PROPERTY investment group SAS Global's Forrestdale Business Park development has run into more problems after prospective land purchasers defaulted on nearly half of the pre-sales commitments.
PROPERTY investment group SAS Global’s Forrestdale Business Park development has run into more problems after prospective land purchasers defaulted on nearly half of the pre-sales commitments.
SAS Global Forrestdale reported in September that it had 66 pre-sales contracts for the 105-lot development, but to date only 28 have settled.
TEYS Property Funds, the entity responsible for the company, told investors last week that legal enforcement action was being taken in relation to a further 28 of the reported pre-sale commitments.
TEYS managing director Michael Teys told an investors meeting in Perth the deterioration of presales at Forrestdale appeared to be “more significant than normal falling market casualties, and needed to be further investigated”.
The problems at Forrestdale follow the failure of five SAS Global investment companies.
SAS Global directors Anthony Beamish and Philip Meagher released a statement last month to assure investors in SAS Global Forrestdale and five other property investment companies that the entities were unaffected by the recent collapses.
As of November 26, SAS Global Forrestdale had reached settlement on 28 of 105 of its subdivided lots at Forrestdale Business Park, while 12 additional contracts were likely to settle soon.
In its worst-case scenario, assuming contracts likely to settle, soon settle and those under legal action do not settle, SAS said it would have 65 lots to sell, and its debt on the land would be $27 million.
The debt after ‘likely’ settlements would be $17 million
SAS Global also clarified previous advice to TEYS, disclosing that $81 million of presales included expressions of interest or ‘holds’ as opposed to binding contracts.
Some prospective buyers, including SAS Global’s Mr Beamish, were released from contracts because the project did not reach a March 2009 sunset clause.
Fellow director Mr Meagher was reported as holding seven lots in the list of $81 million sales but did not enter any binding contracts either before or after the March 2009 sunset expiry.
Mr Teys said a forecast of investor returns for SAS Global Forrestdale would not be available until a new valuation of the land had been completed, and estimated this would take at least three to four weeks.
The legal action follows a Supreme Court ruling in July where Sherrin Investments was required to honour 10 contracts for the purchase of SAS Global Forrestdale land.
