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Hanover Group chief executive Sam Stubbs says his firm is happy with its involvement in the property sector despite having millions of dollars tied up in four large property development projects which have suffered setbacks in the past few months.
"It's all well in hand," he said.
The firm had loaned across a very broad property portfolio, diversified by type and geography to maximise returns and offer spread of risk, he said yesterday.
The private financial services group jointly owned by Eric Watson and Mark Hotchin has called for mortgagee sales of 99 units in two large Auckland apartment blocks, Harbour Green and Winsun Heights.
In the past week, Hanover moved to recover a $14 million debt from Winsun Developments, in receivership and liquidation. Winsun Developments put up the 153-unit Winsun Heights on Vincent St on the fringe of Auckland's CBD and Hanover is taking 93 apartments, 10 carparks and an office to mortgagee sale by tender closing on November 14.
Hanover also had payment problems with another Auckland apartment project, Harbour Green, where Winsun developer Lily Zhong was also involved. Hanover's money was not repaid fast enough, so in August the financier called for the mortgagee sale of the units in the block too.
Work on Harbour Green at 11 Union St was undertaken by Kalmar Projects, the same firm owed money on Winsun Heights.
Real estate agency City Sales sold six Harbour Green units on Hanover's instructions during the winter. Stubbs said at the time his company had called for the sale of the units because the developer was being slow selling them and repaying the loan.
This week, it was revealed that financial pressure on the developer of a Kinloch golf course near Taupo might result in its sale. Hanover Finance is the developer's main backer, with FE Investments. Only 40 of 176 residential lots were reported to be sold.
A Melbourne project too has struck major problems and Hanover made provision to write off a large sum.
Hanover and failed financier Bridgecorp loaned money for the Bayshore project by the collapsed Westpoint Corporation which built 18 shops and 304 apartments. Hanover made a $2 million loss provision on this deal and Bridgecorp was selling down its interest when it went under.
Hanover has also loaned money for the $2 billion Jacks Point project 15 minutes out of Queenstown. Stubbs said Hanover was "extremely comfortable" with sales at the key property development, despite speculation property sales there were slow.
Sales at Highlands, part of Jacks Point, had been going "fantastically" and 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, he said.
Greg Muir, Hanover Group's chairman, said all the money from the Melbourne project was recovered, Jacks Point was not a short-term project, and there were no issues at Kinloch.
"We have nearly $100 million in the bank, we're audited by one of the big four firms and considering what's gone on in the sector, the business is in really good shape. Had Lily Zhong paid her bills, no one would have had any concerns."
