BCR SAFI paid a premium for the PEP storage property, of which 60,000 square meters are protected areas and canyon areas

According to him Fact Report Prepared by BCR Internal Audit, including nation There were copies and it was discovered that there was a huge discrepancy between the estimated property size when the fund appraised the purchase and the actual usable area.

The document Summary of Property Value Estimates UII-010-2019The agreement signed by two engineers from the BCR SAFI engineering field, Gutiérrez Chaves and Carbajal Soto, estimates the value of the PEP at US$69.09 million.

The report, also signed by the head of projects and infrastructure, Garro Acuña, includes storage properties with a total area of ​​399,000 square meters and an estimated value of US$19.95 million.

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However, an analysis by Grupo Tecno, a company hired by BCR Internal Audit to prepare a valuation of the property at the time of its acquisition, showed that the usable space was much smaller and “consists of wooded areas with irregular topography” and “60,133 square meters of protected areas and canyon areas.”

The audit showed that neither BCR SAFI’s engineering unit nor Grupo Ingenio AIC SA, the company that conducted the external valuation at the time of the acquisition, disclosed the discrepancies. The latter also overestimated PEP’s total valuation, the document said.

Grupo Tecno’s valuation was based on a retrospective engineering technique involving satellite instrument topographic surveys, which determined that the usable property area at the date of purchase was approximately 89,029 square meters, with a fair value of US$1.78 million.

That is to say, between Summary of Property Value Estimates UII-010-2019 Compared to the value determined by Grupo Tecno, there is a difference of 309,971 square meters of available property area.

In turn, Grupo Tecno estimates that this difference in area could result in an expert value of more than $18.16 million being assigned to those “overvalued” properties during the PEP acquisition process.

The discrepancy arises because the value assigned to the property in the document prepared by the engineering area was US$19.95 million (399,000 square meters), while the audit report assessed the available property (89,029 square meters) at US$1.78 million, or 11 times less.

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This “overestimation” of the property’s value, compared to the report generated by the BCR SAFI engineering field, is equivalent to 52% of the amount Grupo Tecno estimates to have overpaid PEP.

A retrospective assessment by Grupo Tecno valued the park at $34.78 million, while the initial estimate by BCR SAFI engineers was $69.09 million, a difference of $34.31 million. In terms of property values ​​alone, the difference amounts to $18.16 million.

The audit defines a yard (or mobile yard) as a specific area for the mobility and temporary storage of containers, equipment and machinery, which must comply with certain technical and construction specifications to allow transportation and temporary storage.

Luis Emilio Cuenca, chairman of the BCR SAFI board of directors, said the report contained important and powerful findings, particularly on the PEP procurement and evaluation process.

“This report shows very clearly what happened during the takeover process,” Cuenca said, adding that they hoped it “will be a blow to boost investor confidence” and defend their interests.

‘negligence’

The report sets out the facts that led the Public Ministry to ignore the complaint from the BCR SAFI board and calls the engineers’ actions “reprehensible” because “they were negligent and failed to exercise their duties of care and diligence”.

The audit explained that the engineering assessment by BCR SAFI is one of the fundamental inputs to start negotiations, determine the appropriate price, and conduct an adequate review of the property and existing areas.

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“The engineers of the BCR SAFI Engineering Department who prepared the UII-010-2019 report should have transparently disclosed the status and actual value of the project as per the responsibilities of their job profile,” the report reads.

The documents state that the professionals used information provided by the property seller in accordance with their authority, failed to verify the size of the property, and failed to raise relevant warnings about the status of the politically exposed person.

In light of this, the report highlights that these factors “completely violate” the effectiveness of the first line of defence in relation to the acquisition projects of the BCR SAFI real estate investment fund.

Unfinished Projects

Another finding of the audit agency was that the acquisition of the project had not been completed, despite the fact that the then interim business and project manager of BCR SAFI assured the subsidiary’s investment committee that the park was 90% developed at the time and would be 100% delivered after payment.

Satellite images provided by GEOINN Geospatial Innovations SA for the report contradict that version. The photos show that by February 2020, the month of the purchase, the project had not been completed. For example, three cold stores had not yet been built. In total, 28 pending projects were identified.

“Neither the PEP property was 100% built at the time of presentation to the Investment Committee and the BCR SAFI Board of Directors, nor at the time of purchase,” the audit noted.

The auditor said that because the cold storage had not been built and was not operational, the property should not be sold, thus acquiring an asset that was “not 100% completed”.

Currently, BCR SAFI is still continuing to adjust the PEP. Douglas Montero, general manager of the BCR subsidiary, said in mid-July that they were working on a remediation plan but had not yet determined how the works would be financed. On Tuesday, August 27, he confirmed that the real estate reform proposal was still in progress.