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Stride changes plans for Investore unit

NZN 9/06/2016 By Sophie Boot

Stride Property is to list its wholly-owned subsidiary Investore Property after changing plans to spin out the unit.

Stride will distribute Investore shares to its own shareholders at a one-for-four ratio as part of the subsidiary demerging from Stride, at the same time as Investore lists on the NZX main board, it said.

Stride will retain a 19.9 per cent stake in Investore, while Stride shareholders will collectively hold between 33.4 per cent to 38.2 per cent.

In May, Stride proposed splitting its property-owning unit from its real estate investment management in a stapled structure.

Under it, each would be a separate legal entity but effectively operate in lock-step, which would allow it to expand the management arm while preserving its favourable tax status.

That transaction would see shares in the investment manager distributed to Stride investors on a one-for-one basis.

Chief executive Peter Alexander told BusinessDesk the proposed stapled structure would still go ahead, and the Investore demerger and listing is a step in Stride keeping its PIE tax status, which allows tax payments to be passed on to shareholders at the company's corporate tax rate if there are insufficient imputations credits available. Companies only qualify for PIE status if they come within a cap on non-qualifying income.

Stride had 59 properties worth $1.27 billion as of March 31, and Investore's portfolio is a specialised percentage of that, Alexander said.

"We are still left with a substantial property portfolio," Alexander said. "The increase we have had in investment management income would mean we would have too much non-qualifying income. Instead of owning this property through a fully-owned subsidiary we will have a cornerstone stake in Investore."

The company announced its listing plans while posting a 16 per cent gain in full-year earnings driven by its expanding property portfolio.

Investore will have a portfolio of 39 large-format retail properties, including 14 Countdown stores it intends to acquire from Shopping Centres Australasia Property Group for $267 million.

That acquisition is subject to a successful capital raising and demerging of Investore from Stride, and the company expects it to become unconditional on June 30.

Stride shares last traded at $2.225, and have gained 2.3 per cent this year.

Its portfolio grew to 59 properties worth $1.27 billion as at March 31.

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