The Resort Group have stalled rental payments to investors for luxury overseas resorts.
The investors who put their pensions into Sipp investments of luxury overseas resorts have been notified that The Resort Group are stalling their rental payments.
The letter was sent to investors on August 28th 2019 by Cape Verde commercial property developer The Resort Group. It stated that rental payments had been delayed due to "certain loan commitments" that they had to honour and lower revenues during the summer months, which in Cape Verde, is the low season.
According to The Resort Group, this is the first missed rental payment since 2011 and reassured investors they would "definitely be paid any outstanding amounts due" and they also said that payments would be "staggered" over the coming weeks.
UK investors are affected if they invested in the Tortuga, Dunas and Llana Beach resorts, some of whom have already seen less returns than they expected.
Last year, some UK investors had not received the returns that they thought they were promised and because of this, their Sipp fees were eating away at their investments, quickly looking like some pensions could be lost.
The Resort Group told investors that the payment delays were caused by a combination of factors that had a knock on effect across The Group. They also said that they always experience lower revenues from their hospitality operations in the summer because it is the low season and they are a quarter late in being paid.
They claim that there are certain loan commitments which they have to honour which have also has an effect on the cash balance within the business.
That said, a spokesperson for The Resort Group said that they have not used the rental returns to pay off the loans.
The spokesperson also stated: "Clients are paid in advance of receipt of any monies due, given that tour operators have a time delay on the payments that are made based upon the cost incurred on the company."
It has been explained that the receipts from the company's tour operators were usually received within 30 to 120 days, these were meant to be staggered.
"We endeavour to pay investors in order of priority as soon as the funds are available rather than waiting for the entire fund to be available before payment" said the spokesperson.
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The information in this article has been sourced from: https://www.ftadviser.com/pensions/2019/09/04/payments-stall-on-overseas-property-investment/?page=2