Hotel 'won't be a burden on taxpayers'

Hotel So in Christchurch. Photo / Supplied

Christchurch developer Dave Henderson says his Hotel So will not cause the taxpayer financial agony.

Henderson, with companies in receivership after trouble at the funky Cashel Street hotel, borrowed more than $20 million from South Canterbury Finance.

But that loan is secured via a first mortgage and Henderson objected to speculation the hotel was worth just $9 million or that its sale would cause losses.

"The loan is not subordinated in any way. There are other second mortgages where South Canterbury will not get a cent back. They have a first mortgage on this property. There are multiple loans which South Canterbury has way in excess of mine. I'm up for taking a beating, but the recent valuations on Hotel So have been in the mid- to high-$20 million bracket," said Henderson whose IRD battle was the subject of a film and book.

"I'm painfully aware I should have repaid my borrowing and I would have refinanced but you can't raise 10 cents in this market. Don't treat it like it's some criminal business" he said.

The hotel was at close to 80 per cent capacity and its average room rate was $89/night, he said, objecting to mentions of 11sq m rooms and its advertised $69/night rate.

"What are you trying to suggest, that because it's small and cheap it's bad?"

Dean Humphries, Jones Lang LaSalle Hotels' national director, has launched a marketing campaign so SCF can get the ex-Inland Revenue office block off its books.

The hotel could fetch up to $30 million. "There has been a significant amount of interest in this asset from both local and international parties. We have been retained as sole agent by Stephen Tubbs and Colin Gower of BDO Christchurch, joint receivers and this is one of Christchurch's newest hotels," Humphries said.

"The sale represents the first opportunity in over two years to acquire a hotel in one of New Zealand's main centres," he said.

"The hotel will offer a fantastic return with further upside potential as it reaches a mature trading platform, aided by the Rugby World Cup."

Hotel So Operations has net assets of -$5 million, Cashel Ventures has net assets of -$4.9 million and Hotel So Corporation has net assets of $496,783, BDO Christchurch said.

Hotel So
* Christchurch hotel
* Opened November 2007
* 283 rooms + amenities
* $20m+ SCF loan
* Companies in receivership