Retail rent comparisons
Liquidations & debt compromises: Jaffe company wound up, Bryers debt scheme deferred, Tauran wound up, Equinox scheme rejected
Planning: Auckland planning hearings, “Sludgegate” out for decision, casino on again, commissioners think about aeropark
Listeds: Richina Pacific “don’t know why”, Kiwi Income bids for KDT, Eldercare loss $6.7m, Deane leaves Ariadne, Savoy thins down, $60m DB project, new Metlifecare ceo, F&P to split
World property: Houston deal, poor US hotel performer, Biltmore sold, Californian developer struggles, Toronto bank sells stakes, Australand readies for land buys, CK Tang makes loss, Rockefeller Centre sold, UK builder buyout, General buys industrials, master-planned LA development, French cinema operators merge, UK housing merger, HK land sale
World business: Korean bank merger on, Daewoo split, CGNU sells in Canada, Halim secures position at expense of Renong minorities, Chinese timber market lifts, Buffett buys industrial businesses, pressure on Wallenbergs, GM layoffs.
Retail rents, internationally and locally
Bayleys Research lists the most expensive retail street in 15 countries in its Christmas newsletter, courtesy of its new international partner Cushman & Wakefield, then drops way down to New Zealand’s most expensive, which it says would slot in about 40th on an international scale. Top internationally was East 57th St in New York at $US7535 annual rent/mÂ², followed by the Champs ElysÃ©es in Paris at $US6026/mÂ². Pitt St Mall in Sydney rose from sixth to third at $US4803/mÂ², Oxford St in London was fourth at $US4263/mÂ², Hong Kong’s Causeway Bay fifth at $US4060/mÂ². Tokyo’s Ginza was sixth at $US2743/mÂ², Singapore’s Orchard Rd 13th at $US1779/mÂ². Bayleys put the top NZ rent at around $NZ1500($US630)/mÂ² in Newmarket, followed by Auckland’s Queen St and Wellington’s Lambton Quay in a range of $NZ1200-1500($US504-630)/mÂ².Liquidations, compromise schemes
Eric Isadore Jaffe’s Australian company, Industrial Banking Corporation Ltd, has been placed in liquidation on the application of the Australian Securities & Investments Commission â€” unexpectedly, because the commission had the application down for a hearing in February. The New Zealand assets are already in liquidation, with the $338,000 proceeds held in court. Mr Jaffe, 79, and his wife are the occupants of one, and Jaffe companies the former owners of four units in a block of five Ring Terrace townhouses overlooking Westhaven. Mr Jaffe also faces bankruptcy on the application of the Bank of New Zealand.
Creditors called to a debt-compromise proposal by apartment developer Mark Bryers decided today to defer any action because of the timing of the meeting. Another meeting will be called on 9 February 2001. The scheme proposes payments totalling about $130,000 for debts totalling $44 million, including significant amounts which may be contested.
Tauran Construction Co Ltd (Chris Smith & Garry Coleman) was placed in liquidation last Friday owing about $2.1 million, with debtors of $800,000 and retentions of $500,000. The company was hit by the collapse of Graeme Raymond’s First Investments two years ago, and again by Mark Bryers’ development group’s collapse. Liquidators are Vivian Fatupaito and David Davidson at PricewaterhouseCoopers.
Equinox Construction (now called GFF Ltd) is also in the hands of the PricewaterhouseCoopers liquidation team after creditors rejected a compromise scheme put to them last week. It has debt of about $2 million. The company was to have built the No 1 Hobson apartment block and had also done the first stage of Redwood Group’s Eden Village.Building awards
The Property Council issued its notice this week seeking nominations for the 2001 building awards. Nominations close on 31 January and the awards will be presented on 27 April.Planning hearings
Auckland City Council’s planning fixtures sub-committee appointed commissioners today to hear resource consent applications for a 12-storey apartment building at 508-510 Queen St (Golden Mile Holdings Ltd), a 16-storey apartment building at 74-76 Wakefield St (Tony Tay & Associates) and to change a heritage floorspace bonus on the AMP waterfront tower into a work-of-art bonus. The waterfront protection society, which took the council to court over granting non-notified consent for the whole project but later withdrew, has been named by committee chairman Cllr Juliet Yates as a party requiring notification of the hearing. A more detailed report on the committee’s decisions will appear later on Thursday.High Court
Resort developer Adrian Chisholm’s “Sludgegate” case against Auckland City Council in the High Court drew to a close today. Justice Chambers is expected to bring down a decision on Mr Chisholm’s allegations of malicious misfeasance by council staff and community board members in February or March.Casino development
The Riverside casino in Hamilton is on again, after the casino developers’ appeal (against the High Court decision to set aside the casino licence) was upheld. Sky City, which holds 55% of the $65 million project, said the development company, Riverside Casino, would resume work on the project as soon as possible next year.Aeropark deliberations
Auckland Regional and Rodney District commissioners hearing the Dairy Flat aeropark applications (earthworks and lime excavation for the ARC, development of a rural-residential subdivision around the aerodrome for the district council) will get back to their deliberations on 17 January 2001. Hopper Investments Ltd (now Pauanui Developments Ltd) wants to create 77 residential lots with runway access.Listeds
Richina Pacific Ltd has sent back a “don’t know why” to the stock exchange’s market surveillance panel on the share price plummet â€” from 40c to 30c in the first four days of the week, back up to 36c by the close on Friday. The company said its position was consistent with the statements in the half-year report issued in September.
