PFI trading volumes at 8-year high ahead of index re-weighting

Property for Industry shares have gained to the highest in almost six years and the volume of trading is at an eight-year high as investors prepare for the specialist industrial property company’s elevation in the NZX 50 Index after its merger with Direct Property Fund.

The merger almost doubled the enlarged group’s shares on issue to 412 million and increased properties in its portfolio to 83 from PFI’s existing 50. The value of the portfolio more than doubled to $814 million.

NZX’s latest review of index weightings is due to come into effect on July 22. While it doesn’t publish index rankings, analysts can subscribe to its index services and make their own calculations. Index-weighted funds are among those that would look to increase their holding in the enlarged company and fund managers in general would tend to welcome the increased liquidity.

PFI’s own estimate, calculated by First NZ Capital for its merger documents earlier this year, is that its ranking in the NZX 50 will rise to 29 from 42. Among property investors on the NZX it has risen to fifth from ninth.

Some 1.7 million shares changed hands on Monday and a further 1.45 million traded yesterday, the biggest volume since June 16, 2005, when 1.8 million shares traded. The shares climbed 0.4 percent to $1.415 today, the highest since November 2007.

“People are building up their holdings because of that index change,” said managing director Greg Reidy. “What’s happening with the share price is what we were hoping would happen.”

Shareholders of the unlisted Direct Property ended up holding 46 percent of the enlarged group and PFI holders owned about 54 percent.

PFI is managed by PFIM, a subsidiary of DPF Management, which was also the manager of Direct Property. DPF Management is associated with McDougall Reidy & Co, whose managing director is Greg Reidy. PFIM took over the management contract of PFI from AMP Capital Investors in January last year.

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