Restructure Property Funds To Benefit Investors

Dominion Funds Moves To Restructure Property Funds To Benefit Investors

Dominion Funds Ltd has moved to restructure 30 investment vehicles into a single entity, Dominion Foundation Property Fund Ltd.

The move is in line with recent industry trends towards amalgamating existing investment structures, enabling investors to achieve diversification through a spread of property types, locations and lease renewal dates, and to increaseliquidity through a secondary market.

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 NTA and forecast cashflows. The independent report prepared by PricewaterhouseCoopers concluded that: "the restructure is fair and reasonable to investors in each of the Unit Trust Funds and Note Companies, having regard to their interests as both Unit holders and /or Noteholders in each of the Unit Trust Funds and Note Companies".

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

"There is no doubt that the proposed restructuring is in the best interest of investors. Reducing the exposure to any one tenant will reduce risk to future distributions " says Dominion Funds Ltd Chief Executive Paul Duffy.

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. Its primary objective will be to pursue growth and maintain the sustainability of future distributions to investors. As a result of the proposed restructure there will be savings in administration costs with the proposed rebanking expected to achieve greater capital flexibility and reduced interest costs.

Dominion Funds is a significant player in the industrial, commercial and retail property field with more than $400 million funds under management and offering investment opportunities in properties throughout New Zealand.

Dominion Income Property Fund Ltd formed last year through the amalgamation of eight investment funds has performed above forecasted projections.