Augusta Capital annual earnings fall 7 percent, gets waiver on debt covenant breach

Augusta Capital, which spent $15.4 million in cash and scrip on acquisitions, reported a 7 percent fall in annual earnings as tax assets reduced its bill a year earlier, and got a waiver by its bank after breaching its debt covenants to fund its recent purchases.

Distributable earnings, the firm's favoured measure as it strips out property portfolio revaluations and one-off transactions, fell to $4.63 million in the 12 months ended March 31 from $4.99 million a year earlier, the Auckland-based company said in a statement. Net profit plunged 63 percent to $1.99 million due to a reduction in the value of the firm's portfolio.

Augusta was granted a one-year waiver after breaching a loan-to-value ratio covenant by lender ASB Bank, and anticipates the $20.85 million sale of a property to a syndicate will reduce its borrowing ratio. As at March 31, the firm had borrowings of $57.9 million at a ratio of 46.6 percent to gross assets, up from $38 million at a ratio of 36.4 percent a year earlier.

In March, the company bought property investors KCL Property and Investment Property Titles for a combined $15.4 million in cash and scrip, giving it about 170 properties to manage, with some $1.2 billion in funds under management.

"While the result for the year reflects the consequence of a loss of a key tenant and the costs of the new business acquisition, the outlook for the company is positive and the focus for this coming year will be to successfully complete the new business integration and successfully lease the vacant space that has driven valuation reductions in 2014," it said.

The board declared a final dividend of 1 cent per share, payable on May 23, taking the total return to 4 cents in the year.

The shares were unchanged at 81.5 cents, and have gained 7.2 percent this year.


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