Apartment developer owes $29.6m

The Stratis apartments won an Institute of Architects award in 2005. Photo / Paul Estcourt

An apartment development business which put up the Stratis apartment block in Auckland's Lighter Quay owes $29.6 million.

Melview Halsey, owned by Nigel McKenna's Melview Developments, went into liquidation in March and Katherine Kenealy and Dennis Parsons of Hamilton's Indepth Forensic were appointed liquidators.

Inland Revenue wants unpaid tax of $1.18 million, the liquidators said.

Most of the tax owed was for the year to September 30, 2009 when all the sale proceeds from Stratis were taken by the bank to reduce its exposure to the block. No funds were available to meet the GST liability arising from the sales, the liquidators said.

The initial report was released on April 28 and it said Melview Halsey was established in June 2003 and traded until an order from the High Court at Auckland in March.

The business took an interest in leasehold downtown Auckland waterfront land, then developed Stratis, the distinctive white block of apartments designed by Andrew Patterson.

Stratis is part of the architect's cloud series which includes the award-winning Cumulus commercial office block in Parnell.

In 2005, the five-level luxury Stratis won an Institute of Architects award for offering an alternative to standard apartment typology. The judges commended McKenna for creating a loch alongside the block.

But McKenna's choice of site was part of the financial problems.

The liquidators said McKenna had attributed the company's failure to two main reasons:

* The undesirability of the leasehold nature of the apartments. Initially the concept of buying leasehold was seen to be a less expensive means of entering the apartment market. However, over time this has reduced to a point where it is now increasingly difficult to sell this type of property.

* The company was also a victim of the general economic downturn and the associated collapse in property values.

By the time of liquidation, Melview Halsey still owned six unsold units.

Creditors were owed $29.64 million, the liquidators estimated. Two secured creditors are owed $26.85 million. Structured Finance (NZ) and Real Estate Credit are the unsecured creditors and IRD is a preferential creditor.

The liquidators said 21 unsecured creditors are owed $5.95 million.

Unsecured creditors include Auckland Regional Council, Auckland City Council, Crockers, Kensington Swan, Lighter Quay Management Services, Melview Holdings, Fisher & Paykel, Lighter Quay Residents Society, Melview Developments, Interior Concepts, Axial Appliances Servicing, Barry Green Land Consultancy, Republik Communications and Tonkin and Taylor.

Creditors can expect nothing.

"On the information presently available to the liquidators it appears that there will be insufficient funds for a dividend to creditors," the liquidators said.

The unsold Stratis apartments were the only assets of Melview Halsey and are estimated to be worth $4.18 million. The next liquidation report is due on October 17.

The Lighter Quay website said the design brief for Stratis was to create an Hawaiian-inspired Lanai lounge-style of apartment for the two- and and three-bedroom units.

That would give residents the option of being open to the sun in fine weather but closed in for wintry days, the website said.

Stratis

* 83 Halsey St, Lighter Quay

* Six-level luxury apartments

* 73-unit east-facing block

* On Viaduct leasehold land