Archive | Securities – NZ

PFI lifts guidance on valuation gain

Property For Industry Ltd upgraded earnings guidance yesterday on an expected $44 million (3.8%) portfolio valuation increase to $1.21 billion.

The NZX-listed industrial property landlord began the year with a portfolio of 84 properties valued at $1.083 billion, acquired 9 more for a total $84 million and sold one for its $12 million book value.

Independent valuers CBRE, Colliers International, JLL & Savills carried out the valuations, which remain subject to finalisation & audit.

PFI chair Peter Masfen said a driver of the valuation gain was the leasing of nearly 88,000m² – 12% of its portfolio. The company secured 24 new & existing tenants for an average term of 5.5 years. Half the contract rent was secured by lease renewals with 9 existing tenants for an average term of 4.3 years. The average term for the 15 new leases was 6.4 years.

Mr Masfen said the company had also completed a series of important strategic initiatives during the year, internalising management, adding to the portfolio and making rights & bond offers.

“These factors have combined to allow us to increase guidance for full-year distributable profit from 7.7-7.9c/share to around 8.0c/share. Guidance for full-year cash dividends totalling 7.45c/share is unchanged.”

PFI will release its full-year results, including the final valuation, on Monday 12 February.

Attribution: Company release.

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Kiwi Property sets bond rate, settles Majestic sale

Kiwi Property Group Ltd has set the interest rate for its $125 million issue of 7-year fixed-rate senior secured bonds at 4.33%/year.

The offer closed yesterday and trading in the bonds will open on Wednesday 20 December.

S&P Global Ratings has assigned an issue credit rating of BBB+ to the bonds.

Majestic sale settled

Kiwi Property said on Monday it had settled the $123.2 million sale of the Majestic Centre in Wellington to Investec Property Ltd, as the responsible entity for the Investec Australia Property Fund. Kiwi Property will continue to manage the building for Investec.

Earlier story:
15 November 2017: Kiwi Property sells Majestic to Investec fund

Attribution: Company releases.

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Augusta buys Wellington property as seed for new industrial fund

Augusta Capital Ltd has unconditionally bought an industrial property in Wellington as a seed asset for a new open-ended industrial fund.

Augusta managing director Mark Francis said on Monday the company had bought the Hub industrial park in Seaview for $44.9 million. It covers 4.06ha at 17 & 25 Toop St, 101-103 & 109-117 Port Rd, Seaview, and has a net lettable area of 32,600m² of warehouse & office. Tenants include Peter Baker Transport, Toll Logistics, Downer, Fujitsu & Jets Transport and the weighted average lease term is 5.7 years.

Recent seismic strengthening was completed to lift all buildings above 70% of new building standard. The purchase price of $44.9 million reflects a 7.46% passing yield following completion of those works.

Settlement date is next Wednesday, 20 December.

Mr Francis said Augusta would fund the acquisition by a mixture of cash reserves & bank debt from ASB.

He said the company was also investigating & undertaking due diligence on several Auckland industrial properties and expected to launch the industrial fund in the New Year with a mixture of Auckland & Wellington stock, but with a weighting towards Auckland.

Augusta expects the fund to initially raise between $50-70 million of equity. Augusta will underwrite $35 million of that and is working with a consortium of high-net-worth private investors to underwrite the balance.

It will be Augusta’s first open-ended unlisted multi-asset fund (as compared to the closed-end Value Add Fund & single-asset funds): “The establishment is consistent with the previously identified strategy to broaden our funds management offerings to appeal to a wider range of investors and to give existing investors more choice, in addition to our typical offerings of single asset syndications. It will also assist in providing further recurring management fee income at a meaningful level.”

Augusta expects the fund’s initial offering to be open by the start of February, with settlement at the end of March.

Attribution: Company release.

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Ryman to turn Karori campus into retirement village

Ryman Healthcare Ltd said yesterday it planned to convert a landmark Wellington site into a new retirement village.

Ryman, New Zealand’s largest retirement village operator, has bought Victoria University of Wellington’s former Karori campus, which will be converted into a retirement village with independent & serviced apartments & a care centre.

Group development manager Andrew Mitchell said: “It is an iconic site in the city’s largest suburb, and we’re pleased it will continue to be a significant community asset for the city.”

Victoria’s vice-chancellor, Professor Grant Guilford, was also pleased with the outcome: “We have listened to a wide range of varying views about what should happen to our former campus. The divestment process has provided all parties, whether they are public, community or private, to put forward the most practical, beneficial & realisable options for future use of the campus land & buildings. On balance, we believe Ryman Healthcare has the community focus, professionalism, experience & resources to make the best use of the campus land & buildings.”

