Tag Archives | Augusta

Cotterill takes chair at NPT

Bruce Cotterill (pictured) replaced Tony Sewell today as chair of NZX-listed property company NPT Ltd, following the success at last Friday’s special shareholder meeting of 5 resolutions to change board membership.

Mr Sewell, who’d replaced the retiring Sir John Anderson as chair on 17 March, and Jim Sherwin were voted out, Carol Campbell’s position as an independent director wasn’t questioned and she remains on the board, new directors Mr Cotterill & Allen Bollard have been declared independents and the other new director, Augusta Capital Ltd chair Paul Duffy, is not independent.

Augusta bought 9.26% of NPT last August, tried unsuccessfully to get Sir John to call a shareholder meeting on its proposals, which included taking over NPT’s corporate & portfolio management, and took its holding to 18.85% a fortnight ago.

The first resolution at Friday’s meeting, recommending shareholders support a proposal by Kiwi Property Group Ltd to sell NPT 2 properties and buy the management rights for NPT’s portfolio, was defeated with a 54.87% vote against.

Mr Cotterill was New Zealand managing director and then regional managing director of real estate consultancy Colliers Jardine for 5 years in the 1990s. 2 years ago he was appointed an independent director of Pumpkin Patch Ltd. He’s also chaired Noel Leeming Group Ltd and been managing director & chief executive of Yellow Pages Group Ltd and a director of Woosh Wireless Ltd. Now he chairs Move Logistics Ltd, NZ Retail Property Group Ltd’s advisory board and Swimming NZ.

Mr Bollard is a former finance director of the Fletcher Building Group (when it was part of Fletcher Challenge Ltd) and property developer & investor Unity Group, and was chief executive & chief financial officer of Tramco Group Ltd for 9 years before moving into business consulting & governance on his own account in 2012, primarily in property & construction. He’s a director of Viaduct Harbour Ltd, Ross Green’s Riverside Industries Ltd and Tamaki Makaurau Community Housing Ltd.

Former DNZ Property Fund Ltd (now Stride Property Ltd) chief executive & executive director Paul Duffy joined Augusta’s board last November and took over chairing it when Peter Wilson retired in December. Mr Duffy was at DNZ for 13 years, leading its transformation from a large group of syndicates through its NZX listing in 2010 and on to building a $950 million portfolio of managed & directly owned properties. DNZ changed its name to Stride Property Ltd last year. Before joining the DNZ group, Mr Duffy had a long career at Fletcher’s, finishing as general manager of Fletcher Property Ltd and a director of the Fletcher Development Co Ltd.

Earlier stories:
21 April 2017: Augusta wins fight for NPT
7 April 2017: Augusta lifts stake in fight for NPT
31 March 2017: An unlikely twist could still derail NPT’s Kiwi deal
31 October 2016: Fourth era for NPT a hard option to combat
27 September 2016: Augusta buys 9% of NPT

Attribution: Company release.

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Augusta lifts stake in fight for NPT

The fight for control of NZX-listed NPT Ltd heated up today as Augusta Capital announced it had increased its stake to 18.85%, 2 weeks ahead of a shareholder meeting where the board has recommended supporting a proposal by Kiwi Property Group Ltd.

Augusta bought 9.26% of NPT last August, proposed selling assets into it and taking over company & asset management, then added a proposal to replace the NPT board when NPT was slow to call a shareholder meeting.

That meeting has only just been called, for Friday 21 April, but the only part of it relating to Augusta’s proposal is the vote on board seats – to remove directors Tony Sewell & Jim Sherwin, leaving Carol Campbell as the one remaining member from the existing board, and appointing Augusta nominees Allen Bollard, Bruce Cotterill & Paul Duffy. The NPT board not only favoured Kiwi’s proposal, but set out what it didn’t like about Augusta’s.

Augusta chief executive Mark Francis said today the company had bought 9.59% of NPT from other shareholders for $10,559,674, with settlement to occur next Tuesday, 11 April.

