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570 DUNSMUIR UPDATE
December 20, 2004
TO ALL CONCERNED
On Friday, December 3, 2004 the Trustee completed a court-approved sale of 570 Dunsmuir.
The decision to market the building for sale was pursuant to Justice Tysoe's order of August 2002 whereby he instructed the Trustee to monitor the downtown real-estate market and act accordingly when they deemed it was appropriate to pursue a sale of 570 Dunsmuir.
After discussions with various real estate professionals this past spring, it was agreed we should initiate a marketing program on 570 Dunsmuir. As part of the program an appraisal was commissioned which rendered a value of $11,000,000.
After an extensive period of exposure to the market locally and nationally, and upon review of the considerable interest shown by way of offers to purchase, our options were narrowed down to dealing with three parties. As a result of some astute negotiating, which I was a party to, the Trustee was able to secure a sale higher than the appraised value. The final sale price was $11,188,000.
After current liabilities and our share of indirect costs, as yet undetermined, a recovery of approximately 22 to 25 cents on your original investment dollar won't be far of the mark. There is a possibility it could be more depending on the final accounting of all project matters relating to Eron Mortgage. In our particular case, we may have some litigated financial issues to resolve regarding the allocation of indirect costs which could enhance our recovery. As a project we are still burdened with, in my opinion, an inequitable share of these costs. It is not within the Trustee's jurisdiction to amend the existing formula. There is a court application to be made by the Trustee regarding certain funds related to indirect costs. We plan to plead our case at that time with the intention of convincing the Court once again of this unfairness and to hopefully get a favourable result like we did last time.
With regards to the distribution of funds from the proceeds of the sale of Dunsmuir, there is a procedure that involves the Trustee seeking Court approval. This should take place in mid-February 2005. Shortly thereafter, you will receive partial payment of amounts due less a % hold-back. Presently the Trustee is authorized to retain 30% of all pay-out amounts. This percentage could be amended to a lesser amount by the time we get to Court. In any event, it is more than likely you will receive the entire hold- back amount in due course.
Please contact me if you have any questions regarding the foregoing.
Yours Truly,
Duncan MacKechnie
604-263-4423
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