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AUGUSTA SHAREHOLDER & INVESTOR NEWS - DECEMBER 2019
COVER STORY
Augusta welcomes two new
independent directors
INSIDE THIS ISSUE
FROM THE MD AUGUSTA TOURISM A GUIDE TO
- TWO NEW FUNDS - QUEENSTOWN UNDERSTANDING
LAUNCHING EARLY 2020 DEVELOPMENTS AML
Augusta Senior Management (left to right); Joel Lindsey - Chief Operating Officer, Simon Woollams - Chief Financial Officer, Mark Francis - Managing Director, Adelle McBeth - Head of Operations, Bryce Barnett - Executive Director, Luke Fitzgibbon - General Counsel & Company Secretary.
Contents | 3
Inside Pg 16
Auckland
Level 2, Bayleys House
30 Gaunt Street, Wynyard
4 From the MD Quarter, Auckland 1010
6 Operational Update Pg 9 PO Box 37953, Parnell,
Auckland 1151
T +64 9 300 6161
8 Diversification F +64 9 300 6162
22 Keeping your Digital
9 Spotlight Update Space Safe New Plymouth
335 Devon Street East
10 Cover Story - Welcoming Two New 24 Augusta and Bayleys New Plymouth 4312
Independent Directors
PO Box 44,
26 Understanding AML
New Plymouth 4340
13 Our People
T +64 6 759 1520
28 Health and Wellbeing
F +64 6 759 1521
14 Tourism - Lakeview
30 Glossary
16 Tourism - Radisson Collection Hotel Christchurch
Under Construction 31 Key Dates Level 1, 40 Welles Street
Christchurch CBD 8011
New Zealand
18 Asset Plus Update 32 Recipes
PO Box 16739, Hornby,
Christchurch 8441
20 Augusta Industrial Fund 34 The Last Word
T +64 (9) 300 6161
F +64 (9) 300 6162
Augusta Diversified Fund
New Investment Opportunity Coming Soon
Early Feb 2020 20 Mar 2020 $10,000
Expected Launch Expected Close Minimum Investment
Augusta Diversified Property Fund (Augusta Diversified), will be established with the intention of providing investors with
diversification within the one investment vehicle. The fund’s strategy will include both direct investments in bricks and mortar
and indirect property investments* in managed investment funds, listed property companies and income producing underwrite
arrangements. Augusta’s distribution partner Bayleys, will be in contact early 2020 with further details.
Mid Feb Limited
Augusta Funds Management 2020 is considering making18 Mar 2020
an offer $10,000
of financial products in New Zealand in the Augusta Diversified
Property Fund. No money is currently being sought. No financial products can currently be applied for or acquired. The offer will be
Man Street, Five-StarExpected
hotel Launch
project development Expected Close Minimum Investment
made in accordance with the Financial Markets Conduct Act 2013. No indication of interest will involve an obligation or commitment
to acquire a financial product. Prospective investors are recommended to seek professional advice from an Authorised Financial
Adviser which takes into account their personal circumstances before making an investment decision.
focus
4 | From the MD
FROM THE MD
value of the initial two assets The Albany Lifestyle Centre
is circa $100m and we do not property has been secured as
intend to stop there. We plan to the seed asset, with negotiations
grow the number of assets in the taking place on other assets
portfolio, and the team continue that are being considered to
to search for other properties add further diversification on
and development projects to establishment. A variation to
add to the fund. Properties will our FMA licence is to be sought
be strategically selected for their which will enable us to widen the
ability to increase diversification mandate of the Fund, in search of
while generating sustainable better returns.
A
s we near the start returns and long-term capital
growth. The portfolio will cater to INTERIM RESULTS
of the silly season,
I am aware the both domestic and international The interim results for Augusta
question on everyone’s mind demand and target locations with Capital Limited and Asset
is ‘when is Augusta’s next strong forecast demand and lower Plus Limited were released
offer coming out?’. While seasonal volatility. in late November. While
we have not delivered any full announcements can be
A key objective for Augusta
investment opportunities to found on the NZX, they are
Tourism will be to deliver a stable
the market in the second half summarised below.
income return paid to investors
of 2019, it has by no means monthly, plus the potential for
been a quiet six months here Augusta Capital Limited
capital growth. Investment will be
at Augusta. The team has been available at a $10,000 minimum As communicated in October’s
working tirelessly behind the and multiples of $1,000 thereafter, trading update, a materially lower
scenes acquiring assets and and Augusta Capital will have result against the previously
formulating the structure of the a vested interest in the fund as communicated period has been
funds we intend to launch in a cornerstone investor initially delivered, with Augusta reporting
early 2020. taking at least 10% of the units in profit and total comprehensive
Augusta Tourism. income after tax of $1.63 million,
TOURISM FUND down from $5.10 million in the
As with all of Augusta’s investment same period last year.
As signalled some time ago, the
opportunities, we expect very
Augusta Tourism Fund is being This lower result is due to a
strong interest and demand from
established to provide exposure number of factors, most notably
investors who want a chance to
to a portfolio of hotel and tourism deal timing and investment
be involved in New Zealand’s
sector real estate assets that will into new funds and assets, as
high performing tourism sector,
benefit from the future growth and well as higher corporate costs
so please contact us to register
success of New Zealand’s largest relating to ongoing investment to
your interest.
export earner, tourism. expand Augusta’s corporate and
DIVERSIFIED FUND development teams, in line with
We plan to release the Augusta
the company’s growth strategy.
