Coronavirus and the tourism downturn have stalled $70 million plans for Queenstown's new Radisson Hotel and the conversion of an Auckland building into a budget sleeping pod hotel.
Augusta Property, which manages $1.83b of property assets, told the NZX today both projects were now on hold. It has so far spent at least $22.1m on the two ventures whose futures now appear uncertain.
The biggest is the planned Radisson on the corner of Man St and Brecon St in Queenstown. Augusta bought the property two years ago for $12.9m but said that by March 31, its fair value had fallen to just $9.9m.
A 5-star, luxury hotel was to rise and to be operated by Radisson Collection under a 15-year deal. Today, Augusta said: "Due to complete in early 2022, has been deferred."
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Augusta has a third tourism venture: the planned Lakeview hotel/residential Queenstown project with Australia's Ninety-Four Feet and the Queenstown Lakes District Council.
The business said today: "Augusta has made a $14m commitment to the partnership. Stage 1 due to complete in 2025."
It forecast a $2m to $3m expenditure in 2021 and 2022 on Lakeview, "relating to its share of development costs over this period". It gave no update on whether that project would also be deferred.
Last year, Augusta said it had contracted Christchurch-headquartered Cook Brothers Construction to build the 7500sq m five-level boutique hotel on a former housing site at 17-19 Man St, three blocks back from the lakefront in the centre of the resort town.
Mark Francis, Augusta managing director, said then: "This will be the first Radisson Collection hotel in New Zealand, as well as one of two initial seed assets for the Augusta Tourism Fund."
Plans are to open the hotel by early 2022 and Francis said Queenstown was an obvious choice.
Now, those plans are up in the air.
In Auckland, Augusta had bought the office building on the corner of Nelson St and Cook St, former premises of Newstalk ZB. Construction work was nearly finished to convert that into a Jucy Snooze budget hotel in a project due to be finished shortly.
"Re-development was due to complete in September but has now been deferred due to current market conditions and the impacts of Covid-19," Augusta said in today's market presentation.
Augusta gave no new date for the project's completion but said that by March 31, it had incurred $9.2m development expenditure on the new Jucy Snooze and the project had a sunset date for completion of May next year.
Augusta had already announced it that due to the pandemic, the Augusta Property Fund offer was withdrawn from the market because the board said statements about that were no longer correct.
It forfeited a $4.5m deposit on its ditched purchase of the Albany Lifestyle Centre for the planned Augusta Property Fund, but got an extension on settlement on a second property intended for that same fund. But if Augusta doesn't settle that second deal, it stands to lose another $4.4m. That new fund offer is to open in July, with settlement of Hamilton's Anglesea Centre on September 30.
On its outlook, the listed business said it would "continue to target new opportunities, albeit in a tougher market environment."
Local and overseas investors still wanted good assets. It said it was still focused on a project for Auckland Council at Munroe Lane, Albany, where it has committed to build the new service hub for thousands of council staff. That deal is by related party and fellow-listed company Asset Plus.
Earlier this month, Augusta announced it had raised $45m new capital. It was trading at $1.92 in February but today is around 69c.