Archive | Securities – NZ

Goodman buys Mangere site

The Goodman Property Trust has conditionally bought an industrial property in Mangere for $29 million.

The 3 adjoining sites at 42, 60 & 70 Favona Rd cover 7ha backing on to the Manukau Harbour, predominantly leased to T&G Global Ltd. Currently operated as a market garden, the property has a 2279m² warehouse & 41,790m² glasshouse, and associated office & coolstore space.

Investment management director James Spence, of trust manager Goodman (NZ) Ltd, said last week: “While we are continually investing in the trust’s development programme, we are also looking at strategic acquisitions that complement the portfolio. Leased until June 2023, this property offers longer-term opportunity with the potential to develop 30,000m² of new warehouse space. Providing direct access to State Highway 20 and easy connectivity with the cbd, port & airport, the location is ideal for logistics operators.”

The acquisition is conditional on Overseas Investment Office approval.

Attribution: Company release.

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VXV Fanshawe St sale unconditional

The Goodman Property Trust’s sale of its interest in the owner of the VXV property portfolio along Fanshawe St in Auckland, Wynyard Precinct Holdings Ltd, went unconditional last week.

Goodman said the buyer, a group of funds managed by US asset manager Blackstone Group LP, had received approval from the Overseas Investment Office and the sale would settle this Friday, 14 December.

The 51:49 joint venture between Goodman & Singapore sovereign wealth fund GIC agreed the $635 million sale in May.

After selling $1.2 billion of property over the last 5 years, the Goodman trust’s investment strategy is now exclusively focused on the Auckland industrial market.

The VXV portfolio includes 7 lowrise office buildings, with a total floor area of 88,000m², in the commercial precinct adjoining the Wynyard Quarter.

Earlier story:
18 May 2018: Goodman & Singapore fund sell VXV portfolio to Blackstone

Attribution: Goodman release.

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Pacific Property offer fully subscribed

Property Managers Group closed its $37.44 million Pacific Property Fund Ltd syndication offer fully subscribed on Friday.

The Tauranga-based syndicator raised the money to add 2 industrial properties in Hamilton & Palmerston North to the fund’s portfolio.

Pacific Property, an unlisted commercial property fund, holds a diversified portfolio.

Earlier story:
9 November 2018: PMG looks to add 2 properties to unlisted Pacific fund

Attribution: Company release.

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Vital doubles loan to NorthWest for Healthscope acquisition

NZX-listed Vital Healthcare Property Trust has doubled its loan to its manager to support the acquisition of an increased stake in Australian listed company Healthscope Ltd.

Vital had paid $A41 million to support the investment in Healthscope, and this week upped it to $A81 million.

Vital’s manager, NorthWest Healthcare Properties Management Ltd, is part of a group of entities controlled by Paul Dalla Lana of Toronto, Canada, which invest in & manage properties & businesses in the healthcare sector. The Northwest group also owns 24% of Vital’s units.

Vital chief executive David Carr reiterated in a release yesterday that “an acquisition of Healthscope’s underlying hospital-related real estate is of interest to NorthWest & Vital, in line with their long-term strategy to invest in healthcare real estate assets in the Australasian market”.

He added: “Consistent with their conflicts policy, NorthWest & Vital currently intend to pursue any potential Healthscope real estate acquisition jointly, with scope to introduce other capital partners as appropriate.”

The immediate owner of Vital’s manager, NorthWest Healthcare Properties REIT, announced in May it had acquired a 10% interest in Healthscope at $A2.39/share by way of a derivative contract with Deutsche Bank AG’s Sydney branch. On 20 November, NorthWest said it had bought another 1% on market and on 30 November it amended the derivative contract to increase its interest in voting shares to up to 13.41%, acquired at an average $A2.360062/share.

As an extension of its loan arrangement with NorthWest, Vital agreed to lend the further $A40 million to NorthWest to reflect “Vital’s proportionate contribution to the funding required to support the acquisition of the 13.41% position. The loan is repayable in 12 months, unless the parties agree to a shorter timeframe. The loan continues to be on arm’s-length terms and interest is payable by NorthWest.”

Healthscope owns 43 private hospitals in Australia (down from 45 when Northwest bought in) and pathology operations in New Zealand, and has been a takeover target for months, after its sell-off of $A300 million of assets & 19% drop in net profit to $A89 million for the year to June.

