Australian retirees face a $1billion property loss

The Westpoint, Fincorp and now ACR could see thousands of small investors lose up to $1 billion, with many retirees sucked in by TV advertising.

Collapsed property group Australian Capital Reserve targeted retirees in a string of advertisements offering returns of up to 9 per cent -- much less than a professional investor would require for the same risk.

ACR advertised heavily on TV in the "retirees'' timeslot -- 1pm to 3pm -- and through newspapers.

The company, which went into voluntary administration on Monday, had raised more than $300 million from about 7000 small investors.

ACR issued unsecured deposit notes, using the money raised to finance apartment projects being developed by its development arm, Estate Property Group, in NSW and Victoria.

In 2005, ACR's Prospectus 7 offered one-year returns of 8 per cent and up to 10 years at 8.9 per cent.

Real estate consumer advocate Denise Brailey said she alerted the Australian Securities & Investments Commission to the company's activities in December 2005.

"ASIC should have gone into a heavy campaign to warn them about the model being presented,'' she said.

ASIC placed a final stop order on ACR's ninth prospectus in April. The regulator's handling of property-related collapses such as Westpoint and Fincorp is already under scrutiny from the Senate Estimates Committee.

The role of trustees will also come under the spotlight in committee hearings with Bendigo Bank-owned Sandhurst Trustees involved with both Fincorp and Westpoint, while Sydney-based Trust Company is trustee for the ACR noteholders.

In a statement yesterday, Trust said it was not aware of a "breach of the obligations by ACR under the terms of the Trust Deed''.

Trust's executive general manager, Vicki Allen, said Trust had appointed an independent expert to review ACR and its property arm's financial position.

A statement from ASIC said Trust had been in talks over ACR's financial position for the past two months. Trust was also looking for updated valuations on ACR's properties, ASIC said.

Adminstrator McGrathNicol will oversee the 26 companies in the group which own 21 property developments in NSW and Victoria.

The first meeting of creditors and a separate noteholder information session will be held on June 4.

Ms Brailey, who is employed by litigation funder IMF (Australia) Ltd, said yesterday the group had lured mum-and-dad investors through a network of referral agents that included accountants, solicitors, real estate agents and financial planners.

Source: The Australian