Allied Farmers does deal to sell Five Mile

An aerial view of the Five Mile property development site near Queenstown. Photo / supplied

Allied Farmers, the finance company that took on the Hanover and United loan books in a debt-for-equity swap last year, has conditional agreement to sell the second stage of the Five Mile property development in Queenstown.

Managing director Rob Alloway said the sale of the 23.4 hectare piece of land exceeded the value attributed in Allied's first-half accounts, and was well-timed, given the firm's in negotiations with its own lenders for the next financial year.

"We have been working with a number of interested parties for some time and are pleased to have an agreement secured on terms and conditions which meet our expectations," Alloway said in a statement. "We always knew this site had strong strategic value, and the sale price achieved, which is in excess of the value attributed to the property in the half year accounts, reflects that."

Allied Farmers has had a torrid time since taking on board the Hanover assets, writing down the value of the loan book by almost a third this year alone.

Standard & Poor's agency cut the credit rating on its finance unit, Allied Nationwide Finance, two notches to a B from a BB-, and it hasn't secured protection from the government's extended retail deposit guarantee.

Last week, Allied Nationwide hiked its deposit rates for 12-month through five-year terms by 50 basis points, and introduced a nine-month special of 7.5 per cent in a bid to attract retail deposits.

The shares climbed 2.2 per cent to 4.6 cents on the NZX today and have slumped 60 per cent this year.

Allied Farmers said the Five Mile section is suitable for future commercial and residential development, and the sale is subject to various conditions and approvals, which will be sought over the coming month.

Five Mile was originally owned by Christchurch property developer Dave Henderson, who won drawn-out battle with the Inland Revenue Department which was turned into a film, and was put into receivership by Hanover in July 2008.

The first stage of the development was sold in November last year to Queenstown Gateway Trust.