In late November, Healthscope granted exclusive due diligence to Brookfield Capital Partners Ltd of Toronto, making its second bid to take over Healthscope at a total value of $A2.585/share, or about $A4.5 billion.

Through all the takeover activity, Healthscope has Brookfield’s agreement for it to continue working on establishing an unlisted property trust to hold most of its hospital assets and lease them back to Healthscope, provided it doesn’t enter a binding divestment agreement in the meantime. Healthscope added that “a new co-investor (unnamed) would be introduced to hold an interest of 49%” in the new trust.

Earlier stories:
25 November 2018: Vital Healthcare management fees up for review, new action at Healthscope
23 November 2018: Northwest increases Healthscope stake to 11.1%
9 May 2018: Vital Healthcare’s parent makes new Australian investment

Attribution: Company releases.

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Augusta buys Queenstown site for second tourism fund hotel

Augusta Capital Ltd announced last Monday it had entered into an unconditional agreement to acquire land in the Queenstown cbd for a 5-star hotel development, and on Friday it confirmed settlement.

The site is at 17-19 Man St, en route to the Queenstown gondola. Augusta intends to transfer it to its proposed tourism fund. In the meantime, managing director Mark Francis said the company would continue to progress discussions with potential hotel operators.

“Locations for a hotel development in Queenstown do not come much better than this site,” he said. “The location is central Queenstown, within walking distance of all the key sights & activities in the Queenstown cbd, while sitting in an elevated position which provides premium, uninterrupted views out to the Remarkables.”

He said the vendor had obtained resource consent to undertake the proposed hotel development, which has been progressed to a level of detailed design. “Initial discussions have also been held with potential contractors regarding construction of the hotel, but a construction contract will not be let until a hotel operator is secured. It is expected that construction should commence by the middle of 2019.”

The total consideration payable under the agreement was $13.95 million for the land as well as the designs, intellectual property & site works undertaken to date.

The planned tourism fund already has one asset lined up – 54 Cook St, on the fringe of the Auckland cbd, which is being converted from office to a pod hotel for Jucy Snooze Ltd. The shareholders of Augusta Value Add Fund No 1 Ltd approved the sale of the building to the Augusta Capital group in September, awaiting transfer to the tourism fund.

Earlier stories:
23 October 2018: Fund shareholders approve sale to initiate Augusta tourism fund
24 September 2018: Pod hotel the opportunity for Augusta to close value-add fund with strong return and open tourism fund

Attribution: Company release.

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Funds manager Augusta lifts earnings 122%

Augusta Capital Ltd lifted its half-year earnings by 122%, driven primarily by higher operating earnings & revaluations. On another measure, the non-GAAP adjusted funds from operations assessment of underlying financial performance, the return was 16% higher than a year ago.

Augusta chair Paul Duffy said in the results release on Thursday: “The material improvement in the interim result reflects the early benefits of Augusta’s transition to a funds management earnings model, which is being actively supported by improved balance sheet capability.

“Improved earnings came from Asset Plus and the launch of the Augusta Industrial Fund. The launch & expansion of investor funds, including fees from assets under management, are now core to the company’s growth story.”

Mr Duffy said the new funds had attracted new investors, and a number of existing investors had reinvested.

Broad picture

The company generated $5.03 million of net offeror & underwriting fees and created $950,000 of ongoing gross annual management fees from the 2 new offers.

Net management fee income rose 32% to $4.17 million ($3.15 million), driven by strong transactional income & new assets under management.

Net rental income fell by $840,000 following divestment of Augusta House (19 Victoria St West in Auckland) in July 2017 and the retail title in March 2018, offset against income from the Hub in Wellington until 15 June 2018.

Corporate costs increased by $620,000 to $5.02 million, driven by the level of investment required to support the launch of new fund initiatives.

Net funding costs fell $570,000 to $890,000 after the sale of directly held investments. The company had $32 million of undrawn lending facility at 30 September, to support new initiatives.

Total assets were reduced by $36 million to $105.3 million, primarily as a result of the sale of the Hub in Wellington to the Industrial Fund for $44.9 million. The bulk of these proceeds ($35.9 million) was applied as a debt repayment and the balance held as working capital.

Group gearing based on drawn debt was 6.3% of gross asset value. Intangible assets & goodwill are held at cost net of impairment, driven by asset sales in the managed portfolio. However, Augusta will continue to revalue investment assets to fair value.

2 new investment offerings were completed oversubscribed, raising $143.5 million of new equity, and Augusta completed transition of the Asset Plus Ltd management contract.

