We hope your year is going well and you’re coming to terms with the colder weather approaching, it’s certainly been a mild autumn which has kept water restrictions on in a number of areas, however, it has meant that construction has had very little impact from poor weather.
It appears that New Zealand is in a unique position versus many parts of the world with the control of Covid 19. The next step will be how the economic impact will unfold and how New Zealand can take advantage of the gains made. Certainly, the flow of kiwis choosing to return home will be interesting to track in terms of New Zealand’s net migration figures in 2020, clearly population growth should assist the housing market.
With winter approaching, so is the completion of The Ed which is due for Practical Completion at the end of June 2021. This is a great result given the delays caused by the level 4 & 3 lockdowns in 2020.
Following Practical Completion, Quest will begin their set up while the site team picks up the final Code Compliance Certificates from Council to enable our new residents to move in.
Taking into account normal council timeframes to process the Code Compliance Certificates, we are anticipating that the Quest lease will commence and the first of our residents will be moving in from the beginning of August 2021.
In terms of project detail, the interior of the building is all but complete with defecting underway and commercial cleaners getting the accommodation ready. Common areas and foyers are the focus of attention for the Haydn & Rollett site team, along with the final touches to the exterior.
The apartments are looking fantastic and you now get an excellent perspective of the offering to new residents. The apartments are large compared to others on the market, they are full of light and provide great outlook on all sides. A number of apartments have excellent city views or wider views out to the Waitakere Ranges or up to Mangawhau (Mt Eden).
The interiors provide a neutral pallet so that residents can make the space their own. We’re also pleased with the enhancements we’ve made to ensure that a high level of amenity is provided along with hard wearing finishes. We’re particularly happy with the lanais in the 1 and 2 bedroom apartments which provide indoor/outdoor rooms that will be usable during the cold winter months as much as they are during the summer.
From mid June 2021, we will have two fully furnished apartments ready, which we intend to use for marketing and leasing purposes. Shareholders will be able to view these at either 10am on Wednesday 16th or 10am on Wednesday 23rd of June.
If you’d like to view the apartments prior to the commencement of the marketing campaign please register with management, here.
As advised previously, the valuation of The Ed ‘as complete’ which was undertaken for year-end purposes increased from $57m to $62.8m. The increase was entirely due to increasing apartment price evidence with the value of the commercial space for Quest been in line with the original valuation. The increased valuation uplift provides capital gains of approximately $12m up from $6.2m forecasted in the original Information Memorandum (capital gain = market valuation less total cost to build).
From mid June 2021, we will be launching our marketing campaign to potential residents of The Ed for occupation from the beginning of August 2021. We have decided to manage the leasing directly, rather than utilising the agency community as we believe it’s important to maintain control so that residents can deal directly with us and understand the benefits of living in a Build to Rent property owned by Resident Properties.
As part of the program, we’re launching The Ed website in mid June. The intention is that this website contains everything a resident needs to know about The Ed and the services on offer.
Keep an eye out on www.the-ed.co.nz when it’s due to go Live in two weeks.
We will also be advertising the apartments in a range of media options to build enquiry. Look out for the promotion of The Ed via TradeMe, Facebook, LinkedIn, OneRoof, etc) as it evolves over June and July 2021.
Management is talking to a number of service providers in the local community to make them aware of The Ed and the opportunity to get involved in our small community with theirs.
We’ve also set up our property management platform via Re-Leased which will provide us and our residents with accurate information from accounts, lease documentation, contacts, guidelines and inspection programs through to ongoing maintenance and repairs.
Quest are getting all set for their opening with furniture, fixtures and fittings soon to arrive, as well as their own promotion of The Ed plus other new sites soon to open. You’ll notice their signage is in place if you’re driving by.
Have a look at their new video which will be showing on all Air New Zealand domestic flights soon:
We’re also pleased to announce that Tanya Maher has joined the Resident Properties management team to work on The Ed’s promotion to the market, the leasing campaign and the management of the project on completion.
Tanya joins us with a Bachelor of Property Degree, Residential Real Estate Agency experience in East Auckland, two years as a Commercial Leasing Agent with Jones Lang LaSalle, and more recently, eleven years in London, where she founded her own wellness business and a high-end Raw Food Cafe within a prestigious Chelsea Hotel.
The residential market has continued to elevate with house prices increasing from April 2020 to April 2021 by 21.3% (view the statistics on REINZ website, here).
Our view is that house prices are simply fueled by an under supply of housing stock and historically low interest rates. We still firmly believe that demand for housing will be hard to match in popular areas and that Build to Rent companies are a means to increasing the housing supply and will assist in the solution for what’s been commonly referred to as a housing crisis.
It was hard to miss the government’s recent housing policy announcement, which was essentially designed to curb residential investors’ appetite for existing housing supply. It will be interesting to follow the housing price statistics from here to track whether the new policies have a material impact.
You’re probably aware that the new policy changes were not intended to impact ‘new builds’, however at this stage a definition of ‘new builds’ has not been finalised and is up for consultation until 1 October. Clearly, The Ed and future Resident Properties projects will be new builds however it would be helpful to have the definition finalised. We are consulting with KPMG to keep completely up to date with the amendments and will keep you informed as we know more.
NEW PROJECT 65 UPPER QUEEN STREET
We are working on a new project at 65 Upper Queen Street, Eden Terrace. Over the past couple of months, we have lodged a Resource Consent application for the project that provides 112 x 1 & 2 bedroom apartments plus a residents’ lounge, community podium garden, roof top BBQ area and a café, along with 80 carparks. The ‘as complete’ valuation of the project is approximately $113m.
It is intended that this project will be the subject of our next capital raise and that it is likely that we will form a special purpose ownership company to complete the project to ‘ring fence’ the returns and risks from The Ed and 65 Upper Queen.
Existing shareholders will have the first priority to invest in the Upper Queen Street project before any new shareholders are introduced.
We will be in contact with you to run through the project’s details and capital structure as we progress over the next couple of months.
We look forward to talking to you as we progress over the next few months. As always, if you have any questions, please do not hesitate to make contact with us via the details below.
The Residential Properties Team