From acquisition to exit: the journey of a long-term investment in an unlisted commercial property fund.

Investing in commercial property is a long-term play with the potential to generate a steady monthly income and achieve long-term capital growth.  Like any investment class, there will be ups and downs - but what matters most on commercial property is the time horizon.

To realise optimal returns, investors generally hold these investments for an extended period, riding through market cycles and asset-level changes.

This is the story of one investor, one building, and an 18-year journey inside a commercial property fund. It spans market highs, global recessions, and a global pandemic - and shows why taking a long-term view can make all the difference.

The return journey at a glance Over the 18 years this investor was in Oyster Property Group's 60 Khyber Fund, the asset weathered the Global Financial Crisis, a major tenant exit, three major refurbishments, and COVID-19 disruption. Despite this turbulence, they received consistent monthly income, exposure to long-term growth through reinvestment and benefited from stability through market cycles.

The result for that investor:

• Annual income returns have averaged 8.4 per cent per annum since inception

• Annualised total return of 12.1 per cent for investors

• Sold in February 2023 for $21 million, double the original purchase price

Year one: a clear business strategy

In June 2005, Oyster acquired 60 Khyber Pass Road in Auckland for $10.2 million. The asset was opened to investors in $100,000 parcels. The strategy was clear from day one: maximise income, invest for future resilience, and grow value through tenant strength and smart capital expenditure.

2009 to 2010: income reduced, asset upgraded

In the wake of the Global Financial Crisis, the anchor tenant exited. Rather than rushing to refill the space, Oyster reduced distributions and undertook a strategic refurbishment to reposition the asset.

The short-term impact: lower income. The long-term benefit: stronger tenant appeal and improved lease terms.

2013 to 2019: income strengthened, market strong

As occupancy stabilised and interest rates declined, the building entered a period of strong performance. For the investor, this marked a return to higher distributions - supported by a new well-known global brand as a tenant with a healthy 6-year lease, alongside other well-capitalised occupiers.

2019: adapting to a changing market

With new tenant needs emerging and parts of the building aging, Oyster reduced distributions again to initiate a second major refurbishment. This investment was strategic - anticipating evolving tenant expectations in the office market and positioning the asset to secure quality tenant covenants and extend the value lifecycle of the building.

2020: COVID-19 disruption

The pandemic created a temporary disruption across the property sector. Rather than increase income as interest rates decreased, Oyster kept distributions at a lower rate to prioritise tenant stability and secure a new anchor lease. As a result, the capital value was preserved - and the fund maintained a clear path to recovery.

2021 to 2023: re-leased, stabilised, and sold

With the property repositioned and stabilised, the decision was made to divest. The timing reflected a deliberate strategy - crystallising gains following post-COVID stabilisation while tenant strength and occupancy were at target levels.

In early 2023, the property was sold for $21 million - more than double its original purchase price.

“It’s easy to get caught in quarterly results. But property is patient. This sale crystallised 18 years of smart management and steady growth.”- Fabio Pagano, GM Property, Oyster Property Group

Long-term investing, in practice

This isn’t just the story of one property. It’s an example of how commercial property works when it’s done well — and why investors need to think in decades, not quarters.

What it shows:

• Income stability, even when markets turn

• Inflation resilience, through rental escalations and long-term leases

• Capital growth, driven by hands-on management and reinvestment

• The compounding effect — returns build slowly, then significantly

“From the outset, our strategy was clear - invest in a quality asset in a strong location, secure reputable tenants on long-term leases, and actively manage the property to maximise value.

By prioritising strong tenant covenants, investing in targeted refurbishments, and adapting to the changing needs of the office market, we were able to navigate some significant bumps in the road and deliver strong returns to our investors over the course of the property's lifecycle with us."- Mark Schiele, CEO, Oyster Property Group