Property trusts taken off market

Press, 24 June 1983, Page 4

Property trusts taken off market

PA Wellington Uncertainty created by a statement by the Prime Minister, Mr Muldoon, has caused two new property trust flotations to be taken off the market. Stockbrokers were highly critical of Mr Muldoon’s statement on Wednesday when he warned that taxation of group investment property was being looked at by the Government during the preparation of the Budget. Mr Colin Reynolds, managing director of Chase Corporation, Ltd, which manages the First National Property Trust, said the Prime Minister’s comments made him disillusioned with free enterprise in New Zealand. The Stock Exchange was advised yesterday that units offered in the June prospectus of the First National Property Trust were being withdrawn. “This decision has been

made as a direct result of the investing public’s uncertainty as to the future status of groups’ investment funds created by the Prime Minister’s statement of June 22,” said the trust’s underwriters in a statement.

Forsyth Barr and Company said in a statement that a proposed flotation of 10 million $1 units in the Growth Property Trust would not go ahead “in view of the announcement made by the Prime Minister on Wednesday.” Mr Muldoon made his comment in a statement issued "at the earliest date so that those involved will be aware that the Government is considering the matter.”

He said, “The advent of listed property funds which enjoy the taxation advantage of normal or traditional trusts raises the question of whether this advantage should continue to apply to what are in many

other respects listed public companies. The taxation of unit trusts is also a relevant consideration.”

The underwriters of the First National Property Trust said in their statement that they had sought clarification of the Government’s intentions and were told that no decision had been made and investigations were proceeding. “In the absence of a specific statement of Government intent, the underwriters are left with no alternative but to withdraw the prospectus. This decision has been made solely in the interest of protecting the investing public’s position.”

Investors received Mr Muldoon’s statement badly. New Zealand Property Trust shares, at present the only listed property trust shares, fell 12c to 88c during early trading at the Auckland Stock Exchange yesterday.