Adelaide mortgage fund Angas Securities reports a third of loans more than three months in arrears

Adelaide-based mortgage fund and lender Angas Securities has revealed that a third of its loans are now in arrears.

It comes just days after Brisbane mortgage lender Wickham Securities collapsed with $30 million of retiree funds at risk and following the high-profile collapses of debenture-funded mortgage lenders Banksia and Provident Capital last year.

Around 2500 small investors have invested in Angas Securities' debenture fund, which offers returns from 7.5% to 8% and principally lends the money on at high interest rates as commercial property loans.

Angas heavily advertised its debenture products on the radio.

Its latest fixed interest prospectus issued in December, which offers 350 million first ranking securities at $1 each and an annual rate of return of 7.5%, reveals that as of December 2012 it had a loan book worth $229 million with the proportion of loans 90 days in arrears or more tripling in the past six months to $72.3 million.

Around $33 million of these loans are more than a year in arrears.

Loans range in size from $2 million to a $9 million loan, which defaulted in June last year.

The company recently broadcast advertisements on Alan Jones’ 2GB show seeking new investors, reported The Australian.

Angus executive chairman Andrew Luckhurst-Smith told the paper the company was comfortable with its arrears levels due to its conservative lending criteria and had no concerns about recoverability and neither would its auditors, Deloitte Touche Tohmatsu, listed on the prospectus.

The largest loan in the Angas portfolio comprises three mortgages totalling $25.25 million over a “prestigious rural/residential property along with collateral security over harbourside apartments in Sydney”.

Angas says the loan is paid up in terms of interest until December 31, 2012

The second biggest loan is a $21.4 million loan to a “Perth based builder and property developer, with a range of distinct residential, commercial and retail properties providing security”

“The principal activity of Angas is to provide short term loan finance fully secured by registered first mortgages over real property,” reads the prospectus.

First mortgage advances do not exceed maximum loan to valuation ratios of 70% for residential, industrial and commercial loans and 50% for rural loans.

The minimum investment is $10,000 with a maximum of $5 million.

The prospectus warns that “investors may not be able to recover all or part of the principal funds invested in the issue or any fixed interest attaching to these”.