The Showgrounds: Stage 2 tenants teased for Timaru development?
Monday, 12 August 2024
An investment company linked to Timaru’s big box retail development, The Showgrounds, is seeking investors, but says businesses listed as stage two tenants on its website are unconfirmed.
KC Securities is calling for expressions of interest in the second stage of the development and lists a number of tenants including anchor tenant Kmart, Supercheap Auto, Petstock and Anytime Fitness.
When asked about the information on its website, company director Cameron Dargaville told The Timaru Herald the stage two tenancies were not confirmed.
The information was listed under a headline Timaru Mega Centre LP (Limited Partnership) Joint Venture, KC Securities LP and Equinox Group.
Dargaville confirmed the ownership of the development had not changed, and KC Securities was only seeking investors. He directed further comment on tenancies to the “general partner”, Auckland-based developer Tony Gapes.
Gapes had been approached for comment, as had Kmart, Supercheap Auto and Petstock. Anytime Fitness was confirmed as a tenant, by Gapes, in December 2023.
Documents released to The Timaru Herald by the Timaru District Council, under the Local Government Official Information and Meetings Act, included a record of title for the 9.9ha Lot 1 at 233 Evans St, which The Showgrounds was located on.
It showed an encumbrance to TDHL, lodged in November 2020, and mortgages to KC Securities Limited Partnership dated February 2, 2021, and Noble Mark Opportunity IX Limited dated December 22, 2021.
The document showed the latter was made second priority, and the other mortgage third, at the time of the December 2021 mortgage being drawn down.
Updated documents, issued in March 2023, for Lot 1 and the 0.9ha Lot 100, showed those mortgages remained in place, and additional mortgages for Lot 100 with the same lenders both taken out on March 24, 2023.
According to its website, KC Securities was established in 2001 and provided secured mortgage loans to borrowers with equity, and was backed by the ownership of select commercial real estate properties.
It aimed to deliver investors returns of 7.5-8% per annum plus profit share, and said it invested in mortgages over property, usually within first mortgage criteria.
Not just a finance company, it said it also actively managed investment property and other property opportunities where it could buy and sell and make a profit.
“We make asset-based lending decisions that focus on the financial strength and underlying value of the collateral that secures the loan rather than on the credit history of the applicant. The length of these loans is generally between six months and two years for amounts ranging from $250k and $15m.”
A portfolio breakdown on the website showed it had lending into Timaru in the year to March 2021 at roughly $11-12m. By March 2022 that had increased to about $21-22m. The company also lent into Auckland, Wellington and Queenstown, but by March 2022, Timaru accounted for almost half of its $47m in lending.
The fund had a minimum investment of $250,000 and gross assets of $51.11m as at Q1 2022.
Information for borrowers showed the company’s indicative interest rates for first mortgages at 12% and second mortgages between 15 and 18%.
A copy of the sale and purchase agreement, between Timaru District Holdings Limited (TDHL) and the purchaser Redwood Group Qt for nominee Timaru Mega Centre Ltd, supplied to The Timaru Herald was heavily redacted, including the agreed amount to be paid for the second stage, lots 5-9. The amount paid for lot 1, $6.35 million, was not redacted.
In his annual management report to June, TDHL chairperson Mark Rogers released financial statements which show the holdings company sold lot 5 for $663, 075.
The land had an area of 8590m2, and was due to be settled on October 12, 2022.
According to QV, 233 Evans St had a capital value of $42.35m as at September 1, 2023 and a land value of $17.55m.
According to the sale and purchase agreement, signed in October 2020, the original settlement date for lots 8 and 9 was to be October 12, 2023. Unable to meet that, TDHL granted the developer an extension to June 30, 2024. At the time, TDHL general manager Frazer Munro said: “We just want to see him finish it off.”
In June, Munro confirmed the company had asked to further extend the deadline but said it was still working through the request.
Asked for an update on Friday, Munro said TDHL was yet to grant an extension and was “still working through options with the developer”.
Lot 8 was originally planned to accommodate a tavern, food and beverage businesses and a large format retail store, and lot 9 a car park.
Lot 7, which TDHL also still owned, was 9242m², and sat at the bottom corner of the development. It had a settlement date subject to clause 32.14. It was not known what that clause stated, as that information was fully redacted in the copy of the agreement released to The Timaru Herald.
In April, it was confirmed the council would grant an application by Timaru Mega Centre Limited Partnership to change the subdivision consent for The Showgrounds to allow it to split the development.
At the time, the council stipulated a $100,000 bond be lodged and gave a non-negotiable deadline of December 1, 2024, for the removal of a large stockpile of material at the development.
On Friday, the council confirmed the $100,000 bond had been lodged and the subdivision consent process had been completed.