Augusta unfazed about syndicate shortfall

Monday, 3 July 2017

Mark Francis, managing director of property investment company Augusta.

Mike Houlker of Bayleys Realty is optimistic his firm will easily sell the remaining units in an ambitious Augusta Funds Management's property syndication.

Augusta Funds is selling a yet-to-be built office complex at 33 Broadway, Newmarket, Auckland in parcels of $50,000 each to retail investors.

The total amount to be raised is $83 million - one of the largest ever in New Zealand, Houlker said.

The tally of received applications stands at more than $61m with 'many millions more' in the processing stage, according to Augusta managing director Mark Francis.

* The good bad and ugly about property syndications****

'There's a shortfall but we're going at a cracking pace for the finishing line. I'd guess we'll end up with about $10m remaining by the end of July.

'It's not surprising because it was such a big capital raising and quite a different proposition given it was a building under construction. So it took longer conversations for the marketing team to explain.'

Augusta had committed to underwriting a proportion of any shortfall and by the close off date of the offer on June 30 it subscribed for $28.35m of units funded by ASB. This weas expected to reduce to about $21m by the end of July.

'We're pretty relaxed, we've landed about where we thought. A lot of it now is just the marketing working through commitments. Some people are awaiting term deposits to mature or property settlements.

'We've seen it numerous times before and it's usually weeks rather than months before the last units are sold.'

Another time consuming requirement was the anti-money laundering requirements which ensures identify of the source of funds and investors.

'It's frustrating but necessary so most of our customers are used to it now,' Francis said.

The building is being developed by Mansons TCLM with completion expected in the first quarter of 2019.

Clauses in the settlement contract means the development risk lies with Mansons and its funders which also provide the initial investor returns until tenants move in.

The anchor tenant is Mercury Energy and Colliers International agents are advertising for other tenants.

The building at the corner with Alma St and near Newmarket's Olympic Pools and Fitness Centre, will allow Mercury to consolidate its four Auckland offices into one hub.

It has a prominent frontage onto Broadway with ground level showroom space and provision for shops.

A massive atrium will extend through all levels to provide natural light. Bridges will connect the large open plan floor plates 'to accentuate openness, accessibility and diminish hierarchy' according to the Colliers marketing blurb.

It will also feature generous high stud heights, secure basement parking with charge points for electric cars, and showers, lockers, storage and bicycle racks.

Augusta said development was progressing two weeks ahead of schedule.