The New Zealand workforce’s renewed appetite for office time is driving a positive long-term sector view as softened values create low buy-in opportunity for investors.
PMG Funds has launched its first retail investment offer for 2023, inviting investment in its Direct Office Fund.
Established in 2016, the Fund comprises four high-quality office premises located in Auckland, Hamilton and Christchurch. These include the flagship 152 Fanshawe Street property opposite Auckland’s Victoria Park and a 5 Green Star Office Design-rated building at 213 Tuam Street in Christchurch. Within these four buildings, 18 diversified individual tenancies contribute to a resilient portfolio.
PMG Funds’ General Manager Investor Relationships, Matt McHardy, says the portfolio has been well-positioned to meet elevated tenant demand as employers increasingly lean on their commercial real estate strategy to enhance culture and retain talent.
“We have seen an acceleration in the ‘flight to quality’ phenomenon for the sector, with a clear focus on fit-for-purpose space that enhances collaboration and supports employee wellbeing. This is reflected in increased occupancy and rent for prime space across our main centres through the first half of 2023,” says McHardy.
“Tenant expectations in terms of location, sustainability, end of trip facilities and flexible fitouts will continue to evolve, therefore we’re inviting further investment in the Fund to ensure we are well-positioned to meet this demand.”
McHardy says the purpose of the offer is not simply to raise capital to meet tenant expectations, but also to reduce debt, increase cash on hand, and therefore position the Fund to take advantage of acquisition opportunities as they emerge without compromising PMG’s investment principles.
“While we consider we’re still some way from turning the corner economically, we believe we’re at a potential low point in the market, and that the intersection of softened property values and enduring tenant demand provide a unique opportunity for investors with a long-term view to gain or increase their exposure to a proven asset class.”
The current downward pressure on property valuations means that participation in the Fund is available at the lowest point since inception at $0.95 per unit, with a projected gross cash distribution return of 6.16% p.a.- paid monthly.