west*wales*news*review

West Wales News Review — analysis with a sustainability slant

Archive for the category “Tourism”

Risky Deals? Landmark Welsh Hotels Sold Room by Room to Investors

Tenby’s prominent Carmarthen Bay Hotel , looking out to sea from above North Beach, changed hands earlier this year and had its name altered to the Fourcroft Hotel. The Osborne family, after operating the hotel for more than 70 years, sold to Northern Powerhouse Developments for an undisclosed sum.

Tenby’s Fourcroft Hotel, previously the Carmarthen Bay, has a prime location overlooking the sea. Photo: Google

What’s the story? It’s not a traditional purchase, one hospitality firm buying a going concern hotel from another. Northern Powerhouse Developments is very different. It acquires hotels and sells individual rooms to investors on long leases such as 125 years. A sister company like Giant Hospitality Ltd leases each room back for 10 years, typically, and promises to pay specific rental amounts to each investor.

Room-by-room investments are now widely marketed in the UK. A brand called Emerging Developments, for example, advertised investments in the Fourcroft like this:

  • “Operational 40 room hotel in Tenby with sea views
  • Full refurbishment to bring up to stunning 4 star modern standards
  • 23 rooms have sea views
  • Full suite prices from just £60,000 (with the option of just £54,000 total cash input)
  • All rooms to be finished with sumptuous décor and high quality furnishings
  • 10% NET return for 10 years
  • 125% buyback option in year 10 (or the option to extend the 10% for another 5 years, or take a 50/50 room revenue split)
  • 2 weeks free usage in your room each year”

Booking a room at the Fourcroft cost from £101 a night on Trip Adviser in October 2017, but anyone who invested £60,000 in the room would expect £6,000 a year for ten years plus £75,000 buy-back — working out at £13,500 a year. The funding model, based on avoiding bank loans, means there may be no bank interest. This increases the profit potentially available to pay investors.  If the hotel is so brilliant that it can charge top room rates, yes there could be more profit – but top hotels are labour-intensive and have correspondingly higher salary costs.

How safe is this type of sale and leaseback  ‘alternative investment’? It depends on the success of the hotel, but the promised returns require business to be booming. All the time.

The sale of hotel rooms is unregulated, so investors take all the risk.

Northern Powerhouse also acquired, in 2016, Caer Rhun Hall in the Conwy Valley of north Wales, and set about selling the 23 planned bedrooms, and then 42 rooms in an annexe and 6 in a cottage.  The hall was an accountancy school and also a wedding venue. Conwy Borough Council agreed change of use to a country house hotel on August 9 2017. Of course, it would have been tough on investors if the council had refused.

Investors are told in a marketing brochure from Select Portfolio, a firm of agents:  “Offering a choice of single, double/twin and premium accommodation, the hotel delivers an annual rental income of circa 10% net of the purchase price for 10 years, with 2 weeks personal use included each year and units starting from £75,000, ranging up to £180,000.”

Northern Powerhouse is also behind the Afan Valley Adventure Resort at Caerau, Cymmer, north of Maesteg,  and Select Portfolio sells lodges there. The four-bedroom ‘lodge 20’ is £249,000 and ‘lodge 33’, also four bedrooms, is £259,000. That’s a great deal more than a timber lodge would cost from the manufacturers – probably between three and four times more, for a lodge constructed and insulated well enough for year-round occupation.

The concept is a form of crowd funding. Investors’ money pays for building conversion and new development, on the promise of receiving operating income for the next decade or so. But if the hotels and resorts are not popular, there may not be enough income to pay to investors.

This is a sales proposition for Caer Rhun Hall: instead of paying £111,000 for a premium double room (including £1,000 reservation  fee), pay £87,000 and go without income for two years. The target income for the next eight years is £88,000, and then Northern Powerhouse would buy it back for the full purchase price plus 25%, £137,500. In a typical scenario, it is hard to see how one room can generate, reliably, a surplus of £11,000 a year (especially as the investor has the right to use it for up to two weeks a year). And then there’s the commitment to buy it back for 25% more than the purchase price.

Given a  typical hotel occupancy rate of 75%-80%, the room would be occupied for 274 to 292 nights. Trip Adviser on October 23 had a double room – not necessarily an official premium room –at Caer Rhun available for £68, which times 274 is £18,632 and times 292 is £19,856. This is not profit, of course. At 7%, the net profit could be £1,304 to £1,390, at 15% £2,795 to £2,978. Respectable, but not sufficient to pay giddy amounts to investors.

