Krukziener seeks to reassure bondholders

METROPOLIS: Apartments filling fast

ANDREW KRUKZIENER: Reassures Metropolis bondholders

Property developer Andrew Krukziener was yesterday putting the final touches to a sales progress report to reassure investors who have funded his 38-level Metropolis apartment development in a $24 million bond issue.

An earlier draft report on progress was sent to Money Managers and to the trustee of the bond scheme Tower Trust, which is keeping an eye on the process.

The downturn in the Auckland apartment market last year, with the forced sale under receivership of 64 discounted apartments in the failed Metro City development, had excited speculation about Mr Krukziener's progress in selling sufficient apartments to cover the bond repayment by the redemption date.

Money Managers managing director Doug Somers-Edgar confirmed yesterday he had invested $24 million of his clients' money in the high-return investment. The bonds pay 14% per annum interest and have a repayment date of May 20.

Mr Somers-Edgar said he was confident about progress. "Everyone I talk to tells me things have ticked up in the apartment market since Christmas. Things are happening pretty much as they should at Metropolis. With falling interest rates the demand for property and property syndications is growing. More recently we've been marketing Australian syndicated offers from MCS Investments."

Money Managers marketing manager Alisdair Scott said the schedule of anticipated sales that Mr Krukziener made available in his draft report this week indicated that bondholders would be repaid.

"It's still dependent on settlement of sales of course but Krukziener's report detailed a series of deals and repayment schedules. But he's pretty confident and May 20 is still a long way off," Mr Scott said.

Tower Trust general manager Glenn Clark said progress reports were frequently sought from Mr Krukziener as part of the trustee's role in overseeing such bond investments, particularly since the downturn in Auckland after the America's Cup.

Another troublesome bond issue being dealt with by Tower - the $8 million Ballantyne Bond - ran into trouble when a developer was unable to make sufficient sales at the Katikati residential development. Money Managers' clients also bought the bulk of those bonds and Mr Somers-Edgar is involved in putting together a rescue which might see investors recover about 40% of their capital, according to Tower.

Meanwhile, the unsecured bonds are part of a total debt package for Metropolis understood to be worth $165 million including interest and expenses. Over the past two to three years developers have offered bond issues at high interest rates - reflecting risk - because of scepticism about the property market among traditional funders.

Mr Krukziener's own financial position has been strengthened in recent weeks with the sale of the Customhouse building in Auckland to interests associated with Eric Watson.

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