PROPERTY DEVELOPMENT SERVICES FOR SAIMU, LIGHT COMMERCIAL AND RESIDENTIAL PROJECTS
Cabernet Capital provides unique property development services to a variety of entities (companies and personal), which builds homes and light commercial units throughout New Zealand using the Saimu system.
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Many of Cabernet Capital’s funding projects involve arranging finance for large construction and property development projects using the Saimu system. For these projects, Cabernet Capital works closely with the suppliers of the Saimu system, one of the funding providers.
This arrangement is unique in New Zealand. We understand no other constructor fully funds a project during the construction process. Having constructor / supplier funding and an effective building product for property developments projects unlocks a huge opportunity to solve New Zealand’s housing shortage.
Cohasset Group’s expertise in construction and property development provides assurance for suppliers and project funders. We work together during the project appraisal and subsequent implementation stages.
Some projects funded by our suppliers are also project managed by the Group in close consultation with the client and the supplier.
Most funding comes from two non-bank sources:
- A private syndicate, which funds only very profitable, robust projects.
- The supplier of the Saimu system funds projects utilising the Saimu system. Providing a project is profitable and robust in all respects, and incorporates a strong exit strategy.
Currently, our funders have a particular focus on papa kainga and other social housing initiatives, particularly those that benefit Maori.
The Group also assists Maori owners and occupants of papa kainga dwellings in respect of obtaining trading bank mortgage finance within a two-year period following the completion of the civil works and the subsequent construction of Saimu dwellings.
General qualifying criteria:
- Minimum rate of return of 30% after contingency. Rare exceptions apply.
- Robust build and civil works contracts in place where applicable.
- The people behind the project must be ethical, professional and expert in their field.
Projects undertaken by a Limited Partnership
Many Saimu supplied and funded projects are undertaken by a Limited Partnership, where the owner of land sells the subject land to the Limited Partnership, in which the land owner becomes a limited partner whose interest in the partnership is proportionate to the agreed value of the land, and whose liability is limited to that agreed value; the land owner’s capital contribution to the partnership.
The land owner retains a registered first and only mortgage over the subject land throughout the project. Hence, the original owner of the project land is able to fund and undertake a project in which they share proportionately in its profit, whilst mitigating and fully securing their capital contribution.
This is a unique form of funding, which unlocks the ability for multiple owners to raise capital against the land for the purpose of developing the land.
In addition to the usual requirements relating to profitability and risk mitigation via robust civil works contracts etc, the only condition on which the funding is dependent, is a strong exit strategy via pre-sales and other take-outs. The Group assists in relation to these requirements.
Papa Kainga and Maori social housing
In relation to a Papa Kainga project, or other such Maori social housing projects, commonly the Maori owners of the land grant licences to occupy in favour of the various completed dwelling occupants. This may or may not involve the special partnership structure described above.
These effective pre-sales (licenses to occupy), supported by deposits held in solicitors trust, are sufficient take-out. In these instances, generally the dwelling occupant whom whakapapas to the subject land, has two years to refinance the supplied project funding.
The Group frequently becomes involved in an advisory capacity at this juncture to assist in securing ongoing finance.
At all stages, the Group embraces tikanga and operates in strict accordance with the kaupapa of the client hapu or Iwi.