This article is from the Australian Property Journal archive
Lend Lease is poised to replicate its success in wholesale funds in Australia into the burgeoning markets of Asia and the United Kingdom.
At yesterday’s annual general meeting, Lend Lease’s managing director Greg Clarke said the group intends to gradually replicate wholesale fund offers in the UK and South East Asia, particularly Singapore.
“We have built a portfolio of wholesale funds in Australia offering institutional investors specialist property investment opportunities across the risk / return spectrum. In addition to the profits realised on selling the assets into the funds, Lend Lease will continue to earn development and asset management fees, and of course fund management fees,” he added.
In the past 12 months, Lend Lease has recorded substantial growth in funds under management, from $8.1 billion at June 2005 to $9.7 billion as at June 30, 2006. The growth was supported by a $0.6 billion contribution from Asia Pacific; $0.4 billion from Europe/UK and $0.6 billion from other areas.
Clarke announced that Lend Lease has opened an offer to institutional investors to participate in a new Asia focused retail development and ownership fund.
That fund is expected to take a major interest in Somerset Central on Orchard Road in Singapore as its first investment. Lend Lease acquired the project in August for $S617 million.
On completion around 2010, Somerset Central is expected to have a value in the order of $S1.1 billion.
Meanwhile, the group is unlikely to immediately pursue a wholesale fund offer in United States.
“…but we see that very much as a long term play at this stage,” Clarke said.
Yesterday, Clarke proudly proclaimed that the 2006 financial would characterised as the group’s biggest single achievement – as nailing the strategic settings – both business and financial – for the group.
“We have three core businesses that have market-leading positions operating in three key geographies. We are leveraging synergies across the business to work on integrated opportunities.
“Lend Lease is in great shape. The economic outlook in each of our geographies remains generally positive. In this environment, the group is well positioned to deliver sustainable growth for our shareholders.” he concluded.
Meanwhile, Lend Lease chairman David Crawford said the position that the company is in today is the result of that culture working at its best.
“Lend Lease is a very different company today to the one I joined as a director in 2001. It is focused. It has a very clear strategy and each of the businesses is operating at the top or near the top of its chosen market sectors,” he added.
Crawford said it is also pleasing to see that this progress is now being recognised by the market, as reflected in the substantial increase in the value of Lend Lease shares since the 2006 result was announced in mid August.
“It is clear from recent brokers’ reports that the group’s strategy is becoming understood and supported.
“I am pleased to confirm that we are budgeting for an increase in Operating Profit in 2007,” he added.
Yesterday, Clarke also agreed to continue as chief executive of Lend Lease beyond his current contract which expires in December 2007, under a 12-month rolling contract, which will run until the end of December 2009.
Crawford also defended Clarke’s remuneration incentive, which was highlighted by the Australian Shareholders Association.
“For the three years to June 2006, the Total Shareholder Return of theGroup was 90%. However, over the same period Lend Lease was 11th out of 19 companies in the comparator set. As a result, the 2003 Long Term Incentive did not vest.
“On reflection, the Board determined that the achievement of senior management in transforming the Group from where it was three years ago needed to be recognised, even if the formal Long Term Incentive measure had not been met,” he added.
By Nelson Yap