Northern Powerhouse Developments currently has a portfolio of six hotels in England, and seven in Wales. The Wales collection is:

  • Afan Valley Adventure Resort, Caerau, Cymmer
  • Belmont, Llandudno
  • Caer Rhun Hall, Conwy (to be joined by a large annexe, and lodges)
  • Fishguard Bay Hotel, Goodwick
  • Fourcroft Hotel, Tenby (previously the Carmarthen Bay Hotel)
  • Llandudno Bay Hotel, Llandudno
  • The Queens Hotel, Llandudno

The three Llandudno hotels, the Fishguard Bay and the Fourcroft, and Caer Rhun Hall are all trading. The Afan Valley Adventure Resort, and the annexe and lodges at Caer Rhun, are in development.

On its website, Northern Powerhouse Developments explains its funding formula:

“The group is funded utilising a tailored funding mechanism known as sale and lease back. The business operates an op co (operational company) prop co (property company) business model. In its most simplistic form the prop co provides individuals the opportunity to buy a room in the hotel and then rent the hotel room back to the hotel operator. This is an alternative to the residential buy-to-let market.

We sell our properties through a global network of sales agents who offer private and institutional buyers the opportunity to buy individual rooms, multiple rooms or whole developments within a given project.

Our team welcomes enquiries from agents, Financial Advisors, Fund managers, UK and overseas estate agents, wealth coaches or property networks.”

Targeting buy-to-let investors is logical because of ex-Chancellor George Osborne’s fiscal attack on buy-to-let landlords, whom he appeared to blame for removing homes from the reach of first-time buyers. From April 2016 there has been a 3% stamp duty surcharge on properties bought to let out. By 2020 landlords will not be able to count any mortgage interest as a business cost. April 2020 is also the time when all privately rented homes must have an Energy Performance Certificate rating of E or better.

George Osborne’s actions to discourage buy-to-let investment have led to savings looking for investment options. Student accommodation, hotel suites, and rooms in care homes are all now marketed as investment opportunities. In these cases, and unlike whole freehold properties, there is no established resale market.

Northern Powerhouse’s model is a form of fractional investment. Not fractions of rooms, as so disastrously at The Corran, Laugharne, but fractions of hotels. Does Northern Powerhouse Developments have a track record to inspire confidence?

Not yet. The company was incorporated on January 7 2016, and is controlled by Mr Gavin Lee Woodhouse, born in March 1978 and so currently aged 39. He also controls Northern Powerhouse Developments (Holdings) Ltd, incorporated on September 30 2016, and several other companies recently formed, none of which have had time to establish a track record.

Northern Powerhouse Developments Ltd’s first accounts, for January 7 2016 to March 31 2017, are available, and show that the company lost £171,635. In addition, although it is owed £3,717,663 by 13 other companies controlled by Mr Woodhouse, it itself owes £4,663,866 to 11 other companies in the expansive Woodhouse portfolio.

We asked both Northern Powerhouse Developments, and Select Portfolio, a firm in Dorset selling the rooms to the public, about their policies for warning novice investors about the risks involved, but have not received replies.

The team assembled to build the business is large and impressive. The operational board of six, chaired by Gavin Woodhouse,  includes corporate banker Andrew Kitchingman; the former managing director of Center Parcs, Peter Moore OBE; and Richard Lewis, former CEO of Landmark Hotels in Dubai. If all these business heavyweights have confidence in the funding model, why question it? It could be that super-rich international investors will be attracted to the idea of buying up established hotels in not-particularly-fashionable locations (that’s one of Northern Powerhouse’s key concepts) and building activity-focused resorts (there is a tie-up with the Bear Grylls Survival Academy for the Afan resort plans).

But medium-scale investors with tens of thousands of £s in search of reliable returns, and not £ millions, please be very careful.

Advertisements

From Laugharne to the Algarve — Fractional Ownership: Timeshare Misfortune Reborn?

Bill Peters hoped that owning half of an apartment in the Portuguese Algarve would be his route to sun-filled worry-free holidays.

Instead, his purchase has created a labyrinthine quagmire of confusion.

