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Dominion Property puts 30 funds into one vehicle


Monday 4th August 2003

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Dominion Funds Ltd has moved to restructure 30 investment vehicles into a single entity with 50 million shares on issue, Dominion Foundation Property Fund Ltd.

The new company, that requires the approval by extraordinary resolutions from investors in late August, will have an interest in 34 properties valued at $166 million, with 63 tenants generating $17.9 million net income a year.

The company said today the move was in line with recent trends towards amalgamating existing investment structures, enabling investors to achieve diversification through a spread of property types, locations and lease renewal dates. It would also increase liquidity through a secondary market.

Dominion Funds is the property investment arm of Doug Somers-Edgar's Money Managers chain, which marketed and promoted the Auckland Metropolis bond issue now in receivership. It put three-quarters of the investors into that investment.

Dominion Funds chief executive Paul Duffy said future listing of Dominion Property Fund Ltd on NZX was an option.

In the first stage, shareholders would be able to trade shares through Money Managers Advisory Network. There are around 4500 investors in Dominion Foundation while there are nearly double that in the whole Dominion Funds group.

It is proposed that investors in 17 unit trust funds and 13 note companies will be issued shares and debentures in the new company which will have ownership of all of the properties currently owned by the unit trust funds.

The proposed exchange from units and notes to shares and debentures has been calculated on a basis of net tangible assets (NTA) and forecast cashflows. Valuation is based on an independent report prepared by PricewaterhouseCoopers which concluded that: "the restructure is fair and reasonable".

The unit trust funds have been in existence from 1996 with many investors holding investments in a number of funds.

Mr Duffy said reducing the exposure to any one tenant would reduce risk to future distributions.

Dominion Foundation's main aim will be to pursue growth and maintain the sustainability of future distributions to investors.

The new structure would result in efficiencies, lower interest costs and greater financial flexibility, Mr Duffy said.

Dominion Funds has more than $400 million invested in industrial, commercial and retail property.

Mr Duffy said Dominion Income Property Fund, formed last year through the amalgamation of eight investment funds, had performed above forecasted projections.

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