GREG NINNESS
Overseas investors will get another chance to buy New Zealand farms next month when Transpower sells eight in the Waikato at prices expected to be well below what the state-owned company paid for them.
To sweeten the deal, Transpower is also offering to provide vendor finance on some properties.
Transpower, which operates the country’s national electricity grid, purchased the farms in a $203 million buy-up of land on which it wanted to erect transmission pylons to strengthen Auckland’s power supply grid.
Many farmers objected to having the massive pylons on their land because of concerns about the possible effect the lines could have on health and the value of their properties.
Some farmers received cash compensation from Transpower to allow the pylons to be built, while others sold their properties to the firm at what were believed to have been generous prices.
Once it acquired the properties, Transpower put easements on the land titles, clearing the way to erect the pylons.
Now it has started selling some of the farms, putting eight Waikato properties up for tender.
The sale is being handled by Bayleys Real Estate Papakura, with tenders closing on March 16, and although the farms are all listed on the Bayleys website – without revealing the vendor’s identity – a Bayleys spokesman would not discuss sale details.
The properties cover a total land area of 581ha and range in size from a 184ha dairy farm to a 9.9ha lifestyle block.
As well as the land and associated facilities such as farmhouses and milking sheds, the sale also includes 157,000 Fonterra shares.
Transpower, and its government shareholder, is expected to book a big loss on the sales.
Valuation records show the eight farms in the tender were purchased between June 2006 and December 2009, when farm prices were booming. Real Estate Institute of NZ figures show median farm prices in the Waikato declined by 37% between December 2007 and December last year.
Transpower’s balance sheet has already taken a hit as a result of the fall in value of the properties. Its accounts for the year to June 30, 2010, show it paid $203.2m for land related to the upgrade, of which $25.9m was earmarked for resale.
It also held $4.1m worth of Fonterra shares. Placing easements on the properties’ titles and related activities cost $33.5m and it wrote down the land by $29.2m (14.3%) to reflect falling farm values.
However, sources close to the rural property market said Transpower may have to write down the properties by a similar amount again this year. It is offering vendor finance “to approved purchasers” on five of the properties. The terms are not known.
While some of the properties could be of interest to overseas investors, several are likely to appeal to a wide range of buyers. And, the Sunday Star-Times understands some of the previous owners have offered to buy farms back at significant discounts to the price Transpower had paid.
– Sunday Star Times
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