Syndicate investors pocket profit
Overseas buyers are pushing up commercial values in Auckland as they seek returns higher than they can obtain in other countries.
Investors who bought a $50,000 stake in one of the four buildings in Spark’s Auckland head-office complex less than four years ago in an Augusta Funds Management syndication will receive about $58,000 back following its sale to a Singapore-based investment fund for $77 million.
The 7495-square-metre office building on the corner of Victoria St West and Dock St, in central Auckland, was bought by SCORE+, a fund managed by Singapore-based SC Capital.
It is the company’s second acquisition in New Zealand following the purchase last year of a large commercial and student accommodation building in Wellington.
Auckland development company Mansons TCLM completed what was then known as Telecom Place – comprising four five-star Green Star office buildings linked by a large central atrium – in 2014.
Augusta Funds Management purchased one of the buildings with a 10-year lease in place to Telecom (now Spark) for $65,186,117.
It then sold 780 $50,000 proportionate interests in the property through Bayleys Realty.
Augusta continued to manage the Victoria Dock Nominees Joint Venture, which was established in September 2014 to own the building on behalf of the 371 investors who bought one or more $50,000 interests in it.
Since then these investors have also received an annual income return of 8 per cent, paid monthly out of the property’s rental income, which increased to 8.5 per cent in August 2017, Augusta executive director Bryce Barnett said.
‘‘Investors predominantly invest in our funds for the long-term monthly Augusta Funds Management executive director Bryce Barnett income returns they provide, which are currently well ahead of what they can earn in the bank,’’ he said in a statement.
‘‘However, there is also the possibility in strong commercial property market conditions like we have experienced in recent years of securing a good capital uplift as well.
‘‘In this instance a very good offer was received for the Spark building, which we felt it was prudent for investors to consider and they overwhelmingly decided to accept it, providing them with a 16 per cent increase on their original equity.
‘‘Due to the regular stream of fund offerings we now have coming on to the market we were able to offer those investors new options to invest their sale funds in, and we arranged for a significant number of them to reinvest in the Augusta Industrial Fund, which recently closed oversubscribed.’’
Barnett said most of the increase in value of the Spark building came from the lease’s fixed annual rental increases of 3 per cent.
The latest sale price was at a yield of 6.9 per cent.
The deal was brokered by Bayleys executive director David Bayley in conjunction with Paul Hain.
Bayley said SC Capital looked at other options before deciding on the Spark building.
‘‘They liked it because of the quality of the location, property and tenant. The property also offered a comparatively higher yield than similar quality properties in Asia.’’
‘‘A very good offer was received for the Spark building, which we felt it was prudent for investors to consider.’’