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West Wales News Review — analysis with a sustainability slant

Archive for the category “Tourism”

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.

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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

 

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