Silverfin, Oyster, Taurus and Augusta vie for syndicate money

Tuesday, 4 September 2018

The Hilton Haulage property being syndicated by Christchurch-based Taurus.

Several property syndicate offers have come to market recently from Taurus, Oyster, Silverfin and Augusta, including a couple with an unusual twist.

Silverfin Capital has also launched underwriting funds which promise returns to investors while helping ensure the companies' success in putting together syndicates.

Syndicate marketers often fall short on their sales targets of units and end up holding an unsold portion of them. So they strike agreements with individuals or companies to pick up the shortfall in an underwrite - for a fee.

For example, when Silverfin launched its Oxford Victoria in 2017 Christchurch it failed to sell all the units and several are still owned by the underwriter and advertised on the Silverfin website.

* The good bad and ugly about property syndications**

Silverfin chief executive Miles Brown said having an underwrite in place gave his company more confidence.

Investors in the underwriting fund will receive a projected pre-tax cash return to investors of 10 per cent a year based on two underwrites a year. This is made up of a 2 per cent fee from the underwritten syndicate, 3 per cent if the funds are called upon, the returns from the underwritten units, and any cash in the bank that is earning interest.

A Silverfin syndicated property at 32 Oxford Tce, Christchurch.

This means investors in the syndicates are paying some of the underwrite - Brown said all costs of floating a syndicate were clearly spelled out in offer documents.

Many investors often invested in the underwrite fund as well as a particular syndicate, Brown said.

Silverfin's latest syndicated offer is for two cool stores in Takanini in Auckland and Waharoa in Waikato with long term leases of 12 and 15 years to Halls freight group.

The forecast return is 8 per cent a year pre-tax for the three years to March 2020.

Other new syndicates in the market include one from Christchurch-based Taurus Group for the Curries Rd warehouse of Canterbury transport and storage company, Hilton Haulage, half owned by Ngai Tahu.

Scott Crampton, chief executive of Hilton Haulage, said the company wanted to sell the property to raise capital for reinvestment in transport and land assets elsewhere.

'Property has a different return horizon than our transport opportunities and this is part of the balancing of our balance sheet. We will continue to require this site indefinitely,' he said.

The Curries Road Limited Partnership promoted by Taurus is seeking minimum investments of $50,000, from wholesale and eligible investors as defined under legislation, or a minimum investment of $750,000.

The aim is to raise $4.25 million, with additional bank funding of $3.80m. Hilton Haulage has taken a 10 year lease with the option of five renewed terms of five years each.

The projected pre-tax cash distributions in years one to three is 8 per cent paid monthly, and managed by Taurus.

Meanwhile, NZX-listed syndicator Augusta has set up a fund seeking $68.5m from investors for a new office building at 96 St Georges Bay Rd, Auckland, being developed by Mansons TCLM.

The total cost of the building is $116m with the balance of the price will come from bank borrowings.

The property will be mainly occupied by Xero, Independent Liquor and Harrison Grierson.

Augusta is underwriting $24.5m and other parties are underwriting the balance. Augusta will receive underwriting and offeror fees as well as an ongoing management fees.