The labyrinth extends far beyond Portugal to England, Guernsey and the British Virgin Islands. Guernsey and the British Virgin Islands (BVI) are both tax havens offering secrecy, and the BVI especially are a popular place for money to be obscured. Details are occasionally leaked, as in the Panama Papers, offering a tantalising glimpse of who keeps assets hidden from tax authorities.

The Panama Papers show that companies involved in Bill Peters’ property purchase are sequestered in the British Virgin Islands, a territory in the Caribbean scoured and scarred by hurricanes Irma and Maria in September 2017.

Bill, who lives on Merseyside, would like to unravel the tortuous web of companies which, he believes, are keeping him in the dark about his property rights, while sending out bills for he knows not what.

In May 2015 he signed a purchase and sale agreement for two quarter shares of Apartment 2A, Block 37, Plot F, Várzea da Luz. The seller was William Hurley of Chillenden, Kent. Bill Peters paid €90,000 and looked forward to holidaying on the Algarve.

What exactly did Bill Peters buy? According to purchase and sale agreement, it was shares 3 and 4 in a company called Isaura Properties Ltd.

Isaura Properties was then registered at 208a Telegraph Road, Heswall, Wirral, but is now at PO Box 5, Willow House, Oldfield Road, Heswall, Wirral. This address, a private house barely visible behind high walls and stout gates in a quiet road, is the home of an accountant called David Leslie Bates. Mr Bates has featured on West Wales News Review before, in an administrative connection with The Corran Resort and Spa, Laugharne: https://westwalesnewsreview.wordpress.com/2017/01/27/sunk-investments-drown-in-carmarthenshire-marsh/. Investors lost £17 million in the venture.

The house in Oldfield Road, Heswall, the unlikely headquarters of a fractional property business empire. Photo: Google

The purchase and sale agreement states that Isaura Properties is the legal owner of Apartment 2A. This company is non-trading and has no assets, according to records at Companies House. The directors are Fractional Secretaries Ltd, David Leslie Bates, Julia Rachel Day, and Lucy Ann Whitfield, all at PO Box 5, Willow House. Previous directors include Nicholas Robert Hannah of La Hougette House, Route des Deslisles, Castel, Guernsey, and three more ‘Fractional’ companies – Fractional Administration Services Ltd, Fractional Administration Solutions Ltd and Fractional Nominees Ltd.

Nicholas Robert Hannah was fined £35,000 by the Guernsey Financial Services Commission in November 2016, and barred from directorships for five years, because he made false statements and was negligent in the management of Guernsey-registered Marlborough Trust Company Ltd. Fellow director Adrian Bradley Howe received the same penalty, and Marlborough Trust Company was fined £100,000. The Marlborough Trust Company is implicated in the 2009 failure of Arch Cru, a group of funds which invested £400 million on behalf of around 20,000 private investors. Marlborough Trust Company was, it appears, ultimately responsible for investment decisions over the assets underlying 23 of the Arch Cru funds held in SPVs – special purpose vehicles – for property, wine, and a company owning other companies which invested in ships.

Carbon credit and wine scams

Marlborough Trust Company appears to operate on the wilder margins of the investment world, and features in a report by the UK Government’s Insolvency Service in November 2015. After investigation by the Insolvency Service, the High Court ordered the liquidation of eight interlinked companies which had been operating scams selling carbon credits called carbon benefit units, and wines. Marlborough Trust Company, and sister company Marlborough Nominees Ltd, were directors of two of the eight companies, Consolidated Carbon Projects Ltd and WK Investments Holdings Ltd, both registered in the British Virgin Islands.

The Insolvency Service reported[1] that “Marlborough Trust Company Ltd based in Guernsey made various representations as to the position of Consolidated Carbon Projects Ltd and WK Investments Holdings Ltd and requested the petitions against these two companies be withdrawn by the Secretary of State“. Who represented Marlborough Trust at the (unsuccessful) petition hearings?

The Insolvency Service said: “David Bates of Marlborough Trust was present at the hearing of the petitions.”

As for Isaura Properties Ltd, this is a company limited by guarantee and has no shareholders. It seems to fit the Oxford Dictionaries’ definition of a shell company, “an inactive company used as a vehicle for various financial manoeuvres or kept dormant for future use in some other capacity”.

