Augusta (AUG) - Was Kermadec Property (KPT)

This looks like Son of Chase ?
http://www.nzherald.co.nz/business/n...ectid=10587963

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Originally Posted by COLIN

I'm with you f.p. on that. NAP is another one in that category. While I acknowledge that some of these particular property trusts may not have the most attractive of properties (unlike APT, for instance) that factor is built into the price and the PIE yields represent a darned sight better proposition than the yields obtainable from a lot of second-tier finance companies around. I think a lot of the reason for the depressed price of some of these trusts is a follow-on from the price slides we have witnessed in LPT's in Australia, where some highly leveraged ones have come unstuck, e.g. Centro Properties.
I was reading an interesting piece today regarding property PIES, which pointed out that maximisation of the tax depreciation shield is one of the main drivers of value under the PIE regime. The aim of the game is to "write off" as much as they can before the corporate tax rate is reduced to 30%.

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Personally I don't like APT, only because I don't much like office buildings. They date, cost a fortune to upgrade - often seem to be in a state of oversupply, and are never purchased at good yields. They are good for the egos of company directors, but little else. Give me a single story grubby old retail building, factory or warehouse anyday - 4 walls and a roof. Having said that - the add one doesn't hurt, and most of these companies do hold a few.

KPF is now Augusta (AUG) after internalising the fund manager. Still small, but looking much more interesting, with the added benefit of management earnings from property syndication providing low-capital growth. Plus the Metroclean, commercial cleaning arm that appears to have come via Augusta and was started in 2010. Currently with 30 commercial cleaning contracts and eps positive.

Still another $2m to pay from 50% of management fees on new syndications. Current management fees of $707k per annum.

From AGM presentation today:

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Funds Management earnings tracking significantly ahead of best case forecasts for the FY2013 financial year.

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AUG spiked to 89cps today - has been a good performer since my last post when it was approx 72cps.

The recent full year result was boosted with fee income from 3 property syndications plus growth in rents. A revaluation gain was also booked on property. Distributable profit up 37% to $4.97m, equivalent to a little over 6cps, although divs total only 4cps - perhaps due to the amounts required for contingent consideration payments for the fund manager acquisition.

Two more property syndications under way this year, so a fair chance they can achieve a similar result in FY14.

While we continue with low interest rates and conditions ripe for asset bubbles, then it seems likely that those entities who can benefit from investor fees will do well. AUG is one of only a handful on the NZX that I can think of in this position.

Interesting announcement out from AUG with acquisition of KCL Property Ltd and Investment Property Titles Ltd (IPT). At least superficially, it appears a good deal with a huge increase in FUM (from $350m to $1.2bn) for only $10m in cash and $5m in scrip (7.14% of issued capital). Scrip to be issued at 80cps compares well to recent price of 76cps (yesterday's close).

Low gearing maintained (post completion of Bunnings Silverdale syndication) of 37%, improved geographical spread with australian property included, increasing dividend to 5.0 cents per annum. Also a new property fund joint venture with Bayley's to offer a range of new listed and unlisted property funds.

All looks like a good deal at this point.

Big pay day coming at $2 a share

ummm - impact on apl shares? what do you think winner69?

Another takeover bid thats looking iffy?