Downturn could mean hotel project is 'parked'

The developer planning to convert Dunedin's former chief post office into a Hilton hotel hinted last night the world economic downturn could lead to the project being "parked".

Dan McEwan of the McEwan Group raised the possibility with the Otago Daily Times while engaging in a war of words with Dunedin solicitor Geoff Mirkin, who is representing four investors worried the project is in trouble.

Mr McEwan acknowledged the project was affected by the downturn.

"It doesn't matter what business you are in, the credit squeeze has an impact on everything, and most importantly it has an impact on developments."

Asked if he thought the project would still go ahead, he said: "Look, in life am I confident I will be alive tomorrow . . . you would like to think so, wouldn't you? But we are in an unusual situation in the current market . . ."

He said Tourism Dunedin, the Dunedin City Council, the Hilton Hotel, his company and investors all wanted to see the building converted to a 112-suite hotel.

As well, there are at least 34 apartments in the development and last month the ODT reported 25 had been sold.

Mr McEwan said the developers had sold 100% of the apartments they needed to, but there were "between two and four floors" of space to sell or lease before the project could go ahead.

"The [hotel] project is totally dependent on the economy and sometimes projects may be put to one side for a while and I think the term that is used is `parked'.

''It is a prospect for any project at any time. We run a lot of projects. We park some. We do some."

Asked if investors would get their money back if the development did not go ahead, Mr McEwan said: "That's a moot point.

''I can't forecast that. How could I? Are you saying that the Government is extending its bank deposit guarantee?" Mr Mirkin yesterday accused the McEwan Group of not being up-front with investors wanting financial information.

Mr McEwan responded by accusing Mr Mirkin of "mischief-making" by going public.

Mr Mirkin said he had been trying for six months to get information his investor clients were entitled to as joint-venture partners.

He had written to the company and attended a meeting with Mr McEwan.

"All we know is that the McEwans have all the financial information on the development and the investors have none.

''They don't have access to the financial accounts. They don't have access to how their . . . investment was spent.

''What was it used for? Is there any left?"

Mr McEwan said his company would not deal with intermediaries, such as Mr Mirkin, only investors themselves.

"Anything to do with any investment or any business is usually confidential. We don't deal second-hand."

Mr McEwan said he would be in Dunedin this week and was willing to meet investors.

"If any investor wants detail on the project, they are most welcome. No problems. There never has been."

An agent selling space in the old post office said yesterday the "credit crunch" had made it extremely hard to sell apartments and efforts were being concentrated on finding a joint-venture partner.

"But once again, everyone's scared to put their foot over the line because there's so much uncertainty out there right now."

 

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