So where did Bill Peters’ €90,000 go? William Hurley says he received just over €75,000, but that leaves nearly €15,000 footloose. “William Hurley told me that some went to estate agents in Portugal, Casas do Barlavento at Lagos; some to lawyers; and €2,000 to ‘fractional owner’,” said Bill Peters. Could that have been Fractional Administration Services Ltd, at that time still a director of Isaura Properties? (It is legal for companies to be directors of other companies, but not transparent or, one suspects, conducive to good management.)

Bill Peters made his purchase despite not receiving clear answers from his lawyer in Portugal, Cristina Marcelino, to questions such as “Is there any debt or lien associated with the property?” A lien is a right to keep property belonging to someone else who owes them money, until the debt is paid.

He learnt this year, from Mr David Bates (as a director of Fractional Administration Services Ltd), that there was at least one debt relating to his fractions of the apartment, £945 in administration fees.

Although Bill Peters bought what he thought was a half share in the apartment back in 2015, the details were apparently not transmitted to the Fractional Ownership Consultancy Ltd (FOC), registered on Tortola in the British Virgin Islands. On August 8 2017 FOC sent, from its office in Guernsey, a bill for £1,195 to Mr William Hurley, the previous ‘owner’, as his portion of moneys due to FOC from Isaura Properties Ltd in 2016, 2017 and 2018. Isaura Properties Ltd is the dormant company which is the legal owner of Apartment 2A. The money was to be paid into Barclays Bank in Ellesmere Port, Cheshire.

Why is FOC demanding money for Apartment 2A? The ‘owner’ of another Algarve property received a document from FOC headed Oceanico – Members FAQ, which indicates the answer.

The background of Oceanico Group is that it acquired land in Portugal and other tourist venues to build resorts with a focus on golf. Apartment 2A is part of an Oceanico development. The Portugal-registered group was created in 2006 by Gerry Fagan from Drogheda, Ireland and Simon Burgess from the UK. At the time Simon Burgess, who had been based in Northwich, Cheshire, was serving a five-year disqualification from holding directorships in the UK, running from February 2003 until February 2008, according to the Irish Independent.[2] Oceanico had troubles from the beginning, selling properties and taking in deposits before it had planning permission.[3], [4]

Banking collapse

Oceanico’s irrepressible (some would say irresponsible) optimism was dashed against the rocks of bank failure in 2008. Anglo-Irish Bank, to which Oceanico was heavily indebted, failed and was nationalised by the Irish Government. The Oceanico loans were passed to Ireland’s National Asset Management Agency, which in 2015 instructed prestige estate agents Savills to sell Oceanico’s Portuguese portfolio.

The background of banking collapse makes it more likely that companies with interests in the distressed real estate would seek to recoup losses in any way possible. This brings us back to the FAQ document from the Fractional Ownership Consultancy, which said that it is:

“the owner and operator of the fractional system used by Oceanico. FOC is based in Guernsey,[5] so it has arranged for all the UK work to be carried out by SMD & Co under a contractual arrangement. This is because the UK companies used in the fractional system are required to have a UK registered office, directors and secretaries which SMD provides from its office in Heswall, Wirral.”

The document continued: “SMD & Co is paid for its services by FOC, and FOC recover those costs through the contractual arrangements with Oceanico, and, ultimately, the fractional owners.”

“SMD & Co is owned, controlled and managed by David Bates, a chartered accountant (ICAEW 7600847) and chartered tax adviser (CIOT 135624). David is also a minority shareholder in FOC, having been involved with that business since its commencement.”

So FOC owns the fractional sale system, which employs companies limited by guarantee (without shares or shareholders) as the legal owners of the properties in which fractional interests have been sold. In Bill Peters’ case, this is Isaura Properties Ltd.

For Isaura, the company secretary is Fractional Secretaries Ltd, but SMD Secretaries Ltd is the company secretary for Fractional Secretaries Ltd. These companies are so similar! David Bates is secretary and director of SMD Secretaries Ltd and a director of Fractional Secretaries Ltd. Julia Day and Lucy Whitfield are directors of both.

Several connections between the Fractional Ownership Consultancy and the Marlborough Trust Company (whose motto could well be ‘wing it and pray’) include David Bates – as a shareholder in FOC, and representative of Marlborough Trust petitioning against the compulsory winding up of Consolidated Carbon Projects Ltd and WK Investments Holdings Ltd, for both of which Marlborough Trust Company was a director. Marlborough Trust Company itself, and Nicholas Hannah, are both among former directors of the FOC.

