Property Insider: $51.7m modular apartment-building insolvency; Fletcher’s ranking in NZ’s 50 busiest builders

How the three blocks of housing units on the Richardson Rd/Hendon Ave corner were planned to look. Now, a lender is owed $50.4m from this job which remains only partly-built. Photo / Property Partners Group

An American financier loaned $50.4m on a modular Ōwairaka apartment scheme but the developer is in liquidation; where Fletcher Building scored in the busiest 50 builders based on 2023 project values; new City Rail Link station building lights up for Matariki, the artist tells of creating a legacy.

Modular proves expensive for American lender

Modular residential construction is often held out as a panacea for our housing shortage yet the financial failures from this industry continue, the latest being a liquidation where an American lender is owed $50.4 million and unsecured creditors a further $1.3m adding up to a total $51.7m.

Build Partners was constructing more than 90 Kāinga Ora apartments. Wiri-headquartered offsite manufacturer Evergreen Modular was making transportable housing modules. Apartment builder Richardson Road was part-way through three huge blocks in Auckland.

All three companies are in liquidation, having been part of Property Partners Group which remains solvent. It operated in the construction and property development sector and was directed by Steve Mikkelsen and Ty Jones.

Liquidators at Grant Thornton said this month that one financier, 1769 Funding, was the main contributor to lending on the large Auckland modular apartment project being undertaken by one of the unfortunate three in liquidation – Richardson Road.

Richardson Road went under part-way through building 108 two-bedroom units in three six-storey blocks on or near the Richardson Rd/Hendon Ave corner in Auckland’s Ōwairaka/Mt Albert.

A tower crane was up, the first block rose and work was held out as a “beacon” for the industry. The Government’s Construction Sector Accord listed Evergreen’s multi-storey timber-framed volumetric construction methodology as reducing carbon emissions, improving environmental sustainability and resulting in better health and safety outcomes for staff.

But now the liquidators’ first report lists $51.7m owing to 10 secured and unsecured creditors.

The first Mt Albert block on Richardson Rd when it was under construction. Photo / Property Partners Group

The funder’s $50.4m was as of May 2 but interest is continuing to accrue on the debt, Grant Thornton’s liquidators wrote.

What interest rate might Richardson Road have been paying?

Last year, the Herald reported on the modular project in From Sweden to Ōwairaka: First of three modular timber housing blocks up. Mikkelsen said then: “We went to the USA, China and Europe but the Swedish model was the right model for us.”

This month, the liquidators told of the structure and interconnections between the entities: Property Partners Group developed apartment and townhouse projects often utilising pre-built modules from Evergreen, including several projects developed for or in conjunction with Kainga Ora, they said.

Work by Build Partners, creating new state homes for Kāinga Ora on Cadman Ave, Waterview. Photo / Jason Oxenham

“Evergreen manufactured modular apartments, the majority of which were for intercompany sale to other members of the group for use in their projects.”

Build Partners – the group’s main trading company – acted as head contractor on the group’s construction projects.

“Richardson Road was a special purpose vehicle set up to develop three six-storey apartment buildings with 108 two-bedroom apartments at Richardson Rd, Owairaka, constructed from off-site manufactured timber volumetric modules constructed by Evergreen.”

Read on in that report and you’ll find the unfortunate combo of factors which pushed all three companies under. How much can be recovered of the $50,407,392 and $1,348,471 is unclear. Assets of $7.7m are listed, of which $7.5m appears as “development WIP [work in progress]”.

Perhaps the six-monthly liquidation report will tell us more.

Insiders now expect the liquidators to try to sell the partly finished construction site to another business to finish the apartments and attempt to repay as much as possible to the American lender.

50 busiest builders for value of work started in 2023

At the Resido apartments in Mt Wellington, all three blocks were built by Naylor Love, which headed the BCI list this month. Here at Residio's opening day (from left) are Hauauru Rawiri of Ngati Paoa, Housing Minister Chris Bishop, PM Christopher Luxon, Clive Mackenzie from Kiwi Property and Simon Shakesheff from Kiwi Property. Photo / Jason Oxenham

Last week, we published the 10 busiest New Zealand builders but now all 50 are revealed.

The BCI Construction League table ranked builders, “including developer/ builders, by the total value of projects started in 2023 in the commercial, community, industrial, legal and military, and multi-residential (three-plus houses/units) sectors”.

Build Partners scored place 24 out of 50, starting one project worth $100m in 2023 – its big Richardson Rd multi-level apartments. The company behind that was in administration but creditors clamoured for liquidation [see item above].

The busiest 10 builders in 2023, with the most valuable jobs ranked in dollar value, were Naylor Love in first place followed by Haydn & Rollett, LT McGuinness, Southbase Construction, Watts & Hughes, Icon Construction, CMP Construction NZ, Dominion Constructors, Calder Stewart and Cook Brothers Construction.

In places 11 to 20 were Build Environs, Fosters, QBS Construction WLL, Aspec Construction, NZ Strong, Livingston Building, McMillan & Lockwood, Apollo Projects, Leighs Construction and BMC, according to the survey.

