A Chinese billionaire gained "unique'' control over a Queenstown hotel complex, despite not owning the property outright, documents released to the Otago Daily Times show.
Jiang Zhaobai is the part-owner of New Wish Investment Ltd, which in March was granted retrospective consent by the Overseas Investment Office (OIO) for its $80.5million acquisition of interests in the 2.5ha Hilton and DoubleTree hotel site in 2014.
In July 2014, New Wish bought the shares of Double Excel Investments Ltd, which owned several mortgages secured over the Kawarau Falls site.
Among the documents released to the ODT under the Official Information Act is an email to the OIO 12 months ago by Auckland-based Chapman Tripp lawyer Mark Nicholson.
Mr Nicholson, who prepared New Wish's consent application, told OIO senior solicitor Tyne Schofield the underlying land's registered owners collectively owed $300million in relation to the site.
The massive difference between the total indebtedness and $80.5million value of the security had given New Wish a "unique amount of control over the asset''.
Mr Jiang is one of China's richest men and the chairman of Shanghai Pengxin, which runs the former Crafar farms in the North Island, and owns several other properties in New Zealand.
Mr Nicholson said it was "conceivable'' his client would eventually convert its position into outright ownership of the hotel site, but it had no such plans in the medium term because of tax benefits arising from the status quo and the high cost and complexity that would be involved.
Double Excel's vendor was Hongsheng Tao, of China, a property investor and developer with whom Mr Jiang had a "longstanding friendship''.
Mr Hongsheng had bought the property's mortgage interests with the intention of developing a casino and convention centre on the site, but decided to sell them after realising the project was unlikely to proceed.
Finding a New Zealand purchaser would have been difficult, Mr Nicholson said.
"It is well known in the New Zealand property market that there is a very limited market of domestic investors interested in debt packages and/or hotel ownership.''
An OIO investigation of New Wish's investment in Double Excel concluded there was no evidence of any attempt by the company to "knowingly or recklessly defeat, evade or circumvent the [Overseas Investment] Act''.
