Monaco resort investor troubles

BY KAREN GOODGER

A Nelson company that developed the $60 million Grand Mercure Nelson Monaco appears to have struck financial problems.

A Wellington-based investor who said he purchased a unit in the resort with a "guaranteed" 8 per cent return has filed an application to put the Monaco Village Ltd into liquidation.

Warwick Walbran said his consultancy company purchased the one-bedroom unit about two years ago for $270,000. "None of the guaranteed returns has been paid that I know of," he said.

He said his own company now faced the prospect of liquidation. "I'm very much less than happy about it."

Other investors had supported him in filing the application, as they were also being held liable for ongoing costs associated with the units without receiving the promised income, he said. "Outgoings could well exceed incomings."

Scott Sanders, the developer and part-owner of the Grand Mercure Nelson Monaco, told the Nelson Mail today the guaranteed 8 per cent return had been based on a commitment from Lombard Finance, which then went into receivership.

"When it went into receivership, we met with investors and said we couldn't pay it over two years but we'd pay it over four years. It's been a very difficult recession over the last 18 months, and numbers to Nelson haven't been what we've projected, and it just takes a little bit more time."

Mr Sanders was not able to quantify how many investors had not received the returns promised.

Most accepted what was happening but a few were "taking a different approach", he said. "Only one has lodged a motion."

The Grand Mercure Nelson Monaco provides hotel-style accommodation and self-contained cottages for up to 280 guests. It was officially completed and opened in November 2008.

Units at the resort are constantly offered for sale through various real estate agencies. The website, allrealestate.co.nz, this morning had 13 listings for units at the resort, with prices starting from $130,000.

Mr Sanders said there were still some units being offered for sale with an 8 per cent return, which the receivers of Lombard Finance had agreed to underwrite.

He didn't believe the liquidation application would be damaging to the resort, which is operated by a different company.

"We're still passionately committed to the resort and very proud of what we've delivered down there. It is delivering returns to all investors now and in really good growth phase."

Grand Mercure Nelson Monaco managing director Clare Davies said bookings were "looking fantastic".

The liquidation application for Monaco Village Ltd is set to be heard by the High Court at Christchurch on February 15.

Mr Sanders last year gained consent to develop a $20 million eco-resort on Best Island, and has previously said he intends to begin work on it this year.

Nelson-based QV registered valuer Geoff Butterworth said he believed the guaranteed returns were only offered on units when the development was sold by Mike Gepp to the current owners.

If investors weren't getting the promised return, it was likely that they would suffer a loss when forced to sell, he said.

- © Fairfax NZ News