Archive | Syndication

One condition left on Central Park sale, and Air NZ extends at Fanshawe St

Goodman Property Trust manager Goodman (NZ) Ltd said yesterday its sale of Central Park at Greenlane had all but gone unconditional, with only Overseas Investment Office approval still required.

The trust has also secured a new long-term lease commitment from Air NZ on its Fanshawe St headquarters.

Goodman (NZ) chief executive John Dakin said yesterday the $209 million Central Park sale to a joint venture led by New Zealand property fund manager Oyster Property Group Ltd represented a significant milestone in the repositioning of the Goodman trust, marking the last of its major identified asset sales.

“Following settlement of the property, the trust’s portfolio will be almost 90% invested in its preferred Auckland industrial sector and will have a value of $2.4 billion.

“With over $850 million of asset sales since 2012, we have positively rebalanced the trust’s portfolio, improving the quality & growth profile of the assets. It’s a disciplined strategy that is focused on the delivery of the industrial development pipeline and building a portfolio of unrivalled quality.”

Air NZ’s headquarters at 185 Fanshawe St.

The VXV precinct

The Goodman trust’s office investment is now focused in the VXV precinct of the Auckland waterfront Wynyard Quarter. The trust jointly owns the portfolio of 7 buildings with GIC Pte Ltd, the sovereign wealth fund of Singapore. The portfolio has a value of $488.4 million and Goodman’s proportionate share is $249.1 million.

Air NZ’s head office at 185 Fanshawe St is in that precinct. Trans Tasman Properties Ltd began development of the 6-level building in 2005, putting a $60 million value on it, but sold the development part-built to what was then the Macquarie Goodman Property Trust, with Air NZ as the incoming tenant.

Air NZ has renewed its lease for 10 years. Mr Dakin said that, and the Central Park sale, would increase Goodman’s portfolio occupancy to 98% extend the office portfolio’s weighted average lease term to 10.6 years and the overall lease term to 6.2 years.

Earlier story:
10 November 2017: Big property sale follows first-half profit setback for Goodman

Attribution: Company release.

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3 sales, a syndication & a lease

Colliers agents have completed 2 sales & a lease in West Auckland, another at Rosedale, and have completed the syndication of 4 distribution centres through Silverfin Capital Ltd.

Syndication sale

Features: 4 Provida Foods Ltd national distribution centres
Outcome: sold to investors in 233 parcels in a Silverfin Capital Ltd proportionate ownership scheme for a total $11.65 million
Agents: Charlie Oscroft & Kris Ongley

North-east

Rosedale

35 William Pickering Drive, unit 4:
Features: 946m², retail showroom/warehouse
Rent: $170,000/year net + gst from tenancy running until 1 March 2018       
Outcome: sold for $2.765 million at a 6.14% yield
Agents: Jimmy O’Brien (Colliers) & Marty van Barneveld (NAI Harcourts)

North-west

Hobsonville

Hobsonville Workspace, 102 Hobsonville Rd, lots 3 & 4:
Features: 600m² off-the-plan office site developed by The Neil Group Ltd; building to be developed by Kea Properties Ltd, it will include a childcare, retail, cafes & office, completion expected end of 2018
Outcome: sold to Kea for $2.848 million + gst
Agents: Sean Finnegan & Craig Smith

Westgate

101-103 Fred Taylor Drive:
Features: 3.55ha vacant industrial development site     
Outcome: sold for $10.5 million + gst
Agents: Sean Finnegan (Craig Smith (Colliers) & David Mayhew (JLL)

Lease

North-west

Westgate

9 Northside Drive, lot 3:
Features: 720m² childcare centre leased to Eduplay Childcare Ltd
Rent: $390,000/year net + gst + opex
Outcome:
Agents: Sean Finnegan & Craig Smith

Attribution: Agency release.

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Pacific Property launches syndication of Kelston mall

Pacific Property Fund Ltd, managed by Property Managers Group, opened its syndication of the $40 million Kelston Shopping Centre yesterday, after committing to the purchase from the Oyster Property Group in June.

Pacific Property is offering 24 million shares at $1.02/share, with a minimum investment of 20,000 shares & parcels of 10,000 shares thereafter. The offer closes on 22 November.

