This article is from the Australian Property Journal archive
LENDLEASE has booked a $313 million interim profit after last year’s first half result was wiped out by the mammoth writedown against its troubled engineering business, and the group’s development pipeline has grown by more than 50% to $112 billion.
Profit from core operations fell 13% to $308 million, while its non-core operations posted a $5 million profit after a $339 million loss last year. The group has sold its engineering business to Spanish company Acciona for $180 million, and is continuing to find a buyer for its services business, which has a backlog of $2.2 billion in projects. Total group revenue fell 4.6% to $7.4 billion. Return on equity came in at 9.6%. Interim distribution was 30 cents per stapled security and earnings was 54.6 pss.
Lendlease is shifting focus towards offshore projects including the $20 billion-plus project in the San Francisco Bay Area that will develop Google-owned land into 15,000 homes and mixed-use projects over the next 10 to 15 years, as well as the $15 billion Thamesmead Waterfront in London. They contributed to a 51% increase in the pipeline on the prior corresponding period.
The group said its urbanisation pipeline is now at $98 billion, including 21 major projects in nine global gateway cities.
“Our key focus remains on driving securityholder value through delivery of our growing pipeline of development projects. Maintaining a robust financial position and strong capital partner relationships will be paramount for this investment phase,” group chief financial officer, Tarun Gupta said.
Funds under management lifted 8% to $37 billion, which included the $1.5 billion listing of the Lendlease Global Commercial REIT in Singapore.
Group chief executive and managing director, Steve McCann said the urbanisation pipeline is expected to create more than $50 billion of institutional grade assets for its capital partners and the group’s investments platform.
“We are well placed to double our current $37 billion of FUM as this pipeline is delivered,” he said.
The construction segment completed $4.3 billion of construction work completed. Activity included the Gosford Hospital redevelopment, the redevelopment of Rod Laver Arena and Paya Lebar Quarter in Singapore, marking the culmination of a four year development that delivered about $4 billion of product including three office towers, a retail mall and more than 400 apartments.
Construction backlog revenue for the core business is $14 billion, and the group said there is approximately $10 billion of work which the Group is in a preferred position on, across both external and integrated projects.
Pre-sales have started for the 72 storey tower at One Sydney Harbour in Barangaroo, which will be Sydney’s tallest residential building, and 207 of the 317 apartments have sold for a combined $1.4 billion.
Gearing was 14.75%, around the midpoint of the 10% to 20% target range and is expected to be between 15% and 20% at the close of the full year.