Tourism Fund to the market The launch of the Augusta
with two strategically selected Diversified Property Fund is While no capital raisings were
assets – Jucy Snooze Hotel, 54 scheduled to occur in February completed over the six month
Cook Street, Auckland, and 2020. This fund will be an open- period to 30 September 2019,
the Radisson Collection Hotel, ended fund established to hold a activity has focused around making
Man Street, Queenstown, both diversified portfolio of property significant progress on creating
of which are currently under investments with the ability to pipelines for long term growth,
construction. The combined invest in all property sectors. investment into the development
From the MD (Continued) | 5
of new fund initiatives and the 2 percent target mid-point but directorships on the boards
acquisition of key assets. A busy within our target range. Economic of numerous well recognised
period ahead is anticipated as we developments since the August New Zealand companies.
gear-up to launch the Augusta Statement do not warrant a
Tourism Fund and Augusta change to the already stimulatory CHRISTMAS CLOSEDOWN
Diversified Fund in the first quarter monetary setting at this time.” Augusta offices across the country
of the new year. Despite this, they remain at all- will be closed from 5.00pm, Friday
time lows in New Zealand. 20th December and re-open on
Asset Plus Limited Monday 6th January as staff take a
While this remains positive for
Asset Plus reported net profit well-deserved break. The Augusta
those of you with a mortgage to
after tax of $2.01 million, down team wish you a Merry Christmas
pay off, it is not so good for those
from $3.20 million in the prior and a safe and relaxed holiday
looking for a return on their bank
corresponding period (pcp). season. We look forward to seeing
savings. Global long-term interest
This reduction in earnings was you in early 2020 for what is
rates remain near historically low
driven by higher due diligence guaranteed to be a busy start to
levels, consistent with expected
and transaction costs and lower the year.
low inflation and growth rates
deferred tax credit adjustments on into the future. Consequently,
property divestments. New Zealand interest rates can be
The last six months have focused expected to remain low for longer.
on securing acquisitions with value- As a result, investors all over MARK FRANCIS
add potential, the first of these the world are driving yields to Managing Director
being 35 Graham Street which record lows across a diverse
was acquired for $58m in June range of investment products.
2019. The future development, Unfortunately increased demand
feasibility and scope of works is for high yielding investment
well underway, and a leasing agent products can bring greater risk for
has been appointed to pursue pre- investors. Artificially high yields
leasing opportunities. may seem appealing, but generally
The 35 Graham St acquisition was the rule of ‘the greater the return,
the first step in expanding the the greater the risk’ applies.
portfolio, but other opportunities While there are managers that
continue to be sought. The Board will chase higher yielding assets
is committed to growing the that compromise on quality and
portfolio in a disciplined manner, gloss over the risks, Augusta will
with a primary focus to close the continue to remain as a proven
gap between the share price and trusted manager that chooses
and NTA. quality assets and long-term
stability over risky, short-term
THE MARKET/ higher yields.
INTEREST RATES
While the US Federal Reserve BOARD OF DIRECTORS
announced its third cut of the year While an official welcome is
to 1.75% on 30th October, on detailed in a separate article by
the 13th November the Reserve Augusta Chairman, Paul Duffy,
Bank of New Zealand made the the company was pleased to
surprising decision to keep the announce the appointment of
Official Cash Rate unchanged at two new independent directors
1%. Reasonings from the RBNZ to the Board in October, Fiona
for the lack of change were cited Oliver and Jonathan Ross. They
as “Employment remains around bring a wealth of experience,
its maximum sustainable level knowledge and governance to the
while inflation remains below the Board, with both currently holding
focus
6 | Operational Update
INVESTING
IN THE
PIPELINE
O
CF
O
s
–
O
C
am –
o o ll s ey
Sim on W J o e l Li n d
Over the past six months, significant progress has been made on the strategic
objectives communicated in May 2019, with activity for the period centred around
creating multiple pipelines for long-term growth, including investment into the
development of new fund initiatives and the acquisition of key assets.
PROGRESS DURING THE PERIOD
Assets under Acquisition activity within the Appointment of two new
management now at $2B. Augusta Industrial Fund with $42 Directors to the Board.
million of properties acquired
resulting in management fees
payable to Augusta.
Continued investment in specialist Progressed Tourism Secured Radisson Hotel Group as
talent and technology. Developments on balance sheet. the operator for the Man St hotel
under construction in Queenstown.
Strategic partnership with Acquisition of 35 Graham Street Purchase of Albany Lifestyle Centre
Ninety-Four Feet in respect to within Asset Plus for $58 million to seed the Diversified Fund.
future Lakeview developments in resulted in increased management
Queenstown over the next fees and potential future
10 years. development opportunity.
Operational Update (Continued) | 7
T
he past six months saw ASSET PLUS LIMITED AUGUSTA TOURISM FUND
significant progress made 35 Graham Street was acquired The Augusta Tourism Fund offer is
towards the establishment for $58m in June 2019 and is expected to be launched February
of both the Diversified Fund and in the early stages of concept 2020. The two seed assets, 54
the Tourism Fund of which we design. The divestment of the Cook Street, Auckland and 17-19
are excited to bring to market Heinz warehouse in Hastings, Man Street, Queenstown, are
in 2020. which settled on 17 December being developed through the
2019 provides some debt use of Augusta’s balance sheet
The acquisition of a number of
headroom to facilitate further and ownership will be transferred
properties ($190 million) and also
investment activity. This asset was to the Tourism Fund upon its
the divestment of properties in
identified as non-core as it did establishment. A significant
the managed portfolio allowed us
not fit the longer-term value-add milestone was entering into a
to take advantage of the strong
strategy. We continue to search hotel management agreement
demand for property outside of
for further acquisitions to grow with Radisson Hotel Group for the
Auckland. Asset Plus commenced
the portfolio under the “yield plus Man Street property (see further
its new ‘yield plus growth’
growth” strategy. detail on page 16). Both projects
investment strategy through the
are in the course of construction
acquisition of 35 Graham St,
AUGUSTA INDUSTRIAL FUND and Augusta will continue to
Auckland, while the Industrial
The Augusta Industrial Fund manage the developments
Fund has also recently made
(AIF) continues to grow with the through to completion. The
two acquisitions.
acquisition of a further two assets new Lakeview Queenstown
To better manage a rapidly located at 27-29 Neales Rd, East partnership (see below) will also
growing investor base, we have Tamaki (Purchase Price $25.22m, provide longer-term investment
invested in the implementation leased to Vulcan Steel Limited) opportunities for the fund.
