NZX-listed Stride Property could target a wider array of Australian and local wholesale investors or even the retail market for its recently-restructured managed fund offering.
Peter Alexander, Stride chief executive, said the real estate investment company could attract interest in its existing and proposed funds management products beyond the current client base of two: the Australian superannuation funds HESTA and Vic Super.
Last week Stride Property (formerly known as DNZ Property) announced plans to create New Zealand’s first ‘stapled’ listed real estate investment firm. Under the proposal, Stride would split its property ownership and funds management units into two separate entities with current shareholders to receive equal shares in each.
Following shareholder approval of the restructure, shares in the newly-formed Stride Investment Management Limited (SIML) would be ‘stapled’ to existing Stride shares.
Alexander said the stapled structure was common in the Australian listed property market but, if approved, Stride would pioneer the approach in New Zealand.
Stride told investors last week the ‘stapled’ structure was necessary if the group was to develop its funds business while also retaining the NZ tax-efficient portfolio investment entity (PIE) status.
The restructure proposal would see Stride keep its PIE rating while entering into a management contract with SIML, which would offer non-PIE products.
Alexander said Stride’s only current investment product – the wholesale Diversified NZ Property Fund backed by HESTA and Vic Super – would be structured as an Australian unit trust. The two Australian super fund investors tipped in more capital recently as the Diversified NZ Property Fund jumped from $105 million to $550 million following the purchase of two shopping centres – in Hamilton and Wellington.
The existing structure is “more like a club” than a broad investment offer, Alexander said, but Stride was open to taking on more wholesale investors – both in Australia and NZ – as the fund expanded.
Stride also planned to launch a new fund to house its recent acquisition of 19 “large format retail properties”, according to the group’s annual results disclosure document released last week.
“[The purchase of 19 properties] provides scale and opportunity for Stride to further its strategy to grow its Real Estate Investment Management business,” the Stride release says. “Stride sees this portfolio as an opportunity to establish anew, specialist investment product with a higher than average leverage and income yield.”
Alexander said in the current low-interest environment there was strong demand for high-yielding investments on both sides of the Tasman,
He said Stride had “a platform to grow” a wider range of investment products that may eventually reach down to the retail market.
If Stride went down the retail route it would have to seek a managed investment scheme (MIS) licence to operate in NZ, Alexander said.