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.

Credit Crunch Forces London Olympic Bosses to Recalculate

London’s Olympic chiefs are having to rework their budgets as the global credit crunch squeezes private funding for the 2012 Games — although Team GB’s success in Beijing has helped boost the coffers.

The government expects about seven billion pounds of private sector money to go into the Olympics and the regeneration of the area around Stratford in east London.

But fears are growing that, as banks worldwide stop lending, developers are struggling to come up with the cash, and taxpayers will have to step in.

The one-billion-pound Olympic Village, which will provide accommodation for 17,000 athletes, is proving the biggest headache as Australia’s Lend Lease, the preferred developer for the project, reportedly struggles to find the money.

A government study published in July warned the deal with Lend Lease — which had hoped to recoup some of its investment by selling on some of the accommodation after the Games — was “significantly affected by the downturn in the financial and property markets since the turn of the year”.

London Olympics May Scrap Venues Amid Credit Woes

London’s 2012 Olympics organizers may scrap plans to build temporary arenas for sports such as basketball and shooting to save money as the global financial crisis squeezes the 9.3 billion-pound ($16.3 billion) project.

“The credit crunch is hitting the Olympics hard, but we remain resilient,” said John Armitt, chairman of the London Delivery Authority, at a meeting of the city’s legislative assembly today.

Organizers have eliminated the need for four temporary venues by moving events to existing arenas such as the ExCeL London conference center. The authority is awaiting a review by consultants KPMG into whether to reassign basketball, equestrian and shooting events, said David Higgins, chief executive of the authority, which is in charge of building the Olympic Park.

The Olympics site is Europe’s largest public construction project, and plans include regenerating a rundown section of east London where the games will be staged. Developers involved in the project have been unable to get bank loans for the Olympic Village, where athletes will stay, and for the broadcast center.

Armitt suggested that the Olympic Village developer, Australia’s Lend Lease Corp., may not be able to arrange private financing for the 1 billion-pound project by the end of December, as planned.

“You should not hold yourself to getting a deal by Dec. 31 if you can get a better deal by Jan. 31,” he told reporters, adding that the funding talks are very “fluid.” Calls to Lend Lease in London and Sydney weren’t immediately returned. The company remains committed to the project, Armitt said.

‘Cozier’ Than Beijing

Mayor Boris Johnson told a parliamentary committee yesterday that the Olympic Park will be “cozier” than that used for this year’s Beijing games. The Chinese government spent four times the amount the 2012 organizers are planning to spend on the games.