Is Hanover Going Under? Or is Henderson?

[Davo36]

Yeah I reckon. He does this deal, that deal and then "Let's build a whole new town!"

Crikey.

[Dean]

I think it was a calculated risk. It went. I'll dream up a town to house 10,000 people and if I get funding I bet I'll get 10,000 buyers off the plans. Who cares if most of them never want to live there as long as they believe they can onsell before settlement all's well.

[Judge]

Or may be he was just unlucky with timing? If he started the development earlier and completed it before credit crunch hit, may be it could have worked? There are a number of completed multi unit development around the country which would not have gotten off the ground if they were started in the current market conditions. Timing is everything.

[Dean]

Agree, timing is everything. Look at all the people now regretting what they purchased two years ago in these type of developments.I bet most of them wouldn't now.

[Ged1]

get 10,000 buyers off the plans.

It was never 10,000 buyers, more like 4,000, unless there was to be only one occupant per dwelling.

[princess]

We were in queenstown at Christmas and some of the locals seemed quite excited about the development.

Lets remember that for most of NZ the housing slump only hit this year - you guys might have seen it coming, but many didn't. (Though i would expect an investor like Hanover to be in the former group!)

Queenstown was such a boom town for so long, and buying off plans has been successful for so many developers, that the plan may just have worked.


Blue Chip's demise brought the spotlight on ALL major property investment schemes, that was bad luck. The fact that Hendo didn't get to critical mass BEFORE the media announced the housing boom was over - not sure if this is bad luck or market saturation.

Good on Hanover for protecting mom and pop investors' money though

[robbyp.]

I doubt the wealthy owners will kick in anymore money or the developers will be able to pay anything back. Its another loss looming for those folk who invested in Hanover.

The owners, Eric Watson and co apparently paid themselves millions of dollars recently, according to the newspaper. Therefore I would expect them to put money back into the company to keep it afloat. If anything happens to them their will really be problems for the government to step in. Isn't there over a billion dollars invested in this company alone? This would cripple NZs mum and dad investors if anything happens. Bernhard Hickey of interest.co.nz did say they were one of the good quality finance companies in NZ on the one new business program. I think they will survive, but I think they should merge with another larger company such as UDC or Marac, rather than weathering the storm themselves.

They are however putting some of the millions of cash back in

http://www.stuff.co.nz/stuff/thepress/4431766a24165.html

[Dean@Massiveaction]

5 mile was Dave Henderson and Dolf De Roos, so it had supposedly deep pockets and great brains behind it.
The market turning might be the main cause however Dolf is USA based so the issues there may have caused them to pull the plug.

[Orkibi]

I remember a few month ago Henderson was saying that If he was smart he should have built/complete the shopping center and get out.

I remember speaking with one of Queenstown valuers some time in 2007 he mentioned " stay away from 5Mile and Property Venture" as they had finance problems back then.

I would not think that Henderson or De Roos would be much financially affected by this.

But Hanover investors might be..

[Dean]

Hanover will not have their mom and dad investers at the top of their priority list. They will be behind Hotchin and Watson who will not contribute one cent unless it will return them that plus more. No other finance company will want to take on Hanover when its in trouble and the Govt will not bail them out. If I had money in Hanover I would be very nervous.

[totaranui]

mad to invest in hanover...

..no investment grade rating, bad loans sold off through an SPV to Fortress's concrete gumboot division to make the loan book look good...jeez, there's no telling some people.

[robbyp.]

Hanover will not have their mom and dad investers at the top of their priority list. They will be behind Hotchin and Watson who will not contribute one cent unless it will return them that plus more. No other finance company will want to take on Hanover when its in trouble and the Govt will not bail them out. If I had money in Hanover I would be very nervous.

I know a lot of people who have got money in it, although some people is maturing in a few weeks. These are people who invested 2 years ago before these finance companies started failing, and they would have got their money out last year if they could have, but they are locked in. If something happens, it is going to cripple many hardworking people.

The fact that Eric Watson and co could pay themselves 41 million out of the company last year is disgusting, and i wouldn't be surprised if it has damaged the company financially, as that money should have been kept in the company for cash reserves.

SOURCE: see:www dot stuff dot co dot nz/4368550a23399 dot html
Big pay packets: Hanover's shareholders Eric Watson, left, and Mark Hotchin have paid themselves a $41 million dividend from the company's $44.9 million net profit for the June 2007 year.

I wouldn't invest in anything at the moment, and certainly not property. I am keeping my cash in safe banks. I am expecting things in NZ to get pretty bad with a major recession, and property to drop by 30-40%.

[robbyp.]

..no investment grade rating, bad loans sold off through an SPV to Fortress's concrete gumboot division to make the loan book look good...jeez, there's no telling some people.

Alot of that happened after people invested. Remember that a lot of these are long term deposits, that were deposited with them years ago.

Also if there weren't finance companies, alot of property development in NZ wouldn't occur.

[totaranui]

hanover has never...

had an investment grade rating and in fact was refused one last year by Fitch. No prudent investor could possibly consider entrusting their money when there is no investment grade rating.

[totaranui]

and if there were no finance companies

(non investment grade that is) then reckless and irresponsible lending to serial commercial hazards like "property developers" wouldn't take place and mom and dad investors (imprudent as they are) wouldn't be losing their money.