Apartment giant Crown Group in hands of liquidators

Liquidators have been appointed to control the fortunes of apartment behemoth Crown Group and 40 of its entities after a dramatic falling out between its two founding partners.

Liquidators have been appointed to control the fortunes of apartment behemoth Crown Group and 40 of its entities after a dramatic falling out between its two founding partners.

The NSW Supreme Court appointed BDO partners Duncan Clubb and Andrew Sallway, national leader of business restructuring, as provisional liquidators over the east coast apartment developer in a bid to fix the year-long impasse to allow it to better function and move forward.

It is understood Crown founding partners Iwan Sunito and Paul Sathio agreed with the dramatic move.

Earlier this week, Mr Sunito told The Australian he was surprised and concerned that his business partner of more than a quarter of a century, Mr Sathio, had previously attempted to liquidate their co-owned development company Crown Group, which has a $1bn pipeline of upscale apartment projects.

In a scathing statement over the impending business break-up, Mr Sunito said he was saddened by the drastic application to the court made by Mr Sathio, which had been made without any warning.

“I am surprised and concerned that such a drastic application could be made to the court by my business partner of 25-plus years, Paul Sathio, without the courtesy of forewarning me or my legal team.”

Crown Group – which the James Packer-controlled Crown Resorts took on over the use of its brand name in 2015 – had a successful history with its architecturally-focused blocks making their mark, mainly in Sydney’s skyline.

But the empire has shrunk from its heyday. A scheme for a planned Sky Trees tower in Los Angeles sporting an undulating timber canopy referencing Hollywood icon Marilyn Monroe’s “flying skirt” moment is uncertain, and plans mooted eight years ago for a $1bn apartment and mixed-use project in Jakarta are not proceeding.

An artist’s impression of the plan for Sky Trees in Los Angeles.

The group is now a far more local affair with incomplete projects across Sydney and Brisbane, and one project entity, Crown W48, which is developing the Japanese-themed Mastery residential community in Sydney’s Waterloo, now in the hands of a receiver with debts of more than $90m.

This fate is unlikely to befall the remaining projects as lenders have been kept apprised of BDO’s appointment and it could break the logjam that had slowed their progress.

The split inside the company, believed to be of a personal nature, has little to do with the pressures from rising costs and tougher financiers that have slammed the development industry.

Instead, the high-profile, creative front man Mr Sunito ran up against the business-focused developer Mr Sathio. After a successful run, the company all but ground to a halt with day-to-day business not proceeding with the pair at loggerheads.

Calling in BDO has been hailed as a step forwards as it will break the impasse between the businessmen and see the company’s affairs dealt with on just and equitable grounds.

This will see the assets split up with both men quietly confident that they will be able to come away with key properties so that Crown Group’s legacy continues, even in a different form.

However, the split is not entirely clean as further legal action looms next month, but the proprietors can now prepare for a future in which they will head in different directions.

Further north, problems loom on another site with Crown’s subsidiary Crown West End having purchased a 12,500 sq m riverfront site in Victoria St, West End, in inner Brisbane in May 2018 for $35m. The developer had initial plans to build more than 400 apartments on the site as part of an “urban resort” but faced a barrage of criticism from residents about its excessive height.

Opponents of the $350m project claimed the initial 14-storey height of the apartment towers was above the 12-storey height limit for the area; there was not enough space between buildings; and there was a lack of infrastructure to cope with the influx of residents.

In 2020, Crown revised those plans to focus on two-bedroom apartments for local owner-occupiers in the wake of a changing property market due to Covid-19. According to the latest publicly available information on RPData the site, which remains a warehouse, is being offered for rent.

Mr Sunito could not be reached for further comment late Friday and Mr Sathio declined to comment.