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Lendlease, one of Australia's largest construction companies, has signed a major contract to retrofit Google-owned land in California into multi-purpose neighborhoods, including homes and offices.
In a statement to the Australian stock market on Thursday morning, Sydney-based Lendlease announced that it and the Silicon Valley company would jointly undertake redevelopment projects of Google properties located near its headquarters located in the city. San Francisco Bay Area.
This announcement comes after last month, Google had promised to pay a billion dollars over the next decade to help address the housing shortage, including redeveloping its own land.
The projects will include 15 square meters of new "mixed-use" neighborhoods with 15,000 new homes, as well as office, retail and hotel developments in San Jose, Sunnyvale and Mountain View, Lendlease said.
"This new joint agreement between Google and Lendlease will help meet the need for new housing in the San Francisco Bay Area," said Denis Hickey, CEO of Lendlease Americas.
Lendlease said the total value of his contract was about $ 15 billion and that its completion would take about 10 to 15 years. The company did not provide details on the transactions, but said the work should begin in 2021.
Analysts said the financial aspects of the deal – the largest ever by Lendlease – are currently difficult to quantify, but it could boost Lendlease, whose after-tax net profits have fallen by 96 percent. % in the first half of the year.
"Although it is difficult to be more specific and that Lendlease can only capture a part of it depending on the structure, the opportunity is clearly great," he said. Rob Freeman, an badyst at Macquarie, adding that the agreement has nearly doubled the number of urban Lendlease projects. .
Mr Freeman added that Lendlease would also be responsible for raising funds for the project and bringing in potential investors such as pension funds and sovereign wealth funds.
Paul Butler, an badyst at Credit Suisse, said Lendlease could expect a profit margin of between 20 and 25 percent on Google's developments. That would add $ 5.5 billion ($ 3.9 billion) to Lendlease's earnings before interest, taxes, depreciation and amortization over the life of the project, Butler added.
Lendlease and Google have been working together for over two years. The Australian subcontractor also builds the new European headquarters of the technology company in London.
Lendlease shares climbed 5.3% in the morning to the Sydney trading session following the news, bringing the developer's shares to their highest level since last September.
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