30 Jan 2024
Words Michael Bleby Australian Financial Review
Construction delays give hotel vendor an edge in scarce market
The financier behind a much-delayed hotel project in Wollongong is counting on competition for new assets in a recovering tourism market to secure a sale of up to $38 million for the development.
Financier Windlock took over the 96-room Grand Pacific Hotel Wollongong project from developer Young Street Apartments, after the mixed-use 16- storey building it was part of was slapped with a prohibition order by the NSW Building Commission in November 2022 due to defects including cracking in a load-bearing wall.
After recommencing work with new builder Advanced Constructions, Windlock, headed by Roberto Calmasini, is selling the hotel ahead of its likely completion in the second quarter of 2025, selling agent Trudy Crooks of Resort Brokers said.
The saga of the hotel shows the effect the past two years of turmoil have had on projects in the low-margin commercial contracting sector.
Figures from corporate regulator ASIC as of January 7 show the construction sector accounted for 1394, or nearly 28 per cent, of the total 5040 insolvency appointments so far this financial year.
But the 14-month delay since the project was halted by the regulator and the resumption of work has also created an advantage for the new owner. Rising costs that made it harder to start new projects would create a scarcity factor for the hotel.
“People can’t get them out of the ground,” Ms Crooks told The Australian Financial Review.
Mr Calmasini could not be contacted.
Builder WP Projects Group, whose directors were named by Cor Cordis liquidators as Jimmy and Raymond Boumassa, went into liquidation owing nearly $10 million due to trading losses, inadequate cash flow and poor management of works at the project.
The building company, which records show shared a director with the developer in Raymond Boumassa until mid-August – the point at which liquidators were appointed – was likely trading insolvent at that time, according to the liquidators.
Windlock has new appointed builder Advanced Constructions to complete the project.
CHOICE HOTEL GROUP BUYS INTO MELBOURNE
Separately, as tourism picks up in Victoria, Choice Hotels Asia-Pac has acquired the City Edge Apartment Hotels franchise, doubling its Melbourne presence by adding five serviced apartment offerings to a 130 hotel-strong Australian network dominated by regional properties.
The local arm of New York-listed Choice International did not disclose how much it paid City Edge owners Peter and Irena Cushen for the acquisition, its first in the region for more than a decade.
But securing the 271 serviced apartments across locations in South Melbourne, North Melbourne, Melbourne CBD, East Melbourne, and Box Hill was an effort to tap the growing metropolitan tourism market, said Trent Conroy, Choice Hotels Asia-Pac’s head of investments and portfolio growth.