Published & corrected 22 July 2020:
Augusta Capital Ltd relaunched its Augusta Property Fund today.
Note: I’ve clarified the return potential 2 paragraphs down, and also clarified the decision not to proceed with the Albany purchase.
Meanwhile, Australian fund manager Centuria Group took its holding in NZX-listed Augusta to 70.8% on Monday.
Augusta’s forecasting a 6%/year pretax cash return paid monthly, but notes that, for some investors, the return could exceed 8% in the first 2 years.
The product disclosure statement notes that the Government’s reinstatement of the building depreciation tax allowance, combined with the fixture & fittings depreciation allowances, would lift after-tax returns in the early years.
In February – before Covid-19 changed the landscape – Augusta had intended to open the fund with 2 properties, the Anglesea Medical Centre in Hamilton and the Albany Lifestyle Centre in Auckland.
However, during the downturn brought on by Covid-19, Augusta Capital (not the fund) was unable to settle on its Albany purchase because of Covid-19.
The Hamilton medical centre sits on 2.4ha & has 28 tenants. Augusta has unconditionally bought it for $55 million.
Augusta managing director Mark Francis said on the fund relaunch today: “The prospects for the New Zealand medical & healthcare property sector remain attractive. The economy itself is not the key demand driver for this sector, therefore this type of property presents desirable non-cyclical & defensive characteristics. The healthcare sector is considered well placed to outperform other sub-sectors within the property market.
“The long-term intention of the Augusta Property Fund is to grow & diversify the fund’s portfolio to provide exposure to a variety of property investments within the one investment vehicle.”
Augusta is offering 35.5 million $1 units to relaunch the fund – a minimum investment of $10,000, in $1000 multiples above that.
The fund will be managed by Augusta Funds Management Ltd, a subsidiary of NZX-listed Augusta Capital. The parent company will be the fund’s cornerstone investor, holding a minimum 10% of units.
Bayleys Real Estate is marketing the fund.
Bayleys syndicated investments manager Samara Phillips said the reinstatement of tax deductions for depreciation of commercial & industrial buildings as part of the Government’s recent stimulus package would make a significant difference to investors’ after-tax returns.
“With the Augusta Property Fund’s PIE (portfolio investment entity) structure, the forecast after-tax return for those on the maximum tax rate of 28% is 5.84%/year for the first financial period ending 31 March 2021 and 5.72% for the following financial year.”
Link for product disclosure statement: www.augustapropertyfund.co.nz
15 July 2020: Augusta takeover update
1 May 2020: Augusta forfeits one deposit, second one for property fund still at risk
28 March 2020: Augusta pulls Albany purchase, but property fund may be revived
27 March 2020: Augusta pulls property fund IPO
17 February 2020: Augusta defers tourism fund, expects earnings cut
7 February 2020: Augusta launches new fund next week
24 May 2019: Augusta buys Albany Lifestyle Centre from Argosy for new fund
2 March 2018: Augusta delays industrial fund launch to get fourth property in
24 January 2018: Augusta wants syndicate approval to add third property to new industrial fund
Attribution: Company release, product disclosure statement.