22 Sep 2023
At PMG, our commitment is to be a trusted fund manager of choice for our investors. We seek to achieve this through sound governance, being transparent about our investment thesis, and sharing our market knowledge and strategies.
In line with this, we want to address a recent article published by the National Business Review (NBR) on Monday, 18 September, which contains some inaccuracies pertaining to a related party property transaction between a PMG-managed wholesale partnership and one of PMG’s retail funds, PMG Generation Fund (the Fund).
The journalist specifically references the Fund’s acquisition of an industrial property at 220 Cumnor Terrace, Woolston, Christchurch (Cumnor Terrace) in November 2022 and the subsequent end-of-financial year revaluation of the property in March 2023.
Considered within the context of the wider economic environment, the article’s observation that the Cumnor property dropped $2M in value over a five-and-a-half-month period (8% drop) aligns with market conditions at very specific points in time. It is considered a short-term aberration in the context of a long-term investment horizon. We also note investors in the Fund have not crystallised loss on this property. The property continues to be owned by the Fund, and while the valuation has reduced slightly due to market forces (i.e., higher interest rates), cash returns to investors have not been directly impacted by any short-term movement in value.
The property is a high-quality industrial property leased to a national tenant and is intended as a long-term investment for the Fund. We remain confident that investors will continue to experience growth in value across the portfolio, in time.
PMG ownership
The article also refers to Oriens Capital as a controlling shareholder of PMG Group, while in fact, we welcomed Oriens Capital as a new 35% (non-controlling) equity partner in July 2022.
Independent decision-making process
To support our active management approach, our investment decisions undergo a thorough due diligence process with clear disclosure regarding any related party transactions. This transaction was overseen, at arm’s length, by separate governance committees, overseen by an independent Supervisor (Covenant Trustees Services Limited) and supported by an independent registered valuer. This process ensures that every decision is made in the best interest of our investors.
The pre-sale valuation of Cumnor Terrace, conducted in October 2022 which determined the purchase price, as well as the valuation completed on 31 March 2023, were done by independent valuers.
Long-term view
PMG and our funds have always maintained a long-term investment horizon. We typically do not try and pick the top or bottom of an economic cycle. We have successfully operated through multiple economic cycles over the past 30 years, and we remain committed to delivering sustainable cash returns and growth in value for our investors.
So, while decreased valuations reflect a temporary softening of values, this is not a reliable indication of potential long-term performance.
We have a dedicated team available to address any questions or concerns at +64 7 578 3494 or at info@pmgfunds.co.nz.
Dr Wayne Beilby, Chairman of the Board
Scott McKenzie, Chief Executive Officer & Director
22 September 2023
