DNZ expects institutions to get a slice

The Meridian Energy building in Wellington is part of DNZ's property portfolio. Photo / Supplied

DNZ Property Fund's chairman expects institutions to buy many of the shares in next month's $35 million float.

Tim Storey said existing investors might not take up all their entitlement.

This means professional investors might buy the rest in the deal which is being taken to the market but not underwritten by Goldman Sachs JBWere.

"We will have to wait to see what the take-up from existing shareholders is. The board has recommended they take up their entitlements and hopes they do so," Storey said.

"But realistically we don't expect all entitlements to be taken up. What is left over will be offered to institutions and the price set through the book-build process."

DNZ could raise up to $45 million but it was too early to tell if it would get the extra $10 million, he said.

"Whether we accept over-subscriptions is at the board's discretion and pricing will influence that decision.

"There appears to be strong institutional support for the offer.

"Among other things, institutions are attracted to the internalised management structure and the governance structure which will be unique among listed property vehicles," Storey said.

DNZ is making a pro rata offer to existing shareholders. Shares not taken up will first be offered to investors who can then apply to take up more than their entitlement.

Then DNZ employees and institutions get the next crack at the deal.

"The offer price for all new shares will be determined following a competitive book-build process at the conclusion of the offer," Storey said.