‘A very curious deal’: The $340m uni campus with a $1.8b price tag

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On a showery Friday greeting successful May, respective 100 mourners, including a erstwhile premier curate and astatine slightest 3 billionaires, gathered astatine Sydney’s Town Hall to farewell a tycoon.

Lang Walker, who died successful January aged 78, had amassed a $5.8 cardinal luck implicit six decades, transforming the earthmoving, excavation and quarrying concern helium founded successful 1964 into 1 of the country’s largest backstage spot developers.

Speakers astatine the memorial work paid tribute to the concern acumen of Walker, who near Jannali High School aft twelvemonth 10, arsenic good arsenic his consciousness of humour; earlier successful life, he’d been known to quip, “It’s lone a rort if you’re not successful connected it”.

Founder and president of Walker Corporation, Lang Walker, died successful January.

“He was quintessentially larger than life,” Barney Glover, the precocious departed vice-chancellor of Western Sydney University, told the mourners. Both hard- and soft-edged, Walker was driven and charismatic, “an imposing man, ne'er to beryllium underestimated”.

Special notation was made of his philanthropy. In 2019, helium donated $26 cardinal to Western Sydney University for a caller professorship and a aesculapian probe gathering astatine Campbelltown.

But portion Walker gave generously to the university, his company, Walker Corporation, stands to summation acold more.

Hundreds gathered to farewell the “never to beryllium underestimated” Lang Walker astatine Sydney’s Town Hall successful May.

The Herald has been examining the woody down the tallest gathering successful Bankstown successful Sydney’s west, an award-winning 18-storey operation that is fractional assemblage field and fractional commercialized bureau block.

(The students contented themselves with the lesser views successful a gathering that was, according to readying documents, designed “purely for acquisition purposes”.)

Walker Corporation spent $340 cardinal to present the 18-storey building.

Walker Corporation delivered the task and paid the $340 cardinal upfront cost.

But it stands to marque astatine slightest 5 times that overmuch from its client, Western Sydney University, which has been accused of overpaying by arsenic overmuch arsenic $1 cardinal nether decades-long contracts entered into without a tender portion Walker remained institution chairman.

The caller building, which opened successful December 2022, sits connected nationalist land.

The assemblage leases the tract from the Canterbury-Bankstown assembly and past subleases it to Walker Corporation for a peppercorn rent. Then, done different sub-lease, the roles are reversed.

Walker Corporation becomes the landlord of the building, receiving tens of millions of dollars each year.

One spot concern specializer has described the woody arsenic a win-win for the developer and a assemblage lacking successful piles of spare cash.

However, different perceiver believes WSU, which relies connected authorities backing and pupil fees, could person saved hundreds of millions of dollars had it opted to get improvement funds from a bank.

“It does look unnecessarily complex, risky and costly for Western Sydney University,” says David Parker, a erstwhile NSW valuer-general.

“It’s a precise funny deal.”

The onshore and the bold program

Compared to its older, sandstone rivals, WSU has less high-fee-paying planetary students and postgraduates to assistance money caller works.

But nether Glover, the erstwhile vice chancellor who eulogised astatine Walker’s memorial and who co-signed the Bankstown leases, the assemblage devised what it called an “innovative” model.

Rather than ain its caller campuses outright, it would lease them instead.

“We spot large worth successful having large field facilities successful the bosom of the CBDs of occidental Sydney,” Glover told The Australian Financial Review in 2019.

“That gives america proximity not conscionable to businesses for placements but universities pull organisations astir them, and that gives america an accidental to catalyse municipality renewal.”

Former Western Sydney University vice-chancellor Barney Glover speaks astatine Lang Walker’s memorial.

A nationalist database of contracts shows the assemblage has six semipermanent leases with a scope of spot developers to supply caller field abstraction successful suburbs including Parramatta, Westmead and Liverpool.

Each was entered into without a tender and the combined outgo of these deals is $2.8 billion.

By acold the largest of these is Bankstown, wherever the assemblage had ambition, a bold program and nationalist land.

Canterbury-Bankstown Council and the assemblage entered into a concern successful 2019 for the assemblage to usage a council-owned tract that had been a car parkland and an adjoining grassy area. In 2021, the assembly formally granted the assemblage a 99-year lease.

In exchange, the assemblage agreed to wage the assembly $1 rent a twelvemonth and a one-off sum of $12.9 million.

The assemblage field occupies the bottommost fractional of the 18-storey building.

A assembly spokesperson said the outgo was “fair and appropriate” and that “the crushed lease connected the spot was negotiated aft a elaborate and extended autarkic valuation process”. The spokesperson added that the lease to the assemblage had been approved by the elected council.

But autarkic councillor and erstwhile lawman politician Barbara Coorey said she was shocked by the magnitude of wealth Walker Corporation stood to make, and she had lone learned that fractional the gathering would beryllium commercialized premises aft it had been built.

“Ratepayers person been shortchanged successful this highly antithetic and arguable onshore woody to the tune of tens of millions of dollars,” Coorey said.

“This is precise invaluable civic onshore successful a premier commercialized portion that was handed implicit with precise small transparency and accountability”.

When Coorey asked the assembly astir the $12.9 cardinal outgo from the university, the assembly said the circumstances were “subject to confidential reports”.

The woody

Having clinched the site, the assemblage needed a developer.

The afloat details of the concern betwixt Walker Corporation and the assemblage are contained successful a confidential improvement agreement.

But nationalist lease documents amusement the assemblage agreed to lease the Bankstown tract to Walker Corporation for $1 a twelvemonth for 98 years.

Walker Corporation agreed to ft the measure for the building’s plan and operation costs, which added up to $340 million.

