Archive | Securities – NZ

Fletcher Forests raises discount rate to 9.75%

Revaluation & lower log prices bring $271 million loss

Fletcher Challenge Forests Ltd chopped the valuation of its forest estate by 44% to $582 million in its June year accounts released today, including a $145 million cut by raising the effective aftertax discount rate from 8% to 9.75%.

The company sold cutting rights on $143 million of the $1.176 billion crop, then cut the valuation of the remainder by $451 million. Log prices, affected by an overall 21% higher exchange rate, reduced the valuation by $298 million.

Net of tax & minorities, the revaluation amounted to $292 million. The sale of cutting rights also cost $19 million after tax. The net loss for the year was $271 million after writedowns of $31 million. Last year’s loss was $249 million, after writedowns (almost entirely from the Central North Island forest partnership) cost $351 million.

Total operating revenue rose 2% to $678 million. Domestic revenue rose 12% to $303 million, exports fell 5% to $375 million.

The company has run a trailing 12-quarter pricing series for valuation for several years, but decided to change to the prices of the past 2 quarters, which were 15% lower.

The carrying value of crop & land is now $728 million, net of deferred tax & minorities. The company cut its debt by 65% to $81 million, an 8% debt:book capitalisation ratio.

Net assets fell from $2.05/share to $1.55/share.

Fletcher Challenge Forests wants to sell the rest of its trees by the end of the year, and is refining a strategic plan for its processing & distribution businesses.

Otherwise, chairman Sir Dryden Spring said, the company had a good year.

Operating earnings before unusuals were down $2 million to $81 million, US distribution associate companies increased sales 20% in local money, log demand was reasonable and net operating cashflow was up $3 million to $46 million.

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Warehouse sales up 9.3%, profit down 8.3%

Red Shed sales rise but margin slips

The Warehouse Group Ltd boosted sales 9.3% to just over $2 billion in the year to June, but saw net profit after tax fall 8.3% to $75.4 million.

Normalised profit (adjusting for 1-off costs, primarily in relation to logistics restructuring in Australia) was 3.4% lower at $79.7 million.

Earnings/share fell 8.5% to 24.7c/share. Final dividend is unchanged at 4c/share, and total dividends for the year are 7.4% higher at 14.5c/share.

Group operating profit before interest, unusuals, goodwill amortisation & tax fell 3% to $142.7 million, mainly because of poor trading results in Australia.

The Warehouse NZ Red Sheds increased sales 7.1% to $1.35 billion, increased same-store sales 5.6% but saw operating margins fall 25 basis points to 10.9%.

Stephen Tindall, acting managing director, said The Warehouse undertook a major revamp of its promotional calendar & marketing format after a weaker-than-anticipated Christmas. “The expected
improvement in sales has been achieved. I am delighted at how the Red Sheds are now performing and we are confident that the momentum will continue.”

Warehouse Stationery increased sales 32.3% to $164.5 million, same-store sales 18% and increased operating margins 231 basis points to 5.7%.

The Warehouse Australia increased sales 17.5% to $A463.3 million, grew same-store sales 2.3% but had an $A11.9 million operating loss compared to an $A2.2 million profit last year.

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TTP claims competitive edge

Trans Tasman tower start confirmation close

Trans Tasman Properties is close to confirming a start on its new office block for the old Auckland Star site between Fort and Shortland Sts.

With two tenants in place and space for their expansion, Trans Tasman would have only five 1100m² floors left to sign up during the construction period — a far easier task than Kiwi Development Trust has faced with its tower up the street, and easier than AMP will face with its PricewaterhouseCoopers Centre on Quay St.

Trans Tasman has been negotiating with law firm Simpson Grierson, already one of its tenants in the Albert St tower of the Finance Centre block. Simpson Grierson would take eight of the 17 office floors, with another two for expansion.

I understand its second likely success would be WestpacTrust, taking three floors. WestpacTrust signed in April to renew space in its building next to the Centra Hotel, but cut back from seven to five floors and a six-year lease. It also has Queen St premises which it would probably retain.

