Byron Bay blues as development sites purchased during pandemic sit empty; plan to extend night-life may help
Just 600m from Byron's famous beach, three prime development sites purchased for $176m now sit abandoned. Could contested licensing laws provide a desirable return on their investment?
Just 600 metres from the Byron Bay beachfront sits a wasteland of boarded-up and dilapidated shops purchased for $176m during the pandemic property boom.
The owners of the three separate adjoining sites on the west side of Jonson Street are sitting on paper losses of tens of millions and hope the local mayor’s plans to extend liquor licensing hours will be the leg up they need to either flip their properties, or develop them.
“The market has changed a little bit from when we first bought in,” said one investor involved, Ross Pelligra.
“It’s softening, so we are trying to work out what’s the next thing.”
Their idleness should also pose a question to investors considering exposure to the booming private credit market given the role of non-bank lenders snapping up local sites.
MaxCap and Metrics Credit are among the owners.
Billionaire Harry Triguboff’s grand-nephew Ilya Melnikoff was in the picture at one point; others who have skin in the game include United Cinema’s Sam Mustaca, Mr Pelligra, and Antony Catalano.
The three sites sit directly across the road from where Justin Hemmes plans to build a Tottis and Jimmy’s Falafel on the former site of backpacker bar Cheeky Monkey’s at 115 Jonson Street. Hemmes paid $13m for the site in 2021 and it, too, is boarded up.
As is next door.
Mayor Sarah Ndiaye applied to the state government to create a special entertainment precinct.
Minister for the night time economy John Graham believes such precincts can restore “vibrancy”.
Special entertainment precinct status will allow her council to set trading hours, govern noise pollution and reduce red tape for activities such as outdoor dining.
But a growing number of locals, including doctors and other frontline workers, are furious because the shire struggles with alcohol-related violence and lacks public transport.
Millionaire property developers may benefit the most.
Mr Triguboff’s grand-nephew Mr Melnikoff paid roughly $38m in 2022 for the site closest to the beach, 90-96 Jonson Street, through his Luxcon business.
It is now in the hands of receiver Joseph Hansell from FTI, on behalf of lender MaxCap Group.
“We are looking to lease the site while we consider all options for its highest and best use,” said Mr Hansell. “In the meantime we are considering all offers.”
Two sales campaigns have failed to shift the fenced-off site, which is understood to owe MaxCap $32m.
“Given the prime nature of the asset, we have decided to continue to hold the asset and explore a number of opportunities to maximise value,” said a MaxCap spokesperson.
Neighbouring 98-116 Jonson Street sold in 2021 for $119m to a group of investors that initially included Mr Mustaca and Mr Pelligra. Now, Metrics Credit is the biggest equity holder, owning more than a third of the asset.
The non-bank lender would not say whether the increase in its ownership occurred as a result of another equity holder failing to meet loan obligations, which is how it came to own Sydney restaurant Rockpool.
Mr Mustaca, who is a 20 per cent shareholder in 98-116 Jonson Street, was not aware Metrics’s shareholding had increased, saying “talks have been going on for months.”
Mr Mustaca owns a number of commercial properties and is the CEO of United Cinemas. He said he was not closely following the special entertainment precinct proposal and surrounding controversy but agreed the town needs help.
“Byron needs anything it can to survive,” said Mr Mustaca. “It’s a beautiful town that needs investment.”
Fellow 20 per cent shareholder in the site, Mr Pelligra, also seemed unaware that Metrics had increased its shareholding. “They’ve got debt and equity,” he said.
“We’re now getting ready to start the development so there will have to be another equity call for all partners … we are recalibrating the project and just trying to work out what capital we need. Obviously the market has changed a little bit from when we first bought it.”
The Bonobo by Raes development at 116-118 Jonson Street is spearheaded by media and hotels entrepreneur Mr Catalano. That was purchased in 2021 by developer Podia and joint venture partner Centennial Property Group for $18.55m and is currently behind scaffolding. There are still 3 and 4 bedroom apartments available from $2.75m according its website. But moving in before this Christmas might be a stretch.
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