Kaihaukai is a traditional practice that Ngāi Tahu hapū (subtribes) once followed to share and trade the resources of Te Waipounamu (the South Island). The exchange of resources enabled the closely related hapū to benefit from the variety, richness, and abundance of resources found throughout the vast island.
Like the practice of kaihaukai, Ngāi Tahu Property has created an innovative investment scheme, Te Haumi Whakamana, that allows each of the 18 Ngāi Tahu papatipu rūnanga to invest and generate direct economic benefits from the tribe’s best commercial properties.
The scheme was created in response to requests by rūnanga for more opportunities to invest in the assets of the Ngāi Tahu Holdings group. Te Haumi Whakamana was launched in August 2015 and to date 14 of the 18 papatipu rūnanga have invested more than $5 million in Ngāi Tahu Property’s Crown portfolio.
All six buildings in the portfolio are modern commercial buildings in Christchurch, Dunedin and Queenstown on long-term leases to Crown or local authority tenants. The buildings are Te Hononga (Christchurch Civic Building), Te Whare Whakapapa (New Zealand Blood) and the Department of Conservation building in Christchurch, the Dunedin and Queenstown Police Stations and the Queenstown Court.
Ngāi Tahu Property board chair Barry Bragg says Te Haumi Whakamana is a very simple, flexible investment scheme that evolved out of consultation between Ngāi Tahu Property management staff and rūnanga.
“When we first launched it not every rūnanga had funds available to invest in it,” he says. “Many wanted time to consider what it was all about and how the product would perform.
Rūnanga who have invested in Te Haumi Whakamana retain the right to buy more or sell their investment every 12 months during a two-month trading window. Any money that Ngāi Tahu Property owe to rūnanga, if they choose to sell, is guaranteed by Ngāi Tahu Holdings.
On past performance, Ngāi Tahu Property’s Crown portfolio of commercial properties, which have an average lease term of 15 years, have generated an annual return of about nine per cent, nearly double that of a term deposit in the bank.
Te Haumi Whakamana also provides rūnanga investors the opportunity to benefit from any capital increase in property values over time, although that comes with a degree of risk that property values may also drop. Initially, Ngāi Tahu Property placed a cap of $500,000 on the total each rūnanga could invest, but in response to feedback, the company is in the process of lifting the investment cap to $1.5 million. In future, the maximum all 18 rūnanga can invest in Te Haumi Whakamana is about to increase from $9 million to $27 million.
“In two years time we may increase it again,” Bragg says.
The total value of Ngāi Tahu Property’s Crown and local body portfolio is currently about $137 million. If rūnanga take up the offer to invest the maximum of $27 million, they would own 20 per cent of the total Crown assets. The rest is already owned by the wider Ngāi Tahu whānui.
Moeraki Ltd, a company owned by Te Rūnanga o Moeraki, was one of the first investors to take up the Te Haumi Whakamana offer, investing the maximum of $500,000 in 2015. “We thought it was an unbelievably good investment,” says Rodger Finlay, an independent director on the board of Moeraki Ltd. “If we could have invested more we would have.”
“To have a portfolio of buildings that are young, modern and that were built by our iwi and tenanted by the Crown on long-term leases, that quality doesn’t exist in the stock market,” he said. “It’s as blue chip as you can get in the commercial property space.”
Finlay said his board was delighted with the returns their investment had generated in the last three years, which was even better because the Crown is regarded as a safe, long-term tenant. “These are some of the best Crown let properties in New Zealand, so as the property market rises, we’re getting our share of the capital growth.”
Finlay says Moeraki Ltd.’s board regards its investment in Te Haumi Whakamana as a long-term commitment and is confident the board would be interested in increasing its investment if it had the opportunity.
With the tribe’s policy of empowering rūnanga to invest in their future, Finlay believes it is “absolutely crucial that the top table of Ngāi Tahu makes sure there are good investment opportunities within the Ngāi Tahu group where that money can be invested.”
The Taumutu Charitable Trust invested in Te Haumi Whakamana because it liked the structured nature of the offer, according to its chair Chris Brown.
Brown said the security and quality of Crown tenancies were an important consideration, along with the terms of the leases and the ability to enter or exit the scheme through a trading window every year.
“We saw it was a very sound investment with good properties and the returns were twice what you would receive from term deposits in the bank,” he says. “Initially we invested $250,000 and then invested another $250,000 to take it up to the $500,000 cap.”
“Communication is everything with this type of investment,” he says. The trust had built up a strong relationship with Ngāi Tahu Property staff.
While he would encourage trust members to look at further opportunities to invest in other Ngāi Tahu ventures, he says it should be careful to balance its investments. “Certainly it is something we would look at, but (Ngāi Tahu Property) has more appeal because we know them now and we have a bit of a track record with them,” he says.
Bragg says Ngāi Tahu Property is very pleased with the success of the scheme in its first three years with 14 of the tribe’s 18 rūnanga taking up the offer to invest. “For us, it’s recognition that it’s a very good product,” he says. “These are our best property assets and we believed when we set this up they needed to be high-quality assets for the rūnanga to have confidence investing in them.”
Bragg said Te Haumi Whakamana was more about the opportunity to engage regularly with rūnanga to talk about opportunities to invest in property in their takiwā than it was about the small injection of their money into the business.
He says the model is so simple and easy to manage, Ngāi Tahu Property is now looking at applying it to other assets in its property portfolio.“We hope to launch another product sometime over the next couple of years,” he says. “We will engage with rūnanga and would like to hear from them what they would like to invest in.”