Big slice of development goes for a song

SHARON VODANOVICH

I DON'T WANT TO SAY I STOLE IT, BUT...: The new owners of the Brooklyn Rise development, John Mouroukis and Peter Barzukas.

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Misery for failed finance company investors – paradise for bargain hunters.

A big part of the trouble-plagued Brooklyn Rise housing development, on which Lombard Finance is owed more than $40 million, has been sold by Lombard's receiver for just $2.25m.

And the delighted buyers – developer John Mouroukis and his real estate agent partner Peter Barzukas – are set to recoup almost all their investment within a few months just by finishing off and selling six nearly complete houses.

Ironically, the aversion that bankers now have to investing in distressed property helped the pair pick it up for what looks like a bargain.

"I don't want to say I stole it, but what helped was that there is no money available from the banks, so we got it for a very attractive price," Mr Mouroukis said.

It took four months to raise the money and he had to get it from a second-tier lender – a finance company.

He said two three-storey townhouses were more than 90 per cent complete and should be on the market soon with an asking price of $650,000 each. Four smaller townhouses would be on the market for $495,000 each once they were finished and asphalt laid on the road.

He expected that when they were sold he and his partner would have free title to the remaining 1.9 hectares of the hillside development, complete with plans and consents for another 54 similar townhouses.

But it was not all cream, because they would have to get contractors to clear the gorse, form some sections, lay on the services and build the houses.

However, he expected them to sell because there was a shortage of new housing stock in Wellington.

Lombard Finance receiver John Fisk said he got the best price he could for Brooklyn Rise, and Lombard's secured creditors, who were owed $110m, would get another couple of cents in the dollar.

Mr Fisk said the $42.6m sunk into the development was Lombard's biggest loan and he was still investigating where that money had gone.

The $2.25m price he got for Brooklyn Rise reflected the problems with a lot of developments on the market.

The terrain, its history, financing and finding developers prepared to take it on made it hard to find a buyer, Mr Fisk said.

Brooklyn Rise was started in 2004 by developer Lance James who is now serving a two-year jail sentence for tax evasion. Lombard Finance, which financed the development, forced its sale to another developer in 2007 before itself going bust in 2008.

THE FORTUNES OF BROOKLYN RISE

2004: Started by developer Lance James (now in jail for tax evasion), with a plan for 90 houses on the hill beside Ohiro Rd, plus 500 on nearby rural land after zoning change.

2007: Development taken over by Auckland developer Tim Manning.

2008: Development falters with about 30 houses built and sold. Lombard goes into receivership.

2009: Receiver finishes four incomplete houses and demolishes some damaged by weather exposure. Calls for tenders.

2010: Partly sold to John Mouroukis, a Wellington residential developer, and Peter Barzukas, a Wellingtonian who has sold real estate on Australia's Gold Coast for the past 20 years. Remaining six hectares of rural land waiting for rezoning is still unsold.

- © Fairfax NZ News