This article is from the Australian Property Journal archive
DANIEL Grollo’s property company Grocon has appointed administrators to two dormant subsidiaries over a $28 million lease dispute with Australia’s largest office landlord Dexus.
Grocon called in FTI Consulting to subsidiaries Grocon Constructors (Qld) Pty Ltd and Grocon Constructors (Vic) Pty Ltd.
Executive chairman Daniel Grollo said the decision was “regrettable”, but it had no choice because Dexus’ attitude was “unreasonable and disappointing”.
The legal dispute relates to lease payments at the 480 Queen St Brisbane office tower.
Grocon sold the 480 Queen St tower to Dexus and the Dexus Wholesale Property fund in 2013 for $543.9 million and provided a two-year income guarantee on any remaining vacancies at practical completion. Furthermore, as part of the deal, Grocon was responsible for the “lease tails” of those tenants who vacated other office buildings to relocate 480 Queen St.
Dexus said the parties had entered into an agreement to restructure and extend the payment terms, but Grocon has not complied and the payment has been outstanding for three years.
A Federal Court of Appeal judgement was expected to be handed down late next month and Dexus has accused Grocon of avoiding the imminent decision by calling in administrators.
“Unfortunately, Dexus’s reluctance to wait until the court matter is concluded, means that Grocon has been left with no choice. The voluntary administration process will ultimately resolve the situation,” Daniel Grollo said.
Grocon said the two subsidiaries are dormant and the appointment “will not impact any Grocon Group employees,”
“Grocon has multiple business arms and the decision to appoint an administrator to these two entities does not in any way affect broader Grocon Group operations, which will continue to operate as business as usual,” Grocon said in a statement.
Grollo added: “Grocon has developed and constructed billions of dollars of real estate for Dexus over the years and its attitude to this matter is both unreasonable and disappointing,”
Dexus hit back at Grocon’s statement, labelling it “factually incorrect”.
“Grocon appears to be seeking to avoid the court hearing by winding up these entities.” Dexus general counsel Brett Cameron said.
Grocon is also fighting separate legal battles with two listed property groups.
Property giant GPT is claiming Grocon owes $20,633,747 for leases that Grocon agree to take “assignment” in the Riverside Centre at 123 Eagle St in Brisbane.
And APN Property claims Grocon owes $36 million over the Scots Church development in Melbourne.
