One of Melbourne’s newest and fastest growing privately-held developers is suffering a fall-from-grace – and substantially revising its building strategy.
Steller, directed by Nicholas Smedley (pictured, top), the son of ex-Spotless and Arrium chairman Peter Smedley – who died last month, is understood to be experiencing construction funding woes, with developments across the board on ice.
In response to questions from realestatesource.com.au about speculation the group had entered voluntary administration, a Steller spokesperson said the builder is taking “proactive steps to downsize certain arms of the business to suit current market conditions” as it looks “to significantly ramp up” the operations across its retirement and aged care portfolio.
“The Steller Group is aligned with a number of key strategic financial partners which continue to finance a number of current and future projects within our portfolio. Their continued support is the backbone of the Steller group and allows us to be nimble and respond to market conditions as they arise.
“Despite the current state of the market, Steller remains very optimistic about the future of its retirement living and aged care portfolio and sees immense growth opportunities in these sectors”.
Steller acquired a number of residential development sites in 2016 and 2017 – the latter year considered to be the peak of that property cycle.
This includes 200 Wells Street, South Melbourne, for which it paid $23.4 million, and a block in Hampton, costing $16.5 million.
It also acquired the former Greyhound Hotel site at 1 Brighton Road, St Kilda, as a permit-ready apartment project, for $7.5 million. Attempts to sell this property last August for about the same price were unsuccessful.
In November, 2017, Steller co-invested in Sorrento’s Continental Hotel and late last year commenced construction of a high-profile refurbishment and extension, said to cost $80 million.
The first stage of the Continental Hotel redevelopment was set to open in five months. That refurbishment would include a hotel, wellness centre and apartments.
Demand for off-the-plan apartments has suffered since 2018 – with agents and developers fearing any change in federal government this month could sink the sector (the ALP is keen to cut negative gearing). Former Prime Minister John Howard OM AC recently likened the ALP’s controversial negative gearing position as “like pushing a drowning man under the water”.
Steller has developed dozens of small-scale residential projects since establishing 13 years ago.
“Our focus over the next two to five years remains our fast-growing retirement and aged care living portfolio,” Steller told realestatesource.com.au this week.