- The joint venture will acquire the development for circa $800M
- Upon completion,. development is expected to have a $3B end value
- Lendlease's interest is expected to decline as the project progresses
Lendlease has today announced a joint venture with Mitsubishi Estate Asia to acquire the One Circular Quay development in Sydney for circa $800 million.
The initial funds will be for up front and deferred consideration, with an additional $50 million payment subject to certain project outcomes.
Upon completion, One Circular Quay is expected to consist of a 59-level luxury residential tower, with a second tower to comprise a 220-home luxury hotel.
In a statement, Lendlease said the project will commence immediately, with an estimated development end value of approximately $3 billion.
Currently, Mitsubishi Estate holds a 19.9% interest in the joint venture. If certain conditions are satisfied, this will increase to 66.7%, while Lendlease’s ownership will reduce to 33.%.
Along with an acquisition fee on settlement, Lendlease will earn development management and construction management fees, equity returns on its capital and potentially performance fees.
The development is expected to be completed by FY27.
“The acquisition of One Circular Quay is consistent with our objective of replenishing the Australian development pipeline and working with investment partners to improve return on invested capital,” said Lendlease Global Chief Executive Officer and Managing Director, Tony Lombardo.
The news comes as Lendlease’s balance sheet and liquidity position remain strong.
Gearing is expected to below the bottom end of the 10-20% target range for FY22 following recent capital recycling initiatives.
