NZX-listed property fund manager Augusta Capital Ltd warned on Wednesday that its half-year earnings would be materially lower than last year’s, but the full-year result to March should be similar.
The company is scheduled to release its interim results on 27 November, but chair Paul Duffy & managing director Mark Francis said on Wednesday the company expects both comprehensive income after tax and adjusted funds from operations to be materially lower than for the September 2018 half-year.
They said 2 factors had led to the reduced earnings:
- The company hasn’t completed any capital raisings generating transactional fee income this financial year, against 2 in the September half last year.
- Augusta has used capital to invest in & develop the Man St (Queenstown) & Cook St (Auckland) hotel properties to ready those properties for offering to investors in the soon-to-be-launched Augusta Tourism Fund. Income & value will only be generated for Augusta once those properties are divested to that fund.
There are caveats on March 2020 earnings matching those for the previous year:
- The Augusta Tourism Fund & Augusta Diversified Fund have to be established by year-end
- Opportunities in the company’s existing funds may lead to the generation of transaction fees.
Neales Rd acquisition
The Augusta Industrial Fund unconditionally bought 27-29 Neales Rd, East Tamaki, Auckland last Friday for $25.223 million, with settlement to occur on 11 November and a 1% acquisition fee payable to Augusta Capital.
Vulcan Steel Ltd, one of the largest privately owned steel companies in Australasia, has occupied 27-29 Neales Rd since the purpose-built 10,705m² office & warehouse was built on the 16,019m² site in 1996. It’s been sold at a 5.3% yield, with 7 years remaining on the 15-year lease, currently returning $1.34 million/year net in rent. The next 2-yearly market review is due in July 2021.
Mr Duffy & Mr Francis said Augusta also continued to seek acquisitions for NZX-listed Asset Plus Ltd, consistent with its mandate. Augusta owns 19.9% of Asset Plus and took over its management contract in March.
They said Augusta expected to maintain its 1.625c/share interim quarter dividend payment when the interim results are announced, adding: “The board will continue to review the dividend on a quarterly basis, having regard to the expected full-year earnings at the time of considering each quarterly dividend.”
Attribution: Company release.