KEY POINTS:
ING Property Trust is blaming the global liquidity crisis and sharemarket volatility for its falling unit price.
Mike Smith, chairman of Auckland-headquartered ING Property Trust Management, told unitholders that the trust was trading at a big discount to net tangible asset backing.
"The trust has not been immune
from the volatility that has been experienced by international and New Zealand sharemarkets," he told investors at the annual meeting.
The trust's units had a net tangible asset (NTA) value of $1.30. Yesterday they closed at $1.13, down from $1.24 in mid-July.
Smith also complained about market reaction to the trust's intention last year to shift out of investing solely in New Zealand and to buy in Japan.
The trust ditched the plan after its largest investors objected, but Smith said yesterday the trust's unit price had suffered when the intention to buy into Japan was announced.
"The board was disappointed at the impact on the unit price, following the initial announcement," he said.
"We believe the market reaction to the announcement was extreme and resulted in the units in the trust being over-sold."
So the board had decided on a unit buyback scheme, which started on June 8.
More than nine million units had been bought for an average $1.23 since then, he said.
The trust has a market capitalisation of $606 million, which it says makes it the third-largest listed property fund by this measure. It announced in April that it had 100 properties valued at $1.05 billion, some of the largest being the $31 million Citibank office block in Auckland, a $23 million block on Newmarket's Carlton Gore Rd and the $24 million TSB Bank Tower in Wellington.
Smith predicted the unit price would recover.
The property portfolio was extremely well-positioned because it had strong "defensive characteristics" to outperform in difficult market conditions, Smith said.
The trust had a 99.5 per cent occupancy rate in its buildings and a weighted average lease term in the portfolio of 4.8 years.
The trust's half stake in the 70ha Manawatu Business Park in Palmerston North was gaining momentum, Smith said.
The trust had also invested in a major land development deal at Albany, in conjunction with Symphony Projects Management.
The board had wanted to merge the trust with another listed entity, Calan Healthcare Properties Trust. But Smith said discussions with Calan's independent directors meant no agreement could be reached on pricing.
Calan's name has since been changed to ING Medical Properties Trust and the independent directors who opposed ING's moves have been replaced.