The university built the Karori campus to cope with the large numbers of ‘baby boomers’ in tertiary education in the 1960s.

Ryman already owns & operates 5 retirement villages in the Wellington region which are home to over 1750 retirees. It has 31 retirement villages in New Zealand & Australia.

Attribution: Company release.

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Smiths City opens in 2 ex-Furniture City outlets in Auckland

Christchurch-based & NZX-listed furniture & appliance retailer Smiths City Group Ltd opened its first 2 stores in Auckland yesterday, in former Furniture City outlets at Mt Wellington & Wairau Park.

The group has 33 other stores, plus 3 clearance outlets. It had already established itself in the lower North Island and had 4 stores in the Bay of Plenty before acquiring the Furniture City outlets in Auckland and another in Whangarei.

Chief executive Roy Campbell said the Whangarei store, which opened in September, was already trading 17% ahead of a year ago, when it was part of Furniture City.

Mr Campbell said Smiths City was rolling out its ‘live better’ livery, developed in response to changes in the retail market including online shopping: “The rise of online shopping has resulted in much greater price transparency & significantly intensified competition.

Traditional ‘bricks-&-mortar’ retailers must not only embrace the online channel, but also make the most of the instore experience, which cannot be matched by online-only competitors.

“In our core categories of furniture & appliances, the instore experience is more important than ever. Customers in these core categories want to touch & feel products before they buy. They want to sit on the sofa, test the comfort of a bed and see whether their chosen fridge has all the storage compartments they need.

“Good service, no-fuss delivery and the confidence that customers can talk to someone ‘just down the road’ are qualities that are highly valued by Kiwis. Combined with Smiths City’s point-of-sale finance offer, they will beat a good deal from an online-only retailer, hands down. We are excited by the opportunities in Auckland.”

Link: Smiths City

Attribution: Company release.

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WSP takeover of Opus down to the washup

Canadian property services consultancy WSP Global Inc paid $256.7 million last Monday to buy out 97.5% of shareholders in Opus International Consultants Ltd, and issued a compulsory acquisition notice for the balance.

The final day of trading in Opus shares is this Monday, 11 December. The shares will cease to be quoted on the NZX from close of business on Wednesday 10 January.

Opus International Consultants is a global infrastructure development & services company with headquarters in Wellington & 35 offices in New Zealand, the UK, Australia & North America.

It came into existence 20 years ago, a year after the New Zealand Government sold the business, as Works Consultancy Services Ltd, to Malaysian Government-controlled Kinta Kellas Ltd, and was listed on the NZX in 2007. The Malaysian Government’s 61.2% holding was more recently through UEM Edgenta Bhd, 69.14% owned by UEM Group Bhd, which is a wholly owned subsidiary of the Malaysian Government’s strategic investment fund, Khazanah Nasional Bhd.

On Wednesday, the Opus board changed from one controlled by UEM Edgenta to one controlled by WSP, but retaining 3 local independents & the managing director.

Directors now are: Independents Keith Watson (chair), Alan Isaac & Sam Knowles; non-independents Dr David Prentice (managing director) & 3 WSP executives, chief financial officer Bruno Roy, chief operating officer Paul Dollin and Australia & NZ chief executive Guy Templeton.

The takeover has been through WSP NZ Acquisition Ltd, a local company owned directly from Canada. In New Zealand, the WSP branch dropped the Parsons Brinckerhoff acronym (PB) from its name in March and it’s now just WSP NZ Ltd. But WSP internationally includes the Parsons Brinckerhoff businesses, bought by UK construction & infrastructure group Balfour Beatty plc in 2009 and sold to WSP in 2014.

Earlier story:
15 August 2017: WSP secures Malaysian stake on way to full Opus takeover

Attribution: Company releases.

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Transport Investments succeeds with backdoor listing

Shareholders in listed shell company Bethunes Investments Ltd approved the acquisition of the business of Transport Investments Ltd yesterday, 4 months after NZ Retail Property Group Ltd pulled out of using Bethunes to list.

Before trading on the NZX opens tomorrow, Bethunes will change its name to TIL Logistics Group Ltd and its NZX ticker code to TLL.

The transactions paving the way for the reverse takeover are expected to occur today. The existing Bethunes directors will resign and be replaced by a new board comprising Jim Ramsay, Trevor Janes, Lorraine Witten, Danny Chan & Greg Kern.

Transport Investments chair Jim Ramsay said: “This transaction secures the future of TIL as one of New Zealand’s leading domestic freight & logistics companies, and we are looking forward to taking advantage of a range of genuine growth opportunities which are available to TIL.”