Trans Tasman, which has moved around the Citibank Centre on Customs St when tenants have taken its space, could take a floor of the new building or accept a short-term tenant, leaving five floors to lease over the two-year construction period.

That would take it over the 70% precommitment required for work on the building to start. Trans Tasman plans to have parking above the foyer, a breezeway in the middle of the building and office levels from the 11th to 27th floors.

Rental trend crucial

The crucial issue for Trans Tasman over the long period it has been planning this building is the rental trend — it got resource consent two years ago, but at that time competition to develop the next Auckland tower was at its fiercest, with AMP holding two of the options, Kiwi fighting for tenants and other possible contenders also still in the running.

Since then, the market has seen the value of Kiwi’s investment plummet. Its Royal SunAlliance Centre was originally promoted as a $248 million building with a $195 million construction cost.

The latest valuation, in March, brought the completion value down to $207 million, a $10.5 million margin over cost.

When Kiwi put its project together in 1997, pre-Asian crisis, projections were generally positive. JLW Advisory rental forecasts for the prospectus showed a range of $300-395/m² for the top buildings at the end of this year, rising to $330-420/m² by December 2001.

The Kiwi prospectus showed Royal & Sun Alliance Insurance on an average base rent for its low-level floors of $367.50/m². Law firm Russell McVeagh McKenzie Bartleet’s average base rent was shown as $384/m2 for two low levels and the top of the lowrise. After a second major law firm, Bell Gully Buddle Weir, signed for lowrise space, Russell McVeagh moved to the highrise on unstated rent.

AMP floors bigger, starting vacancy greater

AMP NZ Office Trust will have 22 office floors averaging 1352m² in its waterfront tower, and is starting construction with precommitment on 54% of its 30,000m² of office space. Rent details have not been revealed, but general manager Anthony Beverley said the average was $352/m², with less of a margin between top and bottom than the Kiwi tower had, because low-level tenants would still have commanding views.

As rents softened over the past two years, incentives regained prominence after almost being phased out. That can change the rental picture significantly, because a high face rent — one floor in the Royal SunAlliance Centre is said to have a $500/m² tag on it — may have future value to the landlord as a ratchet starting point, but may also be heavily discounted through incentive and fitout arrangements.

Trans Tasman’s leasing manager, Bruce Catley, says bluntly that he doesn’t like incentives forming part of the rental scale, allowing him to ramp up the face rent although the actual rent may be far lower. He also says Trans Tasman may prove to be a rare developer by producing a new cbd office building at a profit.

“We’re looking at $395/m² for the top down to $300/m², on the basis of no incentive,” he said recently. “I’m saying, ‘If you want a fitout, we’ll give you the money but you pay it back over the term of the lease.'”

Mr Catley believes Trans Tasman can get its building up profitably on a rental average of $320/m², which puts AMP under pressure for its remaining space.

At that rate, a deal between two developers competing for a small supply of tenants might make sense — one buying out the other’s site, plus margin, for instance (as happened recently when Westfield took over Location Group’s property across the road from the St Lukes shopping centre, where expansion is planned).

AMP trust needs the image, TTP changing tack

But such a deal would seem impossible here. AMP has already started work, and needs to own one of the most prestigious buildings in the country at any time if it is to maintain the image of the listed office trust with the best cbd portfolio.

And Trans Tasman has decided to call itself a developer. One half of Trans Tasman, Seabil, was formed as a solid investor favoured by institutions and the founder of the other half, Sir Bob Jones, painstakingly explained to many a reporter in the 80s that he was an investor and that developers were fools.

But times have changed. Syndicators Waltus and Dominion have taken a share of development margin on projects they have entered with Fletcher Construction, and Property For Industry has bought numerous buildings with future expansion and development opportunities in mind.