of our new CRM system and we and 48 Honan Place, Avondale
continue to widen the expertise (Purchase Price $16.65m, leased LAKEVIEW, QUEENSTOWN
within the Augusta team, setting a to TCI NZ Limited). These two A partnership was formed with
stronger platform to manage the properties are in the highly Melbourne-based developer
increasing portfolio and investor sought-after and tightly held Ninety Four Feet (NFF) which then
base. With interest rates at record Auckland industrial precincts of entered into a legally binding
lows, we anticipate continued East Tamaki and Rosebank Road, Development Agreement with
strong investor demand for our and increase the fund’s geographic Queenstown Lakes District Council
new investment funds. weighting within Auckland from (QLDC) in respect to the three
Our focus is on delivering the 66% to 70%. hectare Lakeview development
best sustainable returns for our site in Queenstown. The
investors and this means Augusta AUGUSTA DIVERSIFIED FUND partnership will develop a range
has a robust and rigorous due The Diversified Fund offer is of residential, hotels, co-working,
diligence process. It takes a expected to launch in February co-living, hospitality and retail
considerable amount of time to 2020. The Albany Lifestyle Centre options on a staged basis, with
get the right deals on the table, property is the seed asset, construction estimated to take
and our investment criteria means with one other asset currently more than 10 years and phased
we decline significantly more deals being considered to add further over 7 stages, with an expected
than we accept. Augusta was active diversification. A FMCA licence end value of over $1 billion.
on the due diligence front and a variation will be sought which will Augusta will invest a 25% stake in
number of deals were ultimately not widen the mandate of the Fund. the partnership.
pursued over the past 6 months.
Considerable work is going into the
two new funds prior to launch to
ensure they deliver for investors. In
the case of the upcoming Tourism
Fund, capital has been deployed by
Augusta to invest in the seed assets
and an operator, ‘Radisson Hotel
Group’, was secured for the Man St
property in Queenstown.
focus
8 | Diversification
t
Diversification. It’s an important • Sector (e.g. office, industrial, en
m
ge
investment consideration, so retail, hotels, residential)
na a
what does it actually mean?
ta Fu n ds M
• Location
Diversification means spreading
your investments across • Tenancy mix (e.g.
different assets and asset number, industry)
gus
classes to reduce risk. Not
Au
The upcoming offer for the
r-
putting all your eggs in one
M
rk
ll e
Augusta Diversified Property
a
M ro
ad nt
basket is a common phrase ig a
n, F i n a n c ial
Co
Fund is designed to help investors
for this.
manage property investment
At any point in time, some assets diversification, utilising Augusta’s
may be performing well and extensive experience in acquiring
others may be under performing. and managing commercial real
and office tenants, anchored
If you invest in a group of assets, estate to build a portfolio of
by Mitre 10 Mega with a lease
varying performance levels can property assets with a mix of the
through to 2033. The property is
balance each other out, reducing above factors over time.
well located on a high profile site,
volatility and the impact of
The Diversified Fund’s objective with considerable growth and
unforeseen events. Alternatively,
is to provide investors regular development taking place in the
if you invest in a single asset and
cashflow and the opportunity surrounding Albany Town Centre
something unforeseen happens,
for capital growth by investing in area and good transport links.
the impact could be larger. This
directly owned property, indirect
impact could be positive or A second direct property
property investments* and listed
negative for investors. investment has been identified
property funds*. The Fund also
for the Diversified Fund and is
A diversified investment portfolio intends to generate income
currently under due diligence.
may include assets such as by underwriting capital raises
bonds, shares, property and cash. for property based investment Like all Augusta managed
Investments in property can be funds and schemes. investments, the Diversified
further diversified by asset specific Fund intends to pay distributions
The Albany Lifestyle Centre has
factors including: monthly, providing investors with
been secured as the Diversified
regular income.
• Nature of ownership (e.g. Fund’s first direct property
direct, indirect through investment. This is a $90m More information will be available
managed investment schemes/ mixed-use property in Auckland in early 2020 when the offer is
funds or listed property funds) with 12 established bulk retail expected to be launched.
Direct property Underwriting Co-investment
assets
*Subject to Augusta obtaining a variation of its licence as a MIS manager.
Spotlight Update | 9
Spotlight's flagship store
opening in Christchurch
Augusta have a longstanding from the feasibility stage and on
relationship with Spotlight through the design, consenting,
Property Group (SPG) which procurement and construction
originated with Executive phases using a team of local
Director, Bryce Barnett consultants and contractors.
successfully developing the New Gravitas Consulting are the
Plymouth Spotlight store in the architects, TM Consultants
late 1990s. The relationship have provided a full range of
has continued with Augusta engineering services (structural,
sourcing, acquiring, developing mechanical, electrical and fire) and
and managing the SPG property Calder Stewart Construction are
portfolio within New Zealand. the main contractor.
The latest cause for celebration Following a 14 month construction
is the impending completion period the development is
of Spotlight’s flagship store in nearing completion with the
Christchurch which comprises building’s grand opening due on
almost 9,000m2 of high-quality bulk 11 December.
retail over two levels. Spotlight’s
largest New Zealand store will
occupy the entirety of the top
level and there are two large
format tenancies on the ground
level. The development includes
site works and landscaping with
122 additional car parks situated
between the new store and the
existing Harvey Norman building.
This ties the two buildings together
creating one of Christchurch’s
preeminent bulk retail locations
covering an entire city block and
almost 20,000m2 of land.
Augusta provided development The Development Team (left to right); Stephen Brown-Thomas, Matt Dayman,
Joel Lindsey, Daniel Mahony and Mark Johnston. (Absent - Will Ellison).
and project management services
focus
COVER STORY
10 | Welcoming Two New Directors
WELCOMING TWO
NEW INDEPENDENT
DIRECTORS
BY PAUL DUFFY, AUGUSTA CHAIR
A
ugusta announced With the substantial structural
in October the transformation of Augusta’s
appointment of two business model now complete,
business across multiple sectors in
new independent directors to the Board was focused on adding
both listed and unlisted platforms.
the Augusta Capital Board, a greater depth and diversity
Fiona Oliver and Jonathan Ross. of capability. We are therefore On behalf of the board and the
delighted to have appointed wider Augusta team, I’d like
The appointments were effective
directors of Fiona’s and Jonathan’s to extend a warm welcome to
from October 17th and reflect
caliber. Their experience and Jonathan and Fiona but also
the Board’s move to add further
acumen support our strategy to recognise our current board of
commercial, legal, financial
be New Zealand’s most diverse directors who have contributed
and capital market governance
and respected institutional grade significantly this year to the on-
experience – aligned to the
property funds management going success of the organisation.
ongoing growth and development
of Augusta’s business.
