Property fund in gun over returns figure

By ANNE GIBSON

Investment adviser Money Managers has come under fire from the Securities Commission for the second time in a week.

The firm will alter advertisements for one of its largest property syndicates, after the commission said the ads were confusing.

The commission was concerned that investors might think ads promoting Dominion Funds' Harbourside Property Fund were offering a 7.89 per cent return.

In fact, as noted in the fine print, the "$7.89 return per annum for each $100 invested" included before-tax cash distributions of $3.22 debenture interest and $4.67 debenture principal repayments - ie, the investment returns 3.22 per cent gross.

Also mentioned in the fine print was the fact that resident withholding tax would be deducted from the debenture interest.

Dominion is a $400 million property empire built up over the past few years by Money Managers chief Doug Somers-Edgar and former Fletchers executive Paul Duffy.

Its investments include the Beca headquarters in Vincent St, the Viaduct Point apartments and a 5ha retail block in Tauranga.

The Harbourside fund sought $10.5 million from small-time investors to help finance Dominion's $14.5 million buy of Microsoft House in Auckland's Viaduct Harbour.

The offer opened in March and is due to close in July.

Duffy declined to say yesterday how much money the fund had received so far, but said the firm had agreed to increase the type size of the fine print in its ads.

Last week, the commission said it had asked the Companies Office to investigate laying charges against Money Managers over its handling of finance for an apartment development at 1 Parliament St in Auckland.

The commission said clients were given "misleading information" about the value of the property.