Trans Tasman’s offshoot, Australian Growth Properties, turned developer to build its 363 George St tower in Sydney and the New Zealand company is also looking at aspects of development, as Don Fletcher, for the moment executive chairman, told the annual meeting in Wellington last week.

He said AGP clearly stated in its prospectus it was an active property company, not a property trust. “As a company with property development as one of its objectives, AGP is focused on total return, not rental income alone. Therefore it will continue to hold its assets only where there is still value to be extracted and not as a passive investment.”

For New Zealand, he said, “passive investment alone is not an option that will maximise returns to the group and shareholders in a low-growth, low-inflation environment where rental returns are not forecast to grow significantly in the near to medium term.”

Mr Fletcher said Trans Tasman’s strategy involved holding investments with acceptable returns, selling those to which it could no longer add value, “and developing properties where capital value can be enhanced. Trans Tasman will also consider funding or joint-venture opportunities where the group can use its balance sheet to create value without necessarily utilising cash reserves.”

On those views, Trans Tasman will want to develop the Star site, which it acquired through Seabil and has run as a street-level carpark for several years.

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Trans Tasman & Australian Growth could disappear

That’s an option in a future that wasn’t laid out for shareholders

Trans Tasman Properties Ltd and Australian Growth Properties Ltd, subsidiaries of SEA Holdings Ltd of Hong Kong, could easily disappear from the New Zealand & Australian listing boards within months.

Or turn into quite different beasts. They’ve already started to do that, but property sales could gut the Australian company and, in the present climate, it would be easier than it’s ever been for the New Zealand company to sell down.

Who knows? Jesse Lu, chairman of SEA, does, but he wasn’t at Thursday’s Trans Tasman annual meeting to tell and his man in these parts, Don Fletcher, wasn’t about to give clearcut answers on direction.

They have another chance next Wednesday at Australian Growth’s annual meeting in Sydney, where GPG’s Gary Weiss and mates Laurie Gibbs & Greg Paramor will be out to roll the board (impossible unless Mr Lu decides to be rolled, leaving him no longer in charge of his money).

Australian Growth could sell 80% of its portfolio – 2 buildings — within weeks, a prospect which has seen the Australian company’s share price rise 14% this month. On this side of the Tasman, strong critics are demanding more than platitudes to get the share price of the New Zealand company heading north.

Dismal display until the prodding got sharp

Mr Fletcher — SEA Holdings’ representative, Trans Tasman chairman & Australian Growth director –didn’t help at Trans Tasman’s annual meeting, with a dismal display until the prodding got so sharp that, impromptu, he gave the address he should have written in the first place.

SEA chairman Jesse Lu entered New Zealand in a joint venture that created Seabil NZ Ltd, which listed with a portfolio of Brierley Investments and Fletcher Challenge properties. He went on to invest in Tasman Properties Ltd, the former Bob Jones investment company, saw them both sinking into oblivion, merged them in 1995 and has seen the combined business struggle against high debt and a failure by the New Zealand property market to regain asset value.

In Australia, the group redeveloped 345-363 George St in Sydney, has redeveloped a Melbourne property and sold a Canberra one and is about to market the strata-titled and refurbished former James Hardie building on York St, Sydney.

Mortgage finance business

AGP’s venture into providing 2nd mortgage finance to the developer of an apartment project “in an Australian capital city” (that’s according to AGP’s annual report; Perth according to Trans Tasman’s annual report) raised a questionmark for some shareholders at Trans Tasman’s annual meeting on Thursday.

Although the sum is not large — $A13.75 million – it is clearly in the realm of a finance company activity rather than of a development or property investment company, it’s in a city where AGP has no assets and it is in a market segment, apartment development, in which AGP doesn’t operate. Mr Fletcher said the return would exceed 17%.

“It’s something AGP has been looking into for some time. Their general attitude is it’s a good area to look into for further income. The company has the skills to step in if something goes amiss.”

