Iwi empire hit by slower investment gains

Tribes’ assets now total about $9.2b, but a global slowdown and quiet property market hit wealthiest iwi, reports

Aotearoa’s eight wealthiest iwi boosted their assets by about $700 million over the past two years, but the returns they earned on those assets lately have been less spectacular. The TDB Advisory Iwi Investment Report 2019 shows the richest iwi have assets of $5.5b, up on 2017’s $4.8b. In total, about 75 iwi now have assets of about $9.2b, up on the previous year’s $9b.

But percentage growth has been in the single figures lately, partly because of the global slowdown and also the quieter New Zealand property market.

None of the eight wealthiest iwi achieved TDB’s benchmark of 10 per cent, the report says. The best performer was Raukawa in the southern Waikato, which made 7.5 per cent, followed by Waikato-Tainui with 6.8 per cent and Tu¯hoe with 5.8 per cent. In contrast, NZX50 shares generated strong returns of 19.6 per cent on average last year.

A conservative investment approach, undiversified portfolios, low gearing and heavy exposure to a geographically concentrated asset base are all cited in the report, which notes that the iwi that settled early have better returns. Three iwi have no debt: Nga¯puhi, Raukawa and Tuhoe.

“Overall, 2019 was not a strong year for the eight iwi covered in this report, with none of the iwi achieving our benchmark 10 per cent return for the year. Four of the iwi (Nga¯ti Wha¯tua O¯ra¯kei, Raukawa, Tu¯hoe and Waikato-Tainui) reported returns of 5 per cent or higher, while two iwi, Nga¯i Tahu and Nga¯ti Awa, only just achieved a positive return for the year,” TDB Advisory says.

Measured from 2013 to 2019, Auckland’s Nga¯ti Wha¯tua O¯ra¯kei performed best, returning 13 per cent a year, followed by Nga¯i Tahu with 10 per cent and Raukawa on 8 per cent.

The iwi were strongly exposed to primary industries – fishing, forestry and farming – and 2019 was notable for increased volatility in world markets, due to global trade tensions, TDB notes. Interest rates also fell to record lows “and 2019 also saw a slowdown of the New Zealand property market”.

The iwi have relatively low debt levels. The most highly geared is Nga¯ti Wha¯tua, with an 18 per cent debt-tocapital ratio, followed by Nga¯i Tahu at 13 per cent, Nga¯ti Awa at 12 per cent and Waikato-Tainui at 10 per cent.

Nga¯i Tahu

Nga¯i Tahu, the South Island iwi, increased its borrowings by $48.5m in 2019 so its debt-to-capital ratio rose to 13 per cent, higher than many other iwi, which traditionally have little debt. But it made zero return on assets in 2019, reflecting rising operating expenditure, losses on noncurrent assets and a big loss on the revaluation of property, plant and equipment, TDB says.

Nga¯puhi

Northland’s Nga¯puhi is yet to settle its Treaty claim, with negotiations still under way. It has 67 per cent of its assets in cash and term deposits, fisheries settlement quota and Moana NZ income shares, TDB notes. Historically, the iwi has taken a passive investment strategy and has taken steps in recent years to cut risk.

Nga¯ti Awa

The Whaakari/White Island tragedy on December 9 came after the investment reporting period for the eastern Bay of Plenty iwi, TDB notes, saying it holds 22 per cent of its assets in financial investments, including listed shares, unlisted shares in Direct Capital IV, Pencarrow Bridge Fund and investment in Iwi Collective Orchards.

Nga¯ti Porou

The East Cape iwi has nearly all its financial assets in shares in listed and unlisted companies. Management is outsourced to fund managers. About 60 per cent is in growth assets and 40 per cent in income assets. The largest proportions are managed by AMP Capital, BlackRock Investment Management and Devon Funds Management.

Nga¯ti Wha¯tua Ora¯kei ¯

This iwi of Ta¯maki Makaurau owns Quay Park in the Auckland CBD, with 29 ground leases including the Spark Arena, Countdown supermarket, apartment blocks and offices, as well as 28ha of North Shore land it bought from the Crown to settle. It continues to focus on property development, with construction in progress at the Hillary site at Belmont on the North Shore. The joint venture with Fletcher at Moire Rd in Massey is also under construction and it plans to complete a nursery development in Pourewa in eastern Auckland.

Raukawa

The south Waikato iwi holds about a third of its assets in managed funds with six providers, but that is reducing in favour of direct asset ownership. With five other central North Island iwi entities, it holds a direct investment in Ka¯kano Investments, giving it a small stake in Kaingaroa Timberlands. Its interest in Ka¯kano is worth $36m and provided a dividend of $2.3m in 2019 and a one-off special dividend of $4m. It also owns 45 per cent of Ranginui Station, a 3300-cow dairy and pastoral operation.

Tu¯hoe

The Te Urewera iwi’s assets are 45 per cent in managed funds in global shares, term deposits, New Zealand bonds, global bonds and Australian shares. It has $174m invested in these funds with three managers, earning a realised income of $5.8m in 2019. It withdrew $18m in the year. Forestry accounts for 29 per cent of assets.

Waikato-Tainui

This Hamilton-headquartered iwi has invested primarily in property in the past 16 years but has lately made steps to diversify, selling half of its largest property investment, The Base shopping centre, in 2016. That money went into share purchases and to reduce debt. It owns farms and forests and has investments in Waikato Milking Systems and Go Bus. It wholly owns Novotel and IBIS hotels in Hamilton and half the Novotel Auckland Airport Hotel with Auckland Airport.

The iwi is also building a new 300-bedroom, five-star Pullman by the Auckland existing airport Novotel in Auckland.