“Following that, Augusta Capital will be the largest shareholder in NPT,” he said. “This week’s acquisition of shares in NPT is consistent with our longstanding plan to grow our funds management business and significantly, it strengthens our position ahead of the NPT special meeting on 21 April.

“Having now carefully assessed the Kiwi Property proposal being recommended by the NPT board, we remain firmly of a view that it is not in the interest of NPT shareholders. While we respect Kiwi Property, the current proposal is heavily skewed in their favour – falling well short of what we consider to be fair & reasonable for NPT shareholders.

“Augusta intends to vote against the Kiwi Property proposal and is aware of a number of other shareholders who have indicated their intention to vote against the Kiwi Property proposal. We would encourage all NPT shareholders to seek independent specialist advice concerning its merits before casting their vote.

“We believe the current board is completely out of touch with its shareholders in recommending this deal, and Augusta Capital will also be voting for change through resolutions 2-6, to remove 2 of the current board members, noting that the previous chairman has already stepped down.”

Earlier stories:
31 March 2017: An unlikely twist could still derail NPT’s Kiwi deal
27 March 2017: Kiwi proposal for NPT finalised “in next few days”
6 March 2017: NPT works through detail of Kiwi bid
12 January 2017: Augusta drops court action but NPT meeting likely delayed
8 January 2017: NPT interim report shows company treading water
14 December 2016: Kiwi proposal for NPT revealed
2 December 2016: Augusta gets February court date while NPT continues with meeting plan
23 November 2016: Lack of revaluations halves NPT profit
4 November 2016: NPT considering more than just Augusta’s proposal
31 October 2016: 
Fourth era for NPT a hard option to combat
27 September 2016: 
Augusta buys 9% of NPT

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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NPT works through detail of Kiwi bid

NPT Ltd chair Sir John Anderson said on Friday negotiations were progressing constructively with potential cornerstone shareholder Kiwi Property Group Ltd, but he still hasn’t set the date for a shareholder meeting to consider offers.

NPT said on 11 January the original bidder to take the company over, Augusta Capital Ltd, had dropped its High Court quest to get that meeting brought forward, and Sir John didn’t mention Augusta in his statement on Friday.

On the Kiwi proposal, he said: “Attending to the finer details of the management agreement, sale & purchase agreements and terms of the share subscription, as well as arrangement of other funding for the transaction, is taking longer than initially expected.

“It is critical that the board & Kiwi take the time to get this level of detail right, and for the board to ensure that it achieves the best possible position for NPT & the shareholders in the circumstances.”

He expects the shareholder meeting will now be held in April.

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 drops court action but NPT meeting likely delayed

Augusta Capital Ltd has dropped the High Court proceeding it lodged against NPT Ltd to force an earlier shareholder meeting on an Augusta proposal to inject properties into NPT and replace the NPT board.

NPT had said it would send shareholders the meeting date this month and that it intended to hold the meeting in February to consider Augusta’s & other proposals. However, NPT chair Sir John Anderson told NZX yesterday that, “at this stage, it intends to issue the notice of meeting in February and hold the meeting as soon as possible after that”.

Augusta proposed injecting 3 properties worth $327 million into the company and buying out the management contract. In December, NPT disclosed a competing proposition from Kiwi Property Group Ltd, which proposed injecting 2 of its properties worth $230 million, becoming a cornerstone shareholder with a stake up to 19.9%, also buying out the management contract, but leaving the NPT board intact for the moment though with a succession plan.

Sir John said Augusta’s court action was “an unfortunate distraction. The proceedings were not constructive.

“We are very committed to engaging with shareholders as soon as possible on the very important matters before the company. We will make every effort to hold this shareholder meeting in February, but are conscious that the process of due diligence of the Kiwi Property assets, negotiation of terms and preparation of the shareholder information memorandum may mean this is not possible. In the event of a delay, we certainly expect to be in a position to issue a notice of meeting in February, with a view to holding the meeting soon thereafter.

