Waikato Times: Waikato Regional Theatre complex loan helps ease private funds pressure

Originally published in the Waikato Times, Thursday 14 November 2024.

By Stephen Ward.

Fosters’ Leonard Gardner says a very welcome loan from the Municipal Endowment Fund helps ensure commercial and hospitality sections of the regional theatre can open on time, and eases pressure on private funders. PHOTO: Mark Taylor / Waikato Times

A $6.5 million city council loan to help develop commercial and hospitality sections of the under-construction regional theatre complex will ease pressure on private funding sources, as well as get the job done on time.

Those comments on Wednesday are from prominent developer Leonard Gardner, who’s involved in the Fosters firm building the theatre and the Fosters Custodian Trust.

The latter is in a separate partnership responsible for the complex’s commercial and hospitality sections.

So far the work on those sections has been cash-funded by the WRT Commercial Limited Partnership, which includes a range of prominent Hamilton businesspeople.

The latest view of the project from Victoria St. PHOTO: Christel Yardley / WAIKATO TIMES

A key part of the rationale for the loan from the Municipal Endowment Fund (MEF) is it will help ensure the complex’s sections can open at the same time as the theatre itself.

But it will also help take the pressure off the current funders.

“We’ve got some incredibly generous partners involved here who are fully supportive of the theatre,” said Gardner.

“And I’m sure we would have got there [without the loan]. But the MEF loan just helps make this process easier for us.

“We’re all businesses in the same economic environment.”

The commercial and hospitality sections of the complex are due to be between the facade on Victoria St and the actual theatre itself. PHOTO: Kelly Hodel / WAIKATO TIMES

Besides helping ensure a coordinated opening for different sections, the loans freed up partnership funds.

“It’s just recognition of the environment we operate in.”

Noting the significant contributions made by the partnership’s members already, Gardner said of the loan that “this is the city playing their part in ensuring this is a success”.

The partnership hadn’t been able to get a loan from the likes of banks because legal title hadn’t yet been issued for the sections of the complex that will house the commercial and hospitality sections.

The view of the under-construction theatre complex from above the Waikato River. PHOTO: Christel Yardley / WAIKATO TIMES

So the MEF loan provides it with development funds till title can be issued.

The two-year loan at commercial rates, announced on Friday, follows on from a $25 million council grant to the project and its 10-year annual commitment of $1.1 million for the likes of maintenance.

On loan security, economic development committee chairperson Ewan Wilson told the Waikato Times on Friday that he understood it included “personal” repayment guarantees from partnership members, “some of the most significant movers and shakers in Hamilton”.

However, after Gardner clarified this was actually a formal underwrite from the partner entities guaranteeing repayment rather than “personal” committments, Wilson acknowledged he had “misspoken”.

Economic development committee chairperson Ewan Wilson says he remains “totally comfortable” with the partnership’s loan repayment guarantee. PHOTO: Christel Yardley / WAIKATO TIMES

But he remained satisfied, saying: “I’m totally comfortable with the levels of security”.

Gardner said the five entities making up the partnership were “substantial”, involving the likes of Fosters, businesspeople Lyn Vela and Glenn Miller, and the Gallagher family.

He explained that the $80 million theatre development is ring-fenced from the commercial and hospitality spaces that’ll be between the theatre and the Victoria St façade.

“There’s unit titles being created once the [overall] building is complete to provide the individual titles.”

Construction surges ahead at the Victoria St site. PHOTO: Christel Yardley / WAIKATO TIMES

Gardner was very grateful to the MEF. “It was inappropriate to get a commercial loan over the whole theatre site which was the other option. This [MEF loan] means that we don’t have to do that.”

For commercial sensitivity reasons, Gardner wouldn’t publicly give an estimate for the final cost of developing the partnership’s sections.

On whether revenue from leasing finished sections would be used to service any required loans and transition to a long-term money-making situation, Gardner said: “It’s definitely a social investment, it’s not a full commercial return.”

The under-development new regional theatre is due to open next year. PHOTO: Kelly Hodel / WAIKATO TIMES

Also, he added that “ideally we’d actually find two or three more parties to join the limited partnership to help fund it as opposed to getting debt”.

His job over the next year, he said, was to find those extra partners “to help this thing be debt free”.