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Investors facing heavy losses in the troubled Nido store syndicate have been asked to put in an additional $ 2.25 million by Dec. 16 to avoid a mortgagee sale.
Another $ 5 million of capital would need to be raised by February 28, real estate union Maat Group told investors.
Real estate investors, including many retirees, invested around $ 35 million in a syndicate to build the 27,000-square-meter giant Nido store in Auckland, but expect to suffer heavy losses after both construction firm Vijay Holdings and tenant Magsons Hardware (which trades as Nido) went bankrupt.
Nido went into receivership on December 4 after failing to fulfill its founder’s dream of becoming the South Pacific’s answer to Ikea, which investors hope will make an offer for the giant retail site.
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Possible tenants were being sought and interest had been “encouraging,” Maat told investors.
But the lender Pearlfisher, who provided $ 28 million in development funding, planned to force the mortgagee’s sale, unless some of the money was quickly repaid.
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Furniture and home goods retailer Nido was recaptured by investors in early December.
Maat said: “Pearlfisher has made it clear that it will sell the property as a mortgagee sale after February 28, 2021 unless paid in the sums of: $ 2.25 million before December 16 and another $ 5 million before February 28 “.
One option was to sell the property together with Pearlfisher, but the property could raise enough capital to pay Pearlfisher alone, and investors would receive “much less than the value of their investment,” Maat said.
“The second option and, we believe that the best outcome for investors, is not to sell the building and to take steps to re-rent it and restore value,” he said.
“If that is the preferred approach of investors, a new injection of capital will be necessary to repay Pearlfisher in whole or in part.”
ABIGAIL DOUGHERTY / Stuff
Nido was unable to get the banks to lend him money to buy shares and sell them, as they considered that the company was at too high a risk of not being able to repay the loan. Instead, Nido had to raise money from retail investors. It was those investors who called the receiver.
“To be clear, either more capital is raised from current investors as set forth above or Peal Fisher will sell the building as of February 28, pay off its debt (approximately $ 28 million) with proceeds and the balance after costs. of sale will be distributed to investors, ”Maat said.
More money would be needed later, Maat said, noting that some would be financed with debt and others with another stock offering.
“In addition, more capital is expected to be raised to refinance Pearlfisher’s loan balance. This is expected to be done through debt and equity financing. Financing costs would be reduced significantly more, ”investors were told.
Pearlfisher currently earned 16% interest on the $ 28 million loan, Maat said.
Since the liquidation of Vijay Holdings on November 6, Maat had been working with Pearlfisher to rehire contractors to complete the building, and now he believed the store would be complete by March 2021.
Last month he appeared to have found a buyer for the building, but withdrew.
But, Maat said: “We can report that potential tenants have been identified and shown encouraging interest in the short time since the search has been underway.”
However, he said: “However, we are aware that it may take some time before leases are established for new tenants and income is generated from new tenants. Investors will need to pay maintenance costs, such as interest, insurance and rates. “
The Nest concept was created by entrepreneur Vinod Kumar.
Jason Dorday / Stuff
Nido Managing Director Vinod Kumar was the driving force behind the construction of a 27,000 square meter furniture and home goods store in Henderson, West Auckland.
Kumar was the sole director of construction company Vijay Holdings, which was developing the Nido store until it went into liquidation on November 6.
Kumar, who previously owned the Miter 10 Mega franchise, was also the sole director of Magsons Investments, which sold the land to the union. He was also the sole COO of Magsons Hardware as Nido.