From left: Fiona Oliver and Jonathan Ross.Welcoming Two New Directors (Continued) | 11
FIONA OLIVER
Independent Director
Augusta Capital Board of Directors
Fiona has over 30-years’ we moved out of town, we his love of fishing, although
experience in governance promised ourselves a dog, our his passion from a very young
and business leadership large labradoodle Midas shares age was fly fishing.
and is an experienced our enjoyment of the birdlife, the
As a family, we visit the
board member. carp and ducks in the pond and,
beach as much as possible.
currently, an abundance of spring
She currently holds I was born in Aitutaki, Cook
rabbits (that he can never quite
directorships with Gentrack Islands, and grew up in
catch). He also gets us out and
Group Limited, BNZ Life Northland. Northland is our
about to Riverhead forest and the
Insurance Limited, BNZ “go-to” region but we spend
west coast beaches for his walks.
Insurance Services Limited more time now at Muriwai,
and Tilt Renewables Limited. John and I have two children; where both the kids are
Oliver and Una. Both are volunteer surf life savers. The
She is also member of the teenagers and their main sport is magnificence of the West
Inland Revenue, Risk & water-polo. It’s a fantastic sport Coast continues to amaze us
Assurance Committee and but means plenty of trips to and (and Midas of course).
retired in October this year from the many pools round the
after 10 years as Deputy Auckland area, some very early During the school holidays,
Chair of Public Trust. starts and a lot of time dedicated we camp or hire baches in
Fiona’s governance career to watching their games and Northland in Summer, and
followed her Executive tournaments. Notwithstanding the ski in Central Otago in the
leadership career in the commitment, we wouldn’t miss a Winter. I learnt to snowboard
financial services sector about 10 years ago and
where her roles included thought that once I was
Chief Operating Officer of
As a family, we visit reasonably competent, we
Westpac’s investment arm, could “ski as a family”. We
BT Funds Management, and the beach as much as certainly arrive as a family but
General Manager of AMP
possible. I was born of course the kids are now
NZ’s Wealth Management faster and only seem keen to
business. Fiona brings in Aitutaki, Cook catch up so we can buy them
a specialist knowledge Islands, and grew up lunch. We had a fabulous
of investments and the holiday in Breckenridge,
capital markets as well as in Northland. Colorado, in January this
a deep understanding of year, and were incredibly
regulation and regulatory lucky with the snowfall at
frameworks in commercial game for the world; they are highly night and then sunshine
and corporate law, having exciting and competitive events during the days.
practiced with law firms and the kids love it.
I am looking forward to more
in London and Auckland,
I was a very committed amateur summer-like weather during
including Chapman Tripp
swimmer until I was 15yrs old the Christmas break to swim,
and Russell McVeagh.
and still love to watch all water read, concoct new dishes for
We are a family of four, living sports. Until a few years ago, I the bar-b-q and sit down with
on a one hectare block in participated in Auckland’s Summer delicious salads and movies in
North West Auckland where Ocean swims. Now, I take a the evening. We are walking
we moved several years gentler approach and regularly the Abel Tasman as a family
ago, after having spent all visit the AUT Millennium pools. in January and will spend
of my adult life (when not John was an ocean sailor, originally some extra time in Nelson,
overseas for 10 years) living from the UK and still loves the sea with some more Northland
in central Auckland. When which also allows him to indulge camping later in the month.
focus12 | Welcoming Two New Directors (Continued)
JONATHAN ROSS
Independent Director
Augusta Capital Board of Directors
Jonathan Ross is currently market participants, lawyers and Argentina. I am a once a
a director of the Reserve regulators, and to give lectures year tramper, always in the
Bank of New Zealand, and presentations to judges on South Island. In November,
Marlborough Lines, Oceania the broad theme of the better I tramped 85km of The Old
Health Holdings and resolution of financial markets Ghost Road in Westland with
Rhodes Scholarships in disputes arising out of derivatives three old friends (with whom
New Zealand Limited. and other complex financial I have been tramping for over
transactions. This year, I have given 20 years). Carol and I like to
He is a recognised expert
day-long presentations to judges believe we will forever remain
in corporate, banking,
in Taipei and Shanghai. undefeated at 500. I spend
capital markets, derivatives,
my summers at our family
structured finance and
bach in Turangi. We take
securitisation law. Jonathan
retired from law firm Bell Once upon a time, the boat across Lake Taupo
to the marae at Waihaha in
Gully in February 2011 after I played first class the Western Bays, where for
23 years as a partner. In
June 2011 Jonathan was cricket for a couple of most of the last 20 summers
we have camped next to
appointed as an inaugural seasons, here and the beach for several days.
member of the P.R.I.M.E.
Finance list of experts. in England. A highlight of this year was
raft fishing down the upper
I have been married to my reaches of the Tongariro River
wife Carol, who is from NYC in early March, catching and
I keep myself only tolerably fit
for 37 years. We have 28-year- releasing a couple of dozen
by working out on my rowing
old twins, my daughter is a trout, all caught on a dry fly.
machine. Once upon a time, I
doctor in Tauranga and my son
played first class cricket for a I have just been elected as
works for an American financial
couple of seasons, here and in the Captain of The Royal
markets exchange in London.
England. I was seen just a few Auckland and Grange Golf
Getting the family together is
days’ ago on the bank at the Bay Club. Unsurprisingly, I am a
never easy, but this year we
Oval with some old cricket friends, keen golfer, I just wish I could
will all be together in Auckland
when Watling and Santner put get out more often. I am
for Christmas.
on their record partnership - test particularly proud of my lawn
I currently sit on the cricket does not get much better at our home in Parnell, sown
management board of than that. with the same creeping bent
P.R.I.M.E. Finance, a Dutch grass used on the greens
Once upon a time, I climbed a few
financial services and dispute of the golf club. I mow the
mountains. I still look at my ice
resolution not-for-profit (a lawn with an old Masport
axe, plastics and crampons in our
so-called Stichting), for which Cleveland push mower (which
garage, and imagine that I have
I travel to the annual general may be familiar to some older
one more peak left in me. Not
meeting in The Netherlands readers of this magazine). I
too many years ago, I climbed Mt
(where I can always be seen bought the mower several
Aspiring in the South Island and
in The Mauritshuis in front of years ago off a Christchurch
Mont Blanc from the French side.
