July 2004 decisionsOne application refused – retrospectively Westfield takes full ownership of Newmarket, Auckland properties Sky City increases its ownership of Riverside Casino (Hamilton)… … and Riverside gets retrospective consent to own the land the Casino is on Change in ownership of Juken Nissho Cook St property in Auckland to 1st Class Baggage of Australia Multiplex buys South City Shopping Centre, Christchurch One application refused – retrospectivelyThe OIC routinely approves applications made by overseas investors well after they have purchased an asset, thus undermining its own rules. See for example the retrospective approval to Riverside Casino Ltd below. For once however, it has refused a retrospective application. Christopher Reiter and Iris Reiter of Germany have been refused approval to acquire 12.1 hectares at Kirkliston, Corrigals Road, Hakataramea Valley, South Canterbury for $163,000 from Graeme Sydney Warren of Aotearoa.
According to the OIC,
The subject property was acquired on 21 August 2001 by Mr G Warren with a mortgage provided by the Applicants. At the time of this acquisition the land was leased for grazing purposes, and also had a small plot of 20 olive trees planted by the previous owners as an experiment to see which varieties grew the best. The Applicants’ accountant describes the current use as not more than a lifestyle block.
The accountant advises that the lack of available irrigation water will constrain the Applicants’ proposal to develop a vineyard on the property. It is proposed that the Applicants will develop an adventure lodge on the property which will cater for 5 to 8 independent travellers within the existing cottage. The existing homestead located on the property will be renovated to provide managers accommodation. It is advised that the location is ideal for the development of horse trekking and riding activities, fishing, 4WD safaris and mountain biking.
However “the application for consent has been refused as it was not considered to be in the national interest.” It is not explained what led to this decision. The need for a retrospective decision appears to be due either to the mortgage (which is an interest in land) or to the circumstances under which the Reiters changed from being mortgagees to owners. [Decision number 200420008.] Westfield takes full ownership of Newmarket, Auckland propertiesWestfield Group (St Lukes Group (No.2) Limited and Westfield Properties (New Zealand) Limited), owned 88.6% in Australia and 11.4% by “Unknown Overseas Persons”, has approval to acquire a 50% interest in the following property in Newmarket, Auckland from Auckland One Limited owned by D and M Jen of Singapore: · 4.7 hectares of freehold comprising:
· 2.1 hectares of leasehold comprising:
Westfield is paying $121,227,000 for the acquisition. It held the other 50% interest.
The OIC states:
On 14 August 2002, St Lukes Group (No. 2) Limited (St Lukes) was granted consent to acquire a 50% interest in property owned by Auckland One Limited (the vendor) being the 277 Shopping centre and peripheral land on the west side of Broadway. Contemporaneously, Auckland One Limited acquired a 50% interest in the property owned by St Lukes being on the east side of Broadway in Newmarket, Auckland on which St Lukes proposed to establish a retail shopping centre.
The rationale for the St Lukes/Auckland One Limited investments was to establish a joint venture development programme. Both parties formed the view that by integrating their properties they can achieve a more efficient retail and mixed use development than would otherwise be the case if each undertook separate developments in Newmarket.
Auckland One Limited now wishes to sell all of its interests in the Newmarket properties. It is proposed that St Lukes and Westfield Properties (New Zealand) Limited, together being part of the Westfield Group (Westfield), will acquire the 50% interest in the subject properties held by Auckland One Limited (St Lukes in respect of the properties known as the 277 Properties, and Westfield Properties (New Zealand) Limited in respect of the properties known as the Mercury Energy Properties). Westfield proposes to continue the development of the subject properties in accordance with the original development plans proposed by St Lukes and Auckland One Limited.
See our August 2002 commentary for further details of the previous decisions to which the OIC refers. [Decision number 200420009.] Sky City increases its ownership of Riverside Casino (Hamilton)…Sky City Entertainment Group Limited has approval to acquire up to 70% of Riverside Casino Limited, which owns the Hamilton Casino, operated by Sky City. It includes 0.51 hectares at 340 Victoria Street, Hamilton, Waikato. The additional 15% shareholding is being acquired for $11,102,232 from Tainui Development Limited of Aotearoa. The remaining 30% is owned by Perry Group Ltd of Aotearoa.
