Paramount Property Trust Announces $25m Offer
Paramount Property Trust Announces $25m Offer
Paramount Property Trust (Trust), an entity formed recently with the intention of becoming a leading New Zealand property fund, today announced an initial public offering to raise more than $25 million.
The offer is now open, and will close on 29 November. Forsyth Barr Limited, a member of the NZSE, is the lead manager and organising broker. The offer of units in the Paramount Property Trust is fully underwritten by Forsyth Barr Group Limited.
As detailed in the offer document, the initial gross dividend yield is forecast to be 11 per cent for the financial year to 31 March 2003, on an annualised basis, increasing to 11.2 per cent for the financial year to 31 March 2004. Dividends are to be paid quarterly.
Following completion of the offer, the Trust will acquire two prime Auckland properties, AGC Building in the Viaduct Harbour precinct and Ericsson House in the Domain Centre office park, and intends to subsequently add further quality properties to its portfolio.
Symphony Group and associates, developers of the properties that Paramount will acquire for its initial portfolio investment, will be issued 6.277 million units outside of the public offer as part consideration for the properties. Symphony Group is the manager of the trust through a wholly owned subsidiary.
The acquisition of the two initial portfolio properties and the terms of the appointment of the Manager have been appraised by Grant Samuel & Associates Limited as being fair to unitholders not associated with the Symphony Group. Grant Samuel & Associates Limited (among other activities) provides experts reports and independent advice in relation to public offers, and has, since it's inception, prepared more than 250 public expert or appraisal reports.
Symphony Group director Chris Minty said there had been keen indications of interest in the offer.
"As Symphony will be paying all the issue expenses and the Trust is buying the portfolio below valuation, the issue price of $1 a unit is below the net asset backing and we believe this will add to the attraction of the offer," he said.
"There will be a strong net yield for investors from quality buildings in strategic locations, providing a stable income stream from full leasing, a strong mix of tenants and a weighted average lease term of 7.5 years. In addition, the trust has an active and aggressive growth strategy and has a very favourable first right of refusal agreement with Symphony Group, providing access to properties at preferential pricing."
Mr Minty, who is managing director of the Trust, said he believed investors would be impressed by the strength of the board. Chairman Robin Congreve, a highly experienced company director who has been a director of some of New Zealand's most prominent corporations and is currently chairman of Tru-Test Corporation Limited, NeuronZ Limited and Parex Limited, will have alongside him three independent directors ? Mike Smith, Trevor Scott and Peter Brook.
Mr Smith, who held a number of senior positions with Lion Nathan, including finance director and executive director, is currently a director of Auckland International Airport Limited, Fisher & Paykel Healthcare Corporation Limited, UnitedNetworks Limited and Tru-Test Corporation Limited, and a former director of Fonterra.
Dunedin-based Mr Scott is chairman of Arthur Barnett Limited, Hirequip and Pacific Edge Biotechnology Limited, as well as a director of Blis Technology Limited, Donaghys Limited, New Zealand Light Leathers Limited, the New Zealand Seed Fund and Mercy Hospital Dunedin Limited.
Mr Brook has 20 years' experience in the investment banking industry, and was formerly managing director of Merrill Lynch (New Zealand) Limited and a member of the executive committee for Merrill Lynch Australasia. He is the deputy chairman of the New Zealand Stock Exchange market surveillance panel.
Mr Minty said he believed the strength of the board would be important as the Trust pursued its growth strategy.
The focus would be on the acquisition by the Trust of new or recently refurbished buildings in strategic locations, with a carefully balanced diversification by sector.
Fully-tenanted Ericsson House is the most recently completed building in the Domain Centre office park adjacent to Auckland Domain, a popular fringe city location.
Recently refurbished AGC Building is in Auckland's strongest growth location, the Viaduct Basin. It is also fully leased.
These Symphony-developed properties were among an impressive list of projects in which the company had been involved, said Mr Minty. The 20 property projects it had undertaken included Deloitte House, IBM Centre, the Heritages of Auckland and Queenstown, and Domain Terraces.