Augusta bags plant for syndication
by Colin Taylor Carter Holt Harvey’s paper bag manufacturing facility at 33 Hugo Johnston Drive, Penrose, is the focus of the latest proportionate ownership scheme to be launched by Augusta Funds Management.
Mike Houlker, head of syndication for Bayleys Real Estate and authorised financial adviser, says Augusta Funds has entered into an agreement to buy the land and buildings and is syndicating ownership of the property.
‘‘ The prospectus and the investment statement indicate the scheme will provide investors with a projected initial annual cash return of 9 per cent before tax,’’ Houlker says.
The offering comprises 192 individual proportionate shares at $ 50,000 each to provide investors with a beneficial interest in the freehold title of the property.
The sell- down is being managed by Bayleys with applications closing on May 24 and subscribers can apply for single or multiple proportionate shares.
Houlker says the offer i s fully underwritten by Augusta Funds Management’s parent company Augusta Capital ‘‘ which gives investors certainty that the offer will proceed’’.
Chris Francis, executive director of Augusta Funds, says the offering follows a series of successful proportionate ownership schemes established by the company including a number of Countdown supermarket properties and ASB’s national support centre in Auckland.
Parent company Augusta Capital is an NZX- listed company specialising in commercial property investment and funds management. Its portfolio includes more than $ 300 million of commercial property.
‘‘ The Carter Holt Harvey bag divi sion manufacturing plant syndication presents an opportunity for smaller investors to be involved in a significant commercial property investment,’’ Francis said. ‘‘ Augusta Funds Management’s proportionate ownership schemes are structured to provide investors with a high yielding investment in high quality commercial and industrial real estate, without the burdens of private property ownership.
‘‘ All schemes are managed by Augusta Funds Management, including facilities and property management, preparation of annual financial statements and payment of monthly distributions.
‘‘ Augusta Funds Management also arranges all aspects of bank funding for its schemes, including interest rate hedging and long- term nonrecourse facilities.’’
Francis says CHH’s lease over the Penrose building is for an initial term of 10 years, from settlement with three rights of renewal of five years each.
The building generates an annual rental income of $ 1.2 million plus GST with rental adjustments each year linked to the Consumer Price Index capped at 2.5 per cent and with market- linked reviews every five years.
‘‘ As set out in the prospectus and the investment statement, the scheme is projected to provide a cash return of 9 per cent per annum before tax in the first year with the rent review structure providing scope for growth in the long- term,’’ Francis said.
He says the property valued at $ 14.65 million will be purchased for a total of $ 14.2 million plus GST, if any. The syndication investors will put forward a total of $ 9.6 million with the balance funded by a first mortgage loan facility.
‘‘ The full details of the calculated returns and prospective financial statements are set out in the prospectus and the investment statement,’’ Francis says.
Houlker said CHH’s industrial . complex is in a sought- after location on a 3.24ha site in the Penrose industrial precinct. He says the property comprises air- conditioned offices, a freestanding laboratory and a fire sprinkler- protected warehouse and factory. The warehouse was built in the 1980s and extended in 2001 and a roof refurbishment is to be completed by CHH within t wo years of settlement.
‘‘ The CHH bag division manufactures around 100 million bags per annum and is the leading supplier of multi- ply paper sacks in New Zealand. It also exports significant volumes to Australia and Latin America.’’