Case Study: Structuring a Public–Private Development atDarling Island, Pyrmont

Client: Sydney Harbour Foreshore Authority (SHFA)

Project

Redevelopment of Darling Island (Site 6), Pyrmont – 5,023 sqm with development approval

for a commercial office tower (21,262 sqm GBA / 17,875 sqm NLA)

Context & Challenge

SHFA, a government agency managing strategic harbour-side precincts in Sydney, owned the

leasehold interest in a key development site at Darling Island. The agency sought to capitalise

on this underutilised asset without relinquishing long-term ownership.

The challenge was to structure a property development deal that:

 Delivered ongoing financial returns (8% minimum);

 Limited SHFA’s exposure to development risk;

 Ensured adherence to Environmentally Sustainable Design (ESD) principles;

 Maintained a passive but equity-aligned role for SHFA;

 Involved the private sector without diminishing public policy objectives.

Objectives

1. Ownership Retention – No outright land sale or long-term lease resembling a transfer

of ownership.

2. Passive Role – SHFA to avoid direct involvement in construction risk.

3. Sustainable Returns – Minimum 8% return on land and potential capital contributions.

4. ESD Compliance – Align with approved development envelope and sustainable

building practices.

Approach

Conducted a comprehensive review including:

 Evaluation of alternative ownership structures (e.g. ground lease, strata, freehold

interest);

 Analysis of procurement models (e.g. straight sale, development management, joint

venture);

 Comparative modelling of development structures, including risk/reward allocation;

 Recommendation of Special Purpose Vehicle (SPV) structures that optimise financial

and policy outcomes.

Outcome & Recommendations

Recommendation

 Proceeding with a Joint Venture via SPV Trust

 Finalising legal mechanisms to transfer leasehold interest post-completion;

 Undertake a business case and financial model to support procurement;

 Engage NSW Treasury to confirm Tax Equivalent Regime (TER) and GST treatment;

 Ensure the developer selection process secures an experienced party aligned with SHFA’s sustainability and design principles.

Strategic Impact

This structure allowed SHFA to:

 Activate a high-value, inner-harbour site without divesting public land;

 Attract private sector capital and expertise;

 Ensure enduring revenue streams aligned with public purpose;

 Maintain policy control over design quality, ESD and long-term asset use.