SEA regards southern companies as “development & investment arms”

SEA Holdings clearly regards Trans Tasman and Australian Growth Properties as parts of its business, not as separate entities. SEA’s website describes Trans Tasman as “the New Zealand property development and investment arm of SEA” and AGP as “the Australian property development and investment arm of SEA.”

Mr Fletcher, although chairman & managing director of a New Zealand listed company, lives in Sydney and commutes. He runs AGP’s management company as a contractor.

In New Zealand, Trans Tasman has turned over the past year from an entirely defensive passive investor into a less-geared business able to take more risk and to improve its returns by taking some development margin. It also entered a procurement business, Professional Service Brokers Ltd, in which SEA has the major interest.

To questions at the Trans Tasman annual meeting from Jason Ters & Tony Gibbs of GPG (which is fighting for board seats at AGP and has recommended liquidating Trans Tasman), Mr Fletcher said market indications were that the company’s assets’ values had stabilised. Earnings had been affected because losses on the sale of properties went to the profit-&-loss account.

All things being equal, Trans Tasman should perform better this year, he said.

Auckland Star site on market soon

It still has the former Auckland Star site between Fort & Shortland Sts as a vacant lot used for parking (the building demolished by Brierley Investments when GPG’s Sir Ron Brierley was still on the BIL board, after the now-defunct newspaper was moved up to the New North Rd home of the short-lived Sun newspaper).

Mr Fletcher said Trans Tasman required 80% precommitment to build an office block there, “which is a pretty hard ask. We have failed to do that and I think the board has run out of patience with management. We’re now talking to the council about what can go on it… In the next month or 2 that property will probably be up for sale.”

Selling that would leave Trans Tasman with 5 Auckland office properties (including the Finance Centre’s 4 buildings & parking as a single entity, though it can be broken up), its Viaduct Harbour and Airpark business centre development sites and 2 city parking buildings.

If AGP sells its George St properties and the James Hardie stratas, it will be left with a refurbished Bourke St building in Melbourne and the newfound loans business. The possibility of a repayment of capital, taking the return over the original $A1 issue price, would largely explain the 11c rise in share price this month to A89c.

Listed companies got into the mood in the 90s of saying that if they couldn’t get a good return on shareholders’ money they should return it.

GPG’s Jason Ters calculated Trans Tasman earned 3% last year against an official cash rate of 5%. Mr Fletcher didn’t come up with a different rate of return on the spot, but mentioned factors such as asset sales cutting debt but sending the bottom line into the red to show there were other ways of doing the calculations.

In hindsight, they would have acted differently

However, in his impromptu speech, Mr Fletcher also acknowledged that hindsight showed the company had made strategic errors.

It put together a portfolio of B & C grade properties 8-9years ago, then found valuations fell in the general market malaise to what they’d been 15 years ago. If Trans Tasman made a mistake, he said, it was in not seeing that valuation decline. With hindsight, “we would have sold earlier and bought back in.”

Instead, eventually, with bankers pushing hard to lower the company’s gearing from the 50-60% range, “We quietly went about a property sales programme… to put ourselves in a position today where we can go forward. For the 1st time, this year we have stabilised valuations.”

Airpark an example of quick churn the company wants

Mr Fletcher said the company had to find ways of making its capital work smarter, and had got itself into the position of being able to develop buildings or land to “churn quickly.” The airpark’s 35 lots would sell out 12 months ahead of forecast, leaving Trans Tasman with 2 sites because it wants to get into industrial property ownership, and would return 200-300%.

Mr Fletcher said Trans Tasman had put together a team to look for opportunities like Airpark, but didn’t detail how this entrepreneurial role fitted within what is essentially a straightforward property management business. The result of taking these opportunities for higher returns, though, would be “a decent distribution to shareholders.”

He believed giving up & liquidating – and saying so – would be wrong because “the market would smell it and prices would be discounted down.”

