Developer John Love of Love and Co. talks to the Herald about NZ's biggest office-to-apartment conversion - luxury units hit the market. Video / Alex Burton
A property developer has still to pay Auckland Council $3 million for the Civic Administration Building (CAB) in Aotea Square and 5000sq/m of surrounding land more than seven years after the deal was struck.
Under a 2019 change in the deal, John Love of Love & Co wasto pay the $3m on December 30, 2020, but this month the council’s developer arm Eke Panuku informed the mayor and councillors that payment had been deferred until Love has fully repaid his financier.
Panuku bosses claimed a “significant number” of unsold apartments in the refurbished CAB is the main reason for the payment being deferred.
But Love said the $3m is not due and payable under the terms of an agreement with the council, and disputed a significant number of apartments remain unsold, saying the total is about 10 per cent.
Developer John Love at the refurbished CAB. Photo / Alex Burton
The civic administration building in Aotea Square, Auckland. 22nd February 2024, New Zealand Herald photograph by Sylvie Whinray
The apartments first went on the market in January 2017, and at one stage celebrity real estate agent Sally Ridge was selling them.
Love took on the former asbestos-ridden council headquarters in 2016 and converted the Category A heritage-listed skyscraper into 114 apartments, including a penthouse apartment marketed for $16.5m last year. It remains unsold.
Panuku chief executive David Rankin told the Herald that one of the reasons Love & Co got the nod to develop the CAB was it was a well-established and reputable company, saying the developer had been caught out by complications with the building and the current market.
“It was a costly, very high-risk building to touch. They have carried all the risk and the council has got the main thing it was after which is a quality restoration of the building … while avoiding development risk and putting in money,” he said.
Love said the restoration and adaptive reuse of the CAB had been completed to a very high standard in accordance with the relevant agreements.
He said the works were completed through an unprecedented period of uncertainty, cost escalation, labour and material shortages, Covid and exacerbated by what he called an inept Labour Government.
John Love says 10 per cent of the apartments remain unsold.
The sale of the building and surrounding land has been controversial since the day it was announced in September 2016, including criticism when Love sought changes to the facade of the heritage, 18-storey building.
Councillor John Watson said the $3m deal was the fire sale of the century.
“It’s a scandal, especially when the heritage preservation assured previously by Panuku, and used as one of the main justifications for the paltry price tag, has fallen far short of the mark.
“All up it’s been an incredibly poor deal weighted heavily in favour of the developer and with little or no return to the Auckland public,” he said.
This view is shared by councillor Mike Lee, who said the deal is a “grotesque” example of how the council and council-controlled organisations work in favour of the private sector rather than the ratepayers of Auckland.
“Will there be any accountability for this? - Not bloody likely,” Lee said.
Councillor Christine Fletcher, who was based in the CAB as Mayor of Auckland City 25 years ago, said the situation with the CAB was “beyond outrageous”.
Christine Fletcher says the deal is beyond outrageous. Photo / Nick Reed
She said there was never a strong case for selling the building and surrounding land, and at an outrageous low price for what will be some of the most valuable land in Australasia when the City Rail Link opens.
Rankin said under a deal agreed in 2019 for Love & Co to obtain mezzanine finance to undertake the project, “we are in the queue behind the financier”, saying the $3m payment date of December 2020 was deferred until the financier was fully repaid.
Only once the financier is fully repaid can the council get its money when the original development agreement between Love & Co and the council kicks back in with a set of timelines, he said.
Asked what would happen if Love does not pay the $3m after paying back his financiers, Rankin said Panuku could pursue enforcement provisions in the development agreement.
Rankin and development general manager Allan Young said they did not know where Love is at with plans for the 5000sq m, which have previously involved a hotel and a retail/office/apartment tower on Mayoral Drive, laneways and a “whare tapere” performance space fronting Aotea Square.
Early plans for the Civic Administration Building and surrounding land showed a new whare tapere performance space fronting Aotea Square.
The developer’s focus is on getting sales, not starting stage 2 until they have sold or substantially sold the apartments, Rankin said.
Love said the future stages have the foundations and ground floor slabs in place, and have resource consent.
“We are in the advanced stages of the process to kick off works on completing the future stages including additional high-quality residences and potentially a hotel later this year.”
Bernard Orsman is an Auckland-based reporter who has been covering local government and transport since 1998. He joined the Herald in 1990 and worked in the parliamentary press gallery for six years.
