Augusta’s Aussie syndication

5:00 AM Saturday July 8, 2017 True Commercial

An aerial view of the building complex at 741 Nudgee Rd, Northgate, about 9.5 km from Brisbane CBD. Photo / Supplied

Augusta Funds Management Limited has shifted its syndication focus back across the Tasman with its latest investment offering of a large industrial complex in Brisbane.

Augusta has purchased an 8764sq m building providing a mixture of warehouse, laboratory, cold store and office accommodation on a 1.52ha site at 741 Nudgee Rd, Northgate, in Brisbane’s Trade Coast region, about 9.5 km north-east of the city’s CBD.

The property has a long-term lease, expiring in December 2028, to Health World Limited, one of the largest suppliers of natural medicines and health supplements in Australasia.

The offering of A$50,000 units in a trust that will manage the property is being marketed by Mike Houlker, Samara Philips and Sarah Prebble of Bayleys’ syndication division. It is forecast to provide investors with an initial pre-tax income return of 7.35 per cent, increasing to 7.65 per cent in the June 2019 year and 8 per cent the following year.

The latest offering follows Augusta’s three previous successful syndications, also marketed by Bayleys, of large office complexes in Auckland. These comprised two buildings in the BDO Centre in the CBD (also NZME’s headquarters building) and most recently the offering of 1670 $50,000 interests in Mercury’s head office complex currently under development in Newmarket – Augusta’s largest equity raise to date.    

The latest Brisbane offering involves a total of 355 units of AU$50,000 which will provide $A17.75 million of equity towards the property’s A$28.5 million purchase price. Augusta currently has 12 Brisbane properties under management with a total value ofapproximately A$111.6 million.

Augusta managing director Mark Francis says Australian properties remain an integral part of the company’s investment offerings.

“We see Australian commercial property as a good way for investors to diversify their investment portfolios. Members of Augusta’s management team have over 20 years’ experience syndicating and managing Australian properties and have built up considerable knowledge of and experience in the Brisbane market and an excellent track record. 

“In our opinion, the Queensland industrial property sector continues to experience strong levels of leasing and sales activity which has resulted in falling vacancy rates and rising rentals. The properties we currently manage there are performing well, with the majority showing good capital growth in recent years.”

Augusta executive director Bryce Barnett says the Nudgee Rd property trust is Augusta’s first Australian registered managed investment scheme which is open to both New Zealand and Australian investors. Previous Australian syndications have been structured as limited liability partnerships and were only available to New Zealand based investors. 

Augusta has partnered with Australian-based funds manager DDH Graham Limited to establish and manage the trust. Barnett says the structure may provide advantages such as no stamp duty on transfers of units and a significant tax saving on any capital gain on the disposal of the property as well as other potential taxation benefits through the Foreign Investment Fund taxation regime.

Houlker says the offering provides excellent exposure to the Australian industrial property market comprising a modern 10-year old building in a strong location on a high exposure corner site. It is close to major arterial transport routes and distribution networks and five minutes’ drive from Brisbane airport, 15 minutes from the port and 50 minutes from The Gold Coast via the nearby M1 motorway.

The Trade Coast Region is an 8000ha trade and industry precinct at the mouth of the Brisbane River, with direct air, sea, road and rail network links.

“The property also has a very long lease in place with 11.5 years remaining on the current term and rights of renewal until 2034, “says Houlker. “And, of particular appeal to investors, is the fact that the lease has built in rental growth with a minimum increase of three per cent per annum except for every third year when there is a market review but with a ratchet clause meaning the rent can’t go down. The property’s rising rental is reflected in the increase in income returns investors are forecast to receive in the second and third years of the scheme.”

Phillips says the tenant Health World Limited is strongly positioned in an industry experiencing record growth. Established in 1985 and now owned by American nutrition products maker Metagenics, it manufactures and markets many well-known natural medicines and probiotics, vitamin and sports nutrition products.

“It has a licence to manufacture these goods on the site from Australia’s Therapeutic Goods Administration (TGA) and has invested heavily in the site to obtain this licence,” she says. The TGA is part of the Australian Government Department of Healthand is responsible for regulating the supply, import, export, manufacturing and advertising of therapeutic products.

Phillips says investors may subscribe to one or more $50,000 units and have the option of having their monthly cash distributions paid into New Zealand or Australian bank accounts.

Augusta Funds Management will manage the property under an asset management agreement. It is a wholly-owned subsidiary of NZX listed Augusta Capital Limited and has in excess of NZ$1.7 billion of assets under management encompassing over 150 commercial and industrial premises in New Zealand and Australia. Details on how the forecast pre-tax return is calculated and the risks associated with the investment can be found in the Product Disclosure Statement which is available from Bayleys or by visiting the website www.australianinvestment.co.nz