Archive | Augusta Capital

Augusta & NPT reach agreement on management, shareholder vote to seal it

Augusta Capital Ltd said today it had entered into a binding agreement with NPT Ltd to acquire the rights to manage NPT on an exclusive basis.

It’s conditional on the approval of NPT shareholders at a meeting expected to be held in the second half of March. Augusta, which holds 18.85% of NPT, won’t be voting because it’s classified as a related party.

Mark Francis.

Augusta managing director Mark Francis said: “There has been no change to the key terms previously notified when the non-binding agreement was entered into. These include:

  • Augusta will pay $4.5 million to NPT to acquire the management
  • The management fees to be paid to Augusta under the management agreement include a base management fee of 0.5%/year on up to $500 million of assets under management and 0.4% on assets under management over $500 million, and
  • Property management, performance, leasing, acquisition & development management fees are also payable.

“Augusta expects the management agreement will initially increase Augusta’s recurring base management fee income by about $900,000 based on NPT’s current balance sheet. Augusta considers the remainder of the terms of the management agreement are best-in-class compared to similar management agreements. Importantly, Augusta’s interests are firmly aligned with NPT shareholders’ through its 18.85% shareholding.”

Mr Francis said Augusta had proposed – and NPT had accepted – a “yield plus growth” investment strategy for NPT, which Augusta believed would strongly differentiate NPT from other investment options in the listed property sector and suited the current low-yield environment.

“Augusta has a track record of identifying & adding value to assets. The strategy would see Augusta tasked with repositioning the existing portfolio of assets as well as identifying assets for acquisition which it believes have strong yield & growth opportunities.”

Cotterill adds an out

Bruce Cotterill.

NPT chair Bruce Cotterill said: “Substantial progress has been made since it was announced last year that an agreement in principle had been reached. Since then, the NPT board has worked through a robust process to evaluate the proposal and negotiate the detailed terms. The board is satisfied that the proposal is in the best interests of all NPT shareholders in the context of its current market position & preferred strategy.”

The independent directors of NPT commissioned KordaMentha to prepare an appraisal report, which concluded that the transaction was fair to all shareholders.

“The NPT board therefore intends to recommend that shareholders vote in favour of the resolution to proceed with the externalisation of management. Further detail regarding the basis for this recommendation will be set out in the notice of meeting.”

Mr Cotterill added one key term of the agreement that Mr Francis didn’t highlight: The management agreement may be discontinued after a minimum period of 5 years, under certain circumstances. Discontinuance would require shareholder approval & the payment of a fee calculated by an agreed formula, outlined in the management agreement.

Mr Cotterill added that the NPT board believed the key benefits to NPT of proceeding with the externalisation of management included:

  • immediate cost savings in corporate overheads
  • access to Augusta’s substantial resources & expertise across all of the key areas of property management – well beyond what NPT could reasonably afford itself based on its current size & market position
  • benefits associated with Augusta’s market breadth & depth, which is likely to result in access to more investment opportunities more quickly and therefore more rapid progress against the strategy & goals of the NPT board, and
  • demonstrated success in creating & applying growth strategies and a vested interest in the success of NPT as its current largest shareholder.

Attribution: Company releases.

Continue Reading

Augusta gets one tick for new fund, one more to go

Augusta Capital Ltd has satisfied one condition for the inclusion of a Henderson property in a new industrial property fund, but still requires the existing tenant to waive its first right of refusal.

The building at 12 Brick St, Henderson, is owned by a syndicate which Augusta manages, and the investors agreed last week to sell it to the new fund.

The other 2 properties in the new fund’s initial portfolio are 862 Great South Rd, Penrose, and The Hub, Wellington. Price tag on all 3 buildings is $86.31 million. Between them they have 14 tenants and a weighted average lease term of 7.2 years.

Augusta managing director Mark Francis expects the initial equity to be raised by the new fund will be between $58-60 million. Augusta will underwrite $33-35 million.

Mr Francis said work continued to finalise the product disclosure statement for the offer ahead of registration in mid-February.

Earlier stories:
24 January 2018: Augusta wants syndicate approval to add third property to new industrial fund
29 December 2017: Augusta gets some remodelling for second industrial fund property
13 December 2017: Augusta buys Wellington property as seed for new industrial fund

Attribution: Company release.

Continue Reading

Augusta goes unconditional on Airways redevelopment

Augusta Capital Ltd said on Wednesday all conditions for resyndication & redevelopment of Airways Corp of NZ Ltd’s Christchurch premises had been met and the development agreement was unconditional.

