Five Mile queue for payment

THE SALE of part of Queenstown's troubled Five Mile development to Auckland developer Tony Gapes and Woolworths subsidiary Progressive Enterprises may not yield much cash for long-suffering Hanover investors.

Hanover has sold just over 23ha of the 33ha development via a mortgagee sale. When the deal is settled, Gapes will have 7.8ha of the site and the Sunday Star-Times understands Progressive will own the balance.

None of the parties involved has revealed how much Gapes and Progressive are paying for their sites, but informed sources have told the Star-Times that Progressive is paying about $12 million and Gapes will get his site for about $10m.

However, that may not leave much money for Hanover's investors, who provided most of the original funding for the project and are owed more than $70m.

The Star-Times understands most of the money raised from the sale is likely to go towards paying off a mortgage owed to a joint venture between interests associated with Auckland businessman Martyn Reesby, who owns property financier Structured Finance, and US-based financier Fortress Credit Corp.

It is understood the Reesby/Fortress joint venture is owed around $20m and this will probably be repaid ahead of money owed to Hanover.

That would leave only about $2m for Hanover investors, but, once selling and legal costs are deducted, the amount they may actually receive could be little more than small change.

The sale has also seen the emergence of a new player in the property finance game, Auckland businessman Steve Lockwood, who was one of the largest shareholders in insurance company Crombie Lockwood before it was sold to ASX-listed conglomerate Wesfarmers in 2007.

Crombie Lockwood is believed to be one of the country's largest insurance providers with annual turnover of more than $100m.

Lockwood joined the company in 1983 and started building the business with sales trips during which he slept in his car because the company couldn't afford a motel.

Two weeks ago Lockwood formed a company called Lockwood Finance which is believed to be providing finance to the Five Mile project.

Lockwood confirmed he had taken out a mortgage over the property but would not say what his involvement would be.

Securing a share of the site will considerably advance the interests of Progressive, which operates the Woolworths, Countdown and Foodtown chains in this country, but unlike its main competitor, Foodstuffs, does not have a supermarket in the Queenstown district.

Gapes said his plans for the site were not yet finalised, but would probably be less intensive than the proposals of the original developer, Christchurch businessman Dave Henderson, before his company went into receivership last year.

- © Fairfax NZ News