The target cash distribution return is 7.2c/share for the full year to 31 March 2019.

The Kelston purchase will increase Pacific Property’s funds under management from $74.3 million to $114.6 million, in 9 properties.

Property Managers Group chief executive Scott McKenzie said: “Having multiple tenants & multiple properties in an investment portfolio means total income is less likely to be as affected by the loss of a single tenant or an unforeseen event. This results in more reliable & sustainable returns, attracting more investors to invest, which then results in providing greater liquidity for the underlying shares.

“We also maintain a conservative level of bank gearing compared to other peers in the market. This ensures the portfolio is well positioned to weather any economic clouds that may roll across the horizon and better look after our investors’ interests.”

The centre sits on 2.1568ha at the corner of Great North & West Coast Rds. It was built in 1977, expanded in 1997 and its entrance was upgraded in 2007.

It’s anchored by 3 major tenants – Countdown, Mobil & McDonald’s – and supported by 32 speciality, medical, food, beverage & convenience stores. Property Managers Group plans to offer more health & community services-related tenants, starting with a medical centre, which will take up a lease in November.

Attribution: Company release.

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Maat settles Takapuna syndication

Maat Property Group Ltd has completed its 12th syndication with the $60.85 million purchase of 2-4 Fred Thomas Drive, Takapuna through an equity investment offer to the public.

The property has a net lettable area of 12,200m² in 3 standalone buildings on 2 titles, occupied by a mix of medical & office tenants.

Maat director Neil Tuffin said yesterday the syndicator raised $30.55 million from investors and used bank funding for the balance. He expected the capital investment to increase to $33.65 million soon.

The projected return to investors is 8.1%/year before tax, payable monthly.

The Fred Thomas Property Investment Ltd syndication takes Maat’s portfolio to $260 million.

Maat now manages $260m of properties on behalf of investors.

Attribution: Company release.

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Out of a selldown & rescue, Taurus has built a syndication business ready to grow

In the depths of the global financial crisis, in 2011, Auckland property syndicators Murray Alcock & Allister Knight had one particular syndicate that was going only one way: downhill. Others were shaky, at best.

6 years later, after Christchurch-based Taurus Group Ltd took control of the Aucklanders’ 9 syndicates, investors in that one are looking at daylight, the selldown of the SPI Group syndicates is otherwise almost complete, and Taurus is confident about its own future as a smallscale syndicator.

Taurus Group has 2 arms – its chartered accountancy business headed by Wayne Bailey; and a range of businesses which include capital-raising, property-structuring & syndication, headed by David Kitson (pictured above).

Property syndicate specialist Taurus Management Ltd, part of the capital & finance arm, said on Wednesday it had been granted a licence under the Financial Markets Conduct Act as a manager of managed investment schemes (excluding managed funds) to primarily invest in, or own, real property. It said it aimed to provide good opportunities for investors, mostly in the South Island.

Mr Kitson said the new licence gave the company wider scope to offer managed investment schemes to the public, in addition to the wholesale market. It is now one of 2 managed investment scheme licence holders in the South Island.

Taurus, the early syndication days

But back to the early syndication days of Taurus. In 2011, Taurus began advising SPI Capital Ltd on restructuring its $125 million portfolio of 15 properties in the office, retail & industrial sectors throughout New Zealand and, in 2012, SPI appointed Taurus to wind up the affairs of some of its syndicates.

Taurus has outlined, in an article on its website, its work in trying to deal with the 78 investors in a syndicate that owned a large industrial site in Papakura which had 5 industrial buildings in various states of tenancy & repair, the main tenant in liquidation, and a bank that wanted out.

Taurus persuaded the bank to continue its support rather than force a sale at a large loss, gathered a group of 5 of the syndicate investors willing to support a longer recovery with some extra capital, initially sold some roadfront property and is now moving to sell more of the land, and has negotiated longer-term leases.

Lesson learned: stay smallscale

Mr Kitson has distinguished between Taurus’s investment targets and those of the bigger Auckland syndicators such as Augusta Funds Management Ltd (owned by NZX-listed Augusta Capital Ltd) & Oyster Property Group Ltd (50% owned by ASX-listed Cromwell Corp Ltd, 50% by a group of 5 individuals).

