Investors who poured millions of dollars into the failed Nido homeware share ownership scheme have told of the misery they are suffering.
One investor with $1 million-plus invested has complained to the Financial Markets Authority, another who put in $1m fears he will have to shoot rabbits and dig vegetables to eat, while a third is suffering insomnia and nightmares after putting in $250,000.
A retired farmer, aged 79, said: "I can shoot rabbits and I grow my own vegetables. If I have to, I'll carry on working. I was getting around $5000 per month interest."
Another shareholder in her early 70s is one of 229 shareholders in Central Park Property Investment, which owns the failed Nido West Auckland homeware store and site.
Magsons Hardware, Nido's trading arm, is in receivership and liquidation, the property is under a $46.3m conditional contract after a mortgagee sale by lender Pearlfisher and shareholders' returns are now uncertain.
The retired woman has received no projected 8.5 per cent monthly interest payments since late last year and fears she will not get any money back, let alone thousands in unpaid interest.
The Nido store was built on land paid for with $30m raised by Maat Consulting through a proportional share ownership scheme and $25m of debt from Pearlfisher Capital, a non-bank lender half-owned by investment bank Jarden.
Another $7.5m came from the vendor of the property and ultimate tenant – Nido founder Vinod Kumar.
Neil Tuffin, managing director of Maat Group which issued the shares, said his business was doing all it could to help investors. Other property investment schemes which Maat had were successful, he said.
Tuffin has tried many different avenues, including subdividing the property into 12 smaller units but Pearlfisher did not agree to this, is charging 21 per cent and its $25m loan now stands at $35m due to charges and default clauses.
Tuffin told investors last month of "a verbal offer from a funder, Century Group, to refinance Pearlfisher $30m of the $35m debt" but no further updates have been issued on that.
Tuffin told the Herald that the demise of this investment is attributed to the following factors:
• Vinod Kumar, the businessman behind the concept and Nido director, failing to deliver the development on time and on budget.
• Numerous assurances were made from Kumar that additional capital would be obtained to complete the building and re-capitalise the tenant of the property, his company Magsons Hardware but which he failed to do, resulting in the liquidation of his entities and appointment of a receiver.
• Covid-19 impacting the forecasted retail sales, which culminated in the tenant unable to pay the rent or service the debt to Pearlfisher, first mortgagee.
• The first mortgagee, upon the default of mortgage payments, exercised their right to sell the property despite there being a retail concept that was supported by investors.
Kumar has not responded to requests for comment.
"We are extremely sympathetic to the plight of our investors, who we are reaching out to help through this difficult time," Tuffin said today.
The $1m-plus investor said he took no legal or financial advice before investing. Nor did he read the Financial Markets Authority website property syndicate warnings.
Asked if he'd read the risks in the Central Park company product disclosure statement, he said: "I glanced through. I didn't ask any questions. It just seemed like the return would be quite good and good for future income."
The professional has worked for decades, is aged over 50 and said if the money was lost, that would have a big impact on his and his wife's life. He said: "Money you think you saved up to pass on to children. I think there are some quite big lessons to learn. There should be a limit to how much people can invest in schemes like this, something like $50,000 or $100,000."
A Financial Markets Authority spokesman confirmed a complaint had been received over the Maat offer.
"We ordinarily do not confirm whether we have received complaints in relation to a specific issue, to protect the privacy of the complainant and subject of the complaint from undue prejudice.
"However, given this complainant has provided that information to the media, we can confirm we have received a complaint from a Central Park Property Investment shareholder regarding Maat Consulting, in relation to the Nido property syndicate.
"As with all complaints, we are assessing it through our normal processes. Complaints to the FMA are confidential so we will not comment further on whether or not we have received other complaints relating to this matter," the FMA spokesman said.
The retired woman in her early 70 said: "I put in some hundreds of thousands." She wants Maat to repay shareholders from other, more successful Maat funds.
The woman had a mortgage-free house and said she thought Nido was a good deal but said she had never visited the now-abandoned store, which shut two months ago.
"Covid came along and I worried my superannuation money in a managed fund would have a balance going down and down and down. So I grabbed it all out and I talked to a person at church who sent me a newsletter earlier last year from Maat.
"I hadn't heard of them at the time but felt that they had belief in faith like I do. I was drawn to the 8.5 per cent return. I was looking for somewhere to invest my money. I read a newsletter from May 2020 which said that the Nido store scheme in west Auckland was projecting 11 per cent although it came back to 8.5 per cent."
So she met up with executives behind the fund.
"I'm not investment savvy, although I've had rental properties in the past. Maat had 12 funds they were managing and had a good track record. I felt they could be trusted."
She then attended a presentation and although Nido founder Vinod Kumar was absent, she said she felt even more comfortable about the scheme.
"They knew what they were doing. So I invested in stages and in hindsight it was far, far too much. It should have just been a small amount but I was attracted to the return. It was so much more than putting my money in the bank," she said.
New Zealand bank interest rates were declining constantly at the time, which made her even more sure about the wisdom of her decision.
The scheme went well until December when no interest was paid.
"It wasn't in my bank account so I rang them and they said 'oh, did you not get our email?'
That email was to say that the interest payment would be delayed because Magsons [Nido's trading entity] had gone belly up.
"I was totally alarmed, absolutely - obviously. This was the only savings I had after owning two houses mortgage-free. I still have a little but it's taken half my savings. I had a business and I sold it."
Since December, she said she had been under extreme stress due to financial losses.
"I do sincerely think the Maat people have tried very hard, since December, to try to sort this out and they did get the backing of a new funder to the tune of $30m but that didn't work out.
"This changes my future because my new partner and I want to buy a house together. I'd hoped to put in a significant amount but I'm going to be limited now. We want to start our new lives but I can't ask my new partner to put in 100 per cent of the house price.
"We've been living with this for six months, since December and you go to sleep with it, you wake up with it in your head. You wake up in the morning and realise the nightmare is real."
She attended an Auckland meeting of Nido investors a few weeks ago but that new scheme would have taken five to six years before people got any interest.
"Many people in the room were older than me. That scheme didn't work either, because Pearlfisher exercised their rights of mortgagee sale so Maat couldn't go ahead with an alternative proposal," she said referring to the financier which loaned $25m.
Asked about the 21 per cent interest Pearlfisher charged, she said: "There was no understanding of our plight, our situation."
"The section on risks was about half an inch thick. I glanced through it, but it didn't make a lot of sense to me. I should have gone to a lawyer or just not invested."
Earlier this month, she spent an entire day in bed and said she was unable to eat or function due to the shock of the situation. She feels shame "and such a fool. But a lot of other people did the same as me."
The retired farmer said he remained active and still had savings but he asked: "Can they come after us?"
He was referring to the FMA's website which explains that investors in syndicates can be asked to contribute more money: "As a part-owner of the property, you may share responsibility for its costs and debts. This means you may need to invest more money, for example, if the building needs essential maintenance."
That worried him: "But it's lucky I didn't put everything into this."
The Financial Markets Authority warns that property syndicates advertise regular income with attractive returns but says "structures can be complex, there are risks to be aware of and returns are only estimates, and you may struggle to get your money out".
Fees can be high, unitholders or shareholders may have to invest more money and "we strongly recommend you seek financial advice", the authority says.
Before buying units or shares, syndicate investors should realise returns might not be what was advertised, read the documentation about risks, understand that fees can be high and rise and consult a professional such as a financial adviser to understand if such a syndicate is right for them, the authority says.
Demand for bonds may well stay strong, but there's a catch.