Property firm calls in the liquidators
THE Heritage Property Group has gone into voluntary liquidation, folding its own tent rather than collapsing in a messy financial heap.
Its 11-building portfolio, valued at one stage at about $55 million, has been quietly sold off without the ignominy of creditor-forced receivership or mortgagee sales.
Former director Andrew Cotterrell said the shareholders decided to go into voluntary liquidation, sold all their buildings, paid off the banks and the cash surplus would be distributed to shareholders.
It was far from pain-free – shareholders would be getting less than half their money back – but Cotterrell believed the company had done the right thing.
‘‘It wasn’t a bank-forced thing and that’s sort of important. We did a pretty good job, I thought, to get 11 heritage buildings sold after the Christchurch earthquakes, get the bank paid back in full and have some money left for the shareholders.
‘‘We lost money but we didn’t get torched and that’s a pretty good result.’’
It was a marked contrast to the spectacular failures of Terry Serepisos and Tony Molenaar, who lost control of their properties when they failed to sell as required and ‘‘the banks pushed them over’’.
Cotterrell said the company’s operation involved buying heritage buildings, doing them up and finding new tenants.
‘‘But the earthquakes in Christchurch completely changed the landscape.’’
The climate had already been affected by the global financial crisis which put some tenants under pressure and basically slowed everything down.
But the quakes knocked building values and there were fears that the Government would lift minimum seismic ratings above 34 per cent of new building standard.
This affected loan-to-value ratios and the banks wanted them clawed back.
Insurance costs also rocketed – the company’s premiums shot up from $250,000 to $1m before they were pegged back again.
Cotterrell said the decision to wind up the company was taken about a year ago when the bank put pressure on to reduce loanto-value ratios.
With some shareholders looking to get out, the vote was taken to go into voluntary liquidation.
Four of the properties had been bought by fellow director Peter Dowell and new partners.
Cotterrell said there had to be a realistic juncture between protecting heritage versus safety and viability – ‘‘you can’t save everything with a finial and brass knob, but you can’t bowl everything either, where you have no idea what your past was.’’
However, strengthening buildings like the old Public Trust Building on Lambton Quay was going to cost a lot of money and those buildings would have to be heavily discounted because of it.
Dowell, who was involved in buying Steamship Wharf, 330 Lambton Quay, 97 The Terrace and Change House, said he believed the properties were good value.
‘‘I think the market totally over-reacted. When you look at the last couple of earthquakes we had, the old buildings stood up better than some of the new ones.’’
He also felt that building owners were going to get a break.
‘‘I think there’s going to be tools to assist owners to strengthen their buildings. Whether its going to be councils or Government, things are going to happen because there’s 30,000 [old] buildings in New Zealand and if they don’t, there’s going to be a real problem nationwide.’’
He also believed heritage buildings were being undervalued because a lot of people were double accounting the cost of earthquake strengthening – valuations already had the cost in their 10-year cashflow models and when a buyer came along, it was discounted again, said Dowell. For more property news go to dompost.co.nz/commercial property