Augusta managing director Mark Francis said on 22 December the agreement provided for the development of a new “importance level 4” building which would house part of Airways’ new air traffic management platform. In return, Airways was committing to:

  • an extended 25-year lease term on the new building & 2 of the existing buildings (effective from practical completion, which is expected to occur in mid-2019); and
  • a 9-year lease term on the remaining building (which begins at a date elected by Airways between 12 & 18 months after practical completion).

The combination of those leases provides a weighted average lease term on practical completion of 21.83 years.

The agreement was conditional on receipt of a resource consent, approved funding terms & the approval of the investors in the existing syndicate which owns the property.

This week, Mr Francis said he expected a new single asset fund to be established by 29 March, to raise the required capital for the redevelopment. A product disclosure statement is being prepared, to raise $22.75 million of equity, of which Augusta would underwrite $15 million, with a third party to underwrite the balance.

“The debt & equity funds the purchase of the property from the existing scheme, establishment costs &an expected development spend of $19.23 million.”

Augusta’s guarantee of the development agreement obligations is released on establishment of the new single asset fund, subject to the required equity & debt being raised.

Earlier story:
29 December 2017: Augusta to resyndicate & add to Airways premises

Attribution: Company release.

Continue Reading

Augusta wants syndicate approval to add third property to new industrial fund

Augusta Capital Ltd said on Monday it had made a conditional offer to the investors in one of its syndicated properties for its new industrial fund to acquire that property. The offer is subject to an investor vote. If successful, this would be the third & final property in the initial portfolio for the launch of the new fund.

Augusta manages the syndicated property at 12 Brick St, Henderson, and portfolio & syndication management subsidiary Augusta Funds Management Ltd has sent a notice of meeting to the investors in that property requesting approval for a sale to the new fund.

Augusta managing director Mark Francis said: “It is a relatively new industrial property constructed in 2009, with a long-term lease of at least 10 years remaining to D&H Steel Construction Ltd – and potentially a further 5 years if the tenant does not exercise the break right it has at 10 years.”

Augusta has scheduled the investor vote for Friday next week, 2 February. The sale would be conditional on sufficient capital being raised under the public offering for the new fund and the existing tenant waiving its right of first refusal.

Mr Francis said if the sale is approved, the new fund will be launched with 3 properties in its initial portfolio – 862 Great South Rd, Penrose; The Hub, Wellington; & 12 Brick St.

That portfolio has a current valuation of $87.85 million, 14 tenants and a weighted average lease term of 7.2 years. Mr Francis expected occupancy to be 99% on settlement.

He expects the initial equity to be raised by the new fund to be between $58-60 million. As previously announced, Augusta will underwrite between $33-35 million of that equity raising and intends to subscribe for at least a 10% stake in the new fund and maintain that holding long-term.

Augusta is preparing a product disclosure statement for the fund, which it expects to be registered in mid-February. Settlement of the acquisition of the initial portfolio is intended to occur on 29 March.

Attribution: Company release.

Continue Reading

Augusta gets some remodelling for second industrial fund property

Augusta Capital Ltd confirmed its intention to establish an industrial property fund on 22 December, when it entered into an agreement for the new fund to unconditionally acquire the property at 862 Great South Rd, Penrose.

Augusta managing director Mark Francis said the fund would acquire the Penrose property for $19.05 million, with settlement set for 29 March.

The company settled the $44.9 million acquisition of its first fund asset, the Hub industrial property at Seaview in Wellington, on 20 December.

The 2.37ha Penrose property is fully occupied by Graphic Packaging International NZ Ltd (formerly known as Colorpak NZ Ltd), which will surrender the front portion of the property and enter into a new 8-year lease for the rear portion (from completion of certain works in the second half of 2018).

Graphic Packaging is ultimately owned by NYSE-listed Graphic Packaging Holding Co, which produces packaging for consumer products companies.

Mr Francis said the vendor (a private individual) was obliged under the sale & purchase agreement to complete a demolition of the front portion of the site. Once that’s done, the front portion presents various development options for the new industrial fund. The vendor has also agreed to underwrite $12 million of shares in the new fund (secured by a right to set off against the purchase price payable).

Mr Francis said the acquisition reinforced Augusta’s intention for the fund to be weighted towards the Auckland industrial market. He said Augusta was completing due diligence & negotiations on a further 2 Auckland properties.

Timing of the public offering for the new fund will be announced in the New Year.

