[On Relianz letterhead]

[Date]

Dear [ ]
ST JAMES SUITES [UNIT NUMBER, PURCHASER NAME, DATE OF AGREEMENT]
We refer to the sale and purchase agreement you have signed for the above unit.
You may be aware there have been significant changes in the lending market over recent
months, and financial institutions have restricted their lending activity. Unfortunately this has
impacted on the St James Suites project and we have been informed by our funders that
existing arrangements have changed, and that we require more revenue to continue with the
project.
After carefully evaluating the available options, we have made the difficult decision to cancel
all sale and purchase agreements under clause 18 of the agreement, and are offering you
two options:
1. Receive a full refund of your deposit (plus interest); or
2. Reinvest in the same unit at a higher purchase price, and therefore pay a higher
deposit, under a new sales and purchase agreement (enclosed for your
consideration).
We understand this situation may be concerning for you, however we remain committed to
completing the St James Suites / St James Theatre restoration project.
We have received strong buyer support to date and interest in the project remains very high.
We recommend you seek independent advice regarding the two options, and invite you to
reinvest so the project – including the restoration of the St James Theatre - can progress.
If you wish to reinvest in the project, Relianz needs to know within [10 working days]. Further
background is given below to assist with your decision.
BACKGROUND
Relianz is facing significant issues obtaining and implementing satisfactory finance to allow
the St James Suites project to continue to progress. You may have heard that this is a
difficulty many New Zealand-based developers are currently experiencing. The level of
funding available has reduced and the terms and conditions upon which the funders are
prepared to provide funding are very strict.
Relianz had previously satisfied the finance condition in your agreement. At that time,
December 2015, the finance market here in New Zealand for apartment projects was
significantly stronger. Letters of offer had been received from two New Zealand registered
trading banks, sufficient to allow Relianz the confidence that the project would proceed.
Relianz began progressing the demolition and preparatory work on site, funded significant
work to the St James Theatre and has sought to secure a fixed price for the building work for
the construction of the St James Suites. Unfortunately, one of the banks has now withdrawn
and the remaining bank’s offer is not sufficient for the project to continue.

DM-145145-14-5-V7

 2

Relianz has now done all that it can to endeavour to obtain replacement finance both here
and offshore for the project. However, despite Relianz’s best efforts, there still remains a
significant project shortfall. Critically, for a project of this nature, funders require there to be
sufficient project revenue to demonstrate there is a large enough contingency, and there
must also be sufficient interest cover. The project does not meet these requirements and
replacement funding is being denied.
The only way for replacement funding to be achieved is if there is a significant increase in the
project revenue to meet these requirements. We understand this will be disappointing news
to you.
Clause 18 of your sale and purchase agreement allows Relianz to cancel the agreement if
“monetary or economic developments” and “other factors beyond the reasonable control of
the Vendor whether similar or not” … “prevent the Vendor from commencing or continuing
construction of the Building and completion of the Development or render it impracticable for
the Vendor”.
For the reasons set out above, Relianz advises, by this notice, that it is hereby cancelling the
agreement for sale and purchase referred to above pursuant to Clause 18 because its
finance is insufficient to allow it to progress with the construction of the St James Suites
project.
We appreciate your commitment to the St James Suites project to date. The project remains
viable, but only if sales of the units are put in place on new terms that the funders accept,
which include the following:
(a) An increase in the purchase price, so that there is sufficient revenue in the project to
meet the funder’s requirements;
(b) An increased deposit percentage, as funders require a minimum deposit amount from
each purchaser that is higher than what was required previously; and
(c) A new finance condition to allow Relianz time to enter into sale and purchase
agreements that meet the requirements of funders.
NEXT STEPS
We recommend you seek independent advice and come to your own decision whether to
enter into a new contract for the purchase of this unit. We have enclosed a new agreement
setting out the terms so as to give you the first opportunity to purchase the unit. These terms
are being offered exclusively to existing buyers only. We are advised that the proposed
purchase price represents very good value for money as other equivalent projects in
Auckland are selling at much higher rates per square metre.
We require a formal response from you within 10 working days confirming that you wish to
proceed with the new contract. If we do not hear from you, we will assume that you do not
wish to enter into the new agreement.
We will instruct our lawyers in the meantime to process the payment of your deposit refund
and net interest, returning this to you in accordance with the terms of our agreement. We will
need your lawyer’s trust account details so please ask your lawyer to provide that to Winston
Wang & Associates.
If you would prefer to delay this payment whilst you consider whether to enter a new
agreement, please have your lawyer advise Winston Wang & Associates to continue to hold
your deposit.

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Once again, we sincerely thank you for your commitment to the St James Suites project and
regret that changing circumstances in the lending market have led to this situation. Please be
assured that, provided we can satisfy these new funding conditions, Relianz remains fully
committed to completing the project.

Yours faithfully

Relianz Holdings LP
by its general partner
St James Suites GP Limited