Kiwi Income 'failed to cash in on boom'

Craig Tyson criticised board and managers at the annual meeting yesterday. Photo / Dean Purcell

The $1.9 billion landlord Kiwi Income Property Trust failed to sell properties in the boom to prepare for the downturn, says its biggest investor.

Craig Tyson, ING investment manager, criticised the board and managers at yesterday's annual meeting. He demanded to know why the board failed to prepare the trust so it was in better shape and did not need to sell in the downturn or seek unitholder funds to cut debt.

"My point to the chairman and the board: can we expect in future that this vehicle will be managed through the cycle and that you will sell properties when times are good and prepare the balance sheet for when times are bad rather than getting to the stage where you come to unitholders to reduce the gearing?"

Kiwi sold two properties for $38 million and raised $65 million, $50 million from an institutional placement and $15 million from a unit purchase plan.

Tyson said ING had 15 per cent of Kiwi whose management received about $11 million in the last year to run the business.

Sean Wareing, chairman of Kiwi's manager, pleaded ignorance on the recession question, defended Kiwi's strategy to hold properties for the long-term assets and told Tyson his suggestions were not realistic.

"I don't know of anybody who foresaw the extend of the downturn," Wareing said. "The thought of selling irreplaceable assets over the short-term cycle is frankly unrealistic."

Tyson told unitholders how their returns were actually sinking from 9c a unit in the March 2008 year to a forecast 7.5c a unit for the March 2010 year.

Another investor wanted to know why more women were not on the board and said the finance companies which had failed had been run mainly by men. Women think differently, the investor said.

Director Joanna Perry said she was on the board for her skills rather than her gender.

An investor asked Wareing to predict the unit price and distribution in two years time but he refused, saying that if he knew he would not be on Kiwi's board.

Chris Gudgeon, chief executive of Kiwi's manager, said investors could expect a subdued market with much less economic and investment activity in the next year.

Kiwi has an $800 million debt facility with ANZ, BNZ, CBA and Westpac but is yet to draw $166 million of that. Gudgeon said the trust was conservatively geared and handling the downturn. The trust does not need to refinance until 2012.