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Sale and leaseback offers pour-fect investment opportunity

A commercial winery operation in one of New Zealand’s premier wine-growing regions has been placed on the market for sale offering an 8.50 percent yield through a leaseback arrangement to an award-winning vintner.

The 1.76ha freehold land title at 146 Ugbrooke Road sustains the Awatere River winery operation, a boutique producer notable for its sauvignon blanc variety.

Bayleys Marlborough director Glenn Dick says the land and improvements alone present an inimitable offering, sweetened by immediate occupancy and plans for operational expansion.

“The established tenant is eager to stay on and expects to negotiate a lease on a gross yield basis, or approximately 8.50 percent of the ultimate sale value.

“This provides flexibility for the new owner and a ‘best of both worlds’ dimension with a diversified asset earning a steady cash flow and a consistent return on investment.

“The tenant has plans to improve operational efficiency and increase output by investing in bottling equipment and focusing on supply to key international markets. This would see investors leverage a booming local wine sector by enhancing the current facility to improve profitability and boost rental return.

“New Zealand’s winegrowers report that strong export value and international demand for certain varieties, like Marlborough-grown sauvignon blanc, will support further industry growth over the coming year. This presents a strong business case for adding new facilities to meet forward-looking requirements.”

Dick is marketing the property for sale with Bayleys colleague Ryan Johnson, inviting expressions of interest closing at 2:00 pm on Tuesday, 2nd April 2024.

The expansive estate features a total floor area of 821sqm (more or less) comprising a cellar door and tasting facilities, an underground barrel hall, a fully equipped laboratory, cold storage, and modern offices, including a boardroom and staff facilities.

The entrenched tenant has proposed a 15-year initial lease term from the settlement date, with perpetual renewal rights of 10 years each.

Bayleys national director of commercial and industrial, Ryan Johnson, says the winery has additional consent to produce 15,000 tonnes, which the tenant wishes to utilise with expansion. Currently, the winery produces circa 9,000 tonnes of grapes per annum.

“New Zealand’s wine industry exports rose 25 percent – or $2.4 billion year-on-year in 2023, cementing our reputation as one of the globe’s most sought-after producers despite manufacturing only a small portion of the world’s wine supply.

“Sauvignon blanc has emerged as a particular stand-out gaining popularity in the American market, which is a significant buoy for the Marlborough region – widely regarded as the sav blanc capital of the world.”

The property occupies a prime site close to State Highway 1 and is well-connected via road to Blenheim’s CBD and Seddon, a rural service town known as the gateway to Marlborough wine country.

“Straightforward access north from Christchurch and south from Blenheim ensures there are no barriers to year-round visitation and an efficient distribution network for the winery’s products.”

“After a bumper 2023 harvest for local wine producers, the property is expected to attract strong interest from both domestic and international purchasers. These buyers will have identified the balanced opportunity to invest in a sector with a high capacity for growth, in addition to underlying land value, and the steady cash flow from an established operator providing an immediate return on investment.”

Click here for more information on the listing.

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