Sell or wait – the choice facing Collett’s Corner shareholders
Investors in a collapsed crowdfunded Lyttelton apartment development are voting on whether they want to sell their land now or hold out for a bigger return.
Collett’s Corner Ltd, a company with 600-plus shareholders headed by Camia Young, has received offers for its site on the corner of London and Oxford streets, after advertising it with a mid-March deadline.
The ambitious $14 million Collett’s Corner project, based on the concept of “compassionate capitalism”, received resource consent, but rising costs saw it abandoned in 2021 before construction could start. The company went into voluntary liquidation.
Since then, shareholders – including would-be apartment owners – have been hoping to recoup as much of their investment as possible.
In a non-binding vote weighted according to the size of their investments, Young has given shareholders three options.
They can indicate whether they prefer to accept a $1.03m conditional offer soon, a $1.55m offer conditional on the developer concerned pre-selling sufficient apartments, or wait for a better price.
As sole director, Young will have the final say. She holds the most shares after buying the land for $630,000 in 2013. Significant costs such as interest, planning, legal work and marketing have been incurred in the meantime.
If the property sells, the company will be liquidated and shareholders and creditors paid out a percentage of their original investment.
The first offer would give shareholders a return of between 33% and 65% depending on the nature of their investment. Proceeds would be distributed in nine to 12 months.
The second offer would give a return of 51% to 100%, with funds distributed in about three years.
Young has told shareholders in a letter that neither offer is guaranteed to lead to a sale, and the second is particularly risky.
Both are considerably below two earlier offers of $2.5m and $2.15m for the land, both of which fell through.
“If we sell now, we are selling in a low-value market. There is a chance that if we wait, the market will recover and we could obtain a better offer,” she said.
“If interest rates drop, prices for construction materials stabilise and house prices increase, then developers would be more likely to realise a greater profit.
“If this is the case, then there is likely to be an increase in demand for commercial property, and the value for the site may go up.”
The land was cleared of damaged buildings after the earthquakes and has sat vacant since.
Since buying the property, Young said she had personally invested $1.06m, made up of the loan plus interest to buy the land, shares, and her time for which she had not taken payment.
The company has $465,000 in the bank, and is spending $40,000 to $50,000 a year on holding costs.
In her letter, Young told shareholders there was enough money to wait.
“As the sole director and lender, I am clearly conflicted,” she said.
“Repaying the loan would reduce the annual interest payment, but it would also reduce the protection we have to wait for a better offer.
“At this stage, we have cash in the bank to wait up to 8-10 years, if we really had to wait that long. I sincerely hope and will do everything in my power to wrap up the company as soon as possible.
“But having the cash in the bank gives us the option to wait for a better offer.”