Boral sign earnings-enhancing property agreement
Company enters into Scoresby property development management deed with Mirvac
BORAL Ltd have recently entered into a property development management deed with Mirvac in relation to their Scoresby site (also known as Wantirna South), on the outskirts of Melbourne, which is expected to deliver in excess of A$300 million of additional earnings over the life of the project for the Australian-based multinational construction materials company.
Under the agreement, real estate investors Mirvac will manage the urban development of the 171ha site from 2027 through to anticipated project completion in 2035, which will include the creation of a proposed new housing community and parklands.
The Scoresby site was formerly a manufacturing plant for Boral Bricks in Victoria. Following divestment of Boral’s 40% interest in the Boral CSR Bricks joint venture to CSR Ltd in November 2016, Boral retained ownership of the Scoresby site, with part of the site currently leased to CSR.
Early rehabilitation works, rezoning and initial development activity is planned to take place through to the end of CSR’s lease, after which more significant development activities will occur.
Mike Kane, Boral’s chief executive officer and managing director said Boral has a long and strong track record of delivering earnings from property assets and working with property developers to maximize returns.
‘The Scoresby development will be a significant value-contributor for both Boral and Mirvac, as well as the local community in Melbourne’s south-eastern suburbs,’ he commented. ‘This announcement further demonstrates the embedded value of Boral’s land assets with potential development opportunities for those assets at or near the end of their operational life.
‘Together with the Donnybrook development, which we announced a year ago and is also being managed by Mirvac, Scoresby will be an important earnings contributor for Boral over the next 20 years. The Scoresby and Donnybrook developments are expected to deliver in excess of A$500 million of proceeds for Boral, subject to market conditions over that time and the rezoning of Scoresby.’
Mr Kane added: ‘We also have potential property end-use opportunities at Waurn Ponds and Penrith Lakes in the pipeline, which in coming years should contribute to the sustainable earnings stream we continue to generate from our property assets.’