Both managed fund research houses back up gripes of some New Zealand Rural Property Trust unitholders that the fund's structure needs changing.
A group of 64 unitholders have called for a special meeting to vote on a number of resolutions, including one to wind up the $72 million fund.
Retired Wellington accountant Alex Paterson, who heads the group of petitioners, says, "the whole structure of the trust is flawed."
The primary concerns are that unitholders aren't realising the true value of their investment and structural problems make it difficult to redeem units.
IPAC Research has long argued the trust's structure is flawed and a listed vehicle is the most appropriate way of holding property assets.
Likewise FPG Research say, in a report dated November 1, that it "favours a listing option over the long term."
In a Memorandum of Information that has been sent to unitholders the manager, New Zealand Rural Property Trust Management Ltd says, "the trust structure will remain in its present form until such time as the investment market values the trust's units at nearer to net tangible asset backing."
Once that stage is reached listing will be considered.
In the memorandum the manager basically tells the petitioning unitholders if they are dissatisfied with the trust's performance they should sell their holdings "in the same way as all other unitholders".
"In the managers view it is therefore unnecessary for the trust to be terminated to meet the petitioners' ends."
Paterson says the memorandum fails to address the key issues of cashflow and structure.
His analysis of the fund shows that most of the trust's income is paid out in fees to the manager and the trustee, New Zealand Guardian Trust.
"In 1997 (management and trustee fees) actually exceeded the trust's income from rentals and lease premia," he says.
The manager says in the past the trust has been able to pay all administration fees, and it will be able to in the future.
The memorandum also broadly outlines the future direction of the trust.
Amongst the many things planned are ideas to buy more forests so the trust can generate regular on-going income streams from harvesting operations, and it plans to acquire properties "of scale and production potential".
For the past couple of years the trust has had an outflow of funds, yet the memorandum does not say how the manager plans to raise capital.
The manager opposes the four resolutions to be voted on at the meeting on February 11. It says a wind-up of the trust could take as long as five years, and during that time redemption rights would have to be suspended.
"In the manager's view it would be unacceptable for unitholders' redemption rights to be removed if the process of liquidating the trust's assets was to take longer than 12 months," it says in the memorandum.
Both managed fund research houses back up gripes of some New Zealand Rural Property Trust unitholders that the fund's structure needs changing.