The rapidly cooling property development market was a major factor in the collapse of Auckland-based Belgrave Finance, which yesterday became the 20th finance company failure in the last two years, its directors say.
The property development financier, which has a loan book of about $28 million and owes
just over $22 million to about 1000 debenture investors, said it had become apparent two weeks ago that an expected substantial funding line was no longer available to the company.
Since then it had investigated various options including a moratorium, capital restructure and alternative funding lines.
However, the company's board had decided that given the "tough market conditions" receivership was "in the best interests of our investors".
"A majority of our remaining loans are mezzanine in nature, with many loans being secured by land with development potential," managing director Shane Buckley said.
"We have been affected by the current property market downturn and the inability of developers to raise alternative funding from other financiers."
The company's trustee, Covenant Trustee Company, has appointed Grant Graham and Brendan Gibson of KordaMentha as receivers.
The receivers for a number of finance companies have recently revised downwards estimated payouts for investors, in many cases citing market conditions which make it difficult to realise property loans.
BELGRAVE FINANCE
* The 20th finance company to hit trouble in two years.
* Owes about 1000 investors just over $22 million.
* Has a loan book of $28 million mostly on property.
* Its directors say the company has been hit by "the current property market downturn".
