THE defunct Riverside Pier Hotel project at Barrack Square is to be sold within three months, as the corporate regulator circles the company that tipped investors into the failed development.
THE defunct Riverside Pier Hotel project at Barrack Square is to be sold within three months, as the corporate regulator circles the company that tipped investors into the failed development.
Three hundred investors who sunk $15 million in mezzanine funding to back the project through South Perth-based Finchley Central Funds Management are expected to retrieve about 20 cents in the dollar, according to early estimates.
Finchley co-founder Simon Bell told WA Business News the sale, to an unnamed buyer, would be completed in eight to 12 weeks.
"That's in the process of being sold," Mr Bell said. "Investors will receive proceeds from the sale."
Mr Bell started Finchley, then known as Kebbel Investments, with business partner Richard Beck in 2001.
The company was later used to distribute funds for the collapsed developer Westpoint, and changed its name in early 2006. The corporate regulator has started civil proceedings to have Finchley wound up, claiming the company and its officers have failed and continue to fail to comply with their legal obligations.
The idea to develop an 86-room, floating hotel on the Swan River was pitched in the late 1990s, and more than 10 years on there is only some unfinished foundation work to show for it.
A representative of local developer, PH3 Property Group, which was the developer of the hotel, said it was a difficult situation and all questions had to be posed to Mr Bell.
Finchley, or Kebbel, became the financier of the project by raising mezzanine funding from investors.
One elderly investor contacted by WA Business News has one-third of his superannuation invested in the failed project on advice from his financial planner.
Investors - who can more accurately be described as lenders, as they do not own the underlying asset - were initially paid a handsome monthly dividend, although this soon dried up.
During the past 12 months, they have been told they would receive somewhere between 20 cents and 40 cents in the dollar, with the lower amount representing the most recent estimate.
Mr Bell said red tape was to blame for project hold-ups, but the reason for the sale was a lack of funding. He said the prospective owner would develop the project.
A spokesman for the City of Perth said the licence for stage two works was not given because the developer had not provided sufficient material.
ASIC is seeking to unwind the complex structure that consists of Finchley as the responsible entity for managed investment scheme Finchley Development Capital Funds.
The scheme has two trusts - one of which is The Riverside Trust, with 300 members and $15 million, used to finance the hotel project.
A second product, The Gilead Trust, has more than 600 members who have contributed more than $25 million in mezzanine finance to the developer of a resort in New South Wales.
