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Invercargill aged care asset with triple net lease for private investor

With private investors rarely getting the opportunity to acquire institutional-grade aged care assets in New Zealand, an Invercargill facility with strong land value and a triple net lease provides scope for individuals or trusts to invest in the sector.

As New Zealand’s population ages, the defensive aged care asset class has growing appeal for astute listed and institutional investors. Agents marketing the Invercargill property say now the private market can secure a hands-off income in this sector that benefits from high levels of government funding and can leverage demographic change.

Stats NZ figures show one in 50 people in the New Zealand population are now aged 85-plus and this figure could increase to about one in 30 during the 2030s, and to about one in 20 in the 2040s which highlights the need for ongoing provision of aged care services.

Located on 1.34ha land of Residential 1-zoned land at 1 Cargill Street in the fringe suburb of Waikiwi, around 4.7km from Invercargill, Cargill Lifecare comprises a purpose-built 40-bed aged care facility with a gross floor area of 1,146sqm constructed in the early 1990s.

It offers resthome level care and is co-located with serviced apartments and a small number of freestanding independent units.

The aged care facility is leased to and operated by Heritage Lifecare Villages Limited, one of New Zealand’s leading aged care operators which has a more-than 40-strong network around the country and across both North and South Islands.

Heritage Lifecare effectively uses its scale and resources to run its family-focused care homes, with a proven and successful model that has centralised administrative functions and a strong operational focus on resident well-being.

The land and buildings associated with Cargill Lifecare are being marketed for sale by Deadline Private Treaty closing 4pm, Thursday 7th December, unless sold prior through Michael Frecklington, Bayleys Southland along with Sunil Bhana and Mike Houlker of Bayleys Auckland.

The offering returns net annual income of $204,152 and Heritage Lifecare’s 30-year lease commenced March 2022 with rights of renewal until 2112. It is a triple net lease with annual CPI reviews capped at four percent.

Frecklington says Invercargill is attracting strong out-of-area commercial investment, along with high levels of activity from the retiring farmer sector and growing offshore enquiry.

“It’s the little city that punches above its weight and despite being the country’s most southern city, I’ve already fielded enquiry from two overseas investors who have eyed up the Cargill Lifecare offering for its return on investment.”

Bhana says the corporate-style long triple net lease structure transcends the majority of standard commercial leases and investors need to appreciate the compelling fundamentals on offer.

“It’s highly unusual to see a 30-year triple net lease for any commercial asset – let alone for a regional offering in an accessible price range,” he explains.

“A buyer can secure a sizeable asset without needing to be involved with any day-to-day maintenance or operational commitments, have a steady and consistent revenue stream with built-in growth – all underpinned by 1.34ha of residentially-zoned land in a growing region.

“As the population ages, there will continue to be an undersupply of aged care real estate throughout New Zealand and as evidenced by recent sales of other Heritage Lifecare-occupied offerings in Tauranga and Palmerston North, this completely hands-off investment proposition in Invercargill has tangible weight.”

Meanwhile, in the affluent Hawke’s Bay suburb of Havelock North, another Heritage Lifecare-operated aged care facility with the same lease structure is also for sale.

Waiapu House Lifecare comprises a purpose-built, 75-bed care facility integrated with a small resident funded retirement village on 2.02ha of residentially-zoned land close to the Havelock North village centre.

It is also being marketed for sale via Bhana and Houlker, with local input from Rollo Vavasour of Bayleys Havelock North.

Click here for more information on the listing.

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