Dorchester Property units halted pending asset sale

Trading in units of Dorchester Property Trust, the hotel investor spun out of the financier and insurer formerly known as Dorchester Pacific [NZX: DPC] five years ago, has been halted pending an asset sale ahead of a special meeting later this month where one of its investors is agitating to dump the trust's manager.

Dorchester said a trading halt on its units, which are listed on the Unlisted platform, has been put in place "pending the announcement of the sale of one of the properties." The units last traded on Tuesday at 46 cents, valuing the property investor at $12.4 million.

Dorchester Hotel Property Trust Management, a subsidiary of the NZX-listed Turners which was previously called Dorchester Pacific, says more than $6 million has been returned to investors from property sales of more than $7 million, with remaining assets including the Goldridge Resort in Queenstown, serviced apartments in the Parkview on Hagley in Christchurch, and the Quality Emerald Hotel in Gisborne.

The pending 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 Nov. 30, 2016, when new rules come into effect meaning the trust manager would 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 7,200 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 coming 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 fell 3.1 percent to 31 cents, and are unchanged since the start of the year.

(BusinessDesk)