Babcock & Brown Residential Land Partners has bought a controlling stake in Links Living’s partnership interest in two master planned residential developments in Melbourne.
The properties include Sanctuary Lakes Resort and Sandhurst Club. The Sanctuary Lakes Resort also celebrated its 10th anniversary last week.
Over 1200 homes are now completed and 3500 residents have taken up residence at the resort. Sanctuary Lakes Resort commenced construction in September 1996 with the first land sold in that month and the first residents moving in during November 1998.
With a budget of $240 million staged over 12 years, the economic value of the project is estimated at over $800 million.
The outstanding success of Sanctuary Lakes Resort has seen 1750 of the 2500 lots already sold for more than $280 million.
Both properties will continue to be developed and managed by Links.
The transaction is the first acquisition for the group since listing three weeks ago. Payment arrangements remain subject to confidentiality and will ultimately be determined based on the underlying performance of the project.
BLP’s managing director Michael Balkin said Links will be the group’s fifth development partner.
“The investment in the two Links properties and the partnership with Links reinforces the model of growing and diversifying the property portfolio and expanding the stable of quality development partners in a manner which enhances securityholder value,” he added.
The investment which was foreshadowed in the Prospectus and Product Disclosure Statement dated June 06, 2006 will be funded from existing debt resources and upon settlement, which is expected to occur in late August, will move BLP’s gearing to approximately 35% and closer to its targeted gearing level of 50% – 65% of gross assets.
In addition, Links has also agreed to reinvest $8.7 million dollars in acquiring BLP securities at the IPO issue price of $1.00 each. These securities will be escrowed for two years from 30 June 2006 being the date of IPO. The securities will be sourced from underwriters and investors who had sub underwritten the securities pending the outcome of negotiations with Links.
“We are delighted that Links has demonstrated their confidence in the projects and the long term future of BLP by reinvesting such a significant component of the proceeds in BLP.
“Both the Sanctuary Lakes and Sandhurst Projects are zoned for residential use and following these investments approximately 90% of BLP’s portfolio is now zoned. This again reinforces our strategy of ensuring that a significant proportion of the portfolio is zoned, thereby limiting development planning and approval risks for BLP Securityholders,” Balkin said.
By Kathryn O’Meara
