IN A convoluted transaction, Hunt & Hunt advised on the sale of a commercial site in Melbourne to Bunnings Warehouse Property Trust (BWPT) for $19.4 million several years after the Bunnings Group originally decided against the purchase.
Hunt & Hunt partner Bill Hazlett and lawyer James Christodoulakis acted for Yankel and Little Project Developments, headed by Toll Holdings’ managing director Paul Little, in a range of transactions related to the site spanning two and a half years.
Andrew Willder and Nick Stocks from Lander & Rogers advised Bunnings Group and Andrew Deane from Blake Dawson Waldron advised BWPT.
Yankel originally planned to sell the site at 230-246 Burwood Road, in Hawthorn to Bunnings Group for it to develop its first inner city, two-level store with a 40-seat café and two-level basement car park.
But Bunnings instead asked Yankel to develop the site for lease. Yankel then entered into a building contract with Becon Constructions under which Becon assumed Yankel’s agreement to lease obligations.
Later, Yankel decided to sell the site and Bunnings Warehouse Property Trust ended up winning the tender to buy the site.
“It was unique in that the property was first offered to Bunnings, who said no, but then agreed to buy it from our client once it was built — our client taking the risk of construction. Bunnings was responsible for obtaining planning permits and all parties have agreed to abide by a mechanism for significant consultation during the works,” said Hazlett.
Although there were some obvious unique aspects to this deal, he said the transaction highlighted the lengthy processes often involved in commercial property development. It will be close to five years between the proposal to sell the site to develop the hardware store and the actual completion, due in mid 2009.
“Bunnings insisted from the outset that they apply for the planning permits, so our client wasn’t in control of the planning permit process. But there has been meetings almost on a monthly basis in terms of developing the project with Bunnings,” he said.
“It hasn’t been because our client or Bunnings haven’t been working to produce a joint outcome, this is just the length of time things take.”
Hunt & Hunt’s work included the initial agreement to lease and the lease negotiated with Bunnings, a building contract and later a development agreement along with tender documentation to link together the agreement to lease, the lease, the development agreement, the planning permits, the building contract and the contract of sale and vendors statement.
“The transactions were complex and challenging, especially tailoring the building contract to ‘back-to-back’ the agreement to lease,” Hazlett said.
BWPT will build the new store for a cost of about $24 million and will lease it to Bunnings Group Limited under a 12-year lease for initial net rent of $2,710,000 per year.