The Girl with the Pearl Earring seller on TradeMe who sadly
I have also been seen at 6,000
and The Goldfinch). A couple no longer had a lawn to mow
metres on top of Mt Kilimanjaro
of times a year, I visit various after the 2011 earthquake.
in Tanzania and at almost 7,000
financial centres in the Asia/
metres on Mt Aconcagua in
Pacific region to meet withOur People | 13
OUR PEOPLE
It has been a busy few months behind the scenes here at Augusta and we are
excited to announce the arrival of some new team members. We also welcome back
a more familiar face, Jess Tuki who has returned to the New Plymouth office from
maternity leave.
JESSICA TUKI
Finance Associate
Jess joined Augusta as a Finance Associate in February 2015. Prior to this she has worked
in the Business advisory team at Staples Rodway Hamilton. As a Finance Associate, Jess
oversees the finance and accounting functions for a portfolio of New Zealand based property
Schemes. This includes the preparation of financial statements and annual budgets liaising
with the bank around funding requirements; ensuring all compliance obligations are met; and
assisting in the development and implementation of strategy for each Scheme in her portfolio.
Jess recently returned to the New Plymouth Office from maternity leave.
MELISSA YARROW
Portfolio Associate
Melissa has recently joined the team in the Auckland Office as a Portfolio Administrator.
She has a Degree in Marketing and Commercial Law and has previously worked in the
Banking and Aviation Industries. Melissa’s primary role will be general business and support
for the Asset Management team. This will involve coordinating portfolio functions such as
insurances and valuations, liaising with external parties and assistance with the preparation of
investor correspondence.
CORBIN GIDDY
Summer Intern
Corbin has joined the Augusta team in the New Plymouth office over the University break,
following his third year at the University of Waikato. Currently, Corbin studies a Bachelor
of Management Studies with Honours, double majoring in Finance and Human Resource
Management. Corbin has an interest in property and endeavours to pursue this after
graduating. The key tasks Corbin will be completing while he is here involves an analysis of the
past historical financial performance of funds managed, reconciliation of off-market financial
transactions and the digitizing of these reconciled transactions into Augusta’s Enterprise
Resource Planning System.
TOM REEVES
Summer Intern
Tom has just completed his second year at Victoria University of Wellington studying a
Bachelor of Commerce, Majoring in Finance and International Business. During his early stages
at high school he began trading equites and foreign exchange in New Zealand, Australia and
the United States. Tom has a keen interest in property and likes the idea that it is one of the
few tangible assets that can be added to an individual’s portfolio. The idea of physically being
able to see and touch an investment makes property an ever-growing interest of his. Tom will
be interning in the Auckland Office over the next couple of months, assisting in many different
facets within the business.
ALEX STURMER
Summer Intern
Alex is currently in his fourth year studying a Bachelor of Commerce majoring in Accounting
and Finance with a minor in Economics at Otago University. At present Alex is assisting with
analysing past historical financial performance of funds managed, reconciliation of off-market
financial transactions and the digitizing of these reconciled transactions into Augusta’s
Enterprise Resource Planning System.
focus14 | Tourism
Lakeview
A once-in-a generation opportunity
BY WILL ELLISON, SENIOR DEVELOPMENT MANAGER
These factors come together
so infrequently that we see
Lakeview as a once in a generation The design will be
opportunity and are both proud of international
and excited to be associated with it.
standard in a
THE MASTERPLAN uniquely New
OVERVIEW The project is forecast to be
Augusta, in partnership with delivered in seven stages over
Zealand context.
Melbourne based developer a twelve-year period (following Extensive native
Ninety Four Feet (NFF) and subdivision). It will deliver upwards
Britomart Hospitality Group, has of 100,000 sqm of gross floor
planting and
won a competitive process to area across a range of sectors sympathetic building
develop the former Lake View including residential, hotels, food &
Campsite in Queenstown. beverage, co-working, co-living and
materiality will
As a development opportunity
gallery space. The total completed acknowledge the
value is expected to be well in
Lakeview is of rare quality. The
excess of $1bn.
history of the land.
site commands sweeping views
over Lake Wakatipu and the The design will be of international
Remarkables and is situated standard in a uniquely New Zealand THE OPPORTUNITY
just a few minutes’ walk to the context. Extensive native planting
Augusta has agreed to take a
lakefront and the 150 cafes, and sympathetic building materiality
25% interest in the development
bars and restaurants in the heart will acknowledge the history of
with Ninety Four Feet taking the
of Queenstown. At over three the land. The natural landscape
balance. NFF will also act as the
hectares of developable area, it is and built form are to seamlessly
Development Manager, reporting
substantially flat (unusually so for coexist, with sustainability at the
to the consortium.
central Queenstown). The zoning heart of the design. A network of
of the site is accommodating, and laneways will stitch the precinct into Significantly, Augusta will have a
Queenstown Lakes District Council the neighbourhood and hospitality, first right of refusal to purchase
is responsible for subdividing and retail and art will stimulate a three completed hotels as well as
servicing the land into developable vibrant community for locals and co-living and co-working spaces.
super-lots. visitors alike.Tourism (Continued) | 15
For the Tourism Fund, the first right NINETY FOUR FEET density residential and hotels
of refusal provides an avenue to but have also created affordable
Ninety Four Feet (in case you
acquire well located, large scale housing and co-working spaces.
were wondering: the length
and high-quality investment assets
of a basketball court) are a Their development experience is
which would otherwise be rarely
family owned and operated tailor made for Lakeview, which
traded. This is a key advantage to
property development company, encompasses multiple uses and
the fund, as it underpins its long-
headquartered in Melbourne. will require creativity, flexibility
term growth with prime assets in
and an appreciation of quality
New Zealand’s key tourism market. NFF have a wealth of property
design to realise the true value of
Naturally, we are happy to be able development experience having
the opportunity.
