Asset Plus proceeding with office complex
AUCKLAND: NZXlisted Asset Plus, with a $112 million market capitalisation, has held a groundbreaking ceremony for a $142 million new Auckland project which it won shareholder approval to proceed with.
Asset Plus managing director Mark Francis said iwi representing Tamaki Makaurau led the ceremony this week with new Auckland Council chief executive Jim Stabback, representatives of Augusta Capital and project partners.
The new building will be 15,900sq m, over six levels, with two extra basement car parking levels for 224 vehicles. Most of it will be leased for an initial 15 years to Auckland Council as its new northern service hub that will draw staff into one central location which the council stipulated had to be near major public transport and amenities. The site is at 68 Munroe Ln, Albany.
Shareholders voted on September 29 for the company to go ahead with the project and on October 1, Asset Plus completed a fully underwritten capital raise for $60.2 million to start the development and it held an extraordinary general meeting for investors to vote.
Completion is planned for 2023. The construction contract is let to Australianheadquartered Icon which is now finishing The Pacifica apartments in Gore St and Commerce St in the CBD as well as building a new hotel on the corner of Wyndham and Albert Sts.
Of the comparison between current market capitalisation with the Albany project value, Mr Francis said: ‘‘I’m not sure you’re looking at it the right way.
‘‘Once it’s done, we’re going to add that value of assets. We’re creating equity through this development.’’
The company’s borrowing will rise from $75 million to $130 million, with a loantovalue ratio of 43%.
The company’s limit is 50%. Risks of unforeseen costs during the project were cited, along with general construction risks.
‘‘If completion is delayed beyond December 16, 2022, then liquidated damages are payable to Auckland Council. Full recovery might not be possible from Icon,’’ the shareholder presentation said.
All that could hit shareholder dividends.
Tenant default, rent relief and abatement were other risks, along with property valuation uncertainty and an economic downturn as well as the impact of Covid19.
Grant Lowe and Arie Dekker, Jarden research analysts, have an ‘‘outperform’’ on Asset Plus, upgrading it from neutral, noting the successful equityraising and saying the company was finalising its bank facility renegotiations ‘‘thereby securing the necessary capital to progress its planned Munroe Ln office building’’. — The New Zealand Herald