STR - Stride Property [ex DNZ Property]

[Dr_Who]

Would like feedback on this float.

Why DNZ and not the other LPT that is currently available on the market?

[fungus pudding]

Would like feedback on this float.

Why DNZ and not the other LPT that is currently available on the market?

Have they announced a float?

[Anna Naum]

Have they announced a float?

Investors eye $800m float of revamped property group

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10608923

[Jessie]

Investors eye $800m float of revamped property group

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10608923

"A listing with an initial market capitalisation close to $800 million is expected"

- this must be wrong. Market capitalisation can't be much more than $300m after accounting for debt and the discount that most LPTs are currently selling at.

The IPO will need to raise maybe $150m to pay out management contract and reduce debt. I wonder whether existing shareholders will have the opportunity or desire to contribute? Many will be heavily burnt victims of Money Managers who won't have much cash left.

[fungus pudding]

Investors eye $800m float of revamped property group

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10608923

Thanks - I hadn't seen that but was aware that it was inevitable. I've got a heap of shares in this thing, which I've had for years. I'd like to see the full details of this offer.

[Snapper]

Very positive article in the Herald (almost too positive) but need to see the numbers. I already hold but may be interested in more depending on discount.

[Omega]

Priced range of 76-86 cents and underwritten. Some mickey mouse allocation method of 1/3rd firm and 2/3 contingent- full details not yet available. With trading on the unlisted at 42-45 cents prior to halt, the capital raising/IPO price is no bargin!

[fungus pudding]

Priced range of 76-86 cents and underwritten. Some mickey mouse allocation method of 1/3rd firm and 2/3 contingent- full details not yet available. With trading on the unlisted at 42-45 cents prior to halt, the capital raising/IPO price is no bargin!



Where did you get the info?

[fungus pudding]

Where did you get the info?

Just found it in Herald myself. Should have looked first. Will be an interesting offer.

[CJ]

Why DNZ and not the other LPT that is currently available on the market?The amin differences appear to be:

- the type of property held
- the management are in house so interests are in theory alligned (as much as anyone who gets bonuses based on 'performance' can be).

[Jessie]

Priced range of 76-86 cents and underwritten. Some mickey mouse allocation method of 1/3rd firm and 2/3 contingent- full details not yet available. With trading on the unlisted at 42-45 cents prior to halt, the capital raising/IPO price is no bargin!

I don't think the unlisted share prices are comparable. The Herald article quotes 188m shares currently on issue but there are actually 470m I think. So it appears there will be some consolidation of shares (2 for 5?) prior to listing. This would imply a price for current shares of about 32 cents. Current asset backing is about 80 cents but that is irrelevant - I guess it require a big discount to make the offer attractive when compared with other property companies which also sell at large discounts to net asset value.

[fungus pudding]

I don't think the unlisted share prices are comparable. The Herald article quotes 188m shares currently on issue but there are actually 470m I think. So it appears there will be some consolidation of shares (2 for 5?) prior to listing. This would imply a price for current shares of about 32 cents. Current asset backing is about 80 cents but that is irrelevant - I guess it require a big discount to make the offer attractive when compared with other property companies which also sell at large discounts to net asset value.

In which case the fairest action for current shareholders would be to sell the buildings and wind the show up. Listed property shares sell at a discount to valuation - properties don't.

[Snapper]

In which case the fairest action for current shareholders would be to sell the buildings and wind the show up. Listed property shares sell at a discount to valuation - properties don't.

Inthe paper it said existing shareholders held 188.5 million shares which is exactly half of the 377 million share capital in the latest report. 2 for 1, I'd guess.

Fungus, agree with you - on that basis they should wind it up. No wonder the institutions were so enthusiastic about it. Unfortunately however, shareholders won't have much of a say in it, they'll just have to lie back and take it.

[fungus pudding]

Inthe paper it said existing shareholders held 188.5 million shares which is exactly half of the 377 million share capital in the latest report. 2 for 1, I'd guess.



Errrrrrr............ 1 for 2 I'd guess.

[Snapper]

Errrrrrr............ 1 for 2 I'd guess.

Yeah, got my one's and two's mixed up

[fungus pudding]

Yeah, got my one's and two's mixed up


I have emailed DNZ and asked them if this 1 for 2 for existing shareholders is what they intend. It will be interesting to see if and/or when I get a reply.

[fungus pudding]

I have emailed DNZ and asked them if this 1 for 2 for existing shareholders is what they intend. It will be interesting to see if and/or when I get a reply.

And the answer from them is ............'We are unable (?) to comment before the prospectus is issued. Which means they are able to comment but choose not to, which in turn means that you azre right. Existing shareholders are about to be shafted Royally.

[Jessie]

And the answer from them is ............'We are unable (?) to comment before the prospectus is issued. Which means they are able to comment but choose not to, which in turn means that you azre right. Existing shareholders are about to be shafted Royally.

Yes they are keeping very quiet about the details although obviously the Herald reported managed to get a glimpse of the prospectus. Unfortunately she didn't note the most important details of the offer though, at least for existing shareholders. We will all find out in a day or two I guess.

[Jessie]

In which case the fairest action for current shareholders would be to sell the buildings and wind the show up. Listed property shares sell at a discount to valuation - properties don't.

Actually the best action for shareholders of most property companies would be to wind them up as they are mostly selling at steep discounts.

[Omega]

Jessie, would be interested to know where the share consolditaion info source came from as this is news to me. I haven't seen any reports of this and there was no mention of this by the brokers when I enquired about purchasing some shares. Considering as I baulked at the price and advised my interest was nil at that price, one would have thought it was an important fact to highlight.

[Jessie]

Jessie, would be interested to know where the share consolditaion info source came from as this is news to me. I haven't seen any reports of this and there was no mention of this by the brokers when I enquired about purchasing some shares. Considering as I baulked at the price and advised my interest was nil at that price, one would have thought it was an important fact to highlight.

The Herald article says there are 185 million shares currently on issue but there are actually 470 million shares on issue according to the last annual report. That suggests there will be some share consolidation. But the Herald reporter has got things completely wrong before (ie, talking about a company with a 800m capitalization!) so until we see the prospectus we can't really be certain what is in the proposal.

I presume current shareholders will have the rights to subscribe to new shares but this will disadvantage those without available funds (many retired people are in this company).

The real problem is that the company has to significantly lower its debt levels which are much higher than other property companies. The alternative would be to sell properties but that might be difficult in the current climate although other trusts (eg NAP) have been selling properties although at prices below their last valuation. I think the managers would be reluctant to sell properties as this lowers the value of their management contract.

[Anna Naum]

The Herald article says there are 185 million shares currently on issue but there are actually 470 million shares on issue according to the last annual report. That suggests there will be some share consolidation. But the Herald reporter has got things completely wrong before (ie, talking about a company with a 800m capitalization!) so until we see the prospectus we can't really be certain what is in the proposal.

I presume current shareholders will have the rights to subscribe to new shares but this will disadvantage those without available funds (many retired people are in this company).

The real problem is that the company has to significantly lower its debt levels which are much higher than other property companies. The alternative would be to sell properties but that might be difficult in the current climate although other trusts (eg NAP) have been selling properties although at prices below their last valuation. I think the managers would be reluctant to sell properties as this lowers the value of their management contract.

I think the consolidation was 2:5 to 1 and they were trading around the 40-45c prior to this. Trying to check.

[Billy Boy]

DNZ like most company's are let to learn.....
YOU CANT SELL A SECRET
BB :)

[Snapper]

I think the consolidation was 2:5 to 1 and they were trading around the 40-45c prior to this. Trying to check.

I think your're right about the 2 for 5. Re DNZ's portfolio, it's mainly in the 5 to 40 mill category so it should be quite liquid. The best result for shareholders would be for DNZ to sell down more of its properties, I understand there's about 97-98% occupancy so it shouldn't be too difficult.

The management company and the fact that its directors hold the voting shares in DNZ mean that ordinary shareholders have little or no say in this. The directors bought out Doug Somers-Edgar a year or two ago which would have cost them a bit and they will be looking at recouping that and more when they get bought out post float (40 odd mill).

Another case of ordinary shareholders taking it up the ar#e

[Omega]

Sorry folks, I still don't buy into the 2:5 share consolidation to justify the 76-86 cents cap raising price or the NZ Herald article qty of shares on issue. There's no logical reason for a share consolidation and the Herald figure of 188.5m shares is most likely an error. The writer may have meant the value in dollar terms was $188.5m based on last sale price. Nothing is certain until DNZ releases the documents, but I'll eat my hat if the cap raising price produces anywhere near the same yield as the shares that were last trading on the unlisted market.

[Jessie]

Sorry folks, I still don't buy into the 2:5 share consolidation to justify the 76-86 cents cap raising price or the NZ Herald article qty of shares on issue. There's no logical reason for a share consolidation and the Herald figure of 188.5m shares is most likely an error. The writer may have meant the value in dollar terms was $188.5m based on last sale price. Nothing is certain until DNZ releases the documents, but I'll eat my hat if the cap raising price produces anywhere near the same yield as the shares that were last trading on the unlisted market.

I think you'll have to eat your hat. To attract $150m the yield will have to be similar to other small property companies such as NAP or KPF - ie, 10%+. The reason for a consolidation must be purely cosmetic - it means the shares will list at about $1 rather than 30 cents.

[Snapper]

DNZ are very generously offering a buy back facility for existing shareholders at 82 cents a share post consolidation which equates to just under 33 cents pre consolidation. This on an current asset backing of 84 cents?? This gets worse and worse.

[Jessie]

It looks like I was correct. Here is the announcement

"DNZ Property Fund Limited (“DNZ”) today announced that it is seeking to raise $130 million from new and existing shareholders as part of a proposed listing on the New Zealand Stock Exchange.

The $130m IPO features a $30 million priority pool reserved for existing shareholders and a $100 million offer to institutions and NZX Primary Market Participants. Oversubscriptions of up to an additional $10 million may be accepted under the priority pool.

The offer price is 82 cents per share, following the 2 for 5 share consolidation undertaken earlier this week."

[fungus pudding]

DNZ are very generously offering a buy back facility for existing shareholders at 82 cents a share post consolidation which equates to just under 33 cents pre consolidation. This on an current asset backing of 84 cents?? This gets worse and worse.

Yes. They are just gangsters. I ended up with a heap of shares after initially buying into some of the Money Mannagers' syndicates. I picked the eyes out of the good ones, but then they managed to get agreement from investors to amalgamate them. Every step of the way since day one has been a further shafting for investors.

[Jessie]

I put $5000 into one of the MM property funds 15 years ago and I calculate this investment will be worth $4856 if DNZ lists at 82 cents a share. Hopefully there will be a bit of a premium so I can get my original money back! The return after tax over 15 years has been 5.8% which isn't too bad I suppose. I think my fund (Cornerstone Property I think it was called) has done better than most of the Dominion funds.

The price set for the IPO equivalent to 33 cents. I was hoping for something around 40 cents, especially given the recent improvement in property company prices. However, the prices people were paying on the unlisted market were unrealistic compared with listed companies. Eg, NAP has the same NAV per share but much lower debt and was selling at 36 cents when DNZ was selling at 50 cents. I will probably subscribe to quite a few shares in the priority pool as they seem pretty cheap.

[Jessie]

Yes. They are just gangsters. I ended up with a heap of shares after initially buying into some of the Money Mannagers' syndicates. I picked the eyes out of the good ones, but then they managed to get agreement from investors to amalgamate them. Every step of the way since day one has been a further shafting for investors.

I think a lot of investors will be totally pissed off when they realize how little their original investment is now worth. But the damage was done years ago, firstly when they paid Doug a commission of 10% and then high management fees to run generally mediocre buildings with high gearing, and finally paid out millions to Doug's retirement fund to let someone else take over his cash cow. I don't blame the current managers.

[Snapper]

I think a lot of investors will be totally pissed off when they realize how little their original investment is now worth. But the damage was done years ago, firstly when they paid Doug a commission of 10% and then high management fees to run generally mediocre buildings with high gearing, and finally paid out millions to Doug's retirement fund to let someone else take over his cash cow. I don't blame the current managers.

Don't think so, the damage is being done now. The current management have choices about how they go about reducing debt and this option gives them(the management company) a brilliant result while shafting existing shareholders. How many property company capital raises do you see at a 60% discount to NTA?

Some back of the envelope figures

Post - consolidation no. of shares 188,500,000 NTA $2.10 $395,000,000
Number of shares to be issued 175,000,000 say $0.80 $140,000,000
less management company buyout $ 43,000,000

Total number of shares 363,500,000 NTA $1.35 $492,000,000

For existing shareholders whose pre consolidation NTA was $0.84, that has been reduced to $0.54 cents.

What they should be doing is listing on the market then selling down properties - they have managed to sell a number over the past year at book value so what's the problem with continuing that process?

[fungus pudding]

Don't think so, the damage is being done now. The current management have choices about how they go about reducing debt and this option gives them(the management company) a brilliant result while shafting existing shareholders. How many property company capital raises do you see at a 60% discount to NTA?

Some back of the envelope figures

Post - consolidation no. of shares 188,500,000 NTA $2.10 $395,000,000
Number of shares to be issued 175,000,000 say $0.80 $140,000,000
less management company buyout $ 43,000,000

Total number of shares 363,500,000 NTA $1.35 $492,000,000

For existing shareholders whose pre consolidation NTA was $0.84, that has been reduced to $0.54 cents.

What they should be doing is listing on the market then selling down properties - they have managed to sell a number over the past year at book value so what's the problem with continuing that process?

Exactly. It would be far better for existing investors to suspend or reduce dividends while undertaking a program to sell off some buildings. Unfortunately this whole outfit has never given a toss for its investors, like everything Doug Somers Edgar had anything to do with.

[Dr_Who]

Another Goldman Sachs special served to the public on this one. Kathamandu and now DNZ. The Doc will also say no to this one.

DNZ managers to personally pocket $43m of $130m capital raising

Jazial Crossley | Thursday November 19 2009 - 12:03pm
Soon-to-be listed company DNZ Property Fund today announced details of its $130 million public offer and plans to list on the NZX on 17 December.

The capital raising is to reduce the company’s debt and fund the $43 million termination of the contract with its existing manager.

But the manager is its current chief executive Paul Duffy and its director Alastair Hassell through their company DNZ Property Group, formerly Dominion Funds.

Mr Hassell who is retiring next March and Mr Duffy will each personally receive $21.5 million of the funds invested by shareholders.

Speaking at a presentation to media at DNZ Property Group’s Auckland head office this morning, chairman Tim Storey said that $43 million was “required” to terminate the contract.

“Paul [Duffy] will receive just over $20 million, half of it in shares and half of it in cash,” Mr Storey said.

Sitting alongside him, Mr Duffy was silent.

Goldman Sachs JBWere, as advisers of the “management internalisation” had recommended the $43 million deal which Mr Storey described as at the "lower end of the range" along with an independent subcommittee.

DNZ Property requires that half of the $21.5 million each be reinvested back in to the company – the portion in shares – under an eighteen month long moratorium.

What Mr Duffy does with his $10 million cash is a “personal” matter, said Mr Storey.

Mr Hassell, who is retiring in four months, was "in transit back from Queensland" following this morning's press conference therefore unavailable for comment.

The $130 million capital raising offer, is underwritten by Goldman Sachs JBWere will consist of 158.5 million shares at 82c each.

This includes a $30 million pool of priority funds that will be available first to existing shareholders with $10 million of room for oversubscriptions.

DNZ Property Fund owns $730 million worth of commercial, retail and industrial property in 61 buildings with an average asset value of $12 million.

The capital raising opens on November 23 and closes December 4, with allotment scheduled to take place on 16 December before it lists on the NZX the following day.

[fungus pudding]

Another Goldman Sachs special served to the public on this one. Kathamandu and now DNZ. The Doc will also say no to this one.

DNZ managers to personally pocket $43m of $130m capital raising

Jazial Crossley | Thursday November 19 2009 - 12:03pm
Soon-to-be listed company DNZ Property Fund today announced details of its $130 million public offer and plans to list on the NZX on 17 December.

The capital raising is to reduce the company’s debt and fund the $43 million termination of the contract with its existing manager.

But the manager is its current chief executive Paul Duffy and its director Alastair Hassell through their company DNZ Property Group, formerly Dominion Funds.