No wonder Bill Peters cannot find out exactly what he owns, who is entitled to charge him, and for what. It appears that he does not have many rights at all. His fractions of Apartment 2A are dispensed by legal owner Isaura Properties Ltd, which wrote for itself Articles and Memorandum of Association greatly in favour of itself, not the fraction holders – who are not directors of the company. The directors on incorporation in 2006 were Fractional Administration Services Ltd and Fractional Nominees Ltd, and the secretary was, as now, Fractional Secretaries Ltd, all at Mr Bates’ Post Office Box address in Heswall.

The directors can suspend or vary the rights of fraction-holding members for multiple reasons including not paying money when it is demanded, and for behaviour which directors think is detrimental to the company or the property. A fraction-holder whose rights are suspended “shall continue to be liable for all the obligations attaching to membership (unless they have been cancelled).”[6]

The company’s ‘founder member’ is important, too. This was Oceanico Stepping Stones Ltd, registered at the Heswall PO Box address. The founder member and all other members have to approve any transfer of ownership, including the price to be paid, and the founder member can veto the sale – so Bill Peters has purchased something he might not be able to resell. And who are the directors of Oceanico Stepping Stones? Fractional Secretaries Ltd, David Bates, Julia Day and Lucy Whitfield.

Beware removal of rights

It is feasible to argue that it is in Oceanico Stepping Stones’ interests, as the powerful founder member, for other members to be confused over the correct procedures for registering their interests, because the founder member can then make a case for removing their rights.  William Hurley’s lawyer in Portugal, Justin Ryan, emailed David Bates on August 30 2017 to say “In my opinion, if the buyers [William Peters] want to register their ownership then they need to deal with you.” Mr Bates did not answer this question but wrote: “I don’t want to upset anyone, but it is not our position to agree who pays the fees. If you have agreed the buyers pay, that is fine, but they do need to be paid otherwise they remain the obligation of Mr Hurley.” So what is the procedure for registering a new member of Isaura Properties? If anyone should know, it is surely the directors of Isaura Properties itself, including David Bates.

Buying a fraction of Isaura Properties has not been, for Bill Peters, a passport to trouble-free holidays. He might have expected his purchase to be protected under the European Union Timeshare Directive, introduced across the EU by February 23 2011 as a response to timeshare misselling scandals. (See, for example this article, ‘Timeshare horrors: fresh hope for 100,000 people locked into costly contracts’, by Kate Palmer, in The Telegraph online, May 30 2015.)

The status of fractional ownership remains a grey area, but buying a right to use an apartment or villa for a portion of every year is much more like timeshare than joint ownership of a property. The Resort Development Association advised back in 2010 that members should behave as if the directive definitely applies to fractional sales. The rules are nothing difficult, principally an obligation for full disclosure in marketing and sales, a ‘cooling off’ period of 14 days after a purchase agreement is signed, and a bar on any money changing hands during the cooling off period.

Bill Peters says: “I was not given information about any debts on the property, or any regular payments due, even though I asked specifically.”

We asked David Bates whether, in his opinion, fractional ownership is covered by the EU timeshare directive, including the requirement for full disclosure. We also asked for his take on advantages and drawbacks of fractional investments. As yet, we have not received a reply.

The fractional saga, which cost investors in The Corran, Laugharne, so many £ millions, appears a tale of mystery enveloped in mist – but buyers can start to penetrate the fog:

  • by searching out and reading all the small print
  • by not signing anything until all their questions have been answered satisfactorily, with documentary proof, and
  • by avoiding solicitors recommended by vendors and choosing one with a high reputation to uphold

Bill Peters relied on a lawyer in Portugal recommended by the estate agents selling the fractions of apartment 2A, but feels he was fobbed off with sparse, incomplete answers.

And he still doesn’t know exactly what it is he bought.

 

[1] ‘8 companies involved in multi million pound international carbon credit and wine investment scam ordered to close’, press release from the Insolvency Service, November 27 2015.

[2] ‘Oceanico defends its director barred in UK’ by Charlie Weston, July 7 2006.

[3] Article by Charlie Weston, as above.

[4] This happened at The Corran too.

[5] But registered in the British Virgin Islands.

[6] Articles and Memorandum or Association section 12.2(e).

Corran’s Tangled Web:Intentional Misrepresentation?

