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PFI expands property portfolio

NZ Newswire logoNZ Newswire 3/10/2017 Paul McBeth

Property For Industry has bought nine properties for $69.5 million to extend the average lease term of its existing portfolio and acquire development opportunities in the future.

The Auckland-based company adds eight industrial properties and one head office to its existing $1.1-billion portfolio of 83 properties, which will increase the weighted average lease-term to 5.4 years from the current 4.8 years, it said on Wednesday.

The deal won't add to earnings, with PFI affirming guidance for distribution profit of 7.7-to-7.9 cents per share, however two-yearly rent reviews offer the chance of increased revenue in the future and low site coverage provides "significant medium to long-term development potential".

PFI will fund the deal through a fully underwritten pro-rata renounceable rights issue to raise $70m.

Eligible shareholders will be entitled buy one share for every 10 held at the close of trading on October 12 at a price of $1.54 apiece, a 7.1 per cent discount to a theoretical ex-rights price based on Tuesday's closing price of $1.67.

"PFI has a long track record of delivering strong and stable returns to our shareholders and this acquisition represents a continuation of this strategy," chairman Peter Masfen said.

"The corresponding equity raise allows us to complete this transaction while providing flexibility to invest further across our portfolio."

The deal will initially be funded through an extension of the property investor's banking facilities with the proceeds from the capital raised going to repay that debt. PFI's gearing ratio will fall to 32.3 per cent from 34.2 per cent once the acquisition and rights issue are completed.

PFI's board and senior executives will take up all their rights to subscribe to the offer, which is underwritten by Forsyth Barr.

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