Mr Hassell who is retiring next March and Mr Duffy will each personally receive $21.5 million of the funds invested by shareholders.

Speaking at a presentation to media at DNZ Property Group’s Auckland head office this morning, chairman Tim Storey said that $43 million was “required” to terminate the contract.

“Paul [Duffy] will receive just over $20 million, half of it in shares and half of it in cash,” Mr Storey said.

Sitting alongside him, Mr Duffy was silent.

Goldman Sachs JBWere, as advisers of the “management internalisation” had recommended the $43 million deal which Mr Storey described as at the "lower end of the range" along with an independent subcommittee.

DNZ Property requires that half of the $21.5 million each be reinvested back in to the company – the portion in shares – under an eighteen month long moratorium.

What Mr Duffy does with his $10 million cash is a “personal” matter, said Mr Storey.

Mr Hassell, who is retiring in four months, was "in transit back from Queensland" following this morning's press conference therefore unavailable for comment.

The $130 million capital raising offer, is underwritten by Goldman Sachs JBWere will consist of 158.5 million shares at 82c each.

This includes a $30 million pool of priority funds that will be available first to existing shareholders with $10 million of room for oversubscriptions.

DNZ Property Fund owns $730 million worth of commercial, retail and industrial property in 61 buildings with an average asset value of $12 million.

The capital raising opens on November 23 and closes December 4, with allotment scheduled to take place on 16 December before it lists on the NZX the following day.

The whole scheme need to be whacked with an injunction.

[Jessie]

[QUOTE=Snapper;282322]Don't think so, the damage is being done now. The current management have choices about how they go about reducing debt and this option gives them(the management company) a brilliant result while shafting existing shareholders. How many property company capital raises do you see at a 60% discount to NTA?

All property companies have been struggling to reduce debt either by selling property, or raising equity. DNZ has far higher levels of debt than any other company. They have sold $26m of property in the last year but would need to sell vastly more to reduce debt to comfortable levels. Whether this would be possible in the current environment or be better for shareholders than the recapitalization plan, I don't know.

[Snapper]

The only way for existing shareholders to avoid being diluted is to buy the same number of shares as they already hold. Unfortunately the pool for existing holders is only $30 mill. The institutional placement has apparently been snapped up. Funny that.

[Snapper]

[QUOTE=Snapper;282322]Don't think so, the damage is being done now. The current management have choices about how they go about reducing debt and this option gives them(the management company) a brilliant result while shafting existing shareholders. How many property company capital raises do you see at a 60% discount to NTA?

All property companies have been struggling to reduce debt either by selling property, or raising equity. DNZ has far higher levels of debt than any other company. They have sold $26m of property in the last year but would need to sell vastly more to reduce debt to comfortable levels. Whether this would be possible in the current environment or be better for shareholders than the recapitalization plan, I don't know.

They would have to sell about $170 million worth to get their debt back to 35%, they might also have to reduce their distributions in the interim to keep the banks happy. I'd be far happier with that than what they're doing now.

Just as an aside, I see that Simon Botherway, who is a director of DNZ and approved this, is also a member of the Securities Commission. God help us.

[ziggy]

As a shareholder I am really annoyed by this announcement. It stats that the consolidation has already taken place earlier in the week. Do we as shareholders have any say in this - do we just have to take what miserly portions they give us. It is yet another product that money managers promoted that has not performed.

[fungus pudding]

The only way for existing shareholders to avoid being diluted is to buy the same number of shares as they already hold.

But their original holding is still diluted. The extra purchase is only a bit of compensation they can shout themselves.

[Snapper]

In the PWC report in the investment statement it goes over the dilutionary impact and also explains the net effect if you puy more shares in the placement.

[troyvdh]

..and various "powers at be" are encouraging folk to put their money in shares as opposed to the rental properties....these two IPO's (katmandont) are in my opinion not worthy of consideration as it appears that others have already taken the "potential for growth" out of the equation and the prime motive appears, on the face of it ...greed above all else.
Sad really.

[fungus pudding]

In the PWC report in the investment statement it goes over the dilutionary impact and also explains the net effect if you puy more shares in the placement.


I haven't seen the statement. What return are they predicting?

[troyvdh]

I maybe paranoid but has anyone else noticed that articles on both stuff and nz herald no longer mention the fact that so many million dollars raised is being paid to two directors....

[Omega]

Net cash dividend was 4.85 cps pre share consolidation. This equates to 12.12 cps post consolidation but following cap raising this is set to reduce to 6.80 cps. New shares will only qualify for 2 payments in the next nine months and quarterly thereafter. This is no bargin for the those participating in the cap raising, and a real kick in guts for existing shareholders.

[fungus pudding]

Net cash dividend was 4.85 cps pre share consolidation. This equates to 12.12 cps post consolidation but following cap raising this is set to reduce to 6.80 cps. New shares will only qualify for 2 payments in the next nine months and quarterly thereafter. This is no bargin for the those participating in the cap raising, and a real kick in guts for existing shareholders.

If those figures are right why the hell would the institutions have snapped up the 100 million on offer? Or is that just bs?

[Snapper]

6.8 cps is a yield of 8.3% net on the issue price of 82 cents. For a 33% taxpayer that's a gross yield of 12.4%

[fungus pudding]

6.8 cps is a yield of 8.3% net on the issue price of 82 cents. For a 33% taxpayer that's a gross yield of 12.4%


Which is less than the other listed trusts.

[Omega]

If those figures are right why the hell would the institutions have snapped up the 100 million on offer? Or is that just bs?

I've been asking myself that very question when you compare them to the likes of ING/GMT. Maybe because it will form part of the NZX50 and LPT indexes but it still seems out of kilter when you consider how the institutions/underwriters scored big time in many of the other cap raisings this year.

[Snapper]

According to PWC in their appraisal only two forecast yields are higher than DNZ (based on 82c), Kermadec and ING.

[Omega]

The PWC report is forecasting for FY2011 to show DNZ in a better light because they have forecast a number of the other LPT's FY2011 dividends lower than their 2010 dividends. Furthermore DNZ is "skipping" one of the payments in the 2010 calendar year which reduces the yield for the first 12 months from 8.3% to 6.2%.Then you have the likes of GMT who are only paying out 90% and retaining the other 10% for debt reduction or developments.

[Jessie]

[QUOTE=Snapper;282322]Don't think so, the damage is being done now. The current management have choices about how they go about reducing debt and this option gives them(the management company) a brilliant result while shafting existing shareholders. How many property company capital raises do you see at a 60% discount to NTA?

The discount to NTA is 35% not 60%. The numbers for the new shares (yield, discount to NAT, etc) are similar to other property companies. We will know when it lists if existing shareholders have been shafted. If it lists at close to 82 cents then the price was right. As I said, for most investors in DNZ, the damage was done years ago. It is only now that the company is being listed that they find what the market value of their investment really is. A rather uncomfortable reality for many.

[fungus pudding]

We will know when it lists if existing shareholders have been shafted. If it lists at close to 82 cents then the price was right.

If it lists at 82c that's the equivalent of 33c of the original share, which at the time of the final amalgamation (about a year ago) had an NTA of $1.00. The shares have been diluted and that's a shafting.

[Jessie]

If it lists at 82c that's the equivalent of 33c of the original share, which at the time of the final amalgamation (about a year ago) had an NTA of $1.00. The shares have been diluted and that's a shafting.

No Fungus. Property prices have fallen. The company was highly geared. There was the management agreement already in place which cost a lot to get rid of (thank Money Managers for setting that up). Face facts. The shares are only worth about 33 cents.

[Snapper]

[QUOTE=Snapper;282322]Don't think so, the damage is being done now. The current management have choices about how they go about reducing debt and this option gives them(the management company) a brilliant result while shafting existing shareholders. How many property company capital raises do you see at a 60% discount to NTA?

The discount to NTA is 35% not 60%. The numbers for the new shares (yield, discount to NAT, etc) are similar to other property companies. We will know when it lists if existing shareholders have been shafted. If it lists at close to 82 cents then the price was right. As I said, for most investors in DNZ, the damage was done years ago. It is only now that the company is being listed that they find what the market value of their investment really is. A rather uncomfortable reality for many.

Pre-consolidation, the shares had an NTA of 84 cents which equates to $2.10 post consolidation. New shares are being offered at 82 cents which is 39% of $2.10. So it is actually a 61% discount to NTA, even more of a rort.

[fungus pudding]

No Fungus. Property prices have fallen. The company was highly geared. There was the management agreement already in place which cost a lot to get rid of (thank Money Managers for setting that up). Face facts. The shares are only worth about 33 cents.

Largely due to the issue of heaps more shares. In addition the return to investors will nearly halve in spite of the large rise due ($16 million?) in income. They could have halved the return, used the remaining half to reduce debt, and flogged off a couple of buildings. They didn't. Nor have they kept investors informed of anything. Apparantely we'll get something in the mail next week. Up until now we've got information from the Herald. They're gangsters.

[Jessie]

Largely due to the issue of heaps more shares. In addition the return to investors will nearly halve in spite of the large rise due ($16 million?) in income. They could have halved the return, used the remaining half to reduce debt, and flogged off a couple of buildings. They didn't. Nor have they kept investors informed of anything. Apparantely we'll get something in the mail next week. Up until now we've got information from the Herald. They're gangsters.

I suspect when the numbers are carefully examined, we'll find they've come up with a fair solution for the existing shareholders. If you want to see what can happen to highly geared property companies when the market turns, look across the Tasman.

[fungus pudding]

I suspect when the numbers are carefully examined, we'll find they've come up with a fair solution for the existing shareholders. If you want to see what can happen to highly geared property companies when the market turns, look across the Tasman.


DNZ gearing wasn't anywhere near the levels of Aust. companies. They were managing fine and only really need to reduce debt to list the company. There are plenty of pvt. companies, syndicates etc with gearing up to 50% or more.

[Snapper]

I suspect when the numbers are carefully examined, we'll find they've come up with a fair solution for the existing shareholders. If you want to see what can happen to highly geared property companies when the market turns, look across the Tasman.

I can't imagine why you would say something like this ("a fair solution for existing shareholders") because you obviously haven't 'carefully examined' the numbers and yet you're willing to believe they're doing the right thing by existing shareholders. I'm a DNZ shareholder, what's your interest in this?

[Jessie]

DNZ gearing wasn't anywhere near the levels of Aust. companies. They were managing fine and only really need to reduce debt to list the company. There are plenty of pvt. companies, syndicates etc with gearing up to 50% or more.

Why should the appropriate level of gearing have anything to do with whether the company is listed or not? Surely it relates to whether the banks will continue lending at a reasonable cost. It appears they won't at present. Even after this capital rising, DNZ will be more highly geared than any other LPT.

Other property companies (APT & KIP) have had to raise new capital at big discounts to share price or NTA, but the effects on current shareholders was smaller because the amounts raised weren't large. DNZ raised much more so the dilutionary effect were much greater. The other problem was the appalling management arrangement. The managers had total control of all decisions and an assured income regardless of performance, and the shareholders couldn’t sack them for 20 years. Buying them out was very expensive. Imagine running a democracy with 5 elections per century. How shareholders agreed to this rort in the first place is beyond comprehension.

[fungus pudding]

I can't imagine why you would say something like this ("a fair solution for existing shareholders") because you obviously haven't 'carefully examined' the numbers and yet you're willing to believe they're doing the right thing by existing shareholders. I'm a DNZ shareholder, what's your interest in this?

I'm also an investor with over 300,000 'old' shares. I'm far from impressed. There's no way they are acting in the shareholders' interest. Surely the investors could slap an injunction on this mob? Who's the expert on that?

[Jessie]

I can't imagine why you would say something like this ("a fair solution for existing shareholders") because you obviously haven't 'carefully examined' the numbers and yet you're willing to believe they're doing the right thing by existing shareholders. I'm a DNZ shareholder, what's your interest in this?

I have a few shares in DNZ and will probably purchase quite a few more. You should too if you think current shareholders are being shafted. The share price will leap dramatically on listing if you are correct. The final value of my shares is almost exactly what I calculated they were worth 12 months ago when I heard they were going to list. I based this valuation on other small indebted property companies. I should have sold them on the unlisted register where unrealistic prices were being paid but never got around to it.

[Snapper]

At the price they're being offered I most probably will buy some more. As far as the price leaping dramatically I don't necessarily see that happening, it all depends on how institutions/brokers view it.

[fungus pudding]

At the price they're being offered I most probably will buy some more. As far as the price leaping dramatically I don't necessarily see that happening, it all depends on how institutions/brokers view it.

But why would you? They won't be any better than ING, GMT, KIP, etc. I haven't seen the proposal yet and can only go by what I have read here - but unless I've missed something, I don't like it. Sounds like if I double my no. of shares I'll get about the same return as I was getting. Last bit of guff I ever had from them was gloating about how they could maintain the yield for investors. Not about how they could halve it. However I'll have a good look at offer statement when I get it, but I don't trust them. This whole outfit have been shafters since day one.

[Year of the Tiger]

I started with this lot in the late 90's when I was working overseas and a friend's financial adviser was singing the praises of a couple of investment opportunities they had on the go at the time.

Showcase Properties and Metropolis.

I let myself get sucked in and agreed to put a bit of money into both. :eek:

We all know what happened to Metropolis and Showcase has continued to morph from identity to identity over the last decade. My file for this investment has now got more faces than Michael Jackson. Of course, now it is DNZ Property Group.

There is no way they will get any more money from me and I can't see it being too long before I cut my losses and head to the hills. :(

YOTT

[fungus pudding]

I started with this lot in the late 90's when I was working overseas and a friend's financial adviser was singing the praises of a couple of investment opportunities they had on the go at the time.

Showcase Properties and Metropolis.

I let myself get sucked in and agreed to put a bit of money into both. :eek:

We all know what happened to Metropolis and Showcase has continued to morph from identity to identity over the last decade. My file for this investment has now got more faces than Michael Jackson. Of course, now it is DNZ Property Group.


At least Michael Jackson has stopped.

[Jessie]

But why would you? They won't be any better than ING, GMT, KIP, etc. I haven't seen the proposal yet and can only go by what I have read here - but unless I've missed something, I don't like it. Sounds like if I double my no. of shares I'll get about the same return as I was getting. Last bit of guff I ever had from them was gloating about how they could maintain the yield for investors. Not about how they could halve it. However I'll have a good look at offer statement when I get it, but I don't trust them. This whole outfit have been shafters since day one.

I don't think the share price will leap much on listing either which just proves my point that the offer is fair to current shareholders.

[Dr_Who]

Most of the money have gone to the lipstick pigs, nothing left for the shareholders. OINK OINK!

[Jessie]

I started with this lot in the late 90's when I was working overseas and a friend's financial adviser was singing the praises of a couple of investment opportunities they had on the go at the time.

Showcase Properties and Metropolis.

I let myself get sucked in and agreed to put a bit of money into both. :eek:

We all know what happened to Metropolis and Showcase has continued to morph from identity to identity over the last decade. My file for this investment has now got more faces than Michael Jackson. Of course, now it is DNZ Property Group.

There is no way they will get any more money from me and I can't see it being too long before I cut my losses and head to the hills. :(

YOTT

Money Managers were very good at marketing but hopeless at investing. No doubt they had the best of intentions but they always greatly underestimated the risk of their investments and went for high returns so that they could justify their high commissions. When setting up portfolios for retired folk who couldn't afford to lose capital, they used unlisted highly-geared property funds, and later their in-house finance company First Step, as income investments. Effectively they treated them as having risks equivalent to Govt bonds.

[Dr_Who]

Money Managers were very good at marketing but hopeless at investing. No doubt they had the best of intentions ....

You are kidding me right? Wake up and smell the roses!

MM is just as bad as these guys. Ask the Bond holders in the Krukziener Metrolpolis Apartment, just to name one of many.

[fungus pudding]

I don't think the share price will leap much on listing either which just proves my point that the offer is fair to current shareholders.


Yes - because this float of new shares has halved the value. They were never given a chance on the unlisted market. They could only be bought/sold through one broker initially; prices were only posted on Friday's, and before anyone knew about them they pulled trading. Had they been left alone and the debt handled differently investors would be much better off. Even if the dividends had been halved, at least the other half could have reduced debt thereby increasing our equity. It's a right royal, fair dinkum shafting.

