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Another major property developer, Caydon Property Group, has collapsed into receivership, threatening the future of projects worth over a billion dollars, including the historic Nylex site on Melbourne’s Yarra River.
Receivers McGrathNicol and liquidators Jirsch Sutherland were appointed on Tuesday to take control of Caydon’s assets, including the Nylex site development in Cremorne and apartment projects under construction in Moonee Ponds, Preston and Alphington.
The iconic Nylex site in Cremorne.Credit:
Caydon’s managing director, Joe Russo, blamed falling property prices, COVID lockdowns and business uncertainty for his company’s difficulties, saying it was “extremely difficult to make this decision” to put them into liquidation.
“Sadly, over the last few years, Caydon has had to deal with one difficult market situation after another. The latest and really confronting challenge we’ve been facing has been the pricing factors affecting the Australian property and construction industry,” Russo said.
Construction costs, builder insolvencies, supply chain interruptions, interest rate pressures and negative house price sentiment put further pressure on the company’s finances, he said.
The firm’s woes were exacerbated by the collapse of top-tier builder Probuild. It was under contract to construct the first stage of Caydon’s Nylex ‘Malt District’ development before it, too, went under in March.
Russo said two of Caydon’s projects, HOME in Alphington and Due North in Preston, will not be affected by the collapse.
“These remain fully funded projects that will continue through to completion,” he said.
Caydon purchased the Nylex site, an old malt factory, in 2014 for $38 million and is midway through transforming it into the multi-million dollar residential, commercial office and hotel precinct.
Heritage Victoria approved plans for the area that required the developer to keep the majority of the concrete silos under the Nylex clock sky-sign intact, at one stage they were earmarked for demolition, because of their significance as a marker of Richmond’s industrial past.
Credit:Matt Golding
The group has already completed a 14,000 square metre office tower which it pre-sold to global investment house AXA and leased to accounting software firm MYOB.
The escalating number of property-related collapses in Victoria follows a slower-than-expected recovery from the COVID-19 pandemic.
Earlier this month, another large private developer, CBD Development, put six companies that rely on rental income from commercial and residential tenants into liquidation, blaming government rent relief measures and the pandemic for their failure.
That followed home builder Langford Jones Homes’ collapse owing creditors more than $10 million just days after another Victorian builder, Snowdon Developments, also went into voluntary administration, leaving 550 homes unfinished and 262 creditors owed $17.8 million.
Caydon was tipped into receivership by Asia-based financier OCP Asia, the lender that pulled the plug three years ago on high-flying developer Steller, whose major project was the redevelopment of the historic Continental Hotel in Sorrento.
Steller, run by Nicholas Smedley and Simon Pitard, owed OCP Asia $97.3 million. It is not known at this stage how much OCP is owed by Caydon.
McGrathNicol partner Matthew Hutton said he had direct or indirect control over Caydon’s assets secured by OCP, including completed residential and commercial property, sites under development and land holdings.
“The receivers are undertaking an urgent financial assessment of the properties and assets under their control. We will be working constructively with all stakeholders, including financiers of individual properties, to secure the best possible outcome for all parties,” Hutton said.
Jirsch Sutherland liquidator Malcolm Howell said current contractual arrangements with purchasers of Caydon’s properties, whether pre-sales or completed stock, “should not be impacted”.
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