Buyers jostling for real estate eyesore

Construction work on Ponsonby's Soho Square site could begin this year if a buyer is found. Photo / Steven McNicholl

Supermarket, retirement and healthcare businesses are lining up to buy Soho Square, Ponsonby's Strategic Finance-funded five-level eyesore.

The fate of Strategic, which went into receivership on Friday, hinges partly on the sale of one of its biggest real estate punts, the 1.3ha excavated site which is the subject of offers due by April 8.

How much money receivers at PricewaterhouseCoopers recover for 13,000 investors hangs on the strength of the real estate market and partly on the efforts of Bruce Whillans, CB Richard Ellis' national director, and Richard Horne, senior managing director.

They are in charge of Soho's marketing campaign to quit the site bounded by Crummer Rd, Pollen St and Williamson Ave.

Whillans said yesterday he was dealing with inquiries from New Zealand-owned businesses jostling to buy.

The successful tenderer might start construction work there this year, he predicted, naming the supermarket, retirement village owner/operator and medical centre sectors.

The controversial Soho was to be a $250 million urban village and Ponsonby's newest shopping, apartment office and carparking centre.

But the development was heavily leveraged and strongly opposed by locals. Developer Layne Kells' Ponsonby Mall Trust went into receivership at the end of last year owing Fortress $24 million and Strategic $69.76 million.

Whillans and Horne are marketing Soho as being in New Zealand's most expensive suburb and the information memorandum tells buyers Kells' plans and shows how their advanced nature would allow a buyer to continue work on the project under the existing planning consents.

Property investors and businesses were keen but none planned to fill it in or restore the land, Whillans said.

"I'm probably working with about six groups who are interested in it," said the broker, under the instructions from Fortress, which wants its money back.

"There's approval there for 32,386sq m and all the people interested are looking to try to maximise the advantage of the existing resource consent approvals. No one is looking to fill it in. But businesses like retirement villages and supermarkets and medical centres all need extensive carparking. People are taking the view that the hole is there and you have to work with it," Whillans said.

Doubts hover over Strategic's subordinated portion of the property. Early indications are that it might recover only a portion of its loan.

"I'm absolutely confident Fortress will get their money back," Whillans said, emphasising he was not working for Strategic.

He said the strength of the property market was apparent from the 11 offers on the leasehold land at Beaumont Quarter. "The sector has changed. The developers who relied on mezzanine funders are gone. We have got a different breed of buyers and they have got money," he said.

Strategic froze repayments to about 13,000 investors owed $417 million in August 2008 and investors agreed to a moratorium in December 2008. But in January the business failed to make the first scheduled repayment to investors of 3.4c in the dollar, or $12 million.

The missed payment triggered a review and Perpetual Trust asked PricewaterhouseCoopers to step in on Friday.

CB Richard Ellis' information memorandum shows the property is zoned for mixed-use activities.

These include a care centre, welfare centre, educational facility, entertainment facility of less than 500sq m, funeral parlour, healthcare services, laboratories, non-permanent accommodation, offices, residential units, restaurants and cafes or retail premises up to 500sq m.

BIG BETS

Strategic funded:
* Soho Square, Ponsonby.
* Hilton in Fiji.
* Takapuna's Sentinel apartments.