Augusta first-half earnings drop 26% as year-earlier syndication deal washes through

Augusta Capital [NZX: AUG] reported a 26% decline in first-half earnings as a year-earlier gain from a syndication deal wasn't repeated and the listed property investor and fund manager predicted volatility in funds management returns.

Distributable earnings, which strip out unrealised movements in the value of the property portfolio, dropped to $2.66 million in the six months ended September 30, from $3.6 million a year earlier, the Auckland-based company said in a statement. Funds management net revenue dropped 24% to $4.57 million, with Augusta reaping a "significant boost" in the prior year when it completed the syndication of the Victoria Dock building in Auckland.

"Earnings from the funds management business will, as previously indicated, have some volatility," managing director Mark Francis said.

Offsetting that was a 46% gain in investment property net revenue to $3.34 million. Net profit rose 88% to $7.24 million, or 3.04c per share, including a $3.78 million gain on the value of its investment properties. Gross revenue increased 3.7% to $10.4 million.

"Augusta continues to reshape its direction from a pure property ownership company to a more diverse funds management business," Mr Francis said. "The objective is to better utilise capital resources to generate income from a range of property-related activities."

Last year, Augusta bought property investors KCL Property and Investment Property Titles for a combined $15.4 million in cash and scrip, giving it about 165 properties to manage, with some $1.1 billion in funds under management.

Augusta's occupancy rate was 99% as at September 30, up from 94% six months earlier, with a weighted average lease term of 6.8 years. The portfolio was valued at $86.5 million at the balance date, and since then the company bought an Auckland building for $16.5 million.

The board had already declared a second-quarter dividend of 1.25c per share, which was paid on November 13.

The company said second-half earnings will be bolstered by its pipeline of property syndications, which it expects to complete in the financial year.

The shares last traded at 97.5c and have increased 0.5% this year.

(BusinessDesk)