KEY POINTS:
Blue Chip executive director Mark Bryers says deadlines for late rent payments promised to investors are overly optimistic and not all payment dates can be met.
The founder of the residential property investment firm which has drawn complaints from investors lately said yesterday that problems would not be resolved as fast as some had been told.
Although many people owed rent from November were paid at the end of last week as promised, Bryers said it was no easy matter to get all payments up to date rapidly.
Some investors had been overpaid so a thorough reconciliation was needed before matters were resolved, Bryers said from his boardroom on the 20th level of his New Zealand headquarters on Queen St.
Bryers was in Auckland yesterday on a visit, saying he now lived in Sydney but returned here regularly partly due to family commitments.
He is concerned at criticism of his company but says much of it is unwarranted and just plain wrong.
Earlier this month investors who had been crying out for their late rent got letters from Blue Chip chief executive Neil Bell outlining a payment schedule and saying all rent owed from November would be paid by the end of last week.
Many investors were happier when they got those payments but Bryers acknowledged yesterday that not everyone got paid because Bell had been too optimistic.
Bryers said he regretted the difficulties which he attributed partly to the company's fast growth.
"This is a human error issue of some magnitude," he said, referring to problems with how the data was entered into computer systems for clients when Blue Chip rearranged its business late last year.
"It goes to the heart of the data being put into those systems. You know, 2000 properties is a substantial property management portfolio but, more importantly, no one in New Zealand has had a book where they have taken on 700 [properties] in one year and that's where the systems were not appropriate, the resourcing was not appropriate and that's where the mistakes occurred."
To rectify the issues, a full manual reconciliation and audit of payments was required, he said.
But he also encouraged investors to put the problems into perspective, saying Blue Chip had been going for seven years, many clients had leases of more than four years and yet rent was outstanding for just five weeks.
He understood the emotion of clients whose payments were late, but he said trading banks worked on the theory that a residential property was not tenanted continuously and if clients were managing the properties themselves, they would have times when the rent did not flow continuously.
Asked to describe the scope of the business, Bryers said more than 3000 investors owned just under 2000 properties in Auckland, of which 40 per cent were standalone houses, 30 per cent were townhouses and 30 per cent apartments.
In a joint announcement this week, Blue Chip and real estate chain Harcourts said the management of Auckland properties would be taken over by Harcourts. Bryers said yesterday that Harcourts would initially manage 1100 properties and the rest would be transferred to Harcourts from three other parties once management agreements expired.
Before Harcourts could step in, a complete audit and reconciliation of payments at each property must be carried out, Bryers said. Other payment problems were uncovered, such as non-payment of body corporate fees and rates, Bryers said, estimating the total portfolio had a capital value of $800 million to $850 million.
He is angry about media coverage of the problems at the firm lately.
He is also angry that at least two other Auckland-based real estate firms have been pitching to manage the Blue Chip properties this month, saying some disgruntled former employees were involved.
But he said he was not surprised other firms would make the pitch. People had to judge whether they believed it was appropriate to give their business to a small private company, he said.
"It just happens to be people who are ex-employees trying to generate business for themselves. People have to put this in perspective. In seven-and-a-half years, you've got a five-week gap with rent not being paid and suddenly everyone wants to jump on Blue Chip as a finance company and another Bridgecorp which is going to have a momentous collapse in New Zealand."
Bryers won't be attending an investor meeting next week. Greta Norman, a Blue Chip investor, is organising the event at 7pm on Wednesday at the Jack Dickie Hall, Greenlane, but Bryers said he had not been invited and knew nothing about it.
"She's got every right to call a meeting of whoever she likes. Obviously if I'd known about it and met with her and understood what she was trying to do and achieve, I would have been happy to address those people. Except that I'm in Sydney next Wednesday and in Melbourne on Thursday. I commute between both countries," he said, adding that he had shifted to Sydney's Walsh Bay.
Asked about investors who had complained they had paid deposits on properties not yet developed, Bryers said this was being resolved.
"We've been working on that in the last year and reduced that problem by 50 per cent," he said, estimating deposits were held for 170 Auckland properties not yet completed.
But changes to council regulations for development work and in bank lending criteria for the size of apartments had been at the root of the delays, he said.
"In Auckland, not only have the banks and councils changed their criteria for the sizes of properties already consented to but then there have been changes in the building code too."
Investors have complained loudly over the long wait for apartments in a St Martin's Lane development but Bryers said work had begun there and would be finished by May next year.
"It's a typical example of the council holdups and it should have been already finished by now."
As for complaints from clients about lack of code compliance certificates, Bryers blamed that on both territorial and central government and cited The Avenues at Albany as an example. Blue Chip was taking legal action over problems there, he said.
The company had spent more than $3 million on remedial work at investors' properties in the past seven-and-a-half years "on all sorts of issues, including leaks".
As he left the boardroom for his next meeting, Bryers said he was also owed money because he had "several" Blue Chip property investments.
Company's scope
* Blue Chip is based in Auckland.
* It has more than 3000 investors.
* They own nearly 2000 properties. Those properties are in the Auckland area.
