Collapse of a brick and mortar empire

Jamie Peters announced his bankruptcy this week. Photo / Supplied

Aucklander and ex-Rich Lister Jamie Peters says he started small in property but eventually made profits of $10 million on one building deal.

Back in 1989, Peters took advantage of the last bust. He bought houses at mortgagee sale, renovated the places then flicked them. Profits from one deal funded the next.

"The simple formula was to buy and renovate, including reline, paint, recarpet, and upgrade the kitchen, bathrooms, plumbing and electrical services. During this time I handled all sales by myself, as well as the advertising and marketing. I found myself arranging finance for buyers and through this process I got a reasonable level of finance and mortgage broking experience," he recalled this week.

By 1994 his empire was growing so he bought large groups of properties, flats in blocks of 10 or 20.

"I would renovate and then proceed to advertise and sell to the public. At this stage I was actually selling units faster than I could finish them.

"My total sales of individual units increased to more than 200 units annually," he remembers.

He expanded from Auckland into Wellington where he developed 300 properties then moved to commercial buildings.

"In 2004 I bought the Finance Centre on Albert St in Auckland's CBD from Trans Tasman Properties for $60 million. I broke it up [into strata titles] and resold it within 30 months for $75 million, less $5 million in expenses.

"Since January 2000 I have been the primary developer at Gulf Harbour. I bought the land and rights to 2400 household units for $57 million.

"The deposit was $5.8 million and to pay this I leveraged all my private assets. I thought I would be able to sell on a leasehold basis, specifically a lease with the right to buy back the land over seven years. On this basis I sold $25 million to $30 million of land."

Gulf Harbour was his undoing. Peters said he could not renew funding lines, nor could he repay loans of $100 million-plus so bankruptcy was his only option.

"I am a proud man and did not want to become bankrupt. I have dealt with almost every funder face to face over the last two years and with most of them we have resolved the issues.

"I have used my remaining resources to keep my team in place," he said of his Starline Group.

"Unfortunately I have achieved all that I can and I am now left with no alternative but to draw a line and allow myself to be placed into bankruptcy."

THE GOLDEN BOYS: PROPERTY DEVELOPERS
* Jamie Peters, Auckland: Announced his bankruptcy this week.
* David Henderson, Auckland: Facing a bankruptcy application from IRD.
* David Henderson, Christchurch: Companies in liquidation and receivership.
* Mark Bryers, Sydney: Bankrupted this month.
* Nigel McKenna, Queenstown companies in receivership.
* Neville Mahon, Fiji Hilton companies in receivership.