Change of ownership2

A new decade has arrived and with it the news that the Pleasurama site has a new (old) owner. The owner of the freehold is Ltd Company Ramsgate Development Co Ltd which up to November 2019 was owned by Colin Hill who used his puppet retired accountant as owner of the 100 shares, however as of the 3rd November 2019 these shares were transferred to Martin Carlo Rigden making him not only the lead director but sole owner of the Ltd Company.

At the same time the charge imposed by the Mintal Group (actually Colin Hill again) was satisfied in full. This implies that £3,434,346 was paid to Colin Hill by the new owner to give Martin Rigden clear title to the freehold

However what also seems to have happened is the money spent on the site is now in excess of £11M which seems to be an extraordinary sum considering what has really been spent on it over the years.

Accounts 2019

Expenditure
In 2013 I wrote a blogpost (read it here) which laid out the known expenditure :-

Item	Narrative	Cost	Evidence
Lease	3X 199 years	£550000	Dr Sue McGonigal
Deposit	Refundable to SFP	£1000000	Dr Sue McGonigal
Cliff repairs	Contribution	£100000	TDC & Painter
Roadworks and Storm drain	KCC Highways	£600000	Painter to BBC
Planning application	FRC Frewster	£22000	TDC
Total		£2272000

Since then (bar maintenance) the only known maintenance on the site is the cost of the site obelisks which according to Cardy weren't paid for from Colin Hill's funds (this amount was in the region of £750K according to the sub-contractor who did the actual work.

Then in 2016 Ramsgate Development Co Ltd bought the freehold for £3M however they didn't actually pay this amount as the deposit of £1M was deducted, the interest on said deposit was deducted as was the cost of the 3x199 year leases @ £550K meaning just under £2M was paid over.

That makes a figure of around £5M and not the £11M that appears in the current accounts.

Stopping up order

Kent County Council are applying for a court order to re-designate a piece of highway to enable clear title on the piece of land as shown on this title map.

Why is this important is because currently the area marked in pink is still designated as a roundabout and highway because when they moved the roundabout up towards the tunnels in 2007 the legal work to change its designation should have been completed at the same time.

The original site

This shows the work being carried out 2007-8 clearly marked is the old road, carpark and roundabout

This shot is from the new roundabout by the tunnels showing the line of the promenade and where the original boundary line.

By 2009-10 this boundary had been moved to where it is today and at the same time Cardy decided to "borrow" some of the promenade to place their site huts. This actually saved them money as the promenade made a more substantial support for the huts

The last picture, courtesy of Michael Child's blog shows that the installation of the wall was in addition to the original boundary wall being erected.

Now why is this important:
1. It shows that KCC, who built the new roundabouts, have allowed Cardy to build on their highway and it shows that they were incompetent in allowing this to occur.

2. It also shows that when the site freehold was transferred to Cardy Ramsgate Ltd in 2016 part of the land being transferred was still a designated highway.

It also means that when this stopping up order is achieved then there will be nothing stopping the freeholders selling it on with extant Planning Permission.
From this

To this

I know which is best for Ramsgate.

Why didn't Labour follow through with terminating SFP's involvement

There has been much speculation and political hand wringing over the reasons why Labour, under the previous administration, didn't terminate Shaun Keegan's (SFP Ventures (UK) ltd) attempted landbanking scheme on the Pleasurama site.

The brief details are a Development Agreement (under Ezekiel & the Tories) in September 2006 and its variation in September 2009. The variations meant that the building had to be completed on the 28th February 2014, Something that was apparent was never going to happen and pressure was applied to Labour and TDC in Winter 2013 to serve notice of default and take back the land.

There were members of the local community that attended the Overview and Scrutiny that requested advice from Pinsent Mason LLP as to the correct procedure. When February came and went we all assumed the default notice had been served it came as a kick in the teeth when discussions resumed with Keegan and Cardy and to date no reason has ever been given as to why the advice from the lawyers changed.

The purpose of this blog is to speculate as to why from December 2013 when the legal advice seemed to be to "serve notice" to March 2014 "we have changed our minds"

One area that has always been clear is that the DA's didn't have a "Long Stop Date" incorporated within them. Could this have been incompetence by TDC lawyers (Eversheds LLP) or were they asked not to incorporate such a date (It would have meant that failure to complete would have meant an easier job of removing SFP). It should have led to TDC having set dates to manage the project against, something they had been heavily castigated for not doing in the District Auditors report in 2001/2

I repeat "Effective project management procedures should be adopted for all projects as early as possible in the life cycle of a development scheme"
In the summary of the 2004 report the auditor is satisfied this is being addressed

Now you would have thought that this was a priority especially in view of the "materiel defect" of failing to incorporate a "long stop date".
At many of the O&S meetings we attended we asked whether there was one officer tasked with overseeing the project and the answer was always NO.

