Global property group Lendlease teamed up with Aware Super to purchase a strategic stake in the $1 billion Greenpoint urban development in Brooklyn, New York City
Under the plan, Lendlease will take a 25 per cent stake in the development and Aware Super, previously known as First State Super, will have the lions’ share of 75 per cent. Overall the partnership has bought a 90 per cent stake in the 2.6 hectare site with the current owner, London-listed private equity firm, David Zalaznick’s JZ Capital Partners retaining 10 per cent.
Lendlease chief executive Steve McCann told investors at a strategy day in August that he intended to move the company towards more dual-investment projects to generate long term recurring income from rent collection and reduce the risks of developments.
Mr McCann said the deal aligns with Lendlease’s strategy to grow its development business in targeted US cities. Since 2015, the development pipeline has grown to about $30 billion, across New York, San Francisco, Chicago, and Boston.
“Lendlease has a 40-year history operating in New York. This opportunity aligns with Lendlease’s strategy to grow its development business in targeted US gateway cities,” Mr McCann said.
Build-to-rent, while still in its infancy in Australia, is based on the US multi-family model, where the developer retains the property as the landlord, instead of the traditional build-to-sell model. It gives tenants long-term lease deals at more affordable rents.
Lendlease and Mirvac have lobbied state governments to change tax laws such as land tax to make the sector more palatable for developers.
Mirvac is moving to the next stage of development at the Green Square Town Centre, in Sydney’s South, comprising nine buildings, with about 800 build-to-sell apartments amid retail and commercial space.
The $1.5 billion in cash raised by Lendlease in April, will be used to help fund the US acquisition and undertake the development. It adds to Lendlease’s $20 billion partnership with Google to jointly deliver three major urban regeneration precincts in the San Francisco Bay area.
The site at 1 Java, Brooklyn is on the on the East River and will include a re-imagined public waterfront esplanade with a connection to the India Street pier and NYC Water Ferry.
Denis Hickey, chief executive Americas for Lendlease said the deal extends the 2018 partnership it formed with Aware Super. The two organisations established the US$2 billion ($A2.7b) Lendlease Americas Residential Partnership (LARP) to develop and hold residential for rent assets in targeted US gateway cities.
“With this latest investment, the LARP portfolio now spans projects in Chicago, Boston and New York,” said.
Alek Misev, portfolio manager at Aware Super, said the deal will add to the fund’s exposure in the US multi-family sector. He said the project expands the fund’s US portfolio of affordable housing, multifamily/build-to-rent and serviced apartments.
Source: Thanks smh.com