Augusta Capital buys land and plans for 5-star hotel in Queenstown for a new Tourism Fund

Monday, 26 November 2018

An artist's impression of Kevin Carlin's proposed hotel development, Queenstown Views. The development site, plans and consent have been bought by Augusta Capital for $13.95m

Commercial property investor Augusta Capital has bought a central Queenstown five-star hotel development project for $13.95 million to place the development in a new Tourism Fund

The price included the land as well as the designs, intellectual property and site works undertaken to date, Augusta Capital said.

Augusta said the agreement to buy the site was unconditional and settlement of the transaction was expected before November 30.

Mark Francis, managing director of Augusta Capital, said the new Tourism Fund would capitalise on the shortage of hotel accommodation, particularly in Auckland and Queenstown.

The property is the second purchased for a new tourism fund that is expected to be launched in 2019 with more purchases by Augusta Capital signalled.

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The seller of the Queenstown site and hotel plans is American property developer Kevin Carlin of South Island Investments who will have a consultative role in the development.

He has developed several properties in New Zealand.

An illustration of a corner suite in the proposed Queenstown Views hotel development.

Carlin called the hotel development Queenstown Views and costed it last year at $100m.

Augusta said it might progress the hotel development before establishing the new fund.

The site for the hotel is 17-19 Man Street on route to the Queenstown gondola and provides outstanding views out to the Remarkables, the company said.

Mark Francis, managing director of Augusta Capital, said: 'Locations for a hotel development in Queenstown do not come much better than this site.

'The location is central Queenstown within walking distance of all the key sights and activities in the Queenstown CBD while sitting in an elevated position which provides premium, uninterrupted views out to the Remarkables.'

The proposed luxury hotel will have five storeys and a basement, 47 studios, 9 suites including 3 corner suites, and a luxurious penthouse.

It will also offer a restaurant, piano bar and cocktail lounge, 150-guest function room and onsite parking.

The 57-room 'smart' Mi-pad Queenstown hotel opened mid-year, the fourth hotel in the past 12 months to open in the tourist mecca.

Francis said resource consent had been obtained by the vendor to undertake the proposed hotel development which had been developed to a level of detailed design.

Augusta was in discussions with potential hotel operators with a number expressing interest.

Initial discussions had also been held with potential contractors regarding construction of the hotel but a construction contract would not be let until a hotel operator was secured.

Construction was expected to start by the middle of 2019.

Francis said announcements on the launch of the Tourism Fund would be made in the New Year.

'Augusta is in the process of finalising due diligence on a collection of exciting opportunities for what will be an unlisted fund.'

'Tourism is hugely important to the New Zealand economy and infrastructure is essential in harnessing the benefits of growth in the sector.'

'The fund will invest in existing operating hotels and develop hotels where an appropriate risk-adjusted return can be extracted for investors.'

Augusta bought another property for the proposed Tourism Fund two months ago.

Augusta Funds Management acquired 54 Cook Street in Auckland from Augusta Value Add Fund No. 1 Ltd for $16.5m, in a related-party transaction.

Augusta Funds Management would hold the asset and then use the property as a seed asset for a new open-ended Tourism Fund, the company said in September.

The new fund was part of Augusta's core strategy to broaden and diversify the funds management offerings to appeal to a wider range of investors.

Augusta said then it expected to raise money for the new fund in the first quarter of 2019.

Augusta has a conditional lease with Jucy Snooze for 20 years for Jucy Snooze to convert 54 Cook Street into a 'pod hotel'.

The agreement is conditional upon resource consent, building consents and the cost estimate for the landlord's works being less than or equal to $14.5m.