Archive | Syndication

Augusta closes Mercury HQ syndication 34% short, underwrites balance

Augusta Funds Management Ltd closed its $83.5 million syndication of Mercury Energy Ltd’s new headquarters in Newmarket 34% short on Friday, but subscribed for the balance itself and expects to reduce the shortfall to 26% by the end of July.

Augusta is funding its own underwrite with an ASB Bank debt facility.

Managing director Mark Francis said the $83.5 million target for the 33 Broadway, Newmarket, syndication was Augusta’s largest capital-raising and drew $61.8 million of applications.

Of that total:

  • Applicants for $55.15 million had completed all anti-money laundering requirements before the closing
  • Applications for a further $2.4 million were complete but funds hadn’t been received by Friday. Mr Francis said Augusta would transfer units to these investors on Monday, immediately reducing the underwrite by $2.4 million
  • A further $4.25 million of applications were from investors who either needed to complete final anti-money laundering requirements or didn’t have funds available until July. Mr Francis said Augusta would subscribe for these units and transfer as funds became available.

Accordingly, Mr Francis said, Augusta subscribed on Friday for $28.35 million of units funded by the debt facility, reducing this to $25.95 million on Monday and anticipating a reduction to no more than $21.7 million by the end of July.

“Those units remain available for sale and inquiry remains strong,” he said.

Earlier stories:
28 March 2017: Augusta unconditional as second tenant signed for Broadway development
20 February 2017: Augusta launches Mercury syndication
22 December 2016:  Augusta takes new step in syndication

Attribution: Company release.

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Augusta unconditional as second tenant signed for Broadway development

Augusta Capital Ltd has gone unconditional on its purchase for syndication of Mercury Energy Ltd’s new headquarters at 33 Broadway, Newmarket, where construction is just starting.

Mercury Energy will be the anchor tenant, consolidating its 4 Auckland offices in the one 5-green-star building and occupying over half the development at the roundabout across the road from the Newmarket Olympic pool. The company will be on a 12-year lease. Augusta managing director Mark Francis also confirmed Tegel Foods today as an office tenant.

Augusta subsidiary Augusta Funds Management Ltd will raise $83.5 million of equity through a unit trust to be established to acquire the property. Augusta Capital will underwrite $33.5 million and other parties the balance of the capital raising.

Mr Francis said a product disclosure statement was being prepared and the offer should be open for investment in mid-April. No money is being sought yet.

The building is under construction by Mansons Broadway Ltd with settlement (but not building completion) scheduled for 1 July. Mansons will provide a 10-year capex guarantee from completion.

When Augusta entered into the agreement in December to acquire the unfinished development, Augusta managing director Mark Francis said it was a new phase in syndicate investment strategy: “Augusta believes this transaction signals a key strategic step as it moves from not simply being a buyer of investment grade assets but into funding & development of investment grade assets.”

The total consideration is $143,111,878, with a fixed amount payable at settlement, further drawdowns made on a cost-to-complete basis as the development progresses, and retention amounts payable on achievement of certain development & leasing milestones.

Earlier stories:
20 February 2017: Augusta launches Mercury syndication
22 December 2016:  Augusta takes new step in syndication

Attribution: Company release.

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Goodman takes syndicate units to facilitate Millennium Centre sale

The Goodman Property Trust’s manager said yesterday the trust had taken $12 million of units in the property syndicate that has bought the Millennium Centre at Greenlane (pictured) from it.

Goodman sold the 3 office properties at 600-604 Great South Rd, Greenlane, to syndicator Oyster Management Ltd for $210 million last year and settled yesterday.

Goodman (NZ) Ltd chief executive John Dakin said the trust had taken units in the syndicate to facilitate the transaction, would hold the investment for a maximum 2 years and expected to receive an annual return of 8%.

Mr Dakin said Goodman had also sold the commercial buildings & associated development land at 1 Show Place in Addington, Christchurch, for $14 million as part of its asset recycling programme. The unconditional sale to a local investor is expected to settle before the end of this month.

“An active sales programme is reducing debt and providing funding capacity for the trust’s development activity. It’s a strategy that is improving the quality of the portfolio and increasing investment in the favoured Auckland industrial market, a sector we expect to deliver superior growth,” he said.

The 2 transactions take Goodman’s total value of sales this financial year to almost $280 million.

