Asset Plus AGM: second capital raise attempt indicated after $100m try withdrawn

Asset Plus needs to build for about 1200 people at 6-8 Munroe Lane, Albany. Photo / supplied

Listed property investment specialist Asset Plus didn't pay shareholders their final quarter dividend because of the pandemic but it is considering raising new capital - except perhaps not the $100 million it asked for in March, then ditched.

The company held its AGM in Auckland yesterday at Link Market Services in the BNZ building, Queen St.

Stephen Brown-Thomas, the development manager, said about 40 people went.

Shareholders were to get 3.6 cents a share for the year to March 31, 2020 but without the last quarter payment, that amount fell by around 25 per cent.

Dividends have been reinstated for the first quarter of the March 31, 2021 year. The first dividend is due to be paid around August 12.

In an investor presentation yesterday, Asset Plus said the pandemic had provided material future uncertainty in the real estate market.

The business is the smallest real estate specialist listed on the NZX. Managed by Augusta, it only owns four properties valued at $142m, has 71 tenants and is 34 per cent geared.

Shares are trading around 36c.

It owns Christchurch mall Eastgate, a bulk retail property in Stoddard Rd with a Warehouse, the Auckland Council service centre at 35 Graham St where it planned to add a further three levels and an empty site at Munroe Lane, Albany, where Auckland Council has struck a deal with it to build the new northern service centre.

Shareholders heard yesterday how values fell lately.

"The investment property portfolio materially reduced in value by $19.1m as at March 31. Rental abatements and relief applied to the April to June 2020 quarter has
impacted operating earnings by $590,000, equivalent to approximately 4 per cent of the current annualised gross rental income," the company said.

Most rental abatements are now agreed and all key tenants are back on full rent. But regular monitoring of smaller retail operator performance was continuing.

This lost revenue will be partially offset by the reintroduction of building depreciation in the next financial year.

Augusta, a related party, manages Asset Plus but is being taken over by ASX-listed Centuria Group. A shareholder yesterday asked what would happen to the manager and was told that the manager would be Centuria once the takeover was completed.

Chairman Bruce Cotterill addressed the meeting, then Brown-Thomas talked to the investor presentation.

"We didn't get too many questions, but we got comment from people about the dividend with different positions on the importance of dividends to them. People were split on this topic," Brown-Thomas said today of the event.

"We also had a question around the future equity raise and growing and how much it would be. We were seeking $100m [in March] but the chairman said it would be less this time," Brown-Thomas said.

"People recognise that to grow the company we do need equity, we can't do it on debt alone," he said.

The investor presentation said Asset Plus is buying land at Kamo in Whangarei for $2.1m in a deal due to settle tomorrow.

"That's a long-term pipeline redevelopment opportunity, highly visible site, which is zoned industrial but has a multitude of higher and better uses. We have identified the council has in their long-term plan the proposal to put a roundabout on state highway one which makes this site highly accessible in the future," he said.

At 35 Graham St, the company might not build as much as initially planned - doubling the building's size: "The property provides options for reduced scale redevelopment," the investor presentation said.

Brown-Thomas said: "The preferred option is a full-scale redevelopment adding three levels to create a 20,000sq m building. But that is subject to sufficient tenant pre-commitment. The second option if we don't get sufficient pre-commitment is to refurbish the existing building of 10,000sq m so rather than add three floors, we'll strip off the facade and do up the building."

A third alternative was to give it "a very light touch refurbishment and lease it as-is, where-is, he said.

At Munroe Lane, Asset Plus plans a $140m development but it said last week it had extended the funding timeframe on that project. Its also needs shareholder approval to go ahead - and more capital for such a small business to undertake such a big development.

Conditions had to be fulfilled by July 31 but those are now extended until October 30.

Icon Construction has been appointed to build on the site behind the Mitre 10 MEGA. Shareholders heard yesterday of Icon's appointment.

Investors were told Asset Plus had big plans: "We remain committed to securing growth opportunities for Asset Plus to continue to execute the full transformation of the company."