The OIC states:
The Applicant (SkyCity) currently owns 55% of the ordinary shares in Riverside Casino Limited (RCL). SkyCity proposes to acquire a further 15% of the ordinary shares from Tainui Developments Limited. RCL owns SkyCity Hamilton, a gaming, entertainment and conference centre located in Hamilton. A subsidiary of SkyCity operates SkyCity Hamilton pursuant to a management agreement.
Sky City Entertainment is owned · 23.91% in Australia, · 10.59% in the U.S.A., · 4.88% in the U.K., · 2.67% in Hong Kong, · 1.18% in Singapore; and · 56.77% in Aotearoa. [Decision number 200420012.] … and Riverside gets retrospective consent to own the land the Casino is onThe OIC has given Riverside Casino Limited (RCL) retrospective approval for acquiring the land on which the Hamilton Casino is sited. In other words, it has been operating on a site it did not have a legal right to own.
The Applicant seeks retrospective consent to the acquisition of the subject property. Consent was not sought by RCL at the time of acquisition as the fact that the property was entered in the Historic Places Trust Register was overlooked.
The approval is for RCL to acquire 0.51 hectares at 340 Victoria Street, Hamilton, Waikato for $2,092,971 from Perry Group Limited of Aotearoa.
States the OIC:
Sky City Limited acquired 55% of the ordinary shares in Riverside Casino Limited (RCL) in 1999. RCL acquired the subject property to establish SkyCity Hamilton, a gaming, entertainment and conference centre located in Hamilton on 23 March 2000. A subsidiary of SkyCity operates SkyCity Hamilton pursuant to a management agreement.
As the OIC relates it, RCL was owned as follows (presumably in 1999): · 7.4863% by persons who may be “overseas persons”, · 6.875% by Harrah’s Entertainment Inc. of the U.S.A., · 5.566% by Camerlin Group Berhad of Malaysia, · 1.8646% by Franklin Resources Ltd of the U.S.A. · 1.7811% by Singapore Government, · 30% by Perry Group Limited of Aotearoa, · 15% by Tainui Development Limited of Aotearoa, · 31.427% in other shareholdings in Aotearoa
In fact this represents the fact that Sky City Entertainment owned 55%, Perry Group 30% and Tainui 15% (since sold to Sky City – see previous decision); and that Sky City was then approximately 63% owned by Brierley Investments Ltd, which had Camerlin, Franklin and Singapore Government shareholding. Harrah was also a shareholder of Sky City. [Decision number 200420013.] Change in ownership of Juken NisshoSingapore Juken Sangyo Pte Limited, 100% owned by Wood One Company Limited of Japan, has approval to acquire up to 87.629% of Juken Nissho Limited. This is an additional 2.629% over its present 85% shareholding, which it is acquiring for $12,750,000 from Nissho Iwai Corporation of Japan. Juken Nissho owns: · 12,155 hectares of freehold in the Northland, East Coast and Wairarapa regions; and · 12,163 hectares of leasehold in the Northland, and East Coast regions.
The OIC states:
Since Juken Nissho Limited (JNL) was established in 1990, 85% of the shareholding has been held by Wood One Company Limited (by its wholly owned subsidiary Singapore Juken Sangyo Pte Limited). The remaining 15% has been held by Nissho Iwai Corporation. Nissho Iwai Corporation has recently decided to sell its interest in JNL. Prior to the sale of these shares it is proposed that an additional 2.629% of shares will be issued to Singapore Juken Sangyo Pte Limited (a wholly owned subsidiary of Wood One Company Limited). The issue of these shares will increase the Applicant’s shareholding to 87.629%. It is proposed that the shares held by Nissho Iwai Corporation will be sold to Toshio Nakamoto, Chairman of Wood One Company Limited, who will acquire a 1.65% interest and Yusho Nakamoto, who will acquire a 10.721% interest.
