Fletcher launches property trust

Press, 15 June 1983, Page 31

Fletcher launches property trust

PA Wellington New Zealand’s largest property trust, Prime' Investment Fund, is to be launched in August by the property group of Fletcher Challenge, Ltd, and will seek stock exchange listing.

The Perpetual Trustees Estate and Agency Company of New Zealand, Ltd, will be trustee, and Prime Investment will have a capital of more than $2O million in 100 c units.

The fund manager will be Challenge Management, Ltd, a wholly-owned subsidiary of Challenge Properties, Ltd. Three of its directors will be from outside Fletcher Challenge, and three will be FCL appointees.

The chairman and chief executive of Fletcher Challenge, Mr R. R. Trotter, said that his group had been examining property trusts and their alternatives in detail for more than six months.

“We concluded that a property trust that emphasised the quality of its properties was the best choice,” he said.

“As the investments are long term, we will be concentrating initially on major office buildings on prime sites in the main cities,” said Mr Trotter. “The trust organisers already have an undertaking that an option can be exercised on a substantial Wellington office block, and a number of Auckland prospects are also being assessed.”

Mr Trotter said the trust’s size and choice of buildings meant that the smaller investor could secure the benefit of rental increases and capital appreciation on select major properties that would not normally form part of similar funds.

As a group investment fund, the income received by the trustee would not be taxed and all of the income, after expenses, would be distributed to unit holders.

That income would then be taxable, where applicable. “The buildings that form the fund’s investment will be managed through Challenge properties who have a wide expertise in all aspects of real estate, including property management,” said Mr Trotter. “I expect that the trust will grow substantially, but prudently, over the next five years.” He said that until negotiations are complete on the initial building portfolio, it was impossible for the trustee to nominate a firm initial yield.

“There will be an earnings estimate in the prospectus, which should be available in August,” Mr Trotter said.

Borrowing by Prime Investment Fund will be limited to a third of the trust’s current value, and all of its net income will be distributed to unit holders at half-yearly intervals. The organising broker is Jarden and Company, of Wellington.