TTP takes biggest hit yet but has it bottomed out?

By Campbell McIlroy

Friday 1st March 2002

DON'T LOOK DOWN: Losses from sales and revaluations wiped $81.8 million from the portfolio, which included the Auckland Club Tower (left), the Ministry of Commerce building in Wellington (middle) and Finance Plaza, Auckland

Trans Tasman Properties took a bath with this year's annual result, losing $20 million on property sales and devaluing its portfolio by a further $61.7 million.

But analysts said investors may not have seen the company hit the bottom of the barrel yet.

One pointed out the company's net asset value per share, although having dropped from 70c to 59c, was still well shy of the 35c offered to minority shareholders as part of the proposed capital restructuring last year.

The losses from sales and valuation writedowns, $81.8 million in total, equates to an effective 6.2% loss in the value of the portfolio.

While TTP executive chairman Don Fletcher said the writedown and loss on sales had been severe he was adamant the portfolio was now fairly valued. "Valuers, over the past few years, haven't had a lot of sales evidence of where the market is. Bottoming rentals and a hint of some growth gives us more confidence that we have hit the bottom."

On the positive side the company's Australian assets were valued up $800,000 and the operating surplus, before unusual items and minority interests, was $27.3 million, despite the loss of revenue from $195 million worth of properties sold during the year.

The sales included five properties in Australia for $109.7 million and nine properties in New Zealand for $85.3 million.

The sales and portfolio devaluations have seen the company's assets fall from $1.3 billion last year to $1.1 billion for the year ended December 31 2001.

The proceeds from the sales were applied to the repayment of bank debt which saw total liabilities reduced from $663.7 million to $568.9 million.

Mr Fletcher said despite the level of debt the company still had plenty of money to carry out development work and acquire new assets.

The company's annual result said it had successfully negotiated a new term facility to fund the New Zealand portfolio, underwritten by HSBC, including the ANZ. The new facility is for a three-and-a-half-year term from May.

TTP has also negotiated a new three-year $A200 million facility following the completion of 363 George St, which used $A115.7 million.

It is unlikely there will be more wholesale disposal of assets to retire debt and Mr Fletcher said any future sales would be more a portfolio management issue as opposed to a disposal programme.

The company's annual report will also reveal details of the successful development and sale of the last of the Maritime Sq sites in Auckland's Viaduct.

Property industry insiders said the building was sold for $11.75 million.

In the meantime the company will be focusing its energy on developing the 2.6ha it holds next to Auckland's Viaduct Harbour.

This will take time and the company also has to contend with the Auckland Waterfront Advisory Group (Awag) putting together a master plan for the area. Some industry participants have expressed scepticism as to whether the master plan will work as there are a large number of vested interests in the area.

Awag expects to have its master plan completed by the end of the year but TTP is expected to continue with its development plans. The sale of assets over the last year, coupled with the development activity being taken on by the company, appear to indicate a more pro-active approach to the company's portfolio.

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