As the opening of Zara and H&M at Sylvia Park draws closer, the company responsible for bringing them to New Zealand has made a record profit. Kiwi Property made $250.8 million in the year to March 31, an increase of 118 percent on last year’s profit of $115.2 million. Plus: The company expands on when these stores will open this year. rn
The value of Kiwi Property’s property portfolio also increased by almost $176 million. It now has nine significant retail assets in its portfolio, up from seven in 2015.
These properties are valued at $1.79 billion and generate $1.36 billion in annual retail sales each year.
The star performer in its retail portfolio, Sylvia Park, set a record valuation for the year by reaching $704 million (10.2 percent increase).
These results were also bolstered by consumer spending at its shopping centres rising.
Sales across significant categories like outdoor and leisure stores, department stores, cinemas and food and beverage all increased.
“After several years of consumer spending restraint we are pleased to see an increase in discretionary spending,” chief executive Chris Gudgeon said.
Kiwi Property’s record profit has been attributed to the strategic decisions it’s made in the past year, which include getting Zara and H&M to open their first New Zealand stores in Sylvia Park shopping centre.
The move was praised by RCG executive chairman Paul Keane last year, who told The Register that despite not being a retailer, Kiwi Property chief executive Chris Gudgeon was his pick for ‘retail personality’ of 2015.
Keane said securing the two big international names last year would not have been an easy assignment for Gudgeon.
“First off, they [H&M and Zara] would have had to have been convinced that new stores in Sylvia Park would work, then they would have had to negotiate a deal that was attractive whilst at all times protecting the value of the asset. The result will really benefit other Sylvia Park retailers through the generation of additional pedestrian traffic, and most importantly will probably see these two outstanding retailers open elsewhere in Auckland and other major New Zealand locations,” he said.
In its annual report, Kiwi Property gave a loose date for Zara and H&M’s opening. It said the stores will open in Spring this year, which could be anytime from September through to November.
The shop spaces they’ll soon fill are currently still under construction in Sylvia Park mall, with a $19.2 million revamp in the works.
Gudgeon said the introduction of these two global retail brands sends a clear signal of its intentions for its properties.
“Our vision for Sylvia Park is to create a truly world-class retail offer, and our expansion plans feature new international brands, concept stores, additional specialty retail, market-leading food and dining offers, additional carparking and potentially one or more department stores.”
Sylvia Park currently has a mix of 38 percent New Zealand retail chains to 45 percent Australian and international retail chains. The remainder of retailers include independent retailers, supermarkets and department stores.
A wider 20,000 square metre retail expansion planned for Sylvia Park is expected to cost $180 million, and will take place between 2016 and 2021.
This would create space for new international brands, concept stores and specialty retailers currently on a waitlist, Kiwi Property said.
Other opportunities for expansion include a café court (pictured), more department stores and more carparks.
The Base Shopping Centre
Kiwi Property also outlined its future investment plans in the report.
It said it was growing its retail portfolio by focusing on opportunities in the Auckland region due to its population, economic and employment growth, as well as dominant regional shopping centres around the country.
Kiwi Property said the purchase has helped investors benefit from part ownership of New Zealand’s largest single-site retail centre.
It also said The Base is well located within the ‘golden triangle’ of economic and residential growth in between Auckland, Hamilton and Tauranga.
Seeing as it has ticked Auckland and now Hamilton off its list, The Register predicts it may turn its eye to Tauranga for retail property investment next.
LynnMall and The Brickworks
In the report, Kiwi Property also championed the success of its The Brickworks’ dining and cinema development opened at LynnMall in November last year.
Gudgeon said retail sales across the mall increased 20 percent in the four months after it opened, with foot traffic also up 17 percent.
“Projects like this help to redefine the way communities meet and socialise, and we’ve been impressed by the enthusiastic response to this project by our West Auckland shoppers,” he says.
This success is also reflected in LynnMall’s rise in value. Kiwi Property bought it in December 2010 for $174.5 million, and it is now worth $269 million.
Another retail development in the works is Westgate Lifestyle, which is located close to NorthWest mall.
It will be opened in the next couple of months, with 28 large-format retail stores in the site.
These stores include Harvey Norman, Briscoes, Rebel Sport and Freedom Furniture.
Kiwi Property’s top retail tenants