Augusta goes on property buying spree for new fund

Listed property investor and fund manager Augusta Capital [NZX: AUG] has bought a $92.8 million property portfolio, which it plans to next year pour into a new unlisted fund for investors.

The Auckland-based company bought two office and two industrial buildings, and will throw in an existing office block it owns into Augusta Value Add Fund No.1, giving it assets worth some $112 million.

The fund is expected to provide investors yield, with redevelopment or potential re-zoning and conversion opportunities to increase value.

The properties include an 30,000m² industrial complex on 4.5ha at 100 Carbine Rd, Mt Wellington, Auckland and subleased to Bunnings as its central city distributions centre; a 4-level office building at 54 Cook St, Auckland CBD, with more than 4000m² of lettable area on a 1500m² site; a 10,640m² future redevelopment site at 11 McDonald St, Mt Eden being used for warehousing and bulk retail by seven tenants; a newly refurbished seven-level office tower at 151 Victoria St West, Auckland CBD with 4800m² of lettable area, including ground floor retail and leased by NZ Post; and a multi-tenanted, multi-level office building in Auckland’s CBD, with mixed used zoning and already in 16 strata titles.  

The company put up $15 million in equity for the fund, which is fully underwritten by a group of high-net worth private investors, who contributed $45 million.

The balance will be provided by a prime bank on a first mortgage basis, with the fund likely to be offered to wholesale investors by January next year.

The fund is "consistent with the previously identified strategy to broaden our funds management offerings to appeal to a wider range of investors and to give existing investors more choice, in addition to our typical offerings of single asset syndications," managing director Mark Francis says.

"It will also assist in providing further recurring management fee income at a meaningful level."

Last month, the firm reported a 26% drop in first-half earnings after a year-earlier gain when a syndication deal wasn't repeated.

Augusta reiterated guidance that revenue from its funds management business will be volatile, depending on when it completes deals.

The shares last traded at 96c, and have dropped 1% this year.

(BusinessDesk)