Big write-down for Pacific First Mortgage Fund

Unit holders in the Pacific First Mortgage Fund have received a rude shock, with a confirmation from Balmain Trilogy Group that the gross assets of the fund have been written down to the tune of $448.9 million for the year to 30 June.

Balmain Trilogy, which battled hard to become the responsible entity for the fund, announced this week that the gross assets of the fund now stand at $521.1 million, with the write-down representing an additional impairment of $108.9 million from the written down value which stood at $630 million as of 31 December, 2008.

The announcement by the company came as it sought to extend funding arrangements with the Commonwealth Bank, and as the Australian Securities and Investments Commission (ASIC) granted an extension with respect to the fund’s annual accounts.

Balmain Trilogy joint chief executive Rodger Bacon explained the position by referring to “the woeful performance of City Pacific” — the previous responsible entity for the fund.

“More disappointingly, the biggest part of this write-down is attributable to loans to related parties of City Pacific,” he said.

His fellow Balmain Trilogy joint chief executive Andrew Griffin sought to reassure investors that the worst was over.

“We believe that with the removal of the previous conflicts, and with the benefit of significantly greater management resources, that the worst for unit-holders is over,” he said. “The rebuilding of the fund can begin in earnest.”