DNZ aims to raise $130m with IPO

DNZ own properties such as North Queens Wharf, Wellington.

DNZ Property Fund's initial public offering is due to open on Monday next week, offering the market shares in a real estate business with assets valued at $730 million.

Prospectus documents being viewed by analysts and professional investors show DNZ will have a projected market capitalisation of $294.7 million to $313.6 million.

The share offer, completely underwritten by Goldman Sachs JBWere, will close on December 11 and seek to raise $130 million.

The difference between the $730 million value of the assets and approximately $300 million expected market capitalisation is due to DNZ's high gearing and the market's automatic discount priced into the stock for risk.

Full trading on the NZX is expected to begin on December 17 and the offer price of the shares will be 76c to 86c.

DNZ's manager wants the business to reduce its gearing after financiers showed reluctance to renew or extend loan facilities, forcing the business to the listed market.

DNZ will be the fifth largest listed real estate vehicle in New Zealand by market capitalisation.

DNZ, previously known as Dominion Funds, has existing investors who bought into the 32 original Money Managers property syndicates which each owned one property in most cases.

Those syndicates were amalgamated into one business which has traded on the unlisted market but was suspended indefinitely while the float was being organised.

DNZ already has 188.5 million shares issued to these original investors.

But DNZ will issue a further 151 million to 171.1 million shares, anticipating gross proceeds of $130 million.

DNZ's management will be paid out half in shares and half in cash in a settlement expected to be worth $43 million. The manager is owned by chief executive Paul Duffy and interests associated with ex-chairman Alastair Hasell, who is staying on the board.

The prospectus shows 25 million to 28.3 million shares will be issued to DNZ Management or its associates as part of the move to internalise the manager.

By September 30, DNZ owned 61 properties in 411,440sq m of occupied space, leased to 277 tenants. It has an occupancy level of 96.1 per cent. Cornerstone tenants include Bunnings, the Government, ASB, Meridian, Mitre 10, Lion Nathan and Westpac.

DNZ PROPERTY FUND

Next Monday: Share issue opens.
December 4: Priority offer closes.
December 11: Full offer closes.
December 17: Trading set to begin on NZX.