Aotearoa's eight wealthiest iwi boosted their assets by about $700 million over the past two years, but the returns they earned on those assets have been less spectacular.
The TDB Advisory Iwi Investment Report 2019 shows the richest iwi have assets of $5.5b, up on 2017's $4.8b. In total, about 75 iwi now have assets of about $9.2b, up on the previous year's $9b.
But percentage growth has been in the single figures lately, partly because of the global slowdown and also the quieter New Zealand property market.
None of the eight wealthiest iwi achieved TDB's benchmark of 10 per cent, the report says. The best performer was Raukawa in the central North Island, which made 7.5 per cent, followed by Waikato-Tainui with 6.8 per cent and Tūhoe with 5.8 per cent. In contrast, NZX50 shares generated strong returns of 19.6 per cent on average last year.
A conservative investment approach, undiversified portfolios, low gearing and heavy exposure to a geographically concentrated asset base are all cited in the report, which notes that the iwi which settled early have better returns. Three iwi have no debt: Ngāpuhi, Raukawa and Tūhoe.
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"Overall, 2019 was not a strong year for the eight iwi covered in this report, with none of the iwi achieving our benchmark 10% return for the year. Four of the iwi (Ngāti Whātua Ōrākei, Raukawa, Tūhoe and Waikato-Tainui) reported returns of 5 per cent or higher, while two iwi, Ngāi Tahu and Ngāti Awa, only just achieved a positive return for the year," TDB says.
Measured from 2013 to 2019, Auckland's Ngāti Whātua Ōrākei performed best, returning 13 per cent a year, followed by Ngāi Tahu with 10 per cent and Raukawa on 8 per cent.
The iwi were strongly exposed to primary industries - fishing, forestry and farming - and 2019 was notable for increased volatility in world markets, due to global trade tensions, TDB notes. Interest rates also fell to record lows "and 2019 also saw a slowdown of the New Zealand property market".
The iwi have relatively low debt levels. The most highly geared is Ngāti Whātua, with an 18 per cent debt-to-capital ratio, followed by Ngāi Tahu at 13 per cent, Ngāti Awa at 12 per cent and Waikato-Tainui at 10 per cent.
Ngāi Tahu, the South Island iwi, increased its borrowings by $48.5m in 2019 so its debt-to-capital ratio rose to 13 per cent, higher than many other iwi, which traditionally have little debt. But it made zero return on assets in 2019, reflecting rising operating expenditure, losses on non-current assets, notably Oha Honey, and a big loss on the revaluation of property, plant and equipment, TDB says.
Northland's Ngāpuhi is yet to settle its Treaty claim, with negotiations still under way. It has 67 per cent of its assets in cash and term deposits, fisheries settlement quota and Moana NZ income shares, TDB notes. Historically, the iwi has taken a passive investment strategy and has taken steps in recent years to cut risk.
The Whaakari/White Island tragedy on December 9 came after the investment reporting period for the eastern Bay of Plenty iwi, TDB notes, saying it holds 22 per cent of its assets in financial investments, including listed shares, unlisted shares in Direct Capital IV, Pencarrow Bridge Fund and investment in Iwi Collective Orchards.
The East Cape iwi has nearly all its financial assets in shares in listed and unlisted companies. Management is outsourced to fund managers. About 60 per cent is in growth assets and 40 per cent in income assets. The largest proportions are managed by AMP Capital, BlackRock Investment Management and Devon Funds Management.
Ngāti Whātua Ōrākei
This iwi of Tāmaki Makaurau owns Quay Park in the Auckland CBD, with 29 ground leases including the Spark Arena, Countdown supermarket, apartment blocks and offices, as well as 28ha of North Shore land it bought from the Crown to settle. It continues to focus on property development, with construction in progress at the Hillary site at Belmont on the North Shore. The joint venture with Fletcher at Moire Rd in Massey is also under construction and it plans to complete a nursery development in Pourewa in eastern Auckland.
The south Waikato iwi holds about a third of its assets in managed funds with six providers, but that is reducing in favour of direct asset ownership. With five other central North Island iwi entities, it holds a direct investment in Kākano Investments, giving it a small stake in Kaingaroa Timberlands. Its interest in Kākano is worth $36m and provided a dividend of $2.3m in 2019 as well as a one-off special dividend of $4m. It also has direct investments in the dairy sector, owning 45 per cent of Ranginui Station, a 3300 cow dairy and pastoral operation.
The Te Urewera iwi's assets are 45 per cent in managed funds in global shares, term deposits, New Zealand bonds, global bonds and Australian shares. It has $174m invested in these funds with three managers, earning a realised income of $5.8m in 2019. It withdrew $18m in the year. Forestry accounts for 29 per cent of assets.
This Hamilton-headquartered iwi has invested primarily in property in the past 16 years but has lately made steps to diversify, selling half of its largest property investment, The Base shopping centre, in 2016. That money went into share purchases and was also used to reduce debt. It owns farms and forests and has investments in Waikato Milking Systems and Go Bus. It wholly owns Novotel and IBIS hotels in Hamilton and half the Novotel Auckland Airport Hotel with Auckland Airport. It is building a new 300-bedroom, five-star Pullman by the existing airport Novotel in Auckland.