NZRPT sells assets to fund redemptions

The New Zealand Rural Property Trust has decided to sell up to $10 million worth of farms to fund unit redemptions.

Thursday, September 10th 1998, 12:00AM

The New Zealand Rural Property Trust has decided to sell up to $10 million worth of farms to fund unit redemptions.
Chief executive Tim Ryan says this move is consistent with the trust deed, as well as being something that was signalled to unitholders late last year.
To date the Ngarua dairy unit and just over half of the 12 blocks that make up the Tarlair property have been sold.
Ryan says the properties being sold are generally the smaller ones in the trust's portfolio as the manager has a strategy to increase the scale of its properties.

Recently the manager has been promoting the trust and the fact that it "is back in business" after having unit redemptions suspended for a year.
The redemption freeze was lifted in November, and in the year to June 30 the manager has redeemed about 6.5 million units.
Ryan says the manager always expected a flood of redemptions once the freeze was lifted, and thought the level may have been much higher.
"We were quite surprised (at the level) considering what unitholders had had to go through in the past 12 months."
Ryan says the promotion has been going well, however it hasn't resulted in any positive funds flow as investors can buy units on the secondary market (latest prices on the market pages) at about 75 cents each, rather than purchasing new units at net asset value which is about $1.21.
One of the concerns unitholders have had about the trust in recent years is the low level of distributions that have been made.
Ryan says the board has spent considerable time on this issue and an announcement on distribution policy will be made in the annual report due out next week.
Back on the farms the trust has successfully converted the Tatarepo property to dairying. Ryan says the conversion has exceeded expectations and the property will reach maximum production in two years, as opposed to the anticipated 3 to 5 year time frame.
Also two new leases are being let on the Waimahaka and Cedar properties.
The trust is still looking towards forestry as being its future cashflow saviour. The manager looked "quite closely" at buying the forests owned by the failed Flat Rocks Forest Trust, however did not buy the assets.
Currently it is negotiating with another forest owner.

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