Auckland property developer and investor Mark Francis admits he took a big personal financial risk buying a substantial block of Warkworth land revealed yesterday to have been sold for $37 million.
However, he talked down any potential conflict with the listed property companies he's involved with.
Francis is managing director of Augusta Capital, taken over by ASX listed Centuria Capital in a deal worth around $169m and recently delisted. He is also managing director of NZX-listed Asset Plus which Augusta manages.
Yesterday, he said a company he wholly owns had sold 39ha of Warkworth land on the town's north-western fringe to an unnamed party but described the risks he took as high.
"Buying bare land and rezoning it is speculative and at the higher end of the risk curve and was certainly not something that Augusta had a vehicle suitable for at the time I acquired it," he said, referring to the purchase being about four years ago.
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GP (Turnstone Capital) had the Stubbs Farm rezoned from future urban to residential which he said would allow a medium-density development of around 700 homes to be built there.
Asked if his own private company should be buying land when he had headed two NZX listed companies which specialised in real estate, he said: "I bought it years ago before we even had control of Asset Plus and it was disclosed too and signed off by the Augusta board at the time I bought it. I didn't compete with any Augusta entities, as we've not done land rezones."
Last year it was reported Augusta was looking to buy Warkworth land and start a new fund developing residential subdivisions.
Francis yesterday said that was correct.
"We looked at it. Augusta was going to buy it from me. I was going to stay in for say 20 per cent to use as the seed asset for our residential development fund but then the Centuria deal came along and it got pushed to one side.
"I was also mindful of the public perception of me selling it into an Augusta fund, even though the board supported it conceptually," he told the Herald.
Michael Midgley, Shareholders Association chief executive, was approached for comment on the events over the Warkworth land. He referred to the price Asset Plus is trading at, having fallen from 64c in January to around 35c today.
"Given the fact that Asset Plus has halved in price lately, shareholders might be saying he should spend more time managing that."
Midgley said now that Augusta was delisted, shareholders would no longer meet and could ask no questions about the Warkworth deal.
Auckland Council said 99ha of land at Warkworth had been rezoned from future urban to a mix of business and residential zones. This would provide for approximately 1000 to 1200 dwellings, 13ha of industrial/commercial land and a new neighbourhood centre of 3000sq m," the approval said.
Turnstone notified its application last May.
The council received 44 submissions. Warkworth is earmarked for an extra 20,000 to 25,000 people so demand will rise in the area for new housing.
Opponents raised concerns about the proximity of the land to farmed property "potentially restricting farming activities" and generating complaints.
A resident of Viv Davie-Martin Dr said their house was on the south-western boundary of the land subject to the rezoning application and they raised concerns about transport linkages and roading.
Asset Plus chairman Bruce Cotterill today announced the appointment of John McBain as a non-independent director.
McBain is the joint CEO of the Centuria which owns Augusta which is also the largest shareholder in Asset Plus. He replaced Paul Duffy as the manager's nominated representative on the board.
On September 1, Asset Plus said its property portfolio valuations had risen from $142.05m in March to $153.4m at the end of August.