Centuria board to decide whether to proceed with Augusta deal

The hi-tech head office and manufacturing facility of natural medicine supplier Health World at 741 Nudgee Rd, Northgate, was acquired by Augusta Capital.

Centuria Capital’s board will meet on Tuesday to determine whether it will proceed with its $174m acquisition of the New Zealand real estate funds management business Augusta Capital.

Centuria, which earns money from management fees and dividend payments from its funds, agreed in January to buy what is one of the largest listed real estate platforms across the Tasman.

At the time, the group tapped the market to help fund its acquisition through Moelis and UBS, launching an $80m placement, with the remainder funded by cash and scrip.

The company’s cash-or-scrip bid for Augusta involved shares being offered at $NZ2 each.

Centuria had already locked up just over 36 per cent of the stock with existing investors. But as of Friday, Augusta’s share price was $NZ1.45.

The understanding is that the transaction will be discussed at Centuria’s board meeting on Tuesday, with the company consulting legal experts as to whether there are any loopholes in the agreement whereby it could abandon its takeover plans.

It is understood that the time frame for deal completion was extended beyond March 31, as Augusta launched its new tourism fund.

Sources close to Centuria said the Augusta transaction contained “all the normal clauses” surrounding market disruption and that the company remained positive on the business itself, given its similarity to Centuria and its strong management team.

But the challenges were around the global COVID-19 pandemic and the impact on the economy.

Centuria’s shares have fallen from $2.76 last month to $1.79 on the back of the COVID-19 crisis, although last week, investor ESR increased its interest in the business to 19.9 per cent.

Its market value is $891m and it has $210.8m of borrowings.

The real estate sector has experienced unprecedented movements in its share price, with some stocks seeing their share prices change direction by 40 per cent in two days.

Property fund manager Charter Hall, which operates with a similar model to Centuria, has seen its shares almost halve since last month.

Other shopping centre landlords are being hard hit, with Scentre and Vicinity Centres both seeing their share prices lose more than half their value since February.