Scoop has an Ethical Paywall
Augusta launches next stage of industrial fund
Media Release
February 19, 2019
The second stage of an industrial fund established and managed by Augusta Funds Management has opened for investment which will enable a further five properties to be added to its portfolio - taking the fund’s total value to close to $300 million.
A total of 105 million $1 ordinary shares are being offered in Augusta Industrial Fund Limited (Augusta Industrial) to provide sufficient capital to buy four Auckland and one Christchurch industrial properties for $173.8 million.
Shares are available in multiples of 1000, with a $10,000 minimum investment, and are forecast to provide a pre-tax cash return of 6.5% in the March 2019 and 2020 financial years.
The offering is being marketed by Mike Houlker, Samara Phillips and Sarah Prebble of Bayleys’ Syndication and Investment Products division. It closes on March 22, 2019.
“Augusta Industrial is all about diversification, providing a wide spread of tenant and location risk in an asset class that is currently outperforming other commercial property sectors,” says Houlker. “A key objective is to deliver a sustainable and stable income return plus the potential for capital growth.
“Unlike many property funds and other investments, Augusta Industrial makes distributions on a monthly basis which is particularly helpful for smaller investors who have recurring monthly outgoings.”
Augusta Industrial is a limited liability company that was established in April 2018 as an open-ended, unlisted property fund, initially consisting of three Auckland and one Wellington properties.
“The original $75 million share offer was oversubscribed when it closed in June last year with many investors missing out,” says Augusta Industrial chair Mark Petersen. “Within a short time period, the value of these assets has grown to $121.64 million from a total purchase price of $114.074 million.
“The shortage of good quality industrial opportunities should ensure industrial property values remain well underpinned.”
The Augusta Industrial portfolio of nine properties, including the five new properties located in Albany, Henderson, Mt Wellington and Otahuhu in Auckland as well as the Castle Rock Business Park in Christchurch, is currently independently valued at $296.7 million. It will have a total of 47 tenants occupying a net lettable area of 175,137 sq m, with a 99 per cent occupancy.
Petersen says Augusta Industrial will continue to look for opportunities to grow its portfolio and maintain a gearing target of 35-40 per cent which may increase to 45 per cent on acquisition of new properties on a short term basis. “Assets will continue to be strategically selected for their ability to contribute to a blended fund weighted average lease term of around six years along with their potential to add value.”
Petersen says Augusta Industrial may look to list on the NZX Main Board at some stage. “However, we do not think it is appropriate to consider a listing for Augusta Industrial at this point given current market conditions,” he says.
The offering’s Product Disclosure statement cautions that no guarantee is given that Augusta Industrial will be listed in the future. It also cannot be listed on the NZX without shareholder approval.
Augusta Funds Management’s parent company, NZX listed Augusta Capital is a cornerstone investor in Augusta Industrial and will continue to hold at least 10 per cent of its shares, subscribing for a minimum of 10.5 million shares in the offering.
“This means Augusta Capital’s interests are aligned with the fund’s shareholders and there is a significant incentive to ensure the fund is performing well,” says Mark Francis, Augusta’s managing director and a director of Augusta Industrial.
“The growth in the Augusta Industrial Fund further evidences the execution of Augusta’s strategy to develop and grow a range of multi-asset property funds in order to be New Zealand’s most diverse and respected institutional grade funds management business across multiple sectors in both listed and unlisted platforms.”
Francis says Augusta Industrial’s strategy for the acquisition of properties is focused on assets with strong property fundamentals such as proximity to key infrastructure and strong tenant covenants and long term leases or the ability to convert to long lease terms. It is also generally targeting properties which have leases with fixed rental increases or, where possible, negotiating new leases with fixed rental increases.
“Each property is actively managed by Augusta Funds Management in order to maintain or increase property values and achieve growth in rental income,” says Francis.
Established in 2003, Augusta Funds Management specialises in shared ownership structures with approximately $1.8 billion of property assets under management across New Zealand and in Australia on behalf of over 3,500 investors.
Augusta Industrial is being structured as a Portfolio Investment Entity (PIE) with tax deducted at an investor’s prescribed tax rate up to a maximum of 28 per cent.
Applications for shares can be made via a Product Disclosure Statement available from Bayleys or by visiting www.augustaindustrialfund.co.nz.
ends
Bayleys Real Estate
New Zealand
Bayleys is New Zealand's largest full-service real estate company. We offer expertise in the marketing and sale of a wide range of property, including residential real estate, farms and lifestyle blocks, and commercial and industrial property. This includes tourism and business sales such as hotels and motels. We also cover the real estate markets in Fiji and other Pacific Islands.
Bayleys also provides a complete property and facilities service including property management and valuations teams focused on achieving both Owner and Tenant satisfaction.
No other real estate company can match our breadth of coverage across all market sectors throughout New Zealand.
John Mazenier: Gaffer Tape And Glue Delivering New Zealand’s Mission Critical Services
Earthquake Commission: Ivan Skinner Award Winner Inspired By Real-life Earthquake Experience
Reserve Bank: Consultation Opens On A Digital Currency For New Zealand
NIWA: Ship Anchors May Cause Extensive And Long-lasting Damage To The Seafloor, According To New Research
New Zealand Customs Service: A Step Forward For Simpler Trade Between New Zealand And Singapore
Horizon Research: 68% Say Make Banks Offer Fraud Protection