Websites: SEA Holdings
Trans Tasman Properties
Airpark business centre brochure

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PFI’s Alexander to head AMP’s new opportunity unit

New unit will seek higher-risk investments to turn over

Property For Industry general manager Peter Alexander is to head an “opportunist” property investment unit for AMP Henderson Global Investors, in the style of 3 opportunity funds AMP has set up in Australia.

The Australian funds target wholesale investors, but the New Zealand version is likely to attract retail investment as well.

Their aim is to secure properties for resale at high returns, probably in the region of a 20% return on equity.

That can’t be done the way AMP’s investment structure is now. In New Zealand, AMP Henderson Global Investors manages PFI, New Zealand’s only listed industrial property investor, the listed AMP NZ Office Trust and the recently renamed AMP Property Portfolio, an unlisted wholesale fund with a diversified portfolio.

None of those entities allows for higher-risk-taking investment.

To get higher returns, the new property ventures unit is likely to enter joint ventures with developers such as Willis Bond, which is in a 50:50 venture with AMP in the Hub, opposite AMP’s Botany town centre. The town centre is a major project which brought in AMP investment from across the Tasman (the AMP Diversified trust has a stake), whereas the Hub has proved a highly successful smaller development, with all its units sold at strong yields.

Willis Bond & Co director Malcolm McDougall was instrumental in forming PFI and followed that with the formation of CBD NZ Ltd, a listed office property investor which didn’t attract enough investment to survive. Mr Alexander was employed there, moving to PFI 5 years ago on the demise of CBD. He will remain at PFI until a replacement is found.

AMP Henderson’s head of property, Anthony Beverley, said the property ventures unit was an outcome of the company’s “core and satellite” approach to property investment. The unit will identify new high-margin property investment & development opportunities for AMP Henderson and its clients in New Zealand.

Mr Beverley said this approach to property investment was employed widely in overseas markets, providing an opportunity for greater returns & diversification.

AMP’s core property activities are conventional real estate investments such as office, industrial & retail property, with a focus on yield-based returns. He said satellite activities were more opportunistic, targeting a higher return and, accordingly, accepting a greater risk.

The core property investments all had established track records of delivering reliable yield-based returns to investors. “However, AMP Henderson is also aware of a range of higher risk/return opportunities which do not fit the well defined investment mandates & risk profiles of the core funds.

“The AMP Henderson property ventures unit will focus mainly on ‘satellite’ activities, and will operate across all property types & transactions, taking advantage of our existing deal flow and our expertise in investment & development.”

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MFL & SIL to sell portfolios to ING Property Trust

Trust portfolio to rise to $370 million

Agreement in principle has been reached for the 48,000 members of 2 ING-run funds to sell their property portfolios of 71 properties to the listed ING Property Trust.

The deal is to be signed next Wednesday. It will take the ING Property Trust portfolio to about $370 million, before disposal of smaller acquisitions.

Sellers are the members of the MFL Mutual Fund and SIL Mutual Fund, which are run by ING NZ Ltd and have a total $900 million under management.

The listed trust will buy their 71 properties for $282.7 million, funded by the issue of 182 million new units at $1/unit and $100.7 million in cash.

The properties are in Auckland, Wellington & Christchurch and are a mixture of commercial, industrial & retail buildings. The funds offered the properties for sale to the trust as a portfolio, and the trust intends to dispose of a number of the smaller & lower-value properties in due course and in an orderly manner.

The acquisition is subject to ING Property Trust unitholder approval and the approval of the Overseas Investment Commission. The trust said it would send unitholders an explanatory memo, appraisal report & notice of meeting shortly.

ING NZ Ltd bought half of the management company of the listed trust and took over running the trust & its portfolio on 1 September, when the trust’s name was changed from Paramount to the ING Property Trust.

Paramount was set up by Symphony Group & its shareholders, and floated at the end of last year with a $57.4 million portfolio of 2 properties acquired from Symphony.

It added the $7.9 million Liggins Institute Building in Grafton in June then the $21.2 million ANZ House at the Domain Centre, a Symphony development due for completion next April.

