Millions at stake as towers left up in the air

May 30, 2007

'TWO unfinished apartment towers in Melbourne are in limbo after the $300 million collapse of a Sydney-based financier and property group.

Estate Property Group and its finance arm, Australian Capital Reserve, collapsed late on Monday amid concerns the value of its projects across Australia were overstated. As many as 8600 small investors could lose millions between them.

The two unfinished Melbourne projects are the 41-level neo200 on Spencer Street and the 14-level Grosvenor on Queens in Albert Park.

On Monday night, McGrathNicol were appointed voluntary administrators of Estate Property Group as well as ACR and 24 other companies. A spokesman for McGrathNicol declined to comment on the fate of the company's projects.

Last night an Australian Securities and Investments Commission spokeswoman told The Age that ACR had been investigated for the "possible overstatement" of the value of its investment properties in its most recent prospectus.

Other areas of concern were the lack of information about the valuation of its projects as well as inadequate disclosure in a number of areas, including construction risk.

The spokeswoman declined to say which projects were involved.

Late last month, ASIC placed a final stop order on ACR, which prevented it from raising funds. ASIC did not disclose its reasons at the time.

ACR relied on raising funds from the public that it then lent out to Estate Property Group to fund development activities. In its latest offer it was promising investors a return of between 8.75 per cent and 9.55 per cent. But a copy of ACR's most recently lodged financial accounts show it was fast running out of cash. Between the end of 2005 and the end of 2006, its cash dropped by more than $33 million to $8.7 million.

Most of Estate Property's projects are in NSW.'

http://www.theage.com.au/news/national/millions-at-stake-as-towers-left-up-in-the-air/2007/05/29/1180205250376.html

KEY POINTS

• Two unfinished apartment towers in melbourne, after the collapse of a Sydney based finanicer & property group.
• As many as 8600 small investers could loss millions between them.

This will mean there are to unfinished building in prime construction area in Melbourne. They will stay uncomplete untill it is worked out what will happen to them. A lot of investers that invest in the construction industy will be out of pocket. Which will give them and other people in investing in the construction industry in the future. This could affect the money that comes into the construction industry for projects.