Kiwi Property Group, the largest property company listed on the NZX, plans to raise $161 million to fund expansion in Auckland as it sees strong growth continuing.
The Auckland-based company will sell about 118 million shares at $1.36 each in the 11-for-one entitlement offer, a 4.5 percent discount to the theoretical ex-entitlement price of $1.4242, it said in a statement. The shares last traded at $1.43, and have gained 3.3 percent this year.
Kiwi Property said it intends to use funding from the offer, debt facilities and selling selective assets to bankroll its investment strategy.
The company has been re-weighting towards Auckland, and will use the offer proceeds to pay down bank debt and reduce gearing. Its gearing ratio was 34.5 percent as of March 31, which would be reduced to 29.2 percent after applying the net proceeds of the planned offer, it said. Its property portfolio of malls and office buildings was worth $2.97 billion as at March 31, with $1.8 billion of that in Auckland.
Kiwi Property is considering expansion and improvement projects at its Sylvia Park mall in Auckland, Northlands in Christchurch, The Base near Hamilton, and in the longer term at Drury, in South Auckland. It is currently undergoing a $126 million development at Sylvia Park, adding parking and expanding the food court, and is looking at a further $200 million expansion involving new international retailers and a department store "as we move to realise our world-class town centre vision for that site."
In April, when Kiwi Property secured agreements over 51 hectares of land in Drury, it said the acquisition was a "strategic long-term holding to capitalise on Auckland's continuing population growth" and it would develop a town centre over the next 20 years as the area developed. The Base, in which it bought a half-stake last year, is "strategically located within the 'golden triangle' of population growth centred on Auckland, the Waikato and the Bay of Plenty", Kiwi Property said.
There is no rights trading under the offer, with two bookbuilds for institutional investors planned for shares which aren't bought. The company affirmed its previous dividend guidance for the 2017 year at 6.85 cents per share.
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