The strange story of some £16.7 million of lost investments in The Corran Resort and Spa, Laugharne, becomes ever more troubling. Investor Ian Dixon discovered that Kayboo, in administration since October 2016, sold 166 fractions of hotel ‘suites’ on land then owned by EHF Hospitality Ltd and which contained no hotel accommodation.

EHF Hospitality’s property at East House Farm is now with Secured Bridging Finance, the mortgagor. Secured Bridging Finance’s Alan Lister contacted West Wales News Review with the following information:

“Our company, Secured Bridging Finance Ltd (via our company’s wholly owned subsidiary company) owns Barns 3, 4, 5, 6, and 7, East House Farm. From time to time Mr Peter Burnett [director of Kayboo Ltd, East Marsh Operational Company Ltd, Pennaf Premier Group Worldwide Ltd and several other companies] enquired about purchasing our barns, but he failed to follow through.

“Our barns appear from the diagram in your article to be included in the fractional ownership scheme. We were not aware that our barns were included.

“While the five barns continue in our company’s ownership we would not have agreed, had we been asked, to their being included in any such scheme.

“We are concerned that our barns – and perhaps our company – may have been intentionally misrepresented as being under the control of the promoters of the scheme.”

EHF Hospitality’s sole current director is Matthew Roberts, who was declared bankrupt in September 2014. Companies House proposes to strike off EHF Hospitality, which has not submitted any accounts since the year to February 28th 2011. Former directors of EHF Hospitality are County West Secretarial Services Ltd (February 4th 2010 to September 23rd 2013) and Paul Manley, of Newquay, Cornwall, for a single day, February 4th 2010.

Paul Manley was, from February 29th 2016 to October 11th 2016, a director of Glendore Real Estate Ltd, which currently owns The Corran, and of the hotel operating company Plustocks Management Ltd (to October 13th). These two companies have replaced Kayboo Ltd, which owned the hotel, and East Marsh Operational Ltd, which ran it. East Marsh Operational Ltd is, like Kayboo, in administration.

Kayboo and East Marsh Operational Company director Keith Stiles remains a director of Glendore Real Estate and of Plustocks Management.

So round and round we go. Round and round.

Ian Dixon also reports that Kayboo sold 133 fractions of suites on land owned by Paul Manley, and that Malthouse Farm, the intended third phase of The Corran’s expansion, was not owned by Kayboo or by Kayboo director Peter Burnett, contrary to a statement made on the application for planning permission (which Carmarthenshire County Council rejected because of flooding and environmental risks, and which was also rejected on appeal).

Investors thought they were buying 999-year leases on land, and property on it, in many cases for their pensions.

But most of them were buying nothing at all.

The depressing story is far from finished.

Over-ambitious investment promises fail at Laugharne’s Corran Resort

When bank base rate is 0.25%, investments offering up to 15% a year, and an uplift in capital, look too good to be true.

In the case of the Corran Resort and Spa near Laugharne, Carmarthenshire, the promised returns were too hot, and have evaporated into the air above Carmarthen Bay.

Kayboo Ltd, the company owning the freehold of the resort property — currently a 21-room hotel with a spa – was forced into administration on October 18th.  Creditors were kicking up a fuss because, they claimed, they had not received the advertised returns, and they could not withdraw their capital.

Comments from unhappy investors  on the website ‘question.com’ include:

“I invested in a glitzy hotel scheme called Corran Resort and Spa. The hotel is still operating in Wales and hundreds of investors have put money in that scheme. I have been asking for buy back of my investment for more than a month but no reply from them.”

“It is not clear to me where all the funds of the investors went.”

“They were paying quarterly till Q3 2015. Then they stopped and I understand they stopped for everyone.”

During the final quarter of 2015, the Corran had to digest Carmarthenshire County Council’s decision to refuse a planning application (reference W/31936) for 200 lodges, a swimming pool and additional restaurant, because of the proposed location in a flood plan, and fears of significant ecological damage. Kayboo said it had a deal agreed with the US-based resorts, hotels and self-catering multinational Wyndham Worldwide to partner it in the lodges venture – but no permission, no well-heeled partner either, and disappointment for Kayboo’s directors Keith Stiles and Peter Burnett.

West Wales News Review’s previous concerns about the investment model were aired here in December 2015,

Investments in the Corran are still being advertised, for example on buytoletinvest.com and quantaxinternational.com. Buytoletinvest.com advertises annual returns of 10% net from years 1 to 10, and 15% between years 11 and 15, with assured resale at 125% of the original investment after year 5, rising to 150%. The promotion claims “Customers can also sell their property on the open market, typically for far greater capital returns.”

