1 April 2010
Property Sale by Balmain Trilogy as cash recoveries gain pace
Balmain Trilogy, the Investment Manager of the Pacific First Mortgage Fund
(Fund), today announced the settlement of sale on 29 March 2010 of a significant
Fund asset located at Surfers Paradise.
The sale price for the asset, a
development site referred to as Pacific Beach, was over $81m. Pacific Beach is a
11,339m2 property located on the beachfront on Old Burleigh Road.
The purchaser,
Ridong (Gold Coast) Development Pty Ltd, had exchanged on the Pacific Beach
property on 20 August 2009 after an extensive marketing campaign that attracted
strong interest from a number of Australian and international investors. The
settlement period was extended from the original settlement date of 20 December
2010, at the request of the purchaser, to enable the Ridong to finalise its
funding arrangements.
Balmain Trilogy Joint CEO, Andrew Griffin, said that the
sale enabled the Fund to make further repayments on its loan to the CBA.
"Whilst
Fortress, a co-lender with the Fund on this property in accordance with an
arrangement with the previous Fund manager (City Pacific), was entitled to
receive its repayment (together with all interest and costs on their loan) ahead
of the Fund, we will still be able to make a significant repayment to the CBA.
"Together with other repayments planned for early April 2010, we are confident
that the CBA loan will be reduced to the $30 million target before the June 2010
deadline set out in the Facility. This will materially assist in our efforts to
start payments to the Fund’s unitholders early in the new financial year." "We
had already properly impaired the value of the asset in the Fund’s accounts so
the sale, whilst crystalising a loss, will not have any significant effect on
the current (recently reported) value of the Fund."
During the settlement period
Balmain Trilogy successfully defended an action brought by the original
borrower, Foresight Acquisitions, for $25 million in damages. Her Honour Justice
Wilson of the Queensland Supreme Court struck out the this action on 5 March
2010. Earlier in the year Balmain Trilogy had also successfully defended an
action by Foresight to prevent the sale from proceeding.
Balmain Trilogy is
currently seeking to recover the costs incurred from these proceedings from
Foresight.