CIY - City Pacific

Re: CIY City Pacific First Mortgage Fund

Chinese splurge in Surfers

Nick Nichols, business editor

August 25th, 2009

A CHINESE buyer has splashed out more than $80 million for a Surfers Paradise beachfront site in what is the biggest property deal in years for the tourism strip.

The buyer is understood to have beaten the cashed-up Sunland Group and Australia's most prolific apartment developer, Sydney billionaire Harry Triguboff, to snare the property in an unconditional contract.

The massive redevelopment site, bounded by Old Burleigh and Wharf roads, is known as Pacific Beach and is one of the many distressed assets controlled by ailing financier City Pacific.

The 1.13ha property, jointly owned by City Pacific and low-profile property investor Craig Perry, was put on the market in May by mortgagee Fortress Credit.

Marketing agents Mark Witheriff of CB Richard Ellis and Dan McVay of McVay Real Estate, would not comment on the deal yesterday, while Fortress Credit did not return calls.

City Pacific's receiver Ian Cousins, of PPB, said he was aware a 'couple' of interested parties were closing in on a contract.

He could not confirm last night whether a sale had been struck.

August 26, 2009 03:44pm

$80m Surfers deal in jeopardy

Nick Nichols, business editor

August 26th, 2009

A $25 million legal battle could delay settlement of one of the Gold Coast's biggest single property deals worth more than $80 million.

The Gold Coast Bulletin yesterday revealed exclusively the sale of the massive Pacific Beach site at the southern end of Surfers Paradise to a Chinese buyer.

But it has since emerged that a partner in the property, Foresight Acquisitions which is led by developer Craig Perry and lawyer Beau Hartnett, has launched a claim in the Supreme Court seeking $25 million from failed financier City Pacific.

The company has alleged that City Pacific, which owns a half-share of the property, breached its $257 million facility agreement by failing to provide the necessary funds to see the project completed.

Foresight and City Pacific were joint-venture partners in the proposed $600 million beachfront development.

The First Mortgage Fund, once controlled by City Pacific, and Fortress Credit funded the early stages of the project.

Court documents yesterday revealed Foresight had placed a caveat on the property, which could prevent settlement of the unconditional deal with the Chinese buyer.

The 1.13ha site cost Foresight more than $100 million to assemble and involved negotiations with almost 100 property owners.
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City Pacific, which had a 55 per cent share in the development, and mortgagee Fortress Credit are owed a total of $205 million on the project.

The frozen First Mortgage Fund, now in the hands of Balmain Trilogy, also is owed money over the failed venture.

Foresight has alleged City Pacific's refusal to provide the funds to build the twin-tower Pacific Beach development was in the property financier's own interests.

The document said this was because 'it was unable to provide those funds'.

"As a result of those breaches, Foresight has suffered loss and damage, including the loss of profits that it would have made, had the project been carried out through to completion," the document said.

"The extent of that loss will depend on the rate at which the Australian economy improves in the immediate future."

Documents said the facility agreement was 'frustrated' in September last year, as the global financial crisis reached boiling point.

Foresight also is alleging the notice from City Pacific and Fortress Credit, issued in May, was 'ineffective' as the money under the facility agreement was not yet due.

On June 17, 2008, Foresight alleged it was told by City Pacific representatives that it had until the end of that month to pay back funds which had been advanced to them.

The company also said it was told the facility would not be renewed after June 30.

Foresight is seeking $25 million in damages from City Pacific and wants a declaration from the other defendants to dump the facility agreement on the grounds of frustration.

It also is seeking an injunction allowing any of the defendants from appointing receivers or selling the property.

The other defendants include City Pacific Financial Services Pty Ltd and Fortress Credit.

Pacific Beach is one of the largest sites assembled along the Gold Coast beachfront and was set to house two towers of up to 41 levels, and beachside villas.

IS THIS A TIME BOMB TOO?


Foreign financiers step in on City Pacific's Southport project

Nick Nichols and Shannon Willougbhy | July 31st, 2008

CITY Pacific is pulling most of its cash out of the Grande Pacific Broadwater at Southport after finding an Asian venture capitalist as a replacement funder.

The Gold Coast property financier yesterday said Singapore's Teak Capital Partners and an unnamed foreign institutional investor had agreed to pour $44 million into the 25-level seniors-only project which is nearing completion along Marine Parade.

The deal will give the offshore partners priority rights to future Grande Pacific projects, a luxury high-rise retirement living joint venture in which City Pacific has partnered with David Cherry.

Chief executive Phil Sullivan yesterday said the deal did not alter City Pacific's equity interest in the project, which was the first of a chain of luxury retirement communities planned by the partners.

Mr Sullivan said, under the deal, Teak Capital would retain the rights to participate in Grande Pacific's second project, the $120 million twin-tower Grande Pacific Imperial planned for Imperial Parade at Labrador.

