PLANZ to be wound up
Guardian Trust is to wind up its three passive property funds.
Thursday, June 28th 2001, 3:24PMGuardian Trust is planning wind up its three listed property index funds as they are unlikely to have their binding rulings renewed and investor interest in the funds has been low.
The three NZSE listed companies are Property Leaders Australia, Property Leaders New Zealand and Property Leaders Australia & New Zealand.
Directors plan to put resolutions to wind up the three companies to the respective annual meetings of shareholders of the companies to be held on 23 August 2001.
While the concept behind the establishment of the three companies of a passive investment fund based on publicly listed property companies, with the fund itself being publicly listed, is an excellent one it has not found favour with the market, chairman Bill Wilson says.
"Part of the reason for this is timing, with the property sector attracting limited interest in recent years, particularly in New Zealand.
"Consequently, the three listed Property Leader companies have struggled to attract new investors or investment funds against competition from a host of new managed funds products introduced to the market since the property companies were listed in 1998."
Currently, the three companies have between them some 1,000 investors and funds invested of $32 million.
Without the benefit of the investment fund being much larger, the administration costs associated with investing through publicly listed companies have restricted the returns available to shareholders.
Also on the horizon is the very real possibility of the companies losing their tax-free status from Inland Revenue in relation to capital gains.
When they were formed, the three Property Leaders companies received a three-year binding ruling excluding them from tax on capital gains. Without the benefit of that exemption the companies would not have been formed.
The exemption expires in March 2002.
In discussion papers and announcements over the past six months, Inland Revenue has made it clear that passive, single sector funds, such as the property companies, are unlikely to receive renewal of their tax free status.
Directors of the companies have reached the conclusion tat based on lack of current interest in the funds, the costs associated with administering public companies and the potential loss of tax free capital gains status, it would be best for shareholders if they acted early and decisively and the companies were wound up.
In doing this while the companies are financially sound, Directors believe that they will protect the existing wealth investors have in the three property companies by winding them up.
The New Zealand Guardian Trust Company Limited, the manager of the three companies, has a number of other Funds available for investment and Directors will look to give investors the option to reinvest in those Funds without having to pay any entry fees.
Until a final decision on the future of the three companies is made by shareholders at the annual meeting in August, shares in the three companies will continue to be traded on the Stock Exchange.
Directors anticipate releasing a detailed report to shareholders in relation to their options at the time the notices calling the annual meetings are posted.
Directors advise shareholders to make an informed decision in relation to the value of their shares and the actions they take. The advice of Directors is to consider carefully the notice of meeting and the accompanying information to be sent with it.
While there will be some costs associated with winding up the companies, a good rule of thumb shareholders can use to estimate the value of their shares is the net asset value of each company. Guardian Trust, updates and publishes the net asset value weekly and will continue to do so up to the date of the proposed annual meeting.
The net asset values at 19 June, 2001 were:
Property Leaders Australia $1.03 per share
Property Leaders Australia & New Zealand 97 cents per share
Property Leaders New Zealand 82 cents per share
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