Earlier stories:
20 December 2017: Augusta settles Hub purchase
13 December 2017: Augusta buys Wellington property as seed for new industrial fund

Attribution: Company release.

Continue Reading

Augusta to resyndicate & add to Airways premises

Augusta Capital Ltd has entered into a development agreement with Airways Corp of NZ Ltd and the existing Augusta-managed syndicate that owns Airways’ Christchurch premises.

Augusta managing director Mark Francis said on 22 December the agreement provided for the development of a new “importance level 4” building which will house part of Airways’ new air traffic management platform. In return, Airways is committing to:

  • an extended 25-year lease term on the new building & 2 of the existing buildings (effective from practical completion, which is expected to occur in mid-2019); and
  • a 9-year lease term on the remaining building (which begins at a date elected by Airways between 12 & 18 months after practical completion)

Mr Francis said the agreement was conditional on receipt of a resource consent, approved funding terms & the approval of the investors in the existing syndicate which owns the property. These conditions are due to be satisfied by 30 January.

To fund the landlord’s development obligations, Augusta Capital subsidiary Augusta Funds Management Ltd proposes to re-syndicate the property, giving existing investors a preferential right to invest in it.

Mr Francis said Augusta Capital would underwrite $15 million of the $22.75 million of equity proposed to be raised in the resyndication, and a third party would underwrite the balance.

In addition, Augusta Capital has guaranteed the existing syndicate’s obligations, which will be released once the new syndicate is established and the required equity & debt raised.

Augusta expects the new syndicate to be established by 29 March.

Attribution: Company release.

Continue Reading

Augusta settles Hub purchase

Augusta Capital Ltd has settled its $44.9 million acquisition of the Hub industrial property at Seaview in Wellington, which it wants to use as a seed asset for a new open-ended industrial fund.

It covers 4.06ha at 17 & 25 Toop St, 101-103 & 109-117 Port Rd, Seaview, and has a net lettable area of 32,600m² of warehouse & office.

Managing director Mark Francis said today the company would release the timing for the initial public offering of the industrial fund in the New Year.

Mr Francis said last week the company was also investigating & undertaking due diligence on several Auckland industrial properties and expected to launch the industrial fund with a mixture of Auckland & Wellington stock, but with a weighting towards Auckland.

Augusta expects the fund to initially raise between $50-70 million of equity. Augusta will underwrite $35 million of that and is working with a consortium of high-net-worth private investors to underwrite the balance.

It will be Augusta’s first open-ended unlisted multi-asset fund.

Earlier story:
13 December 2017: Augusta buys Wellington property as seed for new industrial fund

Attribution: Company release.

Continue Reading

Augusta buys Wellington property as seed for new industrial fund

Augusta Capital Ltd has unconditionally bought an industrial property in Wellington as a seed asset for a new open-ended industrial fund.

Augusta managing director Mark Francis said on Monday the company had bought the Hub industrial park in Seaview for $44.9 million. It covers 4.06ha at 17 & 25 Toop St, 101-103 & 109-117 Port Rd, Seaview, and has a net lettable area of 32,600m² of warehouse & office. Tenants include Peter Baker Transport, Toll Logistics, Downer, Fujitsu & Jets Transport and the weighted average lease term is 5.7 years.

Recent seismic strengthening was completed to lift all buildings above 70% of new building standard. The purchase price of $44.9 million reflects a 7.46% passing yield following completion of those works.

Settlement date is next Wednesday, 20 December.

Mr Francis said Augusta would fund the acquisition by a mixture of cash reserves & bank debt from ASB.

He said the company was also investigating & undertaking due diligence on several Auckland industrial properties and expected to launch the industrial fund in the New Year with a mixture of Auckland & Wellington stock, but with a weighting towards Auckland.

Augusta expects the fund to initially raise between $50-70 million of equity. Augusta will underwrite $35 million of that and is working with a consortium of high-net-worth private investors to underwrite the balance.

It will be Augusta’s first open-ended unlisted multi-asset fund (as compared to the closed-end Value Add Fund & single-asset funds): “The establishment is consistent with the previously identified strategy to broaden our funds management offerings to appeal to a wider range of investors and to give existing investors more choice, in addition to our typical offerings of single asset syndications. It will also assist in providing further recurring management fee income at a meaningful level.”

Augusta expects the fund’s initial offering to be open by the start of February, with settlement at the end of March.

Attribution: Company release.

Continue Reading

Augusta & NPT reach broad agreement on portfolio management

Augusta Capital Ltd has entered into a non-binding agreement with NPT Ltd to manage NPT’s property portfolio.

