Propertylink beefs up for IPO with $170m Denison buy

Propertylink is on track to float this week with investors backing its ambition to grow its empire to $2 billion.

Propertylink CEO Stuart Dawes, left, and vice chairman Stephen Day. Picture: James Croucher

Property fund manager and owner Propertylink is on track to list on the Australian Securities Exchange this week with investors backing its ambition to grow its real estate empire to $2 billion, with a major step taken as it has finally inked a deal to buy the $170 million Denison portfolio.

The group, which is raising about $500m, already has its bookbuild covered towards the bottom end of the range, reflecting a yield of about 7.6 per cent, sources said.

The range for the forecast distribution yield in fiscal 2017 was 7.3 per cent to 7.8 per cent and the growth of its property funds unit was a key driver of Propertylink’s listing.

“The expected acquisition of the Denison portfolio will see Propertylink lock in part of its forecast assets under management growth for the fiscal 2017 forecast period,” Propertylink independent chairman Peter Lancken said.

Propertylink plans to float on Friday with Credit Suisse, Goldman Sachs and JPMorgan running a bookbuild on Thursday. The firm’s purchase of the Denison portfolio, brokered by Colliers International, was flagged by The Australian in June as the group stepped up its float plans.

Propertylink, acting for its new unlisted Propertylink Enhanced Partnership, has now entered an option agreement with Sydney-based Denison to buy its portfolio of industrial, logistics and warehouse assets for $142m.

The properties comprise nine industrial and logistics assets in NSW, Victoria, Queensland and Western Australia with a weighted average lease expiry of 3.25 years. The PEP fund will acquire another four properties from Denison for $28m if other parties it has lined up do not buy.

Propertylink will pour $17.7m equity into PEP and Goldman Sachs will commit about $53m, with debt used to fund the remainder of the purchase.

“The acquisition of the Denison portfolio is an opportunity to source a sizeable portfolio of assets with significant upside that can be unlocked with Propertylink’s management expertise to deliver superior risk-weighted returns,” Propertylink chief executive Stuart Dawes said.