JOHN B. Fairfax - the largest shareholder of Fairfax Media and one of the bluebloods of Australian business - has taken out a mortgage on his family's landmark estate on Sydney Harbour as the global financial crisis takes its toll on the market value of the company that bears his name.
A NSW land title document obtained by The Australian shows that, in January, he registered a mortgage against one of Sydney's most venerable eastern suburbs properties, "Elaine", a 6800sqm waterfront estate at Double Bay believed to be worth $30 million-$40 million.
The mortgage of Elaine is a potent symbol of the impact of the global economic crisis even on business's "old money" names.
A spokesman for Mr Fairfax said last night: "John Fairfax's private financial matters are a matter for John and no one else."
The estate, with its 1870 mansion and lawn tennis court overlooking Seven Shillings Beach, is an integral part of the history of the Fairfaxes, having been in the family for nearly 100 years.
The January 9 mortgage document states the Commonwealth Bank has lodged a mortgage against Elaine and three inner-city properties: two business units in the Sydney CBD Connaught building, and an Edgecliff flat.
The mortgagor of the properties is John Brehmer Fairfax. It is noted the bank is mortgaging "all the mortgagor's estate and interest in the land" described in the document. Land titles office records indicate this is the first time the property has been mortgaged.
News of Mr Fairfax's mortgage comes a year after The Australian revealed he used a $170 million CommSec margin loan to take over the entire 211 million Fairfax Media shares owned by his family company, Marinya Media.
He repaid the loan and found other financing - but it has not halted interest in the losses he has taken on the move to buy out his family in February last year. Since then, the value of the Fairfax family shares has fallen by more than $650 million to less than $200million - eating into his personal fortune.
Last month, Mr Fairfax's difficulties were on display when he took up just 16 million new Fairfax Media shares worth $12million in the media group's cut-price capital-raising. Under the offer, he was entitled to subscribe for up to 130 million new shares.
The mortgage of Elaine is seen as a sign of the times in the global credit squeeze. A prominent property lawyer said: "I have seen, for the first time, properties that have never been mortgaged now securing loans from banks."
The lawyer said ordinary borrowers would expect to borrow up to 70 per cent of the value of a property by putting a mortgage on it. In the case of Elaine, this could equate to a sum in the range of $21million-$28 million.
Elaine was purchased by Mr Fairfax's ancestor, Geoffrey Fairfax, for pound stg. 2100 in 1911. Descendants have subsequently secured the property for the family through a series of purchases, including by John B. Fairfax's late father, Sir Vincent in 1936. John B. then paid $3 million in 1989 to buy two-thirds of the property's land - but not the Elaine residence - from Sir Vincent.
At some point about or before the time of his father's death in 1993, John B. Fairfax is believed to have taken full ownership of Elaine. He now does not live there but land title documents show he is leasing it to another child of a media dynasty, businessman Cameron O'Reilly - son of mogul Tony O'Reilly - until September this year.
Read the full story in The Australian.
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