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Troubled property scheme calls in restructure specialists

Troubled property scheme calls in restructure specialists

Troubled overseas property investor The Resort Group has hired investment bank Lazard to “review all options available” after it ran into difficulties while building one of its projects.

Investments in the Cape Verde-based luxury property group are held by some UK investors' self-invested personal pensions. Holders have previously told FTAdviser they were facing difficulty as returns have fallen short of their expectations, often not covering the annual cost of running the Sipps.

The Resort Group owns four luxury resorts in Cape Verde, one of which - White Sands - remains under construction. In a letter to investors sent last week, TRG said the resort now required a significant capital injection in order for building work to be completed.

The letter, from TRG chief operating officer Charlie King, added the company's "situation has deteriorated significantly" since its previous update to investors. He said the group had suspended all pre-construction interest payments to investors until a funding solution could be secured.

Mr King said there were “several initiatives are in progress to make this happen”, including discussions with the Cape Verde government about a possible bond issue and negotiations with commercial banks.

A TRG spokesperson said: "The decision to appoint Lazard was taken so as to introduce new capital into the group, while also strengthening our operations moving forward.

"Regrettably our investors have experienced a delay in receiving their rental payments, with one quarterly payment outstanding.

"However, we have and will continue to pay all investors their rental returns due and outstanding, while remaining ever committed to ensuring the long-term success of our resorts."

Sipp investors were sold bricks-and-mortar as well as share-based investments in TRG by advisers and introducers in the UK, in return for rental and interest payments. Some of the investments are held in Sipps administered by Rowanmoor, which has been contacted for comment.

Investors were previously thrown a curveball in August when rental payments stalled

TRG told investors at the time the payments were delayed due to “certain loan commitments” it had to honour, as well as lower revenues during the summer months. It said payments would be made imminently.

However, FTAdviser understands many investors have still not been paid their rental returns for the past quarter.

The Financial Conduct Authority became interested in the investment scheme in 2017 when it wrote to TRG investors to ask for information. FTAdviser understands that probe is still ongoing. 

carmen.reichman@ft.com