A 1.43 hectare block of land on the shores of Lake Wanaka has been up for mortgagee sale since October 2024.
The land at 2 Kelliher Drive, with consents to build 59 townhouses, was valued at $24 million to $26 million by Sotheby's in March last year.
A loan of $15.9 million by Senior Trust Retirement Village Income Generator Limited to Stoney Creek GCO Limited, the vehicle of Auckland developer Andrew Bendemski, expired on 29 February 2024 and was called by Senior Trust. The value of the loan is shown on Senior Trust's website as $17.6 million.
Payment was not forthcoming and the land was put up for mortgagee sale by Bayleys Wanaka.
An undated letter from Senior Trust to its shareholders - required by the Financial Markets Authority (FMA) and published recently on the website - revealed "Senior Trust's borrowers," collectively owing the company $250.6 million as at 31 December 2024, "were not making sufficient trading income (e.g., from selling units and occupation rights agreements) to pay that interest."
That $250.6 million is given as the "total portfolio facility limit."
The other loans are to: The Grove, Orewa, $10 million; Quail Ridge Country Club (Kerikeri), $33 million; Orewa Sands Senior Living, $61 million; The Hill, Pukekohe, $29 million; The Botanic, Silverdale, $33 million; Longridge Country Estate (Paeroa), $33 million; Senior Care Limited Partnership (Auckland), $8 million; and Amberley Country Estate, near Christchurch, $26 million.
The shareholder letter reveals Senior Trust responded by capitalising monthly interest obligations and advancing borrowers money "so that they could use it to cover the interest on their borrowing from Senior Trust and other lenders."
"In other words," the letter says, "money from new investors in Senior Trust was loaned to the borrowers via the borrowers drawing down on existing loans," and "borrowers used that same money to pay the interest on loans back to Senior Trust or other lenders, including an associated investment company named Senior Trust Capital Limited (STC)."
The result was that the dividends Senior Trust's investors received in financial 2023 and 2024 "considerably exceeded the interest payments that Senior Trust received that were attributable to the borrowers' operating activities."
Senior Trust said it had been in consultation with the FMA since November 2024, and had advised the regulator it intends "to change the way its business operates."
The changes include "ensuring that dividends will not be funded in the manner set out above."
Senior Trust's executive director, John Jackson, will not stand for re-election on STC's board. A new chief executive, Matt Major, has been appointed.
The target 8% dividend rate has been reduced to 7%.
UPDATE
The FMA said on June 27 its investigation into Senior Trust Retirement Village Income Generator was ongoing.
9 Comments
Interesting to see the unraveling of developers and development proposals. And interesting in this phase of the market cycle. It suggests to me developers will be dumping land at rates that allow for its development at current market prices. There is a lot more construction capacity available compared to the last property downturn and builders and new developers can keep themselves busy by keeping supply coming to the market.
I have been wondering when Queenstown's bubble will pop - so that will be interesting to watch.
Looks like ST are doing the
"Gradually, then suddenly.” thing.
This stage of the cycle is most interesting as the land will go at true market levels here... Then all other land will end up revaluing down again per sq m to these actual levels,
It's about now you start seeing these sales, then banks increase provisions, then rating agency's warn they are reducing Banks ratings, then finally sovereign ratings are impacted....
Anyone who lived through the GFC cycle will know the well-trodden path.
Investors capital rolled back to investors as "interest" when it was anything but and the investments were failing.
How do you spell Ponzi...
Ps good luck investors in Senior Trust Retirement Village Income Generator Limited. The odds are not in your favour.
Pps. Can't believe they are still allowed to ask for investors funds.
How do you spell Ponzi...
S E N I OR T R U S T
And don't be surprised if some of their investors live in Wanaka. Irony is that the Wanaka-ites probably don't want the development, but 100% want the land values.
Imho no many of this crowd have there money at Craig’s or jardens
too smart to play in that space , that space are more bowling club investors I bet ST sponsor bowling competitions
these bandits will be the ex finance company crowd supplying finance at 12% paying 8%
Fair comment and suspect you're correct
I suspect you are right x2. They all went broke in the GFC for a reason.
yeah but they milk hard for the 10 year s between crisis and move profits into trusts or offshore
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.