Could it be that TDC's failure to keep on top of the project influenced Pinsent Mason's advice and that when engaged TDC didn't fully brief Pinsent Mason.

I wonder what else TDC might have not told them?

It was said at the time that SFP had complained that they wouldn't be able to use Marina Drive because of the weight limit (personally they had 9 years to discover this fact) but maybe they decided to use this material fact as an excuse. It was certainly cited by O&S as an excuse given by Keegan.

There was also much speculation that Keegan was prepared to cite an ex-councillor for attempting to sabotage the negotiations whilst he was a serving Councillor.

In the end Labour TDC didn't follow through with trying to remove Keegan an act that has upset many in Ramsgate and possibly led to their failure in the May 2015 elections.

Labour (in my opinion) need to come clean with why they took the way out they did and totally screwed over those who had campaigned to remove Keegan & Hill from interfering with Ramsgate Seafront.

BUT nothing will excuse the failures within TDC to manage this project whether it be deliberate actions or just plain incompetence but what it really shows is Hill and Keegan are so much cleverer at levering money out of Thanet District Council. I really wonder if this is the real reason TDC do not want the Pinsent Mason report made public. No one wants to be seen as an easy mark.

I know which view I prefer

The gift that keeps on Giving

Today the latest on Companies House shows a charge secured on the recently acquired Freehold (Land Registry ref K838703) by a company registered in Panama. Another well known tax haven but also infamous for hiding the details of ownership from us lesser mortals. In this case however they may have made an error because all charges are now available for download from Companies House. And guess what? Who owns Mintal none other than the moneyman Colin Hill first identified as behind this lash up in June 2013

http://pleasurama.blogspot.co.uk/2013/06/the-money-man-controlling-sfp-and-shaun.html 

 So it seems that promises made by Cabinet members verbally have been wiped out by people far cleverer than the TDC officers tasked with ensuring everything is above board. Now it seems there are two stories doing the rounds firstly that Colin Hill has stumped up the £3M so the freehold can be purchased and along with the £5M already invested has increased his stake to £8M. The Second story, which I favour, is that far from actually buying out Keegan/Hill Mike Stannard has done a deal with Colin Hill and still owes Hill £5M which had already been invested into SFP Ventures (UK) Ltd and that sum is what Hill wants to protect hence the charge on Cardy Ramsgate Ltd.

What is abundantly clear is TDC complete on the sale of the Freehold thereby absolving themselves from any further interest in the ownership of the site. Now all they have to do is hope the Development Agreement to build is watertight and that Mike Stannard can actually build out the site because if he cannot the ball is firmly back in TDC's hands assuming they have a watertight Development Agreement. (Something they have a poor track record of enforcing)

Interesting choice of lawyer to witness especially to those that followed the Ezekiel trial.

Details of the last unaudited accounts by Keegan's accountants no less

Here is a link to Ian Driver's Blog

http://thanetgreencouncillor.blogspot.co.uk/2016/08/ramsgate-pleasurama-financier-colin.html 

 Any further news I will add to this later
Council Statement
"
Thanet District Council can confirm that the sale of the former Pleasurama site on Ramsgate seafront completed on Wednesday 20 July 2016 with Cardy Ramsgate Ltd.
The council has received the monies from this sale.
The site has transferred to the south-east based firm who will be responsible for delivery of the scheme.
Once complete, the development is set to include a hotel, residential apartments, leisure/retail facilities, cafes, shops and a playground. This is in line with the existing planning consent.
The scheme is expected to employ up to 200 people. This would include opportunities during construction and jobs in the hotel trade, commercial units and in the servicing of the residential areas.
The council understands separately that Cardy Construction Ltd. has filed a notice of intent to appoint an administrator. The council does not have any further information in relation to this process at this stage.
The Sale Agreement for the site was completed on 13 March 2015. This marked the exchange of contracts binding the council to complete the transfer of the land.
As with the original development agreement, the council retains ownership of the cliff wall and completed works here in April 2016."


Last May this is what an FOI asked
Dear Thanet District Council,
Please provide details of any payments the developer(s)/buyer(s) of the Royal Sands Development, Ramsgate is/are contractually bound to pay Thanet District Council as per any legally extant planning permission, development agreement, contract of sale, memorandum of understanding OR any other document which might contain this information.
Where payments have or will be made please provide the following information for each amount:
(a) Name of organisation providing the payment
(b) Purpose of payment
(c) Date funds paid/will be paid to the council
(d) Details of any conditions attached to payment
Yours faithfully,


and the response


Thank you for your communication received on 15/04/2015 where you
requested information about contractual payments regarding the Royal Sands
Development.
 
