Projects - Distressed Assets
Northeast Developments Pty Limited
Receivership of distressed retail centre

Summary
- Retail shopping centre
- Toongabbie, NSW
- Receiver for financier
- Senior debt ($50m)
- Unsecured ($2m)
Issues
- 8,000m2 neighbourhood shopping centre with two majors and 44 speciality shops, three levels of basement car parking (stage 1), and approval for 144-unit residential development above and adjoining (stage 2)
- Appointed to manage defect rectification, secure pre-committed leases, lease up vacant shops and consider options for the residential site, which at the time of appointment was limited by an unfeasible design
- Centre completed, but predominantly vacant and was very poorly designed.
- Anchored by Woolworths, who were not required to pay rent until the ground floor was 75% leased
- Specialty retailers claiming rent abatement due to the vacant nature of the centre. Centre was losing $1m pa
Solution
- Retail – secured centre manager, several key tenancies (including second major) to activate rental payment under Woolworths lease, which resulted in breakeven position within nine months
- Residential – amended planning approval to redesign and improve viability of stage 2
- Sold the retail stratum and agreed delayed settlement terms above valuation for sale of the residential stratum
Outcome
- Identified off-market buyer at a 40% premium to residential valuation within 12 months