The OIC also informs us that “the proposal is likely to result in a continuation of the benefits that have accrued to date from Juken Nissho Limited’s investment in New Zealand.” This is controversial: Juken Nissho won the 2003 Roger Award for the worst transnational corporation operating in Aotearoa/New Zealand in 2003. The judges’ report on the award noted its appalling health, safety and environmental record, and that “many of the company’s transactions seem to occur through related parties and, therefore, may provide a way to shift profits offshore and avoid tax liabilities; the company reports losses and pays no tax”. The company was predominantly debt financed and dependent on its shareholders for its continued existence – especially on Wood One:
Juken Nissho’s shares amount to $60 million but, until 2001, accumulated losses exceeded the share investment and the company reported negative equity. The shares are owned by Singapore Juken Sangyo Pte Ltd of Singapore ($51,000,000) and Nissho Iwai Corporation of Tokyo ($9,000,000). The shares in Singapore Juken Sangyo Pte Ltd are owned by Wood One Company Limited (formerly Juken Sangyo Company Limited) incorporated in Japan. This means that Juken Nissho Ltd in New Zealand is controlled from Japan by Wood One, which acts through Singapore Juken Sangyo Pte Ltd.
Under normal circumstances Juken Nissho would be regarded as insolvent. It reports a massive shortfall in working capital each year which suggests that it has extreme difficulty operating on a day to day basis because of inability to pay its bills. Because of the negative equity from 1999 to 2001, the company was totally debt financed. Now it is predominantly debt financed. Most of the debt consists of loans from Japanese banks, with those loans guaranteed by the company shareholders. There is also a loan from Nissho Iwai Corporation. Juken Nissho’s financial reports state each year that the company’s continuing viability is “dependent on the financial support of its shareholders and bankers. The directors of the Company’s ultimate majority shareholder (Wood One) have accepted the responsibility of providing sufficient financial assistance to the Company for the forthcoming twelve months and to ensure financial facilities continue to be available from local and overseas sources when needed”. Were such a statement not made, the auditors would be unable to sign a clean audit report. The statement should not be regarded as a guarantee. It is feasible that if Juken Nissho were to cease operations in New Zealand, its local debt would go unpaid.
(http://canterbury.cyberplace.org.nz/community/CAFCA/publications/Roger/Roger2003.pdf.)
The present change in shareholding reinforces this position. [Decision number 200420001.] Cook St property in Auckland to 1st Class Baggage of Australia1st Class Baggage Limited, owned 50% by Duncan Bull and 50% by Douglas Rikard-Bell, both of Australia, has approval to acquire 2.9 hectares of leasehold at 61-87 Cook Street, Auckland for $30,000,000 from City West Limited and Sandela Holdings Limited of Aotearoa.
According to the OIC:
The subject property currently comprises mixed use buildings and carparking providing semi-industrial and retail space. The Applicant proposes to undertake a development over a five to six year timeframe creating a fully integrated mixed use 28,000 square metre urban development comprising approximately 4,000 square metres of retail space, 5,000 square metres of commercial space, a boutique hotel, approximately 1,000 residential apartments and 2,000 carparks. It is proposed that the land will be developed as an artistic and cultural precinct including open communal gathering space.
According to Chris Hutching in the National Business Review (“1st Class Baggage buys leasehold interest”, 3/9/04), the vendors are “companies respectively associated with developer Jamie Peters of Starline Holdings and businessman Rod Petricevic. Last week the National Business Review reported how the Lamborghini-driving Peters was battling to quell speculation he was in financial difficulties with Inland Revenue after it was revealed some of his companies were subject to winding up orders in the Auckland High Court (adjourned). But the sale of the leasehold interest in Cook St appears unrelated to the difficulties besetting other parts of Peters’ property empire.”
The land lies between Cook, Wellesley, Morton, Nelson and Sale Streets. According to the New Zealand Herald, the new owners plan to spend $600 million on the development (“Second trot around property block”, by Anne Gibson, 6/12/2004, http://www.nzherald.co.nz/print.cfm?objectid=9001868). [Decision number 200420005.] Multiplex buys South City Shopping Centre, ChristchurchMultiplex South City Landowner Pty Limited as trustee of the Multiplex South City Landowning Trust, owned in Australia, has approval to acquire 3.8 hectares at Colombo, Bath and Durham Streets, Christchurch, Canterbury for $45,000,000 from Macquarie Goodman Property Aggregated Limited, owned 60% in Australia and 40% in Aotearoa.
