Local property developer Steller has recently gone into receivership, a state that is usually invoked to avoid bankruptcy and attempt to return the company to profit.
The news comes after an announcement in May that co-founders Nicholas Smedley and Simon Pitard were dissolving their partnership and selling their as-yet undeveloped works.
Steller’s development pipeline is estimated to have a total worth of $4 billion.
Steller, and a number of its related businesses, was officially appointed its new custodians: partners Keith Crawford, Matthew Caddy and Jason Preston of McGrathNicol Restructuring.
McGrathNicol Restructuring have previously helped handle restructuring for engineering contractor RCR Tomlinson and multinational professional services network KPMG.
The appointments have been made by OCP Asia, a financier and hedge fund based in Hong Kong and Singapore.
Receivers will now have control over several assets, ranging from residential properties to land held for development.
On behalf of the receiving partners, Keith Crawford statee that they would be conducting immediate financial reviews of Steller’s assets.
“We’ll be working constructively with all stakeholders, including financiers of individual properties, to secure the best possible outcome for all parties,” said Mr Crawford.
Meanwhile, a number of Steller’s other developments and sites are now for sale. These include assets in locations such as South Melbourne and Hampton Road.
In May, Steller made headlines for abandoning its $35 million redevelopment of the Continental Hotel, a local icon in Victorian beach town of Sorrento. The much-loved heritage building is also now up for sale by owner Julian Gerner.
Read about the construction halt on Steller development the Continental Hotel.
It is also understood that in the lead-up to the dissolution of their partnership, Mr Smedley and Mr Pitard approached various lenders for funding, but that their attempts to refinance were unsuccessful.
Steller had previously borrowed from a group of non-banking institutions which included the Melbourne Jewish Friendly Society, the Equity One Mortgage Fund, and a number of other private super funds. Borrowed money was then used to secure the mortgage for Steller Hampton Road mixed-use development in South East Melbourne.
The Hampton Road development also put Steller’s name in the headlines when the developer borrowed at interest rates of 14 per cent for almost $9 million in fixed mortgage. The end-value of the development was predicted to be $104 million.
Stella had also previously raised money through Sydney-based-fund manager Atlas Advisors, and its own property funds business called Steller Property Funds.
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