Ngāi Tahu Property

Ngāi Tahu Property (NTP) has experienced its most challenging year since inception. The economic turmoil has seen a shortening of available credit and unprecedented consumer uncertainty that has greatly impacted profits from development property. The leases on investment and rural property continue to form the backbone of the property operation and have remained steady in spite of the economic downturn.

Property Development

Residential

A decision has been made not to progress further residential developments unless sensible pre-conditions have been met. As a result the team's main focus has been on conserving capital. Notwithstanding the team have been active in the master planning for Wigram, Lincoln and Preston's Rd in readiness for a market recovery in 2010 or 2011. NTP is a substantial supplier of development land to the Canterbury region. This year has been focused on doing the background work needed to take advantage of those long-term opportunities and we are now well positioned for long-term growth.

Our main active development Linden Grove has performed well despite the economic situation with two-thirds of the 186 sections now fully settled and only five not yet sold.

Commercial

The year in review has been dominated by two main projects: the Christchurch City Council's new Civic building and the Queenstown Post Office Precinct. Both projects will result in very secure long-term tenancy agreements.

Christchurch Civic Building
This project is significant in that it is the first public/private partnership to develop a major local government facility in New Zealand. Construction is continuing to progress well and is due for completion in August 2010. We are confident that we can bring this project in under capital budget.

Queenstown Post Office Precinct
The precinct project is on budget and due for completion in September 2009. The new buildings have all been leased prior to completion and will have an immediate impact on the investment portfolio in 2010.

Property Investment

Investment property has remained solid. The strategy of engaging Crown and premium grade tenants together with proactive management has been borne out over the past year with the investment portfolio demonstrating strong recession proof quality.

Our on-going positive working relationships with lessees has ensured near full occupancy of the portfolio. Of the 106,942sqm of investment property available to let less than 1% (196sqm) was vacant at year-end. The investment portfolio weighted average lease term (WALT) stands at an exceptional 7.74 years compared with an industry average of just over five years.

The recent annual valuation confirmed that in most cases, the downward movement on the investment portfolio is less than the market due to the strength of the portfolio. Commercial Investment Property write-downs of just over $7.4m (4.3%) reflects the quality of our investment property and also the quality of our tenants and leases. This decline in investment property valuations is considered extremely favourable in comparison with industry standards where declines of 10% have been the norm.

Rural land

We have made our first investment in the agricultural sector in Canterbury changing the use of land previously leased for forestry use to create the potential for a variety of agricultural uses.

During the year our West Coast interests saw significant areas of indigenous landholdings previously leased to Timberlands West Coast coming under full Ngāi Tahu ownership.

At FY09 year-end, a dedicated rural team was set up to advance our interests in the rural sector. The immediate focus will be on capital management and the recycling of capital towards agricultural land development as well as a continued focus on Crown discussions to resolve an acceptable position on the Emission Trading Scheme.

Looking Ahead

The past year has seen the toughest property environment in New Zealand in modern times. Ngāi Tahu Property is a long-term investor. Our strategies dictate that we provide for the tough times as well as maximising opportunities in good times.

Over the past year we have assessed the steps we need to take to not only weather the impact of the economic conditions but also to guarantee continued traction on the substantial value opportunities in our land bank holdings. This will ensure the ability to meet the market first once the impact of the recession begins to abate.

We have a strong experienced team committed to building the assets and long-term wealth of the iwi. The potential arising from the Right of First Refusal property assets as agreed to in the Ngāi Tahu Settlement ensures opportunities to capture continued growth. The new financial year has begun well across the board and things are looking more positive moving forward however, at this stage it is too early to forecast any gains. An operating EBIT of $19m has been forecast for the financial year ahead.

Post Office

A vision was developed for a sensitive and integrated site, and for many years Ngāi Tahu Property worked closely with community and national organisations in order to ensure a precinct that would become a true asset. [More...]