Augusta Capital has unconditionally purchased a Wellington industrial property as a seed asset for a new industrial fund that is expected to initially raise between $50 million and $70m of equity when it launches early next year.
Augusta bought the property in Seaview, Wellington for $44.9m and is currently investigating and undertaking due diligence on several Auckland-based industrial properties, it said in a release to the stock exchange.
"It is the company's intention to initially acquire and hold the asset on its balance sheet and to then use the property as a seed asset for a new open-ended industrial fund," managing director Mark Francis and chief operating officer Guy French-Wright said in the release.
Augusta has gradually diversified into funds management and property syndication, where it saw greater benefits from generating recurring fees rather relying on rental income. Augusta Capital will underwrite $35m of the fund's initial equity raising and is working with a consortium of high net worth private investors to underwrite the balance. It will be its first open-ended, unlisted multi-asset fund.
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"The establishment is consistent with the previously identified strategy to broaden our funds management offerings to appeal to a wider range of investors and to give existing investors more choice," said Francis and French-Wright.
Augusta expects the industrial fund's initial offering to be open by the start of February 2018 ahead of a settlement for the new fund at the end of March 2018.
It will provide more detail once the timing is confirmed.The purchase of the Wellington property - ahead of the establishment of the industrial fund - will be funded by a mixture of cash reserves and bank debt from ASB, it said. The settlement date is December 20.
The property has a net lettable area of approximately 32,600 square members and major tenants include Peter Baker Transport, Toll Logistics, Downer, Fujitsu and Jets Transport, with a weighted average lease term of 5.7 years.
The shares last traded at $1.04 and have gained 6.7 per cent this year.