MURDOCH University has offered $1 million to purchase the on-campus building of failed student accommodation company, Murdoch Lakeview Apartments.
The company, linked to health care millionaire Michael Boyd, fell into administration late last year owing $3.2 million to investors in the 105-leasehold unit project.
Administrators from insolvency firm Nogard Clohessy are in negotiations with the university to buy the property. Under the proposed offer investors would receive 20 cents in the dollar.
In 1998, Murdoch University sold a 25-year lease on the land to the Murdoch Lakeview scheme for $3.2 million, which it used to fund a student accomodation development.
However, Murdoch University’s initial $1 million offer has upset secured note holders, mostly elderly retirees, who place part of the blame for the scheme’s failure on the university’s lack of support.
Secured note holders spokesman Alan Steel said the investors involved in the scheme were a collection of elderly people who had virtually put their life savings into the project.
He said a large number of investors were being forced into financial hardship due to the failure of the project, with some having to take the pension or sell their homes.
Mr Steel said he believed part of the reason the student accommodation was not successful was that the university did not support or cooperate with the student accommodation scheme.
“The biggest thing was the promise from the university that it would support the project and refer students before promoting its own student village,” he said.
One source, with connections to the failed project, said that the university’s offer of $1 million for the $3.2 million building, which it has managed for the past 13 months, had placed it in a compromising position.
“The university gets a new building for a very low price,” he said.
Norgard Clohessy partner Vincent Smith said while there was an issue of the university support of the project, a number of other factors played a part.
Mr Smith said the project’s failure was linked to it being undercapitalised from the outset, being based on either optimistic assumptions or incorrect figures of student occupancy rates and a lack of management of the asset.
“There is also the question of the viability of the project,” he said.
Note holders received an interest rate of 11.25 per cent, well above comparable interest rates of the time.
Murdoch University spokesman Nathan Giles said the university had no knowledge of making any commitment to support the project and that it coordinated student accommodation on a needs basis.
He said the Murdoch senate would meet this month to discuss the building’s purchase.
“The biggest thing was the promise from the university that it would support the project and refer students before promoting its own student village.”
- Alan Steel
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