Du Val’s high-flying owners Charlotte, Kenyon Clarke front up to criticism

Thursday, 4 April 2024

• Some Investors in the Du Val Mortgage Fund have started raising money to begin legal action against the company.

• In a rare interview, Du Val owners Charlotte and Kenyon Clarke have responded to the criticism.

• Kenyon says things are fine with the company.

Charlotte and Kenyon Clarke insist their Du Val Property Group is doing OK, despite a group of investors in its mortgage investment fund bringing in lawyers to pursue liquidation of the company.

There have been numerous media stories recently painting the Clarkes and their company in a bad light, which has led to them not only getting their own legal team involved, but also wary of talking to journalists.

There were reports of the Du Val group being technically insolvent in 2023, that the Financial Markets Authority warned them last year over misleading or deceptive statements made to investors, who each put in a minimum of $250,000.

Stuff understands a group of investors have lost patience over the lack of information they’ve been provided with, fear they’ve lost their money, that they’ve been pushed into accepting a debt for equity swap and worry that Du Val has run out of money to complete projects.

Although the profile of Kenyon and Clarke is high, and they’re involved in a reality TV show, where the trailer glamorises an extravagant lifestyle, they rarely give interviews.

However, they agreed to meet up with Stuff this week to give their side of the story and answer the criticism there has been about them.

Initially Kenyon was prickly when the subject of a group of investors launching a fighting fund to pursue the liquidation of Du Val was brought up, saying that from what he’s heard it’s only one investor.

But Stuff understands half a dozen investors are committed to this battle and a similar number are supportive.

Auckland barrister Jeremy Johnson is one of the lawyers involved and says they are looking for other affected investors to come onboard.

“A number of investors in the Du Val Mortgage Fund are coming together to take action in relation to the Mortgage Fund particularly focused on liquidation,” Johnson has told Stuff.

“They are all deeply concerned about the current situation with Du Val and whether their investments might be at risk. Other concerned investors are welcome to join as well.'

So back to Kenyon, who insists the vast majority of the Mortgage Fund investors have kept faith with Du Val and that the business is doing OK.

“We are fine,” Kenyon said.

“We are just kicking off new projects now. Every property business in Auckland has gone through the floods, cyclones and huge cost inflation, we’ve had projects delayed, 100% we have.

“But we’re human, we’re a business and we live within an organic system where s… goes wrong. It’s how you manage it that’s important.

“We’ve completed 100 homes that are due for settlement in the next couple of weeks.

“That’s stages one and two of a $180m project, the Mountain Vista Estate, then three, four and five are completed after that.

“We’ve had some projects that are a bit later than others, so what? We’re building just under 500 homes in Auckland and I’m stoked about that and proud about that.”

It has been a tough time for property investors in New Zealand, coming out of Covid, there was a labour shortage, followed by high inflation and a cost of living crisis.

“Even though it’s been tough, we’ll come out the other side of it with many hundreds of homes being built, which is awesome,” Charlotte said.

“A lot of people who buy our homes are first-time-buyers or first-time-investors and they’re just making their way in the world.

“I feel like it’s a nice thing to feel that we’re adding value to people’s lives.”

Du Val has been accused of trying to strong arm around 140 investors into converting their investments into equity in a restructured Du Val Group.

But Kenyon says 98% of investors within the mortgage fund, by value, who were offered shares in Du Val Property Group have taken up that offer, and those that don’t, can carry on as they were.

(After this story was published, Charlotte told NBR on Wednesday that in total 81.35% of investors took up the offer. When contacted about this, Kenyon said their offer was extended to another group of investors after his interview with Stuff and said the final percentage of investors who had come across was 81.35%.)

“We’re currently selling $94m of shares and they’re virtually all being taken up by our Mortgage Fund Investors,” he said.

“There will be at the end of that a number of investors who do not wish to come on board and be shareholders, and fair play to them.

“They’ll carry on and they’ll stay in the fund. We’ve made it clear we no longer want to be involved in the wholesale funds management business.

“We’re moving into a more mature market and from our perspective, what we want to do is wind off that over time in a logical way, that ensures everyone gets their money back and that’s what we’re doing.”

Kenyon and Charlotte refute last year’s story in Business Desk about Du Val being technically insolvent, and say it’s now a matter for their solicitors.

They both admit the criticism there has been about them hurts and wonder why there has been more focus on them then other property developers also trying to get through these tough times.

