Archive | Irongate

Irongate concedes defeat – can’t remedy breaches or pay bondholders

Published 3 May 2011

Irongate Property Ltd (ex-St Laurence Property & Finance Ltd) said today it had asked its trustee to appoint a receiver because it was still unable to remedy the breach of 2 trust deed ratios and couldn’t pay money due to bondholders on 15 May.

Perpetual Trust Ltd told Irongate at the end of last year it wouldn’t grant a waiver of the breaches, but also wouldn’t do anything about it immediately. Irongate, meanwhile, worked on selling assets and trying to raise capital.

Irongate’s manager, St Laurence Funds Management Ltd, told the Irongate board it had been unable to raise enough capital or sell enough assets to enable it to remedy the ratio breaches or pay the bondholders. Accordingly, Irongate asked Perpetual to appoint a receiver in respect of the whole of its undertaking & assets. Irongate chairman Kevin Podmore said: “It’s extremely disappointing that the manager’s attempts to raise new equity have been unsuccessful. The moribund commercial property market has not been helpful. The manager has, however, been able to put in place sale contracts which should result in a significant de-gearing of the balance sheet and repayment of much of its senior debt, placing bondholders & shareholders in a better position."

Irongate also sold $37 million of property assets in the September half, applying most of the proceeds to the repayment of debt. It cut borrowings from $156 million in March to $133 million in September, but the debt level was still 68% of total assets.

Earlier stories:

13 December 2010: Perpetual won’t grant Irongate a waiver, but isn’t acting on it yet

1 December 2010: Irongate reduces loss, breaches deed, uncertain on next bond payment

1 November 2010: Irongate gets waivers to defer bank repayment

20 October 2010: Irongate seeks waivers for breach

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Perpetual won’t grant Irongate a waiver, but isn’t acting on it yet

Published 13 December 2010

Perpetual Trust Ltd’s board has told Irongate Property Ltd it has declined to grant a waiver of 2 banking breaches, but won’t do anything about it until the end of January.

Perpetual said it had reserved its position but would review its decision if either breach remained at the end of January.

Irongate (ex-St Laurence Property & Finance Ltd) said in October it had asked Perpetual and Westpac NZ Ltd for waivers in connection with a non-payment under its banking facilities with Westpac. The bank granted a waiver. Irongate said the breaches arose from valuation losses & provisions recognised at 30 September. Irongate chairman Kevin Podmore said today the company continued to reduce debt through asset sales: “If successfully completed, this should result in the trust deed breaches being remedied.”

Earlier stories:

1 December 2010: Irongate reduces loss, breaches deed, uncertain on next bond payment

1 November 2010: Irongate gets waivers to defer bank repayment

20 October 2010: Irongate seeks waivers for breach

 

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

 

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Irongate reduces loss, breaches deed, uncertain on next bond payment

Published 1 December 2010

Irongate Property Ltd (ex-St Laurence Property & Finance Ltd) made a $13.9 million consolidated net loss after tax in the September half, an improvement on the $28.2 million loss a year earlier.

General manager Chris Minty said yesterday the cost of property sales, revaluations & loan provisions were the most significant contributors to this result. Revaluation cut $4.7 million (3.8%) from the combined investment & development/joint venture property portfolio: “While the investment portfolio decreased in value by only 2.3%, the development/joint venture property portfolio recorded another drop in value of 9.3%.”

Irongate also sold $36.9 million of property assets, applying most of the sale proceeds to the repayment of debt. Borrowings were cut from $156.2 million in March to $133.1 million in September, taking them to 67.9% of total assets. The company repaid $30 million of series 1 & 2 bonds, but bank debt increased from $81.6 million to $87.2 million. Mr Minty said: "We are pleased, given the depressed property market, to have successfully sold nearly $37 million of property at reasonable prices, and consequently achieved a major milestone in the repayment of bondholders.” The negative economic environment continued to have an impact, with loan provisioning being $4.6 million. The property sales:

Hastings, Coventry Rd, sold for $2.35 millionPenrose, 27a Cain Park, sold for $2.4 millionInventory comprising sections at Bowral & Bolwarra in New South Wales and townhouses at Whisper Cove & Snells Beach, sold for $7.33 millionPorirua, Central Park, the 2ha of excess yard & 2 linkage sites in Makaro St, sold for $3.28 millionGlenfield, 165 Target Rd, sold for $6.55 millionAlso sold was the Bunnings property in Auckland, for $15 million, which was owned by the St John Balanced Property Fund Ltd (At the time of the sale Irongate held 59.49% of St John, reduced to 52.25% by a recent share buyback offer).

