Property, like most sectors, had a poor year in the past 12 months, but one investment that has done well has been St Laurence Property and Finance Ltd (SLPF).
The investment has generated a profit of $1.02 million in the 8-month period to 31 March 2001.
"On an annualised basis this profit level represents a return of 122% on the capital invested," St Laurence managing director Kevin Podmore says.
St Laurence set up SLPF as a secured bond a year ago because syndications were out of vogue big-time.
The idea was to package a property offering up as a debt instrument because the market had shown it liked these types of investments.
When SLPF went to the market it offered investors 11% annually for three years and it aimed to raise $6 million, but strong demand for the offer saw the company accept subscriptions of $12.5 million.
Podmore says SLPF is a high risk, high return property investment that "will endeavour to provide investors with a return on equity in excess of 20% per annum."
He says the intention is to raise additional capital once the fund has established a financial track record.
Currently SLPF has invested 42% of its funds in secured loans and another 45% in property investments. The balance, 13% is invested in bank deposits
The majority of the initial profit is attributable to an unrealised valuation gain it has earned on its 30% equity share in 2 Kitchener Street, Auckland.
SLPF established a joint venture with NZPS Investments and Axis Property Group to invest in a vacant office building for $4.6 million. Under the arrangement NZPS Investments contributed the property at cost, SLPF provided second mortgage funding and Axis arranged tenants for 3 floors.
The joint venture has successfully managed to fully lease the property within 5 months of settling the purchase. The average lease duration of the building is in excess of 5 years and net rent roll is $848,000 per annum. As a result the market value of the property is now assessed to be $7.85 million.
SLPF is currently considering a number of similar opportunities where it takes an equity stake in return for providing second mortgage funding.
Podmore says SLPF is looking to raise about $5 million of additional debentures in July to fund these opportunities.
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