The non-binding portfolio management agreement, announced yesterday, is subject to due diligence by both parties, negotiation of the terms of the management agreement and the approval of NPT shareholders.

The portfolio is a thin one. NPT has agreed to sell to SkyCity Entertainment Group Ltd its interest in the AA Centre, which runs from Albert St to SkyCity’s front door on Federal St in downtown Auckland. Settlement is scheduled for next July.

The listed property investor has 4 other assets – the Heinz Wattie national distribution centre in Hastings, the Eastgate mall & Print Place in Christchurch, and the 22 Stoddard Rd shopping centre in Mt Roskill, Auckland.

NPT shareholders voted in April to hand the company’s management contract to Augusta, defeating a proposal for Kiwi Property Group Ltd to take over. Augusta lifted its NPT stake to 18.85% before the meeting, and won the vote with the support of associates.

This time round, Augusta won’t be allowed to vote because it’s a related party. Approval will be by an ordinary resolution, requiring over 50% support.

Under the proposal, Augusta will pay NPT $4.5 million to buy the management rights.

Bruce Cotterill.

NPT chair Bruce Cotterill said other key terms included:

  • The agreement will be for no less than 5 years (unless terminated by either party for cause) and thereafter will continue until NPT exercises its right to discontinue, which would require a resolution of shareholders, and
  • The fees charged under the management agreement will be in line with sector benchmarks.

Mr Cotterill commented: “Importantly, the NPT board considers that the proposed investment strategy outlined by Augusta is closely aligned with its views on the preferred way forward for NPT.

“We anticipate the process to move from agreement in principle to finalised documents that can be put before shareholders for consideration could take about 6-10 weeks, although the Christmas period may interrupt that process.”

Francis says agreement “best in class”

Mark Francis.

Augusta managing director Mark Francis said Augusta “considers that the remaining key terms, including management fees & termination rights, are best in class compared to other external management agreements in the New Zealand listed property sector”.

He said the 2 companies would work towards agreeing the full terms of the management agreement so NPT can call the shareholder meeting as quickly as possible.

Mr Francis believed externalising management would be accretive to NPT’s earnings: “Augusta has proposed a ‘yield plus growth’ investment strategy for NPT, which Augusta believes will strongly differentiate NPT from other investment options in the listed property sector and suits the current low-yield environment.

“Augusta has a track record of identifying & adding value to assets. The strategy would see Augusta tasked with repositioning the existing portfolio of assets as well as identifying assets for acquisition which it believes have strong yield & growth opportunities.

“If approved, the externalisation would increase Augusta’s recurring management fee income by about $900,000/year, based on NPT’s current balance sheet. Further details will be available once a binding agreement is entered into and a notice of meeting issued by NPT to its shareholders.”

Links: NPT
Augusta Capital

Earlier stories:
15 October 2017: SkyCity buys AA Centre to consolidate precinct control
28 August 2017: Cotterill sees opportunity for NPT as tenants quit
21 April 2017: Augusta wins fight for NPT
27 September 2016: Augusta buys 9% of NPT

Attribution: NPT & Augusta releases.

Continue Reading

Augusta shareholders get insight into workings of a fast-moving asset manager in an oft-pedestrian sector

Augusta Capital Ltd’s annual meeting last Thursday was an opportunity for investors to gain an insight into a changing world.

The company’s annual results, out in May, showed an entity determined to shift completely out of long-term passive direct investment and into a range of portfolio management roles. It now has a $1.7 billion portfolio of syndicates & other funds under its wing, including privately held portfolios and the Value-Add Fund No 1, which is not about the traditional yield-based returns on property but about repositioning assets and making a profit.

Mark Francis.

Managing director Mark Francis said the company had limited opportunities for growth in its remaining direct property portfolio without substantial new capital being introduced, and market conditions favoured diversifying.

He listed these alternatives, which he saw offering much better returns:

  • Realising further opportunities to manage funds
  • Launching additional funds with the potential to expand & diversify these types of offerings into niche & strongly performing sectors of the economy
  • Ongoing, measured expansion into Australia
  • Maintaining prudent capital management structures throughout
  • Balance sheet transformation
  • Working closely with Bayleys Real Estate to maintain optimal efficiency across the existing asset portfolio, and
  • Active management.

Here & there he would throw in a corporate catchphrase, realise it and revert to blunter language. Augusta is about making properties work – and if they don’t work, can’t be improved further, don’t offer redevelopment opportunities, are syndicates at the end of their time, the company will move on.