"They have the first and last rights of refusal on all Grande Pacific projects at this stage," he said.

"They've indicated they want to get involved in the overall Grande Pacific model."

Grande Pacific's pipeline of projects includes the redevelopment of Greenmount Resort and the proposed 409-apartment retirement complex at Martha Cove in Victoria.

Mr Sullivan said that the initial investment by Teak Capital would cut City Pacific's funding commitment to Grande Pacific Broadwater by about two-thirds.

It also would see the return of $30 million to the frozen First Mortgage Fund before the end of August, while $14 million in construction funding would be assumed by the new financiers.

Mr Sullivan said the deal was one of many tie-ups with institutional investors being pursued by City Pacific.

The news came as City Pacific yesterday also announced it would hold off paying its dividend in instalments, opting instead to make one lump-sum payment of 12c a share on November 28.

City Pacific, which last month delayed the June instalment of the dividend until today, said it would instead use the staggered dividend payments to pay down more bank debt.

It has paid only 3c of the 15c interim dividend so far and last month said it would not be paying a final dividend.

Meanwhile, City Pacific yesterday said it was progressing plans to help unit-holders in the First Mortgage Fund retrieve their investments which have been frozen for almost a year.

The company is proposing swapping units in the fund for City Pacific preference shares.

Mr Sullivan said the move would not dilute the value of existing City Pacific shares, while offering First Mortgage Fund investors the chance to exit their holdings through a stock market listing of the preference shares.

Speculation earlier this year that City Pacific was proposing a swap of ordinary shares for unit-holders was premature, said Mr Sullivan yesterday.

"A preference share is what we would consider an acceptable arrangement (for all parties)," he said.

Mr Sullivan said the offer would be accompanied by an independent expert's report, and investors could see the preference shares issued in October.

Mellifuous,

Please do not post whole articles. Please post a paragraph or 2 and then a link to the article for those who want to read it further.

Also please integrate some of your own opinions/discussion. If people want to read articles they can go to a news site, ASF is about discussing the issues.

Thanks

Prawn

TIGER ECONOMY? Perhaps he was referring to attracting Asian investors?

Queensland Supreme Court Action 7778/09 is a good read for this property.

This is what City had to say about the property, just months before it 'pulled the plug' (according to Foresight Acquisitions in the above mentioned court action).

From the City Pacific 'October - December 2007 Update', page 3

'Pacific Beach – A New Wave of Luxury Beach Front Living'

The Development Application approval from Gold Coast City Council for Pacific Beach in December sent out a signal that the demand for luxury high-rise development is in the ascendancy.

The $600 million twin tower development funded by City Pacific was reported to be the biggest amalgamated beach-front landholding on the Gold Coast at a total of 11,355 square metres.

CEO Phil Sullivan said City Pacific’s funding of Pacific Beach was central to the Company’s proven formula of financing upmarket lifestyle developments in high growth areas.

“We are confident it will appeal to an increasing number of people seeking the high end lifestyle that Pacific Beach offers,” he said.

“Opportunities like Pacific Beach don’t come along every day, particularly given the scarcity of prime beachfront locations.”

Factor in recent research from Colliers International and the case for Pacific Beach becomes even more compelling.

As reported in the Gold Coast Bulletin 6 December 2007, the total amount of development capital currently invested on the coastal strip has reached a monumental $66 billion compared to a 2001 figure of $13.7 billion.

According to the editorial, the Gold Coast has become the ‘tiger economy of the nation’ with 13,000 people making their home here every year.

Also factor in KPMG demographer Bernard Salt’s comments as reported in The Sunday Mail, 18 November 2007 – “We Australians are different from both New Zealanders and Americans. We don’t do desert, we do coast….

We are still enamoured with the beach and the sea change shift continues to grow strongly as evidenced by the Gold Coast’s relentless population boom.”

The Pacific Beach towers are 41 and 36 storeys respectively with 322 apartments, plus 4 beach villas and onsite alfresco dining.

Construction is expected to commence this year.

prawn_86 said:

Mellifuous,

Please do not post whole articles. Please post a paragraph or 2 and then a link to the article for those who want to read it further.

Also please integrate some of your own opinions/discussion. If people want to read articles they can go to a news site, ASF is about discussing the issues.

Thanks

Prawn

Click to expand...

Yes, okay.. point noted.. happy to do that.. I wasn't sure how this forum works, but I'll make sure that I do that in future. I guess I was taken aback when I tried to post links and the forum wouldn't let me until I had posted five times. So, rather than post things out of context, I thought it better to post the whole articles.

Thank you.

I have attached Foresight Acquisitions Pty. Ltd.'s claim relating to Supreme Court Action 7778/09.