It turns out that the impressively titled “Multiplex South City Landowner Pty Limited” is not even a real entity. According to the OIC:
The Applicant, which is yet to be established, is to be controlled by the Multiplex Capital New Zealand Trust, to be established as an Australian registered managed investment scheme, and part of the Multiplex Group. The Applicant proposes to acquire the property known as the South City Shopping Centre, Christchurch. The proposed acquisition will expand the asset base of the Multiplex Group, reduce portfolio risk and provide diversification benefits to investors. [Decision number 200420014.] Land for forestry· EconoForest International LLC, owned 50% each by Richard Neumann Pierson and Gail Adair Pierson of the U.S.A., has approval to acquire 11.8 hectares at Kaitaia Awaroa Road, Northland for $54,360 from Northland Forestry Investments Limited, owned by Hanover Group Limited of Aotearoa. The OIC states: “The Applicant proposes to acquire the subject property which is part of a 70 lot pinus radiata forestry subdivision established in 1997. The Applicant’s 50% shareholder, Mr Richard Pierson, will manage the property. Mr Pierson has over 40 years’ experience in the forestry industry and holds degrees from the University of Minnesota in Forestry and Forest Economics. The subject property forms part of a larger forest that has been subdivided into 10 and 20 hectare lots. The Applicant proposes to implement a management programme and envisages that the harvesting of trees will occur during 2025. The Applicant intends to establish a new rotation forestry following harvesting. The acquisition of the property will allow the Applicant to geographically diversify its forestry investment capital.” [Decision number 200420010.] · Grandy Lake Forest (NZ) Limited, owned 33.34% by Eberhard Gemmingen, 33.33% by Albrecht Gemmingen, and 33.33% by Wolf-Eckart Gemmingen, all of Germany, has approval to acquire 737 hectares at Te Puru Station, Waingake Road, Gisborne for $2,818,125 from Te Puru Station Partnership of Aotearoa. The OIC states: “The subject property contains approximately 324 hectares of existing forestry planted between 1989 - 2003. The Applicant advises that most of the forestry is in need of remedial silviculture. A further 100 hectares of the property comprise wetlands and bush which will be retired from farming. The Applicant proposes to establish a further 276 hectares in predominantly pinus radiata forestry with some stands of douglas fir and lucitanicas. The Applicant has previously obtained consent to acquire land for forestry developments. The Applicant has acquired 1,476.078 hectares at Springhill Station, Mohaka Coast Road, Hawkes Bay (and 1,522.02 hectares at Homestead Station, Land Road, Mahia). The Applicant advises that an overall target of 5,000 hectares of New Zealand forestry is proposed.” Springhill Station was acquired in July 2000 for $1,464,975 and was then stated to be 1,532 hectares (and Grandy Lake Forest was then owned by four Gemmingens – then spelt “Gemmingem”). At the time it was reported that the Gemmingens “hold substantial forestry investments in north America and Germany and believe that Southern Hemisphere forestry investment gives balance to a global forestry portfolio”. Homestead Station was acquired in September 2001 for $2,925,000. See our commentaries for those months for further details. [Decision number 200420007.] Land for wine· Cloudy Bay Vineyards Limited, owned 100% by Veuve Clicquot Ponsardin of France, has approval to acquire 36 hectares at Wrekin Road, Brancott Valley, Marlborough for $3,937,500 from Michael Patrick Edmett Taverner and Sandra Jane Taverner of Aotearoa. The OIC states: “The Applicant, who is one of New Zealand’s foremost wine producers, proposes to acquire the subject property upon which the vendors have established approximately 13.65 hectares in a variety of Riesling, Chardonnay and Sauvignon Blanc vines. The Applicant proposes to establish the balance of the area that is plantable (being a further 12 hectares) in Sauvignon Blanc. The property will be developed concurrently with the Applicant’s existing vineyard properties in Marlborough including a 57.457 hectare adjoining property owned by the Applicant. The Applicant has identified a demand for wine styles that are currently beyond its production capacity. The proposed acquisition will assist the Applicant to meet that demand.” [Decision number 200420002.] · Cabal Properties Limited, owned by Thomas Clifford of the U.K., has approval to acquire 5.2 hectares at Omihi Road, Waipara, Canterbury for $472,500 from Graham Walter Kitson and Nui Matilda Kitson of Aotearoa. The OIC states: “The business activity of the Applicant is the development of land for viticultural purposes for the supply of grapes to Waipara Hills Wine Estate. The subject property adjoins land previously acquired by the Applicant and this acquisition is likely to provide the Applicant economies of scale both in operation of the vineyard and in the future production of wine. The property has been established in Pinot Noir vines by the vendor. The