The Investment model?

The units are developed to Quest Serviced Apartments (NZ) Limited's exacting specifications, unit titled, sold to individual investors then leased back to a Quest Serviced Apartments NZ Limited franchisee for a 30 year lease based on 15 + 5 + 5 + 5 years under a commercial lease agreement. This business model provides investors with a reputable tenant and the security of a known income each year.

What type of title am I purchasing?

You are purchasing a freehold unit title off the plans with either one or two units on the title depending on the configuration.

How many units are there in the development?

There are a total of 39 units with 18 remaining available

Is the unit tenanted?

Yes, the unit is leased to a Quest Serviced Apartments (NZ) Limited approved franchisee for Quest Tauranga under a commercial lease arrangement of 30 years based on 15 + 5 + 5 + 5 years

What is the rent?

The individual gross rents per unit range from $15,300 p.a to $28,300 p.a plus GST depending on which unit it is. This rent is paid into your account on a guaranteed basis monthly.

Does the rent increase?

An increase of 2.0% per annum (compounding), commencing on the anniversary of year 3 after the commencement date of the lease.

Who is the tenant and what track record do they have?

The lessee is a franchisee of Quest Serviced Apartments (NZ) Limited who has been operating in Australia since 1988 and in New Zealand since 1997. Under the “Quest Serviced Apartments (NZ) Limited” banner there are 101 serviced apartments in Australia, 28 serviced apartments in New Zealand and 1 in Fiji. In addition to this Quest Serviced Apartments (NZ) Limited is developing a further 2-3 more operations per annum in New Zealand. During this period not one of the serviced apartments has failed and all tenancy obligations have been met.

Is this a guaranteed return scenario that has been prevalent in the Serviced apartment market in Tauranga for the past 15 years?

NO. Rental guarantees have been a format traditionally used by developers to create an incentive to the market to purchase the apartments in the development. In effect, where the cost of the rental guarantee cannot be covered by the rental earned from the commercial activity of the business, it is actually funded from the surplus embedded in an inflated purchase price. In effect the investor is funding a portion of their own rental return.

This is flawed commercially and evidenced by notable collapses in rental and capital values at the end of the rent guarantee period.

Commercial tenancy - This is what the Quest Serviced Apartments (NZ) Limited lease is and is the commercially sensible arrangement that commercial property investors look for. The return is NOT based on the profitability of the business but is a fixed rent that Quest Serviced Apartments (NZ) Limited pay on a monthly basis to use your unit.

What deposit is required and where does the deposit go?

A 10% deposit is required.
Deposit- This will be held in the vendors solicitor's trust account until settlement of the development.  All interest (less withholding tax and any bank and stakeholder handling charges) will be credited to you upon settlement. 

Do I pay GST on the purchase price?

No because there is a commercial lease in place the purchase is zero rated for GST. You do need to be GST registered prior to settlement.

Can I live there?

No it is a commercial investment property

What is the construction?

It is a reinforced concrete and steel structure building.

Are there any vendor pre sale conditions?

No. The development is not conditional on the vendor achieving a set number of pre sales.

What are the outgoing costs?

(A) Body Corporate Fees (as per pricing schedule)
(B) Tauranga City Council rates (as per pricing schedule)

What is the Carparking?

There is one carpark available for each unit. See pricing schedule for car park allocation

Are the units furnished?

There is a full FF&E package supplied, maintained and owned by the tenant.

What are the other costs?

Tauranga Council rates along with your share of Body Corporate costs which are set by the owners are the only other outgoings.

Who looks after the maintenance?

Day to day maintenance is looked after by the Tenant. Please refer to the lease and Body Corporate budget for full details.

Who set the values?

Independent valuers have set the values of all investment packages based on the rental income and market returns. The value of the unit will increase over time as with any other property investment.

Can I borrow funds?

Yes, this is a standard commercial product which funding institutions will lend on.