[Jessie]

You are kidding me right? Wake up and smell the roses!

MM is just as bad as these guys. Ask the Bond holders in the Krukziener Metrolpolis Apartment, just to name one of many.

Some people on sharetrader seem incapable of reading more than one sentence. No doubt that why they were so easily ripped off by MM.

[Footsie]

dont touch it

[troyvdh]

...given the articulate and probably accurate expressions expressed here and about katmandont by those folk who have real dosh in the mkt what are the chances of Mr weldon et al being confronted and asked why this is all occuring.....crap offerings...just when folk are being lambasted for there preference for rentals...

[CJ]

Can we forget about the past. There is no doubt original investors are getting screwed. You can debate the reasons for ever but it doesn't change the result.

It is worth buying in now?!? The articles I have read seem to be quite positive because management has been brought in house.


dont touch it

Why? Is it worse than the other listed property trusts, or are you saying that just because of the history?

[fungus pudding]

[QUOTE=CJ;282629]Can we forget about the past. There is no doubt original investors are getting screwed. You can debate the reasons for ever but it doesn't change the result.

It is worth buying in now?!? The articles I have read seem to be quite positive because management has been brought in house.

[Quote]

Undoubtedly it is, but hard to see why it is more-so than many of the others LPTs.
Seems to me they are all being given away at miles below assett backing, while sales of C + I real estate don't seem to have much trouble achieving the valuation figures.

[troyvdh]

something really spooky came over me the other day...sweats,shivering and nausea...couldnt figure it out and then ..it came to me...the $90 million paid to "trust me sir bob" by us RJI shareholders in the early 90's buying him out of his management contract...still cheaper than $43 million I suppose....that little exercise cost me $30000..but I learnt a little.

[Dr_Who]

So many crooks in such a small market. Like a small pond full of sharks fighting for space and air.

[fungus pudding]

something really spooky came over me the other day...sweats,shivering and nausea...couldnt figure it out and then ..it came to me...the $90 million paid to "trust me sir bob" by us RJI shareholders in the early 90's buying him out of his management contract...still cheaper than $43 million I suppose....that little exercise cost me $30000..but I learnt a little.

Ummm -- sorry for being a little thick, but could you please explain how 90 million is cheaper than 43 million?

[troyvdh]

...oops...me very very thick....apologies...comes from shivers nausea et al....

[Jessie]

...oops...me very very thick....apologies...comes from shivers nausea et al....

$30,000 - no wonder you're shivering. I remember in 1990 buying quite a few share for 50 cents because Sir Bob was saying they were worth at least a dollar. I didn't know I was buying from him. How he escaped jail is a mystery.

[Anna Naum]

Wonder if the move by Synlait to delay listing has the underwriters of this worried

[Footsie]

A fool and his money are soon parted...

If you are desperate for property exposure.... go out and do it yourself.

[Snapper]

Wonder if the move by Synlait to delay listing has the underwriters of this worried

Don't think so - they've priced it so low that I'd be very surprised if it was undersubscribed.

[Jessie]

Don't think so - they've priced it so low that I'd be very surprised if it was undersubscribed.

The price is quite low and I will therefore subscribe to some extra shares. There may be some risk of selling pressure depressing the price when it lists as there must be a big backlog of people wanting to cash up after being stuck in it for many years.

Incidently, I notice Simon Botherway thinks the damage was done to investors when this structure was set up and he thinks they were poorly advised at the time:

http://www.3news.co.nz/DNZ-full-steam-ahead-with-IPO/tabid/209/articleID/131360/cat/52/Default.aspx

[Snapper]

The price is quite low and I will therefore subscribe to some extra shares. There may be some risk of selling pressure depressing the price when it lists as there must be a big backlog of people wanting to cash up after being stuck in it for many years.

Incidently, I notice Simon Botherway thinks the damage was done to investors when this structure was set up and he thinks they were poorly advised at the time:

http://www.3news.co.nz/DNZ-full-steam-ahead-with-IPO/tabid/209/articleID/131360/cat/52/Default.aspx

I saw the interview and I was quite surprised that he wasn't asked about the effect on the existing shareholders and how this capital raise is meant to look after their interests. As a director and someone who serves on the securities commission this should surely be his top priority.

[fungus pudding]

The price is quite low and I will therefore subscribe to some extra shares. There may be some risk of selling pressure depressing the price when it lists as there must be a big backlog of people wanting to cash up after being stuck in it for many years.

Incidently, I notice Simon Botherway thinks the damage was done to investors when this structure was set up and he thinks they were poorly advised at the time:

http://www.3news.co.nz/DNZ-full-steam-ahead-with-IPO/tabid/209/articleID/131360/cat/52/Default.aspx

Low price? Maybe, but not as low as several other listed trusts if valued on the return.

[Year of the Tiger]

The price is quite low and I will therefore subscribe to some extra shares. There may be some risk of selling pressure depressing the price when it lists as there must be a big backlog of people wanting to cash up after being stuck in it for many years.

http://www.3news.co.nz/DNZ-full-steam-ahead-with-IPO/tabid/209/articleID/131360/cat/52/Default.aspx

I can't see where the pressure comes in from a backlog of people wanting to cash up when I read this in the Investment Statement and Prospectus.

"Shares offered and accepted for sale by Existing Shareholders through the Share Sale Facility will be sold at the Offer Price in the event that the Offer is Oversubscribed. No assurance is given that such Shares can be sold at all and the Company reserves the right to reject any election to sell. If the Offer does not receive subscriptions for at least $130 million of Shares (excluding any subscription made pursuant to the underwriting arrangements), no Shares will be sold through the Share Sale Facility and all elections to sell through the Share Sale Facility will automatically be terminated."

I see that existing Shareholders are in a no-win situation. They will only buy your shares if the offer is oversubscribed and you will get your 82cents per share after the consolidation. If the take-up on the IPO is low, they reserve the right to reject your offer to sell your shares.

Hmmm... decisions, decisions.... as an existing Shareholder, I already have a sour taste in my mouth and this makes the taste a little more tart :(

YOTT

[fungus pudding]

I can't see where the pressure comes in from a backlog of people wanting to cash up when I read this in the Investment Statement and Prospectus.

"Shares offered and accepted for sale by Existing Shareholders through the Share Sale Facility will be sold at the Offer Price in the event that the Offer is Oversubscribed. No assurance is given that such Shares can be sold at all and the Company reserves the right to reject any election to sell. If the Offer does not receive subscriptions for at least $130 million of Shares (excluding any subscription made pursuant to the underwriting arrangements), no Shares will be sold through the Share Sale Facility and all elections to sell through the Share Sale Facility will automatically be terminated."

I see that existing Shareholders are in a no-win situation. They will only buy your shares if the offer is oversubscribed and you will get your 82cents per share after the consolidation. If the take-up on the IPO is low, they reserve the right to reject your offer to sell your shares.

Hmmm... decisions, decisions.... as an existing Shareholder, I already have a sour taste in my mouth and this makes the taste a little more tart :(

YOTT

Same here. DNZ haven't even had the decency to send any guff or to Sth Island investors yet. Nothing. We have had to rely on the odd announcement in the Herald and what I have read here, althought today I did receive advice that my 312,000 are now 124000 shares. As far as I can work out NTA backing and distributions have been diluted by more than 40%. There are no shares allocated for existing investors. They are first come - first served. That's the bad news. The good news is there is a distinct possibility of a court injunction being saught to block this issue of new shares at the discounted price, on the basis that it is against the investors' interests. Moves are underfoot and I've got my fingers crossed. Never have I encountered such appalling behaviour in financial affairs as these gangsters have thrown at us. I have emailed Paul Duffy to express my thoughts, and certainly hope others do the same.

[Year of the Tiger]

I have to admit that I had really put this "in the bottom drawer" as throughout the whole morphing process over the last 10+ years, I've just followed this with a bit of a ho-hum attitude. (I really only took an interst in this stuff myself in around 2003 after realising that putting blind faith in "ADVISERS" is a really bad move)

I've pretty much ridden the waves with this over the last few years but I look back now and see where the rot started to set in.

(Disc. I don't have a lot of shares in this but it still is relative to my total investment outlay.)

Letter on 17 April:

Interim Unaudited NTA
DNZ Property Fund Limited Shares: 13,095
31 March 2009 Interim NTA value: $11,654.55
The NZ IFRS adijusted interim anaudited share NTA as at 31 March 2009 is $0.89. This represents a decrease of 12.5 cent from the post amalgamation NTA of $1.015. The value ascribed to your shares primarily reflects the current independent valuations undertaken on all 63 properties as at 31 March 2009.
Please note that this is the book value of your investment in the fund; the value that the shares may be bought and sold will be indicated by trading on the Unlisted market. As this market commences trading on 20 April 2009 a market price has not yet been established.

Letter dated 29 June 2009 .
The final post-audit NZ IFRS adjusted NAT of the fund is $0.8940.

DRP...based on the current market share price on the Unlisted market, the shares issued under the DRP would be issued at $0.45 each minus a discount of 2.5% for a total price of $0.4388. The actual price of the shares will be calculated based on the market price of the shares at the end of the month after each quarter.

Now after consolidation they (2 for 5) they are $0.82 or $0.33 per share berfore the consolidation.

And I am supposed to be excited about this company and ready to plough more money into it...??? I don't think so.

YOTT

[Snapper]

Same here. DNZ haven't even had the decency to send any guff or to Sth Island investors yet. Nothing. We have had to rely on the odd announcement in the Herald and what I have read here, althought today I did receive advice that my 312,000 are now 124000 shares. As far as I can work out NTA backing and distributions have been diluted by more than 40%. There are no shares allocated for existing investors. They are first come - first served. That's the bad news. The good news is there is a distinct possibility of a court injunction being saught to block this issue of new shares at the discounted price, on the basis that it is against the investors' interests. Moves are underfoot and I've got my fingers crossed. Never have I encountered such appalling behaviour in financial affairs as these gangsters have thrown at us. I have emailed Paul Duffy to express my thoughts, and certainly hope others do the same.

Haven't received my pack yet either. We only have till next Friday to get our application forms which indicates to me that they aren't too bothered if existing shareholders participate or not. At this stage it doesn't appear that there will be any available in the public pool unless the priority offer is undersubscribed.

[Invercoll]

Received my DNZ pack and definitely won't be taking up this offer.

Suspicious of any thing where you can only get out at a loss. Seems to be a real hangover from MM.

Generous offer of DNZ of 82c for existing shareholders to sell their shares now, after consolidation of 2 for 5 blows me away.

Before consolidation each share was 84c and now they are worth $2.1077.
Why would anyone want to sell out at 82c. Sheer theft as far as l can see.

Invercoll

[fungus pudding]

Received my DNZ pack and definitely won't be taking up this offer.

Suspicious of any thing where you can only get out at a loss. Seems to be a real hangover from MM.

Generous offer of DNZ of 82c for existing shareholders to sell their shares now, after consolidation of 2 for 5 blows me away.

Before consolidation each share was 84c and now they are worth $2.1077.
Why would anyone want to sell out at 82c. Sheer theft as far as l can see.

Invercoll

No. They would be $2.10 but for the issue of 158,000,000 new shares which reduces the NTA to $1.28; but the market will slaughter that price. The dividend of 6.8% is ridiculously low compared to GMT, KIP, ING and NAP which means the 'new' shares should hit the market at about 75 - 78 cents. There's certainly better buying than these things at 82 cents. For all that I wouldn't sell at 82 cents - but sure as hell wouldn't buy more. At a rough calculation I would have to invest another $85,000 to maintain the dividend I was getting. No thanks! This mob are bandits and I certainly don't want to increase my exposure to them.

[fungus pudding]

No. They would be $2.10 but for the issue of 158,000,000 new shares which reduces the NTA to $1.28; but the market will slaughter that price. The dividend of 6.8% is ridiculously low compared to GMT, KIP, ING and NAP which means the 'new' shares should hit the market at about 75 - 78 cents. There's certainly better buying than these things at 82 cents. For all that I wouldn't sell at 82 cents - but sure as hell wouldn't buy more. At a rough calculation I would have to invest another $85,000 to maintain the dividend I was getting. No thanks! This mob are bandits and I certainly don't want to increase my exposure to them.

Oops! Sorry - dividend is 6.8 cents - not 6.8%, (that's 8.3%.) Too low compared to other LPTs.

[Snapper]

Don't be too quick to reject taking up the offer just because you're pi$$ed off with what's happening now. Once listed, DNZ will have a reasonable debt level, internal management and a good yield (@ 82c). The average discount for the listed property market is around 15% so if they end up at the same discount that implies a share price of 1.09 or a 33% increase from 82 cents.

If you really think the price will drop then wouldn't you be better off selling into the buyback offer. Not being a smartass but I know how hard it is to divorce the anger you feel at being screwed over and focus on what is the right thing to do.

[fungus pudding]

Don't be too quick to reject taking up the offer just because you're pi$$ed off with what's happening now. Once listed, DNZ will have a reasonable debt level, internal management and a good yield (@ 82c). The average discount for the listed property market is around 15% so if they end up at the same discount that implies a share price of 1.09 or a 33% increase from 82 cents.

If you really think the price will drop then wouldn't you be better off selling into the buyback offer. Not being a smartass but I know how hard it is to divorce the anger you feel at being screwed over and focus on what is the right thing to do.

Not angry, but disgusted. Yes I probably should sell, but I have an aversion to selling any investments. I'm not a trader and just accumulate things. You are right that the discount to the claimed NTA is high, but the dividend is ridiculously low. It's hard to see why anyone would pay 1.09 for a return of approx 6% when at least double that is available rfom other prop. companies.

[macduffy]

Anyone with an interest here should have a good read of Brian Gaynor's article.

http://www.nzherald.co.nz/best-of-business-analysis/news/article.cfm?c_id=1501241&objectid=10612081&pnum=0

[Snapper]

Yeah good article but I think that he should have got stuck into Simon Botherway and Tim Storey a bit more as they are relatively high profile and seem to be defending all these transactions.

Re the yield - according to the PWC report in the offer document only ING Properties and Kermadec have a higher forecast FY11 yield. All other things being equal DNZ's distributable profit should increase partly due to lower management costs and ratchet clauses in their leases.

[Dr_Who]

OINK OINK!

Disgraceful.

[fungus pudding]

Yeah good article but I think that he should have got stuck into Simon Botherway and Tim Storey a bit more as they are relatively high profile and seem to be defending all these transactions.

Re the yield - according to the PWC report in the offer document only ING Properties and Kermadec have a higher forecast FY11 yield. All other things being equal DNZ's distributable profit should increase partly due to lower management costs and ratchet clauses in their leases.

Yields on yesterday's prices
GMT = 11.75%
KIP = 7.84%
ING = 13.07%
APT = 10.64%
KPF 10%
NAP = 10.64%

DNZ @ 8.3 doesn't tempt me. Nearly all commercial leases have ratchet clauses, so it's hard to know why DNZ would increase at a higher rate than others.

[Snapper]

Are you talking net yields or gross? 8.3 is DNZ's net yield at 0.82.

[fungus pudding]

Are you talking net yields or gross? 8.3 is DNZ's net yield at 0.82.


Net yields - they're all pies. What you get is what you get, and those figures are what you get.

[Snapper]

The figures in the PWC report are the forecasts for the 2011 financial year. Are the dividend figures you're using historical?

[fungus pudding]

The figures in the PWC report are the forecasts for the 2011 financial year. Are the dividend figures you're using historical?

They are taken from direct broking site - checked out with my receipts from last year, so historical. I don't see them changing much.

[bull....]

more suckers to the slaughter with this pup.

What happens when they revalue their properties down in 6mths and oh drop the dividend payout amount your lose halve your dough overnight good luck as others say far better property plays available.

[Snapper]

more suckers to the slaughter with this pup.

What happens when they revalue their properties down in 6mths and oh drop the dividend payout amount your lose halve your dough overnight good luck as others say far better property plays available.

Hmmm...what makes you say that? Are you making a comment here on the quality of the portfolio compared to others, I'd be interested to know?

[troyvdh]

...dear snapper..with all due respect...you are an example of what is wrong with our share market....this IPO ..is crap......everone knows this....there is little if not no chance that this will be a successful.....on the face of it 30 % of all monies forwarded are to for a management contract...in the past....bye the way...how many dollars have you in the "mkt"....

