KEY POINTS:
A New Zealand investor with an Australian mortgage trust has been told she must wait 90 days to get her money out of the fund because of difficult financial conditions, just weeks after being told it would only be 30 days.
The retired woman, who does not wish to be named, said she took out a 12 month investment with the LM Mortgage Income fund on the advice of financial advisory chain Money Managers. It was due to expire on August 4.
She wrote to LM Investment Management to tell them she wanted to redeem her investment at maturity but has contacted them twice since only to be told there will be a three month delay.
"First they said it would be at least 30 days from the 4th before it was paid in and the second time it was 'due to the financial climate' it would now be 90 days. "I do understand that times are hard. However, I just worry that I may never get paid out," she said. "If it is just a blip in their redemption payments and they intend to pay us in 90 days, that's okay, but I wonder how many others are getting the same story. It is my money and 90 days is a long time to delay payment as far as I can see."
But a spokeswoman for the company, which has its head office is Surfers Paradise, said it was managing redemptions cautiously and was still paying investors in line with its product disclosure statement.
"Redemptions continue to be processed and paid on a daily basis, and are paid within the PDS guidelines. Redemptions have not been suspended. Investors continue to receive income up until the date of payment." Its products disclosure statement which is similar to an investment prospectus in New Zealand said in general a withdrawal would be paid within 30 days from notice.
But in an asterisked note it also states it is generally required by the constitution to satisfy withdrawal requests within 180 days but "in certain circumstances, that period may be extended to 365 days or the manager may be entitled to suspend withdrawals".
Investment adviser Chris Lee said in good times 30 days was the standard period investors could expect to get their money out but in tougher times like many were experiencing now it was not surprising to see the trust extend its timeframe.
He said investors should get any promised payout date in writing to protect them in case of a freeze.
Four New Zealand mortgage trusts have frozen redemptions this year and two other property funds have also announced freezes.
In April, Tower announced it would close its $242 million Mortgage Plus fund. In July, the $250 million Canterbury Mortgage Trust, $60 million Totara First Mortgage Fund and the $249 million Guardian Mortgage fund froze redemptions. This month, AMP froze withdrawals from its Capital NZ Property Fund and AXA announced it had suspended redemptions by institutional investors from its Mortgage Backed Bonds fund.
