Capital Group

4 apartment towers on the Symonds Street ridge.

In early 2001, CapitalGroup was approached to assist Sanctuary Developments Limited (“Sanctuary”) in the development of one of Auckland City’s first commercially developed student accommodation facilities. Called Princeton, it comprised 120 units on a strategic site in Symonds Street adjacent to Auckland University and AUT. This highly successful project was followed by Columbia (140 units) and 315 units in Empire (both located just off Symonds Street in
Whittaker Place).

In early 2001, commercially developing apartments for students was new to Auckland, as such, Sanctuary needed a financier who would look beyond the numbers of the development and understand the commercial drivers behind
the project.

Alongside Sanctuary, CapitalGroup spent considerable time researching the market and agreed this was a good area to develop and invest in.

Due to the success of Princeton, Columbia followed in 2002 / 2003 and then Empire commenced in 2004 with completion in early 2006.

Why did CapitalGroup invest?
Financing Structure
Outcome

Why did CapitalGroup invest?

Developer – Sanctuary developments has proven itself to be an innovative developer able to think outside the square and complete projects which are high quality and have merit.
Sector – At the time Princeton commenced, CapitalGroup identified through careful analysis, a market which was under developed and poised for very strong growth.
Scalability –The intellectual property Sanctuary had created was scalable and would lead to further successful projects.

Financing Structure

All three projects required high leverage project funding. CapitalGroup provided significant funding to Sanctuary to complete these projects as well as arranging large senior debt facilities. In the early stages, i.e. 2001-2003, the units being developed were unproven as investment propositions making a high level of pre sales difficult. Through CapitalGroup’s belief in the merits and our detailed understanding of the projects, the financing was structured to incorporate underwriting the sale of a large tranche of units in both Princeton and Columbia.

The underwriting of the units minimised the risk to the financiers (and to Sanctuary) and allowed the projects to commence with limited presales in a highly leveraged way and with a manageable downside.

To view the Sanctuary project websites, please click below:

sanctuarydevelopments.co.nz

Outcome

These three projects have delivered 600 innovative and vibrant apartments to the Symonds Street ridge in Auckland. Consistent high occupancy of these homes reinforces the basic investment philosophy that Sanctuary Group championed and CapitalGroup supported.