Auckland Trotting Club members are set to vote on a $20 million-plus land sale proposal to repay banks due to their 246-unit apartment scheme facing $40m losses, a chief says.
Rod Croon, vice-president and acting chief executive of the Auckland Trotting Club, said members would hold a special general meeting tomorrow at 6.30pm to vote on a proposal from the board to sell 350 and 352 Manukau Rd where a Caltex service station and Burger King trade on leases of some years.
Croon said estimated values on those sites of 3360sq m and 2490sq m from Bayleys and Colliers gave an indication they might sell for $20m to $23m.
"We need members' permission to sell," he said.
The money will be used to repay banks when the club books big losses.
The club's main creditors are ANZ and Westpac, owed $40m by next year when the buildings are due to be finished, Croon said.
He disclosed disastrous figures on the apartment scheme: "A $30m expected profit is projected next year to be a $40m loss."
The club has a big partly-finished project at Alexandra Park on Greenlane Rd but the project has been dogged by builder issues, delays and shutdowns.
"The lesson is the board and management didn't have the experience to take on the property project. In the future, we can't put the club at any financial risk and we'll get the right people for the job," said Croon.
The losses were down to four factors: "Builder replacement from Canam to CMP, contract delays by up to three years for Building A, bank interest costs and consultant fees."
Builders are nearing completion of the scheme with retail space but the work is not yet finished.
"The biggest factor is the builder replacement because of the $70m turnaround, $40m was because we had to replace the building contractor," Croon said, referring to litigation now under way.
But he denied the club was in financial difficulties and said there was no talk of insolvency: "We're asset-rich but cash poor. In 2014, we had assets of $51m but projected assets by 2020, including the loss, are $159m."
In November last year, the board was told of a projected initial $20m loss but by February this year, it learned of a further $20m, resulting in the $40m figure, Croon said.
In April, the board appointed Mark Allen as its new property development director. Croon said Allen had 27 years of experience in the construction sector and had worked for Downer and other businesses.
Asked who hatched the idea for the original apartment project, Croon said: "It was the president at the time, Kerry Hoggard, who died in 2015. The board didn't have the experience to do a development like this. Kerry was president from 2012 to 2015 when this whole thing was put together."
Croon said Hoggard had worked with former chief executive Dominique Dowding but members had mostly backed them.
"At the time, we needed more income because trotting was in decline and 99 per cent of our members voted for it," Croon said of the tower scheme.