Property Management Rights - FULLY SUBCRIBED AND NOW CLOSED
Charta Income Fund Limited (CIFL) is in the business of managing a portfolio of over 800 residential properties predominately in greater Auckland. These include freestanding houses, townhouse complexes and multi-unit developments including high rise residential apartments and student accommodation.
Charta Income Fund Limited (CIFL) is in the business of managing a portfolio of over 800 residential properties predominately in greater Auckland. These include freestanding houses, townhouse complexes and multi-unit developments including high rise residential apartments and student accommodation.
It operates through two wholly owned subsidiaries Charta Management Ltd, a company with a 12 year successful track record in residential property management, and World Realty Ltd a licensed Real Estate Agency.
Its objective is to increase the value of the business - and consequently the value if its shares - by increasing the number of properties under management.
Share Offer
In November last year Charta CIFL acquired all the shares in Charta Management Ltd and all the shares in World Realty Ltd, by way of a share offer in which Charta Management Holdings Limited took up part of that offer.
1,600,000 of the shares in CIFL owned by Charta Management Holdings have now become available at the 45 cents per share part paid subscription price Charta Management Holdings paid at that time. This represents 16% of the company.
The unpaid 55 cent portion of the shares can be called at any time within the next three years to provide capital for the acquisition of more management agreements and services. If not called within that time the unpaid portion cannot be called (capital closure date set as 31 August 2015).
This is an ideal opportunity to participate in a company whose business achieves a steady income flow from the management of residential property, growth from the increasing demand for rental space in Auckland, and whose objective is to provide shareholders with a regular quarterly return projected at minimum of 10% p.a.
The company’s preference is for a cornerstone investor who would be interested in taking this significant shareholding in CIFL. However all applications (from potential investors who qualify under the securities Act) to take up all or part of the offer will be considered.
Management
The Board of Directors of CIFL consists of Peter Neven (Chairman and Independent Director), Mark O’Connell (Executive Director), Kerry Hitchcock (Alternate Director for Mark O’Connell), and Kieran O’Hagan (Independent Director). Details of the Board are given on their website.
The Board is responsible for the governance of the business including monitoring the performance of CIFL and approving all investments and divestments to be made by CIFL
CIFL through its Executive (Mark O’Connell and Kerry Hitchcock) manages all aspects of the company and its subsidiary businesses. No separate management structures exist between CIFL and its executive management.
Subsequent to the sale of the shares on offer, interests associated with the management will hold 20% of CIFL
Returns
CIFL has multiple income streams with the majority coming from the contracted Property Management Fee which is an ongoing fixed percentage of the rent collected from the tenants.
Other income streams are the annual Administration Fee paid by the property owner, the Maintenance Fee being a percentage of the cost of repairs and maintenance work undertaken, and a Body Corporate fee for administration of body corporate affairs.
Letting Fees are charged to the tenant for work around the initial tenancy and is equivalent to one week’s rent.
Income from Real Estate activities include commissions earned from the sale of property on behalf of the owner.
The objective of CIFL is to pay a minimum pre-tax 10% p.a. dividend on the amount of issued and called capital each quarter. The first of these was paid on 17 May 2013 (at 10% p.a.) and further dividend payments are scheduled for 23 August 2013 and 22 November 2013.
Financial Results
In the two financial years prior to their acquisition by CIFL, Charta Management and World Realty together showed revenues of $1.7 million and $1.9 million for the years ending 31 March 2011 and 2012 respectively. The part amalgamated result for the year ended March 2013 was just under $2 million.
Because of the change in the business structure it is difficult to compare the past and projected earnings; however for the year to 31 March 2014 CIFL revenues are predicted to be $2 million with earnings before tax of $1.25 million (excluding any expansion of the business through new portfolio acquisitions).
The audited pre-tax and distributable profit for the 4 months to 31 March 2013 (settlement of the purchase of CML and WRL occurred on 30 November 2012) was $225,400 and the company paid two thirds of this to shareholders giving them the 10% return on their called capital predicted at the time the news shares were issued.
Investment Strategy
CIFL’s objective is to be a long term investor in residential property management services and the associated real estate business.
At least every three years the Board will carry out a strategic review of the business following which shareholders will be able to consider alternatives which could include:
- Continuation of the existing organic growth strategy in which property owners increase the number of properties owned and therefore the number under CIFL’s management.
- The expansion of the business by the acquisition of other property management services.
- The outright sale or partial sale of the business.
- The merger or acquisition with a similar minded business.
- Further recapitalisation of the business for further acquisition or growth.
Further information regarding the offer is contained in an Information Memorandum available on request. Simply reply to this email or call me for a copy.
For a copy of the Information Memorandum email or call me on +649 307 3257 or +6421 902 901
The above investment is not an offer of Securities to the Public and is available only to eligible investors as defined by the Securities Act, or those excluded from the Offer provisions of the Securities Act. It is intended for distribution only to selected people to whom, under the relevant laws, it can be lawfully distributed. It cannot be distributed in any other jurisdiction, or to any other people. Its is not offers or solicitations in any jurisdiction in which such offers or solicitations are not authorised, or in which the person making such offers or solicitations are not qualified to do so, or to any person to whom it is unlawful to make such offers or solicitations. Any representation to the contrary would be unlawful. No action has been taken by any person that would permit a public offering in any jurisdiction where action for that purpose would be required.
Cheers
JP
John Paine B.Sc., Dip BIA
TBK Capital Limited
Level 15, BDO Building
120 Albert Street
Auckland 1010, New Zealand
Phone +64 9 307 3257
Fax +64 9 309 4519
Mobile +64 21 902 901
Email john.paine@tbkcapital.co.nz
For more information, please click the contact button below to send us a message.
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