STR - Stride Property [ex DNZ Property]

[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.