The Serious Fraud Office (SFO) has opened investigations into suspected fraud related to three major property developments.
£77 million Pinnacle Angelgate in Manchester was developed by Pinnacle (Angelgate) Ltd and promised to deliver two towers comprising 344 homes. Construction stopped in 2016 on the collapse of the contractor, PHD1.
The company has been liquidated and investors are thought likely to lose £23.7 million, according to a report by administrators. Unsecured credits are unlikely to receive any compensation.
An investigation showed that the developer had withdrawn nearly £30 million of apartment buyers’ money but had been unable to show where the money had gone. The sales agent, another Pinnacle company called Pinnacle MC Global Network, was paid around £13 million in commissions. However, this left the developer £10 million short of the pre-agreed design and build costs, before any of the construction work had started. Project costs later doubled within a nine month period, to £43 million. Investigations are continuing into the ultimate beneficial owner of Pinnacle and its parent company, MVG Holdings.
Two other Pinnacle developments have since been bought, The Quadrant and Victoria House, both in Liverpool, after the special purposes companies that owned them entered administration. Neither is the subject of SFO investigation.
The Angelgate development site was later purchased at auction in July 2018 by Far East Consortium for £5.2 million and is not impacted by the SFO investigation.
North Point Pall Mall, Liverpool
£90 million North Point Pall Mall in Liverpool developed by North Point (Pall Mall) Ltd promised to provide a 366 home scheme. The company is now in receivership.
The part-built residential scheme has since been demolished and the site purchased by the Elliot Group. The new company is planning to refresh the scheme with residential and employment opportunities, but is not affected by the SFO investigation.
The £200 million New Chinatown scheme in Liverpool, developed by China Town Development Company Ltd, included 800 apartments and 120,000 sq ft of office, as well as a 140 bedroomed hotel. China Town Development Company is a North Point Global special purpose vehicle that was incorporated in 2015 and is still trading. As with the Angelgate development, construction stopped in 2016 on the collapse of the contractor, PHD1.
The company was purchased by share purchase in 2018 by Great George Street Developments which aims to restart work on the site, offering a fresh three phase scheme comprising apartments, commercial space and town houses, plus shops, restaurants and bars, and a 144 bedroom hotel. Liverpool City Council owns the freehold.
All three controversial property developments have suffered a series of failed contractors and developers. The developments had attracted investors from the UK and overseas, with many investors claiming to have lost large sums of money after paying up front for flats at the failed developments.
The SFO executed search warrants on 17th January at an undisclosed number of properties across the country in conjunction with Merseyside Police and the North-West Regional Organised Crime Unit. Investors in the three property developments have been invited by the SFO to provide details of their investment via a questionnaire on the SFO website.