Property fund's decisions disappointing: investor

Simon Botherway's resignation has upset institutional investors. Photo / Kenny Rodger

An institutional investor is disappointed at moves by $730 million property fund DNZ.

The fund yesterday announced the resignation of director Simon Botherway and plans to delay dividends and sell property.

Craig Tyson, ING investment manager, said the news was all bad for DNZ.

The company last year shelved a plan to internalise its management and list on the NZX. It continues to trade on Unlisted.

Tyson said DNZ had missed an opportunity to raise the bar for the rest of the sector to align investor and management interests and improve governance.

"It also would have provided liquidity and transparency to existing investors but at some cost in terms of dilution. We hope that DNZ comes back to the market later in the year but these proposed tax changes have certainly created a lot of uncertainty and ultimately returns could be lower if depreciation is denied.

"We're also disappointed that Botherway has resigned. He has always been a shareholder advocate and we took some comfort from the fact that with him on the board, there would be a clear focus on decisions that created shareholder value," Tyson said.

Tim Storey, DNZ chairman, yesterday announced the board's loss of crusading investment advocate Botherway and lawyer Mark Hopkinson.

Storey refused to say who the board would nominate to replace them, or if outspoken critics Derek Young and David van Schaardenburg were likely candidates.

But he did say a special general meeting was planned in Auckland for DNZ investors next month.

The quarterly dividend payment was deferred until February 25.

Assets would be sold to cut debt but Storey could not say what buildings would go on the market, the value of intended sales, the geographic location or which agents, if any, had been engaged.

DNZ investor Derek Button expressed concern about boardroom resignations and moves to sell property.

The real estate would hit the market in a difficult climate just as the Government had announced a big shakeup for tax treatment of this sector, Button said.

"It's a terrible time to sell. If they were going to sell, they should have waited until the market picked up again. There's a lot of 'iffi-ness' with the Government changes."

Institutional investors were yesterday privately smarting about Botherway's departure, saying it sent out bad signals.

Botherway, a former part-owner of institutional investor Brook Asset Management, had criticised the old structure of the business but his arrival was seen as heralding big changes. He went on the DNZ board at the request of major institutional investors.

He has refused to comment on his exit.

The outcome of protracted negotiations between DNZ, Young and van Schaardenburg are yet to be announced and van Schaardenburg was yesterday reserved in his reaction to DNZ's moves.

"Our focus is trying to get the best possible outcome for existing shareholders."

Asked for his view of Botherway, van Schaardenburg said the resignation was purely that director's choice and he understood the reasons. "He wants to be involved as a director of a listed company."

Button said he was concerned about lack of information for shareholders, who got letters this week about the changes.

"DNZ say they are going to be transparent and all they do is issue this statement ... It doesn't give you anything to gain your confidence."

DNZ was yesterday trading at 68c.

DNZ MOVES
* Directors Simon Botherway and Mark Hopkinson have resigned.
* Dividends due yesterday to be deferred until February 25 at the latest.
* Assets to be sold to cut debt.