The future of a $500m Gold Coast development is uncertain after a Queensland developer called managers with creditors owing $83m.
Brisbane-based Nerang Street Pty Ltd is the company behind the $500 million Queen Street Village project on the site of the former Gold Coast Hospital in Southport.
But rising costs, the housing market crash and complications caused by Covid have plunged the project into crisis.
The company has now been placed in the hands of administrators who will meet with creditors to decide the future of the company.
The company owes about $40 million to unsecured creditors, including the large construction company Tomkins, which is owed $16.2 million by Nerang Street.
Secured creditors are owed another $43 million and include local construction companies.
The first stage of the Queen Street Village complex has been completed (pictured), but the rest of the project, including the residential and retirement towers at the Gold Coast site, hang in the balance as the developer calls managers.
The master plan for the $500 million project had visions for public spaces along with restaurant, retail and residential facilities.
One of Australia’s largest private builders, Hutchinson Builders, is owed more than half that amount after lending the company $22 million.
The company, led by David Blanck and Alex Crooke, is now owned by the Robson Cotter Insolvency Group.
The two are managing director and financial controller, respectively, of the company Property Solutions, one of the sponsors of the project.
Both have been contacted by Daily Mail Australia for comment.
Both directors of the disputed company work for Brisbane-based Property Solutions (pictured)
However, the company behind the Nerang Street Pty Ltd project (pictured) has been pushed to the brink following changes in building materials markets, Covid-19 and worrying financing arrangements.
Following a meeting with creditors, the group outlined the reasons for Nerang Street’s financial problems in a report to creditors, reports news.com.au.
The group suffered from a “change in real estate market valuations, an inability to meet financing agreements and, before that, the general impact of the Covid-19 pandemic,” the report revealed.
The company will have more meetings with creditors next week, but administrators have warned there could be a “significant” shortfall in any sale or recovery of the company’s assets.
The luxury development (pictured) is on the site of the former Gold Coast Hospital which was completely demolished to pave the way for the project.
The company owned nine lots of the project in 2018, but has since sold five of them, it was revealed.
Some creditors have already begun to recover values.
Subsequent meetings will decide whether the company is liquidated or whether a deed of arrangement of the company is prepared.
Nerang Street undertook to build the Queen Street Village development on the former Gold Coast Hospital lot.
The master plan had the site slated to become a mixed-use urban development with a central plaza, retail and restaurant space, as well as residential and commercial aspects.
The site is a 3.2 hectare parcel bounded by Queen Street, Nerang Street and Little High Street.
“Due to the size and nature of our integrated master planned community, our vision for this development is to rejuvenate the area and inject life back into the former Gold Coast Hospital site for Southport,” said Mr. Blanck ahead of stage one and two of the development.
The long-awaited first stage of the project recently opened after months of delays induced by Covid, weather and shortages, reported the Urban Developer.
A gym, food court, cinema and supermarket have opened in the development.
Plans for additional construction of a $120 million vertical retirement village were given the green light earlier this month.