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July 16, 2024
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The W-Hotel
The W-Hotel
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Client | Blackstone |
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Budget | Undisclosed |
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Services | Property Advisory: Financier Advisory |
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Sector | Hotel & Hospitality |
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Scope | New Build & Fitout |
Service Provided
Property Advisory: Financier Advisory
Project Details
Delivery of 600 hotel rooms, including coordination with PMSW, the hotel operator, authorities, Tier 1 builders and development managers. In addition to the above, Spectrum undertook extensive pre finance due diligence to assist Blackstone in the funding for the project, and were involved in providing ongoing monitoring.
Overview & Approach
- The Ribbon development is mixed use hotel development set within the southern precinct of Darling Harbour. Upon completion, the 30-storey building will feature 593 5-star hotel rooms and serviced apartments, hotel facilities including restaurants, rooftop pool and bar, ground floor retail tenancies, a brand new IMAX theatre and carparking. It will also provide a new building for the Sydney Harbour Foreshore Authority and associated public domain works. The project commenced in October 2016 and has navigated significant challenges to date.
- SPP has been involved with The Ribbon since September 2019, on behalf of Blackstone as the financier. Blackstone is providing project finance for Tianlong (Investor), with SPP working closely with Greaton as the developer as Blackstone’s representative on all matters documented within the project finance agreements, due diligence reports and other services, including asset and lease advisory.
- The Ribbon has an extensive network of stakeholders and complex legal relationships. SPP’s ongoing relationship with the contractor, project manager, quantity surveyor and developer results in an open line of communication for all facets of the project, allowing SPP to analyse the flow on effects of specific activities and risks to other stakeholders.
- SPP offers an objective lens and ‘one stop’ commercial overlay to the project position by identifying any material changes to critical risks and mitigations across the project budget, construction program and quality assurance measures.
- Not only do we provide cost and project expertise, but we also capable advisors on all commercial property matters such as acquisitions, valuations, leasing, sale matters and ongoing asset management.
Pre-Finance Due Diligence
- In 2021, Blackstone engaged SPP as Lender’s Project Consultant to provide pre-finance due diligence. As Blackstone’s project advisor, SPP worked in partnership with Greaton, Tianlong and Blackstone through an extensive due diligence period in 2021, following the collapse of Grocon as developer and contractor.
- SPP coordinated a multi-disciplined technical review of the status of works and design documentation to provide a clear technical due diligence position and understanding. Through extensive document review, stakeholder interviews and multiple rounds of RFIs, Spectrum scrutinised the project to flesh out potential risks to the project budget, program for completion and quality issues.
- In addition, SPP analysed the project financial status, programme position, Head Contract, quality and design documentation, safety and environmental compliance, property valuation, and contractor performance. A due diligence report was provided to Blackstone for consideration before entering into a finance agreement with Tianlong.
- Project financial status, including cost reporting and cashflow;
- Development and construction program;
- Design documentation, including Greenstar assessments;
- Construction contract; Quality assurance, environmental and WHS documentation;
- Valuation reports (based on end value at completion); and
- Review of commissioning processes incorporating handover to operators and tenants
- Review of proposed leases and market advice on rental incomes
In collaboration with Blackstone’s legal team, SPP also conducted a commercial review of key legal agreements associated with the project, including Agreements for Lease (AFL’s), ground leases, subleases, title documentation including strata plans and easements and other critical precedents.
Additional Due Diligence & Ongoing Monitoring
- In early 2022, SPP’s scope increased due to the Administration of the building contractor, Probuild. On behalf of Blackstone, SPP has been extensively involved in negotiations with Greaton and the project team to procure the replacement builder (Multiplex) and to identify further project risks and issues.
- Prior to Probuild’s collapse, SPP was ‘hands-on’ with its approach, working closely with Greaton’s project team through open lines of communication for all facets of the project including:
- Liaison with the consultant team (Project Manager, Quantity Surveyor) and head contractor;
- Regular site visitations, including progress claim walks; and
- Attendance at PCG meetings
- Detailed cost and commercial status reviews.
This culminates in a comprehensive overview of project status for the monthly drawdown reports for Blackstone.
SPP is also responsible for coordinating the monthly finance drawdown requests between Cedar Pacific’s consultant team and Blackstone, ensuring payments are administered under the project finance agreements.
SPP is also responsible for coordinating the monthly finance drawdown requests between Cedar Pacific’s consultant team and Blackstone, ensuring payments are administered under the project finance agreements.