Unlisted Dominion Funds forecasts 38pc growth

Dominion Funds' property holdings include the DHL Airpark building at Manukau.

The $617 million Dominion Funds plans to own property valued at around $850 million within a year, making it one of the country's largest unlisted real estate entities.

Chief executive Paul Duffy said the addition of Meridian Energy's new $29 million headquarters in Wellington and a series of other purchases would easily see assets grow to between $800 million and $850 million within a year.

Although that will make Dominion the largest unlisted real estate vehicle of its type, Duffy said there were no plans for a listing.

Dominion's plentiful funds flow directly from one of the country's largest financial planners, Money Managers, and its extensive network of financial planners and advisers who are sometimes criticised for a lack of independence and investing in Dominion, which has directors in common with Money Managers.

Duffy said Money Managers had a mandate to commit 18 per cent of clients' funds to Dominion. However, none of Dominion's funds were flowing through Money Managers' FiRST STEP investment scheme.

The property arm of Doug Somers-Edgars' Money Managers issued its annual report for the March year showing it added $127 million to its portfolio, which is split into eight funds.

Dominion raised $13.5 million new capital for one fund, sold a 19.3 per cent stake in a retail fund to Australia's giant Centro Group and had begun building Meridian's new headquarters in February. Fletcher Construction will finish it next year and the asset will be Dominion's largest. Meridian has taken a 12-year lease.

"On completion, this building will be the most environmentally sustainable design in the Southern Hemisphere," the annual report said of the structure, to be owned by the Dominion Income Property Fund.

Experienced property lawyer Tim Storey left Bell Gully in Auckland to join Dominion, whose directors are Duffy, Somers-Edgar and Alastair Hasell, who is also chairman.

One of Dominion's largest new buildings was the DHL office and warehouse building at Manukau. In the past year, it paid $88.2 million for new properties, sold properties for $25.9 million, completed $16.7 million in rent review deals, negotiated $7.7 million in new lease deals and added 10 new staff. Dominion negotiated 75 rent reviews and did 50 new leasing deals.

Dominion has 275 tenants. Its largest is Progressive Enterprises, followed by the Government, Fletcher Building, ASB, Mitre 10, Lion Nathan, Croxley Stationery, Beca, DHL Danzas Air & Ocean and Harvey Norman.

Dominion's largest fund, the Dominion Foundation Property Fund, is a share and debenture company which owns 34 properties, has 61 tenants and a weighted average lease term of 4.9 years.

Duffy said Dominion had managed investment risk by having no more than 15 per cent of rental income in any one fund expiring in a year. No tenant provided more than 10 per cent of a fund's total net income.