March 1994 decisions

March 1994 decisions

Elitist residential project in Newmarket, Auckland by U.S developer

An alarmingly élitist step in residential development has received consent from the Commission. U.S. investor, Christopher Lorillard Norrie, has consent to, through the Middleton Trust, enter into a joint venture to acquire land in the central business district of Newmarket, Auckland for the purpose of development and sale of residential units. Norrie bought the land from New Zealand Rail as part of its disposal of Crown assets in 1992. The Sunday Star-Times reported (“Dreamland becoming a reality”, 13/3/94) that “Last April, American investor Christopher Norrie … embarked on a speculative residential project that should result in more than $200 million of apartments, duplexes and houses being built over the next four years.… Project general manager, Trevor Bolland says demand, already strong, should be assured by a heightened interest in inner-city living, zoning constraints on existing properties, the changing desires of an aging population and the opportunity to create an estate with various densities in a style not seen in New Zealand.” It will be called “Broadway Park” and is clearly aimed as an enclave for the rich and insecure:

“The estate will sit on the Remuera side of the Newmarket railway station with walkway access to the station and neighbouring Broadway shopping district. Streets will belong to the estate and, as with the park, extensive landscaping, sports and community facilities inside the boundary, will be owned by a body corporate. Mr Bolland says that having private roads and facilities offers two advantages.

“We are building our roads and footpaths to a higher standard than the council would require, particularly in regard to landscaping – clay pavers rather than tarmac, special street lamps, state-of-the-art communication facilities. There will be no television aerials, everything will come in by cable. The second thing is security. You know if someone is in there who doesn’t belong. We have surveillance cameras, management on site, but the public will have access to a walkway in daylight.”

Prices are likely to be from $500,000 per property up: construction costs will be (by covenant) a minimum of $200,000+GST, and section prices (450 to 800 square metres) between $230,000 and $400,000.

This is highly reminiscent of Robert Reich’s description of how what he calls “symbolic analysts” – the highly paid professionals, executives and capitalists who make up the wealthiest 20% of society – are “quietly seceding from the large and diverse publics of America into homogeneous enclaves within which their earnings need not be redistributed to people less fortunate than themselves.”

“With each sought-after reduction in their taxes, symbolic analysts in effect withdraw their dollars from the support of public spaces shared by all and dedicate the savings to private spaces they share with other symbolic analysts. As public parks and playgrounds deteriorate, there is a proliferation of private health clubs, golf clubs, tennis clubs, skating clubs, and every other type of recreational association in which costs are divided up among members. So also with condominiums, cooperatives, and the omnipresent “residential communities” which dun their members in order to undertake efforts that financially strapped local governments can no longer afford to do well – maintaining private roadways, mending sidewalks, pruning trees, repairing streetlights, cleaning swimming pools and paying for a lifeguard, and – notably – hiring security guards to protect life and property.” (“The Work of Nations”, Robert B. Reich, Vintage Books, New York, 1992, pp 268-269.)

Meanwhile the Taiwanese Suncern Group are planning a luxury apartment development on a nearby vacant block on Khyber Pass, and the 277 Broadway development is Singapore owned and its supermarket run by Dairy Farm International of Hong Kong. Development of the commercial area is being driven by the recently listed Newmarket Property Trust, 33.3% owned by FAI Metropolitan Life Assurance. It has a $70 million shopping and cinema complex planned, including a three-cinema multiplex. (Sunday Star-Times, 13/3/94, “Bold boost for inner city living”; Press, 19/5/94, p.24, “FAI takes 33.3%”.) Interestingly, none of these developments appear to have been approved by the OIC (or have been approved but details suppressed.)

The Sunday Star-Times reports that Norrie “is an American lawyer who was based in California when he bought the land, but has since moved to Seattle, has interests in horticulture in Hawaii and was distantly related to former Governor-General Lord Norrie. … His joint-venture partner is Neville Mahon, who had been running Project Group’s Wellington operation until that company’s demise in 1988. Woodland Group, the company Mr Mahon formed after leaving Project, is the main contractor for the Broadway project.”

