Precinct seeks up to $70 mln in placement, share purchase plan to repay debt, fund growth

Precinct Properties, formerly known as AMP NZ Office, wants to raise up to $70 million through an underwritten placement and share purchase plan to repay bank debt and give it headroom to fund growth.

The Auckland-based company will raise $50 million at $1 a share, a 4.3 percent discount to the current trading price, in a placement to institutional investors, underwritten by Macquarie Securities (NZ), it said in a statement. The property investor will raise $10 million through a share purchase plan at the average end of day price between Sept. 10 and 16, with up to $10 million in oversubscriptions. The new shares won't be eligible for the fourth-quarter dividend to be paid on Sept. 19.

The funds raised will repay bank debt, reducing gearing to 33.8 percent from 37.3 percent as at June 30, and give it more capacity to fund the firm's portfolio opportunities, it said. The property investor needs about $365 million to deliver on its medium-term projects, and the new equity will provide funding of about $100 million to $110 million, it said.

"Downtown Shopping Centre and Bowen Campus are two exciting opportunities within the CBDs of Auckland and Wellington," chief executive Scott Pritchard said. "The equity being raised helps position us to deliver our vision."

Precinct reported a 14 percent lift in operating earnings of $58.3 million in the year ended June 30, with new buildings, increased occupancy and higher rents underpinning the lift. It predicts an increase in the 2014 annual dividend to 5.4 cents per share from 5.12 cents in the financial year just been.

The company is re-weighting its portfolio to Auckland, which it wants to lift to 70 percent from its existing 60 percent and cuts its exposure to government leases, which it sees as continuing to reduce as the public sector goes through a period of consolidating office space.

The shares were unchanged at $1.045 in trading yesterday, and have gained 5.6 percent this year.

BusinessDesk.co.nz

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