DNZ buys Newmarket office building for $17 million in 'preferred' location

Friday 5th June 2015

DNZ Property Fund, which is almost halfway through a planned series of asset sales, has bought Heartland House in Newmarket, Auckland, for $17 million, in an area it describes as one of its preferred locations.

The office and car parking building includes seven retail units and the purchase price will give DNZ a yield of 7 percent, it said in a statement. The property has a weighted average lease term of 5.5 years, longer than DNZ's average WALT of 5.1 years.

“This acquisition fits well with our strategy” chief executive Peter Alexander said. “This precinct in Newmarket is one of our preferred locations. Newmarket has extensive private and public transport links and excellent amenity. The acquisition is also immediately accretive to both earnings and WALT.”

DNZ sold $32 million of assets as part of a plan to divest $80 million of property in the year ended March 31, leaving it with 41 urban commercial office, retail and industrial properties valued at $872.4 million.

The acquisition will be through existing bank debt and the sale of non-core assets, and is expected to settle at the end of the month.

Heartland House is adjacent to another DNZ-owned property, and Alexander said there were opportunities to add value over the medium to long term.

DNZ shares last traded at $2.05, and have gained 7.3 percent this year. The stock is rated an average 'hold' based on five analyst recommendations, with a median target price of $2.05.

BusinessDesk.co.nz

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