London 2012 Olympic Village developer Lend Lease to ask for more time to raise funds

Australian firm Lend Lease have been trying to raise £1billion in private finance for more than a year, and the lock-down agreement with the Olympic Delivery Authority that gives them exclusive rights to the project is due to expire in the new year.

Telegraph Sport understands that Lend Lease are likely to invoke an option to extend that period to next March in the hope that they may yet secure a deal. The move comes with the Qatari development agency expressing an interest in stepping in should Lend Lease withdraw, and at least one UK-based property developer are also understood to be considering expressing interest.

The ODA have denied that they are in active talks with the Qataris.

Lend Lease agreed to put £1billion of equity and private finance into the village but the banking crisis has severely impacted on their ability to meet their commitment. The Government are resigned to contributing up to £400million of contingency funding to the project and have already forwarded £95million to Lend Lease to enable work to continue.

The ODA are hopeful that negotiations with a new partner for the social housing element of the 2,800-apartment development will ease the financial pressure on Lend Lease and enable them to remain involved.

Two housing associations are already committed to the project, East Thames Housing Group and First Base, but the ODA are in talks with a third, the Southern Housing Group, aimed at spreading the financial risk.

If the three agencies are able to put up significant funding towards the one-third of apartments that will be affordable or social housing, it will significantly improve Lend Lease’s chances of persuading their banks to deliver finance.

A deal on the village is crucial to the project’s chances of staying within the £9.3billion budget set by the Government.

Warning No More Public Money is Available for London Olympic 2012

About 100 million pounds (C$186.4 million) is being spent every month on construction for the 2012 London Olympics despite the economic downturn.

Olympics Minister Tessa Jowell said Wednesday that about 64 per cent of the 9.325 billion-pound (C$17.4 billion) budget for the Games will come from the government and 11 per cent from London taxpayers. She said there will be no more public money available, whatever happens.

“There is no more money and, as I have said before, we are on time and on budget,” Jowell said. “The budget is identified and remains the same now as it did when I made the revised budget.”

Jowell said that hosting the Olympics is still be a positive thing for London despite the huge cost and funding difficulties during the global financial crisis.

“The Olympics is essentially economic gold at a time of economic need,” she said. “A shot in the arm for investment.”