Syndication offers exposure to Auckland commercial building

21:15, Aug 03 2014
Augusta Funds Management's Phil Hinton, left, and Bryce Barnett in front of a map of central Auckland in their New Plymouth office.

Taranaki investors are expected to have a heavy involvement in one of the biggest single property syndications yet seen in New Zealand.

Auckland-headquartered Augusta Funds Management, which in March acquired New Plymouth company KCL Property, is offering for sale for $50,000 each a total of 780 proportionate interests in a 7495 square metre commercial building in Auckland's CBD.

The $39 million syndication follows Augusta's unconditional agreement to purchase what is known as Building C, one of four buildings in Telecom Pl, for $65.18m.

Former KCL shareholders Bryce Barnett and Phil Hinton, who are now Augusta Funds Management's executive director and general manager respectively, anticipate strong interest from their Taranaki clients in the syndication project.

"In fact on the day the syndication was launched, the very first investor was a Taranaki man who immediately purchased 10 of the proportionate interests," said Barnett during a briefing at Augusta's New Plymouth office on Friday.

"This is one of the benefits of our merger with Augusta - it is allowing our Taranaki operation to get involved in really big projects. Thanks to our KCL history, we have a very strong client base in Taranaki, so we're confident that as much as a third of investment for this syndication will come from this region."


This underlines the fact that even though KCL is now part of Auckland- based Augusta, which is a wholly- owned subsidiary of NZX listed Augusta Capital Ltd, it is still business as usual in the New Plymouth office, Hinton said.

"One of things we have always said to clients is that outside of their homes and farms, it's a good idea to diversify into investments outside of Taranaki."

Prior to its merger with Augusta, KCL was a major player in the commercial and retail property investment market anyway, managing more than $750m worth of property in New Zealand and Australia. The merger expanded Augusta Capital's portfolio to close to 170 properties with total funds under management of about $1.17 billion.

Although Barnett and Hinton now spend a few days each week working in Auckland, the New Plymouth office continues to operate with its full complement of staff. The difference now, they say, is that the size of Augusta means the company is able to use its group balance sheet to buy properties unconditionally before presenting them to the investment market for syndication.

This generally means it is able to acquire assets at better prices and on more favourable terms than other syndicators which can be forced to pay more to essentially buy time to raise investor equity before going unconditional on a purchase.

This latest syndication will provide investors with a projected initial income return of 8 per cent for the first full year ending March 31, 2016.

It is being structured as a proportionate property ownership scheme, with the opportunity to purchase a beneficial interest in a proportion of the registered freehold unit title in the property.

Telecom Pl is one of the most modern, highly specified office building complexes in New Zealand.

The complex has achieved 5-star office design and built certifications from the New Zealand Green Building Council.

Taranaki Daily News