Shareholder attacks Kermadec decisions

Mark Francis defends the company yesterday, watched by chairman Peter Wilson. Photo / Paul Estcourt

Kermadec Property Fund's board was asked not to treat its shareholders badly yesterday and take a more conservative approach to real estate.

Shareholder Peter Blackwell criticised the board of the listed landlord which held its annual meeting at Pinot in Orakei Rd, raising concerns about a property deal with an associated party and the general management of the business.

But independent chairman Peter Wilson and managing director Mark Francis defended the company. Wilson said any purchase with a related party carried with it strict procedures and these had been followed last year when Kermadec bought a large Auckland CBD property.

Blackwell's main complaint was last year's $17.5 million deal with Auckland businessman and related party Peter Francis - father of Mark and Chris Francis, who run Augusta Funds Management which manages Kermadec - to buy his stake in the Finance Centre Podium on Albert St.

Blackwell told the board and fellow shareholders that he had raised concerns a year ago and his fears had now proved to be well founded with the value of the property falling. "I thought you were wrong then. I'm damn sure you're wrong now."

He also criticised the board's decision to sell the Henderson court building which Blackwell said he considered a good investment.

"As soon as I bought my shares, you sold it and you bought things that in my view are less than conservative buildings. I say you were wrong and I don't want us to be treated as 'old-fart' shareholders," Blackwell said.

Francis defended the decision to sell the Henderson building.

"I can tell you it was a specialised building with a single tenant with around three-and-a-half years remaining on a lease to a government department that in our view was likely to move. If we were still holding that today, you would be horrified," Francis said.

Other shareholders wanted to know why Kermadec's share price was so low when other listed property vehicles had seen a rally lately. Kermadec shares closed at 42c yesterday.

Wilson could not explain the price and gave a gloomy outlook, saying the company was considering selling properties to cut debt but had rejected raising capital from shareholders.