Investors fear millions lost, take legal action against Lion Property Group

A forensic auditor has been appointed to investigate Melbourne developer Lion Property Group after legal action was instigated by aggrieved investors, raising questions over hundreds of millions of dollars’ worth of proposed East Coast property developments. 

The Supreme Court of Victoria on Tuesday (27 May) appointed an auditor to the group, after more than a dozen investors launched legal “wind-up” applications against Lion and at least 18 of its connected entities. 

The Melbourne-based developer — which is currently spruiking to investors “targeted returns” as high as 65 per cent on one of its projects — has 14 developments in the pipeline on Australia’s east coast, according to its website. 

They include projects in the blue-chip suburbs of South Yarra, Brighton, Camberwell, and Hawthorn East in Melbourne; New Farm and Newstead in Brisbane; and Mermaid Beach on the Gold Coast. 

Searches show one company in the Lion group — called 125-127 Alexandra Avenue Pty Ltd — was placed in administration in February. 

Lion Property Group was founded by directors Garry Pesochinsky and John Sader in 2018, its website states. 

The company and Mr Pesochinsky did not respond to a request for comment. 

The wind-up applications against the group were filed by Melbourne lawyer Peter Richards, who also declined to comment when contacted by Australian Property Investor Magazine. 

Lion Property Group’s website shows it is currently seeking raise up to $18 million from investors to fund a luxury development called Elysian, in Melbourne’s Albert Park. 

The project would deliver a “65 per cent targeted return to investors” over a “36-month investment term”, Lion Property Group states. 

“This is a superb development site between two heritage buildings: the famous Victoria Hotel and a colonial manor home built by the McLean family in the 1800s. 

“It is expected that the project will sell for a cumulative value in excess of $62 million,” it states. 

Rob, an investor who wished to remain unnamed, told API Magazine he had invested $200,000 in two Lion Property Group property developments in 2020 but had not seen any returns and had been unable to recover his funds. 

“It was supposed to be an 18-month project,” he said. 

“I’m five years in, and I’ve heard there’s people out there seven and eight years.”

Under the investment offer, investor Rob was to be paid out when the property development was complete. 

“It’s been 85 to 90 per cent finished for more than two years,” he said. 

Rob, who suffers from a serious medical condition, said he sold his house after splitting from his partner. 

He ended up with about $280,000 from the sale, most of which he invested with Lion Property Group. 

The investment had been financially devastating and he was now homeless and had been forced to live in a caravan. 

Lion Group company 125-127 Alexandra Avenue Pty Ltd was placed in administration in February, ASIC searches show. 

That company is connected to “Aire on Yarra”, a Lion Property Group development at that address in Melbourne’s South Yarra. 

“Our plans for this development site are to build two townhouses and four apartments with a cumulative value of $22.55 million,” Lion’s website states. 

ASIC filings show Melbourne finance company Equity-One Mortgage Fund was appointed administrator of 125-127 Alexandra Avenue Pty Ltd in February. 

Lion Property Group has two planned luxury property developments in Melbourne’s South Yarra, which when complete would be worth about $65 million, the group’s website states. 

It also has a planned $28.8 million project at Mermaid Beach on the Gold Coast, Lion Property Group states. 

“Our plans for this site are to build two townhouses, two penthouses, and four apartments with an expected cumulative value of $28,800,000 before tax.” 

In Melbourne’s Hawthorne East, Lion has a proposed project called “Verda”, comprised of “four high-end townhouses with a cumulative value of $16.8 million”, its website states. 

In Brisbane’s inner-city New Farm, at 356 Bowen Terrace, the group plan to build “four high-end terraces”. 

“Even just in sketch-form, these homes look stunning,” the group’s website states. 

“With a focus on landscaping and decorative flora on the balconies, and the contrasting effect this creates with neighbouring buildings, this development practically named itself: Eden.” 

Soured investment forces drastic life choices

Scores of investors have united in online chat groups to vent their frustration at the absence of any returns on their investments, while Lion Group continues to seek new investors.

Investors who communicated with API Magazine said they were unable to gain any information from Lion management, while Rob said he was now forced to reconsider how he would survive. 

“There’s nowhere to stay in a caravan in town, they’ve got all my money, so I spend a lot of my time in the bush. 

“I’ve also got COPD, which is a pulmonary disease, which means that in cold weather I can’t breathe properly, and if I catch a cold I could die.”

“Two years (awaiting a promised return that never materialised) has gone into five; I’m going to die in my 30-year-old caravan.”