This article is from the Australian Property Journal archive
REPEATED lockdowns in the UK due to the COVID-19 pandemic have forced Lendlease to downgrade its full-year earnings, while it has reportedly forward-sold a $1.2 billion office tower within its Melbourne Quarter development to the National Pension Service of Korea.
Post-tax core operating profit for the 2021 financial year is now expected to be in the range of $375 million to $410 million. Its statutory profit is anticipated to be $200 million to $320 million after tax.
Lendlease is currently subject to a review being undertaken by new global chief executive officer, Tony Lombardo that will look at restructuring resource allocations and simplification, core business operations, and the impact of market uncertainties given the “duration of the pandemic on the company’s operations over the short to medium term”.
“While a range of mitigating actions have been taken to help the Group navigate this environment, the unpredictability of the pandemic has meant many global cities have been forced into extended lockdowns or re-entered lockdowns during FY21,” the group said yesterday.
“As an example, London has extended its lockdown multiple times which has impacted commercial and residential customers from inspecting new products, and committing to leasing and purchasing; and investment partners delaying investment decisions.”
It said this had caused a delay in the expected timing of securing an investment partner for International Quarter London; and weaker rental demand and lower rents on the recently completed build to rent projects at Elephant Park in London.
However, it has forward sold the new 70,000 sqm office tower within Melbourne Quarter. Construction has just kicked off at the Collins Street site after securing an anchor tenant, which according to Australian Financial Review is Medibank.
In recent weeks Lendlease bought a La Trobe Street office tower for $203 million, giving it control of adjoining commercial blocks in Melbourne’s CBD.
Lendlease yesterday revealed it had found an investment partner for the second residential tower at One Sydney Harbour project, as well as for the Milan Innovation District.
Claims relating to historical projects completed prior to the sale of the engineering business to Spanish group Acciona may muddy the earnings outlook.
“While these claims are subject to dispute proceedings which take time to evaluate, the Group anticipates accounting for an additional provision in the range of $90 million to $175 million after tax in FY21,” Lendlease said.
The Melbourne Metro train tunnel project, one of the few retained engineering projects, is “progressing well”.
As well as Lombardo taking the reigns as CEO, Lendlease recruited Simon Dixon as new group chief financial officer and appointed acting CFO Frank Krile as group chief risk officer.
