Pacific 'jewel' hit by finance woes

Southpac Group faces delays on its upmarket Pacific Point hotel, marina, housing and shopping project. Photo / Supplied

Developers of a troubled Allied-funded Fiji project say they have been frustrated by their loan shifting from one lender to another.

Southpac Group, directed by Brent Gibson and Kevin Storey, wrote to investors in the upmarket 22ha Pacific Point hotel, marina, housing and shopping project, saying finance was one of their issues.

Hanover originally loaned more than $20 million but Allied has now taken over the security, leaving the project's future up in the air.

Titles and settlement were due in December, 2007 but Southpac cited delays on the project as being caused partly by the transfer of their loan from Hanover to Allied.

"The Hanover buyout by Allied Finance has put us in talks with the finance arm of Allied and we are presently working through details of the project with Allied, who have indicated a willingness to consider a partnership to complete the project. We anticipate this process should be completed by March 31," Southpac wrote to investors on February 17.

But Allied Farmers managing director Rob Alloway said this week no firm decisions had yet been made and investigations were still being made about the future of the property.

Southpac acknowledged a group of investors wanted their money back but turned them down.

"While we understand that some purchasers' circumstances have changed since agreements were entered into, the contracts form part of the securities under the development loan, which has been assigned to Allied and as a result we must deal with the contracts in conjunction with Allied," Southpac wrote.

"With this in mind, we would like to make our intentions clear. Firstly, the project has a very good future if properly funded. The local Fijian market has proved to be very strong but unfortunately our timing on releasing Pacific Point sections to the local market coincided with Hanover announcing their moratorium.

"As part of the present due diligence process being undertaken by Allied, a local market review is under way, which will include new valuations based on comparative sales," it said.

"While we have been frustrated by the interruption to our programme for the completion of Pacific Point resulting from events beyond our control, we are hopeful we now have an opportunity to bring the project to a successful conclusion," it said, indicating Southpac would know more today.

Southpac marketed Pacific Point as "an integrated marina/resort/residential enclave to be enjoyed by a select few".

"This stunning development will combine waterfront and water view residences with a boutique hotel, marina, commercial centre along with a host of facilities for the exclusive use of residents and guests," it said.

However, the marketing material also indicated the area on Viti Levu's east coast was highly dangerous. It said the gated community would be guarded and although it was only 20 minutes from Suva it was "a world away". Security measures promoted in marketing material included 24-hour gated house security at Queens Highway, gated house security at Pacific Point's entrance, patrolled security and CCTV coverage at strategic locations throughout the property.

Security measures would be "unprecedented", Southpac said, and even the guards would be watched.

"In order to achieve and deliver the lifestyle opportunities on offer, the directors are committed to ensure the safe living environment where families, including women and children, can relax in confidence with the knowledge that they are safe and secure," Southpac said.

A group of about 20 investors have hired Brookfields partner Brendan Meech to examine their options. They put down 10 per cent deposits on about 27 sections after marketing material was released in 2007. But so far, only earthworks have been carried out.

Meech said he would be investigating who owned the large waterfront slice of Fijian land, which entities had mortgages registered on the titles and whether Hanover's mortgage had been assigned to Allied.

He could not issue statutory demands for the return of about $3 million investors' funds because the pre-sale contracts did not specific when Southpac had to develop the site, he said. The money was held in a trust account administered by lawyers Castle/Brown of Newmarket.

One investor said he had bought a number of sections, attracted to the fact that Pacific Point would be used by Suva-based business people and perhaps diplomatic officials who would be drawn to its high security.

Meech said the investors were not disgruntled because the project had not been completed. Rather, they were concerned about the Hanover/Allied situation.

Meech was engaged about a month ago and said his strategy was to wait and see what happened next.

Southpac's marketing material, printed in May, 2006, concluded: "Secure your lot now and enjoy the capital growth through the development stages of this outstanding project." Pacific Point's website, www.pacificpointfiji.com, remains accessible.

Margaret Hills, who has $160,000 invested with Hanover, called for action from Allied.

"Allied should take over this project and finish it themselves," she said. "That way, they are in control and can keep a tight fist on expenditure and costs. I an sure Rob Alloway has the capabilities and practicalities to do this.

"The accommodation should be finished first so it can start earning. The marina should be done as stage two. It is in investors' interest that we get this done as best we can," she said.

FIJI VISION

Southpac Group's Pacific Point plans:

Housing: 1000sq m sections with gated security, $199,000-$299,000 each.
Shops: Cafe, medical, pharmacy, chandlery, diving/surf, souvenirs, arts, crafts, supermarket.
Hotel: 80 rooms with conference facilities, to be "jewel in the crown" overlooking marina.

Source: Southpac Group