Flap over as Kiwi calms doubters

By ANNE GIBSON

The possibility of being exposed to a $300 million property development risk was questioned by unit holders at Kiwi Income Property Trust's annual meeting yesterday.

Investors said they had bought into New Zealand's largest real estate investing trust believing they would be sheltered from high-risk developments.

They thought a separate entity would be formed to undertake large-scale developments, thereby guarding their investment.

Yet the imminent transformation of Kiwi's Auckland land at Sylvia Park into a $300 million shopping complex, and the $90 million upgrade of the Papanui mall in Christchurch, meant the trust was an active developer - and that posed potential exposure risk for investors, they said.

The concerns were voiced during question time at the meeting, a low-key event in Auckland which lasted for less than an hour and at which promotion for the two developments took up most of the time.

Sylvia Park, the largest development planned in New Zealand, will bring 145,000sq m of floor space to the Mt Wellington area.

Kiwi chief executive officer Angus McNaughton said the development would be nearly five times the size of the Manukau or St Lukes shopping malls, each of about 30,000 to 35,000sq m.

Jim Syme, chairman of Kiwi Income Properties (the management company of Kiwi Income Property Trust), dampened a unitholder's concern about development risk by saying the trust was seeking a partner on Sylvia Park and was interested in enhancement of assets via "measured development, not excessive development".

He cited the 40-level Royal & SunAlliance building in Auckland's Fort/Shortland Sts as an example, even though Kiwi formed a separate development trust to take on this risk.

McNaughton said nothing had been settled about financing Sylvia Park.

"We how have nearly $1 billion in total assets.

"We're unsure about the exact vehicle and we won't expose our vehicle to a $300 million development risk on Sylvia Park," McNaughton said.

Another unit holder asked why Kiwi had been so slow to begin developing Sylvia Park.

McNaughton pointed out that Kiwi had taken five years to plan the expansion of the mall at Papanui, taking it from 21,000sq m to 41,000sq m.

Planning Sylvia Park was a much larger exercise.

He said Kiwi hoped to resolve a Court of Appeal challenge to its plans at Sylvia Park early next year.

The case, being brought by Ngati Maru, related only to excavation of the site, not rezoning.

Kiwi was finalising a master plan for the Mt Wellington site and working with anchor tenants, he said.

Kiwi co-founder and board member Richard Didsbury was not at yesterday's meeting because, Syme said, he was overseas.

Syme said that Ross Green, also a founder, would leave Kiwi at the end of the year, as would Kiwi's finance chief Peter Simmonds.

Trust manager Kiwi Income Properties was sold to Australia's Colonial First State Property at the beginning of this year for $57.75 million, according to the Overseas Investment Commission.

The investors at yesterday's meeting, many of them unitholders since Kiwi listed in 1993, moved quickly to morning tea at the end of the meeting.

There was not a single question about the foreign takeover of the influential management company - but they were keen to grab a muffin.