Augusta, in particular, has gone for ever bigger investments and has won strong investor support.

But Mr Kitson said he learned from the SPI restructure & selldown not to get too ambitious and to hold syndicates below the $20 million level, thus requiring fewer investors.

Taurus now manages 4 syndicates with $45 million of property for a total 210 investors.

Mr Kitson said Taurus had seen money flow north to the big syndicators’ offerings, but he believed there was also a strong future in smaller syndicates, and in the South Island: “We see this as complementary to the larger syndicate managers, as the maximum individual property size we will manage is unlikely to be greater than $20 million. There are plenty of attractive opportunities in the south, with very good returns & security. And when it comes to syndicate investment, size does not necessarily matter – tenant profile, returns & security do, so it’s all about the opportunity.

“The syndicates we offer will always have fewer investors, meaning we can continue to provide personal service where investors are bigger fish in a smaller pool. We know it builds confidence to have personal & direct access to the syndicate manager.”

New licence gets Taurus Management focused

Gaining the managed investment scheme licence – a 15-month process – has meant Taurus has had to realign its business to ensure Taurus Management can grow entirely separately from its sister company, Taurus Group. Said Mr Kitson: “The new licence provides the opportunity for the company to start planning a wide-ranging portfolio in the mid-range boutique investment sector over the next 5 years.”

Through the wholesale market, the company recently settled on 9 childcare centres, mostly in the South Island, and is undertaking due diligence on a 10th centre. That scheme will soon own properties worth $25 million.

Taurus Management has also settled the purchase of a 4000m² factory & warehouse in Dunedin, where a sale & leaseback arrangement gave investors the opportunity to be part of a small boutique syndicate with a single very successful tenant. “With monthly cash distributions of 8.5%, the syndicate compares very favourably with larger opportunities in the north,” Mr Kitson said.

Taurus is also conducting due diligence on 2 Christchurch properties, with more opportunities in its sights: “There’s plenty coming up and, while the South Island is our focus, we are also considering forays into regional centres in the North Island, as long as the opportunity is right.”

Taurus Management’s chief financial officer, Michael Kohing, has been with the group since 2000. The company added a distribution manager, Andrew Dorgan, early this year after Mr Dorgan returned to Christchurch from client management & sales roles at 3 banks in London over 7 years, and 5 years in Melbourne as Westpac Banking Corp’s public sector banking team relationship director.

In June, commercial property & investment specialist Charlie Goodwin joined Taurus as a non-executive director. His career has included 6 years as head of investments & marketing for Perpetual Trust, 5 years as a director of Mainland Capital Ltd and, in the last 2 years, work as a consultant providing business case studies and appointment in August as general manager of Ashburton family investment company Tricroft Properties Ltd.

Links: Taurus Group
Taurus, Hunua syndication article: Commercial property – delivering equity growth & dividends, post-GFC

Earlier stories:
15 April 2016: Taurus Group restructures
11 November 2014: SPI directors Alcock & Knight give undertakings to FMA, including repayment
19 October 2012: SPI investors vote to stick with Highland Park cinema property
31 August 2012: Investor majority decides to terminate SPI’s Gloucester syndicate
22 August 2012: SPI Capital manager strikes short-term deal on one syndicate, calls vote on a second
20 April 2012: Syndicator concedes no return to investors in 2 accommodation syndicates 4 years after tenant Edpac’s collapse

Attribution: Company release, website, Companies Register.

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Augusta shareholders get insight into workings of a fast-moving asset manager in an oft-pedestrian sector

Augusta Capital Ltd’s annual meeting last Thursday was an opportunity for investors to gain an insight into a changing world.

The company’s annual results, out in May, showed an entity determined to shift completely out of long-term passive direct investment and into a range of portfolio management roles. It now has a $1.7 billion portfolio of syndicates & other funds under its wing, including privately held portfolios and the Value-Add Fund No 1, which is not about the traditional yield-based returns on property but about repositioning assets and making a profit.

Mark Francis.

Managing director Mark Francis said the company had limited opportunities for growth in its remaining direct property portfolio without substantial new capital being introduced, and market conditions favoured diversifying.

