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Precinct taps US investors for $98M in private placement

Precinct taps US investors for $98 million in private debt placement

By Suze Metherell

Nov. 4 (BusinessDesk) - Precinct Properties New Zealand, formerly known as AMP NZ Office, has tapped US investors for US$75 million in a private debt placement with the proceeds to be used to repay debt.

The Auckland-based company raised the debt in two tranches with US$50 million in a 10-year note paying annual interest of 4.13 percent and a US$25 million 12-year note with a coupon of 4.23 percent, it said in a statement. To remove any threat of currency movements the debt was swapped back to local currency, and was worth $98 million. The proceeds of the issue will initially be used to repay bank debt and increase the weighted average debt maturity profile by one year to four and a half years, Precinct said.

"This transaction is a first for the New Zealand property sector and positions Precinct well to execute on its strategy over coming years," chief financial officer George Crawford said. “The support we received from US investors was particularly pleasing given this is Precinct's first debt issue to non-bank investors and recognises the quality of the Precinct portfolio and the position it holds in the market. Importantly, the pricing achieved was comparable with recent issuance from investment grade rated Australian property entities.”

Precinct has been expanding its Auckland holdings, including entering into a development agreement for a commercial office at the new Wynyard Quarter. Auckland vacancy in city office buildings is at a 20-year low, as New Zealand’s biggest city has benefited from strong population growth, translating to rental demand for businesses.

Quattro, an Australian investor, is in talks to buy Precinct's 125 The Terrace building in Wellington and the SAP Tower in Auckland, as it looks to list a New Zealand-based property portfolio on the ASX. The two properties had a combined book value of $159.4 million as at June 30.

Shares of Precinct last traded at $1.115 and has gained 13 percent since the start of the year. The stock is rated an average of 'hold' based on the consensus of six analysts surveyed by Reuters, with a median price target of $1.09.


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