Extent of capital losses revealed

The true extent of the capital losses in some of the older Waltus syndicates has been made clear in documents accompanying a proposal to merge 29 of the syndicates into one fund.

Tuesday, August 1st 2000, 12:00AM

The true extent of the capital losses in some of the older Waltus syndicates has been made clear in documents accompanying a proposal to merge 29 of the syndicates into one fund.

The documents shows that 19 of the funds have experienced capital losses, and in some cases the value of the minimum initial $5,000 investment has been nearly halved.

To ensure fairness in the merger proposal Waltus has had to calculate a value for each fund and allocate an appropriate number of shares and mandatory convertible notes to investors.

Investors in the better performing syndicates get more shares than those in the problem syndicates.

Hardest hit is Avenue Properties which owns a two level building in Rotorua and the 12 level FMG House in Palmerston North. According to the conversion table the initial investment of $5000 is now worth $2,402. The best performing syndicate is Regalia Properties which owns the Woolworths Supermarket building in Taupo. The conversion value for this fund is $9,851.

Meanwhile, property investor Sir Robert Jones has added his tuppence worth's to the proposal, despite apparently not having seen the details.

"I congratulate your on your syndicate amalgamation intentions which I have read about in the newspapers," he says in a letter to Waltus Investment boss John Hodge.

He goes on to say that the merger is "a very sensible proposal from the point of view of your investors."

His support comes from the belief that the merger will smooth out income flows over time.

Sir Robert says that while some syndicates are doing well at present while others are in trouble, that situation can easily be turned around when leases expire.

His view is that over time the syndicates that are good at the moment will hit trouble.

"They may be trouble-free now but ultimately their time will come while in the meantime the currently troubled buildings will have been re-leased," he says.

Sir Robert reckons the buildings are generally OK too: "I have studied your annual reports and more particularly the photographs of your various properties and it is very obvious that in the main they are excellent buildings," he writes.

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