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Rural Property in bid as values rise on Tasman sales

By Chris Hutching

Friday 22nd September 2000

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SIGN OF TIMES: Farms' auction fetched $18 million
NZ Rural Property Trust managers are relaxed about a bid being launched for the units by Ross Investments, which describes itself as a buyer of distressed assets.

Ross Investments specialises in buying shares, debentures, notes, and other securities in companies with liquidity problems.

In the past it has bought interests in Victoria Park Markets Trust, Registered Securities Ltd, Burbery Mortgage Finance, and Equiticorp Holdings.

But the assets of NZ Rural Property Trust are less distressed than they used to be following a recent restructure to become a closed-end trust and a lift in rural property values as shown in recent auctions of Tasman Agriculture dairy farms.

Ross Investments is offering to buy the units at 75.5c each but they are trading on the secondary market at about 80c so the bid is unlikely to attract unitholders unless they have large parcels to dispose of in a hurry.

Like most property companies the units are trading at a significant discount-to-asset backing, which is about $1.53 per unit.

Trust chairman Sir Selwyn Cushing has sent a letter to unitholders pointing out the difference in price between the bid and secondary market.

Chief executive Tim Ryan said he had received about 40 phone calls but none of the callers expressed enthusiasm for the bid by Ross Investments, which already holds a small stake.

Mr Ryan said the bid comes ahead of a dividend distribution of 1.77c a unit and the beginning of harvesting of a forestry block at Ngaruawahia which will enable the trust to increase distributions, he said.

Meanwhile, Tasman Agriculture says it is achieving sales at auction 10.4% above the values posted in its May balance sheet.

Last week it completed its sixth auction of dairy farms, which collectively fetched $18 million.

South Island rural real estate agents were meeting in Dunedin this week to review the sales strategy for the remaining 58 farms amid rumours a major development possibly involving another corporate player is imminent next week.

Mid-Canterbury agent Chris Murdoch, of Hastings McLeod, said demand had been high and he expected in the normal course of such a sale Tasman Agriculture might need to ensure it staged sales and did not flood the market.

He expected to learn more after a Tasman Agriculture review this week.

He said the most recent sale of Longlands, near Hinds in South Canterbury, was a good property but not necessarily the cream of the crop.

Another sale of the 286ha Miska property near Seafield had attracted several expressions of interest.

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