This article is from the Australian Property Journal archive
LENDLEASE will slash up to 400 jobs and consolidate its property and construction businesses as it sharpens focus on more than doubling both its development completions to $8 billion, funds under management to $70 billion, tune up the underperforming residential communities business and at the same time diversify into the emerging build-to-rent and data centres sectors.
As part of its strategic roadmap outlined yesterday, the property giant is looking to sell out of non-core developments, including its quarter stake in the Victoria Cross metro station project in North Sydney, Brisbane showgrounds and the Waterbank complex in Perth, which it would release $500 million to be deployed in higher returning opportunities.
New chief executive Tony Lombardo said earnings would benefit from the second half of the current financial year, after an incursion of between $230 million and $290 million in restructuring changes in its pre-tax interim profit.
“We spent a lot of time last year talking through our refreshed strategy…we’d still believe that strategy is fit for purpose, so there’s no real change to that strategy,” Lombardo said.
“The focus is really on the roadmap on how we are going to execute the strategy.”
Some $160 million in cost reductions have been identified by the group. About 70% will come from the job cuts and the associated property rental space, which follows some 4,000 jobs jettisoned after the sale of its engineering and services business.
It is hoping to achieve $8 billion in production 8% to 11% core operating ROE by FY24, and by 2025/26 more than $70 billion in funds under management, over $8 billion in annual production and net zero carbon emissions.
Lendlease is targeting $16 billion of project commencements next year. Its current pipeline includes the Barangaroo South residential towers in Sydney, Melbourne Quarter and Victoria Harbour in Melbourne, the Elephant Park development in London, and Lakeshore East and Southbank towers in Chicago.
Diversifying its portfolio into sectors such as build-to-rent and data centres.
Lendlease also acknowledged that its residential business has underperformed settlement targets past three years, with the circa 2,200 lots settled each year below the target 3,000 to 4,000 lots. The group’s communities portfolio has a circa 43,000 lots valued at $13.1 billion.
Queensland represents the lion share with 27,800 lots, followed by Victoria with 7,500, New South Wales with 6,470 and Western Australia with 1,450.
Unlike its competitors Mirvac and Stockland which have capitalised on the residential boom over the past three years.
Lendlease posted an improved core operating profit for FY21 of $377 million.