He listed these alternatives, which he saw offering much better returns:

  • Realising further opportunities to manage funds
  • Launching additional funds with the potential to expand & diversify these types of offerings into niche & strongly performing sectors of the economy
  • Ongoing, measured expansion into Australia
  • Maintaining prudent capital management structures throughout
  • Balance sheet transformation
  • Working closely with Bayleys Real Estate to maintain optimal efficiency across the existing asset portfolio, and
  • Active management.

Here & there he would throw in a corporate catchphrase, realise it and revert to blunter language. Augusta is about making properties work – and if they don’t work, can’t be improved further, don’t offer redevelopment opportunities, are syndicates at the end of their time, the company will move on.

While the company’s refashioning ownership away from long-term passive, it’s also been adjusting its balance sheet to cater for different ownership forms (syndicates closing earlier than they used to, funds with other imperatives, development) and for volatile cash holdings.

The issue of volatility was sorted out at the annual meeting when the constitution was changed with a 99.74% vote in favour of removing the loan:value ratio clause that had impeded some investments.

Recurring fees are the cement

Augusta chair Paul Duffy said the focus of the last year, growing recurring management fee income, remained the focus and would be driven through new syndicates & a range of multi-asset property funds. The company would also invest in new staff, technology & processes to further that aim.

“Recurring annualised base management fees increased 10% in the last financial year. This trend has continued in the new financial year with the completion of the 33 Broadway Offer at the end of June and our latest Australian syndication, which will settle this coming Monday.

“In the last financial year, we raised over $200 million in equity for the establishment of new syndications. This included the 2 largest-ever syndications completed by Augusta – the NZME & BDO buildings at Graham St, Auckland. Outside of the KiwiSaver sector, there are very few entities across the financial sector which will have raised similar amounts of equity.

“The success of those capital raisings has seen the number of investors in our syndicates & funds grow 20% in the past year. Augusta now has over 3000 investors in its syndicates and 880 shareholders in Augusta Capital.”

The sale of remaining Finance Centre properties will be completed in 2018 & 2019, and Augusta will use the released funds to warehouse property before syndication, underwriting & co-investments in new funds. However, Mr Duffy said it was proving harder to source these opportunities.

The earnings

Augusta increased adjusted funds from operations by 19% to $6.75 million, equating to operating earnings/share of 7.7c (6.5c in 2016). Net profit after tax fell 43% to $7.75 million, the result of lower revaluation & disposal gains as directly held investment portfolio assets continued to be divested.

However, as those directly held gains fell, the company increased funds under management by 9.5% to $1.6 billion at balance date – and to $1.7 billion since then, following settlement of the 33 Broadway and Nudgee Rd, Brisbane, properties.

Augusta raised $203 million in new equity through 5 new syndications, lifting assets under management by $347 million and continuing the expansion into Australia. Recurring annualised base management fees rose 10% to $5.6 million at balance date, and have since risen to $5.8 million following settlement of 33 Broadway at the end of June and Brisbane syndicate property Nudgee Rd, settling today. Net asset value/share has risen from 94c in March 2016 to 98c.

He said Augusta, which carries buildings on its balance sheet at cost, would launch more funds this financial year, including “measured expansion” into Australia.

All those funds were about yield, but the Value-Add Fund No 1, is about total return, repositioning assets for capital gain for the investors in the fund, including Augusta itself.

Of the 5 properties bought for that fund, all in Auckland, 3 have been sold:

  • 100 Carbine Rd, Mt Wellington, unconditionally sold for $36.8 million (purchase price $33.45 million)
  • 11 McDonald St, Morningside, sold for $24 million (purchase price $17 million), and
  • 36 Kitchener St in the cbd, sold for $21 million (purchase price was $16.5 million).

Mr Francis said the company was working on options for the other Value-Add Fund properties, Hangar 54 at 54 Cook St and 151 Victoria St West.

Next task is to transform balance sheet

Next up for Augusta is to transform its balance sheet. In short, this is about moving out of direct property ownership – albeit investments such as the company’s stake in the value-add fund and short-term underwrites amount to a form of direct investment – and into portfolio management for other investors. It’s contract management for a spread of entities, expanding the external management concept which listed property entities have switched in & out of over the last 3 decades.

Mr Francis said Augusta was getting better use of its capital through that contract management than it would have by sticking to direct investment. That change led to the 19% increase in adjusted funds from operations, he said.