Then, to wage the developer back, the assemblage agreed to rent the full of the premises from Walker Corporation for 40 years.

But this time, the outgo was not $1 per year.

The assemblage is forecast to wage Walker Corporation an mean of $45 cardinal annually for 40 years – a full of $1.8 billion, according to the university’s database of contracts.

The magnitude is astir 5 times the upfront task costs.

When that lease ends, the assemblage volition request to onslaught a caller woody with the developer if it wants to proceed occupying the building.

Parker, the erstwhile NSW valuer-general who present works arsenic an autarkic spot consultant, said WSU could person approached a large slope to concern the operation costs instead.

“Over the beingness of the loan, they would wage an atrocious batch little than $1.8 billion,” helium said.

“I would suggest it’s a batch similar idiosyncratic who can’t spend to bargain a caller car and does 1 of those hire-purchase lending deals and ends up paying 5 times what the car would person cost.”

Parker estimates the assemblage could person saved up to $1 cardinal connected the project.

‘A stone and a hard place’

But Michael Cook, a erstwhile longtime enforcement astatine Investa Property Group who present runs his ain advisory firm, Cook Commercial Investment Group, said the woody looked similar a bully 1 for some the developer and the university.

“They’ve benignant of nailed it,” Cook says, pointing to other gross the assemblage stood to gain from pupil fees and subleases astatine a well-located campus.

“The fees that they would gain retired of that gathering would beryllium enormous. That gives them cashflow supra and beyond what they would person had they not built the building.”

Walker Corporation president Lang Walker and erstwhile Western Sydney University vice chancellor Barney Glover.

While acknowledging the assemblage would wage respective times much than what Walker Corporation spent, Cook doubted WSU would person been capable to get hundreds of millions of dollars for the upfront costs.

“They are benignant of betwixt a stone and a hard place,” helium says.

“They person each the request for assemblage places and for courses – that generates fees. But they don’t person the superior upfront.”

The project, which received a tallness exemption to scope 86 metres, makes WSU into an bureau landlord that volition person to find tenants for the apical fractional of the building.

Under the main lease, lone 50 per cent of the gathering indispensable beryllium utilized for assemblage purposes.

But readying documents had stated the operation was designed “purely for acquisition purposes”, with a fistful of floors acceptable speech for manufacture partnerships.

A 2022 advancement study from Walker Corporation marked the apical floors for “educational use”.

When the gathering was approved arsenic a state-significant development, its authoritative usage was listed arsenic “university with ancillary retail”, referring to shops connected the crushed floor.

No notation was made of commercialized premises.

A Department of Planning spokesperson said that aft investigating the building’s use, it concluded “there has been nary breach of the improvement consent”.

A spokeswoman for WSU said: “The assemblage is the whole-of-building tenant nether its concern lease, which allows for expansion, maturation opportunities, and collaboration with manufacture partners for teaching, learning, and research.”

The spokeswoman said the gathering was “not lone iconic and aspirational, but designed to conscionable the circumstantial needs of the university”.

Campus to beryllium demolished

The emergence of Bankstown is linked to the demise of the university’s field astatine adjacent Milperra, which sits connected a leafy 20-hectare tract it received from the authorities authorities for $1 successful the 1990s.

The assemblage present plans to raze the field and crook the onshore into a residential lodging task led by the developer Mirvac, a determination the assembly opposed and that has angered parts of the section community.

A assemblage protestation against the residential improvement of Western Sydney University’s Milperra campus.

“It’s the squandering of an irreplaceable resource,” said Paul Judge, a assemblage campaigner whose 3 children attended the campus.

Judge said portion the erstwhile Liberal authorities authorities approved the residential project, backstage improvement was ne'er envisaged erstwhile the onshore was archetypal granted to WSU.

The assemblage had argued it was hard to pull students to Milperra, whereas the Bankstown field was person to nationalist transport and occupation prospects. According to a 2020 ministerial briefing note, the Milperra windfall was meant to assistance money Bankstown.

Glover, the erstwhile vice chancellor who successful February became the Albanese government’s caller jobs and skills commissioner, referred the Herald’s questions to the university.

The assemblage declined the Herald’s petition for an interview.

In effect to written questions astir the Bankstown project, a spokeswoman said: “The process was overseen and signed disconnected by an autarkic outer probity advisor and the commercialized aspects of the task were independently assessed.”

On the question of however the woody demonstrated worth for money, the spokeswoman said the university’s attack was to put successful teaching and probe and not “tie up superior successful operation costs”.

“If the assemblage were to execute the relation of developer, this would person necessitated superior costs being funded from borrowings, thereby incurring involvement costs,” the spokeswoman said.

“The 40-year outgo of the gathering concern sublease arrangements needs to beryllium assessed against the debased upfront costs to physique caller pupil and civic amenity, and little moving costs afforded by the Bankstown CBD campus.

“In today’s dollars, the 40-year leasing outgo to the assemblage is astir $389 million, not $1.8 billion. This excludes immoderate strategical benefits, sublease revenue, collaboration arrangements, oregon different outgo recoveries from manufacture partners.”

A Walker Corporation spokesperson said the task followed a “commonly used” commercialized approach, which allowed the assemblage “to debar the upfront expenditure, ongoing indebtedness repayments and hazard of development”.

“Our lease payments from WSU implicit a play of 40 years are of a just and comparable worth to akin full gathering commercialized leasing structures we person successful spot from the aforesaid clip the woody was initiated,” the spokesperson said.

“Walker volition proceed to negociate the gathering facilities, concierge and information services and instrumentality these adjustments into its superior expenditure.”

The spokesperson said Walker Corporation was arrogant to person delivered a “world-class” campus, having flooded terrible constraints connected the operation manufacture done the pandemic.

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