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An Auckland apartment developer who owes Hanover Group $9 million says the financier is charging an exorbitant 22 per cent annual interest and crippling monthly loan roll-over fees.
Lily Zhong, whose company Winsun Developments put up the ill-fated 14-level 153-unit Winsun Heights opposite Beca on Vincent St, has lashed out at the financier who she predicted would only get half its money back after using fire-sale techniques to sell units in the block.
"Hanover has been charging penalty interest at 22 per cent, along with monthly fees of $15,800," she said.
And instead of getting $11 million back, she said Hanover would be lucky to get $6.5 million from apartment sales.
Hanover is managing the country's largest mortgagee apartment sale, abandoning 93 apartments, 10 carparks and a ground-floor commercial unit in Winsun Heights after problems getting its money back.
But Sam Stubbs of Hanover said the developer borrowed the money in 2004 and the loan was due for re-payment a year ago.
"We lent money in good faith but the developer has not met their obligations, even though they had ample opportunity to effect their own sales process," he said.
"Our responsibility here is to act in the interests of our investors and we've waited long enough," Stubbs said.
On August 17, Hanover appointed Horwath Corporate receiver of the block's rental income, and on Thursday appointed Horwath a general receiver.
Hanover also told Barfoot and Thompson commercial agents Wayne Muir and John Halstead to call for tenders to sell the building by November 14.
Lily Zhong said the $9 million owing to Hanover had been outstanding all this year yet she could not understand the financier's actions which would result in it recovering a small amount.
A rival real estate agency which advertised the block as a "fire sale" last weekend had already secured big deals, she said.
"Unconditional sales of in excess of $11 million were obtained by Ray White Real Estate City Apartment office in a marketing campaign over the weekend, after Hanover shocked the market last week by announcing a fire sale," she said.
Damian Piggin of Ray White said he had a massive response to his advertising campaign.
"I know we did an absolutely fantastic job, with over 200 offers in three days for more than $11 million," he said. "The average sale price for each unit was more than $110,00 a unit."
But these sales could not go ahead because Barfoots was selling the units by tender, he said.
Stubbs said Winsun Developments had instructed Ray White to sell the units individually over a few days, but Hanover preferred to stay with Barfoots and take them to market in one block.
"Barfoot said selling as one block is the best way to yield value so we have a five-week sales process.
"We have had no involvement in the one-day sale process which was the developer trying to recover money and this was less than appropriate," Stubbs said.
Lily Zhong said the block had cost $12.5 million to develop and Kalmar Projects was owed more than $200,000 as a project management fee. But all the company's creditors would suffer because of Hanover's moves, she predicted.
"It is now unlikely that Kalmar and other unsecured creditors will receive any payment."
On Thursday, Winsun's shareholders had put the company into liquidation, she said, appointing John Buchanan and Callum Macdonald of insolvency specialists Buchanan Macdonald. Macdonald said Hanover had put Winsun into receivership on Thursday, following meetings between lawyers Buddle Findlay acting for Hanover, Horwath and his firm.
As liquidators, his firm would take a back-seat role to Horwath as receivers, Macdonald said.
The liquidators will prepare their initial financial report on Winsun by next Friday. Lily Zhong said she hoped that by appointing a liquidator, all parties owed money would get a clearer idea of the financial position.
"The appointment will ensure the sale process conducted by Hanover is transparent to all creditors," she said.
But she fears Hanover will chase her for any outstanding money.
