60 Cashel St in Christchurch is the PwC Centre in that city. Photo / Google Street View
Shareholders who bought into a proportional ownership scheme for Christchurch’s PwC Centre via a company managed by Maat Group of Albany have had their projected 6.5 per cent annual return cut to zero - just one of four with suspended returns, the boss says.
Neil Tuffin of Maat said yesterday risks were clearly outlined in product disclosure statements for all such schemes sold to retail investors, and therefore those investors had received information about what could happen.
Investors are thought to have poured around $180 million into 11 Maat-managed schemes, that money used to buy commercial and retail properties which were also funded by trading bank debt.
Tuffin this week referred to rising interest rates and falling property values which he said had affected a number of other equity schemes Maat managed.
All-up, Maat had 11 such offers in the marketplace, he said. Four of those did not pay investor returns. But he would not name them and said it was up to the Herald to work out what they were.
Some shareholders who are upset have complained to the Herald that projected returns suddenly went from around 9 per cent in some cases to zero. They said they never envisaged getting no money for the many millions they have poured into the scheme, but they are confident their total investment is safe with Maat and they will recover their capital.
They are asking how this can be allowed, but Tuffin is referring to the PDS, which stated risk in the schemes.
The Christchurch scheme is just one of the four which went from paying 6.5 per cent annually to zero.
Cashel Property Investment told investors: “We see it as prudent that we reduce the dividend distribution to zero for the 12-month period commencing April 1, 2023.”
Accounts out for the business record a $3.7m loss for the year to March 31, 2023, a turnaround from 2022′s $2m profit.
Rental income dropped from $3.3m in 2022 to $3.2m, but a non-realised fair value loss on the value of the property saw it decline by $4.9m, which turned that previous profit into a loss. In 2022, its value was only written down by $23,000.
Share equity in the business is listed at $31m in accounts signed by Tuffin and fellow director Mark Hughson.
Cashel Property was formed to own the land and buildings at 60 Cashel St, where the PwC Centre stands, as well as car parking premises at 38 Cashel St.
Current liabilities exceed assets by $30m due to BNZ borrowings which are due to expire on November 13.
The company has breached its loan-to-value ratio and net rental coverage.
But the accounts said Tuffin and Hughson intend to complete a further capital raise before November 13 to repay the BNZ with a portion of the debt and help with the LVR and net rental covenants.
Maat equity investments are for mainly stand-alone properties, and the 11 schemes are:
This week, the Herald covered trouble with 650 Great South Road, which copped an auditor’s warning for borrowings exceeding assets by $13.9m, breaching its covenants. That scheme is one of the four with suspended repayments.
“Given the uncertainty of the interest rate rise expected coupled with the exit of IRD, the directors have decided to cease the dividend return for February and March 2023. This will enable $96,500 per month in cash reserves to be accrued over this period,” a letter from Maat investor relations manager Jodi Tuffin said this year.
She said Maat understood some investors would be feeling concerned.
Maat Group was formed in 2009 “with the vision of creating individual investment opportunities”.
“To achieve this goal, the directors have combined their vast business and personal experience for the benefit of investors and followed their fundamental principles of purchasing quality properties with quality tenants and providing satisfactory return for investors,” the business says.
A crippling $41m loss for Maat investors prompted a shareholder advocate to lodge legal action in April against Tuffin, Hughson and others involved in selling shares to fund the failed West Auckland homeware shop Nido, although Tuffin said he was confident about the outcome.
CNP Holdings, whose director is Aucklander Craig Priscott, has lodged a legal claim against those who raised money to fund what was to be New Zealand’s biggest furniture and homeware store, which shut in 2021 only a few months after opening.
Around $62m was raised, and at least one investor claimed to have lost more than $1m and complained to the Financial Markets Authority.
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.