Silverfin sets $1 billion growth goal
New Zealand property syndicator Silverfin is rapidly emerged as a key player in the market, notching up $280m of property under management in a little over 2-1/2 years.
Working with partner agency Colliers International, the Auckland-based company has added four proportionate ownership schemes and an underwritten fund to its portfolio in the last 12 months.
All five schemes were fully subscribed, with the last three schemes being significantly oversubscribed, demonstrating increasing investor demand in Silverfin's schemes.
Silverfin Capital Ltd has now set itself the ambitious goal of growing its syndication and management portfolio to $1 billion within the next five years.
CEO Miles Brown sees the challenge as balancing that growth with the company's investor-first culture.
"While we've set ourselves an aspirational growth target, we remain committed to being as accessible as ever. We'll do absolutely everything we can to ensure our door is always open to our trusted community of investors."
Established in June 2016, the specialist property syndication and management company has successfully established and managed several proportionate ownership schemes. These are structured to provide investors with a cash return from commercial and industrial real estate, without the burdens of private property ownership.
Brown says Silverfin brings a distinctive offer to the investment community.
"We provide a property-specific investment alternative. Rather than investing in a company or managed fund, our investors acquire a proportionate share in the ownership of a specific property or a small portfolio of related properties.
"This approach allows investors to pick and choose a scheme based on a property's fundamentals and to invest in commercial property at a relatively modest price point. Many of our investors have units in several different schemes allowing them to 'customise' their own property portfolio.
"Our schemes aim to offer solid, steady returns. Investors are paid monthly, with schemes typically targeting a pre-tax cash return of 7 to 8 per cent pa."
Colliers' syndications director, Charlie Oscroft, says the quality of Silverfin's offerings is consistently high.
"We have great confidence in Silverfin; and there's good reason why so many investors we work with are happy to subscribe to more than one scheme," he says.
In the last year, the two brought four proportionate ownership schemes and an underwrite fund to market, contributing a further $84.1m to Silverfin's portfolio.
The five fully subscribed schemes were:
• 704 Halswell Junction Rd, Hornby, ($18.6m): This design-built industrial facility is on a long lease to Metro Glass, expiring in 2026. The property comprises a 9663sq m warehouse and office on a 2.2ha freehold site. The syndication scheme comprises 201 investment parcels of $50,000 each and is targeting a pre-tax distribution of 7.75 per cent pa.
• Hall's Portfolio ($30.4m): This property comprises two substantial coolstore facilities with long-term leases backed by national logistics operator, Hall's Group Ltd; one is a 2.1ha facility at 1 and 15/1 Spartan Rd in Takanini, South Auckland, and the other a 1.2ha property at Lot 1 Factory Rd, Waharoa. The scheme comprises 334 investment parcels of $50,000 each and is targeting a pre-tax annual distribution of 8.0 per cent.
• 55 Lunns Rd, Middleton, ($12.95m): This 9157sq m industrial facility is on a 2.3ha freehold site with a new five-year lease to logistics company K & S Freighters Ltd, a subsidiary of ASX-listed K & S Corporation. The scheme comprises 150 investment parcels of $50,000 each and is targeting a pre-tax distribution of 9.0 per cent per annum.
• Silverfin Underwrite Investment Fund ($5.65m): This offers investors access to the underwriting process with the prospect of stronger returns on investment. Silverfin anticipates the fund will underwrite two of its proportionate ownership schemes in its first full financial year, providing a projected pre-tax cash return to investors of 10 per cent pa.
• 88 Saint Hill St, Whanganui ($16.5m): This closed over-subscribed in February 2019, ahead of the scheduled close date. This two-level department store of 5661sqm was purpose built for Farmers in 2015 and is leased to Farmers on a 25-year lease which expires in 2040. There are 184 units of $50,000 each and the scheme is targeting a pre-tax distribution of 7.75 per cent pa.
Brown says the underwrite fund is a natural development for Silverfin, given the overall growth in the syndication market.
"Syndication as an industry has matured in recent years, with a real focus on governance," he says.
"Silverfin is registered under the Financial Markets Authority, which is tasked with regulating the industry under the Financial Markets Conduct Act. This level of oversight should give investors great confidence in the offerings we bring to the market."
"In addition, Silverfin has strengthened its board in the last year with the addition of independent director John Bishop and non-independent director Paul Macaulay, bringing the total number of directors on the board to four."
Macaulay is the husband of the late Cheryl Macauley, who founded Silverfin in 2016 - sadly passing away in 2018.
"Cheryl put a great team in place, but her most important legacy was our culture," Brown says.
"Silverfin is focused on nurturing our tight-knit investor community. That's what we enjoy, and that's what our investors appreciate – with the ability to come into the Silverfin offices and talk to the people investing their money."
Brown says Silverfin aims to launch three to four new syndications each year, subject to identifying properties with the right investment fundamentals.
"While we do not limit ourselves to a particular asset class or location, the majority of our syndications have been in the industrial sector. However our most recent scheme was in the retail sector where we were attracted by the new building with a very long lease structure and the strong tenant covenant offered by Farmers," he says.
"We are focusing on the $10m to $40m price range, and there are some great industrial properties out there in this price bracket, with good lease terms and strong tenant covenants. They're also often underpinned by large sites which can allow for future redevelopment."
Brown says while industrial is the current favourite, Silverfin will continue to investigate all sectors including opportunities in the Brisbane market.
"We are particularly excited by our next scheme, which we will be bringing to market next month, consisting of a portfolio of six industrial/agricultural properties leased to Inghams Enterprises (NZ) Pty Limited, on a 25-year lease term, which expires in 2039. The target distribution will be 8.0 per cent per annum, pre-tax, and we expect our investors will find the strong tenant covenant and long lease term an attractive proposition."