source: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10659499
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Asian investors owed money by the developer of Auckland's Westin Hotel say the saga is "a bad image" for New Zealand.
A group of 89 investors, mainly from Malaysia and Singapore, have seized control of their rooms in the five-star waterfront hotel following a dispute over unpaid rent and the terms of their lease arrangements.
Troubled developer Nigel McKenna's Lighter Quay Hotel Management (LQHM) owes the investors at least $3.8 million in rental arrears, dating back to late 2008.
Last week the investors gained a High Court order cancelling their leases with LQHM and allowing them to take possession of their rooms from August 11.
On the same day in an adjacent courtroom LQHM - which is already in receivership - was put into liquidation following a petition by British investor GDF-1 LLP, owed about $200,000.
Retired Malaysian accountant Aladdin Mohamed Lip is an investor and spokesman for the Asian group. He said the owners were upset and angry. "We really feel we've been cheated."
Investors were owed $30,000 to $50,000 per unit in unpaid rent. They had "let their guard down", he said.
"We look on New Zealand as quite a safe country. We had assumed that the property market is well regulated, and nothing much would go wrong."
Agents in Singapore and Malaysia had heavily marketed the Westin, and investors had been attracted by a guarantee of 6 per cent rental income for three years.
"I think that more or less blinded us to not read the agreement in detail."
New Zealand lawyers advising the investors had been appointed by the developer, Lip said. "When we signed the sale and purchase agreement we expected lawyers to advise us on anything improper, but we didn't receive any advice."
One of their problems with the lease that had emerged was that use of the common areas of the hotel, such as the restaurant and lobby, did not come with their ownership of the rooms, he said. Owners were being asked to pay extra to use these facilities. The arrangement was "simply not workable".
Last week in court, lawyers for LQHM's receivers argued the chance to negotiate a restructuring of the lease would be lost if the investors' legal bid was granted.
But Justice Paul Heath said the restructuring could still go ahead. He also denied a request by the lawyers to have the details of the lease proceedings suppressed on the grounds the public may think the hotel was closing down.
He said he had listened to the arguments "particularly having regard to the undoubted benefits of the 2011 Rugby World Cup". But the public already knew there were problems.
"If they know there is an order putting the company in liquidation that is more likely to confuse them as to the ongoing viability of the business than learning of this is."
All parties to the proceedings had an interest in ensuring the viability of the Westin and he had confidence media coverage would be balanced, he said.
Receivers were appointed to LQHM on June 30. Receiver Michael Stiassny said at the time of the appointment he intended to keep the hotel operating as usual. The hotel was fully booked for the Rugby World Cup, he said.
Westin Hotel room arrears not the only one
* The $130 million, 172-room Westin Hotel in Auckland's Viaduct Harbour
was developed by Nigel McKenna's Melview Group and opened in 2007.
* McKenna's Lighter Quay Hotel Management (LQHM) is contracted to run the hotel under the Westin brand.
* Rooms were sold to mainly Malaysian and Singaporean investors and leased back to LQHM.
* LQHM was placed in receivership on June 30 owing nearly $6 million to 122 creditors. It is now also in liquidation.
* The Westin is not the only McKenna hotel development to run into trouble - small investors in Wellington's Holiday Inn are also owed rental arrears.
* McKenna's other interests include Queenstown's $1 billion Kawarau Falls development, placed in receivership in May last year.
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Asian investors owed money by the developer of Auckland's Westin Hotel say the saga is "a bad image" for New Zealand.
A group of 89 investors, mainly from Malaysia and Singapore, have seized control of their rooms in the five-star waterfront hotel following a dispute over unpaid rent and the terms of their lease arrangements.
Troubled developer Nigel McKenna's Lighter Quay Hotel Management (LQHM) owes the investors at least $3.8 million in rental arrears, dating back to late 2008.
Last week the investors gained a High Court order cancelling their leases with LQHM and allowing them to take possession of their rooms from August 11.
On the same day in an adjacent courtroom LQHM - which is already in receivership - was put into liquidation following a petition by British investor GDF-1 LLP, owed about $200,000.
Retired Malaysian accountant Aladdin Mohamed Lip is an investor and spokesman for the Asian group. He said the owners were upset and angry. "We really feel we've been cheated."
Investors were owed $30,000 to $50,000 per unit in unpaid rent. They had "let their guard down", he said.
"We look on New Zealand as quite a safe country. We had assumed that the property market is well regulated, and nothing much would go wrong."
Agents in Singapore and Malaysia had heavily marketed the Westin, and investors had been attracted by a guarantee of 6 per cent rental income for three years.
"I think that more or less blinded us to not read the agreement in detail."
New Zealand lawyers advising the investors had been appointed by the developer, Lip said. "When we signed the sale and purchase agreement we expected lawyers to advise us on anything improper, but we didn't receive any advice."
One of their problems with the lease that had emerged was that use of the common areas of the hotel, such as the restaurant and lobby, did not come with their ownership of the rooms, he said. Owners were being asked to pay extra to use these facilities. The arrangement was "simply not workable".
Last week in court, lawyers for LQHM's receivers argued the chance to negotiate a restructuring of the lease would be lost if the investors' legal bid was granted.
But Justice Paul Heath said the restructuring could still go ahead. He also denied a request by the lawyers to have the details of the lease proceedings suppressed on the grounds the public may think the hotel was closing down.
He said he had listened to the arguments "particularly having regard to the undoubted benefits of the 2011 Rugby World Cup". But the public already knew there were problems.
"If they know there is an order putting the company in liquidation that is more likely to confuse them as to the ongoing viability of the business than learning of this is."
All parties to the proceedings had an interest in ensuring the viability of the Westin and he had confidence media coverage would be balanced, he said.
Receivers were appointed to LQHM on June 30. Receiver Michael Stiassny said at the time of the appointment he intended to keep the hotel operating as usual. The hotel was fully booked for the Rugby World Cup, he said.
Westin Hotel room arrears not the only one
* The $130 million, 172-room Westin Hotel in Auckland's Viaduct Harbour
was developed by Nigel McKenna's Melview Group and opened in 2007.
* McKenna's Lighter Quay Hotel Management (LQHM) is contracted to run the hotel under the Westin brand.
* Rooms were sold to mainly Malaysian and Singaporean investors and leased back to LQHM.
* LQHM was placed in receivership on June 30 owing nearly $6 million to 122 creditors. It is now also in liquidation.
* The Westin is not the only McKenna hotel development to run into trouble - small investors in Wellington's Holiday Inn are also owed rental arrears.
* McKenna's other interests include Queenstown's $1 billion Kawarau Falls development, placed in receivership in May last year.
