By Jenny Ruth
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Sunday 5th September 2010 |
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Newly listed DNZ Property Fund is trading at a sizeable discount to its asset backing and has an attractive dividend yield, says Jeremy Simpson, an analyst at Forsyth Barr.
"DNZ has an experienced management team and a unique internal management structure," Simpson says.
Chief executive Paul Duffy "is one of the most experienced senior property professionals in the New Zealand market," he says.
Duffy and Alastair Hassell were paid $35 million of DNZ's recent $45 million capital raising for the management contract.
"Over time, theoretically DNZ should trade at a premium to the other listed property vehicles simply because of its superior management structure."
Nevertheless, management will need to build a track record in the listed market, Simpson says.
Risk factors include its near-term lease expiry profile - while it currently has a 95% occupancy rate, a number of leases expire over the next 12 to 24 months - and its 40% gearing.
"DNZ is very well diversified across office, industrial, bulk retail and shopping centres, although it has 40% of its portfolio in the office sector which we see as being the more problematic sector over the next couple of years."
Recommendation: Accumulate.
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