Strong interest in Qantas lands sale at Sydney Airport
Lendlease, Mirvac and Asian logistics giant ESR are among 18 major groups jockeying to buy Qantas’s 14 hectares of mostly undeveloped land surrounding Sydney Airport as the national carrier looks to pay down some of its multi-billion dollar debt.
The buyer, which could also include the likes of Charter Hall, Goodman Group, AXA, or logistics group Logos, could develop a $2bn business park on the edge of Sydney International Airport.
Qantas would not comment on the identity of the potential purchasers but said the response to the expressions of interest campaign, which closed last week, had been strong.
“It’s resulted in 18 competitive bids that we’re currently working through,” a Qantas spokesman said.
“What’s been clear from the market is that there’s a lot of value in this land given how the surrounding area has developed over the past decade or so. Assuming we sell some or all of the 14 hectares that we took to the market, we’d expect to have agreements finalised in the next two months and complete the transaction by the end of the year.”
Qantas undertook the review of the land fronting Coward St, Kent Rd and King St, Mascot earlier this year. The review revealed there is no need for the airline, which is carrying about $6.4bn in net debt, to develop the five separate parcels, some of which are adjacent to Kingsford Smith Airport and are presently used for staff carparking.
The entire site could be worth up to $500m, with Qantas revealing the sale proceeds could help it pay down debt and buy new aircraft.
Despite national publicity earlier this year that the airline would consider relocating from its Sydney base to Brisbane or Melbourne, the review also confirmed that Qantas’s leased corporate head office would remain in Sydney’s Bourke Rd, Mascot, for the long term.
The land on offer through marketing agent Colliers totals 138,000sq m and was progressively acquired from the late 1960s, when the area around the airport was largely undeveloped.
About 40 per cent of the land is used for carparking for Qantas staff as well as the airline’s aircraft parts distribution centre, engine workshop and other facilities.
A long-term sale and leaseback of Qantas’s 21,795sq m distribution centre, positioned on a 38,920sq m prime industrial land holding, provides a secure income for an initial 10-year term, with two further five-year options included in the offering.
Depending on the market response, Qantas may look to temporarily lease back some parcels of land while arrangements are made to relocate the work functions, which is likely to coincide with the time required for development approvals for the industrial zoned land for the new owner.
Qantas said some or none of the land may be sold as a result, with any sale process to be completed by mid-December.
Combined, the total value of the land, which would be sold as freehold land or on a 99-year lease to the airline, was estimated to be worth several hundred million dollars, Qantas said.
Qantas said the land was surplus to its operations.
Group chief financial officer Vanessa Hudson said the property review revealed the amount of undeveloped and underdeveloped land held by the national carrier around Mascot. “In the current climate we’re obviously looking more closely at what is core and what is non-core, and the reality is that we don’t need this land for any of our long-term strategic goals,” Ms Hudson said in a statement last month.
“We’ve owned some of this land for more than 50 years and much of it is currently used for car parking. Given how Mascot has developed over that time, there’s a lot of value we can unlock by selling it.”
Ms Hudson said the proceeds from any sale would be used “to pay down the debt we’ve built up getting through Covid-19, which means we can start reinvesting sooner in things like new aircraft”.