Apple Giant Sells Site to Fund Growth

T&G Global is selling and leasing back its Whakatu West site in Hastings in a move that will generate nearly $80m to support its growth strategy.

The 9.56-hectare site is being sold to Property for Industry Limited (PFI). The property accommodates in excess of 36,000 square metres of T&G's post-harvest operations in Hawke's Bay, including one of its packhouses, two cool stores, warehousing and 3.7 hectares of storage yard.

T&G Global's chief executive, Gareth Edgecombe, said the transaction will help T&G free up capital to fuel its growth.

"By entering into a sale-leaseback agreement with PFI, we can unlock funds to reinvest back into our core business and new growth activities, while continuing to operate our post-harvest facilities out of the Hawke's Bay," said Edgecombe.

"With strong worldwide consumer demand for our premium apples, including Envy and JAZZ, this capital will be used to fund our operations, continue building out our key global markets, and invest in new technology and our physical assets.

"The Hawke's Bay is a pivotal region for our global business and long-term strategy, with about 60 percent of our apples grown in the region. With interest in commercial real estate at a real high, it made good business sense to recycle these funds into our growth."

Simon Woodhams, PFI's chief executive, said the acquisition of the site secures a specialised asset for PFI's portfolio, occupied by a tenant operating an essential service.

"We're excited about the acquisition of this key site in Hawke's Bay, which is a vital region in New Zealand's high-value primary sector. We look forward to working with T&G in the future," said Woodhams.

The 15-year triple-net leaseback arrangement with PFI provides T&G with rights of renewal for a further 20 years. The commencing annual rental is $3.5m plus GST, with annual fixed rent reviews of 2.25 percent, with an adjustment to market on the seventh anniversary of the lease commencement date.

The unconditional acquisition, which reflects a yield of 4.4 percent, is expected to settle on 15 November 2021. Both parties will update the market upon the sale being concluded.