Shortfall for $220m Colonial property trust

Colonial's $200 million property trust closed undersubscribed yesterday, meaning the two arms of the group which injected assets into the trust will own more of it than they want.

Brokers Warburg Dillon Read were waiting until today for final subscriptions to come through before revealing the level of undersubscription to the $100 million issue of units.

Colonial, through its own life society and recently acquired Prudential Assurance, planned to own 31 per cent of the Colonial First State Property Trust on listing next Thursday.

Colonial Mutual Life agreed to take 8.9 million units and Prudential 36.1 million, and to underwrite in the same proportions. Assets initially are to total $285 million, with $41.4 million of debt, rising to $203.6 million of assets on completion of a Newmarket building at the end of the year. Debt would also rise then, to $59.2 million.

A subscription shortfall, which some brokers suggested could exceed 10 per cent, would take Colonial's initial ownership of the trust to 38 to 40 per cent.

Colonial's head office in Wellington is one building put in the trust after failing to sell last year for a substantially higher asking price. Other properties were contributed by Prudential and a $60.4 million package of three new buildings came from developer Symphony Group. - Bob Dey