South Canterbury Finance's 64 hectare Belfast Park and Tyrone Estates get green light for residential development

South Canterbury Finance's 64 hectare Belfast Park and Tyrone Estates get green light for residential development

By Gareth Vaughan

The receiver of South Canterbury Finance (SCF) is welcoming a decision by the Christchurch City Council to allow a residential development on 64 hectares of land owned by SCF on the outskirts of Christchurch.

The council has approved a request from SCF's Belfast Park Ltd and Tyrone Estates Ltd in a move that should increase the value of the land in East Belfast on Christchurch's northern urban fringe.

McGrathNicol managing partner and SCF receiver Kerryn Downey said he was pleased with the decision, acknowledging it would boost the land's value.

"It satisfies, or in fact, deals with any uncertainty," Downey told

"We've got our asset management people working through the terms of that consent in terms of the specifics and conditions," he added.

As part of the SCF group receivership, Downey is also the receiver of Belfast Park Ltd and its subsidiary Tyrone Estates Ltd.

Belfast Park's first receiver's report notes as of August 31 last year it owed SCF NZ$14.3 million and ASB NZ$10.1 million. It had total assets, including NZ$13.56 million worth of development and investment properties, of NZ$22.7 million and total liabilities of NZ$24.6 million.

Tyrone Estates' receiver's report notes as of the same date it had total assets, including NZ$9.3 million of development and investment properties, of NZ$9.4 million and total liabilities, including NZ$7.9 million worth of loans from Belfast Park and SCF, of NZ$8 million.

The council approval sees the rezoning of about 64 hectares from "Rural 3" to "Living G" to provide for mixed density residential development along with small areas of commercial and industrial land. Belfast Park also owns an adjacent block of business zoned land that was formerly the Canterbury Freezing Works site run by Silver Fern Farms. Consents have been granted for the redevelopment of that site for commercial activities. See the recommendations to the Council here.


Although the obvious route for the receiver would be to sell the land, Downey said all options, including keeping it, were on the table with no immediate plans to put it on the block.

"When we have fully understood the terms of the planning decision and assessed our options we will follow the cause of action which maximises the value," said Downey.

"We'll follow the option that presents the greatest value ultimately to the taxpayer of New Zealand," he added.

McGrathNicol was appointed SCF receiver on August 31 last year when a waiver to a breach of the company’s trust deed expired and it failed to secure up to NZ$300 million of much needed new equity.

The receivership triggered a NZ$1.6 billion payout to 35,000 SCF investors under the Crown retail deposit guarantee scheme and a NZ$175 million Crown loan to McGrathNicol so it could repay SCF's prior charge holders including the George Kerr chaired Pyne Gould Corporation subsidiary Torchlight.

McGrathNicol is looking to sell other SCF assets including Helicopters NZ, an 80% stake in Scales Corp, a 33.5% stake in dairy farming group Dairy Holdings, and SCF's core finance operations.

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The rezoning turns what was really a bit of a wasteland between the main trunk line and the proposed motorway extension into something quite valuable.

The 64ha could take 600-1000 properties.  In the peak of the market undeveloped land in this type of location may have attracted well over $50k per unit.  That's at least $50m.

Of course developed it could potentially earn $80m plus (excl GST) even in the current market. 

But remember that's not all of their assets.  In addition they've got the 20ha or so zoned industrial south of Belfast Road incorporating the old Silver Ferns Farms works.  The GV on this is something close to $20m, although much of that is building value which may or maynot be worth something depending on whether alternate uses are viable. I'd think that even partially developed $1m/ha is a fair land value though whether they eventually look to develop industrial or look for a further zone change (an office park or residential maybe better uses) is debateable.

I'm not sure whether BPL had any options over the remainder of Silver Fern Farms Belfast land or whether what they currently own was the only deal (obviously SFF still own north of Belfast Road across Factory Road), if they did there would be value in that now zoning changes on the other land has been acheived.

Then Tyrone estates has some further land, perhaps $0.75m of already developed sections plus about 10ha of rural land by the start of the ChCh northern motorway in Tyrone St with the possibility of being rezoned once the new motorway goes through and the land becomes isolated from the rest of the rural zone and left within the Belfast urban area.  That land currently has a GV of about $6m which is excessive (it could only probably acheive $2m on a very good day with it's current zoning).  If rezoned it would probably be worth $10m.

So lets add that up (in very rough terms).

Undeveloped as is, in the current market, under mortgagee sale terms with the new zonings the 64ha could be worth $20-35m (a big range but it would depend on the vendor's and buyer's motivation).  The old works might be worth $8-10m under mortgagee terms.  The Tyrone rural block maybe $1.5m and the sections maybe $500k.

So under a quick forced sale maybe $30m up to just under $50m could be acheived now.

Had the rezoning not occured and the council indicated that it would never rezone, the 64ha would have been worth maybe $4m.  The rest the same, so a total perhaps $12-18m (which would NOT be good.  Sold all as one lot under mortgagee terms as little as $10m might have been acheived.

Now if the receivers hold the land and develop, or partly develop (perhaps sell in smaller parcels to other developers once some works were done), and get the remaing land rezoned once the development is underway then they may get $80m+ for the 64ha, $20m+ for the works land, $15m+ for the Tyrone land plus $750k in incidental parcels, then the possiblility is that well over $100m could be acheived.

So the receivers are doing the right thing, and it's probably how a lot of SCF's assets should be treated.  A lot of the defaulted debt is against valuable development property worth not much now but it is land that could generated huge revenue if it was dealt with correctly.

The key is to dispose of the developed properties reasonably quickly to get some money back but think carefully about the big undeveloped assets.

It is conceivable that the SCF failure won't cost the taxpayer much if at all (but don't quote me on that, because I haven't seen their loan book!)


Very detailed stuff Chris. All in all this rezoning is great news for us taxpayers! It might be tempting for the receiver to hang on to this for a bit, rather than sell ASAP...