Instead of being “a listed property company”, Mr Francis said: “We’re a pure-play funds management initiative. We’re getting a better earn – 31% – off funds management than we were off direct property investment.”

The change in focus reduced group gearing from 35.5% a year ago to 26.6% in December and 21% now, but Mr Francis said shareholders could expect that ratio to be volatile, depending on the state of investments: “Given what we’ve got on the radar, you wouldn’t expect us to sit at those gearing levels [in the 20-25% range] very long.”

Shareholders approved amending the company’s constitution, by removing the loan:value ratio limit, with a 99.74% vote in favour of this change. The result, Mr Francis said, was that against a target gearing ratio of 35%, the actual gearing could range from 0-55% on a drawn basis.

Future borrowings will consist of 3 categories, each with its own target gearing levels:

  • Real property: A gearing ratio of about 45%, with interest serviced by the income from the relevant real properties; this category includes properties warehoused short-term, with an exit strategy
  • Investment assets (shares or co-investments in managed funds): A lower gearing ratio, with interest serviced by the distribution or dividend income from such assets, and
  • A separate working capital facility, which will be serviced by the cashflows generated from the funds management business and only used to facilitate new deals or funds initiatives.

“The key focus will be servicing the debt, as the debt profile will be low on a long-term average basis, but may increase with respect to new initiatives.”

Mr Francis said that before the constitutional change, “you will see where we’ve bought property to syndicate and underwritten ourselves, but sometimes we’ve hit a debt barrier.”

Changes for syndicate investors

Syndicate investors will see changes too, as Augusta rationalises the portfolios it manages. It’s prepared to be active in closing a syndicate, including offering investors in some of the provincial syndicates the opportunity to enter a new syndicate with better growth prospects.

Mr Francis said Augusta had put proposals to investors to sell out of syndicates and had sold $150 million of such assets in the last 12 months.

“We believe we’re exiting them at the right time, and we can get better investment outcomes. This is a win-win in our minds. We’ve certainly had strong support from investors for our exploring this avenue, and we still see plenty of opportunity for divestment.”

The NZ portfolio

Augusta’s NZ audited portfolio delivered a weighted average total return of 16% for the year to March, an unrealised average 25% equity gain since establishment and a 4.8% valuation gain in the last year. That $1 billion portfolio excludes Australian audited properties, new schemes, the directly owned portfolio, the Value-Add Fund and privately owned & other properties.

The portfolio is about two-thirds exposed to Auckland and is across all commercial sectors. Mr Francis commented: “If you believe the data, it’s hard to ignore Auckland as the preferred investment location.”

How Augusta goes about buying, and building on what it buys

Company chair Paul Duffy & director Bryce Barnett added some detail on how Augusta goes about syndication purchases.

Mr Duffy said there would be an informal discussion with the board about a proposal – at that morning’s board meeting there 3 of these – and, if an agreement to buy was prepared, the board would have a due diligence committee look at the tenants: “It’s not a passive investment. The returns we achieve, close to 16% – it’s a very active management to achieve those results.”

As Augusta looks more at Australia, and Brisbane in particular, Mr Bryce spoke up as the expert in that market segment. KCL Property Ltd, which he headed, merged with Augusta in 2014, taking $850 million of assets under management into the enlarged group, including a number of syndicated Brisbane assets.

“The Australian opportunities at the moment with the best upside are in the Brisbane region,” Mr Barnett said.

One shareholder was curious to know if Augusta improved a property during its brief ownership before passing it on to a syndicate. “Not as a rule,” Mr Francis said. “We’ll buy something then pass it on. Sometimes that will be in passive form, sometimes it will need working on. But we’re not buying, putting a bow on it and then passing it on.

“For the Value-Add Fund, all 5 properties required some sort of addition. The real opportunity there was the short lease to Bunnings and no opportunity to renew it.”

Mr Duffy added: “At McDonald St, management initiated a plan change. We were able to increase the density of that building. We then found the risk to develop it was too high and we’ve now realised it at a substantial profit.”

Future for syndication

On a question of syndication becoming more difficult if interest rates rise, Mr Duffy said: “We’re trying to tie our bank finance to the lease period with interest rate swaps & so forth, and the team lock in a chunk of bank finance. That’s why the recurring earnings become a driver.”

