Archive | Heartland

Heartland notes offer heavily oversubscribed

Heartland Bank Ltd has closed its 5-year notes offer heavily oversubscribed and it’s accepted the maximum $50 million of oversubscriptions on top of the $100 million sought from institutional & New Zealand retail investors. There’s no public pool.

The company closed the bookbuild for the 5-year unsecured, unsubordinated, medium-term, fixed-rate notes today and set the interest rate at 4.5%/year, a 1.88%/year margin over the underlying 5-year swap rate.

The notes will be issued on 21 September and will mature on 21 September 2022. Heartland said they were expected to have a credit rating of BBB from Fitch Ratings.

Attribution: Company release.

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Heartland lifts profit and looks at note issue

Heartland Bank Ltd increased net profit after tax by 12% to $60.8 million for the year to June. It’s also considering making a notes issue in the next fortnight.

Chief executive Jeff Greenslade said yesterday the increase in profitability was driven primarily by growth in receivables across all divisions – household, business & rural.

Among highlights:

  • 12% increase in profitability to $60.8 million ($54.2 million in the first half of 2016)
  • Net finance receivables up 14% ($447 million) to $3.6 billion
  • 6% return on equity (11.1%)
  • Launch of multiple digital platforms
  • Implementation of new core banking system
  • Earnings/share 12c
  • Total assets up $501.7 million due to the increase in net finance receivables plus an increase in liquid investments
  • Household net receivables increased $227.8 million with reverse mortgages up $126.1 million, motor vehicle loans up $72 million and personal loans (including Harmoney) up $40 million
  • Business division net receivables increased $96.2 million and and rural $123 million
  • Net tangible assets increased from $433.5 million to $490.5 million, and from 91c to 95c/share.

Mr Greenslade said the company was considering making an offer of 5-year unsecured, unsubordinated, fixed-rate notes to institutional & New Zealand retail investors. If the offer proceeds, the company expected it to open in late August.

Annual results presentation

Attribution: Company release.

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Heartland Bank completes equity-raising

Heartland Bank Ltd completed a $20 million placement yesterday at $1.46/share.

Chief executive Jeff Greenslade said it was well supported by Australian & New Zealand investors and introduced a number of new investors to the register.

Settlement & allotment of the new shares is expected to occur tomorrow.

Heartland also intends to make a discounted offer to existing New Zealand shareholders of up to $10 million through a share purchase plan, offering them up to $15,000 of shares/each. Mr Greenslade said the final terms of that offer should be announced in more detail in early 2017.

Attribution: Company release.

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Propbd on Q M21Dec15 – Heartland Bank, Oji resyndication, Seeka, Goodman settles, Caltex decision deferred

Heartland NZ to become Heartland Bank
Oji premises development & resyndication approved
Seeka changes mind on new head office site
Goodman settles Glassworks sales
Commission extends time to decide on Z’s Caltex buy

Heartland NZ to become Heartland Bank

Heartland NZ Ltd will change its name to Heartland Bank Ltd with effect from market open on Thursday 31 December, and its ticker code will change to HBL.

Oji premises development & resyndication approved

Augusta Capital Ltd said on Friday both conditions for development at Oji Fibre Solutions (NZ) Ltd’s Penrose premises had been satisfied and a new syndicate would be established by 31 March.

Augusta managing director Mark Francis said on 27 November the company had entered into a development & lease variation agreement with Oji (ex-Carter Holt Harvey Pulp & Paper Ltd) and the existing Augusta managed syndicate that owns the Penrose premises at 33-43 Hugo Johnston Drive.

The agreement was conditional on the approval of Oji’s board and of the investors in the existing syndicate which owns the property. To fund the landlord’s development works contribution, Augusta’s syndicate manager, Augusta Funds Management Ltd, proposes to re-syndicate the property to raise about $16.5 million of equity.  In addition, Augusta Capital entered into the agreement as guarantor of the existing syndicate’s obligations, which included the landlord’s contribution to the development works, capped at $9 million, and a lease incentive payment. The new syndicate will take over liability for the development.

Earlier story, 27 November 2015: Augusta proposes re-syndication to expand Oji premises

Seeka changes mind on new head office site

Seeka Kiwifruit Industries Ltd has acquired a new head office site in Te Puke, 26km down state highway 2 from Tauranga, one of several property transactions it announced on Friday.
Seeka has confirmed the $4.2 million purchase of a 7.44ha property currently leased by Te Puke kiwifruit tour operator Kiwi360 and an adjacent 5.44ha kiwifruit orchard. The purchase is to be completed on 20 January. The larger property is leased to Green Circle Ltd, the Kiwi360 business operator, which will stay on site until 20 April.
The orchard is directly across the road from Seeka’s Transpack packhouse in Young Rd, Maketu corner, and is adjacent to its Transcool coolstore & KKP packhouse.

Seeka has also reached an unconditional agreement to sell its New World building in Te Puke, across the road from its current head office. The company had intended to relocate its head office to the New World building, but has sold it at its 2014 purchase price of $1.2 million, settling in February.