Key finance & portfolio points:

  • Net profit & total comprehensive income, up 122% to $5.1 million ($2.3 million)
  • Net revenue, up 7.1% to $11.84 million ($11.05 million)
  • Profit before fair value movements, disposals & tax, up 14.3% to $5.9 million ($5.2 million)
  • Adjusted funds from operations, up 16% to $4.56 million ($3.94 million)
  • Total assets, down 25.2% to $105.3 million ($140.85 million)
  • Net assets, up 3% to $86.7 million ($84.2 million)
  • Net asset value/share increased to 99c (98c) due to retained earnings
  • Net tangible assets/share, fell 3c to 75c (78c, but up from 71c in March)
  • Basic & diluted earnings/share 5.83c (2.62c)
  • Second quarter cash dividend 1.5c/share, fully imputed with imputation credits of 0.583c/share attached, and supplementary dividend of 0.2647c/share for non-resident shareholders; the board expects to maintain the full-year dividend at 6c/share, subject to quarterly review
  • All assets within the Augusta Value Add Fund unconditionally sold, generating an 11.7% internal rate of return 
  • Increase in corporate costs as Augusta continues to invest in people to support the growth strategy.

Outlook
Managing director Mark Francis said Augusta would maintain its focus on growing assets under management & diversifying the portfolio: “The tourism sector remains a key focus for Augusta’s next new multi-asset fund offering, and we have previously signalled our intentions as to the future growth of the Industrial Fund. The acquisition of the Queenstown Views property is a further asset secured for the tourism fund initiative and we are also pursuing further opportunities in both Queenstown & Auckland.”

Immediate aims: 
• Exit the final 2 Finance Centre assets
• Launch sector-specific funds
• Grow existing assets under management, specifically Asset Plus & the Augusta Industrial Fund 
• Leverage balance sheet to support underwriting & broader business objectives 
• Invest in further IT to support growth 
• Active asset management in New Zealand & Australia in terms of acquisition, divestment & development opportunities.

Immediate aims:

  • Exit the final 2 Finance Centre assets
  • Launch sector-specific funds
  • Grow existing assets under management, specifically Asset Plus & the Augusta Industrial Fund 
  • Leverage balance sheet to support underwriting & broader business objectives 
  • Invest in further IT to support growth 
  • Active asset management in New Zealand & Australia in terms of acquisition, divestment & development opportunities.

Attribution: Company release.

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Vital Healthcare management fees up for review, new action at Healthscope

Vital Healthcare Property Trust’s manager, NorthWest Healthcare Properties Management Ltd, said on Friday it planned to review its management fees in the first quarter of 2019.

Northwest & its ultimate shareholder, NWI Healthcare Properties LP, are controlled by Paul Dalla Lana of Toronto. Northwest also holds 24% of Vital’s units.

Another arm of the group, NorthWest Healthcare Properties REIT, increased the stake it bought in May in ASX-listed hospital owner Healthscope Ltd, as the takeover & breakup of Healthscope looked more certain.

On the management fees, Northwest committed not to exercise certain rights set out in Vital’s trust deed for the duration of the fee review, with a 31 March end date, including:

  • Their rights relating to the removal of independent directors, and
  • Their right to increase Northwest’s fees above current levels.

Vital chief executive David Carr, who’s also a management company director, said in yesterday’s release the full board would lead the fee review, with input to be sought from a range of unitholders.

“The decision to undertake a fee review follows positive & constructive discussions with a number of unitholders during the course of this year. The review will be conducted in the context of Vital’s existing structure as an externally managed listed trust, and its strategic & operational requirements.

“There can be no assurance of any changes to Vital’s fee structure or the nature of any such changes arising out of the review process.”

Vital will hold its annual meeting on Thursday 20 December.

The Healthscope scenario

In separate action this week, NorthWest Healthcare Properties REIT, of Canada, increased its stake in Australian listed hospital operator & takeover target Healthscope from 10% to 11.1%.

Healthscope, which owns 43 private hospitals in Australia (down from 45 when Northwest bought in) and pathology operations in New Zealand, has been a takeover target for months, after its sell-off of $A300 million of assets & 19% drop in net profit to $A89 million for the year to June.

