Development firm bust but his management company still gets a cut.
He may be exiled in Las Vegas but Rod Nielsen still clips the ticket on at least one of his Queenstown developments.
Mountain Scene can reveal a Nielsen company collects about $140,000 yearly from “management fees” on 36 units at Fernhill Road’s Heritage Villas.
Nielsen doesn’t own the villas – he sold them freehold in 2004-06 to private investors. And he doesn’t actually “manage” them either – the Heritage Hotel across the road does that.
But a confidential lease agreement and villa body corporate papers obtained by Mountain Scene reveal investors who bought from Nielsen company Mondrian, now in liquidation, had to lease the units back to another Nielsen company, Little Rock Management – and this firm’s still alive.
Companies Office records list Nielsen as a shareholder and director of Little Rock. His address is given as Las Vegas, Nevada.
Under their leases, owners grant Little Rock a 12.5 per cent “management fee” out of villa room rates paid by casual guests to the Heritage Hotel, which runs the villas under contract from Little Rock.
A property source with inside knowledge tells Mountain Scene he believes Nielsen splits this 12.5 per cent about 50-50 with the hotel.
Heritage bosses won’t confirm this but, if correct, it’s a tidy sum for Little Rock.
Mountain Scene has obtained figures on two villas for the year ended March 31, based on monthly “investor rental statements” provided by Heritage Hotel.
If these two villas are representative of the other 34 units, Little Rock’s annual cut would range around $140,000.
The agenda for a villa body corporate meeting last month reveals owners took legal advice on getting out of Little
Rock leases – you can’t, was the answer.
Owners are tied in for at least another 15 years – and, at Little Rock’s option, for another 30 years after that.
Villa investors are wringing their hands.
As well as the 12.5 per cent management fee, a swathe of other deductions such as room servicing, sales and marketing, administration and repairs are lopped off what guests pay to stay in their villas – comparatively, owners get the crumbs.
In the full-year figures sighted, one villa puts only 32 per cent of room income into its owner’s pocket – the other villa just 24 per cent.
Based on purchase prices of $800,000 and $900,000, the two villas had net returns of only 2.4 and 1.4 per cent respectively for the March 31 year.
Owners are also left grappling with other problems from Nielsen.
As well as last week’s revelation of a Queenstown Lakes District Council claim for $300,000 to fix a landscaping mess left by Nielsen’s defunct development company, each villa owner also faces a $3000 payout for new hot-water systems.
Two master hot-water systems serve the entire 36-villa complex – except the boilers are sited on adjoining land formerly owned by another Nielsen company.
This company subsequently went broke and its land was sold by the mortgagee – but there’s no easement for the boilers so villa owners now face installing new hot-water cylinders in their individual units.
Seventeen Nielsen companies are reportedly in liquidation or receivership and villa owners may be hoping Little Rock joins them before too long.
Nielsen didn’t respond to Mountain Scene emails.
In March, his estranged brother Greg told Auckland High Court that Nielsen fled the country to escape creditors.