Blame game over Perth city tower

THE receiver of the $500 million Raine Square project in Perth’s CBD has rejected claims by developer Luke Saraceni.

Mr Saraceni has said Bankwest ignored his refinancing proposals in order to take control of the asset at the cheapest possible price.

KordaMentha principal Mark Korda said proposals by developer Westgem Investments, jointly owned by Mr Saraceni and fellow developer Hossean Pourzand, had been unsuitable for the banks, which appointed receivers on Tuesday.

The receivership was triggered when Westgem missed a $50m payment due on December 31, following delays to the troubled project caused by a bitter dispute between Westgem and original builder Salta Constructions.

“The banks have given them every opportunity to sell down assets or find a white knight to meet the payment,” Mr Korda said. “The banks were in very lengthy negotiations” with Westgem.

But Mr Saraceni accused the banks of failing to discuss his refinancing proposals. He questioned the motivation of the banks in taking control of the project, saying it was fully funded to completion and would generate a surplus.

“Over . . . months, Westgem had tried to engage with the security holders to progress a range of commercial proposals” intended to reduce the banks’ exposure and refinance the associated debt, Mr Saraceni said.

“The security holders did not at any time engage with Westgem” on any of these proposals generated by Westgem, he said.

Date: 13 January 2011 | For the full report, please visit http://www.theaustralian.com.au

Raine Square tower in receivership

RECEIVERS have been called in to the $500 million Raine Square development in the Perth CBD area, after the developers missed a payment.

Mark Mentha and Cliff Rocke of KordaMentha have immediately moved to manage the building site, after developers, Westgem Investments Pty Ltd, missed a $50 million payment on December 31.

Westgem is a company owned by prominent Perth property developer Luke Saraceni and his associate Hossean Pourzand.
The project’s financiers BankWest and Bank of Scotland International called in the receivers to Westgem.

“Under the facility agreement with Westgem, there’s been a breach now for some time,” Mr Mentha said.

“The financiers have been in protracted negotiations [with Westgem], affording every assistance and opportunity to sell assets or to find a joint venture partner or white knight but unfortunately they hadn’t been able to do that.”

Mr Mentha added that KordaMentha had been monitoring the project on behalf of the financiers for the past 18 months.

The building site has been affected by several delays and cost increases, including an eight-month delay last year when the original construction company, Salta Constructions, stopped work over in early 2010.

Building company Probuild took over construction in September 2010 and the receivers said it was making good progress, with the building scheduled to be completed by July this year.

In a statement, Saracen Properties, the parent company of Westgem, said it did not believe the appointment of receivers was necessary given the strong financial metrics of the project.

It added it had put forward a number of commercial proposals to BankWest which were being considered before receivers were called in.

The project is 80 per cent complete, and Saracen said it is fully funded for completion.

A spokesman for Bankwest said they were still looking at moving into the building early next year.

“Our overriding priority is to work closely with all our customers on a case-by-case basis to try and assist them with any difficulties that they may be experiencing, as we have done in the case of Westgem Investments.

“Bankwest also confirms it is the head tenant for the commercial tower in Raine Square and is excited about moving into our new headquarters.

“Our planned move is scheduled for early 2012 and we expect that the appointment of receiver and managers will cause no delays to this timetable.”

The building has 44,000sqm of office space – all of it already leased to BankWest which plans to move some 3000 employees into the 20-storey tower next year – and 13,000sqm of retail space, which has pre-leasing commitments of 70 per cent.

There will also be a 227-bay car park and a 650-seat food court.

Tunnel works that will connect the building to the new William Street train station are anticipated to be completed in 2012.

Date: 12 January 2011 | For the full report, please visit http://www.perthnow.com.au