Boral has entered into an agreement with listed developer Mirvac to transform its 171-hectare Scoresby industrial site into a 1700-lot housing estate in Melbourne’s south east.
The site is currently home to Boral's quarry and brickworks plant, located in Wantirna South, 25-kilometres from Melbourne CBD.
Under the agreement Mirvac will manage the urban development of the site, which could see the housing estate have a $1 billion value on completion, subject to the land rezoning and planning approval.
The building products giant said the development has an estimated project completion date slated for 2035.
The agreement marks the second joint project for the two listed companies, after their work together on a residential redevelopment, the Olivine estate, in Melbourne's north suburb of Donnybrook.
Boral expects the former quarry site to deliver more than $300 million of earnings over the life of the project, subject to rezoning.
It kept ownership of the Scoresby site following the sale of its 40 per cent interest in the Boral CSR Bricks joint venture to CSR Limited in late 2016, which is still partly leased to CSR.
Boral expects to earn roughly $66 million from the project through fiscal 2026, including $3 million this financial year.
Boral's chief executive Mike Kane expects Scoresby will be “an important earnings contributor for Boral over the next 20 years”.
“Scoresby and Donnybrook developments are expected to deliver in excess of $500 million of proceeds for Boral, subject to market conditions over that time and rezoning of Scoresby,” he said.
Kane pointed to Boral's pipeline of potential property end-use opportunities at sites, Waurn Ponds and Penrith Lakes.
“Which in the coming years should contribute to the sustainable earnings stream we continue to generate from our property assets,” he said.
Boral said it expects $30 million in earnings before interest, tax, depreciation and amortisation (EBITDA) from its property earnings in fiscal 2019.