Kiwi trust wants owner approval for greater debt

Kiwi Income Property Trust is asking unit holders to approve a $55 million increase in the amount of debt it can carry.

Angus McNaughton, chief executive of trust manager Kiwi Income Properties, said yesterday a meeting of unit holders would be held in Auckland on January 27.

At the meeting, he will ask unit holders to support a resolution amending the trust's deed. He wants unit holders to allow the trust to borrow up to 40 per cent of the gross value of its $1.1 billion fund - at the moment it can borrow 35 per cent.

That means Kiwi would be able to borrow $440 million instead of $385 million.

Support of just over half the unit holders is required for the resolution to pass.

McNaughton said the trust wanted to help improve returns by using debt rather than more expensive equity.

"We're always spending money on various projects and it's just a cheaper cost of capital," he said.

McNaughton said the move did not signal an imminent plan to buy the 80 per cent of Capital Properties New Zealand the trust did not already own.