GREG NINNESS

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Sunday Star Times

A $12 million mortgage was taken out over Hanover co-founder Mark Hotchin’s sprawling Waiheke Island home in August, putting in doubt the value of a freezing order placed on the asset by the Securities Commission two weeks ago.

Hotchin has listed the Boatshed Bay mansion, one of country’s most expensive houses, as his main residential address, although he is currently in Queensland and there are doubts about whether he will return to the Waiheke property.

Rumours the property has been put up for sale have been circulating on Waiheke for some time and the mortgage could have allowed Hotchin to release cash from the asset prior to it being sold.

The mortgage is with Westpac, which has taken security for $12m plus interest over the property, suggesting an interest-only mortgage, although it is not known how much money has actually been advanced or whether the mortgage is also secured over other assets.

Hotchin purchased the property in February 2006, without a mortgage, and ownership was transferred to a trustee company in January last year. The property remained mortgage-free until the Westpac mortgage was registered.

Two weeks ago the Securities Commission was granted a freezing order over the property and other assets owned by Hotchin and some related trusts, to protect the value of assets for any potential claims which may be brought by investors who lost money in Hanover.

However the mortgage over Boatshed Bay could mean it would provide little value to investors in the event of such a claim, if the money provided by the mortgage had already been used for other purposes and could not be recovered. That is because if the property was sold, the bank would need to be repaid ahead of any other claims.

Hotchin and his related trusts also own a significant number of other investment properties. Some of these have mortgages over them and some are mortgage-free.

Waiheke Island.

Hotchin’s interests purchased the 4.5ha property for $13.85m in 2005 and an adjacent two residential sections, which provide access, for $930,000 in 2006. The property has a rating valuation of $11m, although the main 4.5ha has site where the house sits has a mortgage over it to Westpac, which secures up to $12m plus interest. The two adjoining residential sections are mortgage-free.

Paritai Dr, Auckland.

Building work is well-advanced on a enormous mansion on this 4322m2 clifftop property in what has traditionally been regarded as Auckland’s best street. Even though the mansion is still unfinished, it has a rating valuation of $18m and is mortgage-free.

520 Queen St, Auckland.

Hotchin and his wife Amanda own two thirds of this modern office building through a trustee company and a company called Markam Properties. The building was purchased in 2003 for $7.4m and has a mortgage over it to BNZ securing up to $7.7m, although it is not known how much is now owed to the bank. It has a current rating valuation of $12m.

Jacks Point, Queenstown.

Through a trustee company Hotchin’s interests own 15 residential sections in the Jacks Point subdivision on the outskirts of Queenstown. These have combined rating valuations of $6m and are mortgage free.

Gulf Harbour.

Through Omara Property Group, a company jointly owned by interests associated with Hotchin and his business partner Eric Watson, the pair own nine residential sections at Gulf Harbour north of Auckland. These were purchased for $2.8m in 2008 and now have a combined rating valuation of $2.6m. Last year a mortgage to BNZ was taken over the properties which secured up to $2.993m plus interest.

Omara also owns an office building on Fanshawe St in central Auckland, which it purchased for $4.5m in 2008 and which now has a rating valuation of $4.31m; a 66.5ha dairy farm near Matarangi Beach Estate on the Coromandel Peninsula which has a rating valuation of $1.52m, and a retail unit with a rating valuation of $455,000 at Orewa north of Auckland. These three properties are also mortgaged to BNZ.

Northland forest.

Through a company called FAI Money Ltd, Hotchin and Watson’s interests also jointly own just over 400ha of forestry land at Panguru near Hokianga in Northland. Apart from a 120ha block which is partially owned by third parties, the property is mortgage-free, and has a rating valuation of just over $500,000.

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