Foreign investment in Aotearoa/New Zealand
Overseas Investment Office – September 2015 Decisions
Sale Of Lochinver Station To Chinese Declined
The first decision for September is a rarity, a decline! Pure 100 Farm Limited, Zhaobai Jiang, China, People’s Republic of (99%) and Lei Jiang, China, People’s Republic of (1%), was declined approval to acquire a freehold interest in approximately 13,843 hectares of land at Lochinver Station, 3232 State Highway 5, Taupo, otherwise known a Lochinver Station. The vendor was WA Stevenson Holdings Limited and Stevenson Agriculture Limited,WA Stevenson Memorial Trust, New Zealand (100%).
The OIO states: “Lochinver Station is currently operated as a sheep and beef farm. Parts of the farm are used as pre-export isolation units for stock being exported overseas, for grazing, and for dairy support. The Applicant intended to operate Lochinver Station as a sheep and beef station with some dairy conversion. Consent was declined as the relevant Ministers were not satisfied that section 16(1)(e)(iii) was met. Ministers were not satisfied that the benefit to New Zealand (or any part of it or group of New Zealanders) of the overseas investment will be, or is likely to be, substantial and identifiable”.
As reported in the Otago Daily Times (17/9/15) under the headline “Ministers Halt $88m Lochinver Station sale: Government Ministers Paula Bennett and Louise Upston have gone against a recommendation by the Overseas Investment Office and turned down a $88 million bid by Chinese billionaire Jiang Zhaobai’s flagship firm to buy the Lochinver Station. The Overseas Investment Office had recommended the Chinese-owned Pure 100 Farm Ltd be accepted in what Associate Finance Minister Paula Bennett described as a ‘finely balanced’ decision. However, Ministers did not believe the benefits to New Zealand were great enough and used their discretion to reject it.
“While the OIO said the question of whether the benefits or the potential investment to New Zealand are or could be substantial and identifiable was finely balanced, it recommended approving the application. ”We agreed parts of the proposed investment could benefit New Zealand but our judgment on the overall balance of evidence the benefits are not likely to be substantial and identifiable’. It is the first time Ministers have rejected a bid to buy a significant landholding in New Zealand since the rules were tightened in 2012 during the Crafar Farms decision to require the OIO to assess whether a foreign buyer could offer more than a New Zealand buyer would.
“Owners of the land, the private Stevenson Group has issued a statement saying it was disappointed at the process and the outcome. A statement issued by Chief Executive Mark Franklin said: ‘At this stage I am not sure we agree with the assumptions used or the way the criteria has been applied – certainly the assumptions that have been used do not reflect our reality – we carried out extensive marketing of the farm and the hypothetical New Zealand purchaser did not come out of that process. We are concerned that this process has taken 14 months with the end result that we have been deprived of our property rights to sell to the highest value bidder for some vague national benefit which has not been defined. We are unclear as to why this property is different to the many others that have been approved through the OIO process, given the obvious benefits both to the farm and to Stevenson Group’.
“Franklin said that beyond this transaction, today’s decision would ‘have significant economic ramifications for the New Zealand economy, particularly in the areas of international relations, uncertainty of foreign investment and rural land prices’. Paula Bennett denied the decision to override the Overseas Investment Office was because of public concerns about foreign investment. ‘I have no qualms in sitting here and saying it was a decision in the best interest of New Zealand and not a political decision in response to public opinion’.
Bugger All Jobs
“She said the Government welcomed foreign investment and did not believe the decline of one application would be a significant deterrent. She denied it was because of concern about Chinese buyers. ‘I’m not going out there and deciding who buys land on the basis of their surname’. She said one of the reasons for declining was the low number of extra jobs it would provide. Of the 18 factors Ministers had to weigh up, they considered seven to be of high importance and the proposed sale rated low across all seven. ‘An example of that was jobs. There were a couple of contracting jobs and possibly one part-time’. Other examples included the extent of planned conversion of 600 hectares to dairy and conversion of land with wildling pines on it. She said the court’s decision in the Crafar Farms case meant Ministers had to weigh up whether a foreign buyer would offer more than a hypothetical New Zealand.
“Crafar Farms was sold to Shanghai Pengxin but Bennett said there was a big difference with Lochinver. The Crafar farms were run down while Lochinver was well run – and that meant it was easier for the buyers of the Crafar farms to show it would have a substantial benefit to New Zealand. Pure 100 Farm is a subsidiary of the China-based Shanghai Pengxin and applied last year (2014) to buy the 13,800 hectare farm near Taupo for $88 million. NZ First Deputy Leader Ron Mark said the Ministers’ decision to block the sale was ‘baffling’ given the Government had signed off on significant land sales in the past. He questioned why Ministers had seen benefits in allowing the sale of the Crafar Farms to the same company – Shanghai Pengxin – in 2012 and the 13 Synlait farms in Canterbury.
