Dear Fellow Investment Partner,
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Current Property Value
*********************** approx. A$* *5-6 million
Current Loan Commitments: ***************** approx. A$ 10.9 million
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Investor equity Value: ************************** USD *** 0.00
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From the last update you will remember that the Miami Waterfront Developments, in which the Oceania Property Syndicate (OPS) is a major shareholder and investor, had restructured its lending to remove the threat of foreclosure by National Australia Bank.The project would have been a complete loss if this had not been done, as the previous lending plan, requiring interest payments on a quarterly basis, was unsustainable.
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The replacement loan which settled the NAB loan was provided by the EPI Foxtrot Syndicate Limited Partnership in exchange for a first charge mortgage over the property. A short-term loan of A$9,000,000.00 was extended to Miami Waterfront Developments Pty Ltd based on a similar property value with interest accruing as a balloon payment over the loan period until the property could be sold or a new longer term creditor could be found.* The prime goal has been to remove the debt that is carried by Miami Waterfront Developments.
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Although the interim loan period was short it had been hoped that that this would offer a possible recovery where none was possible before.As per the previous update at the end of last year EPI had commissioned an independent re-evaluation of the site as well as a market analysis of the area. This has now been completed and unfortunately does not make for happy reading. At current estimates the property value has continued to decline and has been valued at somewhere between A$5-6 million which is well below its prior valuation the preceding year when it was valued at approximately A$9 million and shows a decline of an additional 30% from its previous market value.
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As the General Partner of the Echo Syndicate I have received a formal notification from the lawyers of the new managers of epi Foxtrot Syndicate Limited Partnership, the Lender, advising me that it will issue Miami Waterfront Developments (Pty) Ltd and EPI Echo Limited Partnership loan default notices within the week. In Accordance with the terms of the respective loan agreements the loans will become immediately due and payable on serving of this notice.
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It is our opinion that neither party will be able to meet the demands for the immediate loan settlement and this will result in a complete loss of investment by the Partnership as the Lender seeks to enforce its security in respect of the loans.
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As General Partner I will therefore be taking the necessary steps to appoint an independent administrator to act on behalf of the Partnership and who will be handling the negotiations for the disposition of the Partnerships assets when the sale of the property completes in due course. They will thereafter provide a final report to all Limited Partners including the accounts and notice of final distributions, if any, on the winding up of the Partnership. The administrators will be provided with all the relevant Limited Partner information and will be in contact in due course to introduce themselves and provide all Limited Partners their contact information.
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We realise that the outcome of this syndicate is not what any of us wanted. There is no realistic outlook for a recovery in the real estate market in outer West Australian region and EPI Echo and Miami Waterfront Developments have exhausted all their remaining options to find an alternative lender. The continued decline in the property values in WA has made it impossible to sustain a leveraged investment in the area.
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Yours Sincerely
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Brett Carnell
GP
EPI Echo Limited
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