$4M sought for hotel project

Press, 15 February 1986, Page 21

$4M sought for hotel project

PA Wellington A new Wellington property investment company, The Terrace Project Ltd, is seeking S4M capital to buy, redevelop, and manage selected innercity properties for hoteltype rental. In its prospectus the company is offering 7.9 M ordinary 50-cent shares at par, and forecasts earnings a share of 13c in 1987, rising to 23c in 1990.

A loss of $210,000 budgeted for the first year is expected to turn over by 1990 — the first tax year — to a tax-paid profit of 52.151 M.

Terrace Project’s first proposal is a S9M redevelopment of 16 residential properties worth almost:s4.6M on and adjacent to the Terrace in Wellington. Purchase rights have been acquired.

The chairman, Mr Fred Turnovsky, describes this as a “horizontal hotel development with a quality

of accommodation far superior to that of a standard tourist hotel.” The prospectus says the development “will provide an area unique in New Zealand, creating in effect, a horizontal hotel in an enclave of tum-of-the-century houses close to the business centre. “A standard of accommodation will be offered equal or superior to any existing hotel accommodation in Wellington.” Three of the properties marked for acquisition have already been developed by two of the new company’s directors, Mr Justin Prain and Mr Alan Jackman. The 13 shortstay suites are drawing 75 per cent occupancy rates at tariffs equal to city premium hotels. The company plans to develop 74" , suites over two years. "The experience of renovating three existing buildings has proved that, within the provisions of the Wellington District Scheme, greater site use Is permitted and achieved at less cost than by demolition and reconstruction,” the prospectus says. It says recent studies con-

firm Wellington’s “severe shortage of hotel accommodation,” and forecast tourist growth of seven to nine per cent.

“The reports conclude that the shortage will not be alleviated in the next five years. The Government has recognised the situation by recently extending financial incentives available for hotel projects in Wellington.” Vigorous marketing will be aimed at the corporate sector and luxury tourist market.

Net assets are forecast to rise from $4.466M this year to 511.397 M in 1990. Pershare asset backing will rise from 50c to $1.20 in that time.

“The apartments are for the corporate, embassy, fami-lies-on-transfer and specialist tourist markets’ and the venture to date, with three houses and 13 apartments has been a great success," Mr Turnovsky said. The directors and promoters intend to , take up about 25' per cent of the issued shares.

Other directors are Messrs Fred Shailes, a former audi-tor-general; Peter Wise, managing director of the Anthony Group and chairman of TAG Corporation; and Richard Gillingham, accountant and financial analyst.