Magellan Orakei goes bust owing $5.6m

By ANNE GIBSON

An Auckland property investment company that traded Maori leasehold railway land has gone under.

Magellan Orakei has been put in receivership and liquidation and will end up with a deficit of $5.6 million, accounts prepared by receiver Brian Mayo-Smith, of BDO Spicers, show.

The company subdivided the land around Auckland's former central railway station and Quay Park, selling the blocks - owned by Ngati Whatua O Orakei but leased out for 150 years - to developers who built apartments units, shops and commercial buildings there.

The accounts show that the first debenture holder, Auckland's Structured Finance (NZ), is owed $5 million. But Structured's Martyn Reesby says he will not lose money and has already been paid some of the money.

Other debenture holders are the P. Spencer Family Trust, the Stewart Family Trust and the David Ryan Family Trust, jointly owed $2.3 million, followed by Equinox Gladstone, owed $2.1 million.

Inland Revenue, owed $1.7 million, is the largest unsecured creditor, followed by Bayleys Real Estate ($418,000), CB Richard Ellis ($234,000), Auckland City Council ($30,000), Russell McVeagh ($22,900), HEB Contractors ($16,900), Lowndes Jordan ($13,500) and Bogaki Property Consultants ($2100).

The undeveloped land attracted grand plans, and Australian department store operator David Jones at one stage agreed to be anchor tenant in a $400 million mall there.

Then Magellan Orakei chief Robin Sheffield announced in 1999 that he had sold the 2.37ha Oriental Markets site to a Taiwanese financier in a deal involving Kerry Knight of Auckland law firm Knight Coldicutt and Chong du Cheng of Equinox Group.

Industry observers said the holding costs on the land would have been crippling.

Summing up Magellan Orakei's assets, Mayo-Smith said one of the largest was Eagle Technology House in Wellington's Willis St, which one real estate agent said would fetch between $4.5 million and $5 million.

The company has $9.5 million of freehold and leasehold land and buildings, says Mayo-Smith's report.

He and Robert Knox, also of BDO Spicers, had been appointed joint receivers "due to the substantial deterioration in the company's financial position caused by delays in various property sales and a consequent inability to pay debts due".

Structured Finance had appointed them under powers in the mortgage debenture.

Reesby said he remained on good terms with Sheffield. "I called the liquidator in because Inland Revenue was going to put the company into liquidation for unpaid income tax, so Robin Sheffield asked me to put the company in receivership," he said.

Developments on the land Magellan Orakei controlled included Greg Kernoghan's apartments at 88 The Strand, a controversial building under construction after a long fight with former Court of Appeal judge Justice Ted Thomas.

Auckland developer Nigel McKenna also built apartments on the land. And the Auckland City Council spent $12 million in 1997 for a leasehold interest in Quay Park land, earmarked for an arena.

Jon Chomley of CB Richard Ellis said his firm had written off the money owed to it by Magellan Orakei. The amount was for work done in a joint agency with Bayleys on selling a block of the land to Starline Group for about $21 million in 2000.

Bayleys spokesman Neil Prentice said he could not confirm whether money was owed to his firm, or what the amount might be.