Chief executive Michael Franks said Seeka had also sublet 2 vacant properties in Totara St, Mt Maunganui, adjacent to its Huka Pack sites, which were on long-term leases as part of Seeka’s purchase of Huka Pack in 2010 from Te Awanui Huka Pack. From 2016, they have been subleased for 14 years to an independent third party. Mr Franks said the annual sublease value would fully offset Seeka’s head lease cost.

While not having an immediate impact on earnings, Seeka believes the purchase of the 2 properties at Maketu would position the company for expansion in that area.

Goodman settles Glassworks sales

Goodman Property Trust manager Goodman (NZ) Ltd confirmed last week that the sale of the Junction units, Move Logistics & DHL facilities at the Glassworks Industry Park in Christchurch for $38.9 million, had settled.

Earlier story, Propbd on Q M7Dec15 – Pacific Property expansion plan, Glassworks sale, RMA bill

Commission extends time to decide on Z’s Caltex buy

The Commerce Commission has extended the time for it to decide on Z Energy Ltd’s application to acquire Caltex brand owner Chevron NZ Ltd to 29 April 2016. Z registered its application on 1 July.

The commission said last Thursday: “We are still continuing to assess the competition effects of the proposed merger in a number of markets, including the retail supply of petrol & diesel, storage terminals, aviation fuel, bitumen and the supply of diesel to customers who purchase it in bulk or through truck stops.”

Earlier stories:
22 November 2015: OIO approves Z Energy takeover of Caltex
3 June 2015:
Z Energy buys Caltex

Attribution: Company & commission releases.

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Corrected: Propbd on Q Th30July15 – 4 units sell at Ray White auction, CDL slips, Heartland on track

4 apartments sell at Ray White’s
CDL Investments makes modest gain
Heartland expects profit at top of guidance range

Corrected 31 July:
CDL Investments NZ Ltd’s after-tax result fell 3.6%. I wrote yesterday that it rose by 3.6%. The actual profit figures are unchanged.

4 apartments sell at Ray White’s

4 of the 5 cbd apartments taken to auction at Ray White City Apartments today were sold under the hammer. Auction results:

The Crescent, 36 Eden Crescent, unit 101, sold for $370,000, sales agents Mitch Agnew & Krister Samuel
Aura, 53 Cook St, unit 1102, passed in at $351,000, Daniel Horrobin & Damian Piggin
Altitude, 34 Kingston St, unit 8H, sold for $316,000, Leo Zhu
Fiore, 152 Hobson St, unit 602, sold for $409,000, Aileen Wu
The Quadrant, 10 Waterloo Quadrant, unit 1318, sold for $280,000, May Ma & Mark Li

Corrected: CDL Investments slips

Correction: I wrote yesterday that CDL made a modest gain of 3.6%, when its after-tax result was down 3.6%.

CDL Investments NZ Ltd’s after-tax operating profit fell by 3.6% in the first half to $8.2 million ($8.5 million last year), on pretax profit up 2.6% to $11.7 million ($11.4 million) and revenue down 4.1% to $23.9 million ($24.9 million).

The company sold 128 sections in the latest period, down from 133 this time last year.

Net asset backing increased by 7.4% to 47.6c/share (44.3c).

Chairman Wong Hong Ren said the listed land developer expected to start sales at its Prestons Rd subdivision outside Christchurch by the end of the year. The company has started earthworks on its 100-lot Kewa Rd subdivision, off Lonely Track Rd beside the Northern Motorway at Albany Heights.

Heartland expects profit at top of guidance range

Heartland NZ Ltd said today it expects net profit after tax for the June year to be about $48 million, at the upper end of the guidance range of $46-48 million.

The company intends to announce its annual result on Tuesday 18 August.

Chief executive Jeff Greenslade also said today that, given heightened market interest in the dairy sector, the banking company’s exposure to dairy was 7.6% of its total lending book: “The average loan:value ratio (LVR) for Heartland’s dairy exposures is 61%. However, it is important to note that LVRs are only one of the indicators of loan quality.

“Where Heartland’s dairy clients are experiencing financial stress as a result of lower dairy payout forecasts, we are actively working with them to fund working capital shortfalls where appropriate and ensuring they have access to appropriate support, including emotional support through the Rural Support Trust & Farmstrong.”

Heartland’s preliminary forecast range for net profit after tax in 2015-16 is $51-55 million, including an allowance for estimated impairments.

Attribution: Auction, company releases.

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Heartland buys 10% of HarMoney

Heartland NZ Ltd has taken a 10% shareholding in New Zealand’s only licensed peer-to-peer lending platform, HarMoney Corp Ltd.

Heartland chief executive Jeff Greenslade said on Monday its subsidiary, Heartland Bank Ltd, would also provide a funding line to enable lending to a range of individual borrowers using the platform.

“Heartland’s strategy is to occupy leading positions in niche markets through specialist offerings which are different to traditional banks. Likewise, HarMoney operates a lending model that challenges those being offered by mainstream banks – a model that can change the way people borrow & invest.”

Earlier story:
8 July 2014: Roberts’ HarMoney gets first peer-to-peer licence

Attribution: Company release.

