Bayleys schemes attract $18.1m

By ANNE GIBSON

Bayleys Real Estate in Auckland has raised $18.1 million from investors for syndicate-style ownership schemes which have $32.7 million worth of real estate, according to a senior executive.

Bayleys executive Jeff Hurt, who is also a director of Investment Property Titles - the Bayleys subsidiary which does the transactions - said five funds had been launched from the Auckland office in the past two years.

These were P&O Cold Logistics, Tyco NZ, Donaghys Industries, Eskimo International Logistics and Scotia Place.

The funds had $14.6 million worth of debt.

Bayleys had multiple roles in these deals, acting as an agent selling the properties, offering a proportionate ownership scheme to investors and then managing the schemes.

Investment Property Titles, which offered the plans and manages the properties, is 70 per cent owned by Bayley Corporation and 30 per cent by Hurt.

Hurt said there was no conflict of interest. "The interests of the offerer, manager, promoter and others are clearly set out in the offerers' statement."

Offer documents show that Bayleys Real Estate acted as agent in the sale of property to the investment schemes and received fees from the vendor.

Investment Property Titles got a one-off offerer's fee and receives annual management fees.

These schemes are legal, but a Bayleys franchise in the Waikato has fallen foul of the Securities Commission, which last week ruled that it had broken the law in promoting the James Smith's Carpark Proportionate Ownership Scheme - an investment in a Wellington building, sold last year for $16 million and offered to investors for $21 million.

Bayleys Realty Group managing director Jeff Davidson this week refused to discuss the outcome of a meeting held on Monday with Bayleys Waikato managing director Mark Winter and Bayleys chairman John Bayley over the issue, but said last week that the Hamilton office was in breach of its franchise agreement and its future was in doubt.

Winter also refused to discuss the situation after the meeting.

Davidson said last week that he could not get a full copy of the commission's ruling because it said no such report was available. "They expect to publish more detail in the next newsletter they issue. We have asked that we be sent a copy when this is being published," he said.

Nor could Davidson get the Colliers International valuation of the carparking building, he said last week. "I have spoken to Mark [Winter] and requested a copy of the full valuation. He has indicated that the documents that are the subject of the banning order will not be released at this time."

Colliers International's corporate services director Alan McMahon defended his firm's $21 million valuation of the Wellington carparking building and attacked Auckland property lawyer John Carter for complaining to the commission that the valuation was inflated.

"We are very happy with our valuation," McMahon said, "and don't agree with Mr Carter that it is over-stated."

Bayleys schemes

* Tyco NZ - owns industrial property at Portage Rd, New Lynn, Auckland. Leased to Tyco NZ. $2.4 million raised from investors. Purchase price $4.7 million.

* P&O Cold Logistics - owns industrial property at Gabador Place, Mt Wellington, Auckland. Leased to P&O Cold Logistics. $5.6 million raised from investors. Purchase price $10.3 million.

* Scotia Place - owns commercial property at Scotia Place, Auckland City. Leased to Auckland International College. $5.1 million raised from investors. Purchase price $8.2 million.

* Donaghys Industries - owns industrial property at Pages Rd, Christchurch. Leased to Donaghys Industries. $2.5 million raised from investors. Purchase price $4.1 million.

* Eskimo International Logistics - owns industrial property at Brigade Rd, Mangere, Auckland. Leased to Eskimo International Logistics. $2.5 million raised from investors. Purchase price $4.3 million.

Investment Property Titles