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Bank reduces funding to syndicate

St Laurence is using a contributory mortgage to replace bank debt in one of its property syndicates.

Wednesday, January 24th 2001, 9:58PM

by Philip Macalister

Property syndicator St Laurence Group has decided to partially replace bank funding for one of its funds with a contributory mortgage, rather than cutting interest payments to mortgage bondholders.

The group had to look at a new source of funding for its Aorangi Property Fund as its banker, WestpacTrust, wanted to reduce its exposure to the syndicate.

"WestpacTrust has sought a reduction in its term loan from $4.7 million to a balance of at least $3.5 million by 31 May 2003," St Laurence says.

Aorangi's directors decided it was "preferable for the repayment to be achieved by partially refinancing WestpacTrust's loan with the funds borrowed from public investors under the contributory mortgages rather than by reducing the interest payments to holders of mortgage bonds."

St Laurence managing director Kevin Podmore says while the cost of the debt will be higher than through the bank, a contributory mortgage was more cost-effective and practical than using a capital raising method such as a rights issue.

A contributory mortgage is cost effective from a documentation and compliance issue, especially for an amount such as this that is relatively small.

"We couldn't really justify having to put together a registered prospectus."

Podmore says this is the first time St Laurence has used a contributory mortgage in this manner, but it is method that will be used more often during the year.

"You are going to see more of these from St Laurence," he says.

He says St Laurence thought carefully about using contributory mortgages as there was some stigma attached to them.

"We didn't want to tarnish St Laurence's name," he says.

Podmore says the mortgage has good security behind it and it is not being used for high-risk property development.

Overall, St Laurence is looking to raise between $1.2 million and $2 million on the security of a second mortgage over the fund's two commercial properties.

The properties are in Molesworth Street, Wellington and Onehunga, Auckland.

The mortgage is for two years and investors will be paid a fixed rate of 10% annually.

You can read Philip's blog here: http://www.goodreturns.co.nz/blog/

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Lender Flt 1yr 2yr 3yr
AMP Home Loans 6.49 5.69 6.29 6.40
AMP Home Loans $200k+ 6.39 5.59 5.99 6.30
AMP Home Loans LVR <80% - - 5.99 -
ANZ 5.99 5.85 6.49 6.85
ANZ LVR > 80 5.99 6.35 6.99 7.35
ANZ Special - - 5.95 -
ASB Bank 6.00 5.85 6.49 6.85
ASB Bank Special - - - -
BankDirect 6.00 5.85 6.49 6.85
BankDirect Special - - - -
BNZ - Classic - - 5.95 -
Lender Flt 1yr 2yr 3yr
BNZ - GlobalPlus 6.19 5.85 6.29 6.29
BNZ - Mortgage One 6.60 - - -
BNZ - Rapid Repay 6.19 - - -
BNZ - Std, FlyBuys 6.19 5.85 6.29 6.29
BNZ - TotalMoney 5.99 - - -
Credit Union Auckland 6.20 - - -
Credit Union Baywide 5.85 5.90 6.50 -
Credit Union North 6.45 - - -
Credit Union South 5.75 - - -
eMortgage 6.04 6.15 6.69 7.19
Fidelity Life 5.70 5.40 6.00 -
Lender Flt 1yr 2yr 3yr
Finance Direct 6.10 6.45 6.69 7.10
First Credit Union 6.45 - - -
General Finance 5.95 6.25 6.50 7.10
HBS Bank 5.90 5.60 5.99 6.35
HBS LVR > 80% - - - -
Heartland 5.95 6.25 6.50 7.10
Heretaunga Building Society 5.75 5.50 6.30 -
Housing NZ Corp 5.75 5.50 6.30 6.40
HSBC Premier 6.24 5.59 6.29 6.55
HSBC Premier LVR > 80% - - - -
HSBC Special - - 5.79 -
Lender Flt 1yr 2yr 3yr
Kiwibank 5.90 ▲5.85 ▲6.19 ▲6.60
Kiwibank - Capped 5.65 6.50 - -
Kiwibank - Offset 5.60 - - -
Kiwibank LVR > 80% - - 6.29 6.40
Liberty 5.64 - - -
Napier Building Society 5.80 6.00 6.70 -
Nelson Building Society 6.45 5.95 6.60 -
NZ Home Loans 6.10 5.69 6.29 6.60
Perpetual Trust 7.70 - - -
RESIMAC - lo doc 7.34 7.14 7.49 8.05
RESIMAC LVR < 80% 5.84 5.64 5.99 6.55
Lender Flt 1yr 2yr 3yr
RESIMAC LVR < 85% 6.84 6.64 6.99 7.55
RESIMAC LVR < 90% 7.84 7.64 7.99 8.55
SBS Bank 5.90 5.60 5.99 6.35
SBS LVR < 80% - - - -
Silver Fern 5.95 6.10 6.55 7.05
Southern Cross 5.95 6.25 6.50 7.10
Sovereign 6.10 5.85 6.49 6.85
Sovereign Special - - - -
The Co-operative Bank 5.95 5.65 5.99 6.35
TSB Bank 6.04 5.40 5.99 6.40
Wairarapa Building Society 6.20 5.75 5.95 -
Lender Flt 1yr 2yr 3yr
Westpac 5.74 5.85 5.95 6.85
Westpac - Capped rates - 6.19 6.69 -
Westpac - Offset 5.74 - - -
Median 6.00 5.85 6.29 6.85

Last updated: 22 April 2014 9:04am

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