Buyers were offered fractions of a room, such as one-twenty-sixth of a ‘boutique suite’ for £18,000 in 2015, as well as whole suites, but the formula relied on high occupancy at very high room rates, such as £340 a night for dinner, bed and breakfast in a top-notch suite at a weekend.

Kayboo’s most recent annual accounts, for the year to March 31st 2015, show tangible assets of £14.5 million, up from £11.5 million the year before, and net assets of £867,092, more than double the year before. £1.572 million had to be paid to creditors within one year, and £14.167 million more after that — an excessively heavy obligation, especially if the physical assets had been optimistically valued.

The message? Mega returns might occasionally materialise, but they don’t come without mammoth risks.

PDR

Farmers claim Tywi cycle path puts livestock at risk

Are modern demands for biosecurity ousting the public from the countryside? Arguments over the proposed Carmarthen to Llandeilo cycle path and walkway highlight the issue. See also the Carmarthenshire Herald, September 16, p.5 

Farmers in the Tywi valley are opposing Carmarthenshire County Council’s intention to reopen parts of the trackway of the former Llandeilo to Carmarthen railway, as a path for walkers and cyclists.

The county council’s ‘Towy Valley Cycleway’ is a venture to encourage leisure cycling, as well as walking, in a safe environment. Farmers, though, have numerous worries about the scheme.

The council’s Environment Department, headed by Ruth Mullen, has applied for permission from the Planning Department to create a path between Nantgaredig and Whitemill, using part of the former railway trackbed and an existing footpath which hugs the banks of the river Tywi/Towy.

For William Richard Lloyd Davies, of Cwm Farm, Abergorlech Road, Carmarthen, flooding is a large risk and he would rather the path ran alongside the A40, or formed part of Celtic Trail route 47, which extends across south Wales and takes in Llanelli and Kidwelly on the way to Carmarthen, completely avoiding the Tywi valley between Carmarthen and Llandeilo.

xxxxx

This map, courtesy of Carmarthenshire County Council and based on a Crown Copyright map, shows the route of the  proposed cycle path between Whitemill in the west and Nantgaredig in the east. The section bordering the river is on the line of an existing footpath. 

Mr Lloyd Davies has told the county council’s planning department that any elevation, even a slight one, “in the creation of the path, will act as a barrier for flood water to run back into the Tywi, and create additional and sustained flooding resulting in property damage and financial loss to myself as a land owner and to other landowners in the area.”

He says that the path plan conflicts with the Welsh Government’s strategic framework for the eradication of bovine TB in Wales, which requires the immediate imposition of movement restrictions once disease is suspected, keeping disease out of clean farms and preventing cattle from coming into contact with the pathogen.

Helen Scott of the Carmarthen Veterinary Centre has told the planning department that several clients along the proposed route contacted her with concerns. Miss Scott’s arguments include:

  • There is no provision for biosecurity cleansing and disinfection.
  • Disruption of boundaries could allow nose-to-nose contact between animals.
  • Dogs could transmit Neospora caninum, a cause of bovine abortion, and worry livestock.
  • Bovine TB, infectious bovine rhinotracheitis and Johnes disease could be transmitted.
  • People could be in danger from livestock.
  • Local wildlife could be disrupted.

The National Farmers Union has also put in a letter of objection on behalf of seven members. One is Clive Jones of Beili Glas, Whitemill. He points out that a “substantial part of the path will run alongside the River Tywi. As one of the land tenants occupying a part of the Tywi valley affected by the proposed development, I have over the years experienced the extensive, regular and unpredictable flooding from the River Tywi. I have grave concerns as to the danger the unpredictable water levels poses to the public using the proposed cycleway. I also have fears of the risk that the river holds even when not in flood, as sections of the proposed cycleway are located in a remote area, anyone who may be tempted away from the path to swim or jump into the river from the river bank could consequently find themselves in distress, with no assistance near by. There have been recent incidents on the Tywi river where such activities have been fatal.”

A detailed map of the proposed path shows exits via public and private rights of way in case of emergency. This map also has a cross section showing that the three-metre wide tarmac path, with one-metre verges on both sides, would be enclosed with wire mesh fencing supported by timber posts 1.2 metres high.

