Investors back refinancing of National Property

Auckland's Rialto Centre is one of the properties to be devalued. Picture / Paul Estcourt

Investors in the $85.6 million listed National Property Trust yesterday approved a $35 million refinancing deal for the Christchurch-based landlord.

National's manager, controlled by St Laurence Property and Finance, sought permission to issue existing unitholders with 35 million convertible preference units worth $1 each, aiming to put the trust on a more stable financial footing.

The trust also sought approval for its manager to enter into an underwriting agreement with St Laurence Property and Finance for a fee of $525,000, amounting to 1.5 per cent of the value of the deal.

This year, the office and shopping centre landlord devalued its portfolio by $17.5 million and that meant National was in breach of its trust deed which bans the trust from borrowing more than 45 per cent of the gross value of its assets. After the valuation fall, the trust's outstanding loans amounted to 47 per cent of the value of its assets, leaving it having borrowed $4.8 million over its limit.

The big value writedowns hit National's shopping centres in Christchurch, Auckland and Tauranga, blowing the limits of the trust's borrowing ratio.

The revaluations were criticised by Paul Dallimore, trust founder, former executive chairman, second-largest unit-holder after St Laurence and an owner of the trust's former manager. He questioned the need for a rescue plan, saying St Laurence had financial expertise but wasn't a property expert.

St Laurence head Kevin Podmore said refinancing was necessary.

"A successful capital-raising will restore a strong financial position to the trust," Podmore said. "With a sound financial base, St Laurence is confident that it has the proven skills needed to create value in the trust and its property portfolio for the benefit of unitholders. To ensure the capital base is restored, St Laurence Property and Finance has committed to underwrite any shortfall in respect of the issue of the units."

After the meeting, Podmore said he had told investors disappointed with the revaluations that St Laurence's interests were aligned with the trust because it held a 12 per cent share. He was confident the trust could move ahead with a stable capital base.

Analyst Mark Lister, of ABN Amro Craigs, expected little opposition to the refinancing deal.

Going down

* Eastgate Shopping Centre, Christchurch: $81 million to $73.5 million.

* Rialto Centre, Newmarket: $42.8 million to $41.8 million.

* Goddards Centre, Tauranga: $18.1 million to $13.2 million.