Thursday, 2 April 2009

Dubai developer withdraws from Barangaroo project in Sydney

From the Sydney Morning Herald 2nd April '09

IT IS 15 months since the Australian boss of Dubai's biggest developer, the royal family-backed Nakheel, said it would expand its "international mandate" by buying a big stake in the leading Australian property group Mirvac.

Now Nakheel is winding back that mandate and has withdrawn from a consortium bidding to develop Barangaroo, the NSW Government's $2.6 billion project on east Darling Harbour.
Mirvac and another of Nakheel's co-bidders for Barangaroo, Leighton, are sharing its pain amid the global credit squeeze and a collapse in Dubai property prices. Leighton was to build the Donald Trump Tower in Dubai until Nakheel and the American tycoon halted the project this year.

The Herald revealed on Monday that Barangaroo - to combine Australia's biggest financial hub and a foreshore park - faced a financial hurdle as bidding consortiums warned the Government they could provide only limited funding. Nakheel's withdrawal raises further questions. Its departure was announced when the three bids for Barangaroo were submitted on Tuesday.

Mirvac Projects, Leighton Projects and Macquarie Property Development and Finance insisted yesterday that Nakheel's departure from their tender did not jeopardise the bid. A spokeswoman said it was locally driven and "we have the financial capacity, the experience and the resources to deliver the project". She could not say what percentage of funding Nakheel was to contribute.

Another bidder, Lend Lease, said it and Westpac, its main financier and bid partner, remained committed. The Herald understands Westpac's funding will be limited but David Hutton, chief executive of Lend Lease Retail and Communities, said his firm's own capital was significant. "We remain confident, despite the current financial conditions, that we can fund the bid."

The third bidder is Brookfield Multiplex. Its major projects director, Mick O'Brien, asked if there were concerns about finance, said: "We're not talking about that when we're in the process. We feel we have a good bid and we will want to discuss those issues internally, with the Government."

When Nakheel took a stake in Mirvac worth about $400 million in December 2007, the Australian chief executive of the company, Chris O'Donnell, said: "As Nakheel looks to move forward its international mandate, it makes perfect sense to look at the possibility of joint developments with a like-minded company."

Two of Mr O'Donnell's former Australian colleagues at Nakheel, Matt Joyce and Marcus Lee, have been held without charge in Dubai, on suspicion of fraud, since January 25. They are among 20 Australians now held in Dubai. The latest two are a NSW man, 57, and another man, facing separate allegations of fraud. Both approached the Australian Consulate-General on March 25.

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