China Construction Bank (New Zealand) provides a $21 million NZD loan for purposes associated with The Victor Apartments Project

Project narrative

In or prior to 2021, China Construction Bank (New Zealand) Limited (CCB NZ) entered into an approximately $21,000,000 NZD loan agreement with Browns Bay Seaview Limited (BBSL) — a New Zealand-incorporated company wholly-owned by Winter Forest Holdings Limited (WFHL), a New Zealand-incorporated and based company with shareholders including developers Xinhong (Victor) Jia (49% stake, voting) and Yuling Yang (51% stake, non-voting) — for purposes associated with The Victor Apartments Project. The loan was secured by (i.e. collateralized) 33 units of The Victor Apartments Project. The Victor Apartments were a multi-million-dollar luxury condominium complex on Bute Road, in Browns Bay, Auckland, consisting of 64 units (ranging from studios to one-, two- and three-bedroom units, 56 residents and eight penthouses) and associated parking spaces with ground-floor retail and a central atrium. The project was completed in 2021, with 31 apartments sold In 2022, difficulties began to arise due to the secured debt owned by CCB, with no refinancing (claimed by Jia to be a lack of cooperation by Yang and another affiliated party, Sen Gao). The wider apartment market in New Zealand had been strain because of the COVID-19 pandemic, rising interest rates, and growth in the length and cost of construction materials and labor In September 2023, financial distress had reached a new high, with CCB requiring that the loan be refinanced. Yang and Gao refused to agree to the proposed terms of the refinancing, which would have included the provision of personal guarantees. Then, in September 2023 CCB commenced a mortgagee sale process. Shortly afterwards, Yang and Gao applied to put WFHL into liquidation on the basis that it was insolvent on October 30, 2023 Jia placed both BBSL and WFHL into liquidation. In November 2023, the 33 units of The Victor and the associated car parks were listed by JLL, which CCB NZ had appointed by to lead the mortgagee sale, with tender to close on November 29, 2023. In January 2024, the 33 units at The Victor were sold to Luxury Living Apartments Trust for over $25 million NZD. CCB NZ's $21 million NZD secured debt was repaid with the sale. However, the liquidators of BBSL brought proceedings against it alleging the sale ($23,500,000 NZD plus goods and sales tax) was at an undervalue of between $16 million NZD and $23 million NZD, and that CCB NZ's marketing campaign and tender process made prospects of liquidator recovery against it high.