Nido shut just a few months after it opened in West Auckland. Photo / Michael Craig
Nido shut just a few months after it opened in West Auckland. Photo / Michael Craig
Details have emerged about court action involving a crippling $41.4 million loss from a property syndicate-style scheme to fund the failed West Auckland homeware shop Nido which was to be New Zealand’s biggest furniture and homeware store but shut only a few months after opening.
Shareholder advocate CraigPriscott has written to investors in Central Park Property Investment, Central Assets Investment and Odin Investment telling of the planned action revealed earlier this month.
Priscott’s CNP Holdings is alleging a lack of information and false and misleading information and lack of disclosure on the money-raising scheme.
But Maat’s Neil Tuffin has asked why Priscott was bringing the claim when he never owned shares in any of the ventures.
“We are confident the proceedings are without merit. We look forward to being vindicated through the court process. Unfortunately, our lawyers advise that we’re unable to disclose the pleadings,” Tuffin has said previously.
Priscott said Maat Consulting incorporated the three companies to fund the big-box store. Yet that $47.2m capital raise to shareholders netted an 87.6 per cent or $41.3m loss, he said.
CNP filed its statement of claim in the High Court at Auckland on April 4 alleging defective product disclosure statements. It is also challenging the Central Park financial statements of 2020 saying they had misstatements in them.
CNP claims failure to disclose a notice of default from financier Pearlfisher which loaned $25m to fund Nido. The Pearlfisher loan was provided to Central Park’s operating subsidiary, Everest Central Investments and secured by a first mortgage over the Nido property.
In November 2021, Neil Tuffin and Mark Hughson confirmed that Central Park Property Investment shareholders would suffer a significant capital loss: only 14.1 per cent of the money invested was returned.
“There were significant delays in the construction programme for the development, resulting in increased costs for the Nido store and liquidation of the tenant and construction company. Delays with building compliance led to delays in the sale of the building. These factors along with large financing penalty costs, contributed to the unfavourable result for investors,” they said then.
They acknowledged the disappointing result and said they had worked tirelessly for its investors to try to achieve the best outcome in difficult circumstances.
Customers queue to get into the new Nido when it opened. Photo / Alanah Eriksen
“Maat Group has many other successful investments and a good track record of delivering robust investor returns over many years. Maat Group has 12 other stand-alone properties which are successfully managed on behalf of investors. Investors have benefitted from the high cash dividend payments and the significant increase in the values of these properties,” the business said two years ago.
On the losses from Nido, investors were told: “This was a development project for a single purpose tenant where all the inherent risks were explained clearly to investors. Unfortunately, all of those risks materialised”.
Directors had invested a huge amount of time and effort trying to achieve a far better outcome for investors.
Tuffin said two years ago: “It was extremely distressing to fall so far short of the possibility envisaged.”
Today, Tuffin said none of the claims Priscott made in the legal action had any merit and all would be vigorously defended in court.
“Maat Group prides itself on being legally compliant and keeps all of its investors well-informed as required by law. We have a history of open and compliant communications with the Financial Markets Authority and expect to maintain a good working relationship with it in future.
“We view Craig Priscott’s claims as being without merit and look forward to being vindicated through the legal process. In the meantime, our focus remains on protecting our investors in a challenging market and maximising their returns, as we have done for almost 15 years,” Tuffin told the Herald.
Priscott’s August 16 letter to investors said CNP had “been investigating the Nido development for over a year”.
CNP didn’t own shares in any of the Maat entities and didn’t suffer loss, Priscott acknowledged. Nor would it be entitled to any compensation from the court if it won the case.
That compensation would instead go to investors. Priscott is seeking feedback from those who did invest their money in the schemes and lost most of it.
The Herald reported shareholders also complained about losing money at the time. One investor with $1 million-plus invested has complained to the Financial Markets Authority, another who put in $1m fears he will have to shoot rabbits and dig vegetables to eat, while a third is suffering insomnia and nightmares after putting in $250,000.
A retired farmer, aged 79, said: “I can shoot rabbits and I grow my own vegetables. If I have to, I’ll carry on working. I was getting around $5000 per month interest.”
Another shareholder in her early 70s was having trouble sleeping and was distressed about losing most of her $250,000.
Anne Gibson has been the Herald’s property editor for 23 years, has won many awards, written books and covered property extensively here and overseas.