As regards safety, the riverside location has much in common with coastal beaches which carry ‘no swimming’ instructions when sea conditions are potentially dangerous, and at times of flood the path could be closed.

Natural Resources Wales has concerns of its own, about protected species, and is asking for further surveys. Dyfed Archaeological Trust wants protection for a Bronze Age round barrow and standing stone, and sections of Roman road. CADW, concerned about the round barrow, said:  “unfortunately the application contains no information as to how the construction work will avoid damage to the scheduled monument”.

Llanegwad Community Council, though, has given its backing to the pathway plan, as has the Carmarthenshire Cycling Forum, which liaises with the county council, The cycling forum  expects the creation of the path to take some time, and possibly require the use of Compulsory Purchase Orders.

Glitzy Investment Scheme Sells Rooms In Laugharne’s Corran Resort….. But Is It Too Good To Last?

So, plans for 200 ‘lodges’ on East Marsh, Laugharne, have been rejected by Carmarthenshire’s planning committee (webcast, December 3rd).

The development, a major expansion of The Corran Resort and Spa, looked very tempting to Cllrs Anthony Jones (Labour, Llandybie) and Kevin Madge (Labour, Garnant) and, citing the potential economic benefits, they both urged the committee to approve the plans, against the recommendation of planning officers.

But the majority of members heeded the warnings about flood risk and environmental damage, and turned the application down.

The Corran lies in a C2 flood risk area. ‘C2’ means it lacks any significant flood defence infrastructure.

The hotel, owned by Keith Stiles and Peter Burnett, looks very smart and comfortable, to judge from the promotional material, and Cllr Madge was highly impressed when he attended a function there. The lodges, plus a swimming pool and a restaurant, would surely be super-stylish, but they would be in a high-risk flood area and would also affect an important Site of Special Scientific Interest, Laugharne-Pendine Burrows, where the Golden Plover overwinters. The development would also have changed the landscape of the Taf and Tywi Estuary Registered Historic Landscape of Outstanding Historic Interest.

Mr Stiles and Mr Burnett announced in May that Wyndham Worldwide, a US-based multinational company with annual revenues of around $5 billion, and already big in the UK holiday self-catering business with multiple brands such as Cottages 4 U, would partner them in the lodges venture.

It would have been interesting to see whether the lodges village would have relied on a financial model which is in place for the existing hotel. Rooms in The Corran Resort and Spa are sold to investors through intermediaries, thereby providing funds for expansion. Property investment firms currently selling space in The Corran include Emerging Developments  SL of Marbella, Spain, which is offering one twenty-sixth of a boutique suite for £18,000 (valuing the full suite pro-rata at £468,000), and is promoting the enticing potential returns from one package as 10% annually for ten years, 12% for the following five years, repurchase at 125% of the sale price in years five to 14, and at 150% in year 15.

The Villa Company is another property investment firm selling fractions of rooms in The Corran, from £18,000 and with returns up to 12%. “Invest with just £18,000 and receive on average £2,300 per year,” says an advert. “After 15 years the developer will buy back the property. Speak to one of our advisors now  to learn more or book a viewing trip to The Corran.”

Selling investments in rooms and part-rooms, whether in hotels, care homes, or student accommodation, has become big business, fuelled by low returns elsewhere and now by the 3 percentage points stamp duty surcharge on conventional buy-to-let properties, announced by chancellor George Osborne last month in the Autumn Spending Review.

Big business – but risky. Investments in rooms and part-rooms – including investments placed in a self-invested personal pension (SIPP) — are not covered by the Financial Services Compensation Scheme, and should be targeted at experienced, affluent investors who can, in theory, afford to suffer a loss.

The Corran is luxurious and pretty pricey by local standards – it has to be, to pay the returns expected by investors. A top-of-the-range suite is £225 per night for bed and breakfast mid week, £340 per night for dinner, bed and breakfast at a weekend. A double room is £175 a night for a mid-week B&B, £290 at the weekend with the addition of dinner.  A snip for an oligarch – and the presence of a helipad signals that The Corran works to appeal to international guests.

Now that the 200 lodges have been rejected, a question comes to mind: without a stream of new property to sell to investors, how easy will it be for The Corran to deliver the projected returns to those who have already invested?

On a wider scale, are the advertised returns from investments in hotel rooms really possible over the long term?

PDR

 

Post Navigation

%d bloggers like this: