Augusta lines up third property for industrial property fund

Tenant will have to waive right of first refusal.

Augusta Capital has made a conditional offer to buy a property owned by one of its syndicates that it wants for the industrial property fund slated to be launched this year.

Auckland-based Augusta's funds management unit has sent a notice of meeting to investors in the 12 Brick St property seeking to buy the property which would be the third and final acquisition for a new fund, it said in a statement. The deal is subject to the fund raising enough capital and tenant D&H Steel Construction waiving its right of first refusal. The meeting will be held on February 2.

Augusta has already bought a $19.1 million site in Auckland and a $44.9 million property in Wellington for the industrial fund, and the Brick St building would give it an $87.9 million value, with 14 tenants on a weighted average lease term of 7.2 years. The company expects to raise between $58 million and $60 million for the fund in a public offering, underwriting between $33 million and $35 million.

The firm "intends to subscribe for at least a 10% stake in the new fund and maintain that holding on a long-term basis," managing director Mark Francis and chief operating officer Guy French-Wright said in a statement.

Augusta bought the Brick St site for $18.2 million in 2013, selling the property into a syndicated offer at the same price later that year. The company has gradually diversified into funds management and property syndication, where it saw greater benefits from generating recurring fees rather relying on rental income.

The firm is preparing a product disclosure statement for the fund which should be finished in mid-February, with the initial property portfolio expected to settle on March 29.

Augusta shares last traded at $1.06 and have gained 8.2% over the past 12 months.

(BusinessDesk)