NZMS 1st directors. Back: Simon Botherway with Culum Manson. Front: Ricky Meyers with James Kellow. Photo / supplied
NZMS 1st directors. Back: Simon Botherway with Culum Manson. Front: Ricky Meyers with James Kellow. Photo / supplied
The financing arm of New Zealand’s largest privately-owned commercial developers has formed a new wholesale venture to raise $100 million initially in its first year for new projects.
James Kellow, chief executive of the Mansons TCLM-owned NZ Mortgages and Securities (NZMS) in Ponsonby Rd, said the NZMS 1st fund wouldoffer 7.5 per cent annually to investors who qualify and he expected it to hit $200m in its second year.
The business is issuing secured notes for qualified wholesale investors via the newly formed entity. Its information memorandum saying no prior ranking charges on the loans will be permitted.
“This is a new product which is the result of many people over the years wanting to co-invest with our business,” Culum Manson of Mansons TCLM and NZMS said. “We’re very proud of the progress NZMS has made over the years. We’re confident with our capital.”
Ted Manson with Finance Minister Grant Robertson in the new MC premises on Fanshawe St. Photo / Brett Phibbs
Kellow said commitments of $28m had been received and some millions were deposited already.
“We’ve done our first two loans: a high-end house that we’ve loaned $2.1m on and will value at more than $10m and seven completed townhouses in Tauranga,” Kellow said.
“We’re mainly targeting Auckland.”
NZMS 1st independent directors Simon Botherway and Ricky Meyers have joined Kellow and Culum Manson on the board.
Botherway was a member of the NZ Securities Commission and chaired the Financial Market Authority’s establishment board. He is also a past guardian or director of the NZ Superannuation Fund.
Meyers is a corporate, institutional and property banker with more than 25 years of senior team leadership and lending transaction experience. He is a former head of property finance for Westpac New Zealand.
Kellow has been chief executive and a shareholder of NZMS which says it is Auckland’s largest non-bank development financer with a focus on property projects. It was formed more than 10 years ago.
“In that time NZMS has not sustained a single loss from cumulative advances of $1.5 billion,” he said.
Mansons Finance and James Kellow Financial Consultants Holdings own NZMS.
Mansons TCLM is one of New Zealand’s largest privately owned commercial property developers, operating since 1983, developing many new five-star green-star buildings. The $650m 50 Albert is rising on Albert St in the CBD but Mansons has also recently finished 136 Fanshawe St for MC, Fidelity Life, 2degrees and Lion and Kiwibank’s new headquarters Te Kupenga at 155 Fanshawe St.
Spark said last month it would move 1800 staff into 50 Albert in 2025.
Mansons building at 136 Fanshawe St. Photo / Supplied
“NZMS has never accepted external wholesale funding before, nor has Mansons, but it’s something we’ve always wanted to do. Just as Ted Manson delivered an exemplary social housing product, we’ve developed an incredibly solid medium-term deposit opportunity for wholesale investors. There’s nothing out there like it. This is truly gold standard,” Kellow said.
He cited a strong borrower demand for shorter-term bridging and development loans, with borrowers squeezed by the banks which are more reluctant to loan to that end of the market.
That type of lending requires specialist skills, experience, knowledge and networks, he said.
“After consultation with interested investors, we’ve established this. A key feature is the subordinated shareholder advances which mean the shareholders are underwriting the back 10 per cent of every loan. This provides additional credit support for investors and reflects the confidence of both Mansons as well as me,” he said.
Under the structure, wholesale investors cannot be more than 58.5 per cent loan to value ratio on the first mortgage security.
“NZMS 1st has already accepted investment applications and approved its first loans, with the goal of raising $100m in the first year. With a carded rate of 7.5 per cent per annum, higher returns can be expected for those avoiding brokerage commission or investing over $5m. The minimum deposit is $750,000. Returns are paid monthly,” the information memorandum shows.
New Albert St style: how building could look once construction is finished. Photo / supplied
“Our decision to issue notes to wholesale investors is a logical next step,” Kellow said.
“We’re simply experiencing greater demand from quality borrowers than what our capacity is to lend. At the same time, due to regulatory bank capital requirements, there is a scarcity of bank funding even for proven, lowly geared property owners or developers.”
NZMS had been financing and supporting residential developments Auckland-wide, including some KiwiBuild homes.
Kellow said the capital raised would go towards helping those needing shorter-term bridging finance and ensuring there was adequate financial resourcing to meet housing demand.
“There is a gap in the property finance market which we continue to fill. By effectively offering a new product to investors, we’re providing in turn more opportunities for investors and developers to deliver more housing choice for first-home buyers.
“The banks have been forced to abandon a lot of lending and development opportunities, even those that have strong loan-to-value ratio coverage. We’re just delighted to be able to grow our capacity to lend thanks to the backing of wholesale investors,” Kellow said.
