Property arm fends off 'taint'

Photo / Brett Phibbs

Real estate manager St Laurence is in receivership but its real estate-owning arm is still strong, with assets valued at $234 million.

Irongate Property was called St Laurence Property & Finance until it ditched the name late last year, saying it was tainted by the struggling management business.

Irongate wanted the market to know it was unaffected by the St Laurence meltdown, even though it is managed by St Laurence (in receivership), is chaired by St Laurence managing director Kevin Podmore and St Laurence owns a cornerstone stake.

Podmore said the receivership did not affect companies which manage the National Property Trust or Irongate.

He wanted investors to agree to a debt-for-equity swap but Perpetual moved to put St Laurence into receivership.

That led to a spat between the two yesterday where Podmore accused Perpetual of not consulting St Laurence and said the board was disappointed and did not give reasons for the receivership.

Matthew Lancaster of Perpetual said the trustee was acting in the best interests of investors and receivership best served those interests.

Another part of the St Laurence business wanted attention, too.

Chris Minty, Irongate's general manager, issued an NZDX notice yesterday saying all was well with his company.

"Following the news that St Laurence and some of its subsidiaries had been placed in receivership by Perpetual Trust, the receivership does not include Irongate Property, any of its subsidiaries or the companies which are the managers of Irongate," he said.

"Perpetual Trust has indicated to the manager that the companies providing management services to Irongate will not be affected by the receivership of St Laurence and the manager will continue to provide services to Irongate," Minty said.

Irongate had real estate valued at $234 million when it issued its half-year report to September 30 last year but that was rapidly decreasing.

Podmore said then the plan was to quit parts of the portfolio.

"It became apparent this time last year that the strategy that has enabled the company to deliver attractive returns to investors for a number of years was no longer appropriate in the new environment.

"In response the company announced a revised strategy. Irongate is now working on downsizing its balance sheet through the continued sale of mature properties, exiting property finance lending and concentrating on value-added development projects," Podmore wrote in his chairman's report.

"We believe the new name and branding will clearly signal to the market the company's new strategic direction and also distinguish Irongate as a separate entity from its 34 per cent shareholder and manager, St Laurence."

Irongate's financial performance has been poor.

It made a $28.2 million net after-tax loss in the September 2009 half-year, compared to a $34.8 million loss for the same period in 2008. And it is still highly geared.

Podmore said sales of more than $100 million had mainly been applied to the repayment of bank debt.

Irongate owed the banks $125.6 million in the September 2009 half-year result, down from $144.6 million by March.

IRONGATE

$234m real estate portfolio includes:

* Auckland waterfront office tower, 139 Quay St.
* Office block, 450 Queen St.
* Viaduct block, 104 Customs St West.
* Vero building, Palmerston North.
* Wellington shops, 55 Molesworth St.
* Ex-Mitsubishi site, Central Park Porirua.

Source: Irongate Property