I'd guess this property at Broadbeach is probably important to both investors in the FMF and share holders in the CPL, since Foresight is seeking $25m in damages from CPL (among other things) and Foresight owes a heap of money to the FMF.

The previous articles I posted relate to this matter, and had I the capacity to just post the links, then I would have done so.

I believe Fortress and the FMF have about $210+ outstanding with Foresight, and Foresight alleges (among other things) that the FMF needs to advance more money Foresight's way to complete the development.

If the media reports are correct that there's over $200m owing, then the big question of the day is 'where has all the money gone?' The site remains untouched.

A 'Chinese' buyer has supposedly signed up on the land, but it seems Foresight has lodged a caveat which would prevent the sale until such time as the resolution of 7778/09.

I think it's a matter that unit holders and share holders should keep an eye on.

http://www.smh.com.au/news/business/money/planning/regulators-backflip/2009/08/24/1251001856329.html
...Some people say ASIC is culpable for not using its already-considerable powers to better protect investors and there is truth in that.

The regulator has never fully tested the limits of its power, which is more considerable than it lets on. In time, when a full account is made of how billions of dollars were lost and the lives of many thousands of retirees devastated, ASIC will be judged in a harsher light than today..........."

....When we were saying help ! help ! help ! a year ago, ASIC did nothing.
If ASIC had heeded our cries for help, and adopted a proactive stance some of our loses could have been mitigated, imo.
But it didn't "test the limits of it's power" and now our loses could be near total.
We anticipated that ASIC would act as a regulator, but it didn't. We then thought it would act as an enforcer, but they didn't.

I am posting some links here of submissions to the parliamentary inquiry that cover all the relevant issues


http://www.aph.gov.au/senate/committee/corporations_ctte/fps/submissions/sub182.pdf

http://www.aph.gov.au/senate/committee/corporations_ctte/fps/submissions/supsub182a.pdf

http://www.aph.gov.au/senate/committee/corporations_ctte/fps/submissions/supsub182b.pdf

http://www.aph.gov.au/senate/committee/corporations_ctte/fps/submissions/sub355.pdf

I am also posting the link to the Inquiry
http://www.aph.gov.au/senate/committee/corporations_ctte/fps/submissions/sublist.htm

Storm investors seem to have a strong representation in these submissions.
There is a lot of reading...
There is a lot of information....

I guess there just doesn't seem to be any sense in grumbling in the wilderness.

Time to simply ask the questions.

Copy of text sent to Trilogy via their website
Today, Friday, 28 August 2009.

Dear Sir/Madam,
Please advise me of the following:-
1. Wrt to 'Pacific Beach', how much has been loaned by the FMF to Foresight? How much by Fortress? What other costs will be added to these debts (legals etc.)?
2. What is the impaired value held for this loan?
3. Why didn't the development proceed?
4. will Balmain/Trilogy be charging lenders from the FMF any 'direct' fees? If so, what are the fees, and the rate of each fee?
5. Restatement of Qs 1 & 2, but wrt Grande Pacific & Teak and/or other co-investors.
I look forward to your early reply.
Thank you.

The following is a copy of text also sent by Trilogy's website
this morning, Friday, 28 August 2009.

1. When will Balmain inform members of the FMF that Mr. Ryan (a senior member of Trilogy management) has been found by a court to have breached a client's trust?
2. Why was KPMG retained when there is clearly a number of members who are not happy with KPMG's performance?
3. Why wasn't another facility provider obtained when there is clearly a number of members who are not happy with the FMF's relationship with the CBA?
4. Why was City Pacific staff encouraged to join Balmain/Trilogy when there is clearly a number of members who are not happy with the staff of City Pacific?
5. Why did Mr. Bacon think that Mr. Ellis was 'tenacious' when Ellis was using our money to fight? I think we'd all agree that everyone could be tenacious using other peoples money, and in circumstances such as City causing members to lose so much of their investments - doesn't Mr. Bacon have any sensitivities to the feelings of the members of the FMF?
6. How is it possible to conduct an objective evaluation of the legal issues when so many of the original 'mob' have been coupled up to the the new train (Balmain/Trilogy)
7. Why was it possible to tell the CBA (and BRW) the future of the FMF, but not tell members of the FMF first?
8. Why haven't members been given a clear and concise plan as to Balmain/Trilogy's vision of the future (or end) of the FMF?
9. What is EXACT position of the FMF with respect to its obligations to the CBA, Fortress, and Teak Capital? (This information must be straight forward and easy to explain to members, why haven't we been told?)

k.smith said:

I am posting some links here of submissions to the parliamentary inquiry that cover all the relevant issues

Click to expand...