[macduffy]

I really don't think that the extent of anyone's exposure to the market is relevant, to this or any other thread although financial interest in a stock should be disclosed, at least initially.

All opinions should be welcome.

Just IMO.

:)

[Dr_Who]

Van Schaardenburg said the DNZ deal was correct from a straight legal perspective "but morally wrong".

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10612394

This is what is wrong with our system. These geezers, like that of Blue Chip, Bridgecorp, Hanover, SCF etc, all understand the mechanics of the system and use it to the advantage and the detriment of the investing public. Even the advisors have been sucked into some of these scams.

We have not learnt from the past (1987) and these guys continue to take advantage of that. Greed indeed blinds us all.

It is legal but it is not moral and a large number of people suffered dearly as a result. Disgraceful really.

[paul29]

DNZ share issue upsets investors


Derek Button says shareholders were never consulted.Retired Auckland builder Derek Button knows property.

As an experienced listed real estate investor, he has confidence in the sector where he worked for decades.

Goodman Property Trust, ING Medical Properties Trust, Kiwi Income Property Trust and Property For Industry are businesses he thinks are well-run and in which he holds units and shares.

But he is one of a group unhappy with DNZ Property Fund's restructuring plan, which will see it list on December 17.

About four years ago, Button bought into DNZ, drawn to its syndication structure, the range of properties it offered and good returns being paid.

He complained that now the value of his investment would be reduced yet shareholders were never asked for their opinion.

"I'm very disappointed that it's been done without giving the existing shareholders good information and telling them it was going to be done," Button said.

David van Schaardenburg, a director of MMG Advisory Partners whose clients are DNZ shareholders, said thousands of existing shareholders would suffer financially.

"The share consolidation in itself causes no value loss. It is the new share issue and the purchase of the management contract which is dilutive for existing shareholders. This deal cuts the net tangible asset value of existing shareholders' investment by almost 40 per cent," he said.

Van Schaardenburg tried to force DNZ to change its constitution to make it seek permission from existing shareholders before it launched such a deal. He remains disappointed about the DNZ board's strong opposition to his motion.

Button is also disappointed.

"It seems we've had the rug pulled from underneath us. You can't stop this deal. It's a fait accompli. But I don't think the managers know how heavy the groundswell is against the way they have done this," he said.

He cannot see any way to recoup his original investment, which amounted to tens of thousands of dollars.

A sum of $43 million, a third of the $130 million raised via the new deal, goes to DNZ chief executive Paul Duffy and ex-chairman Alastair Hasell.

DNZ's prospectus out this month was more of a public relations exercise than a robust document which was clear about the negatives, Button said.

What worries him even more are indications from other businesses of management internalisation. ING Medical's board said at the annual meeting a few weeks ago it was investigating such a structure and AMP NZ Office Trust is also working on the concept. Button intends to keep his shareholding for some years in the hope the price will eventually recover and he can recoup some of his losses.

MMG is "strongly opposed" to the deal for its treatment of existing shareholders but DNZ chairman Tim Storey has defended it. Storey criticised MMG for saying the new deal would reduce the value of existing shareholdings.

Listing would benefit shareholders through attracting a wider investment pool, providing stronger governance, greater transparency and strengthening the balance sheet through debt reduction, he said.

Van Schaardenburg said the DNZ deal was correct from a straight legal perspective "but morally wrong".

[whatsup]

These directors SHOULD BE MADE TO SELL THEIR MANAGEMENT CONTRACT FOR SHARES in this offering that would leave them with skin in the game instead of a falling S/P

[BRICKS]

JUST don't BUY the share let them fend for themselves but it appears NZ investors cant
help THEMSELVES..

[macduffy]

JUST don't BUY the share let them fend for themselves but it appears NZ investors cant
help THEMSELVES..

BRICKS and I don't always see eye to eye but I'm 100% with him on this one!

:D

Why anyone would want to put money into this float (?) beats me.

[i_claudius]

I can quite understand the horror and anger this is causing past and existing investors in DNZ.You are being badly treated.

But as a new investor in these assets I see a reasonable prospect.Acceptable yield at a good discount to NTA (30/09/09 valuations) with the "old problems" of the hideous management contract,excessive gearing and illiquid trading being cleaned out.

I note messers Duffy and Hasell are "invested" out of their proceeds to the tune of 26.2 million shares (embargoed for 18 months).And yes,there are some outs but not without consequences.

I don't think the other directors including Simon Botherway would be taking up $3 million worth of shares without some sense of future value in it.

Are comments this is "crap" or not worth it fairly appraising the new form entity or just reflecting past pain?

[fungus pudding]

I can quite understand the horror and anger this is causing past and existing investors in DNZ.You are being badly treated.

But as a new investor in these assets I see a reasonable prospect.Acceptable yield at a good discount to NTA (30/09/09 valuations) with the "old problems" of the hideous management contract,excessive gearing and illiquid trading being cleaned out.

I note messers Duffy and Hasell are "invested" out of their proceeds to the tune of 26.2 million shares (embargoed for 18 months).And yes,there are some outs but not without consequences.

I don't think the other directors including Simon Botherway would be taking up $3 million worth of shares without some sense of future value in it.

Are comments this is "crap" or not worth it fairly appraising the new form entity or just reflecting past pain?


Work it out yourself. At 82 cents they return 8.6%. That's low in comparison to other lpts, so shares should be around 79 cents. . Based on discount to NTA they shoUld be $1 + based on other lpts. So who knows? I can't see the appeal, but it's a strange world at times. KIP,ING, KIP and GMT all look better to me.

[i_claudius]

Thanks Fungus.

The yield's not too bad...only slightly off some of the other lpts.

Seems to me you're saying it yourself.The appeal is in the discount to NTA and that is where the value might emerge with the internalised management and an improving property market.

LPTs aren't quick trades or stags but an option on property inflation.Provided they self fund,theres always a place for that in my portfolio.Better yields can be achived in the debt market.

Just my humble opinion.

[bull....]

Snapper I think I summed it up its not a good investment in my opinion. high risk doesnt matter if the portfolio bad or good it s a macro thing old chap.


Heres my prediction of the future - revalued property values down
- lower divs
- cash issue to support the balance sheet . diluting poor old s/h ( hence why you will lose halve your dough ) if you dont put more money in.

This senario could or may have already happened to many a property company. guess time will tell , dont mind being wrong.

And yea I think some other companies have a better portfolio for these times.

[Snapper]

Thanks for your opinions Bull, I Claudius, Bricks & co. All different but I guess that's what makes a market. As to the post below...



...dear snapper..with all due respect...you are an example of what is wrong with our share market....this IPO ..is crap......everone knows this....there is little if not no chance that this will be a successful.....on the face of it 30 % of all monies forwarded are to for a management contract...in the past....bye the way...how many dollars have you in the "mkt"....

Dear Troy
I am truly humbled by your due respect, totally undeserved I assure you. Humbly I ask you what attributes I should have to improve the market, bad grammar maybe?

How many dollars do I have in the ""mkt""? What is this, a pi$$ing contest?

[troyvdh]

dear Snapper..fair call (I never got SC English....even worse in maths)....no this not a pi$$ing contest....however over the years I cannot recall how many times i have spoken to folk about making/keeping dosh..and how often some folk aint got any !.
Ive owned rentals for some 30 yrs..longest tenant...11 yrs...he was a realestate agent ?..who worked in the recruitment dept !!!!.As for some brokers..what a joke..almost in every case they almost never had any "skin in the game".
So apologies for being a blunt prick...I could have phrased my point differently....if you get my point.

[ziggy]

There maybe some hope for existing investors!


http://www.sharechat.co.nz/article/471decb4/mmg-could-scupper-140m-dnz-float.html

[fungus pudding]

There maybe some hope for existing investors!


http://www.sharechat.co.nz/article/471decb4/mmg-could-scupper-140m-dnz-float.html

Yes. DNZ have pulled the pin on the public float, citing the opposition from investors. (I'm not sure if I believe that is the reason.) They will return to the unlisted board in the meantime. Let's hope they do it in a better way than before - when tranactions etc were only shown after 5p.m on Fridays.
Presumably it means that at least distributions will be maintained, and they have always been satisfactory.

[Jay]

DNZ Property Fund is pulling its plan to list on the sharemarket until next year, citing confusion among shareholders due to a debate in the media.
The company is the second to pull an initial public offer (IPO) after dairy company Synlait called off its $150 million IPO last week. DNZ was seeking to raise up to $140m.
All applications received from the prospectus dated November 18 are being refunded.
The company said there has been considerable debate about the merits of the IPO.
"This has resulted in confusion and concern amongst some of our shareholders. As a result, the board feels it has a duty to take time to clarify matters for shareholders and correct any misconceptions.
"It is not appropriate to continue to debate the merits of these transactions in the media."
The debate was damaging the company's future prospects and had potential to undermine the relationship between the board and the shareholders.
"Therefore, the board has taken a decision to defer the process until next year," the company said.
The board said it had received overwhelmingly positive support from the New Zealand capital market and the decision to defer was a difficult one to make.
The company will re-establish the unlisted trading market in its shares.
"The board of DNZ continues to unanimously support the proposed capital raising and listing and firmly believes this is in the best interests of the company and its shareholders," the company said.
The IPO has been criticised by a range of people, including commentator Brian Gaynor, who considers the payment of $43 million for the management company as a one-sided related party transaction of a type that should be outlawed.
There has also been debate about the appointment of highly regarded former fund manager Simon Botherway to the board to increase credibility with investors.

[Jessie]

Yes. DNZ have pulled the pin on the public float, citing the opposition from investors. (I'm not sure if I believe that is the reason.) They will return to the unlisted board in the meantime. Let's hope they do it in a better way than before - when tranactions etc were only shown after 5p.m on Fridays.
Presumably it means that at least distributions will be maintained, and they have always been satisfactory.

I'm afraid they won't be able to maintain distributions at anything like previous levels which were unsustainable. It will be interesting to see what prices are offered on the unlisted market but I suspect they will be well below the 82 cents offered in public float.

[fungus pudding]

I'm afraid they won't be able to maintain distributions at anything like previous levels which were unsustainable. It will be interesting to see what prices are offered on the unlisted market but I suspect they will be well below the 82 cents offered in public float.


You don't seem to be able to get your head around the fact that issuing millions of new shares below assett valuation dilutes the value of existing shares. So now with only the original no. of share they would be a screaming bargain at 82 cents. If the 2 for 5 consolidation is not reversed the price should well exceed that. They should also be able to maintain distributions unless they come under pressure to reduce debt. And if that happens the investors' equity wil rise anyway, so it's not all bad.

[Jessie]

You don't seem to be able to get your head around the fact that issuing millions of new shares below assett valuation dilutes the value of existing shares. So now with only the original no. of share they would be a screaming bargain at 82 cents. If the 2 for 5 consolidation is not reversed the price should well exceed that. They should also be able to maintain distributions unless they come under pressure to reduce debt. And if that happens the investors' equity wil rise anyway, so it's not all bad.

I hope you are right

[Year of the Tiger]

Can anyone tell me what will happen to those who have opted to sell their shares and already sent the form back?

My guess is that those forms will now be torn up. :confused:

YOTT

[fungus pudding]

Can anyone tell me what will happen to those who have opted to sell their shares and already sent the form back?

My guess is that those forms will now be torn up. :confused:

YOTT

They certainly should be. The shares offered for sale under the proposed diluted structure never actually came into existence, so I can't imagine how anyone could be bound to sell at the lower valuation when the cancellation of the new offer restores the value. In other words-the vendor changed the offer.

[Snapper]

When they were trading on the Unlisted market they were trading at between 40 and 50 cents which is a post-consolidation equivalent of $1.00 to $1.25. When they start trading their price will be what it will be but at least shareholder's equity won't be hammered in the process.

[fungus pudding]

When they were trading on the Unlisted market they were trading at between 40 and 50 cents which is a post-consolidation equivalent of $1.00 to $1.25. When they start trading their price will be what it will be but at least shareholder's equity won't be hammered in the process.

No, the equity won't, but the price might be, as the public will be pretty wary of them until further announcements. So I don't expect miracles. I hope they trade on the normal unlisted board rather than that 'Friday only' setup they had before.

[Jessie]

No, the equity won't, but the price might be, as the public will be pretty wary of them until further announcements. So I don't expect miracles. I hope they trade on the normal unlisted board rather than that 'Friday only' setup they had before.

On paper, DNZ shares have $2 NAV. However, when you subtract the cost of buying out the managers, deferred tax, cost of selling properties and winding up, the true value per share if the company was wound up might be $1.40. If the properties can only be sold at 10% below the last NAV, this further reduces to $1 per share. This is a bit more than the proposed listing price of $0.82 but not much.

[Steve]

At least the punters have realised that pigs don't fly... :rolleyes:

[fungus pudding]

On paper, DNZ shares have $2 NAV. However, when you subtract the cost of buying out the managers, deferred tax, cost of selling properties and winding up, the true value per share if the company was wound up might be $1.40. If the properties can only be sold at 10% below the last NAV, this further reduces to $1 per share. This is a bit more than the proposed listing price of $0.82 but not much.

Well it's 22% above on your reckoning. I'd say that's quite a bit more. But that's last resort stuff. There are better ways of handling the situation - like forgeting about listing.

[Snapper]

I see Greg Ninness in the SST today was having a go at the decision not to list. Trouble is when he did his calculations he used the pre-consolidation NTA. Bit sad for a business journalist.

[Jessie]

Well it's 22% above on your reckoning. I'd say that's quite a bit more. But that's last resort stuff. There are better ways of handling the situation - like forgeting about listing.

Listing is not the issue with DNZ, although it is obviously good to have a selling mechanism for those who have to sell. Otherwise it is irrelevant. The real problem with DNZ is that their level of debt is too high and the banks will demand higher levels of interest for these debt levels than they did in the past - more than the net income from the properties. Therefore reducing the level of debt is an urgent necessity. How this can be best achieved is the issue. The best option may be to sell off all the properties in an orderly way and pay out the proceeds to the shareholders. As part of this, the managers unfortunately would also have to be compensated.

[fungus pudding]

Listing is not the issue with DNZ, although it is obviously good to have a selling mechanism for those who have to sell. Otherwise it is irrelevant. The real problem with DNZ is that their level of debt is too high and the banks will demand higher levels of interest for these debt levels than they did in the past - more than the net income from the properties.

Who said? There are plenty of privately held commercial properties mortgaged at higher than 47%. The most sensible thing to do is reduce distributions to buy out mngmnt contract and reduce debt - flog off the odd property if necessary. There is no way they would discount the properties so heavily and flog them off, so why the hell should they create shares and discount them. It's a racket.

[Jessie]

Who said? There are plenty of privately held commercial properties mortgaged at higher than 47%. The most sensible thing to do is reduce distributions to buy out mngmnt contract and reduce debt - flog off the odd property if necessary. There is no way they would discount the properties so heavily and flog them off, so why the hell should they create shares and discount them. It's a racket.

The effective gearing is much higher than 47% when you take account of deferred tax and the management contract, and the fact that the property valuations are probably excessive. The managers may be legally within their rights to reduce gearing to protect their investment. Apparently they paid $15-20m for a 1/3 share in the contract when they bought out Somers-Edgar.

[Snapper]

The effective gearing is much higher than 47% when you take account of deferred tax and the management contract, and the fact that the property valuations are probably excessive. The managers may be legally within their rights to reduce gearing to protect their investment. Apparently they paid $15-20m for a 1/3 share in the contract when they bought out Somers-Edgar.

The properties were revalued as at 30 September resulting in a drop in NTA so unless you think the valuers are crap they shouldn't be too far off the mark. After all they've sold $70 million over the past year at or very close to NTA.

[Jessie]

The properties were revalued as at 30 September resulting in a drop in NTA so unless you think the valuers are crap they shouldn't be too far off the mark. After all they've sold $70 million over the past year at or very close to NTA.

I think the best and fairest thing for everyone would be to wind the company up. Hopefully this might realize a bit more than the scrapped plan although most investors will still only get a fraction of their original investment back.

[OldRider]

Has anybody read, or have knowlege of these management contracts, I presume they cover just about all eventualities, so that the owner of the contract has little chance of loss no matter what happens to the property owning company.

What happens if the property owning company sells all properties and is then wound up, or just goes broke, does the management contract still get paid out ? For how much?

