PROPERTY developer Lend Lease Group has secured $2 billion in commitments from retirement funds and its own property fund to develop the first two towers at its Barangaroo South site, a project that ranks as one of Australia's biggest developments.
The funds will allow the development of towers for which tenancy agreements have been signed with Westpac and KPMG to lease 71 per cent of space in the precinct, a former port terminal adjacent to Sydney's main business district.
Lend Lease plans to create a new financial hub for the city after it began work on the $6 billion redevelopment project late last year.
The 22-hectare site will contain 300,000 square metres of commercial floor space.
"Barangaroo South demonstrates Lend Lease's ability to provide access to high-quality, scarce development opportunities," chief executive Steve McCann said.
A further cut in Australia's interest rates "would help everybody", Mr McCann said in an interview on ABC television.
Some $1 billion of the funding will be provided by the Canada Pension Plan Investment Board, which invests for the country's state retirement plans, with $500 million coming from Lend Lease's Australian Prime Property Fund Commercial.
The project represents the CPP's single biggest real estate investment to date.
The remainder would be provided by Telstra Super, the pension fund for the telco's staff, and First State Super, an independent retirement fund.
"This is an excellent opportunity to invest in a high-quality, iconic commercial waterfront real estate development alongside Lend Lease, one of the region's top developers and APPFC, an aligned, local institutional partner," CPP's senior vice-president for real estate investments, Graeme Eadie, said in a statement.
"This investment supports our real estate strategy to acquire premium, long-term assets in key global markets," he said.
The vacancy rate in Sydney's CBD increased from 9.3 per cent in July 2011 to 9.6 per cent in January, as more than 80,000 square metres of new space was added to the market amid slower take-up, property broker Colliers International said in a report on the industry's performance in the first half. BLOOMBERG, AGENCIES
Frequently Asked Questions about this Article…
What funding did Lend Lease secure for the Barangaroo South towers?
Lend Lease secured $2 billion in commitments from retirement funds and its own property fund to develop the first two towers at the Barangaroo South site, part of a larger $6 billion redevelopment project.
Which investors contributed to the $2 billion for Lend Lease's Barangaroo South project?
The funding includes $1 billion from the Canada Pension Plan Investment Board (CPP), $500 million from Lend Lease’s Australian Prime Property Fund Commercial, with the remainder provided by Telstra Super and First State Super.
Which major tenants have signed leases for space at Barangaroo South?
Tenancy agreements have been signed with Westpac and KPMG, which together will lease about 71% of the space in the Barangaroo South precinct.
How large is the Barangaroo South development and where is it located?
Barangaroo South is a 22-hectare former port terminal site adjacent to Sydney’s main business district; the overall redevelopment will include 300,000 square metres of commercial floor space.
Why did CPP and other retirement funds invest in the Barangaroo South development?
CPP said the investment is an opportunity to acquire high-quality, iconic waterfront commercial real estate alongside Lend Lease and a local institutional partner, supporting its strategy to acquire premium, long-term assets in key global markets.
Did Lend Lease’s CEO comment on interest rates in relation to the project?
Yes. Lend Lease chief executive Steve McCann said in an ABC television interview that a further cut in Australia’s interest rates 'would help everybody.'
What significance does the Barangaroo South project have for Sydney’s financial district?
Lend Lease plans to create a new financial hub for Sydney with Barangaroo South, developing commercial towers and attracting major tenants like Westpac and KPMG as part of the city’s expanding business precinct.
How does the Barangaroo development relate to current Sydney CBD office vacancy rates?
The article notes Sydney CBD vacancy rose from 9.3% in July 2011 to 9.6% in January after more than 80,000 square metres of new space was added amid slower take-up, context reported by property broker Colliers International as the Barangaroo project moves ahead.
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