This article is from the Australian Property Journal archive
PROPERTY giant Lendlease has furthered its plans for business renewal via offloading its overseas operations, selling its US Military Housing business for $480 million to an arm of Guggenheim Partners Investment Management.
Lendlease also announced yesterday that settlement of the $147 million sale of its Asia life sciences real estate interests into a joint venture with Warburg Pincus had been pushed back into the new financial year. As a result, its FY24 operating profit after tax was downgraded from between $260 million and $275 million, from previous guidance of $450 million.
Its group gearing forecast for FY24 was also changed, and is now expected to be at the upper end of its 10% to 20% target range.
Lendlease, under heavy pressure from shareholders, in late May announced a $4.5 billion divestment program of its troubled overseas operations, and quickly followed that up with the announcement that it had struck a deal to sell its United States construction business.
It said the sale of its US Military Housing unit represents a “significant premium” to book value and includes the operating platform of the business along with the associated management rights for asset, property, development and construction management. Around 150 employees will transfer with the sale.
FY25 operating profit after tax of $105 million to 120 million is anticipated from the deal, with financial close and receipt of cash proceeds targeted by the end of December.
Combined with the $1.3 billion sale of residential communities to Stockland and Supalai, which was also pushed back to July, and the Asia life sciences deal, the transactions are worth $275 million to $335 million of operating profit after tax in FY25.
“With $1.9 billion of transactions already announced, including the sale of US Military Housing, we have made significant progress towards our target of recycling $2.8 billion of capital in the next 12 months,” Lendlease CEO Tony Lombardo said.
“As this transaction demonstrates, we continue to take a disciplined approach to capital recycling, achieving premiums to book value, as we balance speed of execution with achieving value for our securityholders.”
Lombardo said preparations have also commenced to sell the group’s UK construction business within the next 18 months.”
“Processes to recycle a further $1.1 billion of capital in FY25 are underway, including the sales of The Exchange TRX in Malaysia, our Keyton Australian Retirement Living investment and China Senior Living asset.”
Pressure from key shareholders on Lendlease reached a crescendo in May. Among those, Aware Super and John Wylie’s Tanarra Capital had been pushing hard for management change – effectively claiming the scalp of chair Michael Ullmer, who will be stepping down in November – following a string of soft results and returns, and ongoing scepticism around the viability of its overseas activities. That eventually forced Lendlease’s hand, with the group then making a move to offload its international operations. The group said it would be booking a writedown of up to $1.48 billion in making the move.
