No matter how well heeled one is, there can often be a time when a second tier financier is required to bridge the funding gaps the normal trading banks won’t.
Our main banks are conservative with a capital C but in a twisted manner. They take enormous risks funding home owners into mortgages that at times are greater than 95%. But when it comes to property development they will generally only fund upto 70% of the total costs and they expect to be the last cab off the rank but first ranking – reducing their risk exposure to almost nothing.
Developers often undertake huge projects. Hardly any developer will sit on millions just to plug into a development when logic persuades them to invest their equity.
That ultimately leaves the necessity of dealing with second ranking funders. The types of which existed in spades before the GFC when most in our country were wiped out.
Most second ranking finance companies are scoundrels and owned by private individuals. Half the time the Modus Operandi is to screw the developer and the financiers look for any opportunity to pull the rug on unsuspecting developers.
Hardly a surprise to see this developer have the embarrassment of Â having a trick played by a financier in the public domain. What is most interesting in this instance is that the developer has settled the matter which clearly signals he had no issues with finance and more clearly signals that the financier was the issue.
Tony Gapes is set to take back control of New Zealand’s most intensive affordable housing project after receivers last night confirmed the property developer has settled a company debt.
Some 420 apartments and townhouses are planned for the Springpark estate on a 10.5ha site in Auckland’s Mt Wellington. The first stage is expected to be completed next year.
Springpark is seen as an affordable homes project, with townhouses in stage one priced from $399,000 to $554,000. Most have already sold. Â Read more »