Windfall gain

1.16  The Department was entitled to receive a 20 per cent share of financial gains made by Mapeley's shareholders through the sale or flotation of the whole or part of the business if it occurred within the first five years of the contract and met certain ownership, internal rate of return, and cash flow criteria.

1.17  When the contract was signed Mapeley was privately owned by Fortress Registered Investment Trust (Fortress) (42.5 per cent), Soros Real Estate Investors CV (42.5 per cent), and Delancey Estates Limited (15 per cent). During 2004 Fortress acquired the other shareholders' interests. In June 2005 it listed Mapeley on the London Stock Exchange, issuing new shares which diluted its shareholding to 65 per cent.

A further share issue in January 2006 diluted its shareholding to 55 per cent. These transactions did not trigger the gain-sharing mechanism. The five-year deadline passed in April 2006. Under the contract the Department should have then received a certificate from Mapeley confirming that it was not eligible to share in windfall gain. The Department has not yet obtained this certificate.