Another entity of expansive West Perth-based property investment group SAS Global is under extreme financial pressure, following the collapse of five investment companies under the SAS Global umbrella last week.
Another entity of expansive West Perth-based property investment group SAS Global is under extreme financial pressure, following the collapse of five investment companies under the SAS Global umbrella last week.
The National Australia Bank has appointed KordaMentha as receivers for SAS Global property companies SAS Baldivis, SAS Global Coogee, SAS Global Mandurah and SAS Global Seville Grove.
Also, SAS Global Mosman Park Equity is in the hands of administrators Ferrier Hodgson.
A sixth entity, SAS Global Forrestdale, is feeling the effect of significant debts totalling over $70 million owed to BankWest and TEYS Property Funds.
The money is owed over the July 2006 purchase of a 65-hectare tract of industrial-zoned land at the junction of Armadale Road and Tonkin Highway in Forrestdale.
Engineering and civil works have been completed, and the site has been subdivided into 105 industrial land allotments.
A TEYS Property Fund investor report produced in September showed at June 30 this year TEYS was owed $20.3 million by SAS Global Forrestdale, and the balance of the Bankwest loan was $36.4 million.
In August SAS Global Forrestdale increased its funding limit with Bankwest to $52.05 million to fund completion works, which were significantly higher than forecasted.
The extension in funding had been covered by 66 pre-sales contracts totalling $81 million, but at the end of September, SAS Global Forrestdale had received only 16 settlements, and just $16.6 million had been repaid to BankWest.
The debt issues come after a Supreme Court skirmish with Sherrin Investments over the non-performance of 10 contracts for the sale of land which were entered into in March 2008.
The contracts provided for a deposit to be 'paid now and to be held by De Freitas & Ryan Trust Account'.
In November last year SAS Global Forrestdale issued Sherrin Investments default notices in relation to the non-payment of the deposits.
Sherrin Investments admitted it had not paid any of the deposits, but argued it was not in breach of contract because SAS Global Forrestdale did not comply with specific conditions on the contract relating to the subdivision of land.
Sherrin Investments terminated the contracts in April this year because SAS Global Forrestdale refused to provide information pertaining to the conditions of the contract.
Acting Master Chapman of the Supreme Court ruled Sherrin Investments had no arguable defence and must comply with the original conditions of the contracts.
SAS Global Forrestdale is one of 11 land development companies established by SAS Global since 2003.
The group took on substantial debt to fund each development, but as a result of purchasing land at the height of the property boom, has found the values of the properties have collapsed since the time of purchase, putting each entity in breach of its loan covenants.
SAS Global directors Philip Meagher and Tony Beamish placed four entities, SAS Global Mosman Park Equity, SAS Global Coogee, SAS Global Mandurah and SAS Global Seville Grove in administration last week.
This followed SAS Global Baldivis being placed in administration on November 6.
Collectively, the five entities put into administration owe the National Australia Bank about $75 million.
Current valuations indicate the bank will retrieve most of its debt, but investors who poured in excess of $80 million into the companies will be lucky to recoup any of their funds.
(EDITOR'S NOTE: This story has been updated from the WA Business News paper edition out on November 19.)
