Miami tower project dead in the water amid Caydon Property Group collapse

Another proposed Gold Coast apartment project is dead in the water, after its developer collapsed and a court case for the tower’s approval was dropped. 

Another proposed Gold Coast apartment project is dead in the water after its developer collapsed and a court case for the tower’s approval was dropped.

Caydon Property Group had planned an 18-storey apartment project opposite North Burleigh Surf Lifesaving Club on the Esplanade at Miami, however the 1012sqm site is likely to hit the market as receivers try to claw back more than $20m owed to creditors.

The group had about $1bn of projects under development, mostly in Melbourne, when it went into administration last month.

A key lender of Caydon, OCP Asia, called in McGrathNicol as receivers of 40 Caydon companies, including Caydon Miami Development, which owns the site at 266 the Esplanade.

The Miami project had hit trouble before the collapse of its developer, which was appealing a development rejection by Gold Coast City Council through the Planning and Environment Court.

After five months working its way through court, the case was vacated on Thursday after the development company which brought the court case, Caydon North Burleigh Development, went into administration.

Administrator Malcolm Howell of Jirsch Sutherland, which has been called in to administer at least 29 Caydon companies, recommended creditors place Caydon Property Group into liquidation at a meeting to be held on August 29.

So far, the administrator has estimated debts of $24.8m to 70 unsecured creditors. The company also owes $7.53m tax, and Mr Howell’s report said creditors were unlikely to see any of their funds returned.

Director Joe Russo was yet to submit his report into the company’s affairs, which was due on August 2.

The administrator's report said there were numerous loans made by Caydon to its related entities and, as the entities had either entered into liquidation, or were likely to enter liquidation soon, the loans were considered “unrecoverable”.

The report said the company had likely been insolvent since at least June 30, 2020 and that an insolvency claim brought against the director could total $21.7m.

Mr Russo has not lodged a defence to a potential claim of insolvent trading, which the administrator said would be referred to ASIC.

Mr Russo had blamed prolonged Covid-19 lockdowns, interest rate hikes, lack of labour and skyrocketing building costs ion the collapse of his companies.

The Miami tower was to have 54 units and replace an ageing three-storey unit block on The Esplanade, however it was rejected in February by Gold Coast City Council, which said it was too big for the site.

Tower in doubt after developer liquidation

July 28, 2022: The future of a unit tower near one of the Gold Coast’s most popular surf clubs is uncertain after the collapse of a prolific apartment developer.

Developer Caydon Group Holdings went into liquidation on Monday, with managing director Joe Russo blaming prolonged Covid-19 lockdowns, interest rate hikes, lack of labour and skyrocketing building costs.

It is unclear what impact the liquidation will have on Mr Russo’s Caydon Property Group, which has applied to develop an 18-storey apartment project opposite the North Burleigh Surf Lifesaving Club at Miami.

The tower was to have 54 units and replace an ageing three-storey unit block on The Esplanade, however it was rejected in February by Gold Coast City Council, which said it was too big for the site.

The developer is appealing the decision in the Planning and Environment Court, with the matter next listed for this Friday.

A spokesman for Caydon declined to answer specific questions about the Miami proposal, saying only that “the project and its options are under assessment”.

Property records show Caydon Miami, a company ultimately owned by members of the Russo family, paid almost $18m for the site in several transactions between March and November last year.

Neither Caydon Miami nor Caydon Development Group were in liquidation as of Wednesday afternoon.

Caydon has developed thousands of apartments across Melbourne and is also developing a $1bn commercial precinct in that city.

The administration of Caydon Group Holdings came two years after its auditor warned of its ability to continue as a going concern.

The company’s auditor, ShineWing Australia, drew attention in 2020 to the company’s financial report which indicated that current liabilities exceeded its current assets by $94.2m at the end of that financial year.

Caydon managing director Joe Russo at one of the group’s Melbourne development sites. Picture: Jake Nowakowski

Mr Russo told media two years of Covid-19 lockdowns in Melbourne had caused business uncertainty and severely impacted sales.

“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 said.

“It has been extremely difficult to make this decision, 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.”

McGrathNicol partners Matthew Hutton and Matthew Caddy have been appointed receivers following the appointment of Malcolm Howell of Jirsch Sutherland as liquidator.

The receivers appointment to parts of the company was made by OCP Asia which was funding Caydon’s residential and commercial property, sites under development and land holdings.