[Jessie]

Has anybody read, or have knowlege of these management contracts, I presume they cover just about all eventualities, so that the owner of the contract has little chance of loss no matter what happens to the property owning company.

What happens if the property owning company sells all properties and is then wound up, or just goes broke, does the management contract still get paid out ? For how much?

The management agreement is a very generous 0.6% of total investments per year plus extra fees and performance fees. Therefore, for example, it is not in the interest of the manager to sell properties to reduce gearing. Secondly, the manager controls the board so they can pretty much do what they like. That is why they could make the public offer without consulting the owners.

[fungus pudding]

The management agreement is a very generous 0.6% of total investments per year plus extra fees and performance fees. Therefore, for example, it is not in the interest of the manager to sell properties to reduce gearing. Secondly, the manager controls the board so they can pretty much do what they like. That is why they could make the public offer without consulting the owners.

That last point is the subject of current legal debate.

[OldRider]

By what mechanism does the management company control the board ?

Can they prevent a takeover ? and are they paid out in the event of one?

[Jessie]

By what mechanism does the management company control the board ?

Can they prevent a takeover ? and are they paid out in the event of one?

As the managers can appoint 4 board members and the owners only 2, even if some fairy godmother bought up all the shares, the managers would still control the company.

[Jessie]

DNZ has 2 problems: a high level of debt level, and a management agreement which acts against the interests of the owners.

The current income statement looks something like this:

Annual rents: $60m
Operating expenses: $7m
Management & Admin: $12m
Interest costs $23m
This leaves $18m profit which is well below the current distributions of $23m.

However, the current interest rate of 6.5% will not last. If interest rates increase to say 8.5%, interest costs will increase to $32m and profit will fall to only $9m and distributions would have to be slashed or completely halted. This will be the situation in about 3 years time if nothing is done. Also, under this scenario, banking covenants will be breached, and interest rates will therefore rise even further.

So the company has to act and soon. The only options are to raise new capital or to sell property.

The deferred plan involved raising new capital and left the company in a reasonably sound condition, but reduced equity for existing shareholders.

The alternative is to sell property. However, the managers will not be happy with this as it will reduce the value of their contract. So any scenario involving selling property will also have to factor in a buy-out of the contract. On paper, this should leave the shareholders with more equity per share than a capital raising, but it may be difficult to sell a large number of properties at reasonable prices in the current climate. Something like $300m worth of property would need to be sold to leave the company with 35% debt giving maybe $1 asset value per share or better, depending on the sale prices that can be achieved.

I imagine some combination of property sales and new capital is the most likely outcome of MMG and DNZ management negotiations.

Given the poor past record of many of the properties and the abysmal performance of management, the best option might be to liquidate the company in an orderly manner and pay back everything to shareholders. A payout of better than $1 per share in capital plus residual income over several years should be possible.

[Jessie]

MMG want DNZ managers to sell property rather than raise capital to reduce debt. However, I have my doubts they are right.

At current valuations, DNZ properties have a gross yield of 8% implying a net yield after costs for a buyer at current valuation of say 6.5%. One can currently buy shares in a property trust such as Kiwi with a net post-tax dividend yield of 8%. Why would anyone buy a mediocre DNZ property at anything like its current valuation when they can buy shares in a LPT with better quality properties at a much better yield? I suggest that sale prices may be well below valuation.

[Snapper]

Goy rung up by some call centre guy from DNZ asking all sorts of questions about who I was getting advice from, had I received a letter from Money Managers, did I want to see someone to get financial advice, etc...so now DNZ is wasting our money on getting call centres.

I did sign the resolution that was sent though, there's no apparent shareholder representation on the DNZ board at present so anything would be an improvement.

[Omega]

Share sales since trading recommenced
15/12/2009 7,884 Shares @ 0.70
14/12/2009 1,956 Shares @ 0.80
14/12/2009 15,000 Shares @ 0.80
11/12/2009 2,614 Shares @ 0.50
08/12/2009 677 Shares @ 0.41

[fungus pudding]

Share sales since trading recommenced
15/12/2009 7,884 Shares @ 0.70
14/12/2009 1,956 Shares @ 0.80
14/12/2009 15,000 Shares @ 0.80
11/12/2009 2,614 Shares @ 0.50
08/12/2009 677 Shares @ 0.41

Is it any wonder? Most buyers would run a mile from these mobsters. But you can bet your boots they will use this low price as ammunition to rip us off further.

[Balance]

So what was Simon Botherway, proponent of good corporate governance, doing on the Board of DNZ?

[fungus pudding]

So what was Simon Botherway, proponent of good corporate governance, doing on the Board of DNZ?

Earninghis living. :D

[Balance]

Earninghis living. :D

Gee. Has he fallen on hard times? Selling his reputation to sell DNZ IPO?

[bull....]

I think it was a bad move him going on the board of this company considering his past
reputation seemed to entail berating boards who lost money for S/H.

Maybe he has fallen on hard times?

[macduffy]

I think it was a bad move him going on the board of this company considering his past
reputation seemed to entail berating boards who lost money for S/H.

Maybe he has fallen on hard times?

S B is making a new career for himself as a company director and should prove to be an asset to any that take him on. But I agree that it's a poor career move and poor judgement on his part getting himself involved with DNZ.

[Balance]

S B is making a new career for himself as a company director and should prove to be an asset to any that take him on. But I agree that it's a poor career move and poor judgement on his part getting himself involved with DNZ.

A barking dog does not = a hunting dog.

[fungus pudding]

A barking dog does not = a hunting dog.


Exactly so, or all talk-back hosts would be politicians. Not a pleasant thought at all.

[macduffy]

A barking dog does not = a hunting dog.

Reminds me of the mantra my old CA mates used to chant about an auditor being a watchdog and not a bloodhound.
I'd settle for a good watchdog in the company director role!

Incidentally, do we know who the director/s were who pulled the pin on this particular ill-advised float?

;)

[Balance]

Simon Botherway preached on and on and on about corporate governance, directors' fudiciary duties to act in the best interests of shareholders blah blah blah.

The right thing for DNZ to do is to sell some properties to reduce debt and so be in a position to ride out the property downturn.

It is not in the interests of the directors and management company to do so as it would mean reduced asset size and so reduced fees etc. Total conflict of interest.

Why is Simon Botherway championing an IPO which would allow the directors and manager to cash out their management contract, rather than do the right thing?

[fungus pudding]

Simon Botherway preached on and on and on about corporate governance, directors' fudiciary duties to act in the best interests of shareholders blah blah blah.

The right thing for DNZ to do is to sell some properties to reduce debt and so be in a position to ride out the property downturn.

It is not in the interests of the directors and management company to do so as it would mean reduced asset size and so reduced fees etc. Total conflict of interest.

Why is Simon Botherway championing an IPO which would allow the directors and manager to cash out their management contract, rather than do the right thing?

It's not even clear why they need to reduce debt. It's not a problem if they're not seeking listing. They should trade on as is, reduce dividends and/or some sales to buy out mngmnt contract. Then put some effort into promoting the unlisted secondary mkt, rather than the half-arsed attempt previously, and as started again. The main threat to investors is this capital raising at a fraction of asset backing. That's the killer for existing investors.

[Balance]

It's not even clear why they need to reduce debt. It's not a problem if they're not seeking listing. They should trade on as is, reduce dividends and/or some sales to buy out mngmnt contract. Then put some effort into promoting the unlisted secondary mkt, rather than the half-arsed attempt previously, and as started again. The main threat to investors is this capital raising at a fraction of asset backing. That's the killer for existing investors.

Irrespective, the answer is to reduce debt by selling assets - not dilute existing shareholders through issuing cheap shares to institutions.

Total conflict of interest so why is Mr Shareholders' champion, Simon Botherway, chomping at the bits to help the directors/managers out.

[bull....]

maybe's he realised theirs more money to be made being a director than a shareholder ?

[Balance]

maybe's he realised theirs more money to be made being a director than a shareholder ?

And now he is on the Securities Commission as well!

[Jessie]

It's not even clear why they need to reduce debt. It's not a problem if they're not seeking listing. They should trade on as is, reduce dividends and/or some sales to buy out mngmnt contract. Then put some effort into promoting the unlisted secondary mkt, rather than the half-arsed attempt previously, and as started again. The main threat to investors is this capital raising at a fraction of asset backing. That's the killer for existing investors.

Fungus. If they take your advice they will be broke in a couple of years as anyone who has spent 5 minutes looking at their accounts can see.

[fungus pudding]

Fungus. If they take your advice they will be broke in a couple of years as anyone who has spent 5 minutes looking at their accounts can see.

Their debt is around 47% of the top of my head. High for a listed trust, but not for this structure. Even buying the management contract out would be possible with a mix of limited asset sales and a reduced dividend. Anything is better than printing off millions of shares at a fraction of the nta.
It was less than 6 months ago they were crowing about the dividend being sustainable at 5c per share. Nothing has changed.
And that is what I said - the dilution of stock by cranking up the printing press is not necessary. Or even flogging off approx half the buildings to entirely eliminate debt is better than giving a large proportion away. The buildings will sell at approx valn. The shares will not and even less so if if they issue a squiilion more.

[fungus pudding]

Their debt is around 47% of the top of my head. High for a listed trust, but not for this structure. Even buying the management contract out would be possible with a mix of limited asset sales and a reduced dividend. Anything is better than printing off millions of shares at a fraction of the nta.
It was less than 6 months ago they were crowing about the dividend being sustainable at 5c per share. Nothing has changed.
And that is what I said - the dilution of stock by cranking up the printing press is not necessary. Or even flogging off approx half the buildings to entirely eliminate debt is better than giving a large proportion away. The buildings will sell at approx valn. The shares will not and even less so if if they issue a squiilion more.

Well how about that Jessie. Article in Sunday Times today parrots my last post - so they must be wrong too! Pity there's no link.

[Omega]

I'm with you on this Fungus, as Jessie's opinions appear to exceed her knowledge. ING have sold $100m of property in each of the last 2 years and this year's sales have achieved an average of 102% of the March 2009 valautions. DNZ should have adopted the same strategy instead of burying their heads in the sand and then shafting the existing shareholders at the 11th hour. Why one would sell shares at a huge discount when one can sell properties at near valaution defies logic, even after spending more than 5 minutes reviewing their accounts!

[Jessie]

I'm with you on this Fungus, as Jessie's opinions appear to exceed her knowledge. ING have sold $100m of property in each of the last 2 years and this year's sales have achieved an average of 102% of the March 2009 valautions. DNZ should have adopted the same strategy instead of burying their heads in the sand and then shafting the existing shareholders at the 11th hour. Why one would sell shares at a huge discount when one can sell properties at near valaution defies logic, even after spending more than 5 minutes reviewing their accounts!

The 82 cents offer in the IPO was at least gave an opportunity for investors to escape from this appalling investment at a reasonable price. Now the shareholders are left helplessly waiting for some other offer. The prices on the unlisted market suggest investors have little confidence anything better is likely.

DNZ's shareholders are in a real hole as they have no control over their investment. The managers have a long history of only acting in their own interest regardless of the cost to shareholders. Money Managers have an even worse record of acting in their own interests and will try to string things out as long as possible so that they can retain some influence over their remaining clients.

Really the shareholders need to be proactive. Can't some of the larger shareholders band together and get independent legal advice on the best course of action? Incidently, does anyone have a copy of the current constitution of this company? Can someone post it on this web site.

[Steve]

Incidently, does anyone have a copy of the current constitution of this company? Can someone post it on this web site.

Try doing a search at the Companies Office (http://www.companies.govt.nz) as it will be there if they have one :)

[Jessie]

I'm with you on this Fungus, as Jessie's opinions appear to exceed her knowledge. ING have sold $100m of property in each of the last 2 years and this year's sales have achieved an average of 102% of the March 2009 valautions. DNZ should have adopted the same strategy instead of burying their heads in the sand and then shafting the existing shareholders at the 11th hour. Why one would sell shares at a huge discount when one can sell properties at near valaution defies logic, even after spending more than 5 minutes reviewing their accounts!

5 minutes analysis of the accounts reveals that annual profit is currently about $18m. Interest cost is $23m. However, the interest rate is a very low 6.5% and this will rise considerably when it has to be renewed within the next year or so. This will eat up most of the profit margin. If vacancies also increase as some predict, the company could be in serious trouble. So doing nothing isn't an option for this dog. The IPO scrapped due to MMG's interference wasn't great but at least it was a solution. Hopefully a better one will emerge but don't hold your breath.

[Year of the Tiger]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10625630&pnum=0

Property fund's decisions disappointing: investor

By Anne Gibson

4:00 AM Friday Feb 12, 2010



http://media.nzherald.co.nz/webcontent/image/jpg/SimonBotherway_220x147.jpg Simon Botherway's resignation has upset institutional investors.



An institutional investor is disappointed at moves by $730 million property fund DNZ.
The fund yesterday announced the resignation of director Simon Botherway and plans to delay dividends and sell property.
Craig Tyson, ING investment manager, said the news was all bad for DNZ.
The company last year shelved a plan to internalise its management and list on the NZX. It continues to trade on Unlisted.
Tyson said DNZ had missed an opportunity to raise the bar for the rest of the sector to align investor and management interests and improve governance.
"It also would have provided liquidity and transparency to existing investors but at some cost in terms of dilution. We hope that DNZ comes back to the market later in the year but these proposed tax changes have certainly created a lot of uncertainty and ultimately returns could be lower if depreciation is denied.
"We're also disappointed that Botherway has resigned. He has always been a shareholder advocate and we took some comfort from the fact that with him on the board, there would be a clear focus on decisions that created shareholder value," Tyson said.

Tim Storey, DNZ chairman, yesterday announced the board's loss of crusading investment advocate Botherway and lawyer Mark Hopkinson.Storey refused to say who the board would nominate to replace them, or if outspoken critics Derek Young and David van Schaardenburg were likely candidates.
But he did say a special general meeting was planned in Auckland for DNZ investors next month.
The quarterly dividend payment was deferred until February 25.
Assets would be sold to cut debt but Storey could not say what buildings would go on the market, the value of intended sales, the geographic location or which agents, if any, had been engaged.
DNZ investor Derek Button expressed concern about boardroom resignations and moves to sell property.
The real estate would hit the market in a difficult climate just as the Government had announced a big shakeup for tax treatment of this sector, Button said.
"It's a terrible time to sell. If they were going to sell, they should have waited until the market picked up again. There's a lot of 'iffi-ness' with the Government changes."
Institutional investors were yesterday privately smarting about Botherway's departure, saying it sent out bad signals.
Botherway, a former part-owner of institutional investor Brook Asset Management, had criticised the old structure of the business but his arrival was seen as heralding big changes. He went on the DNZ board at the request of major institutional investors.
He has refused to comment on his exit.
The outcome of protracted negotiations between DNZ, Young and van Schaardenburg are yet to be announced and van Schaardenburg was yesterday reserved in his reaction to DNZ's moves.
"Our focus is trying to get the best possible outcome for existing shareholders."
Asked for his view of Botherway, van Schaardenburg said the resignation was purely that director's choice and he understood the reasons. "He wants to be involved as a director of a listed company."
Button said he was concerned about lack of information for shareholders, who got letters this week about the changes.
"DNZ say they are going to be transparent and all they do is issue this statement ... It doesn't give you anything to gain your confidence."
DNZ was yesterday trading at 68c.
_____________________

YOTT

[Snapper]

I'm not bothered about Botherway taking a hike. A 'shareholder advocate', give me a break! He was going to get 3 million shares at 82 cents . As far as being an advocate goes, I never felt he did anything for existing shareholders other than try to dilute their shares for the benefit of institutional investors.

Continuing to sell down property is the right thing to do; if they have to defer distributions to get their debt down, that's OK too.

[Anna Naum]

I'm not bothered about Botherway taking a hike. A 'shareholder advocate', give me a break! He was going to get 3 million shares at 82 cents . As far as being an advocate goes, I never felt he did anything for existing shareholders other than try to dilute their shares for the benefit of institutional investors.

Continuing to sell down property is the right thing to do; if they have to defer distributions to get their debt down, that's OK too.

Simon has been one of the most vocal promoters of better corporate governance in NZ for some time. I would suggest that him leaving is a real negative. Simon has been prepared for a number of years to take on management about poor performance and to highlight issues.