“Unless Augusta formally withdraws its proposed resolutions, we will still put those to shareholders at the meeting. At the same time full details of the transactions proposed by Kiwi Property Group will be provided to shareholders together with the resolutions required by NZX listing rules for consideration.“

Earlier stories:
8 January 2017: NPT interim report shows company treading water
14 December 2016: Kiwi proposal for NPT revealed
2 December 2016: Augusta gets February court date while NPT continues with meeting plan
23 November 2016: Lack of revaluations halves NPT profit
4 November 2016: NPT considering more than just Augusta’s proposal
31 October 2016: 
Fourth era for NPT a hard option to combat
27 September 2016: 
Augusta buys 9% of NPT

Attribution: Company release.

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NPT interim report shows company treading water

Under-siege listed property investor NPT Ltd posted its interim report & presentation on 30 December, confirming that it remains little more than a vehicle for somebody else’s greater purpose.

The accounts show the company’s 5 properties have overall occupancy of 98.1% – Print Place in Christchurch, a $13 million property, and the $27.2 million Heinz Wattie’s Warehouse in Hastings both on 100%, the $35 million Roskill Centre in Auckland on 97.5%, $58 million Eastgate Shopping Centre in Christchurch on 96.2% and the $36.7 million AA Centre in Auckland down at 92.2%.

Net rental climbed from $5.48 million in the September 2015 half to $6 million in March 2016, but declined to $5.54 million in the September 2016 half.

Directors said in their 30 December presentation the special shareholder meeting planned for February would determine the company’s strategic direction. Meanwhile, they’d focus on unlocking value within the existing portfolio, including looking to further value-add opportunities at Eastgate.

“Given the strong Auckland cbd office leasing market, we will upgrade an additional floor at the AA Centre.”

In an ironic poke at the fluctuating management style – in & out of house over the years, and heading out again no matter who wins the battle for control – NPT would “leverage the closer tenant relationships following the internalisation of the property management function”.

Augusta Capital Ltd bought 9.26% of NPT last September and proposed injecting 3 properties worth $327 million into the company, buying out the management contract and, because of the NPT board’s resistance, replacing the 3 directors.

In December, Kiwi Property Group Ltd came to the board’s at least temporary rescue, if not the company’s, with a proposal to inject 2 of its properties worth $230 million, becoming a cornerstone shareholder with a stake up to 19.9%, also buying out the management contract, but leaving the NPT board intact for the moment though with a succession plan.

When St Laurence Holdings Ltd acquired the management contract on 1 December 2005 for what was then The National Property Trust, it had $268 million in assets. At November 2007 it had $318 million of assets & $184 million of equity. When unitholders agreed to convert the trust into a company at the end of 2010, assets were down to $189 million following global financial crisis revaluations & sales. Impacts from Canterbury’s earthquakes in 2010-11 and the collapse of management contract owner St Laurence drove the portfolio value down to $162 million at September 2011.

It took another 5 years, to September 2016, to get the portfolio back up to $170 million, with net equity at $120 million.

The NPT board hasn’t set a date yet for the special shareholder meeting which will determine the company’s future, beyond saying it will be in February.

Links:
NPT, interim result presentation
NPT, interim report
Kiwi Property proposal

Earlier stories:
14 December 2016: Kiwi proposal for NPT revealed
2 December 2016: Augusta gets February court date while NPT continues with meeting plan
23 November 2016: Lack of revaluations halves NPT profit
4 November 2016: NPT considering more than just Augusta’s proposal
31 October 2016: 
Fourth era for NPT a hard option to combat
27 September 2016: 
Augusta buys 9% of NPT

Attribution: Company 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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Kiwi proposal for NPT revealed

NZX-listed NPT Ltd chair Sir John Anderson revealed a second offer yesterday which he said the board preferred over one from Augusta Capital Ltd, this one coming from Kiwi Property Group Ltd.

Augusta, which became a 9.26% NPT shareholder in September, has been trying to get an NPT shareholder meeting called to consider its proposal, which involves injecting 3 properties worth $327 million into NPT, buying out the NPT management contract and, because of the NPT board’s resistance, replacing the 3 directors.