I apologise for the delay in responding to your request, it is the
councils intention to publish this information once the legal process
concludes so this information is exempt under section 22 of the Freedom of
Information Act and is therefore being withheld.


Whether anyone believes the current statement from TDC or not it hasn't gone nearly far enough to answer the above FOI.

A perfect storm

Thanet's beleaguered UKIP council are currently finding life tough at the top. Firstly they are in danger of losing Dreamland (where they own the freehold) to receivership.
Secondly the saga of Manston airport rumbles on and yesterday they announced spending another £50K of ratepayer's money on another viability study which they say will feed into the proposed Local Plan. This despite spending £100K already.

Thirdly the latest news coming out is that Cardy will be appointing an administrator as they are likely to be looking for a buyer "Workers for Cardy Construction Ltd, based in Canterbury, report they were told to collect their tools due to a stop on works this morning." Full story here

For regular readers of this blog will know that after the 2009 Development Agreement ran out in February 2014 TDC have put their faith in Cardy buying out Shaun Keegan's ltd company SFP Ventures (UK) Ltd and this has recently occurred See here 

It seems now the carefully constructed change over has started to unwind. So where does that leave Ramsgate? And TDC?

The current situation is Cardy Ramsgate Ltd (Mike Stannard) owns SFP Ventures (UK) Ltd which in turn owns 3 leases sold for £550K by Sandy Ezekiel's Tory administration in 2009 and further to that £1M was paid to TDC as a surety. 

SFP's accounts show that just over £5M has been deposited into the company by means of director loans, so it seems likely Cardy have input some of that money (into the tombstones) and the rest by Shaun Keegan.

Has this been paid back to Keegan when Cardy Ramsgate bought out SFP?

Has the surety money (£1M) been used for the deposit to TDC?

The state of play with TDC and Cardy is explained here

So contracts may have been exchanged but the purchase of the freehold has yet to be completed so it seems Pleasurama is in the same position as Dreamland that is TDC still hold the Freehold but the leases are held by a company in financial difficulties.

What hasn't changed is there is extant planning for 107 apartments which remains on the site in perpetuity.
It is possible that a new buyer comes forward and takes over the development however if any new buyer takes over Cardy Ramsgate Ltd and decides to 1. continue the current incomplete deal with TDC 2. Decides to put in New Planning (which would trigger an expensive Flood Risk Assessment) Either way the losers are the tourist industry and by extension the people living in the area.
It was May 1998 when the Pleasurama site caught fire and in looks like the people of Ramsgate have a 20 year anniversary fast approaching without resolution of the site.

What next aliens taking over?

UPDATE:
On the 20th July 2016 Mike Stannard, owner of SFP Ventures (UK) Ltd via Cardy Ramsgate Ltd completed on the deal with TDC by payment of approximately £3M. TDC then would have handed over the freehold and taken back the 3x199 year leases issued to Shaun Keegan in 2009.

We await a statement from TDC as to the development agreement and its long stop date. When TDC issue a statement I will update.

What's a million between friends

For those who have not followed the twists and turns of this saga a brief resume of the shenanigans in 2009 under leader Ezekiel.

The former legal eagle at TDC concluded in 2014 that TDC did little "due diligence" on SFP Ventures (UK) Ltd and even though they paid TDC £1M surety in September 2009 the risk to TDC was too great and the Chief Finance officer was right to recommend not to agree the 2009 amendments.

So where did this £1Million come from. According to the Finance Officer it was via the UK clearing banking system however when pressed she said they had NEVER identified the source of the funds. However it is clear from the letters in TDC's possession this money had arrived via Tortola, one of the British Virgin Islands. A tax haven in anyone else's eyes, however sadly not in TDCs.

SFP Services Ltd is really SFP Services Inc based in Tortola and run by Colin Hill the money man behind Shaun Keegan.
Now where is this money now?
It seems TDC doesn't want to answer this question although it seems likely this is the same £1M referred to by Lin Fairbrass in her answer to "What's happening with the Cardy build"

It seems the money has already been partially spent however the money seems to have passed through many hands so identifying the true source seems to be a moot point as it has effectively been well washed.

Gagged

It seems our local Green Councillor has been gagged by TDC. Story here in the IOTG. It beggars belief that TDC could get into such a pickle over some legal advice. The perception, of course, is they have something to hide.

