Augusta first-half profit halves on revaluations; tilt to funds management continues
By Paul McBeth
Nov. 13 (BusinessDesk) - Augusta Capital's first-half profit more than halved as the company wrote down the value of its
stake in listed property investor NPT and didn't repeat year-earlier valuation gains as the firm continues its shift
into funds management rather than direct property ownership.
Net profit fell to $2.3 million, or 2.58 cents per share, in the six months ended Sept. 30, from $5.2 million, or 5.97
cents, a year earlier, the Auckland-based company said in a statement. That included a $1.8 million writedown in the
value of its 19 percent NPT stake, which it built up to secure control of the firm's board earlier this year, while the
year-earlier period was bolstered by a $3.2 million gain in the value of its property portfolio.
Excluding fair value changes, Augusta's adjusted funds from operations slipped 2 percent to $3.9 million as gains in
funds management fees weren't enough to offset increased corporate and funding costs and lower rental income.
"Revaluation gains going forward will not be a primary driver of growth. This is being actively replaced by earnings
derived from funds under management," chair Paul Duffy said in a statement. "This transformational period will generate
some expected earnings volatility, but the current market environment is creating opportunities to further progress the
Augusta diversified into funds management and property syndication, where it saw greater benefits from generating
recurring fees rather relying on rental income. The firm has almost completed its shift away from direct property
ownership with the three remaining Finance Centre properties due to settle over the next 18 months.
Chief executive Mark Francis told BusinessDesk that staggered settlement was intentional, avoiding the problem of having
$100 million hit Augusta's balance sheet and come under pressure on how to reallocate those funds. Instead, Augusta will
use that capital to seed new investment opportunities as they arise.
"We view our balance sheet as an assembly line - it's a warehousing facility to secure the assets, wrap the bow around
it in whatever shape or form, and then out the other end they go into the end investor's hand into whatever vehicle is
appropriate for that assets," Francis said. "The strategy is a broadening of or diversifying the types of offers we put
Augusta has traditionally focused on single-asset syndicates, but after the success with a multi-asset value-add fund
launched last year has encouraged the firm to look at different types of offers, which are expected to launch in the
next six-to-12 months.
The board declared a second-quarter dividend of 1.375 cents per share, payable on Dec. 1 with a Nov. 27 record date.
The shares last traded at $1.045 and have gained 6.9 percent so far this year.