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Wednesday 5th May 2004 |
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Under their co-ownership arrangement, a nominee for MGP and MGI today entered into a conditional agreement to acquire the property, known as the "Fletcher Site", from a subsidiary of Trans Tasman Properties Limited for a purchase price of $72 million.
The property has a site area of 8.1 hectares with 48,500 sqm of existing improvements, consisting of five office buildings and 18 warehouse/industrial buildings. With a low site utilisation ratio, the property also offers significant future development prospects.
The property is located in Auckland's primary industrial region, benefiting from its central proximity to major motorway access and port and airport facilities. It is also in the vicinity of a number of existing properties held jointly by MGP and MGI such as The Millennium Centre, Central Park Corporate Centre, Penrose Industrial Estate and The Gate Industry Park.
Fletcher Building Limited has a head lease over the existing lettable area with five years remaining. Its annual net rental is $6.5 million with market reviews every three years, delivering a yield of 9.0%.
MGP and MGI's agreement to purchase the property is subject to satisfaction of the following outstanding conditions:
1. approval from the Overseas Investment Commission;
2. waiver of the first right of refusal in favour of Auckland University of Technology; and
3. waiver of the first right of refusal in favour of Fletcher Building Limited.
A valuation report has been prepared for the Fletcher Site and the independent directors have certified that they have reviewed the valuation report and resolved and certified that in their opinion the transaction is on arm's length, commercial terms and falls within MGP's investment policies.
MGP's 50% share of the acquisition will be funded via an institutional placement of units in MGP and the draw down of additional debt. Under the placement, MGP proposes to issue 21.75 million new units at $0.96 per unit, raising $20.9 million. The new units will rank pari passu with existing units on issue from allotment and will be entitled to the distribution for the quarter ended 31 March 2004.
The benefits to MGP's Unitholders of acquiring the property and making an institutional placement include:
· enhanced industrial property sector focus;
· greater portfolio diversification;
· reduced gearing to 35.0%;
· increased weighted average lease term to expiry to 3.9 years;
· improved occupancy rate to 99%; and
· increased index weighting of MGP, creating greater liquidity for Unitholders.
MGP remains on target to deliver a projected gross distribution of 9.3 cents per unit for the year ending 30 June 2005.
John Dakin, Chief Executive Officer of MGNZ said, "The transaction will increase MGP's position as New Zealand's leading listed industrial specialist and reduce its gearing to 35.0% on completion of the transactions."
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