Tower Trust has told investors in the $16 million Park Terrace bond issue that it is confident they will be repaid, however it may take longer than expected because of drawn-out legal proceedings.
The situation is that 43 of the apartments have been paid for in full and the proceeds from those sales have been used to reduce Bank of New Zealand's first mortgage.
Rental income from 16 leased apartments offsets interest on that mortgage.
Next is a group of apartments that have been contracted for, but settlement is still outstanding.
Legal action has successfully been taken against a group of buyers who had failed to complete their apartment purchases.
This group had filed no defence against the claims.
Judgments have been obtained against eight purchases which affect 15 apartments.
The development company, Park Terrace Developments, is now working to recover money from seven of these eight purchasers.
Part of the delay in sorting out this property development is that the case against the group of people who failed to complete their purchases, and are defending the legal action won't be held until February 15, 2002.
"It is disappointing that the hearing of the cases against the majority of defaulting purchases will not be held until early next year," Tower Trust general manager Glenn Clark says.
"This will inevitably delay the repayment of your investment in the bonds," he says in a letter to investors.
Clark says the development company is looking to refinance the package so bonds can be repaid.
"They have advised us that while they are making good progress it is still too early to predict the outcome of these efforts."
Tower says there is also a small number of apartments that have yet to be sold.
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