Lendlease has sold a 25 per cent interest in a tower it is developing above the future Victoria Cross metro station in North Sydney to one of its wholesale unlisted property trusts in a $300 million deal that could give it extra firepower to bid on other lucrative projects as the city undergoes an infrastructure boom.
The contract won by Lendlease was worth $476 million but the company estimates the end value of the project will be about $1.2 billion.
The project was a natural fit for the Lendlease-managed fund, APPF Commercial, which focuses on owning next-generation, sustainable assets in connected precincts with great amenity, fund manager Micah Schulz said.
“This is an exciting development in the heart of North Sydney where our investors will benefit from the value creation that Lendlease routinely unlocks with its recognised world class urban regeneration capability,” Mr Schulz said.
The over-station tower will include about 58,000 square metres of office and retail space. It’s one of several lucrative metro station developments planned across Sydney. The metro system, with 31 stations, is expected to be up and running in 2024.
Lendlease won the rights to develop the station and the 40-storey office tower above it in 2018, knocking out bids from rivals Dexus and Charter Hall in the process.
Lendlease managing director of development Matt Mears said the vision for Victoria Cross was to create a world class integrated transport precinct that would comprise leading sustainability practices that would create offices that would attract global talent.
“As a mixed-use hub with commercial and community appeal, Victoria Cross, like Barangaroo South, will be a place where people will want to come not only to work, but to visit and enjoy unique experiences,” APPF Commercial’s Mr Schulz said.
The deal, estimated to be worth about $300 million given the end value of the project, could free up funds for Lendlease to embark on other infrastructure projects popping up across the city.
In December, Street Talk revealed Lendlease was bidding on the development rights for the Martin Place metro development, with Hong Kong Monetary Authority as its partner. Dexus and Investa are also on the shortlist. A deal with Macquarie Group, which listed the asset for sale in October after an unsolicited bid to develop the precinct was given the green light by the state government, is expected to be reached early this year.
While there had been stiff competition among developers bidding on the over-station development rights across several future metro stops, including Waterloo and Pitt Street, the NSW government has now earmarked another seven sites for the Western Sydney Metro rail line that will likely provide ample development opportunities.
Stations have been confirmed at Westmead, Parramatta, Sydney Olympic Park, North Strathfield, Burwood North, Five Dock and The Bays Precinct, with the NSW government planning for integrated developments for all but North Strathfield. However, how those development opportunities will be opened up to the private sector are still unclear.
Bidding on other over-station developments across the city includes at Waterloo, where John Holland and Mirvac were recently awarded a joint venture contract worth $299 million to deliver the suburb’s new metro station.
The Waterloo Metro Quarter project, expected to be worth $800 million on completion, will comprise five buildings with three skyscrapers and two smaller towers above and around the station, with space for offices, retail and residential, including 5 per cent of apartments being set aside for affordable housing.
Over on Pitt Street in the CBD, construction and development group Grocon has partnered with Oxford Properties, the real estate arm of property arm of Canadian pension fund OMERS, to deliver the first build-to-rent project in the centre of the city, after outbidding short-listed competitors ASX-listed Lendlease and Brookfield Properties.
Meanwhile the NSW government recently scrapped the tender for an integrated development at the planned Crows Nest metro station and has opted for a “construct-only package” instead.
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