Mr Duffy also said Augusta had hired accountancy firm PWC to provide treasury expertise.

He also commented on likely investment in commercial property by New Zealanders, especially the impact of KiwiSaver on the flow of capital: “With KiwiSaver, you’re going to have 10-15% weighted in property. New Zealand has seen foreign capital coming into commercial real estate, so I don’t see commercial property yields going to 6.5-8% in the next 3-4 years. It’s just not possible.”

Loughlin defers retirement

John Loughlin, who’d intended to retire at this annual meeting, will stay on until the end of the year, when a replacement is expected to be named. Mr Duffy said the search for a new director was progressing but wasn’t quite complete.

And Mr Francis complimented Mr Loughlin, who joined the board in 2007, saying they’d had “many robust discussions over the years” and had disagreed as many times as they’d agreed – “and that’s what you want from a director”.

Attribution: Annual meeting.

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Augusta sale on Carbine Rd among 8 Bayleys deals

Augusta Capital Ltd has sold a large syndicated Carbine Rd industrial property in Mt Wellington (pictured) through Bayleys. The agency has also sold 5 East Tamaki properties and 2 more in Takanini & Wiri.

Isthmus east

Mt Wellington

100 Carbine Rd:
Features: 4.48ha site, 29,526m² of buildings – 1970s warehouse, 7-10m stud height, extension added in 2005 providing 9-11m-high clearspan warehousing, separate 2-level air-conditioned office building & large staff cafeteria at the front plus yard areas; currently used as a distribution centre by Bunnings Warehouse, which will be vacating in March
Outcome: sold for $36.8 million to owner-occupier on behalf of Augusta Value-Add Fund No1 Ltd, with vacant possession
Agents: Mike Houlker, Sunil Bhana, James Valintine, James Hill & Scott Campbell

South

East Tamaki

2 Harris Rd:
Features: 3248m² corner site, 1516m² extensively refurbished & reconfigured commercial building, 52 parking spaces; Bayleys Real Estate is the anchor tenant on a 12-year lease from October 2016, insurance broker AON NZ has a 6-year lease on 478m² of office space
Rent: $501,600/year net + gst
Outcome: sold for $7.6 million at a 6.6% yield
Agents: Tony Chaudhary, Janak Darji, Chris Bayley & Stuart Bode

22 Harris Rd, units 2B & 2C:
Features: 2 adjoining industrial units of 441m² & 274m², tenant in occupation for 16 years
Rent: $66,000/year net + gst
Outcome: sold for $1.2 million at a 5.5% yield
Agents: Nelson Raines (Bayleys) & David Turner (Commercial Realty)

44 Crooks Rd, unit B:
Features: 622m² modern industrial unit – 332m² 8m-high, open span warehouse,  144m² ground-floor showroom, 114m² first-floor offices, 13 parking spaces
Outcome: sold vacant for $1.7 million
Agents: Katie Wu, Roy Rudolph & John Bolton

37 Greenmount Drive, unit C7:
Features: 109m² tilt-stab industrial unit – 81m² high stud warehouse & amenities, 28m² mezzanine floor, full height roller door access
Outcome: sold vacant for $330,000
Agents: Roy Rudolph & Katie Wu

11 Andromeda Crescent, unit 4B:
Features: 88m² industrial unit, food grade fitout including chiller
Outcome: sold vacant for $285,000
Agent: Nelson Raines

Takinini

26 Inlet Rd:
Features: 2707m² industrial site
Outcome: sold for $1.7 million at $628/m²
Agent: Nick Bayley

Wiri

18 Joval Place, unit F:
Features: 240m² industrial unit, mid-stud, clearspan warehouse in a busy cul-de-sac
Outcome: sold vacant for $676,000
Agent: Karl Price

Attribution: Agency release.

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Augusta closes Mercury HQ syndication 34% short, underwrites balance

Augusta Funds Management Ltd closed its $83.5 million syndication of Mercury Energy Ltd’s new headquarters in Newmarket 34% short on Friday, but subscribed for the balance itself and expects to reduce the shortfall to 26% by the end of July.

Augusta is funding its own underwrite with an ASB Bank debt facility.

