This article is from the Australian Property Journal archive
MALAYSIAN property developer UEM Sunrise may be muscling out the operators of a 400-seat restaurant and bar and table tennis concept venue from a Melbourne CBD tower before it get the chance to open.
Paddle Battle entered into a lease with UEM Sunrise in 2021 to anchor the retail component of the developer’s Aurora Melbourne Central, an $800 million apartment tower with 959 apartments, which at 88 storeys stands as the city’s third-tallest building.
The relationship between the parties has since broken down, with Kuala Lumpur stock exchange-listed UEM Sunrise terminating the lease in September after bitter disputes over an easement running through the property, air conditioning upgrades and engineering drawings that were incorrect.
Paddle Battle is backed by Eatertainment and its subsidiary, Home of Hospitality, which creates and manages a range of restaurant, bar and café brands. Its backers include Eleanor Barrott, who co-founded MAMOS Greek Street Food, and George Pezaros, who founded the Degani café chain and ENA Greek restaurant, both of which he has since sold.
Barratt described UEM Sunrise’s conduct as “deplorable”.
“We’re backing the venture to the tune of around $7.5 million so far, for an operation that will employ some 150 people and attract upwards of 200,000 patrons per year into the Melbourne CBD,” she said.
“UEM Sunrise, on the other hand, is a billion-dollar juggernaut whose only interest is to lock us out of a lease through long-running, expensive legal action. They build apartments and have no experience in nor understanding of the hospitality sector.
“We’ve been able to stave them off so far but if it continues this way, they’ll be putting a stop to an exciting venture for the city at a time when investment in Melbourne’s retail precinct has never been more critical.”
A statement from Eatertainment and Home of Hospitality said the property agents of UEM Sunrise painted an “optimistic picture during the inspection, assuring Eatertainment that an easement — a walkway connecting La Trobe Street and Melbourne Central Station — would pose no hindrance to Entertainment’s plans for the space”.
However, incorrect engineering drawings from UEM Sunrise led to a redesign of the premises, and promises of an adequate air conditioning system ended with Eatertainment having to foot a $500,000 upgrade to the system – a cost that UEM Sunrise refused to bear.
In addition, the easement on premises led to the refusal of its liquor licence, despite UEM Sunrise’s early assurance it would not pose an issue. This required Eatertainment to undertake further major design changes to adhere to relevant liquor licensing requirements.
UEM Sunrise’s termination of the lease has left Eatertainment facing a potential loss of $3.3 million already invested and an additional $4 million needed to finalise construction and open Paddle Battle.
Eatertainment scored an important legal victory last November with the Victorian Civil and Administrative Tribunal finding in support of Eatertainment’s rights under the lease signed in 2021.
However, its backers are pessimistic about UEM Sunrise’s willingness to adopt a “reasonable, commercially-minded approach”.
“We’re calling on UEM Sunrise to cooperate and collaborate, rather than actively impeding what would be an exciting addition to Melbourne’s hospitality and entertainment landscape”, Barratt said.
