$31m of investors' funds unfrozen

More than $31 million of investors' funds in Midlands Mortgage Trust has been unfrozen thanks to hard work and patience, says general manager Peter Harrison.

The suspension of withdrawals was put in place in 2011 after the Global Financial Crisis following mortgagees defaulting, including former Wellington tycoon Terry Seripisos.

At the time of the suspension Harrison said the fund simply needed "time to heal" and the unit price was devalued to 90 cents, from its original price of $1.

Investors can now withdraw their funds, subject to the standard 90 day notice, and a new prospectus has been registered. An investment statement for new investors is to be issued by the end of the week.

"We are confident given the security of first-registered mortgages and our relatively conservative loan to value ratios that the investment will be appealing to new investors and we have forecast modest growth for the fund over the next three years," Harrison said.

The return of the unit price to its original level was also on the cards.

He said demand for Midland's mortgage lending products had increased.

"Both the number and quality of applications has improved since the latter part of last year which I attribute to the fact that there are fewer operators in this space following the extensive number of collapses during the global financial crisis."

Despite the crisis, investment strategy remained the same.

"First registered mortgages will always be the best type of security to have."

He thanked "loyal investors for their patience" after the "disciplined action" of freezing funds which helped the fund's survival while others collapsed.

The fund has about $10 million cash on hand and a loan book of over $23 million.

Midlands will pay a return of 4.25 per cent per annum at the end of this month, despite the large cash balance it held during much of the suspension period.

Harrison said there was always a substantial income that came from the fund's assets and it was well-able to support the payments.

"Following the repayment to withdrawing investors, the return on assets in the fund lifted by 0.5 per cent."

A few investors had immediately changed their minds about leaving the fund upon receipt of their money, he said.

"They'll be sent investment statements as soon as they are printed."