TIL has a nationwide network of branches, depots & warehouses, and has a specialist road tanker division, which is one of the largest operators in the New Zealand fuel delivery market by road tanker.

Earlier stories:
30 October 2017: Next Bethunes backdoor listing customer is transport operator TIL
25 July 2017: NZ Retail Property Group pulls backdoor listing

Attribution: Company release.

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Vital Healthcare confirms 3 hospital acquisitions & development programme

Vital Healthcare Property Trust has received Overseas Investment Office approval enabling it to commit unconditionally to the purchase of 3 hospitals from Acurity Health Group Ltd and up to $106.5 million to brownfield development over the next 4 years to expand the hospitals.

Vital agreed in May to buy the land & buildings at Wakefield & Bowen Hospitals in Wellington and the Royston Hospital in Hastings for $54 million.

Wakefield Hospital, Newtown

In addition to the acquisition, Vital has also committed to the full redevelopment of Wakefield Private Hospital alongside Acurity, subject to regulatory consents.

The completed development will include 8 operating theatres, 42 beds, a 3000m² medical consulting building, over 260 parking spaces, supporting infrastructure and patient & administration services. Expansion capacity will be built into the design to allow for growth as required.

Vital management company chief executive David Carr said on Friday: “The redeveloped Wakefield will be completed in stages to minimise disruption to existing operations. Completion of the works will provide a sector-leading, modern & functional facility for Acurity to deliver exceptional quality healthcare to patients for generations to come.”

The total forecast capital commitment is up to $82 million. The works are planned to start in 2018 and be completed in mid-2021.

Bowen Hospital, Crofton Downs

Vital also confirmed that, subject to regulatory consents, it has committed to the development of necessary infrastructure for radiation oncology services to be commissioned at Bowen Hospital.

The works will include the construction of 2 radiation oncology bunkers, initially with one linear accelerator but capacity to increase to 2 as demand increases.

Mr Carr said this was the first private radiation oncology service for patients in Wellington. The service is operated by Icon Cancer Care, Australia’s largest private provider of cancer care, in partnership with Acurity. He said radiation oncology services were a logical expansion following the recent commencement of private medical oncology services at Bowen by the Icon/Acurity partnership.

The total forecast capital commitment is up to $11.5 million. The works are planned to start in the first half of 2018 and are forecast to take about 9 months.

Royston Hospital, Hastings

Vital has committed to an immediate development project at Royston, alongside Acurity as hospital operator.

Subject to resource consent, the development will see an expansion into adjacent properties held for development and will incorporate an additional 2 operating theatres, reconfiguration of patient admission & recovery areas, and expansion of medical imaging.

Mr Carr said: “Our agreement with Acurity to enter into a 30-year lease and commitment to an immediate development project at Royston affirms our combined vision to enhance Royston’s long-held reputation as a quality private hospital serving the Hawke’s Bay region.”

The total forecast capital commitment is up to $13 million. The project is expected to start in late 2018, subject to regulatory consents, and is forecast to take about 12 months.

Vital is scheduled to settle the acquisitions this month.  All development capital expenditure is forecast to be rentalised at a yield of about 7%.

Earlier story:
12 May 2017: Vital enters asset & redevelopment partnership with Acurity

Attribution: Company release.

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Steel & Tube owns up to mesh label & testing guilty pleas

After revelations in news outlets this morning that Steel & Tube Holdings Ltd had pleaded guilty – in August – to 24 charges of making false & misleading representations about its seismic mesh products, the company issued a statement to the NZX confirming the guilty pleas.

The company set out numerous dates concerning testing, logos & methodologies, but didn’t mention that it had gone from co-operating with the Commerce Commission to guilty pleas over 3 months ago. It will be sentenced in March.

Steel & Tube interim chief executive Mark Malpass said in today’s statement to the NZX: “On 7 June 2017, Steel & Tube confirmed that the Commerce Commission had filed charges against the company under the Fair Trading Act in relation to 500E grade seismic mesh. The charges in regards to compliance with the testing standard for seismic mesh relate to the application of testing methodologies only, not the performance characteristics of the seismic mesh.

“12 charges relate to the inadvertent use of a testing laboratories logo at the bottom of the test certificates of SE62 mesh. Steel & Tube acknowledged the mistake in March 2016 and immediately removed the logo.

“The remaining 12 charges relate to the application of testing methodologies in the applicable standard, not the performance characteristics of the mesh.

“Steel & Tube has been co-operating with the commission to reach an appropriate resolution of the charges and has entered guilty pleas to the charges.

