New Investment Opportunities Arrive As We Reach 6 O’clock
The world has certainly upended itself over the past few weeks. Economists and market commentators are scrambling to recalculate what impact war in the Middle East will have on inflation, economic growth, property prices and interest rates.
But opportunities often arise in times of disruption.
At Classic Collectives, we believe good property will always be good property, and we’ve secured some prime asset opportunities that we can now present to our investors.
The clock continues to tick
Reserve Bank Governor Anna Breman has warned of higher inflation and weaker economic growth due to the Middle East crisis. But she’s also reassured markets that the Reserve Bank won’t rush to react to short-term inflation spikes, and will instead ‘look through’ the geopolitical and fuel shocks when assessing monetary policy in the coming months.
It’s a sensible approach – higher fuel prices alone should have the same dampening effect on our economy as raising interest rates would.
So where do we sit in the current economic cycle?
We always like to use the analogy of a clock face to explain the different self-correcting phases of our economy. As you’ll see in the graphic below, the market peak sits at 12 o’clock, and we naturally move in a clockwise direction as each economic cycle plays out.
We have well and truly arrived at 6 o’clock now, and rising property prices will be next on the horizon. We have certainly noticed an increase in market activity which is setting a benchmark for commercial property capitalisation rates.
Longer term swap rates have risen considerably but the Reserve Bank is not rushing to increase the OCR – meaning floating rates will remain at current low levels for a while longer.
So what does that mean for investors, and for Classic Collectives? Simple. It’s time to move before property prices move again.
New medical and industrial assets secured
With that in mind, we’re excited to announce our new acquisitions.
Just prior to Christmas we agreed to purchase a 49% share of a new medical facility being built in Hamilton’s CBD. A group of orthopaedic surgeons will own the remaining share and have signed an initial 15 year lease.
This new build (worth a total of $20m), is an ideal asset because medical facilities tend to be immune to the ups and downs of our economy. As our population ages, demand for orthopaedic services will no doubt soar. And the fact the tenants own a stake in the building too gives us the long-term security our investors are looking for. Classic Collectives has raised the equity required from existing investors in our existing Medical Fund. The fact no new investors were required to complete this purchase is a strong vote of confidence in the Medical Fund.
Other opportunities are arising
We do have other opportunities, however, open to interested parties and are preparing formal offer documents for investors to consider.
An opportunity exists in Auckland for our Diversified Fund to own a $12m industrial manufacturing facility. This premium located property in East Tamaki is now under contract and the site is ideal for future development which could add considerable value. In the meantime, we have locked in an eight year lease with Galloway International Ltd (who specialise in rotational plastic moulding), guaranteeing cash flow for the short-medium term. The lease will be guaranteed by sister company, Promains Limited, a supplier of pipeline products New Zealand wide – together with a three month bank bond.
A formal offer document will be available shortly.
In Christchurch we have secured a prime warehouse and office complex at Waterloo Business Park. This property is only a few years old and ticks all the right boxes in terms of location, access and stud height that appeal to industrial users. We’re currently working with Classic Developments to remove an unconsented mezzanine floor and are in advanced stages of negotiations with a large-scale, international business for a long-term tenancy. Once leased, this building will be valued at $8-$9 million and will be added to our Diversified Fund. Interested investors are urged to get in touch as soon as possible.
Property prices and interest rates: where to from here?
With so much global uncertainty, it’s impossible to predict the length and timing of each economic phase in our clock analogy. The next few phases could tick past very quickly.
What we do know is buyer activity in the commercial property space is heating up. So while we have a 6 o’clock window, we’ll be making the most of any opportunities we can find.
Our team will continue to actively investigate potential commercial property purchases around the country. We’ll keep you updated as soon as we have anything else to announce.
In the meantime, thank you for your interest in Classic Collectives. We hope to work closely with you in 2026 to help grow your wealth.
EMAIL: owen.cooney@classiccollectives.co.nz
PHONE: 027 222 6932
