Investors in Fund Managers Otago Ltd's distressed $41 million NZMIT-PIE fund - which is being wound up by the Dunedin-based company - have had their investments devalued further, to 72c per unit.
The fund's unaudited value last November was $41.4 million. For the year to March 2012, the fund booked an after-tax loss of $10.1 million, mainly from losses on overdue loan repayments.
At the end of the last financial year, all of the fund's 43 mortgages were ''on demand'', some as far out as five years, with almost 70% of borrowers in arrears Most was owed by the six largest debtors.
Following three separate suspension of capital redemptions last year from the fund, an April 1 repayment due to investors from the NZMIT-PIE fund has been ''delayed'' until July 1.
The same fund expects further writedowns of its mortgage portfolio in its annual report, for the full-year to March 2013, and lost money selling a commercial building in Auckland.
An investor supplied the Otago Daily Times with a recent management notice to unit holders concerned at the delayed payment and lack of access to annual accounts of the NZMIT-PIE fund.
Fund Manager Otago's managing director, Peter Hutchison, said in the investor's notice it would take ''at least three years'', to complete winding up the fund, but highlighted that was subject to the borrower refinancing loans at maturity elsewhere, or the need to liquidate the security held over their loan.
''The PIE Fund continues to trade profitably, before provisioning for bad and doubtful debts. This is important, as this contributes to the recovery of the unit holders' capital,'' Mr Hutchison said.
Mr Hutchison was contacted for comment and when asked about the payment delayed to July 1, said
he was ''as confident as I can be, based on the information I have today'', of the payment being met.
Accounts online earlier showed the NZMIT-PIE fund booked a $3.66 million surplus for the year to March 2010, which fell to just $401,000 for the year to March 2011, before booking the $10.61 million loss for the year to March 2012.
Mr Hutchison yesterday said the NZMIT-PIE fund's accounts were not online as the fund was being wound up, but he made the accounts for 2011 and 2012 available to the ODT.
The NZMIT-PIE units were issued at $1, but by March 2011 were 94c, then 74.5c in the dollar last November, but were now down to 72c, Mr Hutchison said in the unit holder notice: ''In winding up the PIE Fund we are working diligently to endeavour to achieve a payment of capital to unit holders in excess of the current [72c] unit price''.
He expected last week that while writing down the value of assets, during the process of winding up the trust the asset values would be rewritten up, and investors' unit price would rise.
Mr Hutchison understood that all mortgage trust wind-ups in New Zealand had delivered more than 90c in the dollar back to investors.
Capital distributions are made to unit holders when cash held exceeds 10% of the NZMIT PIE fund.
Mr Hutchison said the distribution due to be paid on April 1 had been ''delayed'' until July 1, because of ''slower-than-expected settlements of some mortgages'', which were to have happened by March 31.
He said the interim financial results to September involved some writedowns, while further writedowns of the mortgage portfolio could appear in the annual report, to March 2013.
''It will be a process of working through each of the loan files and recovering the maximum amount from each mortgage as the PIE Fund is wound up,'' Mr Hutchison said.
At the beginning of the last financial quarter, the PIE Fund had eight impaired loans, totalling $18.7 million, and at April 1 there were six impaired loans totalling $12.2 million, Mr Hutchison said.
''The largest of these involved the sale of a partially renovated commercial building in Auckland. This resulted in a [unspecified] loss to the PIE Fund,'' he said in the unit holder notice.
Yesterday, he said the $6.5 million difference included some asset sales.
Another sale had resulted in a ''modest recovery'', but unspecified, over the next two years, while one of four securities over another loan was settled, with the expectation that the balance on the loan was covered by the remaining security, he said.
Settlement of another impaired loan was scheduled for April 3, Mr Hutchison said.
Another impaired loan was being run as a business in receivership and was ''showing signs of a positive recovery', which would be held ''well into 2014''.
Otago Fund Managers has two cases coming before the courts this year, with both having ''the possibility of significant recoveries'' for the PIE Fund, Mr Hutchison said.
Three funds operated by Fund Managers Otago Ltd
NZMIT-PIE fund: Value at November $41.4 million. Mortgages valued at $41.1 million. Loans to sectors; commercial 70.4%, residential 24.4%, farming 5.2%. Resolution from October last year to wind up fund.
CMIT-PIE: Unaudited value at March, $15.6 million. (November $16.5 million) Closed to new investments. Holds 36 mortgages, valued at $10.9 million. Loans to sectors; commercial 68%, residential 32%, farming, none.
NZMIT-No2 FUND: Unaudited value at March, $11.9 million. (November, $12.3 million) Open to new investments. Holds 57 mortgages, valued at $7.7 million. Loans to sectors; commercial 30%, residential 55%, farming 15%.