“Steel & Tube takes quality & compliance very seriously and, since April 2016, the company has had external accredited laboratories testing seismic mesh. The company has also taken significant steps to enhance its quality & product assurance systems.

“These charges relate to historical matters that are before the courts and the company cannot comment further.”

Others too

As if to make itself look not so bad, Steel & Tube added: “The commission has previously confirmed it has filed charges against 2 other companies in relation to false & misleading representations about seismic mesh. The commission has also said previously that it expected to lay charges against one other company, and that investigations continued into another.”


Steel & Tube also added some background – which, through this 2-year episode, has made the company look less bad, even good, for its proactive approach.

Mr Malpass said: “There were significant interpretational issues with the standard for testing seismic mesh. The ambiguities in the standard led to Steel & Tube calling for a Government/industry review of the testing standard and, in November last year, the clarification that Steel & Tube had sought was issued by the Ministry of Business, Innovation & Enterprise.

“Clarification of the standard gives all seismic mesh manufacturers & sellers certainty regarding how seismic mesh is to be tested to ensure it complies with the standard. It also gives building owners reassurance that all seismic mesh will now be tested in the same way.”

Earlier stories:
8 June 2017: Updated: Commission files 29 charges against Steel & Tube over mesh
8 April 2016: Steel & Tube undertakes dual mesh testing
5 March 2016: Suppliers recheck as commission questions steel mesh, ministry not worried

Attribution: Company release.

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Augusta & NPT reach broad agreement on portfolio management

Augusta Capital Ltd has entered into a non-binding agreement with NPT Ltd to manage NPT’s property portfolio.

The non-binding portfolio management agreement, announced yesterday, is subject to due diligence by both parties, negotiation of the terms of the management agreement and the approval of NPT shareholders.

The portfolio is a thin one. NPT has agreed to sell to SkyCity Entertainment Group Ltd its interest in the AA Centre, which runs from Albert St to SkyCity’s front door on Federal St in downtown Auckland. Settlement is scheduled for next July.

The listed property investor has 4 other assets – the Heinz Wattie national distribution centre in Hastings, the Eastgate mall & Print Place in Christchurch, and the 22 Stoddard Rd shopping centre in Mt Roskill, Auckland.

NPT shareholders voted in April to hand the company’s management contract to Augusta, defeating a proposal for Kiwi Property Group Ltd to take over. Augusta lifted its NPT stake to 18.85% before the meeting, and won the vote with the support of associates.

This time round, Augusta won’t be allowed to vote because it’s a related party. Approval will be by an ordinary resolution, requiring over 50% support.

Under the proposal, Augusta will pay NPT $4.5 million to buy the management rights.

Bruce Cotterill.

NPT chair Bruce Cotterill said other key terms included:

  • The agreement will be for no less than 5 years (unless terminated by either party for cause) and thereafter will continue until NPT exercises its right to discontinue, which would require a resolution of shareholders, and
  • The fees charged under the management agreement will be in line with sector benchmarks.

Mr Cotterill commented: “Importantly, the NPT board considers that the proposed investment strategy outlined by Augusta is closely aligned with its views on the preferred way forward for NPT.

“We anticipate the process to move from agreement in principle to finalised documents that can be put before shareholders for consideration could take about 6-10 weeks, although the Christmas period may interrupt that process.”

Francis says agreement “best in class”

Mark Francis.

Augusta managing director Mark Francis said Augusta “considers that the remaining key terms, including management fees & termination rights, are best in class compared to other external management agreements in the New Zealand listed property sector”.

He said the 2 companies would work towards agreeing the full terms of the management agreement so NPT can call the shareholder meeting as quickly as possible.

Mr Francis believed externalising management would be accretive to NPT’s earnings: “Augusta has proposed a ‘yield plus growth’ investment strategy for NPT, which Augusta believes will strongly differentiate NPT from other investment options in the listed property sector and suits the current low-yield environment.

“Augusta has a track record of identifying & adding value to assets. The strategy would see Augusta tasked with repositioning the existing portfolio of assets as well as identifying assets for acquisition which it believes have strong yield & growth opportunities.

“If approved, the externalisation would increase Augusta’s recurring management fee income by about $900,000/year, based on NPT’s current balance sheet. Further details will be available once a binding agreement is entered into and a notice of meeting issued by NPT to its shareholders.”

Links: NPT
Augusta Capital

Earlier stories:
15 October 2017: SkyCity buys AA Centre to consolidate precinct control
28 August 2017: Cotterill sees opportunity for NPT as tenants quit
21 April 2017: Augusta wins fight for NPT
27 September 2016: Augusta buys 9% of NPT

Attribution: NPT & Augusta releases.

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