KEY POINTS:
The chairman of listed building owner Kermadec Property Fund Shareholders pleaded for questions at yesterday's annual meeting.
But none came until after the close of general business, despite the company trading in an increasingly hostile property climate and its share price sinking from $1 at listing two years ago to yesterday's 66c.
Yesterday was also the date for Kermadec to settle a controversial $17.5 million deal with Auckland businessman and related party Peter Francis - father of Mark and Chris Francis who run Augusta which manages Kermadec - to buy his stake in the Finance Centre Podium on Albert St in the CBD.
Kermadec is the smallest real estate vehicle listed on the NZX with just nine properties.
No shareholders questioned why this year, high-profile developer Jamie Peters of Starline Group had sold his half-share in Augusta, via his Property Manager Holdings which Kermadec's annual report declared was part of Starline.
Peters' exit gave the Francis family complete control of Augusta.
Peters also owned many of the properties which formed the basis of Kermadec's float in 2006 and sold them into that vehicle, at a time when the market was still rising rapidly.
Peters had bought those properties from the much-criticised Trans Tasman Properties.
Only a few seconds before chairman Peter Wilson was about to close yesterday's meeting, and after his re-election, one shareholder asked a single question: Does Kermadec have any plans to buy properties from real-estate-owning syndicates which Augusta manages?
At the time Kermadec was floated, Augusta's main business was managing various syndicates and it continues to manage these but makes no mention of them in the Kermadec business.
Wilson said the purchase question was not a matter which was before the board. Another shareholder objected to Ernst & Young being reappointed auditors, criticising their involvement with failed company Feltex.
Kermadec is shunned by most analysts because of its size and nature, lack of geographic spread - all its properties are in Auckland - and lack of diversification into various sectors of the market, because most of its properties are commercial office buildings.
Augusta has a 10 per cent stake in Kermadec, which the board says aligns the interests of the external manager with the listed vehicle. The manager charges Kermadec fees.
Kermadec owns properties valued at just $148 million and Augusta is about to enter arbitration with apartment owners in the Beaumont Quarter over a massive leasehold land fee hike. Beaumont Partners, managed by Augusta Funds Management, wants to raise ground rents at the 258-apartment housing estate opposite Victoria Park.
Mark Francis, a Kermadec director and head of Augusta, said the Beaumont arbitration was earmarked for October.
Francis mentioned the harder times for property in his address to the meeting but turned this to his advantage, saying it was a good thing the company did not have top-class assets. Predictions were that B-grade office buildings would do better than any other real estate asset class, he told the shareholders.
Francis said Kermadec's outlook was good but growth in the sector would be more moderate in the coming year.
KERMADEC OWNS:
* Nine properties valued at $148 million.
* Finance Centre Carpark, $31 million.
* Bookfields House, $26.2 million.
* Takapuna's Berkeley Cinema, $8.2 million.
