KEY POINTS:
People who have paid deposits to Blue Chip for yet-to-be built properties are surprised to learn the developments are not actually owned by any Blue Chip entities.
Thousands of small investors are wondering where their money is after 19 companies associated with the Blue Chip structured property investment scheme went into liquidation last week. While some are owed rent on finished properties, others have no idea what has become of their deposits on future developments.
The Business Herald understands Blue Chip's business model involved on-selling developments to others, who would then have the obligation of delivering the finished apartments to investors.
However, following the liquidations, what that model now means for the Mum and Dad investors who have poured tens of thousands into the developments is unclear.
The 18-level apartment development in St Martins Lane, central Auckland, is a case in point.
Still a hole in the ground, as of February 2007 the development has been owned by Icon Central Ltd, a wholly owned subsidiary of Paxton Pacific Group Ltd. Lawyer and Paxton trustee shareholder Timothy Slack said he understood a Blue Chip-related company had tried to get the development underway, but had then onsold it.
This was news to Te Puke investors Carol and Cliff Hayes, who told the Business Herald they had always been under the impression the St Martins Lane development was being done by Blue Chip.
In 2005, the couple signed sale and purchase agreements with Blue Chip-related company Kingsley Ltd (now in liquidation) on three future apartments in the development - one on their own and two through joint ventures with Blue Chip NZ as guarantor.
They have invested a total of $665,575. They were paid interest on their deposits, and "procurement fees" on the apartments bought via the joint ventures.
Late last year, the interest payments and procurement fees stopped, and the couple are owed $9000. But the bigger problem is that they have no idea where their initial investment now is.
Slack said Icon had received a lot of calls from investors worried about their deposits. He said all deposits the company had received for apartments were being held in trust by his law firm Carter and Partners.
He said Blue Chip was an agent selling some of the apartments, but Icon could not tell which investors had come from where.
Slack could find no record of the Hayes or their investment, saying it appeared to have been made before Icon's involvement and would therefore not be part of the funds being held in trust.
The apartment building is due to be completed in May.
Other Blue Chip investors put deposits on apartments in the Turner Waverley development in Turner St, Auckland. That project is owned by Norwich Properties, which is ultimately owned by Tim Manning who built many of Auckland's largest leaky home developments.
Quotable Value records show the property was last sold in June 2006.
General manager of Norwich Properties, Brad Worthington, also told the Business Herald that Blue Chip was an agent which sold a number of the units in the development.
Like Icon, he said Norwich had been contacted by a number of Blue Chip investors concerned about their deposits, and they had been told the money was being held by a law firm.
Worthington said construction on the 14 and 17 storey two-tower development was on target to be completed by October/November.
They told us everything would be OK. Now we don't know
Carol Hayes says she didn't think she and her husband Cliff were stupid.
She is angry at being "sucked in" by the Blue Chip structured property investment scheme. "I can't tell you how many tears have been shed."
After building up a waste management business, Cliff Hayes suffered an accident and was unable to work.
He and Carol sold the business, paid off their mortgage, and invested money left over in three yet-to-be built apartments in the St Martins Lane development in downtown Auckland.
The plan was to live off Carol's part-time income plus the interest on their deposits, and the "procurement fees" Blue Chip was to pay them for entering joint ventures with it on two of the apartments.
Late last year the payments dried up.
After "pushing and pushing", the couple managed to get Blue Chip founder Mark Bryers on the phone from Sydney in December.
"He assured us all was well," Carol says.
"We'd worked really hard for the last 20 years, we were in a fairly good position. Now, I don't know."