Earlier stories:
5 October 2016: New leases lift price on Greenlane sale
14 July 2016: Goodman to sell Millennium & Yellow buildings to Oyster
1 July 2010: Goodman buys partner out of Show Place
30 May 2007: Macquarie Goodman buys 50% stake in Addington office park company

Attribution: Company release.

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Augusta launches Mercury syndication

Augusta Funds Management Ltd has launched the syndication of the new $143 million Mercury NZ Ltd headquarters at 33 Broadway, Newmarket.

Syndicate interests are a minimum of $50,000. The offer is being promoted through Bayleys Real Estate and is fully underwritten, including $33 million from Augusta Capital.

Mercury intends to consolidate its 4 Auckland offices in the one 5-green-star building, at the roundabout across the road from the Newmarket Olympic pool. Mercury will be on a 12-year lease. Other tenants have not yet been named.

The building is under construction by Mansons Broadway Ltd with settlement (but not building completion) scheduled for 1 July. Mansons will provide a 10-year capex guarantee from completion.

Augusta is offering syndicate investors a forecast 7%/year pretax return paid monthly from settlement for the first 2 years 9 months, and says the leases will provide 3%/year growth.

When Augusta entered into the agreement in December to acquire the unfinished development, Augusta managing director Mark Francis said it was a new phase in syndicate investment strategy: “Augusta believes this transaction signals a key strategic step as it moves from not simply being a buyer of investment grade assets but into funding & development of investment grade assets.”

Under the agreement, the Augusta syndicate will acquire the property and Mansons will continue to construct the building for that investment entity.

The total consideration is $143,111,878, with a fixed amount payable at settlement, further drawdowns made on a cost-to-complete basis as the development progresses, and retention amounts payable on achievement of certain development & leasing milestones.

During the development phase, Mansons will pay interest on the equity component of the consideration and all bank interest costs of the syndicate/fund that acquires the development.

Earlier story:
22 December 2016:  Augusta takes new step in syndication

Attribution: Agency release.

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Augusta takes new step in syndication

Augusta Capital Ltd subsidiary Augusta Funds Management Ltd has entered into an agreement with Mansons Broadway Ltd to acquire the unfinished development at 33 Broadway, Newmarket, for syndication.

Augusta managing director Mark Francis said today it was a new phase in syndicate investment strategy: “Augusta believes this transaction signals a key strategic step as it moves from not simply being a buyer of investment grade assets but into funding & development of investment grade assets.”

He said that, under the agreement, an Augusta-nominated syndicate or fund would ultimately acquire the property following an equity-raising. Mansons will continue to construct the building for that investment entity.

The total consideration is $143,111,878, with a fixed amount payable at settlement, further drawdowns made on a cost-to-complete basis as the development progresses, and retention amounts payable on achievement of certain development & leasing milestones.

During the development phase, Mansons will pay interest on the equity component of the consideration and all bank interest costs of the syndicate/fund that acquires the development.

The agreement is conditional on:

  • the terms of the loan facility agreement & associated documents being agreed by all parties by 24 January
  • the anchor tenant’s approval by 31 January of the development being sold to an Augusta fund/syndicate, and
  • Mansons obtaining the anchor tenant’s agreement by 28 February to a 3-month extension to the current sunset date for the development, or being satisfied that an extension is not required.

Settlement of the acquisition by the relevant investment entity is scheduled for 1 July 2017, subject to earthworks & piling having been completed.

Augusta Funds Management has also entered into unconditional underwriting commitments for the equity component of the consideration, including $33 million from Augusta Capital. Mr Francis said the ultimate structure of that investment entity was still being finalised.

Energy company Mercury NZ Ltd intends to consolidate its 4 Auckland offices in the one 5-green-star building, at the roundabout across the road from the Newmarket Olympic pool.

Attribution: Company release.

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Property Managers offers new shares as it reorganises syndicates

Denis McMahon’s Property Managers Ltd is bringing 2 new offers to the market in a total raise of $44 million, the largest in its 24-year history.

One offer opened last week, the second opens tomorrow and both are scheduled to close on 2 December, with an ability to extend the closing date to 28 February. The managers intend to have the new fund registered as a portfolio investment entity (PIE) before the offer closes.

Both offers involve reorganising of existing syndicated investments and the addition of new properties.

One is for the PMG Direct Office Fund and the other is for Pacific Property Fund Ltd.