Properties sold since 30 September include Vero House in Palmerston North and 2 properties in Lunn Avenue, Mt Wellington which form part of the Lunn Avenue joint venture company. Mr Minty said sale of the investment properties, along with those sold in the second half of last year, had reduced net rental income by $2.9 million (42.9%) from a year ago, to $3.7 million.

Fair-value adjustments cost $4.2 million ($22.2 million a year ago) and the pretax loss was reduced from $30.4 million to $13.5 million.

Liabilities have been reduced from $210 million a year ago to $138 million, and total equity (including an $11.5 million minority interest) has been reduced from $99.7 million to $58.3 million. On the Australian investments, Mr Minty said: "We are particularly pleased with progress in respect to divestment of our Australian property assets. In the 6 months to 30 September, the Bowral development has been completely sold and significant progress has also been made in the selldown of completed sections & the future development land at the Bolwarra development located north of Sydney. Selldown of the remaining completed section stock is expected to be completed in this financial year. “We are currently negotiating sale agreements, including on our joint venture assets that, if successful, will potentially realise a further $7 million. The proceeds of any sales will continue to be applied to reducing debt." The weighted average lease term was reduced from 4.63 years to 4.46 years during the half-year and passing yield on the portfolio dropped from 7.57% to 6.72%. Irongate repaid the secured bonds that matured on 15 July through a combination of asset sales & funding received from TEA Custodians (Bluestone Group), but Mr Minty said its ability to repay another $50 million due next May was uncertain. Repayment depended on its ability to implement & execute its asset sales programme & various funding initiatives. Failure to make the May payment would be a breach of Irongate’s trust deed and could result in the company no longer being a going concern. “If Irongate was deemed not a going concern, the assets on the statement of financial position would be recognised on a realisation basis (which could be lower than the carrying value they are currently recognised at) and liabilities on a settlement basis (which may result in the recognition of additional liabilities).” "Actively managing the company’s development projects to progress them to a stage where we can sell at an optimal price continues to be our primary strategy for meeting our objective of repaying bondholders. The property market has continued, as expected, to be challenging. However there are still buyers and our experienced management team has been successful in maximising the value of the assets and will continue to enhance value at every opportunity."

Mr Minty said Irongate had notified the trustee that the valuation losses & provisions recognised at 30 September had caused it to breach 2 trust deed ratios and it had sought a temporary waiver to the breaches. Negotiations are continuing on sale of the Irongate management contract between St Laurence Funds Management Ltd and the Bluestone Group as prospective purchaser. Want to comment? Go to the forum.

 

Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Irongate gets waivers to defer bank repayment

Published 1 November 2010

Irongate Property Ltd said on Friday it had obtained funding waivers from Westpac NZ Ltd for a non-payment under its facilities with the bank. Irongate said earlier in October it recently extended one of its Westpac facilities to 31 December. As a condition of this extension, Irongate was required to make a $1.5 million repayment to Westpac on 14 October. Due to a delay in documenting a further funding line with TEA Custodians (Bluestone) Ltd, Irongate had not made this repayment and, as a result, was in breach of its facility agreement with Westpac. The non-payment also resulted in Irongate being in breach of its trust deed. Irongate chairman Kevin Podmore said the repayment was now due to be made on Monday 29 November. Irongate also announced that John Gosney had been appointed to the board as an alternate director for Mr Podmore.

Earlier stories:

20 October 2010: Irongate seeks waivers for breach

6 October 2010: Bluestone negotiates to buy Irongate management

 

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Irongate seeks waivers for breach

Published 20 October 2010

Irongate Property Ltd (ex-St Laurence Property & Finance Ltd) said on Friday it had asked its trustee, Perpetual Trust Ltd, and Westpac NZ Ltd for waivers in connection with a non-payment under its banking facilities with Westpac. Irongate recently extended one of its Westpac banking facilities to 31 December. As a condition of this extension, Irongate was required to make a repayment of $1.5 million to Westpac on 14 October. Chairman Kevin Podmore said: “Due to a delay in documenting a further funding line with TEA Custodians (Bluestone) Ltd, Irongate has not made this repayment and, as a result, is in breach of its facility agreement with Westpac. As a consequence of this nonpayment, Irongate is also in breach of its trust deed. “Irongate is well advanced in the process of arranging the funding to make this repayment, but this requires the consent of Perpetual Trust before it can occur. We expect the necessary consents will be granted and waivers obtained for this nonpayment.”

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Bluestone negotiates to buy Irongate management

Published 6 October 2010

St Laurence Funds Management Ltd is in exclusive negotiations to sell its Irongate Property Ltd (ex-St Laurence Property & Finance Ltd) management agreements to Bluestone Group, following $45 million in new funding from a Bluestone-led consortium which allowed Irongate Property to repay bonds that matured on 15 July.

