Dorchester Hotel Property Trust Management Ltd – the company formed to hold a portfolio for investors when the company’s listed parent exited its moratorium in 2010 – has sold its biggest asset to a party related to a director.
The $8 million sale of the Goldridge Resort Queenstown, agreed last Friday, comes as unitholders head to a meeting called by 2 disenchanted investors who want to take over running the management company.
Dorchester Hotel Property Trust Management’s directors are: Paul Byrnes, managing director of the management company’s parent, NZX-listed Dorchester Pacific Ltd (now Turners Ltd); Turners non-executive director John Gosney; Goldridge manager Penny Clark; and Stephen Underwood, owner of Wellington venture capital & private equity company Renouf Corp Ltd.
Mr Byrnes told unitholders the unconditional sale agreement to the unnamed buyer had been secured by a $400,000 deposit. The price was just under carrying value and settlement is scheduled by 30 September.
The Dorchester trust expects to earn at least $250,000 from the Goldridge through to settlement.
Mr Byrnes said in his letter to unitholders: “The purchaser of the Goldridge is associated with one of the directors of Dorchester Hotel Property Trust Management, who took no part in the assessment of offers received or the recommendation of the sale to the trustee. The trustee, through its due diligence process, was satisfied that the manager adequately disclosed the related party and established processes to manage the conflict of interest, and concluded that the contract satisfies the objective of the trust.”
Mr Byrnes said unitholders would receive the proceeds as soon as practical following settlement.
“With some funds already held from earlier property sales, we expect this distribution will be the equivalent of around 33c/unit on issue in early October. The successful sale of the Goldridge brings the total of properties in the trust sold to date to just over $15 million and, together with profits earned, this has been achieved at overall carrying values.
“This leaves 2 properties remaining in the trust, the 23 Parkview on Hagley Apartments in Christchurch and the Emerald Hotel in Gisborne. We are continuing to actively market these properties for sale although, as we have previously noted, the Emerald is the most complex property in the portfolio.
“Any proceeds from further sales will also be returned to unitholders as soon as practical.”
Referring to the unitholder meeting called for Friday 29 May, Mr Byres said the current managers had proposed a resolution to provide guidance for earlier realisation of remaining properties.
LET Securities Ltd (Deepak Gupta & John Southworth) forced the 29 May meeting, but the current managers countered by offering to accelerate sale of the trust’s remaining properties with an exit target of 31 July 2016, so the trust could be wound up by 30 November 2016.
Mr Southworth said less than 21.5% of assets had been sold in the trust’s 5 years, and it had paid no dividends, so 4 months ago he decided to push for the trust to be wound up because of the lack of action.
When Dorchester Pacific exited its moratorium in 2010, investors got a range of securities under a capital reconstruction – NZDX-listed interest-bearing secured notes, new shares, share options and the units in the property trust.
15 May 2015: 2 investors turn heat up on Dorchester property trust manager
25 August 2010: Dorchester Pacific exits moratorium with $10.3 million of new capital
6 March 2009: Dorchester buys Goldridge Hotel to overcome mortgage predicament
Attribution: Company release.