Adding value to syndicated property
Farmers' Mutual Group shows it is possible to add value to syndicated property funds through active management.
Thursday, October 28th 1999, 12:00AM
Farmers' Mutual Group is taking an active management approach to its syndicated property funds with the aim of adding value to its funds.
In line with this philosophy the group has sold one of the three buildings in its four year old Foodstore Properties fund.
Group product manager Grant Uridge says the Blockhouse Bay property has been sold for $2.7 million. The price is $255,000, or 10.4 per cent higher than the 1995 purchase price.
The manager has considered a number options with the proceeds of the sale, including buying another building, and returning capital to shareholders.
Although shareholders at the annual meeting expressed a preference to buy a replacement property, the manager has taken the latter route.
It says it would have liked to pursue this option however to do so would require the unanimous support of all shareholders "therefore it was deemed to be fairer for each shareholder to make their own decision for their particular circumstances."
The company will do a share buy-back on November 8 and return funds to shareholders.
After the buy-back each shareholder will have a shareholding equivalent to 73.5 per cent of that which they had before the buy-back.
Uridge says this transaction shows that well-managed syndicated property funds can provide investors with good returns.
He says very few of the syndicated property funds in New Zealand have taken this active approach and sold properties.
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