Kiwi Income Property Trust has given notice of a takeover bid for Kiwi Development Trust, owner of the Royal SunAlliance Centre on Shortland St. Last valuation of the tower was $205 million. The offer values it at around $190 million. PricewaterhouseCoopers has to produce the independent appraisal report for KDT by 25 January, and the offer will formally be made after that. The building is now about 90% leased. Kiwi Income owns 39.2% of the development trust.
Eldercare NZ Ltd has reported a $6.7 million loss ($2.2 million profit) for the half-year to November, as foreshadowed at the annual meeting last month.
Ariadne Australia Ltd’s chief executive, Peter Deane, resigned as of Thursday. The Brisbane-based company, now firmly in the development business, will be headed by Kevin Seymour as executive chairman. Mr Deane was previously general manager of Mainzeal Construction in Auckland.
Savoy Equities Ltd, the company formed by now-bankrupt entrepreneur Jihong Lu, has an indirect interest in the Hyatt Residences apartment project and the hope of a windfall win in court against the Auckland City Council over the ending of their Britomart development agreement as its not-all-tangible assets after selling two technology subsidiaries, wireless network provider Safetynet/Ipfinity and mobile application service provider E-Zebra. It’s also selling Shanghai software company JetTronic.
DB Group is to start construction immediately on the last stage of its Waitemata brewery redevelopment in Bairds Rd, Otahuhu. The $60 million job is scheduled for completion by the end of 2002. It will include a packaging hall, new office building and realignment of Bairds Rd. DB began its redevelopment in 1992.
Metlifecare Ltd’s new chief executive is Gavin Aleksich, a corporate advisor who was seconded from Ferrier Hodgson a year ago to lead a strategic review.
Fisher & Paykel has decided to split in two, after a prolonged self-examination, plenty of external advice and with the fruition likely at the end of 2001 or early in 2002. F&P Healthcare will seek listing in New Zealand, on Nasdaq and in Australia, 20% of its shares will be offered in the US and the F&P industrial company (another of those Newcos) will hold 20%. F&P Appliances and Finance will fall into the Newco company, to list in New Zealand and Australia. The US listing should give shareholders a cash payment as well as their interests in the two companies. All well and good until you get to this silly statement: “As a consequence of this proposal, we are subject to the Securities Laws of the US and NZ. These laws limit what we can discuss with our shareholders until we have completed the separation.” This is the same as the nonsensical New Zealand securities law which prevents “advertising” (which some claim to include news stories) pre-prospectus, effectively ensuring insider trading lives, and lives well.World property
Wells real estate investment trust of Atlanta has paid $US45 million to add a fully leased, 29,000mÂ² A grade property in the Enclave business park just south of Houston, Texas, to its $US600 million portfolio, at a 10.48% cap rate. The six-storey building sits on 5.8ha, which includes a four-storey 1465-space parking garage and 2ha available to build another 19,000mÂ² of offices.
Another poor US performer: InnSuites Hospitality Trust, owner of 11 modest suites hotels in Arizona, southern California and New Mexico, went from a $US8000 profit in the nine months to October 1999 to a $US506,000 loss for that period this year. A $US682,000 charge for uncollectible rent from the lessee (the operator is separate from the trust) took the latest quarter to a $US514,000 loss. As well, the trust’s unnamed primary bank has decided to stop funding hospitality operations in Arizona, forcing it to a find a new credit facility for three hotels from next April.
The renowned 730-room Arizona Biltmore hotel in Phoenix has been bought by KSL Recreation Corp from Boca Resorts of Florida, which held it for two years. Built in 1929, it was owned for the next 44 years by the family of chewing gum magnate William Wrigley Jr.
Newhall Land & Farming Co, a developer based in Valencia, California, has sold 924 apartments in four blocks to an unnamed investment trust for $US79 million, plus the assumption of $US50 million of debt, so it can pursue its share buyback programme. The company claims its stock is undervalued. Its third-quarter revenue fell 36% to $US46.5 million and it made a $US612,000 loss, down from a $US11.9 million profit.
Toronto-Dominion Bank will stakes in several landmark Canadian properties to Cadillac Fairview for $C1.28 billion ($NZ1.92 billion), which will become sole owner of the portfolio, in which both were involved in developing. The properties include the Pacific Centre in Vancouver, the Toronto Eaton centre and the Toronto-Dominion Centre.
Australand shareholders have approved the issue of $A100 million in preference shares to take advantage of opportunities expected in the first half of 2001 to restock landbanks for the group’s industrial, commercial and apartment divisions.
Singapore retailer CK Tang reported a $S2.92 million ($NZ3.84 million) net loss (compared to a $S1.42 million loss in the previous September half-year) on a 17% sales jump to $S102 million. Local sales rose 18%, but Malaysian trade was unprofitable, blamed on a big increase in Klang Valley capacity. Net tangible assets rose from S85c to $S1.07.