“The National government has merrily ticked off over a million hectares of land to foreigner buyers, and none of those sales add substantial benefit for New Zealand’. The Stevenson Group may have been disappointed, however that was short lived as they soon found a New Zealand buyer willing to buy this massive station. As reported by Duncan Bridgeman in the National Business Review (5/11/15): “Lochinver Station near Taupo has been bought by a privately owned New Zealand farming group after the Government vetoed its sale to a Chinese company. Rimanui Farms Ltd, which is understood to be associated with the late Peter Spencer’s family, has bought the 13,843ha sheep and beef station, according to Bayleys Real Estate, which brokered the deal. Rimanui will take ownership in March next year (2016) from Stevenson Group. No sale price has been disclosed.
“The deal comes after the Government last month announced it had turned down an Overseas Investment Office application from Chinese company Shanghai Pengxin’s subsidiary Pure 100 to buy the property. Pure 100 had entered into an agreement to purchase the property for $88 million before it was denied. Stevenson Group Chief Executive Mark Franklin says proceeds from the sale will be reinvested in the company’s core businesses of mining, quarrying, concrete and associated investments around these industries, including the development of a major new industrial subdivision around its large quarrying operations in Drury, South Auckland. Mr Franklin estimates the staged development of over 300ha at Drury will take 15 years and is expected to create more than 8,000 jobs.
“Lochinver Station was bought in 1958 by the late Sir William Stevenson, founder of Stevenson Group, after prompting from his son, the late Ross Stevenson, who had observed the property during his hunting expeditions in the area. The property, which has a capital valuation for rating purposes of $70.6 million, is a sheep and beef breeding and finishing and dairy support farm located on the Rangitaiki Plains, 32km from Taupo and 92km from Napier, with a carrying capacity in excess of 100,000 stock units.
“The station also has three airstrips, 22 houses which accommodate the families of 20 permanent staff, a staff recreation centre, 91km of pumice roads, six cattle yards, three woolsheds plus multiple other farm buildings, a lake, and a recreational hunting block. Pete Stratton, of Bayleys’ Taihape office, says Rimanui Farms, formed in the 1980s, is a very experienced and successful pastoral farming group, with other large scale farming operations including Erewhon Station, also located in the central North Island. ‘The company’s focus is solely on sheep, beef, and forestry, conservatively farmed for long-term productivity and growth. It has significant long-term experience in managing properties of Lochinver’s size and scale’, he says”. Good on ya Rimanui for stepping up and ensuring this station stays in New Zealand hands, at least for now.
GE Sells Custom Fleet To Canadians
In another significant transaction Element Financial Corporation, Canada Public (93%), United States Public (4.3%), various public, various (1.4%) and United Kingdom Public (1.3%), received approval for an overseas investment in significant business assets, being the Consent Holders’ acquisition of rights or interests in 100% of the issued share capital of Custom Fleet NZ, the consideration for which exceeds $100m. The vendor was GE Finance and Insurance, General Electric Capital Corporation, United States of America (100%): consideration was $590,000,000. The OIO states: ”The transaction is intended to enable the Applicant to expand and enhance the vehicle fleet leasing and fleet management solutions and related service programmes that it currently offers to its North American customers”. This sale appears to part of GE’s ongoing global sales programme of its finance division assets.
Hong Kong National Buys O’Sullivans’ Horse Training Facility
Flying Class (NZ) Limited, Yu Lau, Hong Kong (SAR) (100%), received approval for the acquisition of a freehold interest in approximately 5.8 hectares of land at 7595 State Highway 27, Matamata. The vendor was O’Sullivan (David John), O’Sullivan (Lance Anthony) and Edmonds Marshall Trustee Services Limited as trustees of the O’Sullivan Family Trust,O’Sullivan Family Trust, New Zealand (100%); consideration was $1,850,000. The OIO states: “The applicant is acquiring a horse training facility. The Applicant will expand stabling facilities on the Land, likely resulting in the creation of new jobs and increased horse sales overseas”.
Americans Add Big Ben Station To Their Large Mid Canterbury Holdings
Coleridge Downs Limited,Calvin Pardee Erdman, United States of America (47.5%), Christian Pardee Erdman, United States of America (26.25%) and Sumner Pardee Erdman, United States of America (26.25%), received approval for the acquisition of a freehold interest in approximately 3,418 hectares of land at 773 Coleridge Rd, Rakaia Gorge, Canterbury. The vendor was Big Ben Limited,Philip Wayne Wareing, New Zealand (27%), Wendy Fay Wareing, New Zealand (25%), Philip Wayne Wareing and Whitehouse One Trustees Limited, New Zealand (24%) and Philip Wayne Wareing, Wendy Fay Wareing and Whitehouse One Trustees Limited, New Zealand (24%); consideration was $12,500,000.