to offer the opportunity to share in delivered hundreds of millions
the success of the Lakeview project of dollars of projects. They have
with our Tourism Fund investors. an enviable track record in high
focus16 | Tourism (Continued)
Radisson Collection Hotel
under construction
BY WILL ELLISON, SENIOR DEVELOPMENT MANAGER
Construction of the Radisson be the first hotel operated by the providing a vibrant social scene for
Collection hotel in Queenstown, group in New Zealand. Radisson guests and locals alike.
began in October on land describe the brand as “a new
Sitting just atop the Brecon Street
owned by Augusta on the generation of iconic properties
stairs, the property enjoys an
corner of Brecon and Man and one-of-a-kind spaces. In our
elevated position above the town
Street. The property will be collection of exceptional hotels, no
centre with uninterrupted views
included as a cornerstone two are ever the same and each
towards the Remarkables from
asset in Augusta’s soon to be has a unique character authentic
even the lowest accommodation
launched Tourism Fund. to its locality.” This approach
level. The vibrant Queenstown
to development resonates with
Radisson Hotel Group (RHG) is social scene is on the hotel’s
us and we are excited to be
one of the world’s largest hotel doorstep, as are the gondola, iFly
working with Radisson to create
operators, with seven distinct and numerous other attractions.
an inspirational, elegant property
brands and more than 1,100 hotels
that acknowledges and connects Over time we expect the location
in destinations around the world.
with Queenstown. to improve further still, as the
Their strength is underpinned
development enabled by Plan
by owner Jin Jiang International The hotel will feature 61
Change 50 continues (most
who operate over 6,000 hotels thoughtfully appointed rooms,
importantly the Lakeview project
in 55 countries. This provides an including studios, suites, corner
described on the previous page),
excellent platform for driving guest suites and a stunning penthouse,
the Skyline Gondola expands
nights, particularly from the key all crafted with a creative design
and council-led streetscape
Asian guest markets. concept that blends contemporary
improvements are implemented.
style with the area’s rich heritage.
Radisson Collection is the premium This pattern of development will
The onsite restaurant will showcase
lifestyle brand of RHG and will ultimately see the existing town
fresh local and seasonal produce,Tourism (Continued) | 17
The hotel will feature
61 thoughtfully centre connect with the Lakeview programming, estimating, interiors
Precinct, with the Radisson and upgrades.
appointed rooms, Collection Queenstown in the
They are passionate about
including studios, prime position to benefit from the
creating amazing spaces for
area’s improvement.
suites, corner suites their clients and love to see
The development is being a project move from concept
and a stunning constructed by local builders to completion and aspire to
penthouse, all crafted Cook Brothers Construction. transform the construction industry
Originally from Dunedin, Cook through innovation.
with a creative Brothers Construction have
Cook Brothers Construction have
design concept that been in operation for almost
strong shared ideals in regards
15 years with regional branches
blends contemporary in Auckland, Canterbury,
to ownership, accountability and
responsibility towards Quality
style with the area’s Southern Lakes and Otago.
and Client Satisfaction with
Their team offers experienced
rich heritage. and specialised services in site,
outstanding results.
project and contract management,
Augusta Tourism Fund
New Investment Opportunity
Early Feb 2020
Expected Launch
20 Mar 2020
Expected Close
Coming$10,000
Soon
Minimum Investment
Mid Feb 2020 18 Mar 2020 $10,000
Expected Launch Expected Close Minimum Investment
The Augusta Tourism Fund, will be established to provide exposure to a portfolio of hotel and tourism sector real estate assets that should benefit
from the future growth and success of New Zealand’s largest export earner, tourism.
Augusta Funds Management Limited is considering making an offer of financial products in New Zealand in the Augusta Tourism Fund. No money
is currently being sought. No financial products can currently be applied for or acquired. The offer will be made in accordance with the Financial
Markets Conduct Act 2013. No indication of interest will involve an obligation or commitment to acquire a financial product. Prospective investors
are recommended to seek professional advice from an Authorised Financial Adviser which takes into account their personal circumstances before
making an investment decision.
focus18 | Asset Plus Update
ASSET PLUS UPDATE
Augusta are management, repositioning and comprehensive demographics
development opportunities can report was procured to influence
currently undertaking a
be secured utilising the expertise and support that leasing strategy.
transformation of Asset
of Augusta, and providing a Concurrently one of the major
Plus into an active, yield unique strategic mandate in the tenants, Countdown, was secured for
plus growth focused fund. listed property sector. an effective 8 year term (exercising
We’ve completed the two consecutive 4 year renewals)
Since taking over management
first material step in this of this entity in April 2018,
providing long-term certainty for
transformational strategy the Centre.
Augusta have placed a strong
with the successful focus on reviewing the existing A number of renewals were also
acquisition of 35 Graham portfolio in light of this newly secured at Stoddard Road, Mt Roskill,
Street ($58.0m) in considered approach; to identify retaining occupancy at this centre
opportunities to restore faith, at 100%.
June 2019.
and add value, to the current
The successful acquisition of 35
The adopted value-add asset valuations. This review has
Graham Street in June was the first
investment strategy provides resulted in the recycling of the
an opportunity to secure major acquisition by Asset Plus under
Hastings Heinz Watties asset
assets capable of benchmark the new investment mandate. The
which is no longer considered
outperformance, whilst purchase provides a strong initial
core (and with potential downside
endeavouring to close the gap yield of 6.85%, with a robust tenant
risk), creating balance sheet
in net tangible assets to the covenant in Auckland Council for
capability for other transactions.
share price. Augusta, as both a 2 year lease back. The property
external manager, and the largest We have also identified a number has considerable opportunity for
shareholder in Asset Plus, remains of value-add initiatives at Eastgate repositioning at the end of the
focused on implementation of Mall in Christchurch, which we are lease term, with a range of options
this strategy to improve returns currently progressing. Significant being considered by Asset Plus.
for shareholders, with a natural work has been undertaken to The development feasibility, and
alignment of interest. This develop a new masterplan for scope of works is well advanced
value-add strategy suits the the centre, with a number of with the business case currently
current low yield, low interest leasing opportunities being being ratified by the Asset Plus
rate environment where active actively pursued. An updated Board. Upon approval Augusta willAsset Plus Update (Continued) | 19
lodge a Resource Consent for
the proposed redevelopment,
in conjunction with production
of marketing collateral. After
an extensive process, Colliers
International have been
appointed as the leasing agent to
pursue pre-leasing opportunities,
which will commence in earnest in
early 2020.
