This article is from the Australian Property Journal archive
THE Liberman family-backed non-bank lender Merricks Capital has placed the $155 million Melbourne Place hotel development in the Melbourne CBD into voluntary administration following payment defaults by the developer.
The developer and owner of the site at 124-130 Russell Street – formerly home to the Theosophical Society – is Triple MMM Holdings, which was previously associated with Longriver Group. Longriver bought the property in 2017 for about $23 million and was involved on the project until the end of June this year, according to a spokesperson.
McGrathNicol restructuring partners Matthew Caddy and Matthew Hutton have been appointed administrators.
The project – in the early stages of construction and funding – will comprise a 15-storey, 189-room boutique hotel on prime land in the Paris end of Melbourne’s CBD. It will also feature three retail tenancies, a signature restaurant space at basement level, a ground and rooftop bar on level 12, a multi-purpose space for events and functions, a gymnasium and back-of-house operational areas.
Merricks Capital is the senior secured lender for the project, having made available a facility of $105 million, of which around $40 million was drawn. The facility forms part of Merricks Capital’s $2.1 billion of funds under management in the private credit sector.
“Melbourne Place sits on a prime site in Melbourne’s east end that is hard to replicate, and we believe it will be one of Melbourne’s leading hotels. Merricks Capital is keen to support it through to completion if the right equity partner is presented by the administrators,” said Merricks Capital executive chairman and chief investment officer, Adrian Redlich.
“Merricks Capital will work collaboratively with the construction company ADCO Constructions, the administrators and other stakeholders to seek to achieve the best outcome for the project and all stakeholders.”
Hutton said Merricks Capital has advised that it intends to support the administration process, including through the provision of additional funding, to ensure that construction can be progressed and maintained, while options for the sale and/or recapitalisation of the development are explored.
ADCO managing director Neil Harding said ADCO remained supportive of the project.
“Construction remains on track for completion in line with project planning, and we will work with all stakeholders to see it to a successful conclusion,” he said.
ADCO has just been appointed to deliver the new $100 million headquarters of AFL club Hawthorn in Melbourne’s south east, and is also undertaking their AFL rivals the Western Bulldogs’ redevelopment of the Whitten Oval in West Footscray.
Meanwhile, Longriver has just sold another Melbourne CBD development site for about $50 million, less than 18 months after picking up the 157-173 Lonsdale Street and 234 Russell Street property for $49.22 million.
While the construction industry has been smashed by supply chain issues and labor costs, sending builders and developers to the wall and threatening numerous projects, the Financial Review reported the issues clouding Triple MMM Holdings were rather problems within head office and specific to the developer.
