No govt guarantee spells end for trust
The recession has caught up with Auckland Mortgage Trust, which has begun winding down its business after failing to secure a government deposit guarantee as access to credit dried up.
Tuesday, 23 June 2009
by Paul McBeth
The fund's trustee, Trustee Executors, agreed to wind down the fund last month. General manager Bruce Rasmussen told investors the aim was to avoid forced property sales and to preserve capital.
"It's tough - most of the property market's in turmoil," he said. "Tighter liquidity controls and less access to credit" made it extremely difficult for the fund to continue, he said.
The fund decided made its decision after "collective investments didn't liquefy," Rasmussen said. The trust will wind down over two or three years, and investors should get back most, if not all, or the $47.5 million fund which was frozen for 90 days.
The decision follows Canterbury Mortgage Trust's move to wind up its $251 million fund in February. Canterbury Mortgage Trust is expected to take two to three years to fully repay investors.
Around 49% of Auckland Mortgage Trust's lending was on commercial property, and some 20% on residential housing.
The Auckland fund is one of six mortgage trusts, including Canterbury, that were founded by solicitor-nominated companies and have Fund Managers Holdings as a common shareholder.
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