Tēnā koe e te iwi,
These are challenging times. I hope that you and your whānau are safe and well. I’m writing to provide you with an update on the Rangitāne commercial entities, amidst COVID-19.
COVID-19 pandemic is an ongoing global outbreak and like all businesses around the world has been providing significant turbulence for our commercial operation. Our directors and management team have been focussed on understanding the short term and long-term impacts of COVID-19 on Rangitāne assets and identifying appropriate mitigations to put in place to minimise any potential losses. As a result of this analysis, we have prioritised our immediate efforts in working with our valued property tenants to understand how COVID-19 is impacting their businesses, and to understand what support Rangitāne can offer to get them through this period of lockdown. It won’t come as any surprise that in most cases this period of lockdown is hurting them.
In the long term it is our expectation that Rangitāne can look to the future with some confidence given the mix of our existing assets, control over our costs and the fact that we are currently debt free. Compared to many iwi and private businesses around Aotearoa, our current liquidity should mean that we are strongly positioned to take advantage of investment opportunities as they arise as a result of this disruption.
We have provided the detailed asset performance breakdown below so that iwi members can understand how each of our asset portfolios are impacted.
What’s good?
- Our Crown leaseback properties are safe and strong assets with robust lease agreements, with very little risk and a steady income stream from the New Zealand Government.
- Notwithstanding the support we’re providing to tenants, Rangitāne House is at record high occupancy levels and generating good cash returns. Likewise, our Horton Street properties continue to perform well.
- Our investment in Flaxmill Vineyard is generating returns consistent with expectations from a good grape harvest yield and demonstrates the benefits of a diversified investment portfolio.
- Our balance sheet is strong and robust. We continue to hold in excess of $4m in cash, which puts us in a strong position to take up investment opportunities that may arise as the economy recovers. We also hold no debt providing us with increased investment flexibility.
What’s not so good?
- In the short term we expect to take a hit on our overall revenue income with a reduction in returns from cash, managed funds, non-Crown rental tenancies, and our aquaculture assets.
What’s still unknown?
- Share markets are likely to continue to experience volatility over the next 12 months. In the short term, this will likely impact returns that we can expect from our direct investments in Meridian, Mercury Energy and Foley Family Wines.
- Our investment in Milford Asset Management has exposure to equities, bonds and listed property assets and has been performing better than other managed funds in the New Zealand market. But in the short term we have been experiencing a loss in value due to the volatility of the global equity markets. Pleasingly, we’ve seen very good active management by Milford to protect the value of the fund in response to recent turbulence in global markets.
How are we responding?
- Relationships with our key stakeholders is the most important response we can initiate at this time. We’re working more closely with key stakeholders, particularly our tenants and customers.
- We’re continuing to explore investment opportunities. It is inevitable that opportunities for investment will arise as a result of COVID-19 and its impact on businesses and individuals. We will continue to seek out good investment opportunities that meet our investment criteria and add value to Rangitāne.
- We’re closely monitoring the market and keeping the lines of communication open with our fund manager, Milford.
- We’re actively managing our cash assets in a way that maximises returns from current market rates.
Lastly, I’d like to take this opportunity to extend my best wishes to you and your whānau as we continue to Unite Against COVID-19. Please contact the office on 03 578 6180 if you require support. He waka eke noa – We’re all in this together.
Ngā mihi, nā
Leigh MacDonald
RHL/RIL Chairperson