Macquarie to boost its portfolio to $1bn

Macquarie Goodman Property Trust (MGP) today announced a $318 million property buy-up that will boost its portfolio to $1 billion and make it the country's second-largest listed property trust.

The move would mean MGP ranked second only to Kiwi Income Property Trust and lift its Stock Exchange ranking to a top-25 placing.

MGP said it planned to acquire the portfolio of industrial and business properties from its cornerstone unitholder, Australia's Macquarie Goodman Group.

John Dakin, chief executive of the trust's manager, Macquarie Goodman NZ Ltd, said MGP had been acquiring properties on a small scale basis, but today's move was a step up -- allowing the introduction of a large scale portfolio of sector specific properties in one swoop.

The purchase would be part-funded by an institutional placement, designed to raise $112.7m, and a unit purchase plan.

The balance would be funded via new debt and a direct allotment of around $48 million of MGP units to Macquarie Goodman Group, which would retain a significant cornerstone investment.

Mr Dakin said the purchase would "significantly improve" the quality, lease expiry profile, occupancy, tenure and average age of MGP's portfolio, while maintaining a conservative weighting to development activities.

It would increase MGP's weighting in the NZX Property index from 12.9 per cent to 17.0 per cent and its top 50 ranking from 29th to 23rd -- above the threshold for inclusion in the Morgan Stanley Capital Index, which major institutions use to track their portfolios.

Unitholders would also benefit in the form of increased dividends, with the payout projected to rise by 3.4 per cent to 10.2 cents per unit in the year to March 2007.

"This is another important step in augmenting MGP's position as New Zealand's leading industrial and business space provider," chief executive officer of the Macquarie Goodman Group, Gregory Goodman, said.

The new portfolio includes a number of high calibre tenants like Air New Zealand, Exel, New Zealand Post and Vodafone; with an increase in weighted average lease expiry from 4.7 years to 5.7 years.

More than 58 per cent of leases expire in 2010 or beyond.

MGP also announced today it has upwardly revalued its property by $27.5m , resulting in an increase in net tangible assets per unit from $1.06 to $1.13.

The institutional placement has been fully underwritten by Macquarie Equities New Zealand. The issue price of the units would be determined via a book-build process on March 2-3.

Under the unit holder purchase plan, New Zealand unitholders on the register as at March 17 could acquire up to $5000 worth of units at the same price as the institutional placement.

The units issued to Macquarie Goodman Group would be at the book build price or $1.19 -- depending on which was higher.

"Macquarie Goodman Group remains committed to its strategic investment in MGP and will maintain its interest of between 25 per cent and 30 per cent of issued units following the transaction," Mr Goodman said.

A trading halt on the units is in place on NZX and would continue for two business days, unless terminated earlier.

The units last traded yesterday at $1.22 against a year high of $1.28 and a low of $1.08.

Today's deal, which has been unaminously recommended by the trust's independent directors, was conditional Overseas Investment Office and unitholder approval, to be voted on at a meeting on March 22.

Independent appraiser, Deloitte Corporate Finance, has been appointed to advise unitholders on the purchase.

MGP confirmed it would pay a final dividend for the fourth quarter to March 31 of 2.465 cents per unit on April 7.

- NZPA