China's Shanghai Zendai to quit Gulf Harbour

China's Shanghai Zendai Property plans to quit its stake in a property developer building high-end residential houses and commercial sites on the Whangaparoa Peninsula north of Auckland.

The Hong Kong Exchange-listed company was part of a syndicate including Shanghai Pengxin's Jiang Zhoabai, which bought Jamie Peters' Gulf Harbour development out of receivership in August 2012 for $35 million but has since decided to sell its 45% stake in holding company Top Harbour, according to Shanghai Zendai's 2014 annual report released last week. The project spans 320,000 square metres, and the company aims to build 1000 residential houses, a 200-room hotel, an office tower and other commercial properties.

"After considering factors such as progress of sales of the project, market demand, funding requirements of the whole project and the time needed for development, the group entered into an agreement in November 2014 to sell all equity interests in the project company," Shanghai Zendai said in its annual report. "Completion of the transaction is subject to the approval and consent by the Overseas Investment Office of the government of New Zealand and is expected to take place in the second quarter of 2015."

The Top Harbour acquisition came at a time when Chinese investment was under intense scrutiny from groups as diverse as the Green Party and Federated Farmers, who claimed foreign ownership of land put the nation's economic sovereignty at risk, and as Jiang's Shanghai Pengxin was finalising its purchase of the Crafar family's portfolio of dairy farms.

In its first-half report, Shanghai Zendai said the development was proceeding in phases, focusing on 37 parcels of land for residential work first. As at June 30 last year, 32 parcels including five with houses to be built had been sold, generating a total contract value of $12.7 million.

When Shanghai Zendai, Jiang and Westlake Investments bought the development in 2012, they said they intended to continue with the project, which was estimated to cost up to $550 million plus finance costs over eight years, according to the Overseas Investment Office decision summary.

A spokesman for the OIO said the office hasn't received an application relating to Top Harbour.

BOSI Security Services, formerly known as Bank of Scotland International, called in receivers in December 2009 after Auckland property developer Peters was declared bankrupt in October 2009 by Marac Finance for just over $3 million relating to a personal guarantee he gave in relation to a loan. Work on the development stalled in 2009 when funding dried up and BOSI stopped injecting new cash during the global financial crisis.

Peters, who was discharged from bankruptcy against the wishes of the Official Assignee, bought the Gulf Harbour land for a reported $57 million in 2000 from Singaporean investors.

Last week, the Auckland District Court dismissed criminal charges brought against Peters by the Official Assignee under the Insolvency Act, with the judge finding Peters' rights to a fair trial had been breached.

(BusinessDesk)