This week Healthscope turned down a quest for due diligence from private equity firm BGH Capital Pty Ltd, heading a consortium comprising industry fund AustralianSuper, Carob Investment Pte Ltd of Singapore & 2 Canadian super funds, the Canada Pension Plan Investment Board & Ontario Teachers’ Pension Plan Board. Instead, Healthscope granted exclusive due diligence to Brookfield Capital Partners Ltd of Toronto, making its second bid.

The BGH proposal is worth $A4.1 billion at an indicative $A2.36 cash/share. Brookfield made a bid in August at $A2.50/share and raised it this week to total value of $A2.585/share. Norges Bank built a 5.1% stake in Healthscope over the last 3 months in a range of $A1.79-2.38/share.

Mr Dalla Lana said Northwest & the Vital trust were interested in jointly acquiring Healthscope’s underlying hospital-related real estate, in line with their long-term strategy to invest in healthcare real estate assets in Australia & New Zealand, and with scope to introduce other capital partners.

Through all the takeover activity, Healthscope has Brookfield’s agreement for it to continue working on establishing an unlisted property trust to hold most of its hospital assets and lease them back to Healthscope, provided it doesn’t enter a binding divestment agreement in the meantime. Healthscope added that “a new co-investor (unnamed) would be introduced to hold an interest of 49%” in the new trust.

Earlier story:
23  November 2018: Northwest increases Healthscope stake to 11.1%
9 May 2018: Vital Healthcare’s parent makes new Australian investment

Attribution: Northwest, Vital & Healthscope releases.

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Asset sales & revaluations lift Stride result

Asset sales & revaluations lifted Stride Property Group’s profit for the September half, but reduced net rental income.

$23.6 million of revaluations lifted portfolio value by 2.7% to $934.5 million. 3 properties were subject to desktop reviews and 14 to full valuations as at 30 September.

Stride chair Tim Storey & chief executive Philip Littlewood said completed asset disposals & higher valuations had contributed to a lower bank loan:value ratio of 34.2% and higher net tangible asset backing
They expect management fee income to be higher over the second half as development activity on committed projects increases.

A stapled security of the Stride Property Group comprises one ordinary share in Stride Property Ltd & one ordinary share in Stride Investment Management Ltd. The group continues to investigate adding more funds to its management portfolio.

Results for the September half-year (September 2017 results in brackets):

  • Net rental income $27.9 million ($29.5 million), lower primarily due to the divestment of 3 Bunnings-operated properties to Investore Property Ltd and sale of the development at Springs Rd, East Tamaki
  • Pretax profit up 13.5% to $44.1 million ($38.8 million)
  • After-tax profit up 20.8% to $40.2 million ($33.3 million)
  • Net distributable profit down 0.7% to $19.6 million ($19.7 million) or 5.37c/share (5.41c/share)
  • Net tangible assets/share up 3% since March to $1.88, excluding value of management contracts ($1.82 at 31 March)
  • Loan:value ratio 34.2% consistent with March, down from 38.8% in September 2017
  • Targeting a combined 9.91c/share cash dividend for the full year

Portfolio:

  • Occupancy up 2.2% to 98.9% (96.7%)
  • Weighted average lease term maintained at 5.1 years
  • Significantly improved lease expiry profile for the next 2 years, reducing from 18.7% in March to 12.2% in September
  • Total leasing transactions, including rent reviews, renewals & new lettings completed across 21% of the portfolio resulted in a total annualised rental increase of 6.3%
  • Market reviews comprised 10% of the total annualised rental and resulted in an increase of 11.5%
  • Comparable sales for the year to September up 11.5% at NorthWest Shopping Centre & 4.0% at Silverdale Centre
  • Net property portfolio valuation gain of $23.6 million, or 2.7%, to $934.5 million ($902.2 million)

Developments, acquisitions & divestments:

  • East Tamaki, 11 Springs Rd, construction of a new head office for Waste Management NZ Ltd, practical completion expected late 2019
  • Tauranga, Bay Central Shopping Centre, $4.7 million expansion for Rebel Sports & Briscoes premises, new 10-year leases
  • 3 Kings, 2 Carr Rd, post-balance date, $6 million upgrade of Bunnings premises in early stages of development
  • Avondale, 439 Rosebank Rd, unconditional contract signed to buy property for $8 million, completion expected July 2020
  • Albany, 33 Corinthian Drive, ASB technology & innovation hub, sale process started post-balance date

Earlier stories:
12 September 2018: Stride outlines plans for commercial property funds
6 May 2018: Stride’s Springs Rd redevelopment for Waste Management goes unconditional
26 March 2018: Investore settles 2 property sales
2 March 2018: Stride’s 3-property sale to Investore settles

Attribution: Company release.

