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

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!)