SEPTEMBER 2014 COMMERCIAL PROPERTY INVESTMENT

Transcription

1 SEPTEMBER 2014 COMMERCIAL PROPERTY INVESTMENT

2 BACKGROUND INTRODUCTION New Zealand s Largest Property Funds Manager following the acquisition of KCL Property Ltd. Approximately $1.17 Billion of funds under management. Two divisions: Direct Property Investment and Funds Management Executive Directors are the largest single shareholder of the publicly listed NZX company. Offices in Auckland and New Plymouth. Directors ensure strong Governance and Compliance. Strict compliance to FMA (Financial Markets Authority) rules and regulations for the protection of Investors.

3 BACKGROUND BACKGROUND OF EXPERIENCE The Executive Directors and General Manager have over 80 years of Commercial Property Experience including: Property Investment Property Management Property Development Strategic Consultancy Advice The Executive Team not only have Commercial Property experience but Valuation Expertise Accounting, Taxation and Finance Expertise.

4 PROPERTY PORTFOLIO PROPERTY PORTFOLIO NUMBER OF PROPERTIES PROPERTY VALUE (NZ$ M) OWNED DIRECTLY BY AUGUSTA SYNDICATES NEW ZEALAND SYNDICATES AUSTRALIA OTHER PROPERTIES TOTAL

5 PROPERTY PORTFOLIO OUR INVESTORS

6 PROPERTY PORTFOLIO GEOGRAPHICAL

7 BACKGROUND FORMS OF PROPERTY OWNERSHIP Full ownership of the property Partnership with other similar investors Syndicated Investment by Proportionate Ownership These structures allow for the ownership vehicle to have their income taxed (if applicable) without being influenced by co-ownership status.

8 BACKGROUND WHAT PROPERTY TYPES DO WE PREFER? Large format retail/ bulky goods retail Industrial Grouped smaller retail Low rise office / showroom combinations

9 BACKGROUND WHAT PROPERTY TYPES DO WE TEND TO AVOID? Hospitality (Motel/ Hotel)* Specialised Property ( Cool-Stores, Laboratories)* Residential of all types Rural property High rise office buildings unless prime specification and location * We do not currently have the intellectual knowledge and experience in these properties

10 CURRENT TRENDS IN PROPERTY INVESTMENT New Zealand is still better placed than most countries Market is strong in sub $10 Million Fewer buyers, especially above NZD$15m but market firming Yields have firmed as demand improves Syndication / Proportionate Ownership is an ideal vehicle for obtaining an interest in good quality commercial property and spreading risk.

11 PROPERTY INVESTMENT RETURNS AND TRENDS

12 PROPERTY INVESTMENT RETURNS AND TRENDS

13 PROPERTY INVESTMENT RETURNS AND TRENDS

14 PROPERTY INVESTMENT RETURNS AND TRENDS

15 OUR PHILOSOPHY ON PROPERTY INVESTMENT Investors should take a medium to long term view To match the property with the investor expectation E.g. Balance of Yield / Growth/ Risk Invest in areas with good natural economic profile E.g. Population growth, transport hub Look for (in this order) Tenant Quality Lease Profile Location Flexible Macro/Micro building

16 HOW DO YOU MINIMISE PROPERTY RISKS? Careful property selection - know your market Sound Financial Structure Full Due Diligence Actively manage the asset

17 THE GOLDEN QUESTIONS If the property was vacated today: Could you re-let it? At the same rental? What alternative use does it have? Are roading patterns likely to change in the vicinity in the medium term?

18 WHY SYNDICATES/PROPORTIONATE OWNERSHIP? Allows you to take a slice of a property, with the same benefits of owning it all. For a given equity parcel, funds can be spread over several properties, therefore reducing risk exposure to the investor. The investor can choose which property they want to invest in, and which location they like. Cash returns are net pre-tax, after all costs. Augusta takes care of all management and accounting for the syndicate. Equity growth stays with the investor Augusta does not take annual growth fees.

19 THE INVESTMENT PROCESS Augusta is always looking in the market for suitable property. When it is found, Augusta will: Secure the property and prepare the appropriate legal documentation to comply with the FMA and Companies Office. Send out an Investment Statement (Information Memorandum) to those who express further interest detailing a Proportionate Ownership Scheme. Hold a meeting to discuss the property. Arrange Debt of no more than 50% LVR on a Non-Recourse basis.

20 THE INVESTMENT PROCESS CONT. Once the Syndicate is formed, Augusta will actively manage the property, including: Regular visits and setting up all property management systems. Undertaking rent review and financing. Completing annual and six monthly accounts. Reporting on a regular basis to investors. Holding of an Annual General Meeting to review equity performance. We take care of all the business of management of your asset.

21 THIS IS NOT A FUND A fund is made up of a group of properties, and you buy shares in the fund to gain an interest. Augusta plans to form these in the future. A syndicate / Proportionate Ownership is direct property investment in an individual property that you choose to invest in by purchasing a unit in that syndicate or a share of the property. None of the syndicates/ proportionate ownership are linked in any way they are all completely separate legally and financially. In a fund, you choose the fund, not the property. In a syndicate, you choose the property.

22 PROPERTY INVESTMENT EXAMPLE

23 PROPERTY INVESTMENT EXAMPLE ADDRESS: BUNNINGS WAREHOUSE, SILVERDALE Purchase Price $20,550,000 NZD Date Settled 25 March 2014 Cash Return Paid Number of Units Investor Equity Raised Gearing: 8.0% p.a Pre-Tax 254 of $50,000 NZD each $12,700,000 NZD 42.4% based on valuation OPPORTUNITIES: 12 Year Lease from 25 March with rights of renewal out to 2048 Annual growth through fixed annual 3% rent reviews for first 12 year term of lease

24 PROPERTY INVESTMENT EXAMPLE

25 PROPERTY INVESTMENT EXAMPLE ADDRESS: 74 BRANSTON STREET, CHRISTCHURCH Purchase Price $9,950,00 NZD Date Settled 30 November 2014 Cash Return Paid Number of Units Investor Equity Raised 9.25% p.a Pre-Tax 23 of $250,000 NZD each $5,750,000 NZD Loan Ratio: 50% OPPORTUNITIES: New 15 year triple net lease to Amcor Flexibles Fixed 2.5% p.a rental increases Buildings to be strengthened to 67% NBS

26 PROPERTY INVESTMENT EXAMPLE ADDRESS: 968 GREAT SOUTH ROAD, PENROSE, AUCKLAND

27 PROPERTY INVESTMENT EXAMPLE ADDRESS: 968 GREAT SOUTH ROAD, PENROSE, AUCKLAND Purchase Price $6,800,00 NZD Date Settled 30 June 2014 Cash Return Paid Number of Units Investor Equity Raised 8.10% p.a Pre-Tax 36 of $100,000 NZD each $3,600,000 NZD Loan Ratio: 50% OPPORTUNITIES: 6 Year remaining lease term to Fletcher Steel Buildings to be upgraded to 80% NBS by Vendor Very good location in sought after industrial area

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