This article is from the Australian Property Journal archive
LENDLEASE is seeking to raise $1.15 billion to strengthen its balance sheet and support the delivery of its $112 billion global development pipeline as well as fund investment opportunities.
Lendlease is undertaking a fully underwritten institutional placement of $950 million and a non-underwritten security purchase plan to eligible security holders of up to $200 million.
CEO Steve McCann said the capital raising will increase its available liquidity to $3.95 billion and Lendlease is currently implementing a phased reopening across a number of projects. The covid-19 pandemic has seen shutdowns in Singapore, Kuala Lumpur, Milan, New York and Boston.
McCann said extensions of time on projects that have been mandated to pause by governments or clients should mitigate the financial risk.
Despite the pandemic, Lendlease’ urbanisation projects continue to progress, with One Sydney Harbour presales currently totalling $1.5 billion, representing over 75% of the first tower.
McCann said Lendlease has a long dated pipeline and more than 90% of the circa $100 billion urbanisation pipeline and approximately 95% of the circa 48,500 land lot pipeline, secured on capital efficient terms which provides flexibility in managing through market cycles and limiting both the operating and financial risk for the group.
Lendlease’s funds under management platform has been boosted by recently securing a $1.6 billion mandate comprising a diversified portfolio of Australian office, retail and industrial assets. The impact of asset revaluations on funds under management and co-investment positions is too early to determine, although the platform has limited exposure to performance fees.
“Notwithstanding recent progress, the profit for FY20 for the core business is dependent on the conclusion of some material transactions in the development segment which may be delayed.
“Reduced productivity in the construction segment is expected to have a short term impact on core profit and the impact of any revaluations on the Investments segment is currently uncertain. Therefore, the forward looking statements included in our HY20 results announcement are withdrawn,” he added.
Meanwhile the sale of its non core engineering business to Acciona is progressing after obtaining approval from the Foreign Investment Review Board. The restructuring cost estimate of $450 – $550 million remains unchanged, although it is subject to any unknown impacts arising from COVID-19.
“Despite the near term uncertainty created by covid-19, the group remains focused on delivering its extensive urbanisation portfolio safely, sustainably and profitably. In doing this, the group will continue to explore capital partnerships. The current portfolio of 21 major urbanisation projects across nine gateway cities provides long term earnings visibility and a strong platform to deliver enhanced risk adjusted returns for our securityholders.
“The equity raising will strengthen Lendlease’s capacity to access capital partnerships to develop this pipeline and pursue additional opportunities which will in turn drive growth in investments and funds under management.” McCann said.