A $US1.85 billion ($NZ4.2 billion) deal signed this week will see the Rockefeller Centre in New York owned by local development company Tishman Speyer Properties and Chicago billionaire family the Crowns, who have bought the 50% interest of the Whitehall Fund, whose partners were David Rockefeller, Italy’s Agnelli family and the estate of Greek shipping magnate Stiavros Niarchos. Mitsubishi bought the centre for $US1.5 billion in the late 80s, and sold it for $US900 million in 1996 to a group headed by Speyer and Goldman Sachs. New retail tenancies and a real estate boom early this year prompted the latest sale decision.
London-based housebuilder Fairview Holdings will be bought out by management for Â£307 million ($NZ1 billion) at 180p/share, up 41% on the price just before the original bid eight months ago after spirited lobbying by independent directors. Poor sharemarket ratings have forced a re-examination of the whole UK building sector. This will be the third management buyout of the year. It’s been backed by development capital group 3i and a Bank of Scotland division, Uberior.
General Property Trust, of Australia, has bought two new fully leased industrial properties on Berry St, Granville, in Sydney, for $A26.8 million plus acquisition costs at a weighted initial yield of 9.5% (or 8.9% after acquisition costs).
Equity Office Properties Trust will provide $US21.5 million (with a one-year note returning $US26.5 million) for Los Angeles developer MaguirePartners to buy a 2.6ha site intended for the 40,000mÂ² Water’s Edge office complex, with an option on taking 80-87.5% of the finished project. It’s in the 440ha master-planned Playa Vista development at Marina del Rey in west Los Angeles, which is being designed to take about 200,000mÂ² of office space.
French movie companies PathÃ© and Gaumont will merge their cinema operations in to a 700-cinema operation in Europe.
Two British housing companies, high-density and mixed-use specialist Beazer and greenfields executive home builder Bryant, will merge to form Domus. The two companies have also concentrated in different parts of the country.
A 1.22ha seafront residential site in Hong Kong’s Sai Wan Ho has been bought for $HK2.43 billion ($NZ727 million), at just under $HK200,000/mÂ² ($NZ60,000), by Henderson Land Development and its associate, Hong Kong & China Gas, in a 50:50 joint venture. They plan to spend $HK4.5 billion, including a 50-storey tower containing three sizes of flats. They’re expected to be priced above $HK6000/ftÂ² ($NZ19,330/mÂ²), compared to an acquisition and project cost of $HK3500/ftÂ² ($NZ11,280/mÂ²).World business
South Korea’s Kookmin Bank and Housing & Commercial Bank have agreed to merge into a $US127 billion entity despite strikes by the staffs of both banks.
Daewoo Corp’s creditors have agreed to split its trading & construction business in three â€” foreign trader Daewoo International, Daewoo Engineering & Construction, both to list in Korea on 13 February and each with about 67% debt, and a bad debts company.
Insurer CGNU (former in May by the merger of CGU, out of Commercial Union and General Accident, and Norwich Union) has agreed two Canadian sales: Commercial Union’s life business to Manulife Financial for $C138 million ($NZ207 million) and Norwich to American International Group (AIG) for $C159 million ($NZ238 million). CGNU’s remaining Canadian businesses, CGU Group Canada and Pilot Insurance, hold 12% of the property and casualty markets.
Renong Berhad chairman Halim Saad has increased his stake in the company from 16.5% to 69%, Renong has raised its stake in United Engineers (Malaysia) Berhad from 38% to 54%, after an assets-for-shares exchange, and the Renong share price has dropped 39% in the past month to 98.5 ringgit (NZ59c), making for an unhappy but powerless turnout of minority shareholders at Renong’s annual meeting this week. Mr Halim said he would buy out the minorities, but not until May 2002. Other companies run by associates of the Malaysian prime minister, Dr Mahathir Mohamad, which have propped up majority interests at the expense of minorities this year include Genting Bhd and Resorts World Bhd.
China’s timber market lifted in the last quarter with an upsurge in major construction and retrofitting of houses. Demand is for teak, cherry, oak, beech and walnut for decorative uses. Chinese log imports hit a record 10 million mÂ³ in 1999, but large quantities were stockpiled.
Warren Buffett’s Berkshire Hathaway has bought its fourth industrial business since June, taking over building products groups Johns Mandiville for $US1.9 billion ($NZ4.3 billion) at $US13/share, compared to $US15.65/share in a failed leveraged buyout five months ago. Berkshire Hathaway, which missed the technology boom bus, has also bought brickmaker Justin Industries, carpetmaker Shaw Industries and paint group Benjamin Moore.
Swiss investor Martin Ebner has bought 5% of Investor, the investment vehicle of the Swedish Wallenberg family, for SF700 million ($NZ970 million) through BZ Group. The Investor group includes telecom company Ericsson and electrical engineering group ABB.
General Motors said last week it would lay off 10% of its North American and European workers, and phase out its Oldsmobile division next year.