Payce gets in bed with Babcock & gets rich

PAYCE Consolidated has jumped into bed with a Babcock & Brown run joint venture and could potential reap in $181.8 million from the new deal.

Payce has invested $25 million in the JV, which will initially be seeded by two assets, The Waterfront at Homebush Bay and Victoria Part Estate in South Sydney.

In addition, Payce has entered into call options with a subsidiary of the JV to sell its undeveloped landholdings at Homebush Bay totalling 11.2 ha for $181.8 million.

The land may be developed into over 2,000 residential apartments and the call option is exercisable at any time between January 2008 and December 2008.

The Waterfront at Homebush Bay is located 20 kilometres west of the Sydney CBD. To date over 1,100 apartments have been completed.

The joint venture has also acquired control over a 6.5 ha site at Victoria Park for $151.5 million, which is located on South Dowling St, 5 kilometres south of the Sydney CBD.

Currently, it is proposed that the site will yield 1,600 residential apartments, 8,500 sqm of retail space and 25,800 sqm of commercial space.

Payce’s managing director Brian Boyd said this represents a significant transaction for Payce as it is a major step away from its current development and landholding activities at Homebush Bay.

“Whilst Homebush Bay is and will remain important to Payce, by entering into this transaction we are reducing our direct holding in the site and are expanding our horizons to develop the company into a substantial property investment and management group with increasing geographical and earnings diversity,” he concluded.

Australian Property Journal