Hotel developer PH3 Property Group cannot yet confirm what form any potential settlement with Westpoint-linked seed investors in its proposed $18.5 million Barrack Square project will take.
Hotel developer PH3 Property Group cannot yet confirm what form any potential settlement with Westpoint-linked seed investors in its proposed $18.5 million Barrack Square project will take.
It is believed investors sunk almost $15 million in mezzanine funding into the project more than two years ago through Kebbel, a company directed by Simon Bell and Richard Beck, which was renamed Finchley in January this year.
Mr Beck is currently under investigation by the Australian Securities and Investment Commission over his involvement with disgraced Westpoint property group and has had his assets frozen.
PH3 director Chris Hazebroek told WA Business News many investors had expressed a wish to remain in the project due to the generous interest payments they had been collecting.
He confirmed investors were being paid between 10 and 12 per cent interest annually in monthly instalments, on initial investments of at least $10,000 into a trust jointly owned by Finchley and PH3.
Mr Hazebroek said a private Malaysian investor based in Perth was keen to buy a stake in the 86-room hotel by entering into a joint venture arrangement with PH3.
“I’ve got to make a decision over the next few weeks whether to go down the track of a joint venture with this man or go to the [original] investors and ask them what they want to do,” he said.
“It wasn’t a position I anticipated to be in because we’d gone so far down the track. We had the investors and did the due diligence… now, it’s a case of me saying, ‘sorry mate’.”
While PH3 considers its options, construction of the three-storey Elan Riverside Pier Hotel is on hold pending building licence approval from the City of Perth for stage-two of the project.
The developer has installed pilings in the river as part of the approved conditions of stage one, but has fallen short of laying a steel frame and pouring a concrete deck.
Mr Hazebroek said he did not want the concrete exposed to the winter elements, or have his construction crew mobilised, while the company awaited a stage-two licence.
“We still don’t have anything in writing as to what they require [for stage-two],” he said.
“They’ve got documents and specifications from us that are substantial, and yet they say we haven’t given them enough information.”
A spokesperson for the City of Perth said it had sent PH3 a letter on May 30 this year containing an extensive list of issues to be addressed before the building licence would be approved.
“We are still waiting for the proponents to provide information necessary for issuing of a building licence for the second stage,” the spokesperson said.
PH3’s original completion date for hotel was March 2007, but this is likely to be pushed out if negotiations continue to stall.
Meanwhile, the developer also has 28 strata office suites on Railway Road, Subiaco, soon to be completed, and residential apartment projects set to go in Scarborough and West Perth.
