Boral sign new Donnybrook agreements with Mirvac
Development could deliver in excess of A$200 million of proceeds for Boral over next 20 years
BORAL Ltd have signed agreements with Australian property company Mirvac to include an additional 278ha of land in the development arrangements for Boral’s Donnybrook property in Victoria, further enhancing Mirvac’s Olivine master-planned estate (pictured).
Boral acquired the Donnybrook site more than 15 years ago as a potential hard rock quarry, but subsequent rezoning of the precinct has precluded any future quarry development. Under the new arrangements, Mirvac will now facilitate urban development of the 465ha site over a multi-decade period.
The Donnybrook transaction is expected to contribute A$9 million of EBITDA to Boral in the current financial year and approximately A$9–14 million per annum of EBITDA through to 2021, and again between 2025 and 2027. Further significant earnings are expected from 2028 to 2037 as the land is progressively developed.
Mike Kane, Boral’s chief executive officer and managing director, said the Donnybrook development would be an important earnings contributor for the company that could deliver well in excess of A$200 million of proceeds for Boral over the next 20 years, subject to market conditions during that period.
‘We look forward to this long-term relationship with Mirvac,’ he remarked. ‘This agreement will create significant value for both Boral and Mirvac, as well as the local community in Melbourne’s northern suburbs.’
With the A$9 million earnings contribution from Donnybrook this year, Boral now expect property earnings to be at the high end of their guidance range of A$55–65 million of EBITDA for financial year 2018.
The company says that as a result of its large landbank and the nature of its operations, earnings from property sales and development continue to be an ongoing contributor to Boral Australia’s results.