Stonewood Homes targets South Auckland with Don Ha partnership
Stonewood Homes, which joined the growing empire of Wellington property developers the Chow brothers this year, is seeking growth in South Auckland by setting up a joint venture with real estate agent Don Ha.
Since the Chows' Inno Capital investment vehicle bought Stonewood's national franchise rights and the Christchurch franchisee in March, the building company's earnings have grown at five times the pace they expected, director Clint Webber told BusinessDesk. A couple of franchisees left the group since Inno took over, which Mr Webber says was because they wanted to be able to use other house building companies. There are currently 16 franchises across the country.
The newest is in South Auckland, with John and Michael Chow and Webber setting up a 50/50 joint venture with Don Ha in an effort to tap the real estate agent's close ties to the development community.
"Don is a large seller of sections in South Auckland and he's got a huge number of developments coming on stream in the next two years," Webber said. "We've got very good delivery and liquidity and that gives us very good access."
Ha was released from bankruptcy last year after building a multi-million property development empire through the 1990s and 2000s before taking on too much debt during the global financial crisis, which ultimately undid him in 2012.
Under the Chows' ownership, Stonewood has been benefiting from membership of the wider group, with cheaper access to building materials as one of Placemakers' biggest customers and the ability to secure finance with the Chows' reputation for paying on time, Mr Webber said. That's helped Stonewood slash building times to 18-to-22 weeks from what had been 36-to-38 weeks under the previous owners.
That's meant the building company has beaten expectations and while he won't comment on the earnings, he said the group had its biggest ever month in September since it was set up in 1987.
Those sales were across all Stonewood's franchises and reduced its concentration in Christchurch to 10-15% from what had previously been 33-40% , Webber said.
"It was right across the board. We're No 1 in Wanaka now and probably very close to No1 in Queenstown," he said.
Christchurch-based Stonewood appointed receivers in February when building work stopped due to a lack of funds. KordaMentha's Grant Graham and Neale Jackson's latest report show the business's assets were sold for $3.4 million, though Webber wouldn't comment, citing a confidentiality agreement. The secured creditor was paid $1.8 million from the proceeds, and the report said ASB Bank was still owed $6.9 million.
Webber paid tribute to the Stonewood staff for their approach to the transition, with 41 jobs saved during the handover. The company has added another 42 who will be based in its new Auckland head office.