As for the shares, I understood he was going to have to pay for them, which if correct suggests he was prepared to put his money where he saw value. Remember Simon and his team ran a very successful fund at Brook before selling out to Macquarie last year.

Selling assets when the market is down does not seem like the best idea to me, unless you think the market is going lower, and given the situation DNZ is now in I doubt anyone will be in any hurry to pay a premium....all the time the current management team continues to take huge fees for loosing other peoples money.

[Snapper]

Simon has been one of the most vocal promoters of better corporate governance in NZ for some time. I would suggest that him leaving is a real negative. Simon has been prepared for a number of years to take on management about poor performance and to highlight issues.

As for the shares, I understood he was going to have to pay for them, which if correct suggests he was prepared to put his money where he saw value. Remember Simon and his team ran a very successful fund at Brook before selling out to Macquarie last year.

Selling assets when the market is down does not seem like the best idea to me, unless you think the market is going lower, and given the situation DNZ is now in I doubt anyone will be in any hurry to pay a premium....all the time the current management team continues to take huge fees for loosing other peoples money.

Well there was no hint of shareholder advocacy in his directorship at DNZ. When he was appointed he had a duty to look after the interests of existing investors, not future investors. Granted, DNZ would have been a more attractive company to hold shares in had the capital raise been completed but this was at huge expense to existing shareholders, those people he's paid to represent.

Of course he had to pay for the shares and of course he saw value in them. GS JB Were priced the float to make it very attractive to institutions which snapped up all they could. If the shares traded at the average discount to NTA that other property companies did (remembering that DNZ would have had internalised management) then he would have made a tidy sum on his DNZ investment.

"Selling assets when the market is down doesn't seem like the best idea...", doing a large capital raise at a very deep discount doesn't appeal to me either and would be more destructive in terms of nta/share.

As far as management fees go, these were brought into alignment with other LPCs last year.

If Simon Botherway is such a great investor advocate why did he, as a member of the board:
- give shareholders no notice of such a large capital raise
- not engage with shareholders to try to convince them that the capital raise was a good thing
- not insist that transferable rights were given to existing holders
- prevent the release of all the information pertinent to the capital raise

His advocacy was for future shareholders, not existing ones and whatever he did at Brook has no bearing on his directorship at DNZ.

[Anna Naum]

Well there was no hint of shareholder advocacy in his directorship at DNZ. When he was appointed he had a duty to look after the interests of existing investors, not future investors. Granted, DNZ would have been a more attractive company to hold shares in had the capital raise been completed but this was at huge expense to existing shareholders, those people he's paid to represent.

Of course he had to pay for the shares and of course he saw value in them. GS JB Were priced the float to make it very attractive to institutions which snapped up all they could. If the shares traded at the average discount to NTA that other property companies did (remembering that DNZ would have had internalised management) then he would have made a tidy sum on his DNZ investment.

"Selling assets when the market is down doesn't seem like the best idea...", doing a large capital raise at a very deep discount doesn't appeal to me either and would be more destructive in terms of nta/share.

As far as management fees go, these were brought into alignment with other LPCs last year.

If Simon Botherway is such a great investor advocate why did he, as a member of the board:
- give shareholders no notice of such a large capital raise
- not engage with shareholders to try to convince them that the capital raise was a good thing
- not insist that transferable rights were given to existing holders
- prevent the release of all the information pertinent to the capital raise

His advocacy was for future shareholders, not existing ones and whatever he did at Brook has no bearing on his directorship at DNZ.

In the interests of a good chat, to answer your questions. It is my opinion that his very strong drive for shareholder advocacy @ Brook does have a bearing on things at DNZ. Simon has a long history of looking after shareholder value, as evidenced by what he did at Brook. DNZ has chosen to sell assets at/near the bottom, why is that worse, well either the company will be a LOT smaller by the end of the sell down, and therefore below critical mass, and/or they will sell the good assets at a bad price or the bad assets at a terrible price.

If they had done a capital raising, existing shareholders would have had the opportunity to invest, the capital base would have been assured, and maybe, just maybe the share price would have reflected the more solid standing of the company.

Would new shareholders have enjoyed the increase in the share price, sure, but so would have existing shareholders, after all why is the stock now offered at 68c with the best bid at 52c, when before this announcement when people knew about the previous deal it was bid higher.

Existing shareholders have shown an incredible lack of investment 'smarts' in owning DNZ shares, sure things could have been better for them BUT the capital raising and new board assured the future of the company. Selling assets at the bottom and the share price suggest the alternative is less beneficial to them.

Could it have been better, maybe, but it was a proposal that would have resulted in a better outcome than the one that now confronts DNZ shareholders.

Personally I would rather have Simon on the board of a company I was investing in, rather than not, as is the case for DNZ shareholders.

[Jessie]

In the interests of a good chat, to answer your questions. It is my opinion that his very strong drive for shareholder advocacy @ Brook does have a bearing on things at DNZ. Simon has a long history of looking after shareholder value, as evidenced by what he did at Brook. DNZ has chosen to sell assets at/near the bottom, why is that worse, well either the company will be a LOT smaller by the end of the sell down, and therefore below critical mass, and/or they will sell the good assets at a bad price or the bad assets at a terrible price.

If they had done a capital raising, existing shareholders would have had the opportunity to invest, the capital base would have been assured, and maybe, just maybe the share price would have reflected the more solid standing of the company.

Would new shareholders have enjoyed the increase in the share price, sure, but so would have existing shareholders, after all why is the stock now offered at 68c with the best bid at 52c, when before this announcement when people knew about the previous deal it was bid higher.

Existing shareholders have shown an incredible lack of investment 'smarts' in owning DNZ shares, sure things could have been better for them BUT the capital raising and new board assured the future of the company. Selling assets at the bottom and the share price suggest the alternative is less beneficial to them.

Could it have been better, maybe, but it was a proposal that would have resulted in a better outcome than the one that now confronts DNZ shareholders.

Personally I would rather have Simon on the board of a company I was investing in, rather than not, as is the case for DNZ shareholders.

I agree that the IPO was probably the best deal existing shareholders are likely to see. They need to raise a lot of cash from somewhere over the next year or two.

[Snapper]

DNZ would have to sell about $150 million of property to have the same debt level as they would have had with the capital raise which will bring their portfolio down to $500 -600 mill. That's still more than PFI, isn't it? The properties they sold last year averaged around book value so even if they took a 5% loss on sale of more properties shareholders would still be in a much better position than if the cap raise went ahead.

Do you think the low share price might have anything to do with the fact that shareholders don't trust the hierarchy at DNZ which Botherway was a part of.

[Anna Naum]

DNZ would have to sell about $150 million of property to have the same debt level as they would have had with the capital raise which will bring their portfolio down to $500 -600 mill. That's still more than PFI, isn't it? The properties they sold last year averaged around book value so even if they took a 5% loss on sale of more properties shareholders would still be in a much better position than if the cap raise went ahead.

Do you think the low share price might have anything to do with the fact that shareholders don't trust the hierarchy at DNZ which Botherway was a part of.

Share price has gone down since Simon resigned so no. Reality is that we are discussing a company that has lost large amounts of shareholders wealth. Sure they sold properties for close to book value, but I think they had written the book value down ahead of selling?

[Jessie]

DNZ would have to sell about $150 million of property to have the same debt level as they would have had with the capital raise which will bring their portfolio down to $500 -600 mill. That's still more than PFI, isn't it? The properties they sold last year averaged around book value so even if they took a 5% loss on sale of more properties shareholders would still be in a much better position than if the cap raise went ahead.

Do you think the low share price might have anything to do with the fact that shareholders don't trust the hierarchy at DNZ which Botherway was a part of.

They would have to sell far more than $150m property to have the same debt level as the proposed capital raise which went straight into lowering debt (after paying off the managers rip-off contract). I think something closer to $300m would be required. depending on the values they could achieve.

[Dr_Who]

Most of the funds will go to paying the promoters exit?

[Snapper]

I suggest you re-read Brian Gaynor's article in the NZ Herald when the float was first announced. He offers an alternative scenario which is a lot more shareholder-friendly.

Jessie, I'm not too sure where you're getting your numbers from but here are the rough figures.

Portfolio value $750 million
Debt $350 million (47%)
Equity $400 million

After sales of $150 million (@ book value) you then have

Portfolio value $600 million
Debt $200 million (33%)

Fair enough or I have I missed something?

[Anna Naum]

I suggest you re-read Brian Gaynor's article in the NZ Herald when the float was first announced. He offers an alternative scenario which is a lot more shareholder-friendly.

Jessie, I'm not too sure where you're getting your numbers from but here are the rough figures.

Portfolio value $750 million
Debt $350 million (47%)
Equity $400 million

After sales of $150 million (@ book value) you then have

Portfolio value $600 million
Debt $200 million (33%)

Fair enough or I have I missed something?

Depends who is providing the funding and if they are prepared to continue to provide said funds. Also I can not remember how much they have written down the assets, if not enough then further impairments will be required (either way given current situation they will probably have to write down further)

Result, above numbers work well on paper....reality I fear is another story.

[Jessie]

Its very good news for long-suffering DNZ shareholders if the following comment from Chris Lee has any substance. Can this be true?

"
When Money Managers began its disintegration, and Edgar’s profile was no longer helpful to DNZ, Hassell and Duffy bought our Edgar. Ironically the winner of this action may be Edgar, for it looks now as though DNZ’s management contract may become redundant, and may cease, without cost to the investors.

This would happen if DNZ’s board agreed to liquidate the company, sell all properties, repay all debt, and then pay out the proceeds to all the shareholders, probably at an effective rate of around 65c for each of the original dollars invested. (The consolidation of shares does not allow for fair comparisons.)

Whisper has it that Hassell, having sided with Duffy in farewelling Edgar, now believes that a total asset sale is in the best interests of the poor old shareholders, so the DNZ board may be about to make a decision to liquidate the company. Good on them, if they do.
"

[Snapper]

I see that DNZ has appointed Michael Stiassny as an independent director. I know that he's fairly well-known but for good reasons or bad? Anyone with any views one way or the other??

[CJ]

I see that DNZ has appointed Michael Stiassny as an independent director. I know that he's fairly well-known but for good reasons or bad? Anyone with any views one way or the other??

He is a liquidator/Receiver by profession so this is probably an indication of where they want to go (ie. sell down some investments to deleverage). Whether he is well known for good or bad reasons depends on whether you agree with what he wants to do. He is a 'hard bastard' (said in a good way) who doesn't back down.

my view: In the short term, this will be a good thing for them. Once they are back on track not so sure. He definitely ruffled some feathers at Vector (the rest of the Board resigned??).

[fungus pudding]

He definitely ruffled some feathers at Vector (the rest of the Board resigned??).


In which case, all power to him with this appointment.

[Billy Boy]

Hope he can sort out the management contract

[George]

Anyone got opinions on the 16 aug NZX listing of DNZ - and the 60c offer from Carrington. I've told my sis who had 2000 shares gifted to her to sell out on listing at supposedly 80c-1.05, but this may not be the best advice.

[fungus pudding]

Anyone got opinions on the 16 aug NZX listing of DNZ - and the 60c offer from Carrington. I've told my sis who had 2000 shares gifted to her to sell out on listing at supposedly 80c-1.05, but this may not be the best advice.

The 80 to 105 cent is the price offered to selected buyers. That is existing shareholders who can apply for a certain dollar amount, but will not know the number of shares they are buying unti the price is set, which is estimated to be 80-105 cents, but depends on certain factors, e.g. instituional investor demand. (It's to be set by a bookbuild process-however that is calculated!) Hopefully the list price should be above this, b ut almost guaranteed to be above the 60 to 80 cent range. The last sales on unlisted market were 90cents, and the management has since been sorted out, so I am quite optimistic they will be nearer 100 to 110 cents depending on bookbuild price. They have been a gangster outfit - another of Doug Sommers Edgars schemes, but after a long miserable history to date, the future looks very good at long lat. I'll give her 65 cents. :D:D

[Snapper]

Bought my shares on Unlisted for 40 cents so after consolidation they've cost me a dollar. I took up my entitlement and I would expect that there will be reasonable institutional demand when it lists - the sell side might be reasonably skinny as the existing shareholders will be loath to sell out at what they perceive to be a loss.

[fungus pudding]

Bought my shares on Unlisted for 40 cents so after consolidation they've cost me a dollar. I took up my entitlement and I would expect that there will be reasonable institutional demand when it lists - the sell side might be reasonably skinny as the existing shareholders will be loath to sell out at what they perceive to be a loss.

That was good buying. I wish mine only owed me a dollar! I took up my entitlement and an extra few of thousand of the 50% extra allowance. Who knows what they will list at, but the income is too good to be ignored at 80-105 cents price. I don't agree with the skinny selling theory. There must be heaps who want out of this thing and they have never really had a chance the way these gangsters have operated to date. Remember most of the investors are quite elderly, and many must be desparate for cash after what they were promised by this and other Somers Edgar schemes. I reckon they'll hover around a dollar plus till things settle, but should certsinly lift in a few months. I also reckon their long term looks fine now the way things have been restructured.

[George]

My mother also has about 2000 shares (left by her brother's will) but she has just sent off the signed letter to Carrington with her share number. At 86 she's happy to get the money on offer. Inquired with DNZ if it was possible to cancel the letter but apparently not, unless Carrington decides to out of their good will, so guess it's not worth the bother.

[Snapper]

You're right, there's probably a lot who would like to sell, whether they do or not is a different matter. When they see the difference between NTA and the trading price they might have second thoughts. I'm happy with what DNZ are doing now and as long as commercial property prices hold up they should be fine. The worry is if valuations continue to fall coupled with 42% debt...there goes the equity.

[fungus pudding]

My mother also has about 2000 shares (left by her brother's will) but she has just sent off the signed letter to Carrington with her share number. At 86 she's happy to get the money on offer. Inquired with DNZ if it was possible to cancel the letter but apparently not, unless Carrington decides to out of their good will, so guess it's not worth the bother.e cheque.

Cancel the cheque then tell Carrington . Goodwill will be non-existent. That's the fellow Whimp who has made the odd appearance on Fair go from memory and well known for stunts like this. Absolute minimum price will almost certainly be 90 cents + when they float in a week or so.

[fungus pudding]

My mother also has about 2000 shares (left by her brother's will) but she has just sent off the signed letter to Carrington with her share number. At 86 she's happy to get the money on offer. Inquired with DNZ if it was possible to cancel the letter but apparently not, unless Carrington decides to out of their good will, so guess it's not worth the bother.

I have just recieved another unsolicited offer from NZ investment securities whoever he/she/it/they are! (Probably Carrington in disguise, or maybe his mother) This time for 75 cents. Pro-rata share price has been set at 97 cents, so I'm unlikely to be selling those I have just bought for 75 cents. These are due to hit the market on 16th August, so that might be interesting - or not! I could be running around looking for that man with all the 75cent pieces this time next week. :D:scared:

[Snapper]

I thought that 97 cents was quite encouraging. Towards the upper end of the indicated range and considering that the take up by existing holders was only $8.5 million, good support from institutions. Surprised that there was so little support from existing holders, time to get over it and move on, folks!

[CJ]

I thought that 97 cents was quite encouraging. Towards the upper end of the indicated range and considering that the take up by existing holders was only $8.5 million, good support from institutions. Surprised that there was so little support from existing holders, time to get over it and move on, folks!I think the Insto's needed to buy in for indexing purposes (property index and NZX40 - once updated). Will be interesting to see where they go once listed. With such a big insto take up, they wont need to do it on market.

[fungus pudding]

I thought that 97 cents was quite encouraging. Towards the upper end of the indicated range and considering that the take up by existing holders was only $8.5 million, good support from institutions. Surprised that there was so little support from existing holders, time to get over it and move on, folks!

Most of the investors in DNZ, I'd say the vast majority are elderly retired people whose life savings have been wiped out by this and other Money Managers ****y schemes. I spoke to many of them at last shareholder meeting. Most couldn't afford to buy, and those who could just have no belief left in this outfit. Can't say I blame them. No use telling them to get over it. They never will. They were fitted by the honey-tongued Somers Edgar.

