Developer's nightmare that turned into a dream

Angus McNaughton has seen Sylvia Park develop from these World War II military huts into a bustling precinct. Picture / Paul Estcourt

On the day 40,000 people poured into his new $300 million Sylvia Park shopping centre, Angus McNaughton was picking up litter in the carpark.

"I wanted the place to look nice," said Kiwi Income Properties' chief executive.

It was Thursday, June 1. McNaughton's day had begun poorly and early. By the time he was in the carpark on trash duty he was red-eyed, from a lack of sleep.

The day had begun a few hours earlier with McNaughton waking up at 3.30am in a cold sweat, worried he was about to open the country's largest mall but he could be all alone.

What if no one came to shop? What if it all went wrong? What if a $300 million investment crashed and burned on day one?

As those questions raced about his mind, the former farm boy tried to control his nerves - to no avail.

After counting the minutes for a while, he couldn't stand it any longer and decided to drive the few kilometres from his Pukekohe farm to Sylvia Park in Mt Wellington.

But that early morning nightmare quickly turned into a dream. In an omen of what was in store, McNaughton was startled to find a shift worker waiting at the mall doors before the sun was up.

"He wanted to be the first person to be a shopper at Sylvia Park," McNaughton said. "So we gave him a $100 shopping voucher."

Soon the carpark was streaming with car lights as throngs of people gathered around the entrance. When the doors opened, a stampede disappeared down the aisles to The Warehouse Extra where 199 colour TVs were on offer for $49.94.

"It was like the stampede of the bulls in Pamplona," McNaughton said, recalling the sight of one shopper arriving in her nightdress.

While McNaughton was working on carpark trash, another corporate boss flew past pushing a load of trolleys - The Warehouse's chief executive, Ian Morris - and they were able to have a short chat about both of them working in the carpark.

"It was such madness on the day," McNaughton recalled. "But we had to laugh about being out in the carpark."

So bosses became workers and shoppers became bosses as everyone came down with consumer flu, blocking motorways and causing traffic chaos.

And all dreams must end, as McNaughton found later that day when would-be shoppers jammed the Southern Motorway, forcing authorities to issue warnings to stay away from Sylvia Park.

Now, things are somewhat easier..

"Life has settled down well at Sylvia Park," McNaughton said. "The centre is trading really well and, as expected, traffic has settled down, with no issues even at peak trading times such as late nights and weekends.

"We've had some really positive feedback, which is great. The fashion opening at the end of August will be exciting with a number of new entrants to New Zealand, including Kookai and Roxy out of Australia."

McNaughton grew up on a sheep and beef farm in the Waikato and has always loved the land. But a city career meant he had to settle for a 5ha block at Pukekohe. However, he now takes delight in daily drives past Sylvia Park on his way to work in Quay St's historic Ferry Building.

His parents, Donald and Clarice, sent him to King's College and McNaughton credits the Auckland boarding school with having developed his strong competitive streak. He challenges the perception that such schools are only for the well-to-do by saying:. "Only about 25 per cent of the parents with kids there write out cheques without looking."

A short stint overseas interrupted a university education where he switched from Massey to Waikato before graduating in management, then he worked as a stock agent.

Like many of the country's top property executives, McNaughton worked for St Lukes Group, later taken over by Westfield. At the time, St Lukes was emerging as the dominant mall player.

Then, in 1994, McNaughton met Kiwi founders Ross Green and Richard Didsbury, who had just listed their trust and needed new talent.

They bestowed on him the nebulous title of "special projects manager".

Kiwi had listed in December 1993 and McNaughton's first job was on the Majestic Tower in Wellington.

"We had just $100 million in assets," McNaughton recalls of the fledgling Kiwi.

In the trust's latest annual report, McNaughton wrote of the trust's record $72.1 million profit for the March 2006 year, its $183.9 million asset growth to reach $1.45 billion and low debt level of $236 million, representing 16 per cent of assets.

But life at Kiwi has not all been plain sailing.

Early last year, McNaughton was under attack from institutional investors, particularly Brook Asset Management's crusading Simon Botherway.

He was being challenged to defend Sylvia Park's level of risk, debt burden and depressing effect on yields in a trust that had formerly been an investor, not a developer.

The trust's much-prized income returns were being questioned, with investors voicing their discontent at a special meeting. Things were not looking good for McNaughton.

Opponents see him as the defender - and puppet - of Kiwi's managers, Australia's Commonwealth Bank, more intent on developing assets to increase management fees than working in investors' interests.

But McNaughton points to structural corporate changes Kiwi made in response to criticism over Sylvia Park and Kiwi's excellent 14 per cent annual return in the past three years.

He has projected a gross dividend of 9.1c a unit for the March 2007 year. He said management fees were $1.7 million less than they would have been before the trust changed its corporate governance and the managers' interests were now more aligned with those of unit holders.

These days, McNaughton can be excused for having a smile on his dial - after all, it's not often someone's dream comes so resoundingly true.


Angus McNaughton

Age: 41.
Family: Married with two children.
Lives: On a 5ha farm at Pukekohe.
Schooling: Glen Murray Primary School, Te Kauwhata College, King's College, Auckland.
Tertiary education: Massey University, Waikato University, honours degree in management studies.
Position: Chief executive, Kiwi Income Properties, which manages Kiwi Income Property Trust. Runs country's largest listed real estate fund worth $1.45 billion.
Career: Began as a stock buyer for Dalgety's, then worked for Affco. Joined Challenge Properties, later St Lukes Group, in 1990 as administration manager.
Early 1994: Joined Kiwi Income Property Trust on special projects. Headed Kiwi's retail management portfolio.
2002: Took over from Kiwi founders Ross Green and Richard Didsbury as chief executive.
Positions: Member of Business Roundtable, the Property Council and a trustee of Keystone Property Education Trust.