Cote d’Azur complex gets new lease of life

An Irish management firm has revitalised a French resort after it ran into problems

 

In the heady days of the Celtic Tiger, owning a slice of the Cote d’Azur became a reality for many people who would never have dreamed it was possible. The French leaseback scheme, where you could buy a property and be guaranteed a rental return each year, made it possible to get that slice of heaven. Returns were usually about 4 per cent. There was also a refund of the VAT paid on new builds.

The 280-unit Le Petit Lac Resort, built around a lake, 7km from Cannes at Mandelieu-La Napoule, seemed just the perfect place to enjoy holidays and let the property pay the mortgage. The resort with one-, two- and three-bedroom apartments, was marketed in Ireland off the plans by Overseas Properties, and Savills HOK with prices from €212,000 - €365,000.

It was managed by a French company, MMV, and for the first years from 2008 all was well. In 2012, MMV notified the 280 owners that they would be cutting the rents by 30 per cent. Average rents were €10,000 depending of unit sizes.

Rent reduction

There was a similar association of about 70 French-speaking owners. Eventually, no rent was being paid and the management of the resort had been transferred to another company, Mandelieu Resort MR by MMV. MR did pay some rent initially but the resort was being neglected, with less expenditure on upkeep.

Both groups were taking legal advice on what to do. There is no facility in French law for a class action, so each individual owner had to engage a solicitor to work on their behalf to try to recoup the unpaid rent.

“Collective action was the only way forward for us for as owners”, says Celine Naughton, who became involved in the owners’ association, PLOA. To move forward the two groups had to agree on a new management company. The legal action with MMV is still ongoing.

Enter Splash Hospitality, an Irish management company led by Ray Byrne, which was known to one of the owners. Splash Hospitality is and had been associated with the management of the Wineport Lodge, the Ice House Hotel, and a number of bars in Dublin such as Cafe en Seine, Howl at the Moon and the George. It had also managed the Phoenicia resort in Malta, which was sold in 2013.

The Splash management team made presentations to both sets of owners’ groups during the autumn. At a meeting of the two groups representing 200 owners, the decision was unanimous. They liked the plans for the future outlined by Splash and the motion to engage them was carried.

One of the first things was to get the resort looking good again, with maintenance of the buildings, landscaping and changing the name to Mimozas Cannes resort. They hired a new chef and catering team to run the restaurants and bars. There is also a spa with a thermal suite and beauty therapists. Splash also believed that the resort should stay open all year: previously, it was seasonal.

Wider market

Expedia

Splash expects the average return for owners will be in the region of €5,000 per annum, depending on the size of unit and the owners’ usage. They expect, over the 10-year period of the lease, to grow the business and double that return.

There will be some units available for sale over the next few months, for about €150,000-€200,000 each. This is 30 to 45 per cent below the original prices in 2006. Many people left the Cote d’Azur market in recent years, having made losses across their investment portfolios.

For this year, the rental rates will be pitched a bit below the market rate to build the business back up.

A week in high season will be from €1,600 to €2,022 for one- and two-bedroom apartments; in May it will be from €1,066-€1,346. There are also special offers for shorter stays.

mimozascannes.com

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