KEY POINTS:
Hanover Group is "extremely comfortable" with sales at a key property development and its funding, chief executive Sam Stubbs said yesterday.
Recent talk around the traps has it that the Eric Watson and Mark Hotchin-owned financial services group was being squeezed between falling debenture reinvestment rates and a lack of sales at its large high-end residential Highlands development which is part of the $2 billion Jacks Point project, 15 minutes out of Queenstown. However, Stubbs yesterday said Highlands had been going "fantastically".
Of the initial release of 50 sections launched a year ago and priced at between $400,000 to $700,000, 30 had been sold so far, said Stubbs.
"We sold three last week at over $600,000."
The project is managed by subsidiary Hanover Property Group but funded by Hanover Finance.
Highlands probably accounts for a large chunk of the $634 million in commercial and residential property development exposure Hanover Finance disclosed in its most recent publicly available numbers, those for the June 2006 year.
"We never disclose individual loans but it [Highlands] is very lowly geared and we're very happy with it as are our auditors because they've just signed off on it."
Stubbs also reiterated that despite a fall in reinvestment rates from around 80 per cent before the Bridgecorp collapse to between 50 and 60 per cent recently, the company "absolutely" had no issues with funding.
Hanover last week revealed a 5.8 per cent increase in June year net profit of $60.6 million and said it had increased cash reserves to $143 million, which would cushion it against the slowdown in debenture funding.
"Business is great here right now, I tell you. We've got tonnes of cash and tonnes of opportunity, we're really good.
"We've just had our results audited and they're all looking very strong. We're very, very comfortable right now."
