Property trust plan dropped

Press, 13 December 1989, Page 43

Property trust plan dropped

PA Wellington New Zealand Rural Property Trust Management, Ltd, has withdrawn its proposal for the NZ Rural Property Trust to buy half of the management company. The company’s plan drew widespread criticism from investment analysts and created a potentially difficult situation for the trustee.

"While the manager acknowledges the proposal has financial merit, the potential conflict of interest would appear to be unacceptable,” NZRPT Management general manager, Mr Gary Tattle, said yesterday in a joint statement with the trustee, NZI Guardian Trust.

“The trustee must clearly have a role where it can consider the longterm interests of the unitholders alone. We are also aware that there must be no possibility of decisions being made which could question the independence of either the trust manager or the trustee,” Mr Tattle said. A meeting on December 15 to consider the proposal, believed to be the first such plan in New Zealand or Australia, has been concelled. But Mr Tattle said he was still working on developing the trust. The trust, established in 1987 and currently with funds exceeding $5O million from 4200 unit holders, has been yielding more than 14 per cent before tax.

The management company, which runs the trust as its sole source of income, started earning a profit once the fund reached S4OM this year. It is owned by Ascot Management Corporation, Ltd, which was proposing to sell 49 per cent to concentrate on expansion in Australia where it also owns the management company running the Australian Rural Property Trust.