A succession of market hits over the past few years has combined with the latest inflationary pressure on the construction industry to claim another high-profile victim with liquidators appointed to part of Melbourne’s Caydon Group.
Hong Kong-based financier OCP Asia called in receivers to subsidiaries of Caydon Group, after liquidators were appointed to the company which is undertaking the $1 billion Malt District redevelopment in Cremorne, Melbourne.
Caydon Group is a prolific developer that has delivered more than 3,000 apartments, hotels and offices over the past 20 years - a record that managing director Joe Russo says he is ‘immensely proud of’.
“Sadly, over the last few years Caydon has had to deal with one difficult market situation after another,” Russo says.
“The latest and really confronting challenge we’ve been facing has been the pricing factors affecting the Australian property and construction industry.
“The significant disruption to our business created by two years of COVID-19 lockdowns in Melbourne has caused business uncertainty and severely impacted sales.”
Russo describes the liquidation as an ‘extremely difficult’ decision for the company to make.
“Pressure on construction costs resulting in builder insolvencies and supply chain interruptions, and now the interest rate pressures, and negative house price sentiment has placed additional pressure on our operations,” he says.
“But to ensure the best possible outcome for all of our partners and customers, we have had to commence the liquidation of part of our Australian business.”
Malcolm Howell, of Jirsch Sutherland, has been appointed liquidator to part of the Caydon Group. OCP Asia has appointed Matthew Hutton and Matthew Caddy, of McGrathNicol Restructuring, as receivers to the Caydon subsidiaries affected by the liquidation.
The receivers have control over a number of Caydon Group assets, including completed residential and commercial property, sites under development and land holdings.
Caydon’s current Melbourne developments HOME in Alphington and Due North in Preston, both of which are under construction, have not been impacted by the appointments and remain fully funded for completion.
However, the liquidation of Claydon subsidiaries is a double blow for the Malt District project, the site of the historic Nylex silos. Claydon had engaged the now failed Probuild to construct the first stage of the project, which had reached practical completion before Probuild, formerly one of Australia's largest builders, collapsed earlier this year. It is unclear what the future holds for the project in the wake of Claydon's woes.
“The receivers are undertaking an urgent financial assessment of the properties and assets under their control,” say Hutton and Caddy in a joint statement.
“We will be working constructively with all stakeholders, including financiers of individual properties, to secure the best possible outcome for all parties.
“OCP Asia intends to support the receivership process, including through the provision of additional funding, to ensure the properties and assets can be progressed and maintained while options for development and/or disposal are explored.”
Russo confirms that its HOME and Due North projects will remain unaffected and that buyers will not be impacted.
“We intend to work closely with the liquidator and all of Caydon’s stakeholders throughout this period to minimise any disruption,” he says.
The collapse of the Caydon subsidiaries comes amid the latest concerns that rising interest rates are the next big threat to the Australian economy.
Earlier this month, AMP senior economist Shane Oliver warned that the Reserve Bank of Australia is ‘determined to get inflation under control, even if it means the risk of recession’.
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