Lendlease's $1b New York play
Property developer Lendlease, with backing from Aware Super, has made its first major regeneration foray into New York, taking control of a Brooklyn site on the waterfront with plans for a $1 billion build-to-rent project.
Across the East River from Manhattan, the project will transform a full city block in the Greenpoint neighbourhood into about 800 apartments, with a portion of those earmarked for affordable housing under a New York City program.
The deal comes hard on the heels of Lendlease chief Steve McCann’s declaration in late August that the locally listed global player would significantly ramp up its real estate development and funds management activities around the world, fuelled in part by a $1.15 billion raising earlier this year.
It also gives Lendlease a coast-to-coast portfolio of major urbanisation projects across the US, including a build-to-rent development also backed by Aware Super in Chicago and an ambitious plan for housing development on Google-held land in Silicon Valley.
“On the back of the $20 billion partnership we signed with Google last year to jointly deliver three major urban regeneration precincts in the San Francisco Bay area, this takes our US development pipeline to over $30 billion of current and future projects,” said Denis Hickey, chief executive for Lendlease’s Americas business.
Backed by Aware, the rebadged First State Super, Lendlease takes control of the Java Street site from London-listed investment house JZ Capital Partners and development vehicle RedSky, which will retain a minority 10 per cent position in the project. Lendlease paid $US100 million ($138 million) for its 90 per cent stake in the development project, which had been on the market for $US165 million.
Within their partnership, Lendlease holds a 25 per cent interest while Aware Super has a 75 per cent stake.
The project also ticks another major theme for Lendlease’s global business strategy by increasing its exposure to build-to-rent, considered a more resilient asset class through the pandemic disruption and economic slowdown.
The Brooklyn deal is also a story about the increasing export of Australian super fund capital into global real estate markets and follows on from Aware Super’s first direct property deal abroad, taking a major stake in a European serviced apartment operator last month.
“We’re proud to move this project forward with Lendlease while further expanding our successful US multifamily portfolio and building out our strategy in affordable housing, multifamily/build-to-rent and serviced apartments,” said Alek Misev, portfolio manager at Aware Super.
In keeping with a major urban regeneration project, the Brooklyn project will rework some of the public waterfront esplanade, improving the connection to the India Street Pier and NYC Water Ferry.
While the project is Lendlease’s first major urbanisation play in New York, the company has grown deep roots in the city over the past 40 years through a series of construction projects and a condominium joint venture on Fifth Avenue.
