Hell of $1m bust in middle of boom-town
Although Auckland’s property market soars, one investor is still hugely out of pocket, writes Susan Edmunds.
AN investor who sank $1 million into an Auckland property development project says he can’t believe the project failed in a booming market.
Whitney Mews Ltd, the company responsible for a 22-unit development in Blockhouse Bay, was put into liquidation last month. The first liquidators’ report shows it is expected that there will be a deficit of $685,379 as a result of the liquidation. On top of that, millions of dollars in investor funds were lost.
The company originally used $3.5m in investor capital to buy the property from a finance company for $1.3m. Former Whitney Mews directors Murray Alcock and Allister Knight picked up the then-stalled development and told investors that the project would be finished in 12 months. Instead, it took seven years.
One investor, who did not want to be named, said he put $1m into Whitney Mews in 2009 and had received only about $280,000 back, when investors’ shares were sold to Covepark Investments, which went on to finish the development.
He said he had been burned by the experience. ‘‘It was awful. They were pulling out good money and propping up stuff that was ready to fall over. They dragged two entities down.’’
The investor said the development – in a hot Auckland property market by the time it finished – should not have failed.
In 2013, the development was in the news when Whitney Mews cancelled existing contracts using a sunset clause and re-marketed the properties for $135,000 more.
Whitney Mews Ltd’s directors were Murray Alcock and Allister Knight, who were also directors of the troubled SPI Capital and its Property Fund. They were fined $25,312 each in 2015 for failing to file audited financial statements for SPI for several years.
In 2014, they agreed not to seek investment funds from the public for five years and to repay SPI Property Fund investors.
In the past two years they have had six companies go into liquidation and the liquidators’ reports show deficits of more than $16m.
Alcock said there would be no more money to go back to the original shareholders, because they had sold their shares in a commercial deal with Covepark.
‘‘I believe the existing shareholders are quite happy and the original shareholders should be happy, they got paid whatever they sold their shares for. They sold their shares for a sum that was certainly a discount from what they put in.’’
He said the development had taken a long time because it had been affected by the global financial crisis and the amalgamation of councils.
Company shares were divided into investment shares, which gave investors the right to receive distributions from the company but not to vote, and management shares, which carried voting rights but did not give distributions. SPI Securities held the management shares, meaning investors had no say in the company and were unable to change the directors. WHERE’S Wally?
Well, he was last spotted doing a keg stand on Hyde St, in the heart of Dunedin’s student quarter.
As well as Wally, there were Jedis, Trump supporters and a Thomas the Tank Engine – as one of the biggest events on the student calendar kicked off yesterday with 3600 revellers snapping up tickets within minutes.
One party-goer, who looked suspiciously like Dunedin Mayor Dave Cull, told gathered media the annual Hyde St Keg Party was ‘‘extraordinarily well-organised’’ and was getting better each year.
Residents organised the event with support from the student association, which became involved in 2013 following concerns about safety.
Otago University Students Association President Hugh Baird said more security and food had been added to the event, which ‘‘keeps on getting better and better’’. Hamish McNeilly