Retired farmers who contributed some of the $59 million poured into a proportional share ownership scheme to buy New Zealand's largest homeware store are worried after the shop's builder went into liquidation this month.
Two ex-farmers in their late 70s and mid 80s from the Hawera and New Plymouth areas have expressed concerns about their approximate $1m investment each into Nido, the giant Henderson store which opened in early June.
They are enjoying $5000 per month returns from Magsons Hardware (trading as Nido) as the tenant, with returns pegged at 8.5 per cent.
But the store's builder's collapse has left them wondering how safe their money is.
One finance expert told the Herald they were surprised the elderly farmers had invested in the business, which was high risk based on the 8.5 per cent return.
"Property syndicates work well when there's a long-term tenant. Anything paying over 4 to 5 per cent is just too risky, particularly for retirees," the financier said.
Mark Hughson, an accountant whose clients bought into Nido's landlord via investment specialist Maat Group, said only time would tell how it would all work out.
Hughson of Hawera accountants Hughson & Associates said he also had money in Central Park Property Investment, the company associated with Albany-headquartered Maat.
Hughson is also a director of Central Park Property Investment along with Neil Tuffin, Maat's managing director.
Tuffin said this week that entities associated with Nido founder Vinod Kumar might need more money and that was an option being considered by Maat.
It was in Maat's interests for the rent to continue to be paid by Nido.
Kumar said last week Nido's future as a retail operation would be assured if plans he had in play worked out the way he expected. Kumar did not respond to questions this week.
One investor in his late 70s said he had invested $1m in Central Park Property Investment and was receiving $5000 per month as payments from Maat. He had concerns about the retailer's viability and Maat's ability to continue to pay such high returns at 8.5 per cent annually.
"Why would I put the $1m in the bank? You don't get any return any more," said that retired farmer.
Another investor in his mid-80s with Central Park Property Investment shares was not overly concerned.
He had made inquiries with Maat but was unable to ascertain plans about what Maat might do to assist Nido, the retail business.
While he understood the retail arm of Nido was not directly affected, the liquidation of building company Vijay Holdings came as a shock, he said. Many investors in the Nido property were retired farmers in the New Plymouth and Whanganui areas, he said.
Hughson & Associates had been the man's accountants for half a century and he enjoyed the return being paid monthly.
Covid's outbreak, delays opening the store and problems with the construction were issues which had obviously dogged Nido's opening, he said.
"My grandfather said if you ever have any money, invest it in bricks and mortar or land," the investor said.
None of the retirees wanted to be named. Kumar is this week not returning calls.
Maat says it manages a large portfolio of properties in Auckland, Whakatane, Whangarei, Petone and Porirua.
Kumar founded New Zealand's biggest furniture store but he wrote to suppliers a few weeks ago, saying that his building company could pay them and is seeking to refinance.
Kumar sent a letter to Vijay creditors saying he had financial issues and "we won't be able to pay the balance promptly but over time that is certainly the intention".
Daran Nair and Heiko Draht of Greenlane Chartered Accountants were appointed liquidators of Vijay Holdings at the request of shareholders on November 6.
Kumar told the Herald last week: "The construction company has existed for 22 years and done $122 million of work. It's so disappointing for us."