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Heartland lifts return on equity

Heartland NZ Ltd said yesterday it expected net profit after tax for the June year to be about $36 million, at the upper end of the $34-37 million range previously advised.

The NZX-listed bank company will announce its full-year results on Monday 25 August.

The 2014 result will be a $29 million (421%) improvement on last year. Chief executive Jeff Greenslade said the difference was partly due to the one-off charges made last year, but also resulted from the growth of operating income and continued management of operating expenses & impairment levels.

The recently acquired New Zealand & Australian home equity release mortgage businesses of Seniors Money International Ltd contributed about $1 million, net of acquisition costs.

The indicative earnings for 2014 equated to a return on average equity of about 9.0% for the full year, but Mr Greenslade said the bank had improved its performance during the year to achieve a 9.7% return in the last quarter.

Last year it had a 2% return, and in 2012 a 6.5% adjusted return, calculated by excluding the one-off expenses of $24.3 million pretax incurred as a result of the change in strategy on the non-core legacy property asset portfolio.

Attribution: Company release.

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Heartland says non-core property selldown speeds up

Heartland NZ Ltd said today its selldown of non-core property assets had progressed ahead of expectations this year.

Managing director Jeff Greenslade said: “Non-core property assets have reduced by 51% from $87.1 million to $43 million in the 5 months ended 31 May. Heartland had previously forecast non-core property assets to be $57.9 million as at 30 June.”

The breakdown at 31 May was net receivables of $16.9 million (22 receivables with an average balance of about $800,000) and investment properties of $26.1 million (13 properties with an average balance of about $2 million). Mr Greenslade said Heartland retained $9.7 million of provisions against these assets and didn’t expect earnings to be affected by them.

He said marketing campaigns in New Zealand & Australia should arrest the 2-year decline of the reverse-mortgage loan book Heartland bought from Seniors Money International Ltd, completed on 1 April.

Mr Greenslade said the loan book of Seniors’ New Zealand & Australian Home Equity Release mortgage businesses historically repaid at around 10%/year, but had been declining since 2012.

“To date, Heartland has integrated the businesses and is conducting a marketing campaign in New Zealand for the HER product, including TV advertising that started in May. This has produced higher numbers in the sales pipeline than anticipated. The New Zealand book is expected to turn around and grow in July or August 2014, ahead of expectations.

“In Australia, where sales are largely through distribution partners, 47 salespeople have been accredited across 4 key partners. A TV campaign will be launched in Australia, starting in July. Growth expectations remain on track.”

Earlier story:
14 April 2014: Seniors deal gives Sentinel founders & Quadrant stake in Heartland

Attribution: Company release.

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S&P lifts Heartland rating

Heartland NZ Ltd said yesterday Standard & Poor’s had raised its long-term issuer credit rating on its Heartland Bank Ltd subsidiary from BBB- to BBB and assigned a negative outlook.

Managing director Jeff Greenslade said the rating upgrade reflected S&P’s view that:

  • Heartland’s business position strengthened over the last 3 years upon the bank’s transition toward its core niche markets – such as vehicle asset finance, invoice financing, livestock financing & reverse mortgage loans – and away from non-core assets
  • contestability in these typically higher-risk specialist markets is lower than in traditional commoditised markets such as residential mortgage loans
  • Heartland has made progress in exiting its non-core property portfolio and reducing its residential mortgage lending portfolio.

The negative outlook reflected the negative economic risk trend assigned to the New Zealand banking system and S&P’s concerns around economic imbalances, which weren’t specific to Heartland.

Link: S&P report

Attribution: Company release.

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Seniors deal gives Sentinel founders & Quadrant stake in Heartland

Seniors Money International Ltd (ex-Sentinel Ltd) has acquired a 9.3% stake in NZX-listed banker Heartland NZ Ltd as part of the $87 million price for selling its New Zealand & Australian reverse mortgage businesses to the bank.

The 43 million shares, priced at 90c, represent $38.7 million of Heartland’s purchase price.

Heartland conditionally agreed in February to buy Seniors Money International’s New Zealand & Australian home equity release (reverse mortgage) mortgage businesses. Settlement was on 1 April.

NZX disclosures at the end of last week show Heartland acquired New Sentinel Ltd & Australian Seniors Finance Pty Ltd, and that the Heartland shares held by Seniors Money are subject to a 12-month lockup deed unless there’s a takeover bid for Heartland or some other corporate reorganisation.

Takapuna-based Richard Coon & Ian Hendry created Sentinel in 2003, 5 years after selling the Sovereign insurance group to Commonwealth Bank of Australia. Sentinel was a specialist offering financial products & services to those approaching or in retirement. Using the Seniors name, it expanded into Australia in 2004, Ireland in 2005, Spain & South Africa in 2006.

Seniors Money International, chaired by former prime minister Dame Jenny Shipley, is now 47.14% owned by 2 Quadrant Private Equity funds, of Sydney. Coon family interests hold 13.87% and Mr Hendry 4.39%.

Attribution: Company announcements.

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