Website: ING Property Trust

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National trust buys Goddards in Tauranga

Purchase at 9.8%, yield 11% on full leasing

The National Property Trust is to buy the Goddards Centre in Tauranga for $7.25 million, with settlement due on 1 May.

Executive chairman Paul Dallimore said the trust had recognised the Bay of Plenty for a long time as satisfying its investment criteria, experiencing high rates of economic development and population growth on the back of a well-performing export sector.

The 2-storey Goddards Centre is in the heart of Tauranga’s business district, with access to Devonport Rd & Grey St. It’s primarily a retail arcade, with 20 shops on the ground floor, offices & 2 restaurants upstairs.

Mr Dallimore said the property had a passing rental return on 9.8%, increasing to 11% when the current vacant areas are leased. It also had development potential, and the trust’s manager was investigating further retail & office options.

The trust has also signed a conditional agreement to buy an adjoining property to help those proposals.

Sales agent for the transaction was Kevin Wehipeihana of Bayleys, Tauranga.

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Pastoral House purchase settled

Update, 29 January 2004: AMP NZ Office Trust settled its $23.95 million purchase of Pastoral House in Wellington today.

AMP office trust confirms Pastoral House buy

Refurb to turn it into A grade space

AMP NZ Office Trust confirmed on 19 December it has bought Pastoral House at 94-98 Lambton Quay in Wellington for $23.95 million.

The trust mentioned it was tendering for the building on 17 December, when it announced various restructure moves & Ronin Property Group’s acquisition of a cornerstone stake plus 50% of a new management company.

The vendor was Pastoral House Partnership, a joint venture between Fonterra Co-operative and BNZ
Properties Ltd. Settlement is scheduled for 30 January.

Trust executive manager Rob Lang said the trust planned to spend another $15.5 million refurbishing the 18-storey building, lifting it from B-grade comfortably into the A category.

“Following the refurbishment & leasing to new tenants, Pastoral House has a forecast yield on cost of 9.7%. Its value on completion has been independently estimated at $43 million,” Mr Lang said.

He said the project would improve earnings/unit & net tangible assets/unit. “The project has a
neutral effect in the June 2004 financial year, but will lift the distribution by an average of 3-3.5%/year over the following 5 years.”

Mr Lang said the fund would finance both purchase & refurbishment from its existing balance sheet capacity. The project represents a shift in focus within the trust’s existing investment policy, which included appropriate refurbishment opportunities.

“We have been very encouraged by the tenant response to the trust’s refurbishment & new construction project at Nos 1 & 3 The Terrace, which adjoins Pastoral House in the
Government sector of Wellington’s central business district.
“Since that project was announced in September, we have acquired a great deal of market intelligence & tenant interest which has given us the confidence to embark on a 2nd Wellington initiative in a short
space of time.”

The trust’s existing Wellington properties are 100% occupied. Mr Lang said vacancy in the Wellington cbd was falling, new stock was in short supply and demand, mainly from government organisations, was pushing rental growth in the premium & A-grade categories. These organizations also generally preferred longer lease terms than corporates.

“The refurbishment of Pastoral House will make it 1 of the top 3 office buildings within the
Government accommodation precinct, along with No 1 The Terrace and Bowen House. Like No 1 The
Terrace, it will provide Government & commercial tenants with the efficiency & productivity gains that
come from brand-new office space, but without the costs of moving into a new development.

“For large tenants looking for multiple floors in Wellington, this will be the only option over the next 3 years.”

Mr Lang said this was the 1st time Pastoral House had been offered for sale. Wellington’s premium & A-grade assets are tightly held and rarely available for purchase.

The purchase will increase the trust’s Wellington weighting from 25.8% to 30.6% and, including the Terrace refurbishments, will increase its total portfolio value from $578 million to $650 million.

Pastoral House used to be home to the NZ Dairy Board but is now 37% vacant, rising to 42% within 6 months. That made refurbishment more feasible.

