First village to appoint receiver: Tom Camp’s Tarneit Skies

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Few villages fail as businesses and even fewer require a receiver to be appointed, so there is much interest in Ferrier Hodgson taking on Tom Camp’s Premier Village Developments and its Tarneit Skies village near Werribee, on the southwest outskirts of Melbourne. Is it the start of a trend, given the financial times?
In part the answer appears to be a product and pricing problem. Tarneit Skies is highly regarded for its design and build quality and Tom had in five years built and sold 84 ILU’s. But he also built 30 apartments and over the past two years has just been able to sell 4 of them. They were priced at $265 to $345,000, compared to new 3 bedroom homes in Tarneit priced at $300,000.
Camp also had the problem that his primary source of funding was a little known Gippsland group called South Eastern Secured Investments (SESI). Based in Korumburra, a dairy town, SESI was formed by a group of local solicitors who sold debentures to their clients. Their biggest investment was the $18.8 million provided to Tarneit Skies. When Tom Camp defaulted on this loan in December it caused a knock-on effect with SESI, causing them to call in the administrators KordaMentha. Indirectly Tarneit Skies triggered the freezing of $160 million of depositor funds for 3,000 farmers in Gippsland.
Prime Trust had also lent Tom Camp $18.7 million with a second mortgage over Tarneit Skies. Prime Trust has now written that loan off as a full loss.
The familiar pattern that has been emerging over the past nine months is that operators that use mezzanine finance have been caught badly by the global financial crisis because, unlike the major banks, these financiers do not have the depth of funds and flexibility to work with operators through difficult cash flow periods.
The new owner will no doubt buy Tarneit Skies at a substantial discount and be able to fix the apartment pricing. There are also 8 ILU’s built and ready for sale plus land for 36 more. The agent is John Newman of Cooper Newman on 03 9831 9831. In the meantime the investors in SESI have just received their first return of funds, being 10 cents in the dollar (with more expected).
Market review
As we finish the first quarter of 2009 it is timely to review the market performance of the major publicly listed stocks with village portfolios.
JAN 08 JUNE 08 DEC 08 MCH 09
Becton $3.73 $1.43 $0.11 $0.12
FKP / Aveo $6.41 $3.40* $0.60 $1.02
BBC/LLP* $0.90 $0.43 $0.22 $0.12
Prime Trust $0.86 $0.47 $0.13 $0.14
Aevum $2.81 $1.85 $1.02 $0.78
Lend Lease $17.20 $9.50 $7.20 $6.26
Stockland $8.35 $5.39 $4.40 $2.97
Free booklet for your residents
The Federal Government has developed for the first time physical activity recommendations for older Australians. They have published a free booklet titled ‘Choose Health: Be Active’. It guides residents on achieving 30 minutes of physical activity each day effortlessly. Order your free copies 1800 500853
Development approvals this week
Each week we will list the new Development Approvals that have been passed over the past seven days. This week the value is $17.9 million in retirement villages and $24.6 million in aged care, a total of $29 million.
Retirement villages
Young, NSW 43 units $5.5 million
Springwood, QLD 16 ILUs $2.4 million
Cannonvale, QLD 46 ILUs $10.0 million
105 ILUs $17.9 million
Aged care facilities
Caves Beach, NSW 51 beds $11.5 million
Watanobbi, NSW 44 units $5.0 million
95 units $16.5 million
Aged units/Seniors units
Beecroft, NSW 12 units $2.1 million
Ermington, NSW 4 units $0.5 million
16units $12.6 million