Augusta Capital Ltd has sold the Finance Centre in Auckland for $96 million, 8 months after an $87 million sale fell over.
The buyer’s identity wasn’t disclosed on either occasion. However, I understand the buyer this time is a private Hong Kong investor with New Zealand residency.
Augusta managing director Mark Francis said on Wednesday the new transaction was unconditional from the buyer’s perspective, and only conditional on Augusta shareholders’ approval. That will be sought at a special meeting in late July.
The new deal follows separation of the centre’s components on to 4 titles. Mr Francis said settlement dates were subject to new titles from the current subdivision being issued, which Augusta expected to happen within the next month.
The property fronts Albert St, Victoria St West & Durham St West. The Queen St building originally named as the Finance Centre when Chase Corp Ltd built the complex in the 1980s is now the Crombie Lockwood Tower and is owned by Robt Jones Holdings Ltd.
Augusta’s new transaction will be staged, each of the 4 components of the Finance Centre being sold in different tranches between October 2016 & April 2019. Those stages are:
Augusta House, 19 Victoria St, price $30 million, deposit $3 million upon shareholder approval being obtained, settlement date 1 October 2016
Podium retail, 22 Durham St, West, $25 million, $2.5 million payable upon shareholder approval being obtained, $2.5 million payable on 1 June 2017, settlement date 1 April 2018
Carpark, 22 Durham St West, $30 million, $3 million payable upon shareholder approval being obtained, $3 million payable on 1 June 2017, settlement date 1 April 2019
Podium, 22 Durham St West, $11 million, $1.1 million payable upon shareholder approval being obtained, $1.1 million payable on 1 June 2017, settlement date 1 April 2019.
Under the agreements, Augusta has committed to $1.16 million of capital expenditure on the podium retail, carpark and podium properties, with no further liability for capex. Taking into account the capex & other sale costs & fees, the effective net sale price represented a 3.8% gain on the current carrying book value of the Finance Centre. The gross purchase price represented an effective capitalisation rate of 6.5%, based on current market rents.
Mr Francis said Augusta intended to reinvest the net sale proceeds in its funds management business: “Augusta believes the staged nature of the transaction provides a timeframe over which the proceeds can be invested in the funds management business, while maintaining a level of recurring income from the Finance Centre properties, while that transition/investment occurs.
“The sale will create material balance sheet capacity to enable the warehousing of assets for future syndication, greater levels of underwriting with respect to new deals as well as the ability to make a direct investment in new fund initiatives, as has been previously signalled to the market.”
28 August 2015: Finance Centre sale falls through
Attribution: Company release.