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Investors revolt as Westin rooms shut

Investors who own units in Auckland waterfront Westin hotel are outraged that receivers have decided to shut 93 of its 170 rooms.

Creditor Bank of Scotland appointed KordaMentha receivers to control of troubled property developer Nigel McKenna’s Lighter Quay Hotel Management, the company responsible for paying Westin investors their returns, in June.

In the High Court last month, individual leases on hotel suites were terminated after a dispute between unit owners and receivers.

KordaMentha receiver Michael Stiassny said because of the reduction in rooms available to hotel operator Westin, 99 staff would be made redundant.

“This is clearly disappointing as we have done everything possible to keep the hotel operating at full capacity until now,” Mr Stiassny said.

Westin unit owners, who said they invested around $80 million in the hotel on the premise of high returns but received few payments, said the situation had deteriorated.

“There is a very real potential here to badly damage New Zealand’s tourism brand, throw into disarray the plans of hundreds of guests booked for the 2011 Rugby World Cup, cost jobs and be a black mark against New Zealand’s international reputation as a safe place to invest,” unit owners’ representative Graham Wilkinson said.

“This property is New Zealand’s premium hotel, in our largest city and we are going to watch a slow destruction in value and a large inconvenience to thousands of guests.”

The hotel’s conference and spa facilities, café and restaurant would continue operating.

More by Jazial Crossley

Comments and questions
18

Another stiassny special. Act the tough guy, bully your way through and preside over the inevitable destruction of value. and get paid for it - what a joke

Get your facts right - it ain't Stiassny's fault this has happened or that he has had to close some of the units. The fault lies with McKenna - Stiassny is just doing his job and tiding up after the disaster left by McKenna. The investors only need to look to him for blame.

McKenna to blame - yep, agree with that. However once in charge of the situation there's an easy way and a hard way to deal with the fallout. Unfortunately for the investors and the staff at the Westin taking the adversarial approach was always going to end in tears. Mr S isn't exactly known for listening to points of view not his own.

Totally agree, McKenna has a lot to answer for! Where is he now, oh that's right he's not there to clean up any of the mess is he, doesn''t want to get his hands dirty. I bet he has no feelings for the poor people who will lose their jobs now.

You are a clown - at best - receivers only get appointed when people go broke, so don't blame Stiassny - blame some twit whose arse couldn't cash the cheques his mouth were writing. If it is in liquidation, it has no value otherwise someone would buy it - idiots like you remind me of mechanical clowns on a sideshow, mouth open and shaking your head every time you make some dumbarse comment.

the investors are hard done by but on the other hand, signed a too good to be true deal with guaranteed returns. closing 93 rooms is not the solution though. the hotel needs more to run profitably and on the long run, the other services will hurt.

...one of those investor will sell me a room so I can get a cheap crash pad in the City.

Stiassny, is well known to play favourites. Hark back to the "specials", he gave to Mark Hotchin (The Rise, St Heliers) when he was the BNZ liquidator, in the early 1990s. All, because, Hotchin's daddy was friends with the then-BNZ chairman.

You would need rocks in your head to invest in something like this.
Buy your own building which you can control yourself.

initial problem was purchasers not understanding the contracts they signed could lead to this situation in the event of default..They have now done the right thing and brought the situation to heel and now simply need to hang on in there as the longer those rooms are unused the sillier the situation looks for the mortgagee who is only going to go backwards in value and will eventually tire of the losses from holding a brocken asset which cant be fixed without the whole.

Most investors are influenced by the usual few-year-rental guarantee!

I see that the receiver is saying the offer for the commercial units was not good enough, but the owners spokesman is saying they got a valuation done before they made an offer.

So were they over valued in the first place and hence too much money lent against them or is it the value has dropped significantly or is the current valuation not correct. If we knew the ansswers to all of those we could tell who was being unreasonable.

The investors are making a play to take over the Hotel. Hence the attempt to apply pressure by withdrawing their rooms and the low ball offer for the commercial component.
I think they actually were paid 4% nett as a return which is quite good for a Hotel in its first two years of trading and during a recession.
Personally I reckon the investors are stupid. They get nothing now and cant use the rooms for income. The Units cant be residential either, only a Hotel. Now I doubt any Hotel chain will work with these asian investors given this behavior so you can forget them doing a deal with a major chain even if they win.Their Units are now worthless.
So good luck to them paying their own mortgages! If they dont pay the Ground Rent then good ol Viaduct Harbour Holdings will just seize them-ha.
They should have taken the deal offered by McKenna.
McKennas Bank looks like BOS who like most other Banks today have probably written off the debt and therefore will wait...
Lets see who blinks first.

You have to be joking,Mckenna make an offer !!!
Watch this space and lets see where Mckenna is in six months time.

Looks like McKenna made an offer already.
NZ Herald June 19
"Creditors owed millions of dollars by the management company of five-star waterfront Westin Auckland will meet on June 24.

The $130 million Lighter Quay hotel has been running at a loss since it opened three years ago.

Developer Nigel McKenna has proposed a $10 million plan with benefits in the next six years, half to be paid in cash.

Investors will decide on the scheme at the meeting".

one thing for certain is that if the Common areas are worth what the receiver thinks or is being led to believe then the return on value let alone the debt from the reduced Hotel operation is through the floor negative.

receivers wanted 3/4 of hotel revenue for their commercial assets which is just worth about less than 1% of the hotel building costs. This is outrageous. They have since offered to accept less of hotel revenue to close the deal with investors but the deal is still far off. Overall. The NZ property investment is just in rubbles and without the asian investors, there would be no 5 Stars hotels let alone Westin. I believe all foreign investors will run off NZ someday and cause property in NZ to crash.

Simple answer,buy the ground floor commercial spaces and take control