Augusta first-half earnings drop 26% as year-earlier syndication deal washes through

Tuesday 17th November 2015

Augusta Capital reported a 26 percent decline in first-half earnings as a year earlier gain from a syndication deal wasn't repeated and the listed property investor and fund manager predicted volatility in funds management returns.

Distributable earnings, which strip out unrealised movements in the value of the property portfolio, dropped to $2.66 million in the six months ended Sept. 30, from $3.6 million a year earlier, the Auckland based company said in a statement. Funds management net revenue dropped 24 percent to $4.57 million, with Augusta reaping a "significant boost" in the prior year when it completed the syndication of the Victoria Dock building in Auckland.

"Earnings from the funds management business will, as previously indicated, have some volatility," managing director Mark Francis said.

Offsetting that was a 46 percent gain in investment property net revenue to $3.34 million. Net profit rose 88 percent to $7.24 million, or 3.04 cents per share, including a $3.78 million gain on the value of its investment properties. Gross revenue increased 3.7 percent to $10.4 million.

"Augusta continues to reshape its direction from a pure property ownership company to a more diverse funds management business," Francis said. "The objective is to better utilise capital resources to generate income from a range of property related activities."

Last year, Augusta bought property investors KCL Property and Investment Property Titles for a combined $15.4 million in cash and scrip, giving it about 165 properties to manage, with some $1.1 billion in funds under management.

Augusta's occupancy rate was 99 percent as at Sept. 30, up from 94 percent six months earlier, with a weighted average lease term of 6.8 years. The portfolio was valued at $86.5 million at the balance date, and since then the company bought an Auckland building for $16.5 million.

The board had already declared a second-quarter dividend of 1.25 cents per share which was paid on Nov. 13.

The company said second-half earnings will be bolstered by its pipeline of property syndications, which it expects to complete in the financial year.

The shares last traded at 97.5 cents and have increased 0.5 percent this year.

BusinessDesk.co.nz

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