Ann: GENERAL: ARG: $100m equity raise funds prope

• Release Date: 18/12/12 11:41
• Summary: GENERAL: ARG: $100m equity raise funds property portfolio expansion
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ARG
18/12/2012 09:41
GENERAL

REL: 0941 HRS Argosy Property Limited

GENERAL: ARG: $100m equity raise funds property portfolio expansion

18 December 2012

MARKET RELEASE

$100 million equity raise funds property portfolio expansion

Argosy Property Limited intends to raise up to $100 million by way of the
issue of new equity to partly fund two separate acquisitions with different
vendors, both involving landmark office buildings in the government precinct
in Wellington.
The conditional acquisitions are at 15 Stout Street (formerly the Ministry of
Defence building) and the NZ Post Headquarters in Waterloo Quay.  Both
purchases will be backed by long-term government tenancies and are consistent
with Argosy's acquisition strategy, as outlined to shareholders earlier this
year, to make acquisitions that are well located, meet the needs of tenants
and are accretive to shareholders.
The acquisitions will:
o Be EPS accretive post upgrade completion
o Increase the portfolio WALT from 5.4 years to 6.1 years
o Significantly improve the portfolio lease profile
o Improve quality of earnings

Equity will be raised in two tranches: a placement involving institutional
and other qualified investors to raise up to $80 million and an offer to
Argosy's existing shareholders to raise up to $20 million through a Share
Purchase Plan ("SPP"). Eligible shareholders (i.e. with registered addresses
in New Zealand) will be invited to subscribe for new shares in parcels of
$1,000 to a maximum of $15,000 each.  Argosy expects to announce details on
or before 3 January 2013 with SPP documentation to be provided to
shareholders in mid-January.  The SPP will close in early February 2013.
Argosy Chairman Mike Smith says "the acquisitions will enhance Argosy's
portfolio and add significant value over time. Both of the Wellington
properties have long term lease agreements in place with government agencies
which improve the portfolio's weighted average lease term from 5.4 years to
6.1 years, along with improving our lease expiry profile.
"Pro-forma gearing as a result of this equity raise goes from 40.7% to 36.5%.
 The capital raise together with existing debt facilities and our programme
of non-core property sales, will support the upgrade of these properties and
potential further near term accretive acquisitions.  Argosy has a leverage
target of less than 40% debt-to-total-assets in the medium term."
After completing the transactions and subsequent upgrade capital expenditure,
Argosy's total property portfolio will be 65 properties with a total value of
approximately $1.1 billion."
The initial acquisition cost will be $33.2 million for Stout St and $60
million for NZ Post, with upgrade expenditures of $46.6 million  and $40
million respectively.  The Stout St upgrade expenditure will occur over
January 2013 to June 2014, with the NZ Post upgrade expenditure occurring
following contractual completion to December 2014.   The Stout St acquisition
is expected to be unconditional prior to Christmas and the NZ Post
acquisition is expected to be unconditional by no later than early March
2013.
Chief Executive Peter Mence says "both buildings are compliant with
Wellington City Council's earthquake code and involve an upgrade component
which we have carefully evaluated through our property due diligence. The
upgrade aspects of each acquisition will add significant value for
shareholders, while delivering on our goal of adding value to assets by
focusing on providing quality working environments that fulfil tenant
aspirations."
"Both acquisitions have been purchased as long term assets. The Stout Street
building adjoins two other Argosy properties offering future upgrade
potential to further enhance earnings."
The institutional placement is to be managed by First NZ Capital and is
expected to be completed during Tuesday.  Application for a trading halt has
been made to the NZX.

Transaction Timetable
Placement expected to close: 5.00pm, 18 December 2012 (or earlier)
Trading halt lifted: 5.00pm, 18 December 2012 (or earlier)
Settlement of Placement: 7 January 2012
Expected Settlement of 15 Stout Street: Late January 2013
Expected Share Purchase Plan offer period: Mid January to early February
2013
Expected Settlement of NZ Post Acquisition: Late March 2013

Building Descriptions

1. Includes capitalised interest of $2.9 million
2. On end cost
A conference call for institutions and qualified investors that are
interested in participating in the placement will be held at 10.30am, 18
December 2012. Dial-in details as follows:
Dial in number: 021 711800
Meeting room ID: 533761#
Meeting room password: 7680

- ENDS -

Press enquiries
Peter Mence
Chief Executive Officer
Argosy Property Limited
Telephone: 09 304 3411
Email: [email protected]
Dave Fraser
Chief Financial Officer
Argosy Property Limited
Telephone: 09 304 3469
Email: [email protected]

Argosy Property Limited
Argosy Property Limited is the most diversified property fund listed on the
New Zealand Stock Exchange. It has a $906 million portfolio of 63 properties
across the retail, commercial and industrial sectors. The Company has a focus
on quality properties where value can be added and properties modernised to
extend their effective utilisation.
End CA:00231265 For:ARG    Type:GENERAL    Time:2012-12-18 09:41:33