Monday nights ABC Four Corners examined three property investment groups that have lost over $1 billion of mum and dad savings and all three have either been a major or minor player in the retirement village sector. Most devastating was a review of the collapse of Prime Trust, allegedly orchestrated by Melbourne lawyer Bill Lewski. Prime Trust grew rapidly to be the second largest operator of villages across Australia behind Primelife [for whom Lewski helped engineer the original funding in conjunction with founder Ted Sent]. It collapsed with $550 million losses, not helped by the fact that over two years Lewski extracted over $140 million. As the liquidator, Stirling Horne, said on the program, that if that money had been left in the company it would not have collapsed and 10,000 mum and dad investors would not have lost their life savings. That liquidator also stated that given the way Lewski had gifted the money to his two sons via trusts, it was not recoverable. The program showed a $4.6 million beach house Lewski bought himself last August. He received a $34 million success fee for listing Prime Trust on the stock exchange, plus a $60 million fee for the sale of village management rights. He verbally gave himself the management rights and assumed the right to sell them. The board, led by Michael Woolridge [Ex Minister for Health in the Howard government] didnt object.
The second property investment group was Banksia, based at the small Victorian town of Kyabram in the Goulburn Valley. It went into receivership with $650 million in losses, being savings of small farmers and even the local community aged care facility, which had invested $3.5 million. Banksia retirement villages included in its investments. Investors hope to get back 50 cents in the dollar.
The third property investment group is LM, based on the Gold Coast. It is still operating but had one investment fund that collapsed with substantial losses for private investors. While not mentioned on the program, LM was a substantial retirement village funder prior to the GFC and its unexpected withdrawal of funding support at that time caused a number of village operators to eventually fail.
Place these three collapses on top of the investments lost across Babcock & Brown Communities, Village Life, ING Real Estate Communities and Retirement Village Group, one can understand why both mom and dad and professional investors, are wary of the sector. A sentiment not helped by Four Corners.
