AN UPDATE ON FOREST HILLS

We were all very excited about the potential of this complex.  Seann Poli spent weeks pouring over numbers with Stuart, Rene, crunching different financial scenarios to test how the complex would operate under various conditions. Seann and Stuart made a number of visits to the site before the purchase. Due the fabrication of deception by the complex staff under the direction of the Seller, the representation that was offered was more positive than the reality.

After the purchase, we spent hard earned dollars and lots of our time in renovating the complex and changing the name to try and attract a higher profile tenant.

We changed the staff at the complex, we were able to acquire the services of an exemplary property manager and hired a book keeper in Calgary to make sure that the financial reporting was done in a timely fashion.

Stuart was brought on as a director for his investment into the Partnership and his experience in multi-family. Rene Burke, MBA, was brought on for her money raising abilities and her MBA background. Both Rene and Stuart were also given shares in the General Partner and of course appointed as Directors.

Seann Poli was given guidance from the bank to release conditions based upon the bank's due diligence from their national analysis team.  He conducted a walk through of every apartment in the complex (210 in all) to ensure that all the suites that were recorded as occupied were.  We later discovered that the owner had left abandoned furniture in suites that were actually vacant to give the appearance of occupancy.

Unfortunately we soon discovered the extent to which the fraud the Seller had committed in representing the financials to us, the bank, and even the Seller's own listing agent, CBRE, so we decided to sue the seller. This fraud consisted in over reporting the revenue, under reporting the expenses and the extent of the renovations made. This lawsuit is currently in progress.

Stuart and Rene differed in their vision from Seann and Lavana as to how the Partnership should run and persuaded the limited partners that Seann and Lavana should step down to allow Stuart and Rene to take over. At the time of the change of management on September 29, 2009, the assets of the limited partnership, that were turned over to Stuart Palace, the two real estate projects and more than $600,000.00 in cash. The new General Partner (management)which was solely owned by Stuart Palace assured the limited partners that with his skill and obvious financial interest could do a far superior job in managing the project and would get it back on track. Unfortunately, even with his best efforts, his undertaking was not fulfilled.

 Seann Poli has been helping the partnership ever since the change in management initially with the operations of the Partnership and continuously with the law suit.
 
The Partnership also has the support of the bank and Seller's listing agent with respect to the law suit.

Since the change in management about a year ago, the occupancy has dropped to a historical low largely due to the state of the U.S. economy.  My understanding is that the Partnership is giving the complex back to the bank.  Seann Poli is still assisting with the law suit against the previous owner and commits to assist in the law suit until a final verdict from a jury has been decided.

You will find more of an update on the "Need to know" tab.