NSW property developer set to enter administration and attempt restructure

Sydney property developer Keith Johnson will place his development company Johnson Property Group into the hands of administrators in an attempt to restructure the business, which is struggling with a $100 million debt load.

According to a report in the Australian Financial Review, Johnson has secured the support of lenders including Westpac, National Australia Bank and Gresham to place the group in the hands of administrators from Sydney accounting firm deVriesTayeh.

The plan is to try and restructure the business with a refinancing deal.

Representatives from both Johnson Property Group and deVriesTayeh were contacted for comment, but were unavailable prior to publication.

Johnson Property Group is one of NSW’s largest private land developers and is best known for its huge masterplan communities.

The company’s current projects include a $200 million development at Lake Macquarie, a development at Cooranbong near the Hunter Valley and the giant Pitt Town housing development in the Hawkesbury Valley, which has been the subject of bitter protests from residents.

But while Johnson Property Group claimed just three years ago to have a land bank with 12,000 lots and a total value of $3.5 billion, Keith Johnson has told the AFR that he is now “worth nothing”.

He said delays with local government planning processes had meant he was forced to hold on to land while paying ever-increasing interest charges.

The global credit crisis – which has been a particular problem for property developers – has also dried up Johnson’s funding sources.

Indeed, it was funding woes that led Johnson to become embroiled in what he claims was an alleged scam involving a company called Western Gulf Advisory, which has offices in Bahrain and Switzerland.

Last year, WAG arrived in Australia talking up its willingness to lend to businesses, particularly property developers.

Johnson managed to secure a loan from the company for $150 million, and in August paid an $81,000 non-refundable fee and then a further $3.8 million establishment fee.

However, the loan was never made and Johnson was unable to recover his $3.8 million establishment fee.