Developer Charles Ma: down but not out

Saturday, 11 May 2024

Failure to pay debts when they were due is the reason the Edin Rotokauri development in Hamilton has ground to a halt, but the company’s founder still believes in his vision.

Edin Rotokauri, which launched in early 2022, was intended to be a new suburb of 2000 homes and a retirement village on the north-west fringe of Hamilton.

It was envisioned as a medium-density development, but one with a difference as about 50% of the 137 hectare site would be kept as community parks and nature reserves.

Auckland based developer Charles Ma was the driving force behind the project, and the company he set up to carry out his ambitious plans was Rotokauri North Holdings Ltd.

But the Auckland High Court put the company into liquidation on March 22, and liquidators Steven Khov and Kieran Jones, from Khov Jones, have now issued their first report on the company.

It said the reason the company had failed was that it did not meet its debts as they fell due.

Five creditors were listed in the report, including Bloxam, Burnett and Olliver Limited, the engineering and planning consultancy that applied for Rotokauri North to be put into liquidation in early March.

There were also unsecured creditors, and the liquidators were determining if there were any unpaid wages, and holiday or redundancy pay owed to former employees, the report said.

A claim from Inland Revenue was yet to be received.

The value of Rotokauri North’s land and building assets were not disclosed in the report, and nor was the total value of the company’s assets.

That information was withheld because it was commercially sensitive, and the liquidators said it was prudent not to disclose any value because it might be prejudicial to a current or future sale.

Figures around the estimated deficit, the value of debt to the total preferential and secured creditors, and the estimated deficit before unsecured creditors were withheld for the same reason.

But the liquidators understood the company had entered into a conditional sale agreement for the Rotokauri property after a marketed sale campaign.

“They are in the process of reviewing the sale to determine whether or not there is benefit to the company to progress the sale, and as part of this process, they are engaging with the relevant secured creditor.”

Rotokauri’s solicitor was also holding funds from parties that had bought lots of land, and the liquidators were currently assessing that position, the report said.

“It is not practicable to estimate the date of completion of the liquidation or if there will be any distribution at this stage.”

The Rotokauri North development would be a significant one for Hamilton, and Ma said that he still believed in the vision behind it despite the current situation.

He said it had been a healthy project initially, but the last few years had been difficult.

There were significant hikes in rates, timing blew out drastically because of lockdowns, there were supply chain hold ups, costs escalated, and the economy declined.

Refinancing became more difficult, and it got to a point late last year where the market had not changed after two years, he said.

“We realised we had to let the project go in order for the vision to be delivered, so we started the process of engaging with the market to sell the land with consents late last year.

“Early this year we had one serious buyer who was doing due diligence, and discussing issues with the council. I was hopeful it would be sorted in a couple of months, and the project would continue.”

But the liquidation application was made, the company was put into liquidation, and he had to stop work on the development, Ma said.

“We have got it to a good stage to pass on. The plans are more developed so a new developer can get on with it, and develop the vision without us, or with us. That is the overarching thing that I want.”

He had to wait and see what happened with the liquidation, and the potential sale, he said.

“If it proceeds I am confident creditors will be paid because they deserve it. If the purchase does not go ahead, I would like to have the chance to refinance and continue with the project to see it through.

“I am confident I could get refinancing as there seems to be some changes in lenders’ sentiment, and we have some interested international funders. Plus the market has come back a bit on costs.”

He said the development was a passion project, and he thought the local community believed in it too, so he wanted to see it go ahead, even if he was not able to be involved.

Edin Rotokauri is not Ma’s only ambitious development. He, and his company MADE Group, have been working on a $1 billion housing development in the Auckland suburb of Drury West, 40km south of the central city, for many years.

That development is called Auranga, and will eventually have 3000 homes on a 83ha block. A retirement village, many homes and a primary school have already been built, but progress on other features has slowed.

Work was affected by the tougher economic times, but it was Ma’s loss of a legal battle with KiwiRail over the location of a train station that had the biggest impact.

Ma had wanted the station to be close to Auranga’s planned town centre, but KiwiRail decided to put it almost half a kilometre away from the centre.

The situation left him disillusioned, and he decided it might be best to sell up because Auranga would no longer be the project he had originally envisioned.

“So we put the block of land intended for the town centre section on the market at the end of last year too,” he said.

“It attracted a potential purchaser, but they were unable to proceed further early this year. It came back to me, I had another look, talked to the community, and decided to proceed - and now I have good news on that.”

He had confirmed a new funding source for the town centre development, and could now announce it would be going ahead, he said.

The $100 million development will be called Sharewater Ngakoroa, and will include a supermarket, food and beverage outlets, shops, a healthcare centre, and maybe a hotel.

A consent application for the town centre has been submitted, talks with supermarket operators were underway, and he hoped to launch the project, and its new website, formally this month, Ma said.

“We are aiming to start earthworks by the end of this year, subject to pre-sales. We also aim to start unlocking the islands precinct. The development is maturing into the next phase.

“To get development underway is almost a miracle. But it is not a new funder that is enabling it, it’s an existing funder, Australian based with a New Zealand wing. They believe in me and are going with me.”

Development of the earlier stages of Auranga had left him with valuable experience around costs, and he knew where current construction costs were, he said.

“We will proceed based on that, look at where the market is, put in place honest pricing, and deliver on that basis.

“It is a slow process, but it will get there and once the town centre is up and running, I hope Auranga will become a destination, as I have always dreamed.”