Macquarie Property Trust joins the market's big boys

Macquarie Goodman Property Trust (MGP) plans to buy $304 million of assets from its Australian-based sister Macquarie Goodman Group (MGQ), effectively doubling its size and propelling it into the sharemarket's top 50.

MGP's management company Macquarie Goodman NZ Ltd (MGNZ) said today the plan would result in MGP becoming the second largest NZX listed property group by market capitalisation.

The deal is expected to take MGP into the benchmark NZSX-50 gross index of top stocks, "thereby increasing investor awareness... and enhancing trading liquidity in the MGP units".

The assets MGP will acquire are MGQ's interests in New Zealand industrial and commercial property developments which have either been completed or commenced and which are currently held jointly by the two groups.

MGP will also take a 50 per cent interest in development land at MGQ's Central Park Corporate Centre, Greenlane and The Gate Industry Park, Penrose in Auckland.

As well as creating New Zealand's second largest listed property trust the deal would simplify MGP's property ownership structure, MGNZ said.

Meanwhile MGNZ has also proposed restructuring the fees it receives for managing MGP, reducing its base fee and the introducing a performance based payment.

This would result in an "improved alignment of the interests of unitholders and MGNZ," MGNZ said.

MGP will fund the $304m purchase with a combination of debt, and a $151 million capital raising consisting of an $80m institutional book build and a $70m priority entitlement offer.

The book build is taking place today and tomorrow and is fully underwritten by Macquarie Equities NZ at the higher price of $1.06 per unit and the price determined by the book-build.

It is expected MGQ will hold between 30 and 34 per cent of issued MGP units once the deal is completed.

MGP's units were placed in a trading halt this morning and trading will recommence trading on Thursday morning after the book build is completed. They last traded at $1.21 on Friday.

The priority entitlement will see all unitholders offered two new MGP units for every five they already hold.

The transaction is expected to be settled by April 1, 2005 but the the purchase and management fee restructure will remain subject to unitholder approval which will be sought at a meeting to be held on April 23.

MGNZ said other benefits for unitholders from the proposed acquisition included a projected increase in the annual gross distribution from 9.45 cents to 9.80 cents per unit for the March 2006 financial year and an increase in net tangible assets.

- NZPA