St Laurence managing director & Irongate chairman Kevin Podmore announced the negotiations to the annual meeting in Wellington on 24 September. As a result, Bluestone chief executive Peter McGuinness has resigned from the Irongate Property board, which he joined only at the end of July.

The Bluestone Group, established in 2000, is a commercial lender & asset manager operating from offices in Australia, New Zealand & the UK. It manages a $1.5 billion portfolio of mortgages & commercial loans. Irongate Property has a diversified portfolio of property-related investments and operating activities including passive investment property assets, properties held for future development and interests in other property-owning entities. Its investment strategy has been to target growth and add-value assets and to maximise their value through active development & management.

However, after reporting a loss for the March year and increasing the loss by $4 million to $54.5 million after a review at the beginning of July, the focus turned to debt repayment and portfolio reduction. The company sold $120 million of property in the March year, reducing bank debt to $81.6 million, and since then has reduced bank debt to $76.5 million. It’s reduced its portfolio from $373 million to $236 million.

Despite that necessary change in emphasis, managing director Chris Minty said the company’s intention was to continue aiming to become a listed property development & funds management company.

Earlier stories:

26 July 2010: Bluestone chief joins Irongate board

5 July 2010: Irongate gets Bluestone support

2 July 2010: Irongate reassessment increases loss

1 June 2010: Irongate makes $50 million loss, warns of possible trust deed breach

31 December 2009: Irongate (ex-St Laurence P&F) improves bottom line, Albany leasehold takes most blame for continued loss

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Attribution: Company releases, story written by Bob Dey for the Bob Dey Property Report.

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Bluestone chief joins Irongate board

Published 25 July 2010

Irongate Property Ltd has appointed Bluestone Group chief executive Peter McGuinness as a director, 3 weeks after Bluestone led a consortium which lent Irongate $45 million.

 

The new funding allowed Irongate (ex-St Laurence Property & Finance Ltd) to repay in full its series 1 & 2 bonds, which had been scheduled to mature on 15 July.

 

Irongate also agreed indicative terms with the consortium for additional funding which will help the company reposition its property investment business and enhance its property portfolio. Mr McGuinness has been chief executive of Bluestone Equity Release and group chief finance officer, worked for a UK non-bank mortgage originator and is a chartered accountant.

The Bluestone Group, established in 2000, is a commercial lender & asset manager operating from offices in Australia, New Zealand & the UK. It manages a $1.5 billion portfolio of mortgages & commercial loans.

 

Earlier stories:

5 July 2010: Irongate gets Bluestone support

2 July 2010: Irongate reassessment increases loss

1 June 2010: Irongate makes $50 million loss, warns of possible trust deed breach

 

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Irongate gets Bluestone support

Published 4 July 2010

Irongate Property Ltd (ex-St Laurence Property & Finance Ltd) said on Friday it had agreed binding terms with a consortium led by Bluestone Group which will provide $45 million in new funding, allowing Irongate to repay in full its series 1 & 2 bonds, scheduled to mature on Thursday 15 July.

 

Irongate has also agreed indicative terms with the consortium for additional funding which will help the company reposition its property investment business and enhance its property portfolio. The Bluestone Group, established in 2000, is a commercial lender & asset manager operating from offices in Australia, New Zealand & the UK. It manages a $1.5 billion portfolio of mortgages & commercial loans. Want to comment? Go to the forum.

 

Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Irongate reassessment increases loss

Published 2 July 2010

Irongate Property Ltd (ex-St Laurence Property & Finance Ltd) said yesterday it had reassessed the carrying value of its investment in the National Property Trust following the sale of most of its holdings on 13 May.

 

Irongate general manager Chris Minty said the reassessment, after the release of its unaudited financial statements for the March year, was done on the advice of its auditors and reflected the loss realised on the sale of its investment in the carrying value as at 31 March as part of its value-in-use calculation. On this basis, the carrying value of associates was reduced from $12.5 million to $8.4 million and the loss for the year increased from $50.5 million to $54.5 million. Mr Minty said the adjustment to the carrying value had resulted in the company breaching one of its trust deed covenants as at 31 March. However the breach was remedied following settlement of the sale. “Holding units in the National Property Trust was no longer part of Irongate’s core business and the proceeds of the sale of the units, $7.43 million, was used to retire debt. Debt reduction is one of the strategies set by Irongate’s board early in 2009 and remains a key strategy whilst the commercial property market continues to be challenging.” Mr Minty said the company’s audit had been completed and the annual report would be released by Wednesday 7 July. That’s the last day NZX Regulation has given the company to file the report or face suspension of its securities from trading. The report was due by 30 June.

 

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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.

