Where are the Udecott accounts? What is the mystery? Are the issues resolved or not? Is there yet another code of silence surrounding this nexus between Calder Hart, the PM's office and PriceWaterhouseCoopers? But what does the IWC have to do with all this? You see, the various Udecott supporters have continued to applaud this project as the flagship and a leading example.
So here are a few facts on that project:
1. The break-even rent: This is the rent a project needs to earn to repay its cost (those costs include land, professional fees, construction and finance; they do not include for profits or maintenance).
In the case of the IWC, that break-even rent was calculated by me, in this column and prior to the Uff Enquiry, as being of the order of $30 per sq ft. Please note that rents of good quality space in PoS at the time this project was approved would have been in the $12 psf range.
2.The feasibility test: I questioned Calder Hart under oath at the Uff Enquiry and he stated that only one Udecott project had been the subject of a feasibility test; the very IWC. He stated that its "break-even rent was under $20psf" but when I questioned what was the value he had attributed to the land, he replied "nil."
Bogus and unprofessional approaches to massive investments. Hart was prepared to omit the property in order to carry out a feasibility test on a property development. That is the sheer scale of the failure we are looking at.
All these projects were approved by the Cabinet, according to Manning's May 13, 2008 statement to the Senate.
3. The financing model: Udecott's 2006 Annual Report was strong on the point that that project, in particular, did not require a State letter of comfort or guarantee. It was meant to demonstrate the scale of achievement and independence.
4.When will the IWC break even? The best offices in PoS are rented in the $15 psf range and the IWC comprises some 900,000 sf of offices; that is about nine times the size of the Nicholas Tower on Brian Lara Promenade.
Due to its size, it would be reasonable to expect the IWC to fetch a rent of about $12 to $13psf now, if one were fortunate. Given that background, it seems that this project will never break even.
If Udecott's best project never breaks even, the entire company must be insolvent or so close as to not make a difference. If their best project is a big-time loser, it is no wonder that the last administration was a reluctant to publish Udecott accounts. The very year (2006) that project started was the very year the accounts stopped being published. The profitability of the Hyatt, which was reportedly cited by John in last week's article, needs to be backed up by those accounts. In any case, the unprofitable offices far eclipse the Hyatt. It is clear that Udecott's new board have a heavy task before them in terms of fixing its many ills, but they need to start with an honest and straightforward approach. If the country has to count our losses, you need to do so now. There is no right way to do the wrong thing.
Afra Raymond is managing director of Raymond & Pierre Ltd and president of the Joint Consultative Council for the Construction Industry (JCC). www.afraraymond.com or www.raymondandpierre.com.