Lender MaxCap considers the future of Luxcon’s Byron Bay apartment project

A sales campaign for Luxcon’s Byron Bay site has fallen flat after lender MaxCap gained the site in August and investors face the prospect of accepting a loss or putting more money in.

Ilya Melnikoff, head of property company Luxcon. Picture: Hollie Adams

Commercial lender MaxCap is mulling whether to take a loss on a luxury apartments project in Byron Bay or work with a company controlled by billionaire Harry Triguboff’s grand-nephew, Ilya Melnikoff, to reach a rescue deal.

The Australian understands MaxCap recently wrapped up a round of offers to sell the site in Byron Bay, which the lender gained from Mr Melnikoff’s Luxcon Group in August.

But buyers reportedly were only willing to offer MaxCap about $28m for the site in the centre of New South Wales’ most popular beach town, despite it having lent $32m for its purchase.

Luxcon had planned to use the site, currently Byron Plaza, for a $200m mixed-use development across the road from Justin Hemmes’ Cheeky Monkey’s restaurant and Bar.

The reopening of borders and the return to the office by workers has taken the heat out of the Northern Rivers market, and property values in the top end of NSW are said to be sinking.

Property prices in Byron Bay soared more than 77 per cent from March 2020 to April 2022 when they peaked.

Luxcon secured the site in November 2022.

MaxCap is understood to have recently contacted investors to gauge interest in whether they were willing to accept a loss on the Byron Plaza site or tip more money in to fund its potential development.

Any potential developer would face a smaller project for the site after a redesign reduced the plans from 54 units to 44 in the face of public opposition.

A spokeswoman for MaxCap declined to respond to questions regarding attempts to sell the site.

“The sales process has not concluded and therefore we cannot comment at this stage,” she said.

The move to walk back the Byron Bay exposure came after MaxCap lauded its backing of Mr Melnikoff’s project in November 2022.

MaxCap NSW director David Oudshoorn told media at the time he was delighted with the project.

In August last year the lender had even noted it expected to get a “full repayment” from the Byron Bay site after seizing it from LuxCon.

“Given the prime Bryon Bay location and the benefit of development approval for a significant mixed-use project, MaxCap anticipates strong demand for the site,” a spokesman told The Australian at the time.

Mr Melnikoff is understood to be seeking a new lender for the site, after earlier efforts to move the debt off MaxCap fell flat.

He told The Australian that disposal of the Byron Bay site was a “last resort”, noting that he hoped to proceed with the project with the backing of another non-bank lender.

“We’ve got an offer on the table for construction, we’re looking to restart the project in a couple of months,” he said.

“We are working closely with them in terms of the refinancing, but we’ve got a proposal on the table now that I believe will be satisfactory.”

Market sources report many lenders have pulled back or will only fund premium projects at higher rates.

Mr Melnikoff has a number of other projects under way along the eastern seaboard.

Luxcon’s East Melbourne and Port Melbourne projects are both due for construction completion in mid 2024.

MaxCap backed Luxcon’s foray into East Melbourne, advancing $76m to fund the first mortgage construction facility for the project in 2021.

US giant Apollo Global Management took a 50 per cent stake in MaxCap in 2021, in a deal which resulted in founders Wayne Lasky and Brae Sokolski taking millions of dollars off the table.