So let us examine what that legal advice may be.

Firstly the background to this is Cardy have approached TDC officers to solve the ongoing saga over SFP Ventures (UK) Ltd as TDC had served a breach notice on the Company due to inaction on their part.

As part of the process of allowing Cardy to take over SFP the Council have requested 3 pieces of information from experts. Firstly a formal valuation of the site by Strutt & Parker. Secondly a full structural survey of the cliff face, and thirdly legal advice from Pinsent Mason (PM). This last it seems is what Ian Driver removed from the Council office and is subject to a Legal Injuction to stop him disseminating the contents.

The valuation, also subject to the injunction,  is hardly rocket science as any competent accountant or estate agent could easily work this out based on the 2005 valuation which, since the then council legal officer announced as no longer on "pink", is in the public domain.

So lets examine just why Ian Driver has been gagged.

The Council Legal Officer, Harvey Patterson, announced at an Overview & Scrutiny T&F group meeting that due to the passage of time all paperwork prior to the 2009 Development Agreement should no more be kept secret so that means the suppressed Legal Advice cannot be anything to do with that. Neither is the prior advice concerning the serving of the breach notice as that seems to have been released into the public domain despite still being on "pink".

So what could this new advice be and just why is it so controversial? Firstly lets see just what the legal advisers were asked to do. To get to a point where PM can give advice they have to test why TDC are in this current predicament, this would indicate they have questioned the officers and examined paperwork to see how the current situation arose. They then would have used that 20/20 hindsight knowledge to formulate their advice.

So discounting their current advice to Council as that may have some confidential aspects however it is widely known that Cardy will be "allowed" to be the Developer once they purchase SFP Ventures (UK) Ltd so it isn't a huge secret and they are "the only game in town" it then becomes apparent that the information given to Pinsent Mason by officers may potentially be "Politically sensitive" or as is more likely highly sensitive to Officers on 2 counts.
Firstly to get to a position where appropriate advice can be given officers may have had to be completely honest to the lawyer and if they had known that information would be leaked they would have been less than forthcoming if they meant they would be perceived as inept.
Secondly it may be that the story being spun would be somewhat scuppered if the real truth was able to be read by the general public hence politically sensitive.
People already have a perception of how incompetently TDC operate however that would be far worse if the real truth came out.

 As an example of what transpired in 2012 FORS discovered that the freehold of the site was being requested by Shaun Keegan and we petitioned to stop it being handed over by TDC until at least the hotel was completed to "Shell & Core" however papers given to me show that the Freehold was going to be handed over for the surrender of the 3 leases (cost £550K) plus a payment of overage £3M plus a payment of £30 (to cover the legal cost of dissolving the leases) making a total of just under £3.6M not far short of the leaked site valuation. This "sale" of the freehold was kept from the public as we were led to believe the leases were important to Keegan on top of the freehold.

Further we are being told that Cardy approached Officers with a deal however what is clear from the leaked "Golden Balls" email it was in fact TDC who made the 1st approach to Cardy in August 2013 and not as we are led to believe Keegan's legal adviser who bought it up in their mediation meeting after the breach notice was served in July 2014. Also the Task & Finish group were aware of this in April 2014.

It is entirely possible that there are other reasons why this legal "advice" is being suppressed however what TDC politicos need to understand is the Public perception of TDC is at an all time low and people have very long memories. Its like the X-Files "the truth is out there".

Cabinet Decisions

16th October 2014 

Cabinet met in open session to discuss approving the officers in finalising a new development agreement with a reputable local builder Cardy Construction Ltd

10.1 It is recommended that Cabinet authorise the project team (in consultation with the S151 Monitoring Officer, Head of Paid Service and Cabinet Member for Finance and Estates) to progress with negotiations involving variations to the existing agreement (or a new agreement as provided for within the existing contract) in respect of Royal Sands. These negotiations will be undertaken in accordance with existing delegations and within the parameters detailed in paragraphs 3 through to 7 provided best consideration is achieved.
10.2 It is recommended that if further information becomes available during these negotiations that would result in there being a significant negative effect on the consideration owed, particularly as a result of the cliff wall surveys, then the matter should be brought back to Cabinet for further strategic review.

Part 1 video here

Part 2 video here

Once you remove the histrionics and the political utterances what is left is mainly centered around whether the £3.79M for the freehold is sufficient and whether TDC's duty of care around any future purchasers of the leases for either the hotel, apartments or commercial shops.