“No one likes to read about themselves in a less than complimentary way. Does that put pressure on you as a family? Of course,” Kenyon said.

“But at the same time, I believe that our job is to build homes and that’s what our focus is.

“Sometimes you do wish you had the opportunity to respond and that’s why we’re here today.”

Charlotte says it’s been tough for them not to let this impact their family life.

“As much as possible, we are focused on doing the business of Du Val and what Du Val is, which is where our focus needs to be, because for everybody to be happy, the business needs to perform.

“But when we go home, we have four kids to attend to and sure we have some help, but not a lot.

“What that means is I’m up early in the morning, I’ve got the kids to get on with and usually people like Kenyon is sending me some media, which is awful and then I’m trying to deal with the children, while I’ve got this in the back of my head.

“When I go back at night after a hard day in the office, I have to deal with my four children again, to keep them happy. It’s super tough and it’s been awful for me.

“It’s very personal and I think it’s so s…, it’s not a fun time.”

Kenyon is more bullish and has a bring-it-on attitude to criticism.

“My job is to build houses, protect investors’ capital and build shareholders' value,” he said.

“I don’t much think about anything other than the Blues, who I love.” (Du Val is a sponsor of the Super Rugby team).

“I understand that Charlotte might be at the coalface, in terms of responding to enquiries, but the people who understand our business and are buying our homes and have chosen to be our shareholders, those are the people I care about.

“I’ve had s… talked about me for years and it doesn’t impact me in the same way it impacts Charlotte, so long as I know we’re working productively to get the job done.

“Last year, we got hit by the flood and the cyclone on a big project, which was Mountain Vista Estate.

“It took out a whole block of homes. We just ripped that to pieces and rebuilt it and then we got hit by the cyclone, then we had to rebuild it again.

“All businesses face headwinds. Headwinds in terms of looking for long term capital for funding, being able to find labour and timber after Covid. But we’ve successfully navigated through that and built one of the largest development businesses in New Zealand.

“I’m not going to complain about being of interest to the media, but in terms of the fundamentals of our business, I’m not concerned in any way, shape or form.

“For the people who have invested in the funds, where things haven’t gone the way they would have liked, and that small number of people who’ve elected to not come on board as shareholders, that doesn’t mean that I don’t believe we have a responsibility to respect their capital and ensure distributions and redemptions can happen, and the way to do that is by focusing on the fundamentals, which is delivering housing.”

Perhaps one of the reasons why there has been added attention on the Clarkes is their image of living glamorous lives. At a time when the property industry is struggling, is it a good look for Charlotte and Kenyon’s TV trailer to show them on a private jet, a helicopter, Rolls Royce and a yacht?

“It’s a really fair question to ask,” Kenyon replied.

“Property development is feast or famine. There are times when you’re going really well and times when it’s tougher.

“So in terms of releasing a show in a tougher economic season, you’d have to consider the wisdom of that.

“When we were approached to do the show, it was based on being a voice of encouragement for young entrepreneurs. If you live in New Zealand, you realise this is a country that has an epidemic of tall poppy syndrome.

“A lot of the voices of inspiration come from America, rather than anywhere else. I think that’s sad and I wanted through the TV show and my Instagram to be a voice of encouragement for young people to get on and do something with their lives.

“The TV show isn’t designed to be a glut of high-living lifestyle. You’ve seen the trailer, which is clickbait, to get people to watch it.

“It’s the highs and the lows of being in business and what it takes in terms of doing that, going through Covid and that experience.

“In the show itself, I talk about losing my mother and father within three months of each other and sometimes the resilience you need as a family and business to keep doing things.

“I want to be a voice of encouragement and inspiration for young Kiwis, who maybe haven’t had the privileges I’ve had in my life. I’m really excited for when it comes out.”

Kenyon says they’re not yet sure when that will happen.

“We’re waiting for the distributors to let us know where it’s going to be airing,” he said.

“Our distributor believes it’s probably going to go offshore first and then come back to New Zealand.”

Correction: An earlier version of this story stated that Kenyon Clarke said 98% of mortgage fund investors who had been offered shares in Du Val Property Group had taken up that offer.

To clarify, it was 98% of the total money invested, not 98% of investors that he was referring to.

Following the publication of this story, The Du Vals told Stuff extended the offer to another group of investors. The story has been updated.