Auckland ambition

Plans for one of Auckland's most ambitious development projects have been scuttled, resulting in the sale of a big inner-city block…

Westpac has called a halt to funding for the £223 million Rhubarb Lane, a 20-building project on a 2.9ha north-sloping site with three street frontages.

The credit crunch has turned that dream into a nightmare, and the bank wants its money back quickly.

It is demanding an auction, rather than a sale by tender, as the fastest sales method.

The land is the old Auckland City Council works depot, now owned by developer Jamie Peters of Starline Group.

It is on an area bounded by Cook St, Wellesley St and Nelson St.

"The world's newest village is right here in Auckland," says Rhubarb Lane's website. "A super group of New Zealand's leading Architects are about to rejuvenate Auckland's creative district."

Westpac has told Bayleys to sell the land, and Mr Peters says the matter is out of his hands.

Westpac is the first mortgagee but other funders are involved, including St Laurence and Babcock and Brown.

The Herald understands Westpac has a £15 million mortgage on Mr Peters' freehold interest and a similar mortgage on the leasehold. This mortgage is not for sale.

The council sold the works depot about eight years ago for about £2.2 million. It was sold to Starline Group about four years ago for £11 million. Total debt on the land is now believed to be about £50.5 million.

Bayleys will auction the property on December 10th.

"This is one of Auckland city's largest redevelopment sites," said David Bayley and Robert Platt of Bayleys.

Ground rent of £750,000 a year starts from July 1st next year, but from October 1st, 2012, the rent rises to £2.5 million and is reviewed every seven years after that.

Sydney-based Doug Rikard-Bell of Pelago bought into the project a few years ago, and planned to develop the land owned by Mr Peters. Kellands Real Estate promoted Rhubarb Lane as a big mixed-use project.

Pelago, which said it specialised in "distressed venture management", called the project the Victoria Quarter Depot Site.

"This venture is a 3ha CBD site in Auckland and includes 20 buildings, street hierarchy, courtyards, with non-competing and complementary components," Pelago said, showing images of seven-level buildings and street-front cafes with outdoor dining.

Mr Platt said yesterday the land information memorandum on the property was with law firm Simpson Grierson, acting for Westpac, and should be available today.

"Taking it to auction rather than selling by tender sends a very definite sign to the market. They want it sold."

Mr Peters bought former funder Bridgecorp out of the deal.

In 2005, Bridgecorp Holdings applied to the Overseas Investment Commission for permission to buy the property.

The Herald reported at the time that "Bridgecorp, which is also one of the funders of the £200 million development, previously owned a 24 per cent stake in the land-owning company which holds 61-87 Cook St."

Bridgecorp then won permission to increase its stake to 50 per cent which Peters later bought.

Rod Petricevic, who was then Bridgecorp's boss, said at the time the matter was "somewhat complex" but that the Australian developers had lodged their resource consent application for the new village in 2005.

Buildings of up to 10 levels were planned over a five to six-year development phase.

Source: NZ Herald