Argosy buys out distressed JV partner
Dec. 3 (BusinessDesk) - Argosy Property Trust has bought out its distressed joint venture partner in the Manawatu Business Park in Palmerston North.
Peter Mence, general manager of the trust's management company, told BusinessDesk the partner, a local Palmerston North company named Valour Ideal, was a victim of the global financial crisis and hadn't been able to fund its share of the development.
“We've parted on very good terms. The parties have dealt with each other honourably,” Mence said. “There's nothing wrong with the underlying asset, it's just the global financial crisis and the cost of completing the development.”
No money has changed hands and the trust has bought Valour out in exchange for assuming its debts and obligations. The deal took effect from Nov. 30.
The trust's accounts for the six months ended Sept. 30 valued the minority interest in the business park at $8.3 million and that the minority interest contributed a $3.3 million loss for the six months to the trust's $10.2 million net profit before a one-off and non-cash tax charge.
A price adjustment will be made following the completion of subdivision work and the issue of titles which is expected by mid-2011.
“In the event that payment is required from either party following the adjustment this is to be by an exchange of property at valuation. Current projections show it is highly improbable that the trust will be in a position where payment is required,” the trust's manager said.
Argosy, formerly ING Property Trust, bought its 50% of the business park in mid-2006 when the park was bare land, although Ezibuy had been signed as a key anchor tenant.
Earlier this week, Argosy said it had unconditional agreements to sell three properties and some vacant land at its Palmerston North joint venture for about $26.4 million with settlement occurring through to mid 2013.
Today, Argosy said it could confirm a further unconditional sale at the park for a building with a pending vacancy for $1.3 million compared with its $1.29 million March 31 valuation. “This sale, together with recent leasing activity, means that all the buildings at the park will be fully leased.”
In a separate transaction, the trust has sold vacant industrial land in East Tamaki, Auckland for $3.3 million , below its $3.65 million valuation. “The property has been vacant for over eight months and is not considered to meet the functional requirements of future tenants,” the manager said.
The shares fell 2.7% to 73 cents in trading on the NZX today.