Dorchester Property sells Goldridge resort for $8m to director's company

Dorchester Property Trust, the hotel investor spun out of the financier and insurer formerly known as Dorchester Pacific five years ago, has agreed to sell the Goldridge Resort Queenstown to an entity associated with one of its directors for $8 million, just under its carrying value.

The buyer paid a non-refundable deposit of $400,000, with the remainder due on or before September 30, the trust's manager, Dorchester Hotel Property Trust Management, said in a statement. Forecast profits of at least $250,000 earned before the closing of the deal in September will be kept by the trust, and the proceeds will be distributed to unitholders as soon as practical.

"With some funds already held from earlier property sales, we expect this distribution will be the equivalent of near 33c a unit on issue in early October," director Paul Byrnes said. "The successful sale of the Goldridge brings the total of properties in the trust sold to date to just over $15 million and, together with profits, this has been achieved at overall carrying values."

Units in the trust, which are listed on the Unlisted platform, were halted last week pending the announcement of an asset sale, and last traded at 46c, valuing the property trust at $12.4 million.

The manager said the director took no part in assessing offers received or the recommendation of the sale to the trustee, which was satisfied the related party transaction was adequately dealt with.

Today's announcement leaves serviced apartments in the Parkview on Hagley in Christchurch, and the Quality Emerald Hotel in Gisborne as its remaining properties, of which the Emerald was seen as the most complex property in the portfolio.

The asset sale comes as trust investor LET Securities, owned by directors Deepak Gupta and John Southworth, seeks to replace the current manager of the trust at a special meeting on May 29, saying Dorchester Hotel Property Trust Management hasn't returned capital to investors quickly enough.

The Dorchester manager disputes the claim and has put forward its own resolution to be voted on at the meeting for it to accelerate the timeframe within which the remaining properties are sold to no later than July 31, 2016, with the trust to be wound up by November 30, 2016, when new rules come into effect that mean the trust manager will need to be licensed by the Financial Markets Authority, incurring additional costs.

The Dorchester Property Trust was set up in 2010 as part of a recapitalisation plan for Turners, then called Dorchester Pacific, and owned four hotels estimated to be worth $33 million at the time. Some 7200 Dorchester Pacific debenture holders owed $84 million swapped their debt for the units along with shares in the finance company, three-year interest-bearing notes, and options to buy more stock as part of a deal to keep the business afloat.

Dorchester came out of the recapitalisation with new funding when the Business Bakery came on board, and has since bought debt collection agency EC Credit, Levin-based lender Oxford Finance and more recently took over Turners Auctions, and rebranded itself as Turners.

Shares of Turners rose 1.6% to 31c, and have declined 4.7% this year.


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