Apartments and townhouses are being developed by DDL but receivers have taken over the project after financial trouble. Video / Michael Craig
Debts of $55.7 million have mounted at a troubled south Auckland residential development - making it one of the larger failures in the stretched house-building sector lately.
Delays, building material shortages, cost overruns, the pandemic, Auckland's 107-day lockdown last year, a break-in and insufficient presales were cited as reasons forthe failure of the 122-property DDL housing project on Ormiston Rd, Flat Bush.
Administrators Jared Booth and Tony Maginness of Baker Tilly Staples Rodway Auckland quoted director Baljit Dheil of the failed DDL Homes Ormiston and DDL Homes Ormiston 2020 as giving those reasons for problems finishing her scheme and delivering places to buyers who paid deposits.
Both companies are in triple-insolvency: receivership, liquidation and voluntary administration.
Accountants issued their first reports on the businesses on Tuesday, showing two secured creditors claimed $42.7m but unsecured creditors claiming a further $13m to hit $55,755,000.
Vandals wrecked a new $675,000 DDL home last year. Photo / Supplied
"Distress, delays, shortages and cost overruns caused by the Covid-19 pandemic and lockdowns, a break-in, and insufficient presales," the liquidators quoted Dheil as the reasons behind the failure.
"The director advised that in February, Vincent Capital ceased to provide direct funding to the companies and requested the repayment of loans by May 26 and that her subsequent attempts to refinance the development were unsuccessful," Booth and Maginness wrote.
The two companies' business was developing and building housing at two properties they owned: 370 and 397 Ormiston Rd.
A DDL house was wrecked last year when a digger was used to attack the almost-finished $600,000-plus home.
Dheil advised that construction works were primarily carried out by DDL Homes Central, an associated company, and funded by Vincent Capital.
But last month, Vincent appointed Neale Jackson and Brendon Gibson of Calibre Partners joint and several receivers and managers of all present and after-acquired property.
Then administrators and liquidators were called in.
All up, 105 homes are under construction in terrace and apartment styles and in varying stages of completion. The four projects are Maison D'Ormiston, Ormiston stage 2, Mission Heights and Ormiston Heights. Sections take the total project to 122 places.
Buyers of 26 townhouses got some good news lately though: their DDL places are due to be finished by October.
Neale Jackson of Calibre Partners told buyers of the almost-finished townhouses that settlements due in July would be made in October.
Site works on the DDL land on June 27. Photo / Michael Craig
"The sunset date under your sale agreement is currently July 22. Under the sale agreement, there is a right for the vendor to extend the sunset date by nine months under certain conditions. We are exercising this right because those conditions have been met and it is clear the sales cannot settle by the current sunset date," Jackson wrote, pleasing some buyers who said at least they would get places they had paid deposits on.
It's too early to say if the $55.7m creditors will get any money back.
DDL is not the only troubled residential project with partly-built homes.
Across at Onehunga, work has stopped on a partially built block of apartments while a buyer is found.
The builder leaving a partly finished $85 million 85-unit Auckland project expressed concern recently about buyers who paid deposits for new homes there.
Wayne Birchall, managing director of Teak Construction Group, which left Beachcroft apartments, voiced concerns about those who put down thousands of dollars in deposits.
The block is at 98 Beachcroft Ave and was previously being marketed by Bayleys.
Anne and Bruce Clegg were developing the units via their Erson Developments but a statement issued this week said that had ended.
Matt Currie of Crux Partners, now project managing, said a buyer was being sought to complete the entire scheme.
Asked for an update at the end of last month on how selling the unfinished block was going, Currie said: "We are currently working through a process with a small number of parties."