Augusta, and the Asset Plus
Board remain patient and
disciplined in relation to potential
acquisitions. The first half of
this year has seen material due
diligence conducted on two
substantive transactions that
would bring significant scale,
and value-add opportunities
to the Asset Plus portfolio in
accordance with the yield plus
growth strategy. Considerable
The 35 Graham Street transaction • Set a strong platform for sustainable
time has been invested by
has provided a springboard for growth moving forward;
Augusta on these potential
further expansion by Asset Plus.
transactions, which were • Provide an appropriate yield
Our focus remains on securing
complex and of substantial scale, reflective of the value-add, and total
investment opportunities in
demonstrating the wide skillset of return approach adopted.
accordance with the value-add
the Augusta team. Augusta look forward to progressing
mandate to:
Augusta are also actively pursuing these opportunities within the
• Increase the scale of the portfolio
opportunities to create assets, existing portfolio, and the new
(and subsequently reduce the
through disciplined development. prospects - continuing to build on
management expense ratio);
Leveraging our strengths, and the momentum gathered to date.
resources to unearth and respond • Reduce the share price to
to prospective requirements. NTA gap;
focus20 | Augusta Industrial Fund
Augusta
Industrial Fund
It has been another very of East Tamaki and Rosebank
Road, and together increase
busy quarter for the AIF’s geographic weighting to
Augusta Industrial Fund the Golden triangle from 66%
(‘AIF’), both managing to 70%. We consider this to be
the existing portfolio and a real strength of the AIF due to
the Auckland Industrial market’s
growing the Fund. historically low vacancy rates and
g er
In October AIF unconditionally strong rental growth.
a na
contracted to purchase two
FM
new properties; 27-29 Neales FUNDING
AI
d
Rd, East Tamaki and 48 Honan
an
The acquisitions have been Be en
t
nH m
Place, Avondale. The acquisitions funded through a $28 million ar d an a
ge
in g -
H e a d of A s s e t M
take the total AIF portfolio to 11 increase to the existing AIF debt
properties and 49 tenants. facility and will take the loan to
value ratio to 45.4% (from the
Since the inception of AIF, the
current level of 38.0%). This
team has been diligently looking
remains well inside the AIF debt DIVIDEND FORECAST
to identify new assets that
covenant limit of 50%. As a result The current dividend forecast of
enhance the existing portfolio,
of the additional debt funding no 6.50 cents per share p.a. (pre-
particularly opportunities in the
new equity is required to facilitate tax) will be maintained following
high-demand Auckland industrial
the acquisitions. The acquisitions the acquisitions and the Fund’s
market, where vacancy rates
will take the AIF’s total gross Weighted Average Lease Term
are at record lows of c.1.8%.
asset value to approximately (WALT) will increase to 5.5
The properties reviewed for
$341.7m, up from the current years from 5.4 years (as at 31
acquisition have been ones that
level of $299.8m. October 2019).
we would only acquire on the
basis they maintain or increase
the current AIF return forecasts,
The table below details the AIF metrics both pre and post the acquisition
improve the diversification and
of 48 Honan Place and 27-29 Neales Rd.
sustainability of income and
ideally strengthen the weighted Current Post Honan
average lease term (WALT). We Metric
Position & Neales
have reviewed several potential
Assets 9 11
acquisitions, undertaking due
diligence on a number, but Tenants 47 49
we have either withdrawn our Portfolio Valuation $299.8m $341.7m
interest or have not pursued these
Occupancy 99.0% 99.5%
because they do not meet these
key investment fundamentals. Net Income $19.65m $21.9m
Passing Yield 6.55% 6.41%
We are pleased to confirm the
two properties acquired meet WALT (as at 31 Oct) 5.38 years 5.47 years
these core investment objectives. Gearing 38.0% 45.4%
Both properties are located in the
Current Pre-Tax Distribution 6.5% 6.5%
highly sought-after and tightly
held Auckland industrial precincts Golden Triangle Weighting
1
66% 70%Augusta Industrial Fund (Continued) | 21
NEW ACQUISITIONS
27-29 Neales Rd, East Tamaki, Auckland
The purchase price for this property was $25.22m and
settlement took place on 11 November 2019. The current
annual rent is $1.34m + OPEX + GST and there are six and a
half years remaining on the lease with Vulcan Steel.
Vulcan Steel is one of the largest privately-owned steel
distributors in Australasia. There are strategic advantages for
the tenant with this property as they also occupy the site directly
to the rear. The heavy industry zoned property sits in the well-
connected and established industrial hub of East Tamaki, close
to the highly sought after Highbrook subdivision.
The property was developed in 1996 for Vulcan Steel, with
this length of occupation demonstrating the suitability of the
property to the current tenant.
48 Honan Place, East Tamaki, Auckland
The purchase price for this property was $16.65m and settlement took place on 9 December 2019. The current
annual rent is $925,000 + OPEX + GST and there is seven and a half years remaining on the lease with TCI NZ.
TCI NZ is one of New Zealand’s largest plastic injection moulding companies and produces a variety of household
NEW ACQUISITIONS Long-Term Focus:
and service products under the Taurus Products brand. The light industry zoned property is in the growing
Rosebank Road precinct, which has benefitted greatly from the improved connectivity with South Auckland
provided by the Waterview tunnel.
While we are pleased with what
has been achieved to date, we are
constantly on the lookout for new
acquisition opportunities which
satisfy our strategic investment
objectives and strengthen the
overall risk profile of the Fund.
As signalled from the beginning,
the Board’s long-term objective
remains listing Augusta Industrial
on the NZX Main Board. However,
such a decision will not be made
until the Board considers the market
conditions are right and the Fund
is of an appropriate investment
48 Honan Place, East Tamaki, Auckland scale. Augusta Industrial cannot
be listed on the NZX without the
The purchase price for this property was $16.65m and settlement took place
prior approval of the Shareholders
on 9 December 2019. The current annual rent is $925,000 + OPEX + GST
and no guarantee is given that
and there is seven and a half years remaining on the lease with TCI NZ.
