Investors risk losing $20m on Albany project

By Anne Gibson

Up to 350 investors - many of them elderly - risk losing a combined $20 million on a faltering residential development in North Shore City.

The future of the $500 million Albany high-rise "super-city" is in doubt after investors were told they might not get this month's interest payment.

Investors who poured $20 million into initial funding for the colossal scheme on Auckland's northernmost outskirts have just received warning letters.

The mini-city for thousands of Aucklanders was to be built on bare leasehold land near Westfield Albany, bringing a new town centre for thousands of people.

In November 2006, property executives Garry Looker, Kevin Podmore and Nick Wevers said plans were for a 200-room hotel, large-scale apartment project with three towers rising up to 30 levels, 15 office blocks rising 10 levels high, a retirement village for hundreds of people and a new bulk retail centre.

Project chief Adam Reynolds said the apartments alone could sell for $400,000 to $500,000.

But Peter Brook, the chairman of developer Albany City Property Investments, has told shocked investors it is "uncertain as to whether ACPI will be in a position to meet the next quarterly interest payment to bond-holders".

The payment is due on June 30.

Bond-holders expected 10.5 per cent annual interest but Mr Brook said ACPI had a number of problems after the failure of two deals to sell leasehold land for residential developments.

"Recent valuations of the property assets of ACPI show a substantial decline in value as a result of the current economic climate.

"A consequence of this is that ACPI does not currently comply with a gearing ratio, being one of the financial covenants of the bond issue as set out in the trust deed dated November 14, 2006.

"The trustee has agreed to extend the trust deed requirements to June 15 to enable ACPI time to work through the position."

Mr Brook has promised to update investors in the next few weeks.

The project is a who's-who of property entities.

The land was bought by Cornerstone Group's Rick Martin for $250 million a few years ago but this year a banking consortium was reported to have exercised its rights and taken control.

ACPI is managed by Albany City Management, which is owned by Symphony Projects, Auguste Holdings and Valad Funds Management. Valad is connected to the Australian Stock Exchange-listed Valad.

ACPI said it had bagged the Holiday Inn as operator for its international hotel.

But that building has never risen.

Are you an investor? Email anne.gibson@nzherald.co.nz

Are you an investor?
Email Anne Gibson

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