The OIO states: “The Applicant has been granted consent to acquire a 3,418 hectare sheep and beef farm in Rakaia Gorge, Canterbury, known as ‘Big Ben Station’. The Applicant intends to integrate Big Ben Station with its existing farms in the area – Coleridge Downs, Dry Acheron and Annavale. The proposed integration, together with the Applicant’s substantial five year capital investment plan, is expected to significantly improve the performance of all four properties”.
Martin van Beynen reported on this sale at Stuff.co.nz (2/11/1)5 under the heading “Hawaiian Ranchers Buy Canterbury’s Big Ben: A United States ranching family has bought a Canterbury station for $12.5 million. Calvin Erdman, 84, and his sons, Sumner and Christian, acquired the 3,418-hectare beef and sheep farm known as Big Ben station, 40 kilometres from Methven, after approval from the Overseas Investment Commission in September. The low profile Erdman family already owns the Coleridge Downs, Dry Acheron and Annavale stations and plans to integrate Big Ben into its existing farm operation, run by manager Tony Plunkett. Under an investment plan for all the land it now owns around Lake Coleridge, the family proposes protecting about 1,500ha with a QEII open space covenant or conservation covenant and extending the existing walkway on Dry Acheron to create a loop track that would cross Big Ben station.
“Calvin Erdman, whose mother was a rancher in Wyoming, bought a 16,000ha ranch on Maui, Hawaii in 1963. Media star Oprah Winfrey recently bought a 400ha ranch next door. Some of Erdman’s original ranch was sold off to a resort and a subdivision and 4,451ha has been placed under the control of a trust to protect its status as open farm land. Native forest on the land has also been fenced off and enhanced. The Erdmans have diversified farming on the remaining 7,284ha by setting up a vineyard and augmenting the cattle herd with sheep, goats and elk. The first wind turbine on the land started construction two years ago and an eight turbine wind facility is planned. The sellers of Big Ben Station are Philip Wareing and related interests. Wareing has property, transport and farming businesses in Mid Canterbury”. See our commentaries for June 1994, April 1998, October 2002, July 2005, April 2007 and August 2012 commentaries for details of Erdman’s previous purchases here.
Canadian Government Buys Oxford Dairy Farm
Emerald Dairy Farm Limited, Canadian Government (100%), received approval for the acquisition of a freehold interest in approximately 280 hectares of land at 357 & 243 Woodstock Road and 3408 South Eyre Road, Oxford. The vendor was Beauhill Trustee Limited as trustee of the Beauhill Trust, New Zealand (100%): consideration was “withheld under section 9(2)(b)(ii) of the Official Information Act”. The OIO states: “The Applicant is ultimately, indirectly, owned by the Public Sector Pension Investment Board. The land is currently being used as a dairy farm. The Applicant intends to acquire the Land for the purpose of dairy farming and milk production and will engage FarmRight to manage the Land for that purpose. The Applicant intends to develop the farming operation on the land by:
- increasing the stocking rate through an increase in herd size;
- increasing production on the land; and
- investing additional capital into the land for development purposes”.
Jonathon Underhill at Scoop.co.nz (30/10/15) reports briefly on this sale and the Canadian pension Funds previous purchases here: “Canada’s Public Sector Pension Investment Board, whose New Zealand assets including 30% of the nation’s biggest plantation forest, got approval to add to its dairy farm portfolio in September, the same month that the Government shot down Shanghai Pengxin’s $88 million purchase of Lochinver Station. Emerald Dairy Farm, which is indirectly owned by the Canadian pension fund known as PSP Investments, was granted consent to buy a 280 hectare dairy farm near Oxford in North Canterbury by the Overseas Investment Office. PSP met the test of a substantial and identifiable benefit to New Zealand with undertakings to create jobs, lift production and boost export receipts. The OIO also took into account its previous investments in New Zealand.
“PSP got approval last December (2014) to buy a 964 ha dairy farm near Mt Peel in Canterbury through a separate entity, Cumberland Dairy Farm, again meeting the test for jobs, production and exports. The price wasn’t disclosed in either transaction. In November last year, the OIO approved PSP’s purchase of 18 commercial and retail properties for about $1 billion from AMP Capital Investors. That deal got over the line on job creation, development capital and the offer to gift a riverbed to the Crown.