The AMP trust has 1 new tenant on the way in – the Bank of NZ on a 10-year lease of 2 floors, 10.6% of the building.

The refurbishment will start in mid-2004 & will be complete by July 2005. It will include new floor
coverings & ceilings, new lift interiors, a major air-conditioning upgrade for high-density occupation, new lighting, a new access control system and the addition of sprinkler systems.

Pastoral House – key facts

Located at 94-98 Lambton Quay, with dual frontages to Lambton Quay and The Terrace
A predominantly commercial mixed-use office tower completed in the late 1970s
17 office levels, 1 retail level & 1 parking level
Total net lettable area of 15,587m²
The typical office floorplate of 800m² is efficient
Levels 2 & 3 comprise the t2podium levels, with a net lettable area of 1300m² each
All floors receive superior natural light
Easy access to many major government departments, Parliament, the motorway & railway station
Current average weighted lease term is 2.62 years. Major tenants are BNZ and Fonterra, which occupies the majority of the currently let office space on various lease terms extending until the end of 2004.

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Placement cuts PFI debt level

Debt back to 29% after $9.8 million purchase

Property For Industry has made a private placement of 17.9 million shares at 77c to cuts its debt level from the company’s self-imposed ceiling of 35% to 29% following purchase of two Mt Wellington properties for $9.8 million. (Earlier story: Tuesday’s purchase details).

Settlement of the placement will take place next Tuesday. It was arranged by JB Were & Sons (NZ).

The $13.78 million net proceeds of the placement, exceeding the purchase price for the two Watts and Holyoake buildings by $4 million, will be used for more property investment and to finance expansion in existing properties.

PFI chairman Allan Lockie said the placement was “the most economic means of capital expansion for the company at this time and at the least cost to investors.”

Shares have climbed steadily

The shares had been on a steady climb from 70c a year ago and hit 85c in late March before dropping back to 80c at the close on Thursday, so the placement discount is 3.75% on the closing price.

PFI went to its general shareholders with a cash issue three years to raise $35.7 million, but the event proved a nightmare. The issue was only 57% subscribed and the share price dived to 58c. The placement is easier and quicker, and most unlikely to bring about a similar price slump.

Mr Lockie said the company had numerous attractive expansion opportunities available. “We estimate that PFI currently owns less than 5% of its target market. It is therefore in the interests of all shareholders that the company has the financial resources to capitalise on these opportunities.”

He said this was a logical time to raise capital as interest in the listed property sector had strengthened and PFI’s share price was trading recently at a premium to asset backing.

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GPG has resounding victory over Perry’s Rubicon interest

Judge orders Perry to quit 36 million shares

Justice Judith Potter has delivered a resounding victory to GPG plc in its campaign against the Perry Corp shareholding in Rubicon Ltd.

GPG went to court claiming Perry, a New York investment fund, breached New Zealand securities regulations by not properly disclosing its interest in Rubicon, an offshoot of the Fletcher Challenge breakup which has interests in biotechnology businesses, some of its own forestry plus a stake in Fletcher Forests Ltd.

Justice Potter ruled:

Perry must forfeit 12 million Rubicon shares

Perry must sell 24 million Rubicon shares within 180 days, on market & at arm’s length, and no Perry associate may acquire those shares

Perry shall not exercise voting rights in respect of the 24 million shares to be sold

GPG can exceed to 20% ownership limit, set under the takeovers code, as a result of these orders

Rubicon must not pay Perry in relation to the 24 million shares to be sold

Any distributions by Rubicon are to be made pro rata to the holders of the remaining Rubicon shares.Implementing these orders will see GPG’s stake rise from 19.99% to 20.9%. Perry’s stake will fall from 16.32% at Christmas to 7.2%, taking its shareholding from 45.5 million to 9.5 million shares.

GPG made a partial takeover bid for Rubicon last year to take it to 50.1%, but got only 5.78% acceptance instead of the 30.1% it wanted.

Rubicon increased its stake in Fletcher Forests to just under 20% in February.

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