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Irongate makes $50 million loss, warns of possible trust deed breach

Published 1 June 2010

Property investor Irongate Property Ltd (ex-St Laurence Property & Finance Ltd and 34% owned by St Laurence Ltd, now in receivership) went from an $87.2 million loss in the March 2009 year to a $50.5 million loss this year.

 

The company also warned it might not be able to repay secured bonds maturing on 15 July on the due date, which would put it in breach of its trust deed. General manager Chris Minty said yesterday the major contributor to the 2010 result was a $34.3 million decrease in the value of the company’s property portfolio as a result of property sales during the year & revaluations.

 

That equated to a 10.3% decrease in value across the combined investment & development/joint venture property portfolio. Mr Minty said the investment portfolio fell 3.3%, but the development/joint venture property portfolio fell 29.3%. Loan provisioning & write-offs contributed $14 million to the bottomline loss. Mr Minty said Irongate had continued to downsize its balance sheet. Total assets fell from $372.6 million a year ago to $240.4 million as the company realised $91.2 million from property sales and applied most of the proceeds to the repayment of bank debt & secured debenture stock. It cut bank debt from $144.6 million to $81.6 million, and from 38.8% to 34.2% of total assets. Irongate also has $80 million of secured bonds that are due to be repaid in the next 12 months.

Net asset backing has decreased from $1.39/share after the April 2008 rights issue to 78c/share last year and to 44c/share this year.

Mr Minty said: "Whilst there are some signs that the economy is beginning to stabilise, the extremely difficult economic climate continued to adversely impact on property values in the year under review. We are very pleased, given the current environment, to have successfully sold nearly $120 million of property, including joint-venture properties.” Irongate has been selectively marketing its mature & non-strategic property assets, which reduced gross rental income by 34.1% to $18.8 million. However, the weighted average lease term increased from 3.96 years to 4.66 years and passing yield on the portfolio improved from 7.03% to 7.57%. $28.67 million of joint-venture assets were sold and the proceeds again applied to debt reduction. This divestment programme is scheduled to continue this financial year.

In Australia, Irongate has completely sold its Bowral development since balance date and made significant progress selling down sections at its Bolwarra development in the Hunter River valley north of Sydney. The company expects to complete its selldown at this development this financial year. Irongate sold 8 of its investment properties for a total $84.7 million, 6 around Auckland, one in Palmerston North and the other in Porirua:

Auckland cbd, 170-174 Queen StMt Wellington, 510 Mt Wellington HighwayMt Wellington, 5-11 Reliable WayNorth Harbour,  13 William Pickering DriveParnell, 62-70 Beach RdPenrose, 49 Station RdPalmerston North, 279 Cuba StPorirua, Heriot Drive, Unit B, Harvey Norman Centre.

 

Mr Minty said: "We are also currently negotiating sale agreements that will potentially realise a further $50 million, the proceeds of which will be applied to reduce debt. Well leased properties continue to generate good levels of interest and we will continue our policy of selling down assets where we can realise good value." In the current environment, and in light of the financial results, the directors said it was prudent to make no dividend payments until the series 3 bonds, which are due to mature in May 2011, have been repaid. The company expects to be in a position to repay the secured bonds that mature on 15 July 2010 through asset sales – but also said its ability to repay them on due date remained uncertain.

 

"The uncertainty relates to the company’s ability to implement & execute its asset sales programme. In the event that the company fails to make this payment, it will be in breach of its trust deed and the trustee will then have ability to carry out enforcement action on behalf of the secured bondholders. This could result in the company no longer being a going concern. “If Irongate was deemed not a going concern, the assets on the statement of financial position would be recognised on a realisation basis – which could be lower than the carrying value they are currently recognised at – and liabilities on a settlement basis, which may result in the recognition of additional liabilities. Post-balance date, St Laurence Ltd was placed in receivership: “This has had no impact on the management of Irongate but the negative association with St Laurence has impacted on certain sales contracts Irongate has had under negotiation.” As consequence of the appointment of receivers to St Laurence, the Irongate board decided  the National Property Trust units it held had ceased to be strategic assets. Therefore, as part of its asset realisation programme, Irongate sold 15.2 million of those units post-balance date for $7.43 million. Outlook In light of the continuing difficult financial climate, the company’s downsizing strategy remains unchanged. Mr Minty said: "Our focus will remain firmly on debt reduction. Accordingly, we will also continue to actively & intensively manage the company’s development projects in order to progress them to a stage where we can realise their value. As we expected, the operating environment has continued to be challenging and the opportunities to enhance the value of the portfolio have been difficult to progress with funding remaining very tight.

“Given the dire financial news coming out of Europe, we expect this situation to continue for some time. However our experienced management team will continue to pursue selective opportunities as they arise."

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