Why No?, page-5

Hi GPASAS

A bit of info for you about Couran Cove since your invested.

Chuck Feeny, not a dumb guy. Poured more than $400 million into this place and walked away from it with 2 cents. You would be wise to ask yourself why?
"Mr Feeney has invested some $300 million since launching the project in the mid-1990s, much of it to pay rates and levies on unsold property.
The resort made a loss of $85.9 million in the year to February 2011, and Mr Feeney placed InterPacific and four associated companies in voluntary liquidation."

We have had a weeks family holiday there every year for the last 5 years in early Jan. We've watched with bemusement as the past owners have tried so hard to gouge money out of the place. It's quite laughable. Ferry fees, bike tax, esky tax, extortionate marina tax, golf cart to your room tax, $9 for a XXXX(it's not even worth 10c). They no doubt all end up asking themselves, how did we get it so wrong?

We have been fascinated by the comings and goings of the past three attempts to make this place work. The truth is it doesn't and might I pessimistically add, it won't under these guys either. The major problem is the body corporate structure that everyone is under. Put simply, every unit/ecolodge has to pay $10k per year body corp + approx $2k rates and power. The body corp has a power station that generates power for the island. If it breaks or needs major refurb, add another levy on. Water is also supplied by the body corp. Heaven knows the body corp needs to be that high just to maintain the infrastructure that is there. But it all leads to a holiday home that you have to pour $12k per year before you even start on getting a return. As most property investors know, a house in the burbs that rents for 52 weeks of the year will outperform a holiday rental property that rents for 15-20 weeks of the year. Intelligent property investors will not be rushing to buy into this scheme. Selling renovated Marine Suites for $250k which is 30% cheaper than in 2006 gives an indication of the capital growth one can expect. "Our agents tell us," and "We should be able to," 'How can we not make money?' are the same statements that the past owners have come unstuck on.

Don't get me wrong, we love the place for a holiday. It works for us. We have low standards for the actual resort, we know what we're getting. We have our own boat and and tube and ski the Broadwater and pull back in to the Cove when done. Take the kids in the boat down to SeaWorld for the day. Pull up to the Pontoon at Runaway Bay Shopping Centre and get whatever food we want for mainland prices.

The complaints that you read are valid especially if you pay the rack rate. If we were stuck on the island without transport paying$300 per night for average accomodation and $9 for a beer as the majority of punters are, they tend to get grumpy and let all their Facebook mates know about it. The staff this year under the new management were great. Chalk and cheese to Craig Dowlings mob from last year. The excitement hasn't worn off and maybe they're getting paid properly.

Good luck with the investment but be wary especially if shareholders can get left with the can and preferred note holders walk (good chance).

Josh
An old Chimerian