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  1. #1
    The Good Banksie's Avatar
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    Default Collett's Corner

    I have made a token pledge to Collett's Corner, an equity crowd funded property development. Does anyone have experience with this type of investment? I'm trying to decide if I should commit to a decent amount.

    As it stands I am worried they will not get their target amount of $2mil - it seems to me if they only get the minimum of $300,000 then it's going to be an extremely risky proposition.

    https://www.pledgeme.co.nz/investmen...llett-s-corner
    https://ohu.nz/wp-content/uploads/20...er-IM-Rev1.pdf
    Last edited by Banksie; 28-02-2019 at 04:34 PM.

  2. #2
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    Default

    From my brief glance of the prospectus (and I haven't worked out all the #s), I would say the #s don't stack up. I question:

    1) Funding of the $14M it would cost to build - sourced from where?
    2) 20 year payback (2041) is a long time to wait

    Despite the $2M crowd funding start up, it's HIGHLY dependent on the $14M it needs to build the place.

    Be very weary of such funding projects. Meaning, if the banks won't touch these projects, you have to question why? It's because the shareholders from crowd funding have no control vs a bank who lends, will place a lien on the property title and can foreclose the project.

    All in all, in 20 years time frame for payback, there are FAR better places to park you $ at a much lower risk matrix. Also the prospectus states the projected IRR (internal rates of return) % is based at the discretion of dividend payment and book value which I find amusing. While 'dividends' & 'book value' are related, they go in opposite directions. Anotherwords, the value of the shares is tied to the book value, if the company pays dividends (a draw down on the shareholder's equity), then naturally by accounting, the 'book value' will drop. Anyways, i'm sure there are a lot of holes I could pick out...

  3. #3
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    Default

    Quote Originally Posted by Banksie View Post
    I have made a token pledge to Collett's Corner, an equity crowd funded property development. Does anyone have experience with this type of investment? I'm trying to decide if I should commit to a decent amount.

    As it stands I am worried they will not get their target amount of $2mil - it seems to me if they only get the minimum of $300,000 then it's going to be an extremely risky proposition.

    https://www.pledgeme.co.nz/investmen...llett-s-corner
    https://ohu.nz/wp-content/uploads/20...er-IM-Rev1.pdf
    Wouldn't touch it. Way too risky and when it gets tough the "community" of funders will want to blame someone. Where's the majority of the funding for the building coming from? This is only a small part.

  4. #4
    The Good Banksie's Avatar
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    From the Investment Memorandum the majority of the funding ($10 mil) is coming from the sale of the apartments on the top 2 floors. With the $2mil fund raising this would mean they're around $1.8m short. This is covered by loans and shares in lieu of professional fees.

  5. #5
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    Default

    I can assure you what ever initial funds raised (to the $2M limit), a fair portion of it would be consumed by mgt and admin fees (not all professional and consent fees can be done in lieu). But you've brought up another scenario:

    Do the rights holder of funding the $2M startup have any greater say than those investors that buy the top 2 floors? Normally in any building project in it's entirety, the investors would want equal say (especially if $10M to construct the portion would have to match those other investors that put up $4M). They're not mutually exclusive. If it so happens the initial shareholders have a greater say of the project, you would be hard pressed to find any investor that would put $ towards the building of the top 2 floors. This kind of arrangement reminds me of 'cross leased' titles on properties.

  6. #6
    The Good Banksie's Avatar
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    Some good points SBQ. Thanks for your input on this thread.

    It seemed odd to me that the sale of the apartments almost covered the full cost of the build so I did a quick check with the figures I have. In a question and answer session they said the entry level price for a studio apartment would be $430000. I checked the drawings and the smallest studio is 33sqm. This works out at $13,000 per square metre. There is co-living space i.e. shared laundry and rooftop gardens but it still seems like a very expensive sqm rate. While the shared living areas seem like a good thing, these are going to come with a high maintenance cost, so I should imagine the monthly fees to live in the building won't be cheap.

  7. #7
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    It's bound to succeed as there appears to be a Labour MP as an investor.

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