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Northwest increases Healthscope stake to 11.1%

The Canadian real estate investment trust which controls the Vital Healthcare Property Trust & its manager has increased its stake in Australian listed hospital operator Healthscope Ltd to 11.1%.

NorthWest Healthcare Properties REIT said on Tuesday it had added 1% of Healthscope’s voting shares, through onmarket buying, to the 10.1% it acquired in May under a forward derivative contract with Deutsche Bank AG’s Sydney branch.

Healthscope has a portfolio of 43 hospitals concentrated in large metropolitan centres throughout Australia.

Northwest chair Paul Dalla Lana & chief executive John Frey said Northwest & the Vital trust were interested in jointly acquiring Healthscope’s underlying hospital-related real estate, in line with their long-term strategy to invest in healthcare real estate assets in Australia & New Zealand, and with scope to introduce other capital partners.

NorthWest is an unincorporated, open-ended Canadian real estate investment trust which owns New Zealand company NorthWest Healthcare Properties Management Ltd, manager of the Vital Healthcare Property Trust, and holds 24% of Vital’s units.

Attribution: Company release.

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Revaluation lifts Argosy half-year return

A revaluation just before the September half-year balance date lifted Argosy Property Ltd’s portfolio value by $34.6 million, resulting in a 5c/share gain in asset backing.

Chief executive Peter Mence said in the interim report yesterday the revaluation was undertaken following evidence of improved market conditions since the last valuation date of 31 March 2018, and desktop valuations performed by Colliers International during the period.

The $34.6 million gain lifted the portfolio 2.2% above previous book value.

Mr Mence said the post-revaluation contract yield on values was 6.63%, and 6.7% on fully let market rentals.

The company has been progressively selling non-core assets, and Mr Mence said 10% of the portfolio, worth $153 million, remained categorised as non-core. This includes 2 properties sold for a total $45.7 million, both with December settlements, and the Albany Lifestyle Centre, which is on the market.

“Argosy will continue its divestment programme over the next 12-18 months to take advantage of current market conditions,” Mr Mence said.

The company has a $650 million debt facility, and Mr Mence said Argosy would review its long-term debt funding options with a view to diversifying its debt funding base over the next 12 months.

Statistics:

  • Pretax profit $71.2 million ($27.4 million)
  • After-tax profit $66.8 million ($23.1 million)
  • Total portfolio value $1.62 billion ($1.51 billion)
  • Revaluation gain 2.2% on book value to $34.6 million (nil)
  • Disposal gains $2.9 million ($165,000)
  • Basic & diluted earnings/share 8.07c (2.8c)
  • Net tangible assets $1.17 ($1.12 in March)
  • Debt:total assets ratio, excluding capitalised borrowing costs, 36.8% (35.9% in March)
  • Borrowings $603.8 million ($552.8 million)
  • Weighted average lease term 5.6 years (6.6 years)
  • Weighted average interest rate 4.86% (4.98% in March)
  • Occupancy (by rent) 98.4% (98.8% in March)
  • Gross distributable income up 7.1% to $33.4 million
  • Gross distributable income/share up 6.6% to 4.04c (3.79c)
  • Net distributable income up 9.2% to $28.7 million
  • Net distributable income/share up 8.8% to 3.47c (3.19c)
  • Weighted average lease term 5.6 years (6.1 years in March), reflecting the adjusted arrangements with NZ Post at 7 Waterloo Quay in Wellington

The company completed 42 rent reviews on $15.5 million of existing rental income during the half-year, achieving 3.4% rental growth (3.1% annualised).

Argosy completed 24 lease transactions (16 new leases, 7 renewals, one extension) on 39,500m² of net lettable area.

These included:

  • East Tamaki, 320 Ti Rakau Drive, Bunnings Ltd 10 years
  • Albany, Albany Lifestyle Centre, E Road Ltd 9 years, Peterken Enterprises Ltd 6 years
  • Albany, Albany Mega Centre, Auckland Outdoor Holdings Ltd 6 years.

Mr Mence said the company had filled some of the vacancy at the Citigroup Centre, 23 Customs St East in downtown Auckland levels 2, 14 & part 13 leased, enquiry on the remaining floors 6, 7 & the balance of 13.

Link:
Interim report

Attribution: Company release, interim report.

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