DNZ Property goes to investors with capital-raising deal

The $746 million DNZ Property Fund has asked investors to register for a capital-raising deal.

Tim Storey, DNZ's new chairman replacing Alastair Hasell, has just sent letters to investors inviting them to participate.

But he did not say how much was being raised.

"DNZ is considering making a public offer of new shares. In the event of any capital raising, DNZ would intend to make a priority offer to existing DNZ shareholders, the terms of which are still to be determined. This letter is providing you an opportunity to indicate your preliminary interest in any such capital raising," Storey said.

Indications had to go to DNZ before 5pm on October 27 and an investment statement would be prepared, he said.

DNZ is under pressure to cut its debt which now stands at the highest in the property sector.

Chief executive Paul Duffy told investors at the annual meeting a few weeks ago that he wants debt to be under 40 per cent.

DNZ was trading on Unlisted until early this month when it went into a trading halt due to speculation about big changes.

David van Schaardenburg, principal of NZ Funds, was cynical about Storey's letter.

Shareholder appetite for the capital raising had been extremely weak, he said, and DNZ itself had been vague in the amount of detail it had given to the market about its direction.

DNZ had been trading at a massive discount to asset value on Unlisted, with a market capitalisation of about $200 million before the trading halt.

Yet it is one of the country's single largest property funds and owns big shopping centres, industrial and commercial real estate.

The business was called Dominion Funds until a big shake-up.