The group yesterday confirmed the Brisbane site earmarked for its iconic $900 million French Quarter project in Brisbane was up for sale, with a price tag believed to be more than $80m.
Sources say financiers are erring on the side of caution in situations where, if they lend to a company such as Devine, the banks would be further exposing themselves to a major shareholder, which in this case is Leighton. Leighton owns 57.11 per cent of Devine.
As a result, Devine has been forced to shop around beyond the top four banks to secure finance.
Devine said the move to sell properties was not due to funding issues.
Instead, it was to buy more land in Victoria and South Australia, with five residential development sites under negotiation in Melbourne.
"We have got some large tracts of land in Queensland and we want to sell off parts of those so we can buy more land in Victoria," managing director David Devine said.
"All our broadacres are for sale if the price is right, but they are not aggressively for sale."
But Mr Devine conceded that there had been some debt aggregation issues with certain banks that had already lent money to Leighton.
"Leighton remains a shareholder in Devine and with some banks there are aggregation issues, but we leave those alone and go to others," he said.
Leighton's total debt as at June 30 was $613m. It is widely spread across various institutions and banks, with exposure to all of the top four Australian banks.
Wal King, chief executive of the global construction giant Leighton, struck a deal at the height of the boom in February 2007 to pay $95m ($1 a share) for a stake of more than 40 per cent in Mr Devine's company. As part of the deal, Leighton had first right to buy shares owned by directors Mr Devine and Ken Woodley after this year, representing at the time 26.8per cent of the share register, and 16.2per cent after dilution.
Yesterday, Devine's share price closed steady at 48c.
This week, Leighton chief financial officer Scott Charlton said banks were a lot tighter on lending this year.
"The banks were looking at how they treat their exposure; whether it is aggregation to clients or whether it is aggregation to the whole market," Mr Charlton said.
"Our intentions are that Devine is the residential developer of choice for the Leighton group and we will work through Devine.
"But any decision about whether ... Leighton invests more depends on if Devine can come back to the group and present another opportunity."
Mr Devine said his company wanted to joint-venture its large-scale residential projects. Its focus would be on its $500m, 678-apartment Hamilton Harbour mixed-use development joint venture with Leighton Properties.
An offer was already being considered for the sites planned for its $900m Brisbane French Quarter mixed-use development, which was not expected to proceed until at least the next financial year.
The site was being marketed by Jones Lang LaSalle's Geoff McIntyre and Ray White Transact's Rick Bird.
It was amalgamated by Devine over a number of years for two planned residential towers, a hotel and retail development.
"We have had some interest in it. We are looking at that at the moment," Mr Devine said.
Among the assets for sale was land earmarked for Devine's Redbank Plains development.
"If we can sell half of that and replenish our stock in Victoria, we'd be happy," Mr Devine told The Australian. "Townsville is the same, we have 1000 lots up there.
"If we can sell some of that and replenish our stock elsewhere, that is the plan."
The Queensland-based developer previously flagged in August, when it delivered its full-year net profit of $16.7m, that it had more than 7000 blocks and expected to sell more than 2000 in the year, while seeking joint-venture opportunities with vendors.
But it had not signalled that it would consider selling land for the French Quarter project on the corner of Margaret and Albert streets, or that more Melbourne sites would be snapped up.
Mr Devine yesterday said another site, at 96 Albert Street in Brisbane's CBD, was for sale.
That was after a deal last year to buy the office block for $24.5m collapsed when the buyer could not secure finance.
Expressions of interest closed this week.
Mr Devine said that the group was still negotiating with banks to secure funding for its $300m Ann Street office tower located in Brisbane.
Sources say financiers are erring on the side of caution in situations where, if they lend to a company such as Devine, the banks would be further exposing themselves to a major shareholder, which in this case is Leighton. Leighton owns 57.11 per cent of Devine.
As a result, Devine has been forced to shop around beyond the top four banks to secure finance.
Devine said the move to sell properties was not due to funding issues.
Instead, it was to buy more land in Victoria and South Australia, with five residential development sites under negotiation in Melbourne.
"We have got some large tracts of land in Queensland and we want to sell off parts of those so we can buy more land in Victoria," managing director David Devine said.
"All our broadacres are for sale if the price is right, but they are not aggressively for sale."
But Mr Devine conceded that there had been some debt aggregation issues with certain banks that had already lent money to Leighton.
"Leighton remains a shareholder in Devine and with some banks there are aggregation issues, but we leave those alone and go to others," he said.
Leighton's total debt as at June 30 was $613m. It is widely spread across various institutions and banks, with exposure to all of the top four Australian banks.
Wal King, chief executive of the global construction giant Leighton, struck a deal at the height of the boom in February 2007 to pay $95m ($1 a share) for a stake of more than 40 per cent in Mr Devine's company. As part of the deal, Leighton had first right to buy shares owned by directors Mr Devine and Ken Woodley after this year, representing at the time 26.8per cent of the share register, and 16.2per cent after dilution.
Yesterday, Devine's share price closed steady at 48c.
This week, Leighton chief financial officer Scott Charlton said banks were a lot tighter on lending this year.
"The banks were looking at how they treat their exposure; whether it is aggregation to clients or whether it is aggregation to the whole market," Mr Charlton said.
"Our intentions are that Devine is the residential developer of choice for the Leighton group and we will work through Devine.
"But any decision about whether ... Leighton invests more depends on if Devine can come back to the group and present another opportunity."
Mr Devine said his company wanted to joint-venture its large-scale residential projects. Its focus would be on its $500m, 678-apartment Hamilton Harbour mixed-use development joint venture with Leighton Properties.
An offer was already being considered for the sites planned for its $900m Brisbane French Quarter mixed-use development, which was not expected to proceed until at least the next financial year.
The site was being marketed by Jones Lang LaSalle's Geoff McIntyre and Ray White Transact's Rick Bird.
It was amalgamated by Devine over a number of years for two planned residential towers, a hotel and retail development.
"We have had some interest in it. We are looking at that at the moment," Mr Devine said.
Among the assets for sale was land earmarked for Devine's Redbank Plains development.
"If we can sell half of that and replenish our stock in Victoria, we'd be happy," Mr Devine told The Australian. "Townsville is the same, we have 1000 lots up there.
"If we can sell some of that and replenish our stock elsewhere, that is the plan."
The Queensland-based developer previously flagged in August, when it delivered its full-year net profit of $16.7m, that it had more than 7000 blocks and expected to sell more than 2000 in the year, while seeking joint-venture opportunities with vendors.
But it had not signalled that it would consider selling land for the French Quarter project on the corner of Margaret and Albert streets, or that more Melbourne sites would be snapped up.
Mr Devine yesterday said another site, at 96 Albert Street in Brisbane's CBD, was for sale.
That was after a deal last year to buy the office block for $24.5m collapsed when the buyer could not secure finance.
Expressions of interest closed this week.
Mr Devine said that the group was still negotiating with banks to secure funding for its $300m Ann Street office tower located in Brisbane.
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