The NZ Rural Property Trust has begun a wide-ranging strategic review, after its unitholders voted against a proposal to list the trust on the main board of the New Zealand Stock Exchange.
About 82% of unitholders voted against the listing proposal, which was considered at a meeting in Auckland on November 2.
An independent report by PricewaterhouseCoopers recommended against the listing. The trust’s board was also against the move.
Listing might improve liquidity, but it was unlikely to solve the problem of the trust’s units trading at a substantial discount to their net asset value, the report said.
The units, which trade at around $1.15 on the exchange’s secondary market, have a net asset value of about $1.69.
Ryan says a commitment to put the listing proposal before unitholders was included in a restructuring of the trust in October 1999. At the time it was seen as a possible way to alleviate concerns about liquidity.
Now unitholders have decided to keep the trust unlisted, the manager will begin reviewing business strategy, Ryan says.
For now, though, the trust will stick with the existing plan, that has improved performance over the last two yeas, he says.
"Having said that, factors outside our control, such as international circumstances, may mean we have to vary our decisions tactically year by year."
One key issue will be timing the harvest of the trust’s forests.
"We don’t see any benefit to unitholders in harvesting trees if log prices are depressed just for the sake of generating cash for income distributions. That would erode unitholder value."
The trust owns about 32 rural properties, including about 873ha of forest.
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