proposal is likely to result in economies of scale in vineyard operation and wine production for the Applicant’s overall viticultural operation.” The owner of Cabal Properties is Lord Thomas Clifford. In October 2000 the company gained approval to acquire 12 hectares of land from Waipara Hill Wine Estate Ltd, at Omihi Road, Waipara, North Canterbury for $416,531. In August 2000, Cabal Properties Ltd gained approval to acquire 12 hectares of land from Greystone Vineyard Ltd, at McKenzies Road, Waipara, North Canterbury for $202,500 on which he intended to develop a vineyard. That land is five kilometres from this property. See our commentaries for those months for further details. [Decision number 200420006.] Other rural land sales· David Chen Chih Wei of Australia has approval to acquire 5.4 hectares at 499 Apotu Road, Kauri, Whangarei, Northland for $598,000 from Utopa Limited of Aotearoa. The OIC states: “The Applicant who is an Australian citizen has accepted employment as a pathologist with the Northland Pathology Laboratory commencing on 6 July 2004. The Applicant and his family are intending to reside permanently in New Zealand and propose to acquire the subject property as a permanent residence. The Applicant is demonstrating a commitment to New Zealand through intending to reside permanently in New Zealand.” [Decision number 200420003.] · Blackdogmountain Trust, owned by Peter Karl Eck and Kerry Lynn Edwards-Eck of the U.S.A., has approval to acquire 31 hectares at Mangakawa Road, Cambridge, Waikato for $534,375 from Eric Noel Onyon of Aotearoa. According to the OIC: “The beneficiaries of the Applicant have made an application to the New Zealand Immigration Service for New Zealand permanent residence under the Skilled Migrant category. The vendor currently leases the property for grazing sheep and cattle. It is proposed that this use will continue initially and that the Applicants will eventually graze their own stock on the property in conjunction with their existing property which is to be utilised as their permanent residence. The beneficiaries of the Applicant are demonstrating a commitment to New Zealand through applying for and intending to take up New Zealand permanent residency.” The Trust received approval to acquire its existing property in March 2004, 26 hectares at 247 Te Miro Road, Cambridge, Waikato for $341,250. See our commentary for that month for further details. [Decision number 200420011.] · Ronald Frederick Smith and Rosalie Anne Smith of the U.K. have approval to acquire 6.9 hectares at 48A Pineridge Lane, Katikati, Bay of Plenty for $845,000 from Lynnaire Averill Deidre Avers of Aotearoa. The OIC states: “The Applicants are currently residing in New Zealand under the Long Term Business Visa scheme and propose to take up New Zealand permanent residency once they are eligible to do so under the Long Term Business Visa scheme and reside permanently in New Zealand. The Applicants propose to acquire the subject orchard property which currently contains 1.6 hectares of kiwifruit and 1.5 hectares of avocados. The Applicants advise that the property provides an option of growing salad crops or Chinese vegetables at a later stage. The Applicants are demonstrating their commitment to New Zealand through intending to take up New Zealand permanent residency.” [Decision number 200420004.] Summary statisticsAll investments As with last month, the value of investment approved in the year to this month is lower than for the previous (July) year, as is the net value (i.e. disregarding sales from one overseas investor to another, and discounting part New Zealand ownership of the assets). By far the greatest part of the value of the approvals is for sale from one overseas investor to another. This was a quiet month for the Commission.
*These tables give data for the month of July 2004. In addition the OIC granted one retrospective approval during the month: to Riverside Casino Limited (see above). This involved a gross consideration of $2,092,971 and a net investment of $493,376, and a gross land area of 0.51 hectare and a net land area of 0.12 hectares. It also refused one retrospective application during the month. This involved a land area of 12 hectares and consideration of $163,000.
Investment involving land As noted last month, gross sales of land approved by the OIC during the years to July have increased hugely in area, though net sales have fallen to the point where more is being recorded as being transferred to New Zealand part-owners hands than passed on to new overseas owners. A large proportion of the hectares being bought and sold are between one overseas investor and another. Refusals (above) have risen in number, but are still a small proportion of the total.
* See note above – in addition there was one retrospective approval granted during the month involving a gross land area of 0.51 hectare and a net land area of 0.12 hectares.
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Compiled by: Campaign Against Foreign Control of Aotearoa, P. O. Box 2258 Christchurch. |
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