Banksia, falling over with 600 million at stake, is nothing compared to this one....but so far its frozen...and seems like some other dodgy stuff going on , on the gold coast property
THE fine people who work the phones at LM Investment Management don't find Peter Drake mysterious. Rather, they say the dashing figure behind the $3 billion fund empire is not mysterious at all.
He is always jetting about somewhere, though. And it is hard to escape the conclusion that - at least for this lowly reporter who has been striving to contact him for months - he is at least elusive.
Many of Peter Drake's investors, whose savings are frozen in LM Investment Management's funds, would like to see a little more of him.
Take Sam Leonardi. The retired cane farmer from Mossman in far-north Queensland needs an operation on his knee but can't afford to pay the gap. His life savings of $220,000 are frozen in the LM First Mortgage Income Fund.
''Haven't seen a dividend for three years,'' he says. "I've been fighting with them for years now to get my money back.'' He can't get Centrelink payments because the money in LM is counted, ironically, as an investment.
Will Peter Drake grace investors with his presence next week at the big meeting for LM's flagship First Mortgage Fund? To the chagrin of those assembled for the last meeting, he was dashing about in foreign climes.
This time, Rodger Bacon of Trilogy fame is seeking to wrest the management rights from him. It could be a gory duel for the Scarlet Pimpernel of Australian funds management.
After the financial crisis in November 2009, about $25 billion in funds around Australia were frozen. It is now about $11 billion.
Gold Coast mortgage funds were especially hard hit. Of LM's funds, four are frozen, but among those that remain open is LM Managed Performance Fund.
This ''unique opportunity'' caught my eye because 60 per cent of the fund is a loan to a property development named Maddison Estate, about 30 kilometres north of Surfers Paradise.
According to company searches, the mystery man himself, Peter Charles Drake, appears as the sole director in the company that owns the property.
Peter Drake has a grand vision for Maddison. He has struck a memorandum of understanding with world surfing champ Kelly Slater to build the maiden Kelly Slater Wave Pool.
Gardening guru Jamie Durie has signed on to do the landscaping and Olympians Sam Reilly and Natalie Cook are on board as all-star ambassadors.
The numbers surrounding Maddison are just as impressive as the celebrities themselves. More than $217 million of the $370 million in the LM fund is committed in this single project, yet it seems investors have only a second mortgage.
Suncorp is owed $22 million ahead of investors in LM. And of the $217 million advanced on Maddison to date, $101 million has gone on interest and borrowing costs. Interest has to be paid to Suncorp, distributions paid to investors, and management fees paid to LM. These are now 5 per cent but can rise as high as 10 per cent each year. Let's not forget the fees to financial advisers - those who tipped the investors in receive another 3 per cent per year.
Back of an envelope, you could smoke $30 million a year, on this one project, just to keep the money flowing.
The Australian Financial Review has mooted a market value as low as $30 million on Maddison. After all, the Queensland hinterland is hardly booming.
LM rejects this. Its own valuation has grown a lot lately, in fact. In September 2011, the largest loan in the fund was $142,155,456. This had risen to $191 million by July 2012, to $211 million in August, and to $217 million in September.
Notwithstanding this impressive increase in the value of the Maddison, $75 million in less than a year, our Gold Coast operatives confide that the site has not been cleared and other people seem to be living on it. Neither are any surveyors' pegs visible.
Mind you, a lot of money has been spent; so Jamie Durie may well bob on the scene at any minute, hoes at the ready. These big projects take time and painstaking preparation.
The work has been well and truly done on the financial preparation, however. Peering behind the various entities, the LM group is headed by Peter Charles Drake. The owner of the Maddison property is Coomera Ridge Pty Ltd, and this company has one director, Peter Charles Drake.
The second mortgagee, which presumably has been provided with the money from investors, is a company called LM Coomera Pty Ltd (renamed Maddison Estate Pty Ltd) which has one director also, Peter Charles Drake, and one shareholder, LM Coomera Holdings Pty Ltd.
This company also has one director: you guessed it, and one shareholder, LMIM Asset Management Pty Ltd.
LMIM Asset Management Pty Ltd has only one director and one shareholder, too. Yes, that's right.
Peter Drake the lender must talk to Peter Drake the borrower to establish if the loan is performing, or in default. Perhaps, to be arm's length, one Drake exempts the other from attendance.
