One of LM's biggest assets worthless

LM Investment Management went into voluntary administration early this year.  The LM First Income Mortgage Fund has been frozen since 2009 with $100 million of New Zealanders’ investments in it.
The LM Managed Perfomance Fund is due about $250 million from the housing development, which is being developed by Maddison Estate Pty Ltd. The development firm is headed up by Peter Drake, who was the founder of LM and has been accused of withdrawing huge amounts of money to fund his lifestyle.

Maddison is one of LM’s biggest assets – on paper, anyway.

LM is the second-ranked security after a $22 million mortgage to Suncorp. Suncorp wants to be relieved of its security by the end of the month. If the debt can’t be refinanced, it is likely a receiver will be called in to sell the property. Should this happen, LM investors will likely receive nothing.

The value of the development seems to have been very much overstated. In its report, Korda Mentha said it had repositioned Maddison as a basic residential development, without some of the added extras that had been proposed, such as a wave pool, because the investment would not pay off.