While the company’s refashioning ownership away from long-term passive, it’s also been adjusting its balance sheet to cater for different ownership forms (syndicates closing earlier than they used to, funds with other imperatives, development) and for volatile cash holdings.

The issue of volatility was sorted out at the annual meeting when the constitution was changed with a 99.74% vote in favour of removing the loan:value ratio clause that had impeded some investments.

Recurring fees are the cement

Augusta chair Paul Duffy said the focus of the last year, growing recurring management fee income, remained the focus and would be driven through new syndicates & a range of multi-asset property funds. The company would also invest in new staff, technology & processes to further that aim.

“Recurring annualised base management fees increased 10% in the last financial year. This trend has continued in the new financial year with the completion of the 33 Broadway Offer at the end of June and our latest Australian syndication, which will settle this coming Monday.

“In the last financial year, we raised over $200 million in equity for the establishment of new syndications. This included the 2 largest-ever syndications completed by Augusta – the NZME & BDO buildings at Graham St, Auckland. Outside of the KiwiSaver sector, there are very few entities across the financial sector which will have raised similar amounts of equity.

“The success of those capital raisings has seen the number of investors in our syndicates & funds grow 20% in the past year. Augusta now has over 3000 investors in its syndicates and 880 shareholders in Augusta Capital.”

The sale of remaining Finance Centre properties will be completed in 2018 & 2019, and Augusta will use the released funds to warehouse property before syndication, underwriting & co-investments in new funds. However, Mr Duffy said it was proving harder to source these opportunities.

The earnings

Augusta increased adjusted funds from operations by 19% to $6.75 million, equating to operating earnings/share of 7.7c (6.5c in 2016). Net profit after tax fell 43% to $7.75 million, the result of lower revaluation & disposal gains as directly held investment portfolio assets continued to be divested.

However, as those directly held gains fell, the company increased funds under management by 9.5% to $1.6 billion at balance date – and to $1.7 billion since then, following settlement of the 33 Broadway and Nudgee Rd, Brisbane, properties.

Augusta raised $203 million in new equity through 5 new syndications, lifting assets under management by $347 million and continuing the expansion into Australia. Recurring annualised base management fees rose 10% to $5.6 million at balance date, and have since risen to $5.8 million following settlement of 33 Broadway at the end of June and Brisbane syndicate property Nudgee Rd, settling today. Net asset value/share has risen from 94c in March 2016 to 98c.

He said Augusta, which carries buildings on its balance sheet at cost, would launch more funds this financial year, including “measured expansion” into Australia.

All those funds were about yield, but the Value-Add Fund No 1, is about total return, repositioning assets for capital gain for the investors in the fund, including Augusta itself.

Of the 5 properties bought for that fund, all in Auckland, 3 have been sold:

  • 100 Carbine Rd, Mt Wellington, unconditionally sold for $36.8 million (purchase price $33.45 million)
  • 11 McDonald St, Morningside, sold for $24 million (purchase price $17 million), and
  • 36 Kitchener St in the cbd, sold for $21 million (purchase price was $16.5 million).

Mr Francis said the company was working on options for the other Value-Add Fund properties, Hangar 54 at 54 Cook St and 151 Victoria St West.

Next task is to transform balance sheet

Next up for Augusta is to transform its balance sheet. In short, this is about moving out of direct property ownership – albeit investments such as the company’s stake in the value-add fund and short-term underwrites amount to a form of direct investment – and into portfolio management for other investors. It’s contract management for a spread of entities, expanding the external management concept which listed property entities have switched in & out of over the last 3 decades.

Mr Francis said Augusta was getting better use of its capital through that contract management than it would have by sticking to direct investment. That change led to the 19% increase in adjusted funds from operations, he said.

Instead of being “a listed property company”, Mr Francis said: “We’re a pure-play funds management initiative. We’re getting a better earn – 31% – off funds management than we were off direct property investment.”

The change in focus reduced group gearing from 35.5% a year ago to 26.6% in December and 21% now, but Mr Francis said shareholders could expect that ratio to be volatile, depending on the state of investments: “Given what we’ve got on the radar, you wouldn’t expect us to sit at those gearing levels [in the 20-25% range] very long.”

Shareholders approved amending the company’s constitution, by removing the loan:value ratio limit, with a 99.74% vote in favour of this change. The result, Mr Francis said, was that against a target gearing ratio of 35%, the actual gearing could range from 0-55% on a drawn basis.

