Senior Trust Capital

New Listing

STCU_Issuer_Profile_2021_-_020821.pdf (usx.co.nz)

https://www.usx.co.nz/uploads/paperc...pdf?1627867601

For anyone following Senior Trust Capital, it looks like a mortgagee sale is underway of the land being developed by Roy’s Bay Estate:

https://www.realestate.co.nz/4212553...ve-lane-wanaka

https://www.roysbay.co.nz/

According to the STC 2021 annual report (note 10), there was $8.3m lent to Roy’s Bay Estate at 15%. The note detailed that security was held, although taking into account higher ranking debt owed the LVR was 99% at 31 March 2021. Assuming this mortgagee sale is in fact Roy’s Bay Estate, there is potential for some losses for STC here.

A market update from STC would be good.

Probably one of the downfalls of the Unlisted - less rigourous/different disclosure rules . Still, it would be in their interest to maintain best practice and update the market on the ramifications.

Not sure of the loss, but there has been a signifcant updraft in prices in Wanaka since March 2021 - for the calendar 2021, there was a 47.5% increase in prices, and land values remain strong. A few weeks ago a development on the edge of town towards Cardrona sold most of the 46 section release on the 1st day, at around $1,000 per sqm.

"Roys Bay Estate" is in a much better/desireable location, and comes with the development resource consent. Would be interesting to see what tipped over the developer.....maybe building costs got out of hand compared to any sales. Alot of that Meadowstone land is fairly rubbish around there, so might have had to do more earthworks than expected.

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Originally Posted by Sideshow Bob

Probably one of the downfalls of the Unlisted - less rigourous/different disclosure rules . Still, it would be in their interest to maintain best practice and update the market on the ramifications.

Not sure of the loss, but there has been a signifcant updraft in prices in Wanaka since March 2021 - for the calendar 2021, there was a 47.5% increase in prices, and land values remain strong. A few weeks ago a development on the edge of town towards Cardrona sold most of the 46 section release on the 1st day, at around $1,000 per sqm.

"Roys Bay Estate" is in a much better/desireable location, and comes with the development resource consent. Would be interesting to see what tipped over the developer.....maybe building costs got out of hand compared to any sales. Alot of that Meadowstone land is fairly rubbish around there, so might have had to do more earthworks than expected.

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Holding the second mortgage when the first mortgagee is conducting a mortgagee sale is not normally a good place to be, as the first mortgagee usually only interested in recovering its debt (and nothing more). In this case, the first mortgage of $13m is funded by Senior Trust Retirement Village Income Generator Limited, which I assume must be related to STC. The directors of that company would have to act in the interests of that company however, so it may not be straightforward (i.e. not agreeing to a sale that recovers their debt when there are no other purchasers at the table would be challengable).

Note 10 in the 2021 financial statements did indicate that the Roys Bay Estate project has been offered for sale, so obviously these efforts came to nothing (i.e. potential RV buyers will have already passed up the chance to buy, although they may be interest now at a cheaper price from the mortgagee).

It looks like the 2021 valuation was based on an assessment of the operators interest, which I assume requires a completed RV development. If a RV isn't the future use (noting there are some planning approvals in place), what is a valuation on the bare land in today's market?

https://www.odt.co.nz/regions/wanaka...mijp0l2hhi6s1o