Places 21 to 30 were taken by Simplicity Living, GJ Gardner Homes, iLine Construction, Build Partners, Clelands Construction, TW Construction, Canam Group, Macrennie Commercial Construction, Metro Advances and Maycroft Construction, BCI’s list said.

Fletcher Building is 31st on the busiest builders' list. Photo / Natalie Slade

Fletcher Living only made number 31 on the list, with just six projects for $69m. The builder has pulled out of all high-rise construction and now specialises in house building, a much lower-value end of the market.

Places 32 to 40 were taken by Reco Construction, Hero International, Aintree Group, Chancellor Construction, Wolfbrook Property Group, Classic Group, HRS Construction, Soho Group and Mike Green Homes, BCI said.

In the final 10 places, 41 to 50, were Amalgamated Builders, Cassidy Construction, Miles Construction, Legacy Construction, Alaska Construction, McKee Fehl Construction, Scott Construction, Kalmar, RCC Group and Consortium Construction, BCI’s table showed.

Last week, BCI held an event in Auckland to launch the second year of results.

“With perspectives from some of the country’s top main contractors, Government and building and construction apprenticeships, our panellists took to the seminar series stage to share exclusive insights into how their organisations have navigated recent challenging market conditions, the current state of New Zealand’s construction industry, changes and opportunities on the horizon, as well as the role of Government, apprenticeships and women in building a bigger and better construction industry for all,” BCI posted after the event.

Last week's event in Auckland where the new construction league table was launched and where industry issues were discussed. Photo / BCI Central

Quin Henderson of Southbase Group, Andrew Moore of CMP Construction, Adrian Mathieson of Calder Stewart, MP Chris Penk, Greg Durkin of the Building and Construction Industry Training Organisation and BCI’s Ashleigh Porter and Ben Hurrell were thanked for their contributions to the forum mid-last week at BuildNZ.

Thanks to BCI for launching this survey last year and announcing the second year of results this month.

The survey is a much-valued contribution and the only authoritative list of its kind.

Builders guard their rankings which they say can influence future contracts, workloads, the perception of their business in the marketplace and people’s confidence in their ability to take on and then deliver projects.

Not everyone agrees entirely with their place on the list. Often they’d like to be bumped up because they say projects they are working on did not quite fit the measurement criteria, may have been started before or after the set dates or other reasons.

Certainly, being missed off the list when you’re a big builder is something that can cause consternation.

But generally, this initiative is something highly discussed amongst builders, gives strong guidance and is welcomed.

Mānawatia a Matariki!

Sky element features on the midtown Te Waihorotiu building at Wellesley St in central Auckland. Photo / City Rail Link

It’s with joy we note the beauty of City Rail Link’s new Te Waihorotiu station building and its stunning sky element features.

It glows and shimmers and draws the eye in a way we’re only now beginning to see in large-scale projects where te ao Māori artwork is appearing on everything from motorways and bridges through to the NZ International Convention Centre and in many places and spaces on the CRL development.

Could CRL be offering our most advanced civic works when it comes to displaying toi Māori?

This new work is glowing just in time for Matariki.

“Made up of thousands of coloured aluminium fins, this upper façade is an expression of the tears of Ranginui [Sky Father],” CRL said last week in posting pictures of the glamorous glowing exterior.

Artist Graham Tipene [Ngāti Whātua, Ngāti Kahu, Ngāti Hine, Ngāti Haua, Ngāti Manu] has already got people talking, in December with a unique art experience at Auckland’s Myers Park, off Queen St. The work occupies the space under the Mayoral Drive bridge at the northern entrance to Myers Park and can be described as a sensorial experience of light and audio effects made up of birdsong, taonga pūoro and water sounds.

The Herald has reported how it will change according to different stimuli from people, weather and other environmental influences, creating a perpetually unique experience.

Artist, Graham Tipene, pictured last December at the multi-sensory artwork transforming the underpass at Myers Park. Photo / Michael Craig

At the new CRL building, seven extremely thick glass skylights are now installed to flood the floor with light and also to represent the Matariki constellation.

Tipene is also the artist for the new Te Waihorotiu building facade. CRL quoted him as saying that the normalisation of traditional knowledge used in the CRL project had been impressive and a step in the right direction for Tāmaki Makaurau and Aotearoa.

“This station and this project are a testament to the nationhood we must strive for, and the excellence the Poutama facade design recognises brings to the fore a narrative that all of Tāmaki Makaurau and Aotearoa can be proud of,” Tipene said.

The artwork took 10 years from start to finish, he said. It is three levels high and is on three sides including the Albert St and Wellesley St faces of the building.

Tipene has been a consultant and key artist on civic and council-led projects including the Waterview Tunnel, Victoria Park, Auckland Library, Tirohanga Whānui Bridge in Albany, the Myers Park Underpass and now CRL.

“The work we do is for children we will never meet. My grandkids’ grandkids will say ‘I see myself in this environment’,” Tipene said.

What a statement from the facade he designed. Whakamihi, matua.

It’s never too late to say mānawatia a Matariki!

Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.