Initially, the fund will acquire 8 properties held by syndicates Property Managers Ltd manages – 4 in Auckland, 3 in Tauranga, one in Rotorua – to create a $29 million portfolio which will also be open to new investors.

The properties are:

Auckland: 52 Lovegrove Crescent; 5 Short St, Newmarket; 2 Robert St, Ellerslie; 22 Amersham Way, Manukau
Tauranga: 143 Durham St, 127 Durham St & 117 Willow St
Rotorua: 1214 Ranolf St.

The managers are aiming to achieve gross distribution yields of 7% to March 2017, 7.5% for the March 2018 year and 7.75% by the March 2019 year. They aim to grow the value of the buildings in the fund and add more properties to it, and are aiming for a gearing ratio in the range of 40-42%.

Property Managers will also offer shares in Pacific Property Fund Ltd, which owns 5 properties, intends to pool the interests in 2 other syndicated properties and proposes to buy a third, unidentified property in a regional centre which relies on agreement being reached between the current owner & the tenant. If that doesn’t happen, the third property will be left out the current fundraising.

For Pacific Property Fund, the managers are offering $16 million in shares, which would be cut back to $10 million of the third new property is excluded. The fund is aiming for a gross distribution return of 7.5% for the first full year, to 31 March 2018.

2 new properties for Pacific

The 2 new properties for the Pacific fund are 46 Spring St, Tauranga, to be acquired from the Prime Investment Group syndicate; and Stag Park at 140 Napier Rd (State Highway 5), Taupo, from Transport Ventures Ltd.

Property Managers chief executive Scott McKenzie said PMG Direct Office had been set up following requests from investors for more liquidity, diversification & access to the buoyant Auckland office market.

He said it was the first of a number of new funds Property Managers intended to market: “Over the past few years the office market, particularly in Auckland, has been performing well, with low vacancies & increasing rental returns. Our investors have told us they want greater diversification & more sustainable returns. This is achieved by placing multiple properties, rather than one, into a managed investment scheme which provides greater exposure to more buildings & tenants.

“This is part of our strategic plan to shift away from the traditional single-building ownership structures where investor returns are more reliant on the performance & retention of individual buildings & tenants.”

Links:
Property Managers
Pacific Property

Attribution: Company release, product disclosure statements.

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New leases lift price on Greenlane sale

Published 3 October 2016, additional material at foot 4 October 2016:
Goodman Property Trust’s sale of 3 office properties at 600-604 Great South Rd, Greenlane, to syndicator Oyster Management Ltd has gone unconditional, and at a slightly higher price. The sale is contracted to settle on 28 February 2017.

The properties are the 2 Millennium office estates & the Yellow HQ building.

Goodman management company chief executive John Dakin said today the price had been revised, from $206 million to $210 million – determined on a passing yield of 7.25% – to reflect new leases secured during Oyster’s due diligence period.

Mr Dakin said Goodman would provide an equity underwrite to Oyster of up to $12 million to facilitate the transaction. The underwrite will extend for a maximum 2 years, and any amount drawn will receive an annual return of 8%, consistent with other investors.

Mr Dakin added: “This is an important transaction for the trust and part of an asset recycling programme that is providing significant balance sheet capacity. With sales proceeds of around $300 million expected this financial year, the trust’s loan:value ratio is at the bottom of the target band of 30-35%. It’s part of an organic growth strategy that is focused on delivering the trust’s development programme and rebalancing the portfolio, with increased investment in the Auckland industrial sector.”

Oyster chief executive officer Mark Schiele said the funds management company intended to structure investment in the Millennium Centre as a wholesale syndication.

Earlier story:
14 July 2016: Goodman to sell Millennium & Yellow buildings to Oyster

Attribution: Company releases.

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Silverfin settles Centre Place South purchase by syndicate

Kiwi Property Group Ltd confirmed on Friday that it had settled the $46.8 million sale of Centre Place South – the former Downtown Plaza – shopping centre in Hamilton, and Silverfin Capital Ltd confirmed today that it was the buyer.

Silverfin has raised $27.6 million from wholesale investors in a fully subscribed syndicate marketed through Colliers.

Silverfin managing director Cheryl Macaulay said that once the company was licensed by the Financial Markets Authority as a fund manager it might offer some of the syndicate to retail investors, as some of the initial investors had taken larger portions. “However, they’re getting 9%/year, they might just say no to retail.”

