Asset Plus, the NZX listed business managed by Augusta Capital owned by ASX-listed Centuria Capital Group, has launched a $60 million capital-raising offer to undertake a big North Shore development.
Institutional investors said this morning the offer had been expected for some time and followed the withdrawal of a $100m capital raising plan this year.
The pulled $100m scheme and the latest $60m offer are so the company can afford to develop a big Albany block for around 1200 people, a building to become Auckland Council's northern service centre.
"Asset Plus announced a $100 million equity raising in March 2020, which included funding for the Munroe Lane development but, given global volatility and uncertainty at that time, this offer was withdrawn and the shareholder meeting to approve the offer and the Munroe Lane Development that had been scheduled for 31 March 2020 was cancelled," the company said today.
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Investors said the lower $60m sought was "certainly a better bite-sized capital raise", indicating more of an appetite for the new deal than the old.
Bruce Cotterill, Asset Plus chairman, said the company had clear objectives to increase the scale of its portfolio.
"The equity raise, along with the restructuring of our bank facility, is expected to provide the necessary funding to complete the Munroe Lane development and deliver on those objectives," Cotterill said.
Mark Francis is Asset Plus managing director and holds the same position at Augusta.
A shareholder meeting is planned for 2pm on September 29 to approve the development.
Major shareholder Augusta supports the development and will take all its entitlement and its pro-rata portion, increasing its shareholding from 18.85 per cent to 19.99 per cent.
Just before Christmas last year, the company announced it had struck a deal with the council, to be the anchor tenant, agreeing to lease nearly two thirds of the total office net lettable area of 15,900sq m on a 15-year lease from completion in December 2022.
The site is behind the Mega Mitre 10 off Oteha Valley Rd near Westfield Albany and the council specified it needed to be near key transport links when it moves staff into the new premises.
Mark Gunton of NZ Retail Property Group said he had bid to get the council to shift to his Westgate project on the northwest fringes but instead the council picked Albany.
Asset Plus bought the site on December 2 last year for $7.25m and it estimates the project will cost about $120m.
Building work is due to start in November, and the company hopes to have the project finished by late 2022 "under the agreement to develop and lease with Auckland Council".
Talks have been held with Australian-headquartered builder Icon, working on The Pacifica apartment/hotel block. An early contractor involvement agreement was awarded to Icon.
About 39 per cent of estimated construction cost to completion were fixed last month. Around 80 per cent are anticipated to be fixed at the time of award of the construction contract.
Augusta Funds Management and its specialist development team will oversee the development.
The council has signed an initial 15-year lease, commencing on completion of the development, with two six-year rights of renewal over 63 per cent of the net lettable area, Asset Plus said today.
Asset Plus owns the council's existing service centre at 35 Graham St in the CBD.
Its shares are trading at just 36c, down from more than 60c in January.