Sales suspended on Canberra Aalto apartment project following LMIM collapse
Off-the-plan apartment sales at the Aalto apartment project in Canberra have been suspended following the sudden collapse of Peter Drake's Gold Coast-based LM Investment Management (LMIM) in March.
The project is the second major development casualty following the demise of the $1 billion Maddison Estate project, which is languishing in Pimpama on the Gold Coast.
Aalto's first mortgage was with the closed LM First Mortgage Income Fund, now in the hands of administrators FTI Consulting following the collapse of LMIM on March 19.
The 12-storey complex, designed by architect Bruce Townsend and due to be built at 7 Irving Street in Phillip, is the largest apartment project in Canberra.
It is being marketed by Keenan Veraar and James Herbert of LJ Hooker project marketing.
It features one bedroom apartments priced from $385,000 and two-bedroom apartments from $499,000.
David Colman, regional manager of southern NSW and the ACT at LJ Hooker, tells Property Observer that there were would be no sales contracts signed until clarification on the project’s status.
LJ Hooker has a marketing agreement with a subsidiary of LMIM.
No apartments have yet been sold.
“We have proactively been sending requests for instructions about what to do next,” says Colman.
“We are still taking enquiries but we don’t want to enter into any deals if the project does not end up going forward.”
He added that LJ Hooker was not getting “bowled over” with enquiries.
A high-tech video prepared using architectural drawings of the project shows the views residents would have of the Federal parliament building.
Annual results filed by LMIM to June 30 2012 reveal a loan made by the LM Managed Performance Fund to Aalto Apartments Pty Ltd totalling $24.6 million alongside a $16.9 million loan to Peter Drake.
The LM First Mortgage Income Fund comprises a portfolio of 26 registered first mortgages and one second mortgage with a historical book value of $326 million.
Administrators John Park and Ginette Muller of FTI Consulting are undertaking an “orderly sale of assets” and will pay investors in the fund $4.27 million at the end of May with a “program of regular quarterly capital distributions proposed”.
LMIM remains the responsible entity for the fund under allowance made by ASIC following the suspension of LMIM's financial services licence on April 9.
A vote is scheduled to be hold on May 24th where investors can decide whether another fund manager Trilogy should be replace LM as a temporary responsible entity of the fund.
According to FTI Consulting, if this succeeds, Trilogy via class action lawyers Piper Alderman will then be able to bring claims against the responsible entity of the Fund, LM Investment Management Limited, its directors and other third parties.
FTI Consulting has promised there would no receivership-driven sales of assets.