The Centre Place Shopping Centre comprises Centre Place North & Centre Place South, which are separated by the pedestrianised Ward St. Kiwi Property owns & manages Centre Place North and will manage Centre Place South on behalf of the Silverfin syndicate.

Centre Place South has a net lettable area of 10,933m² bounded by Anglesea & Ward Sts & Worley Place. It underwent a $36 million refurbishment in 2013 and has a new Farmers department store on a 15-year lease & 25 specialty tenancies. Silverfin has projected a 9% pretax cash return for the first year.

Centre Place North has a net lettable area of 15,630m², 75 specialty tenants & 2 cinemas. Kiwi Property acquired the whole property in 3 tranches between 1994-2005.

This is Silverfin’s second syndicate and it’s doing due diligence for a third, scheduled for release in September. The first was at 21 Hobill Avenue, Wiri, in May-June, where Silverfin raised $12 million in $750,000 parcels for a $22 million purchase.

Earlier story:
23 June 2016: Slight adjustment to Centre Place South sale price

Attribution: Company release, Silverfin offer documents & call.

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Augusta closes NZME Building A syndicate oversubscribed

Augusta Capital Ltd’s syndication of one of the 2 NZME buildings on the corner of Victoria St West & Graham St in the Auckland cbd has closed oversubscribed.

Augusta Funds Management Ltd raised $70 million of equity from investors when it syndicated Building A, NZME Central, at 4 Graham St, which it bought from Mansons TCLM Ltd for $115,818,265. Settlement of this transaction will occur next Monday, 15 August.

Augusta will receive an offeror fee of $2.198 million for establishing the syndicate, an underwriting fee of $750,000 & ongoing annual management fees.

The property has a current weighted average lease term of just under 12 years and is leased to news business NZME Ltd, law firm Meredith Connell & liquor company Pernod Ricard NZ Ltd (with the vendor currently leasing a vacant floor). It has a 5 green star design rating and a seismic rating of 100% of new building standard.

Augusta managing director Mark Francis said it was the largest single capital-raising the company had undertaken, exceeding the $60 million raised this year for Augusta Value Add Fund No 1 and the previous largest syndicate raising of $39 million for Building C, Spark City, also on Victoria St West.

Including syndication of an Australian property for $A14 million of equity from New Zealand investors, Augusta has raised $167.5 million in syndications this year.

The company is still contemplating whether to syndicate the $90 million NZME Building B, which would require $50 million of equity.

Earlier story:
25 July 2016: Finance Centre sale confirms Augusta’s full focus on funds management
Attribution: Company release.

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Vinta launches wholesale fund with 3 Wellington properties

Australian property investment company Vinta Group Pty Ltd launched a $121.35 million New Zealand fund for wholesale investors with 3 properties yesterday.

New Zealand subsidiary Vinta Funds Management Ltd is seeking $80.6 million in total equity, of which Vinta will invest up to $16 million, leaving the fund 34% geared.

The direct, open-ended wholesale unlisted property fund’s first 3 properties are all in Wellington and are among the first properties Vinta bought when it entered the New Zealand market in 2001:

  • 33 Bowen St, the recently refurbished and award-winning 12-storey headquarters of the Ministry of Education
  • 110 Featherston St, an 8-level office building with the Maori Trustee & Crown tenants, and
  • 13-27 Manners St (pictured), a 15-storey building occupied by public & corporate tenants including Nokia & Healthcare of NZ Ltd.

Vinta’s head of distribution, Simon Donohoe, said a priority would be to acquire additional properties that complement its investment strategy and provide diversification benefits across asset class, geography, tenant type & income.

The 3 properties have a weighted average lease term of 9.6 years, and over 72% of income is sourced from the Government & Nokia. The seed portfolio has delivered an internal rate of return of 12.1%/year over the 14 years to 30 June 2015. The fund’s year 1 forecast income distribution yield is 7.6%/year (annualised). Minimum investment is $200,000 and multiples of $25,000 thereafter.

Mr Donohoe said the wholesale market was starved of stable, long-term investment product.

Vinta’s core/core-plus strategy distinguished it from value added, or opportunistic strategies when making investments. Core meant low leverage, risk & potential returns with predictable cashflows, generally investing in stable, fully leased, multi-tenant properties within strong, diversified metropolitan areas. Core-plus meant moderate risk & return, generally investing in core properties, though many would require some form of enhancement or value-added element.

Link: Vinta NZ

Attribution: Company release.

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