KEY POINTS:
One of the country's richest tribes expects big spending and sliding property values to hit its bottom line this year.
Mike Pohio, chief executive of Hamilton-based Tainui Group Holdings and Waikato-Tainui Fisheries, said net tax-paid profit was decreasing. It was down from $64.2 million last year to the
already-announced $52.4 million this year and is expected to fall under $50 million next year.
But he emphasised that the drop was fully expected, the result of a double whammy: property devaluations in a falling market combined with the need for capital expenditure.
"The March 2009 result will be down but the next two-year period is about spending money," Pohio said, citing the need for reinvestment if the company is to build a secure long-term economic future for Waikato-Tainui.
Tainui is one of Hamilton's most powerful landlords, enjoying benefits from Waikato's dairy boom and with a diverse range of interests including the 1.4ha of land under Kiwi Income Property Trust's Centre Place Mall as well as hotels and housing estates.
Tainui, with assets of $500 million, was dogged by financial and property troubles earlier this decade but is now aiming to become an even more dominant landlord.
Pohio, of Ngati Pikiao and Ngai Tahu descent, was raised at Okere Falls near Rotorua and was a manager of Port of Tauranga's container terminal and merger benefits manager for dairy giant Fonterra.
He sees property as the key to Tainui's financial advancement and not just in the Waikato.
Tainui has a big stake in a former Land Corporation block around Lake Taupo where it has 230ha of prime lakeside land and an interest in a 1100ha adjoining block of pastoral farming land, owned by Tainui's joint venture partners Auckland real estate specialists Jon Spencer and Steve Hawkins.
Recreational, forestry and commercial operations are planned for these Lake Taupo blocks, even a golf course.
But Pohio said Tainui's biggest vision was for the Hamilton greenfields Ruakura land, a 550ha block five minutes from Hamilton's centre.
Crown-owned AgResearch has perpetual entitlement to 60ha of this land, Pohio said. The entire block is now farmed but Tainui has a $3 billion concept for this plot.
"We have $100 million invested in The Base retail centre and there's 29ha of land there, compared with 550ha of land at Ruakura so if you multiply that out, we're talking potentially about a $2.9 billion investment over 10 to 50 years. Ruakura is our next major strategic development and will be similar to The Base in that we own the land, we will develop it and find the tenants," he said.
Plans are for Ruakura to become a light industrial, manufacturing, transport and commercial hub, although it is zoned by the Waikato District Council for agricultural purposes with some research uses allowed, so a plan change is needed.
In July last year, Tainui took full control of The Base, buying out The Warehouse's half-share of the retail/commercial complex at Te Rapa. Tainui now has plans to expand The Base and take floor space from 4.4ha or 44,000sq m to 10ha or 100,000sq m.
Pohio emphasised the desire to eventually move Tainui's focus away from shopping and tourism.
"We want to buy property to diversify and extend our range," he said.
Tainui has the Hamilton Riverview Hotel and in December last year, it opened the Hotel Ibis Tainui. This was the second development in the CBD with French-headquartered Accor and the Hamilton City Council.
In the shorter term, Tainui is keen to plough even more money into hotels.
It is eyeing opportunities to develop a new hotel in either Tauranga or Auckland and is working closely with Accor to identify opportunities, anticipating a joint-venture management/ownership arrangement.
Development of a 126-room $20 million Ibis or a more upmarket 250-room $60 million Novotel are on the cards, Pohio said.
"Even though tourism is turning down, we're long-term investors," he said.
Residential land is also part of Tainui's portfolio: a 450-section development is under way at Rotokauri and a 650-section project at Huntington.
"We're selling about 70 sections for about $200,000 each a year usually, although this year we'll struggle to sell 50," Pohio said.
A 64ha block of land at Huntly Power Station, 6.5ha at Wintec, and 65ha at Waikato University are also under the group's control.
TAINUI GROUP HOLDINGS
* Manages assets of Waikato-tainui people.
* Wholly owned by Waikato Raupatu Trustee Co
* All shares held by Waikato-Tainui parliament - Te Kauhanganui o Waikato Inc.
* 65 Waikato marae each elect three representatives.
* Guiding principle: Leading Maori economic development
$500M ASSET BASE
* Tainui Group and Waikato-Tainui Fisheries:Real estate: $400 million
* Ryman Healthcare, 4.5%: $37 million
* Managed funds: $20 million
* Fishing: $35 million
* Debtors: $7-8 million