Any "Best Consideration"  must include things other than just cash

"The terms of the Consent mean that specific consent is not required for the disposal of any interest in land which the authority considers will help it to secure the promotion or improvement of the economic, social or environmental well-being of its area. Where applicable, authorities should also have regard to their community strategy. Although these criteria derive from the Local Government Act 2000, their use in the Consent is not confined to authorities with duties and powers under that Act. Therefore, authorities not covered by the 2000 Act can also rely upon the well-being criteria when considering disposals at less than best consideration. It will be for the authority to decide whether these decisions taken comply with any other relevant governing legislation. In all cases, disposal at less than best consideration is subject to the condition that the undervalue does not exceed £2,000,000 (two million pounds)."

Cliff Face

7.1 The area of cliff wall adjacent to the site is approximately 4 meters from the developed out property boundary. The cliff wall forms part of common land and the council recognises its duty to ensure that all reasonably foreseeable steps are taken to ensure it is adequately maintained.

7.2 The council undertakes regular inspections of the cliff wall to monitor the cliff face for movement and repairs. The council will ensure that new detailed surveys are undertaken in the area of cliff wall and all the reasonable concerns that have been raised will be investigated with the outcome published.

7.3 Part of any contractual modifications will require careful consideration in respect of any works required to the cliff wall. Cardy have agreed to make a capital contribution and are also mindful that in order to sell the units they will need to provide evidence to any buyer and their insurers that the cliff wall is safe and there are mechanisms for adequate ongoing repairs.

7.3 Cardy and the council project team, plus external technical civil engineering experts will carefully consider the outcomes of the surveys and work towards a solution that means that the repairing obligations to the council for ongoing maintenance will be kept to a level no higher than that which they would have been should the development not have proceeded.

I might add more later

does it add up

After the meeting with officers Edwina and Mike yesterday at Cecil Square, Margate I though I would stick my accountant hat on to see if the figures for the Royal Sands development add up for Cardy Construction.

As a prelude to this I would just say the building trade and therefore the saleability of the units have change greatly over the last few years and it is apparent that the new development, nearing completion, along the way is suffering as only 2 units so far have been reserved leaving a cash flow issue for that developer.

It is also true that hotels nowadays aren't being built by hoteliers but rather leased from a service company so effectively they are only tenanted and the proposed 60 bed 3* hotel being suggested is likely to go the same way. Its future value is more likely to be determined by its annual lease times 10 than a sale price. The same is likely to occur with any restaurants and coffee bars.

So lets do the sums 107 apartments @ average £300K equals £32M + hotel   + A3 units

assuming to build the hotel and fit out would cost around £5M you would look to a value of £7M to turn a profit, so 60 rooms @ £90 per night with occupancy of 78% equals turnover for rooms @ £1.49M less overheads @ 70%. this 70% would include annual lease of £700K as that's normally how hoteliers work in today's climate. The same would apply to the A3 use. That would mean the site fully developed would have a value of approximately £40-£42M. That on the face of it would be advantageous to Cardy who would expect to spend a further £20M building it all.

This is only half the story as cash flow would be their biggest problem as it is with most developers. Currently Cardy are out of pocket by £1.5M (give or take) and they have yet to pay Keegan what he thinks he deserves and the cost to TDC which in 2012 was just over £3M and is likely to have risen to just under £4m with the latest valuation.

So assuming the saleable element is the 107 apartments we have  £32M less SFP cost (£7M) + £4M (TDC) less build costs (assuming no over runs) makes a margin of £1M.

Assuming again Cardy transfer the A3 and hotel into a service company they will (assuming they do lease the units) have an ongoing cash flow of +£1M per year and not to be sniffed at.

There is however oen more issue as TDC officers understand they have a duty of care which is to divulge any issues that impact on the saleability of the build. In 2008 £900K was spend on cliff works and in 2012 a further inspection was made which had a number of recommendations none of which were started (but I bet the work was costed) As these recommendations are outstanding still the cost needs to be paid and as one of those was the painting had to be redone this is likely to be a future maintenance cost payable by the residents of the apartment owners in with their service charges.

I think that the saleability of apartments depend greatly on the ongoing service charges and this coupled with the damaging sea air would cause a lot of people to shy away from buying causing ongoing cashflow issues.

I am told in Oostende in Belgium there are many units like this already built were the developer has given away apartments to the builders because they cannot afford to pay the builder so they receive a benefit in kind.

Further if painting the cliff becomes a regular maintenance issue we all remember the scaffolding erected in 2008 and the moths of work carried out. On an open site that is a pain however imagine this in a 13ft access road which is the only access for deliveries, car parking and refuse removal.