iProsperity Placed in Voluntary Administration


The accommodation industry freefall has hit Sydney-based real estate fund manager iProsperity Group hard.

iProsperity fell into voluntary administration on Thursday, less than three months after sounding out plans to acquire a portfolio of seven Kimpton Hotels in the US for $US477 million (A$720 million).

The Hong Kong-backed fund manager, led by Michael Gu, has now had 13 entities associated with the group appointed to insolvency firm Cor Cordis with administrators Barry Wight, Jeremy Nipps and Alan Walker overseeing the account.

Cor Cordis noted its role as administrator did not extend to the underlying investments of funds managed by the respective IPG entities.

Since 2016 iProsperity had built itself to be among some of Australia's biggest hotel owners, backed by the SB&G Hotel Group, investing over $1.5 billion into real estate assets predominantly within the hotel sector.

Those close to the matter said the group had been caught out by the rapid decline in occupancy across its portfolio with investors tentatively stepping back from the stricken accommodation sectors.

▲ Occupancy levels of hotels across the country are currently between 10 and 20 per cent.
▲ Occupancy levels of hotels across the country are currently between 10 and 20 per cent.

The group's early acquisitions included the Novotel Glen Waverley in Melbourne, the Century City Walk shopping mall in Glen Waverley and Sydney's 122-room Park Regis Hotel. The group offloaded all three assets in mid-2019.

In 2018, the group acquired Brookfield’s 419-room Pullman on the Park hotel in Melbourne for $200 million and also ventured offshore picking up the Iririki Island hotel resort in Vanuatu.

iProsperity was touted as the buyer of the French-owned AccorInvest $250 million portfolio in September—which comprised 1,797 rooms across 23 real estate assets and 1,249 rooms over six lease interests.

The group announced the acquisition of the 11,245 room Kimpton portfolio in March, with the contractual agreement expected to complete in early May, but paused the approach as the corrosive impacts of Covid-19 shutdown international travel and tourism globally.

The pre-Covid deal had been driven by a broad interest from high net worth investors looking for “US dollar denominated real estate assets”.

Signs the company was in trouble became apparent in May when a subsidiary of the fund manager, iProsperity Underwriting, had been placed in the hands of receivers after not paying interest of more than $3 million.

ASX-listed Agricultural Land Trust claimed that iProsperity Underwriting was in default on interest payments due on loans it had provided.

Administrator Barry Wight said for Cor Cordis the focus would now be on attempting to stabilise iProsperity while conducting a full and thorough investigation into its affairs.

“It remains too early to determine whether a viable restructure plan can be developed, but we look forward to working closely with the iProsperity Group’s stakeholders over the coming weeks,” Wight said.

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