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• Published date: 29 May 2023
• Author: Brent Melville
• Publication title: Daily Post, The (Rotorua, New Zealand)

The former prime minister and his son, Max, entered into a development co-venture with the Chows in February 2022, under their MTK Capital entity

The Hong Kong-born brothers and wider family own volume home builder Stonewood, having amassed their early fortune running Wellington takeaway, strip club and massage parlour operations.

The target was to raise about $100million by this year, with projects under way in the eastern Auckland suburbs of Glen Innes, St Heliers and Wai o Taiki Bay. The company held full equity in those properties.

Key said the Chow family’s development interests are investor-based, and returns are linked only to profits with no locked-in interest payments on debentures.

BusinessDesk reported in November 2020 that a debenture-style property fund was in planning, although it appeared to be shelved at the time.

Obligations for regular interest payments is an area that has tripped up other developers on the back of elevated interest rates.

The high interest rate environment has been cited by Auckland apartment developer Du Val Group as the reason for shutting off quarterly cash distributions to investors in its mortgage fund. It also significantly cut back on investor returns into its build-to-rent fund, from 7.5 per cent to 2.25 per cent for the last quarter.

Du Val, as with Christchurch’s biggest residential builder Williams Corpo, has also cut deals with second- and third-tier non-bank lenders to fund projects.

Williams Corp is also known to have significant unsold stock on hand. The cost of holding that has seen its finance arm, Williams Corp Capital Partnership LP, extend the payment terms to investors from six-monthly to annually for the $152.4m worth of funds on the books.

John and Michael Chow own the Stonewood Group, one of the country’s largest residential franchise builders.

Last year, the group completed 1145 builds valued at $408m, rating them as the country’s 14th most prolific builder, according to construction research firm Pacifecon, which provides an annual rating of the top 200 builders.

Stonewood Key

Williams Corp, at 1145 homes, was last year rated in 67th place, with...