Lend Lease lands $1.5b job for Sydney entertainment precinct
Investors have applauded the news that Lend Lease was in the winning consortium to redevelop the $1 billion Sydney Convention, Exhibition and Entertainment Precinct (SICEEP), with the shares up 16¢ to $9.
Lease Lease and its partners beat out competitors Brookfield Mutliplex and will allow the group to effectively "book end" the redevelopment of the Darling Harbour precinct from Barangaroo South, at the Northern end to near Haymarket in the South of the City.
Under the deal, Lend Lease, as part of the Destination Sydney consortium including HOSTPLUS, Capella Capital, AEG Ogden and Spotless, will work with Infrastructure NSW (INSW) to enter into a $1 billion Public Private Partnership (PPP) to design, construct, finance, maintain and operate the convention, exhibition and entertainment facilities.
Brokers said the deal would be a significant boost to Lend Lease's development pipeline at a time when construction remains under pressure in non-mining cities.
The project will also boost the local building sector in a year that saw three major developers hit the wall through lack of forward work.
In a note to clients JP Morgan's Anthony Passe-de Silva says Lend Lease will secure a number of earnings streams from the project by acting as PPP development manager/financial advisor (via Capella Capital), delivering design and construction services (via project management and construction) and investing 50 per cent of the project equity.
"The redevelopment of the five hectare site around SICEEP also provide further opportunities to expand and lengthen the group's mixed use development pipeline," he says.
"Lend Lease believes that the site could have an end development value of over $1.5 billion, including 1,400 apartments, 15,000 square metres of commercial space, 7000 sqm of new retail space and a 900 room hotel."
He said using Lend Lease management's “rule of thumb” provided at the May 12 Investor Day, this project could deliver about $150 million in pre-tax and overheads earnings for Lend Lease over the life of the project.