Fernhill Hotel Ltd buys land for Queenstown Hotel and Condominium

In another Norrie/Woodland project this month, with a similar flavour to it, the Queenstown Lakes District Council is selling a 2.5 hectare property at Queenstown to Fernhill Hotel Ltd, for a price that has been withheld. “It is proposed that the property be developed as a resort Hotel/Condominium complex. There is already in existence planning rights for such a development … the vendor (the Queenstown Lake District Council) is disposing of the property in order to promote the objectives…” Fernhill is 25% owned by Norrie and 75% by Woodland Property Holdings Ltd, in turn 50% owned by T.Y. Tseng of Taiwan (see December 1993 decisions.) The other 50% of Woodland Property Holdings is owned by the above Woodland Group.

Tiong family’s Neil Construction buys 29 hectares at Albany for subdivision

In another residential subdivision development, the Tiong Family of Malaysia (the owners of Ernslaw One, one of the largest overseas owners of Aotearoa forests) is buying 29.3 hectares of land at Albany, North of Auckland for $6.42 million through their company Neil Construction Ltd. The land is apparently for speculative subdivision: the “benefit” of the purchase according to the Commission is that:

“The proposed purchase falls within the portfolio of subdivisional activities within the Auckland Region which are targeted by Neil Construction as part of its subdivisional programme. The Commission is advised this purchase will increase competition on a local and national level. The applicant states that technological and management skills will provide long term benefits for New Zealand subdivisional development and the construction industry.”

Ernslaw One buys 1,330 hectares in Waitotara Valley

Their company, Ernslaw One Ltd is also buying further forestry land this month. It is buying 1,330 hectares of land in Makakoho Road, Waitotara Valley for “approximately” $539,440. “The Commission is advised that the proposal represents a further expansion of its New Zealand forestry interests and the choice of the Wanganui/Manawatu region is because Ernslaw manages approximately 5,000 hectares of forests in that area and there is a need to expand this resource base to enable the company to produce wood fibre for a suitable industrial base.” Ernslaw is also acquiring right of ways over land at Slopedown District, Longridge, Southland. The land is owned by Longridge Ltd and Landcorp Investments Ltd. The right of ways are to get access to a 1300 hectare property at Slopedown District, Longridge whose acquisition by Ernslaw was approved by the Commission in May 1993 – but until now that approval had been suppressed.

For more on the Tiongs, see the commentary on the December 1993 decisions.

U.S. Blakely Pacific buys part of Matakana Islanders’ land and forestry rights

A decision highly significant in the denouement of the Matakana Island story concerns Blakely Pacific Ltd which gets approval to acquire approximately 1,981 hectares of land and certain forestry rights on Matakana Island, Tauranga for approximately $15 million. The vendors are Te Kotukutuku Corporation Ltd and Matakana Island Trust Incorporated. The Islanders’ battle to get control of the island’s forestry resources from ITT Rayonier (U.S.A.) and Ernslaw One (Malaysia), included several months blockading the road to prevent continued logging, and a successful, precedent setting, appeal to the courts against the OIC’s decision to give approval to ITT and Ernslaw. It is ironic that having won, the islanders had insufficient resources to develop the forestry on their own and had to sell half of the island to another transnational, Blakely Pacific. However they apparently are confident that this one is better than the long line of corporates who have exploited the island. In the words of the OIC decision: “The vendors … who represent the tangata whenua of Matakana Island state the proposal provides the Maori people on the island with the opportunity to preserve and protect all matters of cultural, religious and historical significance while utilising Blakely finance and expertise to develop the island’s forestry operation.” Blakely Pacific are acting as Trustee of the South Blakely Trust of Washington. It is a subsidiary of 130 year old Port Blakely Tree Farms Ltd (U.S.A.). (For more details of this latest development, see Foreign Control Watchdog, CAFCA, No. 76, September 1994, p. 5.) (This decision was released only on appeal to the OIC.)

