Investors in property scheme hit by further delays

Investors in property scheme hit by further delays

Investors in the Dolphin Trust are facing delays to their interest payments, weeks after the company admitted to months-long delays on maturity payments.

The Dolphin Trust, renamed to German Property Group (GPG) in April 2019, is an investment scheme focused on redeveloping German listed buildings into luxury apartments, and promised UK investors double-digit returns on their investments.

But the company has been beset with problems as investors, many of whom gained access through self-invested personal pensions, saw the maturity date of their investments come and go without payment.

In his latest letter to investors dated August 7, Charles Smethurst, chief executive of GPG, said the company would not pay investors their interest payments for the next three months while it reviewed options to resolve the original delay.

He promised investors that interest payments would be added to their capital and paid in full at the end of the investment period.

Mr Smethurst wrote: “We are currently reviewing several options to resolve this delay, we are in discussions about the possible sale of properties where such a sale would be more financially beneficial to our clients than continuing with development ourselves.

“I want to reassure you that this should not cause you alarm.

“Your investment remains safe because it is secured against tangible assets in the German property market, this is structurally different to the market in the UK, renting residential premises is more common."

He added: “One consequence of this is a generally slower turnaround in property sales, if one compares the German market to its British counterpart.

“The German market is secure and our business model remains solid.”

In June, GPG blamed the German property market for the missing interest payments.

The company told investors construction and property developments had been delayed by "various localised factors", and that the average completion time for a redevelopment project in Germany had "steadily lengthened over recent years".

"These issues have impacted on the progress of the project you are currently secured against and this has led to the delays in being able to repay the funds at the contractual date," Mr Smethurst wrote at the time.

Mr Smethurst has now told investors that a dedicated team at the company will call them each month to give them an update on their investments.

A spokesperson for GPG said in response to the latest delay: “In June, we wrote to all maturity clients informing them of a 12-month delay on repayments, and we have agreed with those clients to provide them with an update every four weeks.

“The reason for the delay is due to many factors, in particular the structure of the Germany property market. The board are in discussions with additional developers who can assist in our developments as well as purchase the properties where that would be most financially beneficial to our investors. 

“We are also consulting with institutional investors to further reduce the delay.”