Grocon booted from Channel 9 tower project
Property giant Grocon has had a $200 million contract for a North Sydney office tower terminated amid a refinancing deal that saw construction scion Daniel Grollo arrange to pump funds into the company.
Grollo, the group’s executive chairman, says he had a settlement for work already done and none of the group’s other projects is affected. He finalised a capital injection to the private group shortly before Christmas but would not tell The Australian how much money was involved.
Grollo is working to position the group for the future, with the refinancing coming after two loss-making Queensland projects worth about $1 billion.
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Grocon had signed a contract to build a 39-storey office tower that will be the new home of the Nine Network at 1 Denison St, North Sydney, but amid the refinancing, the $1 billion tower’s developer, Winten Property Group, terminated the construction contract with Grocon.
Grocon was delayed in providing a form of financial security known as a performance construction bond, lodged in favour of a client in case a builder defaults on a project.
Winten did not return a request for comment when contacted by The Australian.
Grocon had done three to four months of design management work on the $200 million project and is now in conversations with Winten about the work. “I’m sure there will be a settlement,” Grollo told The Australian. He says no other Grocon construction projects are in a similar situation and no other construction contract was terminated.
The company is this year expected to focus on the emerging build-to-rent sector, in which superannuation funds and other institutional investors own large towers and rent the apartments.
Grocon is one of Australia’s largest private builders and had $286 million in revenue in 2016, the most recent year for which accounts are available. Grollo’s father, Bruno, and his family have combined wealth of $720 million, according to last year’s rich list.
Grollo splits his time between a family base in New York and overseeing the company’s operations locally. His experiences in the US have driven Grocon’s build-to-rent plans, tipped to be revealed in more detail soon.
In Queensland, Grocon was in October prevented by regulators from taking on new jobs in the state after booking losses on its award-winning 480 Queen Street — a $590m office tower in Brisbane — and the $550m Parklands Project, which forms the athletes’ village for April’s Commonwealth Games on the Gold Coast.
Mr Grollo saidthe issues in Queensland had been “put to bed” and subcontractors paid.
The owners of 480 Queen Street are Dexus Property Group and its wholesale fund, both contacted for comment yesterday. The Parklands project will be leased to the Gold Coast 2018 Commonwealth Games Corporation, which did not comment when contacted yesterday.
Grocon is already developing the $730m Ribbon project in Sydney’s Darling Harbour that was sold to Chinese-backed investor Greaton. Greaton did not return a request for comment yesterday.
Grocon is also expected to be chosen, with Chinese developer Aqualand and Westfield shopping centre owner Scentre, to deliver the $2bn-plus Central Barangaroo harbourside precinct.
– with Elizabeth Redman
This article originally appeared on www.theaustralian.com.au/property.