Managing director Mark Francis said the $83.5 million target for the 33 Broadway, Newmarket, syndication was Augusta’s largest capital-raising and drew $61.8 million of applications.

Of that total:

  • Applicants for $55.15 million had completed all anti-money laundering requirements before the closing
  • Applications for a further $2.4 million were complete but funds hadn’t been received by Friday. Mr Francis said Augusta would transfer units to these investors on Monday, immediately reducing the underwrite by $2.4 million
  • A further $4.25 million of applications were from investors who either needed to complete final anti-money laundering requirements or didn’t have funds available until July. Mr Francis said Augusta would subscribe for these units and transfer as funds became available.

Accordingly, Mr Francis said, Augusta subscribed on Friday for $28.35 million of units funded by the debt facility, reducing this to $25.95 million on Monday and anticipating a reduction to no more than $21.7 million by the end of July.

“Those units remain available for sale and inquiry remains strong,” he said.

Earlier stories:
28 March 2017: Augusta unconditional as second tenant signed for Broadway development
20 February 2017: Augusta launches Mercury syndication
22 December 2016:  Augusta takes new step in syndication

Attribution: Company release.

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Augusta unconditional as second tenant signed for Broadway development

Augusta Capital Ltd has gone unconditional on its purchase for syndication of Mercury Energy Ltd’s new headquarters at 33 Broadway, Newmarket, where construction is just starting.

Mercury Energy will be the anchor tenant, consolidating its 4 Auckland offices in the one 5-green-star building and occupying over half the development at the roundabout across the road from the Newmarket Olympic pool. The company will be on a 12-year lease. Augusta managing director Mark Francis also confirmed Tegel Foods today as an office tenant.

Augusta subsidiary Augusta Funds Management Ltd will raise $83.5 million of equity through a unit trust to be established to acquire the property. Augusta Capital will underwrite $33.5 million and other parties the balance of the capital raising.

Mr Francis said a product disclosure statement was being prepared and the offer should be open for investment in mid-April. No money is being sought yet.

The building is under construction by Mansons Broadway Ltd with settlement (but not building completion) scheduled for 1 July. Mansons will provide a 10-year capex guarantee from completion.

When Augusta entered into the agreement in December to acquire the unfinished development, Augusta managing director Mark Francis said it was a new phase in syndicate investment strategy: “Augusta believes this transaction signals a key strategic step as it moves from not simply being a buyer of investment grade assets but into funding & development of investment grade assets.”

The total consideration is $143,111,878, with a fixed amount payable at settlement, further drawdowns made on a cost-to-complete basis as the development progresses, and retention amounts payable on achievement of certain development & leasing milestones.

Earlier stories:
20 February 2017: Augusta launches Mercury syndication
22 December 2016:  Augusta takes new step in syndication

Attribution: Company release.

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Goodman takes syndicate units to facilitate Millennium Centre sale

The Goodman Property Trust’s manager said yesterday the trust had taken $12 million of units in the property syndicate that has bought the Millennium Centre at Greenlane (pictured) from it.

Goodman sold the 3 office properties at 600-604 Great South Rd, Greenlane, to syndicator Oyster Management Ltd for $210 million last year and settled yesterday.

Goodman (NZ) Ltd chief executive John Dakin said the trust had taken units in the syndicate to facilitate the transaction, would hold the investment for a maximum 2 years and expected to receive an annual return of 8%.

Mr Dakin said Goodman had also sold the commercial buildings & associated development land at 1 Show Place in Addington, Christchurch, for $14 million as part of its asset recycling programme. The unconditional sale to a local investor is expected to settle before the end of this month.

“An active sales programme is reducing debt and providing funding capacity for the trust’s development activity. It’s a strategy that is improving the quality of the portfolio and increasing investment in the favoured Auckland industrial market, a sector we expect to deliver superior growth,” he said.

The 2 transactions take Goodman’s total value of sales this financial year to almost $280 million.

Earlier stories:
5 October 2016: New leases lift price on Greenlane sale
14 July 2016: Goodman to sell Millennium & Yellow buildings to Oyster
1 July 2010: Goodman buys partner out of Show Place
30 May 2007: Macquarie Goodman buys 50% stake in Addington office park company

Attribution: Company release.

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