Hilton Hotel rejects option on property

By ANNE GIBSON

Hilton Hotel has refused its option to buy a new $57 million building at the end of Princes Wharf, which will instead be sold to Asian investors.

The $50 million Hilton Hotel, owned by developer David Henderson's Kitchener Group, is behind schedule and will not open until February.

It had been scheduled to open this month.

The Kitchener Group is also seeking a further $20 million to finance debts over the wharf development.

Mr Henderson said the chain would still operate the hotel, with Hilton taking a 15-year management contract.

Asked why there was ever any discussion about Hilton buying the property, Mr Henderson said: "It was a negotiating tool."

Negotiations were now taking place with an Asian investor but confidentiality arrangements prevented him from revealing further details.

Mr Henderson said a prospectus seeking investors for the wharf development would be issued soon.

Kitchener raised $12.7 million earlier this year to fund the Hilton and Mr Henderson's luxury penthouse apartment on top of the hotel. It promised an 11 per cent return.

Syndicator-bond arranger St Laurence Group, of Wellington, has issued a prospectus to raise money for 624 car parks on the wharf.

Wayne McCarthy, of St Laurence, said this issue was seeking $8.9 million and would pay 11.55 per cent.

St Laurence will soon apply to the Companies Office to raise a further $8 million and $14 million to refund Kitchener Group's debt on the wharf.

This is expected to return 17 to 18 per cent.

Mr Henderson said High Court action over a disputed $500,000 being claimed by builder Hartner Construction was "in limbo - Hartner are making positive moves to fix the defects and there are no grumblings from either side."

A report completed for Mr Henderson showed that "in excess of $500,000" would be required to resolve problems with the buildings.

He added:"But it's all under warranty."

Sales of apartments on the wharf were "in excess of 95 per cent, and we only have 14 or 15 left to sell."

The hotel is the last stage of redevelopment of the wharf.

It began when Kitchener won a Ports of Auckland tender in 1997, taking a 98-year lease on the wharf and former ports headquarters building for $25.75 million.