Our New Zealand and Australian cousins have not had a happy time of it in the UK property market, buying as they did near the peak.
Pennant Holdings’ experience has been a particularly sad one, as a letter from their new chairman, Brian Johnson, to the shareholders makes clear.
Pennant — an Australian investment company specialising in property and construction, with some interest in natural resources — paid 197p a share for a 49% stake in Country & New Town Properties last October. The price is now 131p per share.
A considerable part of C&NT’s troubles stem from its half share in Bay Financial Corporation, a Boston property company bought by C&NT in 1986. The high borrowings used to fund this purchase put a hole in C&NT’s profits in 1987. Mr Johnson says Bay “appears to have a lack of direction, poorly defined corporate objectives, is undercapitalised and holds too many non-income producing properties”. C&NT will be addressing its relationship with Bay, he adds.
However, unlike New Zealanders Chase Corporation and Aurora Holdings, who decided to sell out of the UK, Pennant are hanging in.
The rescue plan is suitably drastic: the company is selling 41 investment properties, and keeping 11, worth some £75m. A further seven have been earmarked for redevelopment, and other miscellaneous investments — including a wine and spirits retailer in the Turks and Caicos Islands — are being sold off.
In future, C&NT intends to steer away from investment and into development.
And, to get away from unhappy memories, the Australians have decided to reflag the company — its new name will be Pennat Properties.
