NZ Super buys into $1b new town

The NZ Super Fund is likely to be an investor in the $1 billion Flat Bush Town Centre development under way in South Auckland.

Last week the Manukau City Council announced that the contract to develop the centre had been transferred from Auckland developer Nigel McKenna's financially stricken Melview Group to Todd Property, a subsidiary of Todd Corporation, the investment arm of this country's wealthiest family.

The Sunday Star-Times understands the project will proceed as a joint venture between Todd Property and Wellington development company Willis Bond, with the NZ Super Fund providing part of the funding.

The fund's contribution is likely to be channelled through Willis Bond Capital Partners, a private equity fund specialising in property-based investments.

Flat Bush will eventually be home to 40,000 residents and Melview had the contract to design and develop its 17ha Town Centre – a mix of residential, commercial and cultural facilities.

The land for the Town Centre is currently owned by Manukau City Council and once it had approved Melview's plans for the site, Melview would have had to start progressively purchasing the land to allow development to proceed.

Melview was awarded the contract in October 2007, but the council is yet to approve its plans and there have been concerns about about the company's finances and its ability to purchase the land and complete the development.

The companies behind most of Melview's recent developments, including the massive Kawarau Falls hotel and apartment project in Queenstown, the Holiday Inn Hotel building in Wellington and the Westin Hotel and Lighter Quay apartment developments at Viaduct Harbour in Auckland, have collapsed, leaving creditors millions of dollars out of pocket.

Todd Properties has acquired Melview's intellectual property rights to the Flat Bush project – essentially the planning work done to date – and the city council is expected to approve the plans early next year, suggesting changes Todd may make are likely to be minor.

That leaves the way open for McKenna to have some ongoing involvement in Flat Bush, most likely as a consultant to the Todd/Willis Bond joint venture.

Flat Bush is seen as a good fit for Todd, Willis Bond and the fund.

Todd Property is already undertaking substantial residential developments, at Long Bay on Auckland's North Shore and the Stonefields project between Panmure and Ellerslie, while Willis Bond has extensive commercial and mixed use property development experience.

It has developed several well-known properties in Wellington's CBD, including the Chews Lane project and the NZX Centre.

The company has recently been looking to expand into Auckland and was one of the potential buyers of the infamous hole-in-the-ground site at Ponsonby in central Auckland – the stalled Soho Square project.

Davies said it was likely to be the middle of 2012 before Flat Bush construction began but would not comment on likely partners.

Willis Bond chief executive Mark McGuinness and NZ Super Fund spokesman Paul Gregory declined to comment on their likely involvement.

- © Fairfax NZ News