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Stride Property's Investore subsidiary to join NZX 50 after bookbuild

Friday 1st July 2016

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Stride Property's wholly-owned subsidiary, Investore Property, will join the S&P/NZX 50 Index until at least September after it is spun off from Stride this month. 

Investore will list on the NZX 50 index and other S&P indices after the close of trade on July 6. It will be a member of the benchmark index and the other indices at least until the next rebalance in September when it will be reviewed for ongoing membership, said Douglas Beem, associate director of S&P Global. 

The planned listing and initial public offering was announced earlier this month as part of Stride's strategy to retain its portfolio investment entity (PIE) tax status. Stride will distribute Investore shares to existing shareholders at a one-for-four ratio as part of the subsidiary demerging on July 11, and will retain a 19.9 percent stake while Stride shareholders will collectively hold between 33.4 percent and 38.2 percent.

The IPO was priced at $1.49 a share after the bookbuild was completed last Friday, with $170 million allocated to institutional investors and brokers, and $15 million set aside for eligible Stride shareholders. Investore also got commitments to subscribe for the full $15 million reserved for those shareholders who don't take up the offer. The indicative price range was between $1.37 and $1.49 a share.

The Stride shareholder offer for the Investore IPO closes on July 5.

Investore confirmed its deal to buy 14 Countdown stores from Shopping Centres Australasia Property Group (SCA) for $267 million had gone unconditional and will settle on July 12 at Stride's special meeting yesterday. Investore's portfolio consists of 39 large-format retail properties, with the remaining 25 properties also standalone large format retail shops such as supermarkets and hardware stores located around New Zealand with long-weighted average lease terms. 

Rickey Ward, New Zealand equity manager at JBWere, said there was a lot of interest in Investore. 

"Looking at the allocation compared to what people bid for it, no matter who you talk to the allocation percentage was very low, and that means there's an enormous amount of demand for it," Ward said. 

The spinoff timing had been fortunate in many respects, Ward said, as it came after the UK voted to leave the European Union and resulting market uncertainty drove investors to more reliable stocks with consistent yields. Comfort about future earnings meant investors could buy a longer dated cash flow with a greater degree of confidence, he said.

"There is a strong case it should go higher [over time] because it's got a tenant which is locked in very long lease terms, the only question you really have to ask yourself as an investor is does Countdown leave New Zealand or these sites?" Ward said. "It's another vehicle in the property sector that has a longer weighted average lease term. It all points towards a very positive investment case. "

Stride shares last traded at $2.35, and have gained 8.1 percent this year.

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