The port operations of Timaru District Council’s commercial arm are more important than the dividend it provides to owners, according to its chief executive.
Frazer Munro is the first Managing Director of Timaru District Holdings Ltd (TDHL) – the wholly owned subsidiary of the District Council (TDC) – and says its lucrative operations are mainly based on the success of the port.
TDHL holds a 50% share in PrimePort Timaru and owns over 20 port properties and related land leases. There is also a 47.5% share of the company’s Alpine Energy lines that combine for assets valued at $169.26 million filed in a recent semi-annual report to the TDC.
The holding company paid a $2 million dividend to TDC in 2020-21 and is on track for a $1 million dividend this fiscal year, all in the face of the Covid-19 pandemic and the decision to the Commerce Commission which ordered Alpine Energy to cut its revenues by 19% in 2019.
Munro said the dividend drop was primarily the result of ComCom’s decision and while other Alpine Energy shareholders experienced a larger dividend drop with the changes, TDHL was able to cushion the drop thanks to its diversification.
“The land leases are the predominant property of TDHL,” Munro said, confirming a statement to the TDC from TDHL chairman Mark Rogers that there is “a high level of activity at the port and a asks for companies to be close to the wharf”. keep on going”.
“There is interest in (port) land,” Munro said. The Herald Timaru.
“There’s not a lot of land around ports (around New Zealand) so it’s a bit rare here. It’s been good, we’ve got some opportunities.
“Timaru is in a great position.
“There are always national or international tenants looking for opportunities to establish sites near ports.”
Munro said interest goes back to “this wider primary production hinterland” through fuel tenants, oils, edible oils and chemical companies using the port – the main production inputs, “the kind of stuff that can’t get out of the ship and straight into Washdyke, which Timaru (port) had in his favor”.
“They have to plug in and hook up to a tank and that’s hard to get.
“A lot of ports don’t have a lot of land nearby. That is why we have Timaru Oil Services (TOS) here. They have a pipeline (about half a mile) that goes to the port, and they’ve been scouring the country looking for a site like this.
Munro said the TOS tank farm site was once former warehouses on land owned by TDHL.
“They are a new operator in the local and national fuel market, a company based in the Pacific, and we own the land, and we have leased it to them. It may be a $40 million development.
“Prices at the pump dropped almost overnight when this opened.
“That’s probably a good example of what we’re trying to do with the TDHL portfolio in that we focus on tenants that add value to the port and add value to the community, so because we’re a primary production region, it means a synergy with the port and the community is quite close.
“A site of this size, so close to the port, in such a central location in the South Island, is quite rare. It certainly encourages demand.
“Z Energy has two sites here. It’s bigger than Timaru Oil Services. These are fantastic excellent leases, fantastic assets that continue to turn every day and increase ship calls.
Munro said many businesses are in the Timaru port area because they have a pipeline to the port, so “the ship can park and head, unload, get the job done.”
“It feeds places like Clandeboye (the Fonterra dairy plant) and all these other primary producers.
“And that’s why, even with Covid, this place keeps going because these factories need what the port can provide.”
Munro said development sites are being worked on with new options and there are a number of hectares available.
“TDHL’s role is to ensure that the port is sustainable over the long term and provides this service to the community. So when we talk about bringing prosperity to the community, it’s the investments that do it.
“It’s kind of an independent contribution of prosperity to the community.
“We don’t do that directly ourselves, but our investments through PrimePort and Alpine and the port properties, and then the dividend to TDC which allows TDC to do whatever it chooses to do whatever it wants with that dividend.
“He (TDHL) also ensures that the community has sustainable businesses like the port to support this vast, diverse economy.”
Munro said the diversity is evident when looking at what makes up its tenant portfolio, from large clients like oil companies to mid-sized operators to small businesses.
“Throughout the port we have a range of tenants. We have builders, NZ Customs, MPI, some of the port guys who do some of the operational stuff, seafarers, stevedoring and fishing companies.
“Without these guys, the port wouldn’t work. You need these companies.
Munro said these types of tenants, who now occupy the former port offices, are a good example of some really important businesses.
“Not the Z Energy type, but several different types that without them the port just wouldn’t be as efficient and this ecosystem healthy and resilient.
“We make sure that tenants preferably have a direct orientation to the port in order to really support port operations.
“The value the port adds to the community and region far outweighs the dividend it creates through these businesses…”
The TDHL card:
- Mark Rogers (chairman, independent)
- Rebecca Keoghan (independent)
- Peter Burt (TDC Advisor)
- Sally Parker (TDC Advisor)
- An independent to be appointed
- TDHL formed by Timaru District Council and incorporated on October 29, 1997.
- TDHL is 100% owned by TDC.
- It was established for the purpose of managing the business assets and investments of the TDC.
- The initial core assets were the stake in PrimePort Timaru and Alpine Energy which TDHL acquired from TDC.
- TDHL owns an industrial and commercial real estate portfolio. The aim is to provide a commercial return and support port capacity.