Thames Bank, the property developer bringing legal action against Tristan Capital Partners and one of its funds regarding a UK development, is making a series of allegations including one about valuation of the project.
Particulars of the claim regarding the redevelopment of the Derrys department store in Plymouth on the south coast of England were served on London-based Tristan and its European Property Investors Special Opportunities 4 fund on 17 November.
It has emerged that Thames Bank is calling the development a ‘catastrophic’ failure but one that could have been a ‘profitable JV'.
The development is completed and elements of it are fully let.
Allegations include that Tristan ‘took control of the development and ignored the Joint Venture Agreement which led to a series of catastrophic and avoidable decisions'.
‘By the time of Practical Completion, the total cost of the Redevelopment was a circa £56m outcome on a circa £37m budget, being an increase of c£19m (52%) over the original anticipated cost as reflected in the Budget and Business Plan.’
‘Tristan’s European Property Investors Special Opportunities 4 Holding Sarl (E4) appropriated the shares of JV partner, Thames Bank, due to the catastrophic failures in the development that E4 and Tristan Capital Partners were responsible for.’
One of the most serious allegations is a claim that the EPISO fund ‘misrepresented the basis for the enforcement of the share pledge, where E4 (EPISO 4) had represented that the value of the development was £20 million when in fact they valued the development in their own published accounts seventeen days later at £90 million.4 (a difference of c£70m)'.
Should the matter be argued before a court, it is expected both sides would present views on how the asset was, and should be, valued.
Tristan has said it intends to vigorously defend the claim.
The pan European company referred PropertyEU to the firm's original statement made in November when news of the legal case first surfaced. ‘We consider the claims to be entirely without merit. It would not be appropriate for us to comment further at this time.’
Colin Morris, MD of Thames Bank, said: ‘Our legal claim that is now before the UK courts is simple - we wish to be compensated for the share appropriation at a value that corresponds with the £90m value Tristan have stated to their investors the asset was worth at the time of the appropriation.’
‘Failing this, Tristan need to explain to the pension funds that invest in their business how there can be a £70m variance in the value of the Plymouth asset within seventeen days.’
‘As a directly affected party, we reserve the right to continue our due diligence on the matter and will continue to raise further questions relating to the management of the development and more generally as to the conduct of the parties.’