Carpet maker Cavalier Bremworth's three NZ factories are on the market for sale and leaseback

Thursday, 11 June 2020

Workers turn out carpets at Cavalier Bremworth's Papatoetoe factory.

Carpet maker Cavalier Bremworth is offering its factories in New Zealand for sale and leaseback to release funds for a new strategy focusing on wool carpets.

The three factories in Auckland, Napier and Whanganui would return net income of $3.1 million a year and stand on more than 7 hectares of freehold land.

The factories may be sold individually or together and the deadline for offers is Thursday, July 9 at 4pm.

In April the parent company, Cavalier Corporation, listed on the New Zealand sharemarket, said it was looking at several ways of obtaining additional funds to support the business in the light of the Covid-19 impact and implement its 'transformation strategy'.

READ MORE:

* Cavalier's carpet-making bubbles

Cavalier Bremworth's factory in Papatoetoe, Auckland, is one of its three production sites in New Zealand.

* Cavalier returns to profit after restructure, promotes rugs, re-jigs export sales

The profit margins in selling synthetic carpets were getting thinner while sales of its wool carpets were continuing to grow, the company indicated in February this year.

Cavalier Corporation made a loss of $1.2m in its six months of trading between July 1 and December 31 2019. The market for carpet was soft in Australia and New Zealand, the company said.

'Pressure continues to be seen in low margin synthetic carpets with increasing competition in a tight market and Cavalier expects this trend to continue.'

'Cavalier is positioning itself in the higher value end of the woollen flooring market and, while a smaller part of the market, sales of Cavalier’s premium Bremworth Collection wool carpets continue to grow,' it said at its half-year result in February.

The factories are at 7-9 Grayson Avenue and 2 and 9 Brett Avenue in Auckland, at 4-6 Waitangi Road in Napier and at 17-19 Leamington Street and 14 Beaumaris Avenue in Whanganui.

The initial lease on the Auckland factory is six years with net rent of $1.6m, and 10 years each on the Napier and Whanganui factories.

Cavalier has been struggling to be profitable for several years, challenged by changing consumer preferences for synthetic carpets over the last decade.

However, Cavalier chief executive Paul Alston said there was now a growing consumer demand for more natural, sustainable and healthier products.

The portfolio sale is being marketed by Bayleys. Real estate agent James Valintine said the industrial sector continued to attract strong investor interest.

The sector appeared to have emerged largely unscathed from the pandemic disruption. Bayleys had seen an uptick in sale and leaseback offerings.

Cavalier was founded by Grant Biel and Tony Timpson, who set up a modest carpet factory in Auckland in the 1970s. They launched the Cavalier Bremworth brand in 1987, Colliers said.