23 May 2013

Property firms recommend merger plans

8:38 am on 23 May 2013

Listed firm Property for Industry (PFI) and Direct Property Fund (DPF) say their planned merger will give them a portfolio worth $800 million and will mean higher dividends for shareholders.

The two companies have formally recommended to shareholders plans to merge, creating the fifth largest listed property vehicle, with a market capitalisation of $500 million.

The transaction, subject to shareholder approval, will go through on 1 July.

Independent expert, Deloitte, says the deal will benefit PFI and DPF shareholders equally.

Under the deal, Property for Industry will continue as an entity, with Direct Property Fund shareholders receiving 123 PFI shares for each of their DPF shares.

PFI's ranking on the NZX 50 Index is expected to rise from its current position of 42nd to 29th.

PFI managing director Greg Reidy says the strategy for the new entity is to keep the focus on the Auckland industrial market.

He says industrial property has been the main stay of both companies for the past 10 years.

Mr Reidy says the other focus will be on shareholder returns and ensuring the portfolio is working as well as it can.

He says any further acquisitions will be reviewed on a case by case basis based on what it does for the company, shareholder's returns and the portfolio.

Mr Reidy says it's hoped PFI's rise up the NZX 50 will create more demand for the shares.

Shares in PFI fell 1 cent to $1.33 on Wednesday.