Sydney Futures Exchange to clear for New Zealand Futures Exchange

The Sydney Futures Exchange Clearing House Pty Ltd, a subsidiary of Sydney Futures Exchange Ltd has consent to carry on business in Aotearoa because …

“The London Clearing House Ltd has indicated its wishes to terminate its current contract of clearing with New Zealand Futures and Options Exchange Ltd at the earliest possible date. The Commission is advised that the clearing of New Zealand Futures and Options Exchange market by Sydney Futures and Options Exchange Ltd is the only viable alternative for New Zealand Futures and Options Exchange. The Commission is further advised the proposal will promote New Zealand’s economic growth by ensuring New Zealand retains its domestic futures and options exchange. The applicant states that the benefits of a futures and options exchange for New Zealand are that it provides a local facility for hedging risks and a system for price discovery.”

(In other words it is another cost of the uncertainty brought about by open markets, particularly in currency, and another avenue for speculation.)

SEABIL, owned by SEA and Brierleys, becomes biggest listed property owner

Internal restructuring shows SEABIL NZ Holdings Ltd, a joint venture between SEA Holdings Ltd of Hong Kong (60%) and Brierley Investments Ltd (40%), being set up to own SEABIL NZ Ltd, and Fanion Properties Ltd. The value put on these two subsidiaries was released only on appeal: it was $11,591,648 in the case of SEABIL NZ Ltd and $1,833,457 in the case of Fanion Properties Ltd. According to Fiona Rotherham of the Independent, SEABIL is about to become the biggest listed property owner in Aotearoa with the $218 million acquisition of “the cream of Fletcher Challenge’s remaining property portfolio, five commercial properties in Auckland and Wellington.” The properties include a 40% interest in the ASB Bank Centre in Auckland, FCL’s Penrose head office, Prudential Plaza in Takapuna, the Ministry of Commerce building and Morrison Morpeth House in Wellington. SEABIL already had 34 properties, including recently acquired Lufthansa House in Auckland, and has $450 million in shareholders’ equity. Its property management is contracted out to Terra Firma Group, a company owned by four former Brierley Properties Ltd staff who also manage the Auckland Sky Tower casino project. The SEABIL parent company, SEABIL Pacific, is focussing on investing in China in Chengdu and Sichuan province. (Independent, “$500m portfolio will turn SEABIL (NZ) into NZ’s largest listed property coy”, 15/4/94, p.20)

Van Heeren takes shares in Tranz Rail

Retrospective consent is given to a businessman to take shares in Tranz Rail Ltd, the holding company for New Zealand Rail. Mr Alex van Heeren (nationality unstated, but a resident of Aotearoa) is given retrospective consent to take up 9,545,455 $1 ordinary shares at par through his company Tessaro Developments Ltd. The consent was requested because “the solicitors acting for Mr Van Heeren have doubts as to whether he is deemed to be an ordinary resident, notwithstanding he has been here for fourteen years.” In commenting on the July 1993 decisions (when the takeover of New Zealand Rail was approved by the Commission) we reported:

“Two months after the sale was announced, it was revealed that two more shareholders were part of the deal. Alex van Heeren, “who has interests in forestry and other export industries, and is the owner of Huka Lodge, near Taupo” will take a shareholding of 9.1%. The David Lloyd Group, a private investment company belonging to the Richwhite family, will take 4.5%. Fay Richwhite will hold 31.8% and WCTC and Berkshire 54.5% between them (“Business pair named ‘back-up shareholders’ for NZ Rail”, Press, 17 September, 1993).”

M.I.M. subsidiary, Highlands Gold, set up to take over prospecting licences

A M.I.M. Holdings Ltd subsidiary, Highlands Gold (NZ) Ltd, is being set up to “take an assignment of 70% interest in each of two prospecting licences granted under the Mining Act.”

