Property investors in the lurch

Property investors in the lurch
June 04, 2007 02:35pm
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A DIRECTOR of beleaguered property investment firm Australian Capital Reserve (ACR) has vowed to do all he can to return funds to mum and dad investors facing financial ruin.

Executive director Samuel Pogson today apologised to noteholders of ACR, some of whom stand to lose their retirement nest eggs.

"We'll be working with the administrators to get the best result for them," Mr Pogson said.

"We sincerely apologise for where it is now ... We've put all of our companies into administration, including our own personal companies.

"There won't be a stone left unturned by the administrator."

Estate Property Group, which includes ACR, went into voluntary administration on May 28 with more than $300 million owed to about 7000 small investors.

The larger institutional investors are believed to be owed about $200 million.

Separate meetings

Separate meetings are being held today for creditors of Estate Property and noteholders of ACR, so administrator McGrath Nicol can brief both secured creditors, like banks, and unsecured retail noteholders.

As secured creditors left the Estate Property Group meeting in Sydney early this afternoon, they said there had been no challenge to the appointment of the administrator.

"The critical thing the administrator is seeking is to get secured creditors to maintain uniformity and not take separate actions," one banker, who didn't want to be named, said.

The banker also said the administrator would make a court application to adjourn a second meeting of secured creditors that was supposed to take place within 21 days.

Builders and tradesmen owed money also were present at the meeting, which began at 12 noon today (AEST).

"We're a little bit higher in the food chain than the noteholders so we expect to get fed pretty fast," said Shane Traynor of Complete Fire Doors.

Unsecured investors distressed

As unsecured noteholders began streaming into the Wesley Conference Centre in central Sydney, many were visibly distressed.

One man, who would only give his first name, "Ayman", said he was owed $69,500 by ACR.

"Actually, it's life and death, because it was invested for my kids," he said.

"We need this money desperately, and they misled us.

"Some of it was for our children's education, and also my mother who is very sick overseas.

"We just hope we can get our money back, even without any return."

The meeting of ACR noteholders will be held at 3pm today (AEST).

Administrators Murray Smith, Scott Kershaw, Joseph Hayes and Colin Nicol of McGrathNicol have been appointed to oversee a group of 26 companies, which between them own 21 separate property developments in NSW and Victoria.

ACR raised over $300 million from investors in a series of unsecured loan notes.

It then lent those funds on a secured basis to other companies in the Estate Property Group to help finance various property developments.

A number of secured third party financiers also advanced funds to the group.

The trials facing Estate Property Group follows the failure of property groups Fincorp and Westpoint.