[Billy Boy]

Fungus.... you had better dust off the suit and get on the board !!!:D
things will be interesting when they list. Am wondering what the NTA
will come in at, when the dust settles ?
We had Money Managers man from Invercargill here trying talk us into
voting for liquadation, some time back. I did'nt like what he was saying.
Edgar-Sommers still has a finger in some "Pies" I am told.
Getting rid of the present management structure will be a big plus for
this company and I am very happy with that. I dont hold a lot of shares
and did not take up the new offer. It's a company with some very good
buildings and could do well. Next task, reduce the debt. Then it will fly
Here's watching.:mellow:
BB

[fungus pudding]

Fungus.... you had better dust off the suit and get on the board !!!:D
things will be interesting when they list. Am wondering what the NTA
will come in at, when the dust settles ?
We had Money Managers man from Invercargill here trying talk us into
voting for liquadation, some time back. I did'nt like what he was saying.
Edgar-Sommers still has a finger in some "Pies" I am told.
Getting rid of the present management structure will be a big plus for
this company and I am very happy with that. I dont hold a lot of shares
and did not take up the new offer. It's a company with some very good
buildings and could do well. Next task, reduce the debt. Then it will fly
Here's watching.:mellow:
BB


I agree that the future looks good. I don't agree with dusting off my suit though - these days it's reseved for funerals, (although if the ones hanging in my wardrobe shrink anymore - I'll have to go to them in a track-suit) :(I picked up my entitlement and a couple of thousand of the additional allowance, but I doubt that there's much advantage. They will list at the 97 cents but could quickly fall a bit I suspect. I reckon there's heaps of pent up selling pressure. Might take a couple of months to settle. If they do drop a reasonable chunk I'll buy more. But who knows - it's the toss of a coin at hte moment. Not sure of your point about NTA. It should be $1.59 according to the offer statement - or does that not take into account the extra 10 million? Hadn't really considered that.

[CJ]

They will list at the 97 cents but could quickly fall a bit I suspect. I reckon there's heaps of pent up selling pressure. They seem to be doing quite well - up to 1.18, have broker support (quoted today as the best listed prop company), still at a significant discount to NTA and have just entered the index.

Not sure if it is worthwhile entering at this price but definitely would have been at IPO price.

[fungus pudding]

They seem to be doing quite well - up to 1.18, have broker support (quoted today as the best listed prop company), still at a significant discount to NTA and have just entered the index.

Not sure if it is worthwhile entering at this price but definitely would have been at IPO price.

They have risen quicker than I thought they would, possibly because of Whimp buying up a couple of million (at about 67 cents or so) from the original syndicate holders who obviously didn't understand what was going on. I believe he's dribbling these out at the moment. Also DNZ have offered a brokerage-free service to holders of fewer than 25,000 to get rid of small share-holders. So there's a bit of mopping up to do before share price tightens. NTA is fine, but div. is low. At time of restructure it was estimated at 6.7 (PIE) per share for foreseeable future, although I think there's room to increase that. That would give it a thump up.

[fungus pudding]

I hope you are right

:D:D Looks like I was all along.

[fungus pudding]

http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=10680111

[Snapper]

Dividend up to 9 cents for this year. Have to be one of the very few property companies to be increasing their payout.

[777]

ANO, KPF and NPT have recently declared quarterly dividends at the same level as the past four quarters. I am happy with that. Just hope the occupancy rates are maintained.

PFI and GMT are not too far away so will be interested in their payouts.

[fungus pudding]

ANO, KPF and NPT have recently declared quarterly dividends at the same level as the past four quarters. I am happy with that. Just hope the occupancy rates are maintained.



You can add Argosy to that list.

[slimwin]

Can anybody tell me if insurance rate rises due to events in CHCH have already been factored into the share prices of these property trusts or is it a possible future downside?

[fungus pudding]

Can anybody tell me if insurance rate rises due to events in CHCH have already been factored into the share prices of these property trusts or is it a possible future downside?

The tenants pay the insurance premiums, so in the interim only vacant bldgs will affect the lessor. In time though the increased premiums will reflect in the tenants ability to pay rent putting pressure on rent reviews. Most are ratcheted, but increases might be limited until building replacement costs cause higher rent levels, inevitably dragging existing rent levels with them. Overall I can't see it having much downside on LPTs.

[Snow Leopard]

from todays announcement (https://nzx.com/companies/DNZ/announcements/269959):



to change the name of DNZ Property Fund Limited (DNZ) to “Stride Property Limited” (Stride), with effect from 25 September 2015. The application for change of name will be lodged at the Companies Office on 25 September 2015 and the company’s NZX ticker code will change from “DNZ” to “STR” on that date.


The move is the culmination of a number of changes within the company that have seen it become a leader in its sector, with over $950 million of diversified commercial property assets under management.


DNZ Chairman, Tim Storey, says the re-branding is a reflection of the confidence that the company has in its future and the approach that it takes to managing and building its portfolio. He said that the new name more accurately demonstrates the essence of the company and its future direction in the property investment business.


“The company has been through a number of positive changes since listing, particularly over the past 18 months,” Mr Storey says. “We have refined our strategy with a renewed team and leadership and delivered strong results for our investors. Consequently, the market perception of us has shifted.”


DNZ Chief Executive, Peter Alexander, highlights the connection between the company’s new approach to business and its rebrand.


“It’s important our identity represents who we are today and in the future, and that it epitomises our people, our culture, our places and performance. We are a progressive company, forward focussed and confidently moving ahead. The name Stride communicates that confidence and reflects the deliberate and purposeful steps we are taking to deliver the best possible performance.


“With this new branding we will be better differentiated and visible to all of our stakeholders,” says Mr Alexander.


For the year ended 31 March 2015, the company announced an operating profit before other income and income tax of $39.6 million, an increase of 13.1% over the previous year, and an annual cash dividend of 10.25 cents per share, an increase of 13.9%.


“We are very pleased with the performance of the company to date,” Mr Alexander says. “The opening of the NorthWest Shopping Centre on 1 October with 100% of the retail space leased, and the commencement of the NorthWest Two (previously referred to as Westgate Stage Two) development are very strong indicators of the company’s future strength.


“We believe Stride embodies the key characteristics of a company as robust and positive about the future as we are.”


Given that they have gone from $1 five years ago to $2.07 today (plus dividends) whilst hampered by a sedate name we can obviously expect much more once they get into their stride.

Sell your Ryman and Summerset, swap your Pacific Edge, VMob & Xero.

Actually sell everything and buy this.

This is where the money will be made.

Best Wishes
Paper Tiger

Disc: Please be aware that I may be barfing into a bucket over this announcement but I am a long term DNZ holder

[percy]

Totally and utterly disagree with you.
Not once was "well positioned" used...............Buy signal.
Not once was "poised" used...........................Strong buy.
Not once was the word "significant" ...............Very strong buy signal if used more than twice.
Only positive used was "epitomises'................Strong hold.
Long term holder.........................................sho rt term position did not work out.
lol.

[Cobber]

from todays announcement (https://nzx.com/companies/DNZ/announcements/269959):



Given that they have gone from $1 five years ago to $2.07 today (plus dividends) whilst hampered by a sedate name we can obviously expect much more once they get into their stride.

Sell your Ryman and Summerset, swap your Pacific Edge, VMob & Xero.

Actually sell everything and buy this.

This is where the money will be made.

Best Wishes
Paper Tiger

Disc: Please be aware that I may be barfing into a bucket over this announcement but I am a long term DNZ holder

These guys are still piggybacking over decisions made long ago by Paul Duffy, the old CEO and his team.

DNZ was the new name the company rebranded too back in 2010?? (from Dominion Funds not to be confused with Dominion Finance).

5 years later a rebrand is happening again... and I'd say this has more to do with CEO's trying to leave a legacy for themselves rather than new business going forward.

In fact a good recession might expose their growing retail play.

[777]

Yes PT the whole announcement is complete dross.

The name change unnecessary.

[Baa_Baa]

Diversified to buy Westfield's Hamilton and Lower Hutt shopping malls.

http://www.stuff.co.nz/business/74513286/westfield-malls-in-lower-hutt-and-hamilton-to-be-rebranded-after-sale

https://www.nzx.com/companies/STR/announcements/274259

[heisenberg]

I've been reading through the comments about this property trust from 2007-2012 which are mainly filled with negativity.. In 2016 has sentiment changed at all? Any buyers/holders out there?

[Snow Leopard]

I've been reading through the comments about this property trust from 2007-2012 which are mainly filled with negativity.. In 2016 has sentiment changed at all? Any buyers/holders out there?

Beautiful long term uptrend in price, OK uptrend in dividends (for me).

I have held them for years - will not be buying any more in the foreseeable future though.

Best Wishes
Paper Tiger

[fungus pudding]

I've been reading through the comments about this property trust from 2007-2012 which are mainly filled with negativity.. In 2016 has sentiment changed at all? Any buyers/holders out there?


I hold 200,000 Stride. Seem alright to me.

[In4a$]

Been a steady uptrend for me,

[Baa_Baa]

Things getting a bit wobbly? Stride buys two new shopping malls, trying to swallow those, and restructuring around that line of business while Northgate and Johnsonville malls appear to be struggling for survival. Speed wobbles?

Northgate - http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11609164
Johnsonville - http://www.stuff.co.nz/business/80360674/fears-for-the-future-of-wellingtons-johnsonville-mall-as-retailers-pack-up

[In4a$]

Things getting a bit wobbly? Stride buys two new shopping malls, trying to swallow those, and restructuring around that line of business while Northgate and Johnsonville malls appear to be struggling for survival. Speed wobbles?

Northgate - http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11609164
Johnsonville - http://www.stuff.co.nz/business/80360674/fears-for-the-future-of-wellingtons-johnsonville-mall-as-retailers-pack-up

Price is "Wobbling" back on its way up though , may it continue

[Lewylewylewy]

I had a better look at jville mall the other day... there are about 3 shops empty and one with what looked like (in terms of style: paper covering all windows, saying 50% off) a closing down sale. The mall is a busy place for people to eat at lunchtime, but not many going into shops.

[lissica]

Things getting a bit wobbly? Stride buys two new shopping malls, trying to swallow those, and restructuring around that line of business while Northgate and Johnsonville malls appear to be struggling for survival. Speed wobbles?

Northgate - http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11609164
Johnsonville - http://www.stuff.co.nz/business/80360674/fears-for-the-future-of-wellingtons-johnsonville-mall-as-retailers-pack-up

It's struggling because they haven't bothered investing after getting resource consent 7 yrs ago. There is NO reason why a revamped mall would not do well. It is perfectly located in the fastest growing part of Wellington.

[Snow Leopard]

Investore (who thinks up these names?) IPO, Demerger & Acquistion (https://www.nzx.com/files/attachments/237209.pdf)

Spinning out a bit of the company, IPOing it, and giving existing holders some shares in it.

I will have to think about that

Best Wishes
Paper Tiger

[Snow Leopard]

Investore Property Limited (https://nzx.com/files/attachments/237265.pdf)

Flippin nuisance this.

If I do nothing then I am going to end up with a reduced STR holding and an inconveniently small holding in Investore.

But the date range to be in on the offer to buy more is Monday 20-Jun to Tuesday 5-Jul,

and I am very definitely off the grid until the night of 1-July and even then I will be far from home.

Apparently the PDS is out but I have not found it yet.

Best Wishes
Paper Tiger

[Hectorplains]

Investore Property Limited (https://nzx.com/files/attachments/237265.pdf)

If I do nothing then I am going to end up with a reduced STR holding and an inconveniently small holding in Investore.


I read that it was a one for four issue of Investore (groan) shares for all Stride holders. I don't see any mention of this reducing your
Str holding? I could be wrong - often am!

[fungus pudding]

I read that it was a one for four issue of Investore (groan) shares for all Stride holders. I don't see any mention of this reducing your
Str holding? I could be wrong - often am!

I think you're right. That's my understanding but other details that I've seen are skimpy.

[Snow Leopard]

I read that it was a one for four issue of Investore (groan) shares for all Stride holders. I don't see any mention of this reducing your
Str holding? I could be wrong - often am!

Sorry - Reduced value.

Before:
you have your 4 Stride (:() shares

After:
you have your 4 Stride (:() shares and
1 Investore (:mad ;:) share.

So I expect the value of the :( :( :( :( to drop by the approximate value of the one :mad ;: .

Best Wishes
Paper Tiger

[stevevai1983]

It's struggling because they haven't bothered investing after getting resource consent 7 yrs ago. There is NO reason why a revamped mall would not do well. It is perfectly located in the fastest growing part of Wellington.

I like this restructure.
One of the reasons i bought STR: they had many large format retail assets. These assets have long lease contracts (average 14.8years!) and they are very stable even in challenging economic conditions.
AKA they are good stable cash cows.

Now with the Demerger, it's very likely Investore will have higher valuations due to super long contracts and better gross div yield (7.6%~8% compare to 6.3%).
The combined value of 1/3 Investore + STR (with 19.9% Investore assets) is likely to be greater than old STR.
If Investore IPO traded at NTA value, i would like to buy more.

[fungus pudding]

I like this restructure.
One of the reasons i bought STR: they had many large format retail assets. These assets have long lease contracts (average 14.8years!) and they are very stable even in challenging economic conditions.
AKA they are good stable cash cows.

Now with the Demerger, it's very likely Investore will have higher valuations due to super long contracts and better gross div yield (7.6%~8% compare to 6.3%).
The combined value of 1/3 Investore + STR (with 19.9% Investore assets) is likely to be greater than old STR.
If Investore IPO traded at NTA value, i would like to buy more.

How does this work? These properties are currently part of STR's portfolio. Share holders are to be issued 19.9% of the new investore company stapled 1 to 4 with their str shares. Rest of Investore, will be partly held by str and the rest sold to whoever. Have I got that anywhere near right - and if so why would investore shares be stapled to str?? My brain's hurting.

[trader_jackson]

For those that are interested, I believe you can find the PDS and other information for investore here:
(time to start a new thread?

http://www.business.govt.nz/disclose/fmc-register/viewInstance/view.html?id=0b027646737e9b07d7265992a08f270e45484 e087de25568&_timestamp=219946573905881

I am also interested

[fungus pudding]

For those that are interested, I believe you can find the PDS and other information for investore here:
(time to start a new thread?

http://www.business.govt.nz/disclose/fmc-register/viewInstance/view.html?id=0b027646737e9b07d7265992a08f270e45484 e087de25568&_timestamp=219946573905881

I am also interested

Thanks but no joy. That link goes to realme/companies office/page cannot be found. Searching for stride or investore from site search box gives no result.

Found info on stride web-site.
http://www.strideproperty.co.nz/
Investor news/news articles

[trader_jackson]

Thanks but no joy. That link goes to realme/companies office/page cannot be found. Searching for stride or investore from site search box gives no result.

Found info on stride web-site.
http://www.strideproperty.co.nz/
Investor news/news articles

PDS is definitely there... well at least when I go to it, the first offer document is the: Product disclosure statement (for Investore Property Limited)
8104

[Snow Leopard]

For those that are interested, I believe you can find the PDS and other information for investore here:
(time to start a new thread?

http://www.business.govt.nz/disclose/fmc-register/viewInstance/view.html?id=0b027646737e9b07d7265992a08f270e45484 e087de25568&_timestamp=219946573905881

I am also interested

For reasons unknown :rolleyes: your login is not working for the rest of us.

Could you kindly re-enter your details here:
User name: [_________________]
password: [__________________].

Best Wishes
Paper Tiger

[fungus pudding]

For reasons unknown :rolleyes: your login is not working for the rest of us.

Could you kindly re-enter your details here:
User name: [_________________]
password: [__________________].

Best Wishes
Paper Tiger

Something weird here. My login doesn't get me anywhere. Found PDS on Stride website before, under investor news, along with restructuring update, but it's not there now. Just the restructuring update. This is either the work of Allah, the Welsh rugby players, or some drunken Gremlins.

[Joshuatree]

HALFYR: SPG: HALFYR: SPG: HY21 Interim Results and Capital Raise (https://online.asb.co.nz/ost/9A9B0F1BAAF233D5F02397523311CE54/companyannouncements/showannouncement/nzx/spg?issuercode=spg&number=363842&ispdf=false)

Reasonable yield there.

[fungus pudding]

HALFYR: SPG: HALFYR: SPG: HY21 Interim Results and Capital Raise (https://online.asb.co.nz/ost/9A9B0F1BAAF233D5F02397523311CE54/companyannouncements/showannouncement/nzx/spg?issuercode=spg&number=363842&ispdf=false)

Reasonable yield there.