Augusta Industrial will be listed. In
TCI NZ is one of New Zealand’s largest plastic injection moulding companies the meantime, our focus remains
and produces a variety of household and service products under the diligently managing the existing
Taurus Products brand. The light industry zoned property is in the growing portfolio through building strong
Rosebank Road precinct, which has benefitted greatly from the improved relationships with existing tenants,
connectivity with South Auckland provided by the Waterview tunnel. careful management of treasury
and interest rate risk, strategic
asset management and investing
capital wisely to refurbish or develop
additional space on existing sites
where possible.
Long-Term Focus:
While we are pleased with what has been achieved to date, we are constantly on the lookout for new acquisition
opportunities which satisfy our strategic investment objectives and strengthen the overall risk profile of the Fund.
As signalled from the beginning, the Board’s long-term objective remains listing Augusta Industrial on the NZX Main
Board. However, such a decision will not be made until the Board considers the market conditions are right and the focus
Fund is of an appropriate investment scale. Augusta Industrial cannot be listed on the NZX without the prior
approval of the Shareholders. In the meantime, our focus remains diligently managing the existing portfolio through
building strong relationships with existing tenants, careful management of treasury and interest rate risk, strategic22 | Technology Investment
KEEPING YOUR
DIGITAL SPACE SAFE
Back in December last year 1. KEEP YOUR DEVICES AND
(scary that it’s 12 months YOUR APPS UP TO DATE
from then already!!) we Updates aren’t just about adding
shared information to help new features (though that is
you safeguard yourself and definitely the most exciting part of
your information via stronger
a g e r.
them!). They’re also about fixing
passwords and better practices vulnerabilities in a device or an app
M an
around your passwords. that attackers could find and use
IT
Unfortunately, with information to gain access to your computers
h,
ug
breaches and cyber-attacks and information.
lo C
becoming more and more d an
What can you do B ren
common, it’s important to know
what else you can do to protect Keep the software on your
Go Long – Long Passwords
your information online. While devices and apps up to date (most
are Safer
there’s no bulletproof method to computers and mobile phones can
The general rule is the longer
preventing an attack, there are a be setup to update automatically
the password, the safer it will
lot of things you can do that will in the preferences - that way you
be. A good start is at least eight
help to lessen the risk. To help, don’t have to constantly check
characters, but for sensitive
we rounded up some practical on them).
accounts such as a bank account,
tips to help keep your personal
2. CHOOSE UNIQUE extend the password.
information safe and secure online.
PASSWORDS
Original Content Only
One Password = One Account – Be Unique
One of the most important Avoid passwords that are common
practices is to never re-use the choices (i.e. 123456, Password)
same password over multiple or passwords that reference
accounts. That way, if a hack personal details (i.e. if you were
does occur and your password is born in 1965 and had a wife called
compromised, only one account Sally, try something different to
is affected. Sally1965). The more removed
from your details, the better.Technology Investment | 23
s3cu_re_Passw^rds 4. INSTALL AN 6. AVOID SENSITIVE
SALTING PASSWORDS Passwords, ANTIVIRUS AND SCAN TRANSACTIONS ON FREE
like food, often need a pinch of FOR VIRUSES REGULARLY WI-FI OR SOMEONE
salt. Spicing up passwords with A virus is a type of malicious code ELSE’S DEVICE
numbers, capital letters and or program written to alter the way It’s good to be careful about what
symbols (@, #, !, etc) can add a device operates and is designed you do online when you’re using a
additional complexity. Consider to spread from one device to hotspot or free wifi, for example if
adding an underscore ( _ ) halfway another. A virus can harm the you’re logging on at a café these
through a word. system software by corrupting or networks are often unsecure.
destroying data. When a network’s unsecure,
3. LIMIT THE PERSONAL anyone can access it and get hold
INFORMATION YOU SHARE What to do of your data.
Scams, fraud and phishing emails a. Install an antivirus program on
all attempt to trick you into giving your computer. If you’re not What to do
away your personal information confident doing this yourself, a. Avoid doing online shopping or
or your financial details - often a computer services company internet banking on free wifi or
by pretending to be a legitimate can do it for you. an unsecure network
business, like a bank.
b. Run it regularly, for example b. If you are using someone else’s
In addition to this, online attackers every week, and clean up any device limit the amount of
can use the information you post viruses it identifies. personal information you access
to your social media accounts as a
way to trick services you trust into 5. BACK UP YOUR DATA 7. TURN ON TWO-FACTOR
providing access to your accounts. Backing up the data on your AUTHENTICATION
devices - by copying it to another, Two-factor authentication is
What to do separate location — is one of the another way that you can help to
a. Stop and check before you give most important things you can do. protect your online accounts from
out any personal information. being hacked. You can choose to
If you’re targeted you may lose
Make sure you know how have a code sent or generated on
access to your computer, phone,
the companies you deal with your device, like your phone. That
or any of your other devices. But
contact you and know what way, even if someone gets access
if you’ve backed your data up you
kind of information they’ll ask to your password (or manages to
won’t lose any of it.
you for. For example, a bank guess it!), if they don’t have your
will never email you with links phone to receive the code they
What to do
to online banking forms and can’t get into your accounts and
ask you to login. If you’re not For important documents (i.e. information.
sure why you’re being asked for documents you don’t want to
information, call the company lose), you can either: What to do
directly to check what they a. Sign up for a cloud-based a. Turn on two-factor
want it for. Businesses are service like Dropbox, OneDrive, authentication for your
legally obliged to only ask for Google Drive, etc and backup important accounts, such as
information they need those documents to the cloud your email, banking and social
b. Check the privacy controls on media accounts.
b. Or grab a USB or external hard-
your social media accounts. Set drive and save a copy
them so only your friends and
family can see your full details
Adapted from a guide published by Cert NZ. Cert NZ is a NZ government team created with the aim of tracking cyber incidents and
improving NZ’s resilience via alerts and advice provided to NZ companies and citizens. For more information regarding how you can
protect your information online visit www.cert.govt.nz.
focusYou can also read
