Like most investors, we were experiencing a level of uncertainty about what the change in Government would herald for the property sector. So when we were approached in November about a new project in Queenstown with a new shared model/long term rental strategy we were interested to understand the key fundamentals underpinning the project.
New Ground Capital had secured a fantastic site within Remarkables Park, Queenstown. The opportunity was to invest in the development, ownership and ongoing rental return from the complex, which would target the demand for short to medium term rental accommodation required for the local workforce. Much had been written about the challenges facing the Queenstown accommodation sector, including the recent public spat between Queenstown & Lakes District Council with Airbnb.
The development plan proposes three main buildings, up to seven levels containing 223 apartments, retail, food and beverage, basement and outdoor car parking. The projected IRR (Internal Rate of Return) over five years, including a development margin, is 22%.
Gilligan Sheppard has successfully worked with New Ground Capital previously, most recently on the Prebbleton Estates project, and Bruce is a Director and shareholder of New Ground Capital.
Our Gilligan Sheppard investment network had recently invested or divested in property in Queen Street, Papakura, Orewa, Prebbleton Estates (Christchurch) and Ti Point. The exits provided a healthy return and an appetite for new investment.
The structure of the investment in Queenstown already had multiple offers for the debt component from local banks, however, the equity component needed to be confirmed by early December to meet the project plan.
Over a two to three week period, our network delivered over $7m
in equity which enabled New Ground to proceed with the project.
Our investors in this project included many who invested previously in Gilligan Sheppard projects from New Zealand and Australia, as well as a number of current and former sportspeople. During the raise, a number of investors had individual queries about potential tax implications. Having Gilligan Sheppard Partner and head of Tax, Richard Ashby available was incredibly helpful. His advice provided comfort to a number of the investors in this group. Richard provides tax advice as it relates to property development, ownership and investment on a very regular basis.
If you are interested in Gilligan Sheppard’s upcoming property investments, please contact Michael Vukcevic firstname.lastname@example.org. If you have any property related tax questions please contact Richard Ashby email@example.com.