“PSP manages some $C112 billion in pension funds for Canada’s public service, armed forces and Mounties. Of its $C1.5 billion invested in natural resources, about 83% is in timberlands and 17% agriculture. Its increased investment in Kaingaroa and purchase of a portfolio of properties from AMP Capital Investors made Canada the biggest source of foreign investment in between January 2013 and December 2014, according to a KPMG survey of OIO data, putting China in second place”. See our April 2013 commentary for details of the pension fund’s original investment in the Kaingaroa Forest, which was increased in October 2014. See our November 2014 commentary for details of the pension fund’s purchase of the AMP property portfolio.
Craigmore Buys Te Puke Kiwifruit Orchard
Craigmore Farming NZ Limited Partnership,Western European Public (76%), various overseas persons (18.6%) and New Zealand Public (5.4%), received approval for the acquisition of a freehold interest in approximately 43 hectares of land at 84 Waimea Drive, Te Puke. The vendor was the Lawrence (Gilbert Ian), Lawrence (Raewyn Esther) and Walkinton (Richard Bruce),New Zealand (100%): consideration was once again “withheld under section 9(2)(b)(ii) of the Official Information Act”. The OIO states: “The Applicant, together with Trevelyans Pack and Cool Limited, intends to carry out development of the Land to realise the full potential of its associated Kiwifruit Orchard operation”. Another Craigmore purchase, 31 farms and counting.
Other September Decisions
Mill Road Organic Limited Partnership, Rufo Antonio Cosroe Quintavalle, New Zealand (100%), received approval for the acquisition of a freehold interest in approximately 16 hectares of land at 116 Mill Road, Clive, Hawkes Bay. The vendor was VPH Limited New Zealand (100%): Consideration was $1,200,000. The OIO simply states: “The Applicant will establish an organic kiwifruit orchard on the Land.” Not sure why this has come before the OIO, given the applicant appears to be a New Zealander?
Craig Richard Crichton Williams,Australia (100%), received approval for the acquisition of:
- a freehold interest in approximately 0.4 hectares of land at 11 Carlin Creek, Lakeside Estate, Queenstown; and
- a freehold interest in a 1/39th share of 2.8 hectares and a 1/39th share of 0.9 hectares of land at 11 Carlin Creek, Lakeside Estate, Queenstown.
The vendor was Payne (Jason Colin), McNee (Sharron Jayne) and Ainger (Warwick John) as trustees of the Baldrick Investment Trust, New Zealand (100%): Consideration was $1,965,000. The OIO states: ‘The Applicant is acquiring the land for use as a residence and will contribute to the Queenstown Trails Trust in its development of a walking and cycling trail through the Wakatipu Basin”.
QWIL Investments (NZ) Pty Limited,Gold Rainbow Int’l Limited, Hong Kong (SAR) (45.3%), Trueway International Limited, Hong Kong (SAR) (22%), Triluck Assets Limited, Hong Kong (SAR) (7.5%) and Hong Kong Public (25.2%), received approval for the acquisition of a freehold interest in approximately 3.3 hectares of land at 82 Delta Lake Heights, Waihopai. The vendor was Edward William Johns,United Kingdom (100%); consideration was $800,000. The OIO states: “The Applicant intends to lease the land to Accolade Wines New Zealand Limited for incorporation into the vineyard it operates on the adjoining land”.
The approval to buy that adjoining land follows, being Accolade Wines New Zealand Limited,United States of America (38.4%), Australia (20%), China, People’s Republic of (8.1%), Netherlands (8.1%), Singapore (6.8%) and various overseas persons (18.6%), receiving approval to acquire a leasehold interest in approximately 3.3 hectares of land at 82 Delta Lake Heights, Waihopai, Marlborough. The vendor was QWIL Investments (NZ) Pty Limited (shareholding above); consideration was $540,871 (net present value of lease payments). The OIO states: “The Applicant intends to continue to cultivate the grapes on the property by incorporating the land into its vineyard operation on the adjoining land”. See our September 2013 and March 2014 commentaries for details of QWIL’s previous purchases here
Curt Dee Zant and Tricia Dawn Zant Curt Dee Zant, United States of America (50%) and Tricia Dawn Zant, United States of America (50%), received approval for the acquisition of a freehold interest in approximately 492.4 hectares of land at 414 Te Apiti Road, Kairakau, Central Hawkes Bay. The vendor was Ghurka Trustee Limited as trustee of the Robert Fisher No.2 Trust,New Zealand (100%); consideration was $1,700,000. The OIO states: “Curt and Tricia Zant intend to immigrate to New Zealand and reside in New Zealand indefinitely. The property being acquired is a sheep and beef breeding and finishing farm in the Central Hawkes Bay. The Applicants intend to live at the property and operate the farm”.
Campaign Against Foreign Control of Aotearoa,
P.O. Box 2258
Christchurch.