Around 150 people who shelled out thousands for deposits on off-plan apartments at Salford Quays are still left in limbo four years after they were supposed to be built. Furious investors are rejecting a request from developer Fortis to surrender the leases for which they each paid about £100,000 - 50 percent of the asking price of the apartments - to convert them into loans.
The apartments in two blocks should have been completed in 2018 after investors from across the globe bought them off-plan. But all that remains on the site are empty shells. In a letter to the out-of-pocket leaseholders of the 'Herreshoff' and 'Danforth' buildings, Fortis says the deal would allow the funds to become a loan "enabling us to obtain a new planning consent and build out a new project".
The letter, seen by the Local Democracy Service, goes on to say: "This in turn would allow us to repay the funds paid to date by you on completion of the project. This proposal would only work if a large percentage of clients agreed to this revised structure and unfortunately this has been an impossible task due to a number of factors but mainly the understandable hesitation and concern that some clients have with the current situation."
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However, several investors we spoke to said they would not accept the offer, with one saying they had 'completely lost trust in the company'. The Fortis letter says: "As time moves on the construction industry continues to suffer significant cost increases which are making the task of finding a suitable resolution to the current situation more difficult.
"We are continuing to work on finding a viable solution, but a number of clients are now running out of patience and threatening to issue winding up proceedings against the company. Whilst we completely understand everyone’s frustration and the financial strains these issues have caused, we still want to try and get the best outcome for all the clients.
"If proceedings are issued against the company this will result in the project going into administration. Once you take out the administrator costs the residual value to be allocated to the creditors would be even smaller and creditors would likely get somewhere close to 10p in the £1 on the funds paid to date.
"This is out of our control and if someone does issue proceedings against the company then there is nothing we can do. With this in mind and the imminent potential threat of proceedings we wanted to try and offer you one final proposal to avoid the worst-case scenario of administration.
"We have looked at the potential value of the site in the event we could secure an alternative planning consent in the future. Taking this into account and all the risks involved we could raise finance against the asset, subject to being free from charge, which would allow us to get you a maximum return of 40p in the £1."
None of the investors wanted to be identified, but the Local Democracy Service has seen a list of the 40 Herreshoff investors, many of whom live overseas and elsewhere in the UK. One said: "I bought the apartment off plan and sunk my pension money into it and I've got nothing.
"I wanted it to be a base in the UK for myself and my kids because I love Salford because that's where I'm from." Another said: "I invested £156,000 and have seen nothing for it. I have been suffering from ill health for a long time and I was going to use the investment to fund my retirement, but now I'm going to have to sell my house.
"I thought it would be a good investment. They have taken £12 million and all we've got are two empty shells of buildings . A 53-year-old medical doctor said he would have to prolong his career after investing £168,000 in his deposit which he fears he will now lose.
"I have invested my entire career savings into the property and I am in no other pension scheme," he said. "I am absolutely devastated. I will now have to continue working long after I would've otherwise retired."
One investor prepared to be named is Philip Austin, who lives on the south coast. He said: "I have spoken at length with a firm of local lawyers and they are preparing a claim against the developers for six to seven investors, although I have been in email contact with about 20 of them."
The development hit difficulties in January when Beaumont Morgan Developments, the company behind plans for 900 apartments in two blocks on the site of former office buildings at Furness Quay went into administration. Beaumont Morgan was the construction arm of Altrincham-based Fortis Group.
A spokesperson from Fortis told the Local Democracy Reporting Service the original development had run into difficulties with concrete frames in the process of adding floors to the existing buildings. "We've been trying to find a solution for two to three years," they said. "The proposals we've come up with need the agreement of all the leaseholders. Meanwhile, there have been more and more problems with the site.
"We've submitted a new planning application and we have been in discussions with Salford city council over a Section 106 agreement [where developers make a contribution or carry out work in the local community as part of the planning permission] ."
They said that the deal offered to investors to convert their leases into loans could possibly result in a return on their investment of an additional 30 per cent 'once the apartments have been built out'.
"We are not running off with their money," they said. "The funds that have been paid into the job are still sitting there. We are trying to get a resolution. But if they force us into administration the chances are they might not get anything."
The Fortis website says the new 'revised' planning application has been submitted for 336 units and ground floor retail units 'taking the total number of residential units at the Fortis Quay development from 693 to 898'.
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