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Investment News

Property news

Local and international property news and prices for week ending October 29.

Tuesday, November 2nd 1999, 12:00AM

by Philip Macalister

NZSE listed property companies

Mon Closing Sale

Friday Closing Sale

Move

Div Yield%

Price/ NTA %

52 Week High

52 Week low

AMP Office

84

84

0

10.57%

90%

113

83

Capital Properties

46

45

-1

%

 

68

41

Colonial First Property

85

84

-1

N/A

N/A

100

83

Kiwi Development

126

126

0

N/A

168%

145

17

Kiwi Prop B

65

64

-1

N/A

61.5%

83

63

Kiwi Prop N

97

98

1

10.67%

102%

112

94

National Property Trust

89

89

0

11.18%

88%

111

84

Newmarket Property Trust

56

55

-1

17.27%

73%

72

47

Property For Industry

69

70

1

8.90%

88%

91

66

Shortland Properties

64

65

-1

7.48%

73%

68

52

Southern Capital

68

70

-2

N/A

87.5%

95

62

St Lukes

157

156

-1

9.93%

108%

199

155

Trans Tasman Properties

28

27

-1

N/A

37%

50

27

National property news

Capital Properties gets go ahead to try Shortland Take-over
Capital Properties investors have given the company the all clear to push ahead with its attempted $227 million take-over of Shortland Properties. At the same time, Capital Properties announced it already had a 44 percent interest in Shortland, having secured 20 million shares with just a week to go until its offer closes.

The company is offering 34 cents cash for every Shortland share, plus 42c in the form of a five-year capital note with a coupon of 8.5 percent. It said its 44 percent interest in Shortland included indicative acceptances, formal acceptances and on market purchases.

Capital Properties said it had bought 3.3 million shares on-market over the last month at a cost of $2.2 million, an average price of 66c per share. It had also received acceptances for 17.6 million Shortland shares, at its stated offer price of 76cps.

A rival bidder for Shortland, Kiwi Income property trust, has a 10.5 percent Shortland stake which it has said it will not sell to Capital Properties. Unless Capital Properties and Kiwi Income come to some arrangement, this will prevent Capital Properties from reaching the important 90 percent holding, after which compulsory acquisition kicks in.

International
Australian Listed Property Trusts (LPT)

One of the key speakers at a recent securitisation conference held in Australia presented a paper on the listed property trust market, and highlights some of the trends occurring in the LPT industry.

Including more recent mergers and acquisitions between these companies, key transactions that have occurred over the last few years include the mergers of:

  • General Property Trust with GEM Commercial and GEM Retail Trusts;
  • Mirvac Ltd with Mirvac Property Trust and Capital Property Trust;
  • Goodman Hardy and Capcount Property Trust;
  • Colonial Industrial Property Trust with Legal & General Industrial.

 In total, there has been over $3 billion in mergers over the last four years, with most of the activity having occurred this year. The consolidation has been driven by:

  • the over-population in the LPT market;
  • investor requirements for liquidity and their preference to own a smaller number of funds;
  • the desire of management to reduce the cost of capital;
  • the lack of available investment product and attractiveness of pricing of listed market compared to the direct market; and
  • A low transaction cost and financial synergies associated with Trust mergers.

The merger phenomenon is not isolated to Australia. UK and US property vehicles are all experiencing rapid sector consolidation. The forces driving consolidation are very similar. The global motto seems to be "acquire or be acquired"..

Gary Cheyne and Richard Chungare principals of the Ernst and Young Real Estate Group.

« Should NZers consider Australia part of the local market Mate?King builds an empire »

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