18/02/2010 - 00:00

Saraceni, Salta prepared to talk on Raine

18/02/2010 - 00:00


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The lock-down of one of Perth’s largest construction projects has focused attention on developer Luke Saraceni and his contractor, Salta Constructions.

Saraceni, Salta prepared to talk on Raine

LUKE Saraceni has built one of Western Australia’s largest privately owned property developers, but with workers locked out of his marquee site, he could be facing his biggest challenge yet.

Work stopped at Saracen Properties’ $550 million Raine Square development last week, after the lead contractor, Melbourne-based Salta Constructions, ordered its workers off the job, citing concerns relating to non-payment of variations.

It was widely reported the dispute was over $80 million of variations to the $300 million builder’s contract, however Saracen Properties and Salta both said that figure was inaccurate.

Moreover, Salta has declined to explain details of the dispute, fuelling speculation the lockout may have more to do with disputes between Salta and its subcontractors than between Salta and Saracen.

Both Saracen Properties and Salta have said they are committed to resolving the dispute and completing Raine Square, and both companies have said their doors remain open for discussion.

Mr Saraceni, however, said he had also begun preparations to replace the builder should the situation not be resolved.

Although he maintained he was committed to resolving the dispute, Mr Saraceni was scathing when asked about its repercussions for Salta.

“I was absolutely stunned that they would be so stupid,” Mr Saraceni told WA Business News.

“They will never get another building job in this town again with that attitude, there is no developer in their right mind that would employ a builder that takes the attitude that they took.

“They abandoned the site because the developer wouldn’t turn a fixed-price contract into a cost-plus contract to suit them towards the end of the job.

“No developer in their right mind would ever employ them again.”

Mr Saraceni insisted the dispute had nothing to do with the financial health of his business.

“We have a very good, sound working relationship with our banks,” Mr Saraceni said.

“Our banks like us, and we like them. Are they being tough, yes they are, and why are they being tough? Because of the world economic situation, it’s got nothing to do with us personally.

“They’re being tough on us and of course that’s making life hard for us, but we’re here, and we’re surviving.

“The reason some people make that comment is they are surprised that a private person that’s not a public company could be doing a project like that successfully during the middle of a global financial crisis.”

Mr Saraceni said Saracen Properties was in no different position to publicly owned developers that have come under increased scrutiny from the banks thanks to the global credit crunch.

“There wouldn’t be a developer in Western Australia that wouldn’t be under more pressure from a bank than they have been in the last few years,” he said.

“The banks are turning screws on every single client they’ve got that’s a business person, so there’s nothing new in that sort of statement; of course the banks are tough.

“We’re doing one of the largest commercial projects in Australia and we’re a private company, so of course the banks are going to be pushing us.”

Mr Saraceni began his career in property as a town planner with the City of Swan in the 1970s and was promoted to shire planner within two years.

He has also served as vice-president of the Property Council’s WA division.

Since Saracen Properties was launched in 1993, it has become one of WA’s most prolific privately owned developers.

Many of its projects have been done through a joint venture with low-profile investor Hossean Pourzand. The two men share equal ownership of Westgem Investments, which bought the Raine Square site in 2004 for $21.5 million.

Saracen developed Subiaco’s largest office block, the CSC building, and in 2008 completed half of its $150 million mixed use development at 500 and 502 Hay Street in Subiaco, which is home to iiNet’s and Mirvac’s new head offices.

The residential component at 500 Hay Street is under construction.

Saracen Properties also holds ownership of land at 18 The Esplanade in the CBD.

Mr Saraceni said the company had two options approved for the site, a $150 million, 25-storey office block and a $170 million, 40-storey residential development.

He added the company was evaluating a third option, but did not offer details, and said the project would proceed once the global economic climate improved.

Outside of the metropolitan area, Saracen Properties has also delivered an industrial subdivision at Australind, started construction on a $500 million sustainable community in the South West, Vasse Newtown, and is a participant in the Port Geographe project at Busselton .

Saracen Properties has also delivered a number of significant retail projects in recent years.

The company was behind the Woolworths-anchored City Central mall at 166 Murray Street in the CBD, and also delivered a shopping centre anchored by Woolworths on Fremantle’s Adelaide Street in 2008.

In 2004, Saracen Properties, in joint venture with Mr Pourzand, sold City Central, which it bought for $9.8 million in 2000, to Kareelya Investments on behalf of Westralia Property Trust for $56.2 million.

Midway through last year, Saracen completed a $40 million Coles-anchored mixed-use development in Northbridge, Tyne Square, in a joint venture with East Perth-based Psaros Property Group.

Psaros Property Group chief executive Danny Psaros said his four-year relationship with Saracen Properties had gone smoothly, and his impression of Mr Saraceni was of a “straight shooter”.

“My dealings with Luke have always been very professional, and it’s just been a good association that we’ve had with them,” Mr Psaros told WA Business News.

“I’m actually surprised that Salta hasn’t been able to negotiate a deal here.

“(Saracen) will always sit down and have a professional commercial debate about things, and there’s always an answer, as long as commerciality exists.

“On Tyne Square if there were ever any variations we’d put them to Saracen, talk through them and within a week we’d get a resolution that we’d accept.

“We’d accept their view, or they’d accept our view or we would meet half way. There was always a resolution and it was a sensible debate.”

Mr Saraceni also has an interest in viticulture, and in 2008 commissioned Belmont-based Diploma Group to construct a $5.7 million restaurant, microbrewery and wine tasting facility at Saracen Estates on Caves Road in Willyabrup.



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