Leighton takes property stake

Saville Australia and Babcock & Brown, the beleaguered joint venture partners behind the redevelopment of the former Emu Brewery site, may have secured a lifeline in the form of Leighton Properties.

The company is believed to be taking a stake in the $1.3 billion Capital Square project - a development application bearing Leighton's logo was lodged with the City of Perth last week.

The new development application is for three commercial buildings of 31, 18 and two storeys in height, which would sit alongside a tower of 274 apartments.

The buildings would contain about 60,000 square metres of office space in total.

Leighton is understood to have been advising Turnstone Nominees Pty Ltd, the joint venture entity that owns the Capital Square site, on a reworking of the development application.

It's the second revision of the project this year, following an earlier decision in March to abandon a plan for three apartment towers in favour of a commercial office tower and one apartment building.

Saville had previously confirmed it was in negotiations with several parties to either buy a stake in the project or a portion of the site, rumoured to be on the market for $70 million.

A move by Leighton Properties to take equity in the project or purchase part of the site would be welcomed by Babcock & Brown, which has been keen to reduce its exposure following the credit crunch.

Meanwhile, the joint venture has pre-sold 244 of the 274 apartments available in the first tower.

John Holland, another subsidiary of Leighton Holdings, has been undertaking forward site works for the first apartment tower, although is yet to sign a building contract.

It took over the construction work after Melbourne-based builder, Contexx Pty Ltd, exited the project in January.

If it proceeds, the deal would be Leighton Properties' first since establishing a Perth office in February this year.

Leighton Properties WA regional manager Michael Barr said the company had looked at several development opportunities in the state, but would not comment on Capital Square.

Saville Australia declined to comment on the project.