Five Mile development sold

Allied Farmers has confirmed an unconditional the sale of the 23.3ha Five Mile property, near Queenstown, which it took over as part of the purchase of Hanover Finance late last year.

Confirming the previously announced sale today, Allied Farmers managing director Rob Alloway said the buyer did not wish to be identified at this point.

Mr Alloway also did not say how much was being paid for the bare land, which was the second stage of the Five Mile development, other than that it was "nearing the upper end of the valuation scale".

Last month when first announcing the sale, which at that time was conditional, Mr Alloway said the price was above the value of the property as recorded in the half year accounts of $23.2 million. Today he said it was "a reasonable amount" more.

Mr Alloway said a deal of the size of the Five Mile sale could have a substantial impact on the balance sheet of Allied Farmers, which also recently notified the market it had a $16.5m loan facility outstanding to Westpac.

The Five Mile sale was just the first of what he expected would be many larger property deals in the future.

The property market looked to have "a little more" confidence, although for now the value of cash could not be overestimated, and Allied Farmers was looking at restoring liquidity to its balance sheet, Mr Alloway said.

"We've always said that, given time, we could realise value from the former Hanover assets for our shareholders and indeed this has proved to be the case with Five Mile."

Settlement was scheduled for mid-November, and the company buying the property had previously undertaken development in the region.

"They came late to this negotiation with a pretty compelling offer and we are very pleased to be able to have concluded such a significant deal," Mr Alloway said.

"Given the current state of the property market, especially in large scale developments like this, we are very pleased to achieve a price that is nearing the upper end of the valuation scale."

Allied Farmers owned a range of property in Queenstown and he expected the area would recover more quickly than many other parts of the country.

The first stage of Five Mile -- about 7ha, much of which was excavated for an underground carpark -- was sold last November by Hanover Finance to Queenstown Gateway Trust, led by Auckland developer Anthony Gapes.

In December Allied Farmers issued 1.9 billion shares, at a value of 20.7c each, to former investors in Hanover Group, giving the investors 98.07 percent of the company.