Mortgagee now in control of Albany apartments and land

SILVERMOON PARK

• 115-unit development at Gills Rd, Albany.

• marketed as a high-quality village overlooking native bush.

• first stage was 44 units.

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• second stage of 50 units under mortgagee control

• apartment buyers now wondering what will happen

The mortgagee of a big Auckland apartment development has seized 50 almost-finished units after the business behind the project hit "financial difficulty".

Lawyers acting for the developers of Silvermoon Park's stage two at Albany reveal a situation so serious that a party with a security has taken possession of the project to secure its lending - even though a big inflow of money is due shortly because buyers are due to settle.

A letter from lawyers acting for Marmande Property LP - involved in the almost-finished stage two of Silvermoon Park on Albany's Gills Rd - cites "financial difficulty" and acknowledges "client concerns".

Nick Kearney, of Milford lawyers Schnauer and Co, got a letter from Marmande's lawyers at Jesse & Associates in Auckland, telling of financial issues with the second stage of Silvermoon Park.

"Due to issues with the builder and construction consequentially not having been completed as scheduled, our client is unfortunately in financial difficulty. The first mortgagee has taken over the development of stage two and have given notice that they have entered into possession of the mortgaged property being stage two," the lawyer from Jesse Scang Ty Nguy and Lichelle Lapworth said.

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"We appreciate that your client may have concerns in light of the above," it says, adding that Kearney can expect to hear from the lawyers or the mortgagee's solicitor.

"Our client is therefore no longer in control of the development and we understand that the mortgagee is in the process of conducting a mortgagee sale," the letter said.

Kearney said he did not know who the mortgagee was but that it was likely to be a bank.

The 115-unit project has been divided into three stages, he said, and only the second stage of 50 units is affected. Kearney said protecting his client's deposit of $60,000 for a $600,000 unit was paramount.

He expressed concerns about the apartment scene, saying he understood the units were "not too far away from being completed."

Kearney said the mortgagee had taken over the land and buildings in the second stage.

Flo, the 91-unit Avondale project, has been cancelled due to big cost rises and buyers at Rose Garden apartments at Albany are being asked for more money.

Colliers International said that in the last year alone, 35 Auckland apartment projects which were planned had not proceeded.

Rising construction and labour costs, combined with more restrictive bank lending, have been cited in many of the deal cancellations.