Other rural land

• Southland Plantation Forest Company of New Zealand Ltd of Japan is buying two further blocks of rural land in Mossburn, Southland for forestry development: one of 250 hectares for $250,000, the other of 513 hectares for $513,000. The company is 51% owned by Oji Paper Company Ltd and 49% owned by C Itoh and Company Ltd, both of Japan. (See for example the July and August 1993, and February 1994 decisions for previous such purchases.)
• Another C Itoh and Company Ltd joint venture is buying 7.6 hectares of rural land at Awarua, Southland, for $2,000 + GST, from Landcorp, to stockpile sawdust and bark from their chip mill. The joint venture is South Wood Export Ltd which is 33¹/₃% owned by C Itoh and 66¹/₃% by M.K. Hunt Foundation Ltd of Aotearoa. See June 1993 decisions for previous purchases by this company.
• Another piece of Waiheke Island is being sold to a German as a “lifestyle property” for the purpose of “building a holiday home and establishing a vineyard operation.” It is a 1.4 hectare property adjoining a 2.7 hectare property which the Commission approved him buying in June 1992. Detlev Dannemann is buying it for $95,625. (The 2.7 hectare property cost $240,000 in 1992.) Apparently as an alternative, Dannemann and Dr Rainer J. Eschenbruch of Aotearoa have been given approval to lease up to 4.1 hectares of land on the island: this appears to be the same land. Dr Eschenbruch is involved with Rongopai Wines of Te Kauwhata and “will oversee the proposed viticulture operation.”
• They liked it so much they bought the farm: a U.S. couple, Richard and Barbara Sahlie are buying 15.388 hectares known as “The Crossing” on Woodbury Road, Geraldine for approximately $850,000. “Mr and Mrs Sahlie have stayed at the property on a number of occasions before and have always enjoyed the property and that is their reason for wishing to purchase … the purchasers will market the property as an exclusive accommodation establishment through existing offshore business contacts.”
• A Mr Bayer of Vanuatu, through his company, Nu-Tech Ltd, is buying 4.1 hectares of land on Clifton Road, Whitford, Auckland, as a “lifestyle” block for $850,000.
• A Singaporean owned company, Sweetwater Nurseries (NZ) Ltd is leasing 27.82 hectares of land at Awanui, North Auckland Land Registry, for 5 years, for a total rental of $58,750. The land is adjacent to 29.8 hectares of land purchased by Sweetwater in 1993 and will be used for a forest nursery. (See the October 1993 decisions for further details.)
• Nikko Canterbury Forest Ltd, owned by Mr Kan’ichiro Sakurai of Japan, is buying 107 hectares of rural land in Gebbies Pass, Banks Peninsula for $248,000. It will be used for forestry development to export timber to Mr Sakurai’s Japanese business. The vendor is a “Mr Carter“. This is Mr David Carter, National MP for Selwyn, who has a farm in the area.
• Yet another piece of land at Broadwood, Far North District is being sold off for forestry. This time it is 40 hectares being sold to members of the Liu family from Taiwan, through Diamond Enterprises Ltd.
• A 19.2 hectare orchard in Kerikeri is being sold to B & Y’s Orchards Ltd, owned by Stanley So of Hong Kong, for $430,000. “Mr So sees an opportunity to develop and cultivate the orchard utilising New Zealand expertise and creating a long term lifestyle for him and his family” using an Aotearoa manager and workers.
• Telecom Auckland Ltd, a subsidiary of Telecom Corporation of New Zealand Ltd, is buying more land for its yuppy-phone repeater sites: this time 2484 square metres in the North Auckland land registry area. The price was originally suppressed but was released in October 1996 as $18,000.

Internal restructuring: Toyota Finance; Sumitomo rearranges Nelson Pine

In an intriguing “internal restructuring”, Toyota Finance New Zealand Ltd is acquiring new vehicles from TFNZ (Wholesale) Ltd for “approximately $42 million“. Both companies are ultimately wholly owned by Toyota Motor Corporation of Japan, through Toyota Finance Australia Ltd.

And Sumitomo Forestry Co. Ltd of Japan is moving its 50% ownership of Nelson Pine Industries Ltd from one subsidiary which is being wound up, Sumirin Capital Investments NZ Ltd, to another, Sumirin NZ Ltd.