Waves project underwater

The company behind the prominent Phillip Island accommodation project The Waves apartments will be liquidated after a sale of assets still left the group with debts of more than $4 million.

Phillip Island Motels, which had been controlled by entrepreneur George Frew and his family, was put into receivership nearly two years ago after property investors shunned the development at Cowes. The liquidation is the latest setback for the one-time international hotelier and racehorse owner, bankrupted in the wake of the Tricontinental bank collapse in 1980s.

George, wife Natalie, and son Stephen built the multi-stage project on The Esplanade to sell to investors and then lease back and manage some of the apartments as tourism accommodation.

"There were 120 units built over 10 years, and the last 55 were under way when we crossed the line in the GFC," director Stephen Frew said. "People stopped buying, there were problems with the builder and the pre-sales fell over."

The company owed $7.97 million to National Australia Bank at the time Phillip Island Motels was put into administration in mid 2011, with the debt secured by 31 apartments and several operational spaces in the complex. Unsecured creditors, including the Tax Office and Bass Coast Shire, were reportedly due $220,450, according to documents filed with ASIC.

Ross Blakeley, managing director of receivers FTI Consulting, said The Waves struggled to make sales in the "depressed and competitive" conditions of Phillip Island's holiday accommodation market, and the development and operational costs of the project could not be met.

The management company for The Waves, Harbour Apartments, which was also run by the Frews, is also in external administration with debts of $918,500.

Knight Frank was appointed to sell 31 apartments in stages four and five of the project in late 2011, which has continued to operate during the administration. All the units sold for $155,000 to $245,000 each, with a source saying prices achieved were below valuation. FTI Consulting excluded the valuation information from ASIC filings on the grounds it was of a "commercially sensitive nature" that might "prejudice" the sale of the company's assets.

"They had a bit of a fire sale. The bank did themselves a lot of damage with the underselling," Mr Frew said.

Liquidators Brooke Bird, appointed in early April, report Phillip Island Motels stills owes about $4 million to the bank and $87,395 to unsecured creditors.

The Frews continue to manage the accommodation operations.

cvedelago@theage.com.au

Twitter: @chrisvedelago