Future borrowings will consist of 3 categories, each with its own target gearing levels:

  • Real property: A gearing ratio of about 45%, with interest serviced by the income from the relevant real properties; this category includes properties warehoused short-term, with an exit strategy
  • Investment assets (shares or co-investments in managed funds): A lower gearing ratio, with interest serviced by the distribution or dividend income from such assets, and
  • A separate working capital facility, which will be serviced by the cashflows generated from the funds management business and only used to facilitate new deals or funds initiatives.

“The key focus will be servicing the debt, as the debt profile will be low on a long-term average basis, but may increase with respect to new initiatives.”

Mr Francis said that before the constitutional change, “you will see where we’ve bought property to syndicate and underwritten ourselves, but sometimes we’ve hit a debt barrier.”

Changes for syndicate investors

Syndicate investors will see changes too, as Augusta rationalises the portfolios it manages. It’s prepared to be active in closing a syndicate, including offering investors in some of the provincial syndicates the opportunity to enter a new syndicate with better growth prospects.

Mr Francis said Augusta had put proposals to investors to sell out of syndicates and had sold $150 million of such assets in the last 12 months.

“We believe we’re exiting them at the right time, and we can get better investment outcomes. This is a win-win in our minds. We’ve certainly had strong support from investors for our exploring this avenue, and we still see plenty of opportunity for divestment.”

The NZ portfolio

Augusta’s NZ audited portfolio delivered a weighted average total return of 16% for the year to March, an unrealised average 25% equity gain since establishment and a 4.8% valuation gain in the last year. That $1 billion portfolio excludes Australian audited properties, new schemes, the directly owned portfolio, the Value-Add Fund and privately owned & other properties.

The portfolio is about two-thirds exposed to Auckland and is across all commercial sectors. Mr Francis commented: “If you believe the data, it’s hard to ignore Auckland as the preferred investment location.”

How Augusta goes about buying, and building on what it buys

Company chair Paul Duffy & director Bryce Barnett added some detail on how Augusta goes about syndication purchases.

Mr Duffy said there would be an informal discussion with the board about a proposal – at that morning’s board meeting there 3 of these – and, if an agreement to buy was prepared, the board would have a due diligence committee look at the tenants: “It’s not a passive investment. The returns we achieve, close to 16% – it’s a very active management to achieve those results.”

As Augusta looks more at Australia, and Brisbane in particular, Mr Bryce spoke up as the expert in that market segment. KCL Property Ltd, which he headed, merged with Augusta in 2014, taking $850 million of assets under management into the enlarged group, including a number of syndicated Brisbane assets.

“The Australian opportunities at the moment with the best upside are in the Brisbane region,” Mr Barnett said.

One shareholder was curious to know if Augusta improved a property during its brief ownership before passing it on to a syndicate. “Not as a rule,” Mr Francis said. “We’ll buy something then pass it on. Sometimes that will be in passive form, sometimes it will need working on. But we’re not buying, putting a bow on it and then passing it on.

“For the Value-Add Fund, all 5 properties required some sort of addition. The real opportunity there was the short lease to Bunnings and no opportunity to renew it.”

Mr Duffy added: “At McDonald St, management initiated a plan change. We were able to increase the density of that building. We then found the risk to develop it was too high and we’ve now realised it at a substantial profit.”

Future for syndication

On a question of syndication becoming more difficult if interest rates rise, Mr Duffy said: “We’re trying to tie our bank finance to the lease period with interest rate swaps & so forth, and the team lock in a chunk of bank finance. That’s why the recurring earnings become a driver.”

Mr Duffy also said Augusta had hired accountancy firm PWC to provide treasury expertise.

He also commented on likely investment in commercial property by New Zealanders, especially the impact of KiwiSaver on the flow of capital: “With KiwiSaver, you’re going to have 10-15% weighted in property. New Zealand has seen foreign capital coming into commercial real estate, so I don’t see commercial property yields going to 6.5-8% in the next 3-4 years. It’s just not possible.”

Loughlin defers retirement

John Loughlin, who’d intended to retire at this annual meeting, will stay on until the end of the year, when a replacement is expected to be named. Mr Duffy said the search for a new director was progressing but wasn’t quite complete.

And Mr Francis complimented Mr Loughlin, who joined the board in 2007, saying they’d had “many robust discussions over the years” and had disagreed as many times as they’d agreed – “and that’s what you want from a director”.

Attribution: Annual meeting.

Continue Reading
WordPress Appliance - Powered by TurnKey Linux