That's useless, so for those of us who can't access that outfit, here it goes from their website.
https://strideproperty.co.nz/investor-news/documents-reports/

[Joshuatree]

No useless comments from fungus then.Thanks for your useful sharing, not.

[winner69]

From Bev73 on another thread

The last couple of days has seen Stride share price rising. Any idea of the reason?

[fungus pudding]

From Bev73 on another thread

The last couple of days has seen Stride share price rising. Any idea of the reason?

All LPTs have increased.

[CD_CHCH]

$120 million Capital Raise

360232.pdf (nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com) (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SPG/383537/360232.pdf)

[MarineSalvage]

$120 million Capital Raise

360232.pdf (nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com) (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SPG/383537/360232.pdf)

and its been offered to Sharesies - so they must be scraping the barrel

[kiwical]

and its been offered to Sharesies - so they must be scraping the barrelThey certainly found some scrapings in that barrel

"SPG’s $100M Share Placement received strong support, and the total amount investors applied for was more than what SPG needed. Because of this, and so that shares are allocated fairly, Sharesies has scaled every application to 7% of the amount applied for. For example, if you applied for $100 worth of shares, you’ll only receive $7 worth of shares. "

[fungus pudding]

No useless comments from fungus then.Thanks for your useful sharing, not.

I posted my comment pointing out that posting garbage links like resticted sites is no help to anyone, so I added the unrestricted version to the comment I made.

[Snoopy]

SPG, as the ticker reads now, is a share that hasn't found much love from the forum. You can tell that because the ticker in the thread title has not been updated since the company changed it in July 2016, nearly six years ago!

It has a chequered history, some shareholders being 'in' from the early days when the share traded as Dominion properties. Then it was an aggregation of under-capitalised individual property syndicates set up by the former 'Money Managers' investment advisor chain, then headed by Doug Somers-Edgar. Reading back in this thread, it appears some of those syndicates were combined on what some individual unitholders saw as less than equitable terms. Long standing shareholders then saw their capital diluted, as wholesale NZ market capital providers rode in with their 'new capital' to recapitalise the company and save the day. Shareholder returns were further hit when they were advised to buy out an onerous property management contract set up by Somers-Edgar and his senior managers at the time.

I remember reading a slightly satirical book on how to deal with situations like this titled, "Don't Get Mad, Get Even." I have pilloried the previous management contract that had to be disentangled to 'save' Stride in the past. But Stride appears to be going down the same route itself, by setting themselves up as 'onerous property managers'. Who says you can't learn from history ;-P?

This new direction of Stride, is why it has split itself up into SPL (the property owning company) and SIML, (the property management company). It was necessary to do this to maintain the PIE status of SPL, even if from an investor perspective SPL and SIML are 'stapled' together as SPG, an entity that can't be uncoupled from a shareholder perspective.

Stride has created four property owning sub-units for operational purposes:

1/ 'Investore', which holds big box retailers as an asset class, the majority of which are Countdown supermarkets. This business unit is technically independent, as it has its own sharemarket listing. Stride has sold down their own direct holding to 18.8%.
2/ 'Industre', a joint venture with JPMAM (JP Morgan Asset Managers) representing various large overseas institutions. Stride's holding of 52% is forecast to reduce to 25% as partner JPMAM provides all the capital for property acquisitions to develop the business going forwards. Industre consists of a portfolio of industrial buildings. There is currently no mechanism for the general public to be able to invest in Industre directly.
3/ 'Fabric', which owns office buildings. An IPO for Fabric was proposed in September 2021, but was pulled from the market, Stride citing 'market conditions' as the reason. Stride intends to maintain some ownership in Fabric when the float eventually gets away.
4/ 'Diversified' which is a shopping centre owning unit comprising Queensgate (Lower Hutt), Chartwell (Hamilton), Remarkables Park (Queenstown) and a 50% interest in the Johnsonville Shopping Centre (Wellington). I am not sure of the history of this one, as Stride owns what seems like a miniscule 2.1% of that entity, although SPL do own the other 50% of the Johnsonville Shopping Centre that 'Diversified' does not own outright. I am not aware of any way the public can get a direct holding in 'Diversified'.

Stride (SIML) appears to be able to derive 'leasing fees' and 'long term management fees' (based on a percentage of the value of assets under management) from these entities, and - at the beginning when setting them up - an 'establishment acquisition fee' as well!

SIML does look like a very attractive business model. SIML is capital light in itself, but able to enjoy large fees from the assets of others. What is more, the fees are collectible regardless of the underlying performance of the business units. Business unit owners might describe those fees as 'onerous'. But as a potential Stride shareholder, I would describe them as 'financially savvy', 'astutely targetted' and 'greedy'. Well maybe not that last adjective, although I think I read 'greed is good' somewhere?

SNOOPY

[Snoopy]

Stride (SIML) appears to be able to derive 'leasing fees' and 'long term management fees' (based on a percentage of the value of assets under management) from these entities, and - at the beginning when setting them up - an 'establishment acquisition fee' as well!

SMIL does look like a very attractive business model. SIML is capital light in itself, but able to enjoy large fees from the assets of others. What is more, the fees are collectible regardless of the underlying performance of the business units.


From the Chairman's Annual Meeting Address:
"One of the focus areas for Stride in FY2021 and going into FY2022 has been growing our investment management business, which is one of our key objectives. Our total assets under management have grown to $3.4billion when including acquisitions and developments in progress."

and the CEO chimed in later:
"A key aspect of Strides business is that Stride retains a shareholding in each of its managed products, with a targeted weighting of between 20-25%, although this number can vary from time to time. This ensures alignment between Stride and each of its managed products, and is an important aspect of Stride's strategy."

As the 'fee gravy train' rolls along, I thought it might be interesting to look at what is inside the individual 'fee wagons'. Information in the following table is taken from Section 8.4, AR2021.



SIML Investment Property Fees (FY 2021)DiversifiedInvestoreIndustre
TotalTotal %ge


Salary & Wages Recovery$2.377m$0.0m
$0.0m
$2.377m10.3%


Acquisition Fee$0.0m$0.0m
$1.886m$1.886m8.2%


Asset Management Fee$2.597m$4.965m$0.687m
$8.249m35.7%


Performance Fee$0.0m$2.076m$0.636m$2.712m11.7%


Building Management Fee$1.543m$0.428m
$0.056m$2.027m8.8%


Project Management Fee$2.076m$0.096m
$1.023m$3.195m13.8%


Maintenance Fee$0.0m$0.040m
$0.013m$0.053m0.2%


Disposal Fee$0.0m$0.0m$0.0m$0.0m0%


Leasing Fee$1.384m$0.449m$0.194m$2.027m8.8%


Accounting Fee$0.175m$0.250m$0.0m
$0.425m1.8%

[/TR]

Capital Raising Fee$0.0m$0.089m$0.0m$0.089m0.4%


Licensing Fee$0.070m$0.0m$0.0m$0.070m0.3%







Grand Fee Total$10.222m$8.393m$4.495m$23.110m100%





SIML Investment Property Valuations (Over FY2021)DiversifiedInvestoreIndustreTotal










Total Assets Under Management: Including Outside Interests (EOFY2021) {A}$466m$1,038m$610m$2,114m




Investment Assets Under Management: SPL %ge holding (EOFY2021) {B}2%18.8%56.3%Not Meaningful


Investment Assets Under Management: SPL Interest (EOFY2021) {A}x{B}$9m$195m$344m$508m











Total Assets Under Management: Including Outside Interests (EOFY2020) {C}$414m$895m$398m$1,707m


Investment Assets Under Management: SPL %ge holding (EOFY2020) {D}2%18.8%68.3%Not Meaningful


Investment Assets Under Management: SPL Interest (EOFY2020){C}x{D}$8m$168m$272m$448m









Average Total Assets Under Management: Including Outside Interests (Over FY2021)$440m$966.5m$504m$1,910.5m



Total Fees as a %ge of Assets Under Management: Including Outside Interests (Over FY2021)2.32%0.868%0.892%1.21%



Notes

1/ For valuation of 'SPL' investment assets @31-03-2021, including external interests, see AR2021 p38
2/ For valuation of 'SPL' investment assets @31-03-2020, including external interests, see AR2020 p23

Those fees don't sound that high. But I know from my work on the 'Listed Property Trust' thread that an annual fee of only 0.5% of property value has the potential to reduce dividend yield by about 20%.

SNOOPY

[Snoopy]

The beauty of buying a PIE, which most of the NZ property companies are, is that all of the tax work is done for you. Just bank your dividend and spend it! I have to admit the concept of 'don't think and spend ' has a certain ring of attraction for many people. Things aren't quite so simple at Stride though. Stride found itself earning a fair whack of earnings from management fees rather than property ownership. This is a 'no no' when you are 'cooking up a property PIE' apparently. So Stride found a pragmatic solution.

1/ Split off the management fee owning section of the company into a separate entity for tax purposes and call it 'Stride Investment Management Limited'. This is not a PIE and, as a result, I presume shareholders do have to declare their SIML dividends in their tax return (I would be interested if a Stride shareholder can confirm this).
2/ Regroup the rest of the business, the direct property owning bit, under the name 'Stride Property Limited', which can continue as a PIE
3/ Combine SMIL and SPL into a new 'stapled' entity and call it Stride Property Group (SPG).

This way SPG owners retain the benefits of PIE (no paperwork needed for SPL) and they only get a half headache from adding SMIL dividends to their tax return. Good stuff.

But looking over the dividends paid over FY2021, and working out the actual imputation rates, I found something interesting.


It
Dividend date30-06-202004-09-202014-12-202009-03-2021


SPL Dividend Amount0.320c1.928c1.903c1.727c


SPL Imputation Amount0.124c0.266c0.334c0.35c


SPL Imputation Percentage28%12.1%14.9%16.9%


SMIL Dividend Amount2.158c0.550c0.575c0.750c


SMIL Imputation Amount0.839c0.214c0.224c0.292c


SMIL Imputation Percentage28%28%28%28%



The SMIL part of the business is behaving as it should, paying tax at the company rate of 28%. The SPL part of the business starts off doing the same (first dividend). But look at what has happened to the imputation rates for the second, third and fourth dividends (figures highlighted in bold), To remind everyone, a 'fully imputed' dividend is imputed at the rate of 28%. The second third and fourth dividends of the SPL business are not anything like fully imputed. The SPL part of the business is the PIE that 'no-one needs to think about'. But this table is showing that perhaps some thought is required.

It looks like the PIE investors in SPL are getting credit for paying tax at 28%, when in fact the tax paid for the second, third and fourth dividends has been taken off at a much lesser rate. This (underpaying tax deducted at source) happened to me once on a fixed interest investment. The IRD got in touch with me and said that I had to declare that PIE income on my tax return so that I could fix the tax error. I am fascinated to know if SPG shareholders over FY2021 got asked to do the same thing. Are there any SPG shareholders out there that can comment?

SNOOPY

[Snoopy]

Looking over the dividends paid over FY2021, and working out the actual imputation rates, I found something interesting.


It
Dividend date30-06-202004-09-202014-12-202009-03-2021


SPL Dividend Amount0.320c1.928c1.903c1.727c


SPL Imputation Amount0.124c0.266c0.334c0.35c


SPL Imputation Percentage28%12.1%14.9%16.9%


SMIL Dividend Amount2.158c0.550c0.575c0.750c


SMIL Imputation Amount0.839c0.214c0.224c0.292c


SMIL Imputation Percentage28%28%28%28%



The SMIL part of the business is behaving as it should, paying tax at the company rate of 28%. The SPL part of the business starts off doing the same (first dividend). But look at what has happened to the imputation rates for the second, third and fourth dividends (figures highlighted in bold), To remind everyone, a 'fully imputed' dividend is imputed at the rate of 28%. The second third and fourth dividends of the SPL business are not anything like fully imputed.

The SPL part of the business is the PIE that 'no-one needs to think about'. But this table is showing that perhaps some thought is required.

It looks like the PIE investors in SPL are getting credit for paying tax at 28%, when in fact the tax paid for the second, third and fourth dividends has been taken off at a much lesser rate.

I am fascinated to know if SPG shareholders over FY2021 got asked to declare that PIE income on their tax return to fix the tax error. Are there any SPG shareholders out there that can comment?


I got hold of my tax accountant today to clear up this PIE tax at less than 28%, potentially causing a supplementary tax bill for a Stride Property unit holder. The reply was that the lower PIE tax is probably representative of some income, most likely a revaluation of property, being not subject to income tax. Thus there is no requirement for a shareholder to top up their tax paid in a supplementary way, as there is no capital gain tax on a property revaluation to be paid by individual unit holders either. For the PIE working tax status, that means all tax is paid within the PIE structure, with no supplementary paperwork to be filled out by the unit-holder (as is normal with a PIE).

I had another look at the Stride income statement for FY2021 and noticed there was $38.759m in net change in fair value of investment properties thrown into the profit calculation. So I guess my accountant's advice rings true.

SNOOPY

[CD_CHCH]

Hi Snoopy,

I hold a few of these. On the PIE dividend statement there are 2 line items: Fully Imputed Dividend & Excluded Income.

Looking at the Fully Imputed Dividend it shows a Gross Dividend amount and NZ Imputation Credit which has been applied at 28% but if you take the combined total of Fully Imputed Dividend & Excluded Income it makes it appear as if tax has been deducted at the incorrect rate.

I'd never really thought about what each line item meant but seeing what your accountant says it makes sense now.

[Aaron]

Hey Snoopy

I think a Listed PIE like the listed property companies/trusts create imputation credits when they pay income tax. The imputation credits have to be attached to the dividends at 28% but only if there are imputation credits available to attach. Once the imputation credits have been used up the rest is an excluded amount that has no imputation credits attached.

An investor can choose to include the imputed dividend or exclude it from their tax returns depending on their level of income. If your taxable income is over $48,000 there is no reason to include the income in your tax return.

I guess where they are paying out more than their taxable profit you get the excluded dividend. Good old capital from nowhere, like the power companies and there might be more as they can depreciate commercial buildings again for tax purposes lowering their taxable income.

[Bev73]

Hey Snoopy

I think a Listed PIE like the listed property companies/trusts create imputation credits when they pay income tax. The imputation credits have to be attached to the dividends at 28% but only if there are imputation credits available to attach. Once the imputation credits have been used up the rest is an excluded amount that has no imputation credits attached.

An investor can choose to include the imputed dividend or exclude it from their tax returns depending on their level of income. If your taxable income is over $48,000 there is no reason to include the income in your tax return.

I guess where they are paying out more than their taxable profit you get the excluded dividend. Good old capital from nowhere, like the power companies and there might be more as they can depreciate commercial buildings again for tax purposes lowering their taxable income.

As I understand it, and apply it, where income without PIE is $48,000 or less, then PIE income can take the income total to $69,999 before the tax rate increases above 17.5%.
This allows for a tax refund on the 28% imputation credit.

[Aaron]

As I understand it, and apply it, where income without PIE is $48,000 or less, then PIE income can take the income total to $69,999 before the tax rate increases above 17.5%.
This allows for a tax refund on the 28% imputation credit.

I could be wrong but my understanding is that personal tax rates are 10.5% to $14,000. 17.5% $14k to $48,000 and 30% $48,001 to $70,000.

If your income is above $48,000 then every dollar of income above $48,000 is taxed at 30% or more. Portfolio Listed Entities(PLE) can only attach imputation credits up to 28% of the dividend. I am unsure how it could be beneficial to declare PLE dividends if your income is over $48,000 including PLE dividends, as your tax rate is 30% and the imputation credits are 28% you would need to (unnecessarily) pay the 2% difference.

I would be interested to know how you apply it.

[777]

I could be wrong but my understanding is that personal tax rates are 10.5% to $14,000. 17.5% $14k to $48,000 and 30% $48,001 to $70,000.

If your income is above $48,000 then every dollar of income above $48,000 is taxed at 30% or more. Portfolio Listed Entities(PLE) can only attach imputation credits up to 28% of the dividend. I am unsure how it could be beneficial to declare PLE dividends if your income is over $48,000 including PLE dividends, as your tax rate is 30% and the imputation credits are 28% you would need to (unnecessarily) pay the 2% difference.

I would be interested to know how you apply it.

Correct Aaron.