Sir John said Kiwi Property proposed injecting 2 of its properties worth $230 million, becoming a cornerstone shareholder with a stake up to 19.9%, also buying out the management contract, but leaving the NPT board intact for the moment though with a succession plan.

Sir John said the Kiwi proposal was one of 4 received, and the NPT board intended to recommend it to a shareholder meeting which would be called for February. He said yesterday: “As well as our own review, we commissioned an independent assessment by specialist advisors, Northington Partners Ltd, and have consulted with major shareholders. The outcome is that we believe the Kiwi Property proposal is likely to deliver the best short- & long-term benefits to shareholders.”

The 2 Kiwi properties to be added to NPT’s small portfolio are North City shopping centre, Porirua, and the Majestic Centre, Wellington. Kiwi has proposed that NPT fund the transaction via a capital raising & bank debt.

Northington Partners said its conclusion reflected the following key elements:

  • The acquisition of properties from Kiwi Property was more consistent with NPT’s existing portfolio & strategy
  • The Kiwi Property proposal would lead to an immediate & considerably higher level of earnings accretion
  • Kiwi Property would make a significantly higher payment for the externalisation of the management contract
  • Kiwi Property had proposed a more “investor friendly” management contract, with the ability to terminate without cause and the maintenance of an independent NPT board, and
  • The Kiwi Property proposal would provide NPT with the ability to leverage the Kiwi Property management resources to benefit the existing NPT portfolio.

Kiwi has proposed assuming management of the NPT portfolio for $6 million. Sir John said the management agreement could be terminated without cause, on a fee equivalent to the greater of fair market value or 2.5% of tangible assets. NPT would gain access to Kiwi’s fund & property management expertise, its shareholders would benefit from a material reduction in the management expense ratio and from potential investment performance upside resulting from the application of Kiwi’s specialist management capability.

Benefits ascribed to the proposal:

  • An increase in portfolio scale, from $170 million to $400 million, with no material increase in gearing
  • An increase in market capitalisation, from $110 million to $265 million, assisting liquidity & market appeal
  • An immediate 16% increase in earnings/share, from 3.58c to 4.16c
  • A reduction in NPT’s management expense ratio from 99 to 70 basis points/share, made possible by access to Kiwi’s management platform
  • Investment performance upside for NPT made possible by access to Kiwi’s specialist management capabilities and significant resources.

Link:
Kiwi Property proposal

Earlier stories:
2 December 2016: Augusta gets February court date while NPT continues with meeting plan
30 November 2016: NPT sticks to its programme as Augusta goes to court
 16 November 2016: NPT calls in Northington to weigh up options
4 November 2016: NPT considering more than just Augusta’s proposal
31 October 2016: Fourth era for NPT a hard option to combat
27 September 2016: Augusta buys 9% of NPT

Attribution: Company release.

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Augusta gets February court date while NPT continues with meeting plan

The scrap between 2 listed property companies, Augusta Capital Ltd & NPT Ltd, reached an odd point today: NPT, having said it will call a shareholders’ meeting for February, faces a 10 February court date on Augusta’s application to require this meeting “as soon as reasonably possible”.

Augusta said yesterday NPT’s board had been holding out since August on considering the Augusta proposals to add $327 million of properties to the NPT portfolio and for Augusta to take over NPT’s management contract.

Because of the inaction, Augusta proposed a shareholder meeting to replace the existing NPT board.

The court decision is largely irrelevant, because a 10 February hearing won’t ensure the meeting is held any earlier than the end of February.

NPT chair Sir John Anderson called the legal proceedings an “unfortunate distraction”, as the practical considerations meant an earlier shareholder meeting wasn’t logistically possible.

He said there was no compelling reason to depart from the timetable already set, and added: “We are confident that the meeting will take place before the legal process is completed, and so this action is not constructive and is in fact pointless.”

Previous story, 30 November 2016: NPT sticks to its programme as Augusta goes to court

Attribution: Company release.

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