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Stride amends plans for Investore unit with demerger and separate listing

Friday 10th June 2016

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Stride Property will list its wholly-owned subsidiary Investore Property after an initial public offering, changing its earlier plans of spinning out the unit but keeping it in a 'stapled structure.'

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 in a statement. Stride will retain a 19.9 percent stake in Investore, while Stride shareholders will collectively hold 33.4 percent to 38.2 percent.

In May, Stride proposed splitting its property-owning unit from its real estate investment management in a stapled structure, with each as a separate legal entity but effectively operating in lock-step, which would allow it to expand the management arm while preserving its favourable tax status. That transaction would have seen shares in the investment manager distributed to Stride investors on a one-for-one basis.

The Auckland-based company made the announcement while posting a 16 percent gain in full-year earnings driven by its expanding property portfolio, which has portfolio investment entity (PIE) tax status, allowing 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.

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 (SCA) 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.

"Investore will be New Zealand’s only listed property company with an investment strategy focused on providing a stable return to its shareholders through investment in large format retail properties," Stride said.

Stride shares last traded at $2.225, and have gained 2.3 percent this year. Its portfolio grew to 59 properties worth $1.27 billion as at March 31. The company sold shares at 97 cents in a $45 million capital raising when it listed in 2010, using the funds to internalise its management contract and corporatise its structure.

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