Thursday 24th November 2011 1 Comment
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Kermadec Property Fund, which owns five commercial properties in Auckland, will pay up to $7 million to bring its management contract in-house and acquire the funds management business of manager Augusta Funds Management.
The Auckland-based company will pay $5 million to buy out Augusta’s management contract and purchase the funds management business, with additional earn-outs of up $2 million if certain forecasts are met, it said in a statement.
The purchase will be funded by debt, and the deal will be put to shareholders with an independent appraisal report and notice of meeting in January.
“This transaction will re-position Kermadec as an integrated property funds management business, with an ongoing focus on direct property ownership as well as the creation of new managed funds,” the company said.
The announcement comes almost three weeks after Kermadec announced a 27 percent fall in distributable earnings to $1.9 million for the six months ended Sept. 30, as a smaller portfolio brought in reduced rental income. The property investor made a first-half net profit of $611,000, turning around a loss of $6.8 million in the same period a year earlier when it had to account for changes in the tax treatment of depreciation.
Kermadec paid the manager $275,000 in the six month period, down from $297,000 a year earlier. The manager’s base fee is 0.55 percent of gross asset values, with a performance fee based on distributions to shareholders relative to changes in the share price.
The stock was unchanged at 61 cents and has gained 13 percent this year.
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