In July, at the time when the Serious Fraud Office launched its investigation into potentially missing Keydata assets, PwC revealed it was seeking confirmation on the status of the £2m of underlying assets of products invested with Hometrak SA. At the time it said no income payments had been made by Hometrak SA since February 2008. PwC said the payment gap was filled by Keydata’s own funds and that early redemptions have been dealt with in an irregular fashion. A total of 240 investors are affected.
In an update by PwC on Friday, the administrator revealed that investors’ funds had been used to purchase a corporate bond issued by Luxembourg based Hometrak SA.
Hometrak then invested in a US property development company Miles Properties Inc, which in turn invested in two appartment complexes in the States – Regency Pointe in Maryland and Royal Summit in Florida. The properties were acquired with a mixture of investor funds and mortgage finance.
But PwC says it understands these properties are both now in negative equity and the banks have appointed receivers.
PwC says it is the view of Miles Properties that it is “highly probable that investors in these properties will not receive any return on, or return of, equity”.
PwC points out that the Financial Services Compensation Scheme will only consider claims for compensation for losses attributable to the company as opposed to poor performance of an investment product.
It says that on this basis, as matters currently stand, Hometrak backed investment products are unlikely to give rise to valid claims for compensation, however, the FSCS will consider claims brought to it on a case by case basis to determine whether they are eligible for compensation.
Last week Money Marketing revealed that PricewaterhouseCoopers has drawn fees of £1.74m plus VAT up until December 7 for its work spent on the Keydata administration.
The Hometrak products are:
Income Property Bond – Quarterly Income
Income Property Bond – Annual Income
Income Property Bond 2 – Quarterly Income
Income Property Bond 2 – Annual Income
Income Property Bond 3 – Quarterly Income
Income Property Bond 3 – Annual Income
Income Property Bond 4 – Quarterly Income
Income Property Bond 4 – Annual Income
Income Property Bond 5 – Quarterly Income
Income Property Bond 5 – Annual Income
Income Property Bond 6 – Quarterly Income
Income Property Bond 6 – Annual Income