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Infratil executive Tim Brown - Source: ONE News -
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Infrastructure investment company Infratil is selling off some of its non core or low growth assets in a bid to pay down debt.
The company has a wide range of investments in the aviation, transport and energy sectors and last month sold Fullers Ferry for $40 million.
It is also planning to sell or redevelop some of its bus depots.
Infratil executive Tim Brown says the company's decision to sell off assets is a response to a vastly changed business environment in which the global economy remains in contraction.
As a result, low growth propositions or those with a long pay back period - a hallmark of Infratil's investments over the last several years - are no longer as attractive as they were.
"This market isn't willing to wait as long as it was, so we've got to make sure we position our investments into spaces which have got growth as well as earnings, and that's going to mean some assets are going to have to go," says Brown.
One example is Infratil's co-shareholding in the development of Luebeck airport in Germany, with the city's council.
Brown says the investment was always going to be a long-term project, but while resource consents have just been granted, it will be at least another five years before the investment will pay off.
"In this type of environment that may just be too long, so we've negotiated an agreement with the council where we can sell our shares to them later on this year," he says.
In terms of its aviation assets in general, Brown says the company is disappointed but not worried about declining numbers in travel.
"Air travel is influenced by two things: one of them is price and the other is people's incomes," he says.
"Clearly incomes are going to take a hit this year so less air travel will be done this year, but in the medium term it looks like a good proposition."
Brown says the long haul market is expected to keep growing in the medium term, particularly with carriers to and from the Middle East.
The short haul market is expected to remain dynamic, exemplified by the entry of budget airline Jetstar.
Despite challenging times overall, Brown says Infratil remains in a strong position with its debt.
However, the company is adopting a conservative approach with its liabilities.
"We're not going to anticipate that they're just going to be rolled on or that there will be any 'she'll be right' behaviour from our banks," he says,
Infratil's bank facilities fall due in February next year.