I commend Mr K Smith and his efforts to date on flushing out the culprits in the CPL FMF debarcle. I too share the frustrations with ASIC the toothless tiger total inaction in this whole affair. ASIC our "watchdog" completly failed all investors. I too sent a total of 3 emails directly to the appropriate people at ASIC flagging concerns probably starting 18 months ago. I recieved reply to I as I rememebr which pretty much only acknowlegded my email to them. I know a large number of investors did like wise to no avail. I was one of many CPFMF forum members who actively tried to wake the ASIC up to the goings on at CPL.....again our collective efforts to get them into the game failed.

I also called them once and asked what would it take ASIC to take interest in our complaints, their response was typically if we get a number of complaints we will look into those complaints.....a number of more than 3 was suggested when I pushed them on what constitutes "a number". Well there must have been hundreds (if not more) of complaints directed to ASIC that I am aware of. They obviuosly didn't read the newspapers either.

It is interesting that more than 50% FMF unit holders voted to replace CPL as the responsible entity of the FMF I believe a first here in Australia......One wonders if ASIC had taken an active watchdog role in the other mortage funds that failed over the last few years here in Australia wether they would have been able to stop this collapse?

If there is a classic example of a regulator failing investors (both shareholders and unitholders) then I believe this is it. Shame on you ASIC! It was on your watch!!

I hold CPL shares and funds in the FMF......and no respect for ASIC!

Fleetz

Lets hope Balmain is all we hoped it would be.

I look forward to this new age of transparency.

I look forward to the 'renewal' of my investment.

I don't want to live in hope, merely to perish in mire.

THE BEGINNING OF THE END? Seems strange that things are moving so quickly now. I guess now it'll move at a dizzying speed.


City Pacific sell-up set to startVanda Carson
August 29, 2009 - 12:04PM
The Federal Court has appointed a liquidator to wind-up the failed Gold Coast financier City Pacific.

Registrar Jenny Hedge this morning ordered that liquidator Andrew Wily and David Hurst of Sydney insolvency firm Armstrong Wily wind up the company.

The application to have him appointed was made by creditor Hlbc Commercial on August 7, just four days after Ian Carson and Daniel Bryant from PPB in Melbourne were appointed as receiver by the Commonwealth Bank.

Hlbc Commercial is understood to be owed millions by City Pacific.


The Commonwealth Bank is owed $100 million and has a charge over the City Pacific head office in Broadbeach Waters on the Gold Coast, as well as charges over other assets.

City Pacific, which managed a $630 million First Mortgage Fund, has had its shares suspended from trading since July.

Management fees on the $630 million fund generated the bulk of City Pacific's income.

City Pacific, until this year, siphoned $30 million in annual fees from the fund. It also used to reap an additional $20 million a year in loan origination fees from developers borrowing from the fund.

"It is early days at the moment and we still need to work with ASIC (the Australian Securities and Investments Commission) and the receiver to start the investigation," Mr Wily said.

A small collage of memorable statements for the memory of those of us who have lost so much.

I just hope that Trilogy Balmain legal audit leads to some proceedings against those who are well know but remain nameless and the full measure of the corporate law applied.

Well, I'll be happy to eat humble pie if Balmain pursues issues like (1) breaches of TPA, (2) Breaches of Corp Act 601FC, (3) negligence causing economic loss.

My guess is that hell will freeze over before they do for items (1) and (3), especially since they've brought the CBA and KPMG with them. Balmain also hired ex-city employees.

I'd be surprised if the full extent of breaches of s.601FC are pursued.

What is Balmain's motivation? Let's see who gets the legal work - MDRN?

What's the old political saying 'jobs for the boys'?

Hard to be objective with a new head (balmain) on the the old body (FMF).

Nothing more than a head job.

http://www.aph.gov.au/senate/committee/corporations_ctte/fps/hearings/index.htm

Here's a link to the transcripts of the senate inquiry as they move along.

(thanks to the storm thread).

Well, the folk who got diddled in the Storm fiasco have done a great job getting together. Hundreds of them wrote to the Senate Inquiry. Now ASIC is spending $450k on a hearing in Brisbane and the banks are summonsed.

The folk from MFS are very active. Nearly 300,000 postings on Aussie Stock Forums.

But, the folk from FMF, well, nothing --- what's up - happy to lose money?

No activity at all - only two investors (as far as I know) made submissions to the senate inquiry.

The Pot forum has less than 200 members out of 14,000 investors.

I'd guess these people would fight more for a dollar coin not given in change than they would for their tens and hundreds of thousands at risk in the fund.

We are our own worst enemies.

This is yet another issue that should be discussed by the Parliamentary Inquiry...the difficulties that unitholders have in contacting each other when the necessity arises. While unitholders collectively have their legal rights, and are deemed equal within the PDS, the Constitution and under the Corporations Law, the flow of information to all unitholders is far from "equal", and most unitholders form their opinions on news reports, which are often sketchy, and sometimes completely inaccurate, and from the information that is given by the identities that have their own vested interests.