Lend Lease in A$6 Billion Sydney Project

Darlington Musarurwa
21 Dec, 2009
New York City

Australian stocks edged lower but commodities closed higher. Lend Lease plans to spend A$6 billion to develop Barangaroo financial precinct in Sydney. Qantas Airways profit before tax in the current fiscal half year may fall between A$50 million and A$150 million.

[R]3:00 AM New York, 7:00PM Sydney – Australian stocks edged lower but commodities closed higher. Lend Lease plans to spend A$6 billion to develop Barangaroo financial precinct in Sydney. Qantas Airways profit before tax in the current fiscal half year may fall between A$50 million and A$150 million.[/R]

Australian stocks fell despite rising commodity stocks. Commodity stocks rose as crude oil prices jumped 1% to $73.4 per barrel and gold prices increased 0.4% to $1,112 per ounce.

Qantas Airways gained after it estimated fiscal first half profit before tax in the financial year between A$50 million and A$150 million.

In Sydney trading ASX 200 Index stocks dropped 0.3% or 15.4 to 4,635.10.

Of the ASX 200 Index stocks, 97 rose, 85 fell, and 18 were unchanged. Macquarie Media led gainers in the index shares with a rise of 7.1% followed by Qantas Airways jumping 5.1%.

Qantas Estimates Profit of A$150 million

Qantas announced today that profit before tax in the first half of the 2009/2010 financial will rise in the range of A$50 million to A$150 million as operating conditions continue to improve.

However, volatility in economic outlook, industrial capacity, passenger demand, fuel prices and exchange rate continues.

November group passenger numbers rose 9.7% from a year ago, while RPKs jumped 3% and ASKs dropped 2%, yielding a revenue seat factor of 82.3%, which is 4 percentage points higher than the previous year.

The group passenger numbers for the financial year to November 2009 edged up 6.9% from a year earlier.

Qantas is upbeat that the confirmation by the Federal Government to remove foreign investment restrictions under the Qantas Sale Act.

Presently, interest by foreign airline shareholders is restricted to 35% and for foreign individual shareholder is limited to 25%. The total foreign holding restriction of 49% will remain.

Qantas has hedged 85% of its expected fuel requirement in 2009/2010 at a projected price of $88 a barrel, including option premium.

Lend Lease Launches Wholesale Fund

Lend Lease announced today the closure of a new wholesale fund, Lend Lease Real Estate Partners 3, after receiving A$218 million in commitments from a small group of investors.

The fund, with a gearing of 30% to 50%, will invest over A$350 million in “good quality sub-regional shopping centres and commercial assets” over the next 12 months.

It will also participate in the consortium bidding for the ING Retail Fund.

Lend Lease chief executive officer and managing director Steve McCann said the investment is meant to take advantage of the current low point in the property cycle.

Separately, the company announced that it has been selected by the Barangaroo Delivery Authority for a central business district development of A$6 billion. Construction is expected to begin in late 2010.

The company was the highest bidder for the project trumping the competing bid from Brookfield Multiplex. The A$6 billion project involves office towers, shopping center of 320,000 square feet and luxury hotel. The company will also build one kilometer of Sydney Habour waterfront for public.

New South Wales Premier Kristina Keneally said that the project will create 3,000 construction jobs and 20,000 jobs in the financial services industry.

The property developer plans to fund the project with A$1.3 billion in cash and tapping available credit line.

Gainers & Losers

Macquarie Media led gainers in the ASX 200 index shares with a rise of 7.1% followed by increases in Qantas Airways of 5.1%, in Ausenco Ltd. of 5%, in Murchison Metals of 4.9%, in Aquila Resources of 4.6%.

Commodity stocks rose. Aquarius Platinum advanced 3.1% to A$6.66 and Bluescope Steel jumped 2.5% to A$2.90.

Cudeco Ltd. led decliners in the ASX 200 index shares with a fall of 6% followed by losses in Medusa Mining of 5.1%, in Nufarm Ltd. of 4.9%, in Biota Holdings of 4.4%, and AWE Ltd. of 4.4%.