The big sell-off of assets belonging to the insolvent German Property Group (GPG), formerly known as Dolphin Trust, is now entering its second phase, with nominated asset manager and liquidator CR Investment Management kicking off the structured sales process for a further 11 assets.
CR Investment has the exclusive mandate to sell off about 65 properties owned by the Hannover-based German Property Group, which filed for insolvency in 2020 after allegedly perpetrating a fraud on thousands of investors worldwide, mainly in Ireland, the UK and Asia.
Demand was described as 'overwhelming' for the first tranche of 22 assets that CR Investment offered for sale in 2021, with more than 200 binding offers submitted, according to Claudius Meyer, managing director. The structured sales process was conducted entirely online, on a special sales platform developed by Cloudbrixx. These sales were all wrapped up by 2022.
The assets are all unusual, in the sense that they were originally bought by GPG because of their particular status as 'Denkmalgeschützt', or listed or landmarked buildings enjoying special protection. They include castles, barracks, monasteries, watchtowers, military field hospitals, and other properties, often in a crumbling condition, in most cases having lain vacant (and sometimes overgrown) for several years. Among properties sold in the first phase were a cigar factory, a leather factory, two monasteries, an Italianate villa, and parcels of building land.
Not all of the original 65 properties are saleable, said Meyer, indicating that a total of about 50 sales might be realisable.
The current tranche of properties for sale amounts to 220,000 sqm scattered across the country. The properties are located in Lower Saxony (2), Berlin (1), as well as Bavaria (2), Brandenburg (1), Rhineland-Palatinate (2), Mecklenburg-Western Pomerania (1), Saxony-Anhalt (1) and Baden-Württemberg (1), among others. These include condominiums in Augsburg, castles in Rinteln and Preetz, and a former observation tower with restaurant in a tourist location near Berlin.
Marlene Auerbacher, with responsibility for acquisitions and transactions at CR Investment, said there were quite a number of properties in this latest tranche that had genuine development prospects. In any event, she expects to have auctioned off the remaining assets by mid-year, she said. Prospective bidders have until March 31st to submit their indicative offers.
Prospective bidders can view the properties for sale on www.gpg-vertrieb.de, and can access the data rooms within minutes via a link.
German Property Group filed for insolvency in 2020 after ceasing payouts to its thousands of investors, mainly pension savers. Its product was described by the first insolvency administrator as a 'pyramid scheme' that collapsed after taking in €1.5bn from investors, much of it sold through unregulated introducers. At the time of insolvency, the properties owned by GPG were estimated to be worth no more than €150m collectively.
The scheme focused on redeveloping German listed buildings into luxury apartments, and had promised investors double-digit returns. In Asia, several fund managers have returned funds invested by retail clients, after local sellers were charged with not properly disclosing the risks associated with the products. In the UK and Ireland several lawsuits against intermediaries who sold the dodgy German investments are currently winding their way through the courts.
The company, originally known as Dolphin Capital, and then Dolphin Trust, was founded in 2008 by anglicised German, Charles Smethurst. Its pitch was that, using investors' money, it would buy old protected buildings at rock-bottom prices, and then renovate them into high-end apartments. These would then be sold at a big profit, with the proceeds returned to investors.
When it filed for bankruptcy, files revealed to the court showed it held around 70 properties. Much of the money it had received from investors had been siphoned away, a large chunk of it by Charles Smethurst and his family. It remains to be seen what will be left in the kitty for the thousands of duped pension fund investors.
