Court hearing on Dutch property losses is delayed

Irish investors in the scheme included farmers and small business owners

The property portfolio was sold for €50m more than the investor paid

Donal O'Donovan Twitter Email

April 06 2021 02:30 AM

A Dutch court has delayed an initial hearing in a case taken against ACC Bank parent Rabobank by a group that includes dozens of small Irish investors who say they lost millions investing in an Amsterdam property fund even as real estate prices rose in the city.

The Irish investors and Heredium, a Dutch property fund backing their claim, are seeking unspecified damages but say they lost out on €50m by being forced to sell out of the property fund in 2016 in a deal where the bank recouped its money but investors were left with steep losses.

A court hearing for April 6 in Amsterdam was postponed late last week as a result of what is understood to be a request from lawyers for Rabobank. A new date has not been set yet.

An initial hearing under Dutch court procedures allows judges to call a range of witnesses, such as former bank staff as well as investors and others involved in the fund structure.

Some of the mostly farmers and small business people who put pensions and savings into the scheme are expected to outline their experience of what they say were high pressure sales techniques to invest, as well as later concerns about corporate governance and information provision once the fund was up and running.

They will also question whether the high debt structure of the fund was appropriate to market to retail investors.

A group of up to 40 investors bought €250,000 blocks in the scheme promoted by ACC Bank in 2008 but were left with losses, and in some cases owed money to the bank when the fund’s directors – almost all bank employees – directed a sale in 2016.

The buyer, US investment manager Angelo Gordon sold the portfolio within 40 months for €50m more than it paid. One property was sold at a €2.8m profit within weeks of the Irish investors losing ownership.

The fund at the centre of the case, ACC Dutch Property Fund IBV, was founded by Bouwfonds Investment Management, which like ACC was part of Rabobank.

ACC provided €31m of debt to buy just over €40m of office property in Amsterdam.

The deal went ahead even though ACC failed to raise its full €16m target, resulting in higher than anticipated debt.

Rents never fully covered interest and fees, so debt increased to almost €40m over eight years.

The case is being funded by Heredium and proceeds of any settlement will be split between it and Irish investors.

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