$1.7 billion Cooks Cove development takes off

28 August 2008

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Work has commenced on Sydney’s Cooks Cove project, which will create an internationally significant trade and technology zone worth more than A$1.7 billion and one of Australia’s largest airport commercial and mixed use precincts. It is one of the most complex and significant property development transactions in Australia in recent years.

Corrs advised Westpac Institutional Bank and its Specialised Capital Group on the acquisition of a 50% stake in the joint venture with Boyd Properties developing the 108 hectare site adjacent to Sydney Airport. The site currently comprises a golf club, marshes, sporting fields in a poor state of repair, a landfill site and former sewers.

The project consolidates government and private lands and involves the remediation and development of the site into a major commercial hub. This includes the design, construction and marketing of trade and technology related offices, warehousing, retailing and hotel accommodation.

With approximately 70% of the site dedicated to open space containing recreation opportunities, the project also includes the development of a new golf course and enhanced public space, protection of wetlands and the provision of a range of community recreational facilities.

Sean McElduff, general manager of Westpac’s Specialised Capital Group, said: “the project is an exciting investment opportunity. It’s an outstanding, environmentally responsible and sustainable development which is consistent with Westpac’s broader sustainability and community goals”.

Corrs advised Westpac’s Specialised Capital Group on all aspects of the project over a 20 month period. This required negotiating the full range of property and development, debt and equity funding, fund establishment and tax issues, which were successfully addressed by a project team led by partners Peter Calov, Andrew Lumsden, Shawn Wytenburg, Simon Ashworth, Craig Milner and Dixon Hearder.

Peter Calov said: "The successful delivery of this project demonstrated our team's deep understanding of the commercial drivers of this transaction and Westpac’s needs. The key was using the firm's extensive property industry expertise across work streams such as corporate, funds management, finance and tax to resolve issues as they arose and successfully help our client to identify and manage the legal risk".

The project brief was extremely complex, commencing in 2006 with initial due diligence on the site, which identified more than 15 stakeholders with interests as diverse as a local sporting club and the Civil Aviation Authority.

The project involved land swap agreements and compulsory acquisitions, and was complicated by the different types of land (including old system title and crown land), number of parcels of land, number of stakeholders and different types of stakeholders. They included companies, sporting associations, government authorities and statutory authorities – all of which had differing requirements for the transactions.

Work included:

• The negotiation of the State Government development delivery contracts and sponsor support arrangements;
• The negotiation of development delivery contracts and sponsor support arrangements with Kogarah Golf Club;
• Corporate due diligence, fund establishment, shareholder/joint venture and investor documentation, sale and purchase documents;
• Financing, including the structured development facility with Bank of Scotland, intercreditor terms and key tripartite arrangements with the State and Golf Club;
• Complex tax structuring, including income tax, GST and stamp duty issues;
• Planning and environment matters, including the diligence report, local government planning agreement; and
• Issues of remediation as a result of swamp land and an endangered frog species being located in the nominated area.