Aaron Morby
Lendlease is pulling out of the UK and selling its construction business in a radical strategic business overhaul to focus on its home Australian market.
Plan to unravel global construction and development business to focus on Auistralia
The firm expects to offload its UK construction arm within the next 18 months and said it was already well advanced on plans to sell the US construction operation.
The plan to simplify and restructure the global development and construction business comes after a disappointing four years which has seen Lendlease’s stock fall by around half.
Group chief executive Tony Lombardo said that Lendlease would realise A$4.5bn (£2.3bn) from the sale of international construction and early release global property assets.
The sale of international construction will impact 1,400 staff, while the exit from property assets should raise A$2.8bn (£1.5bn).
He said: “During the next 18 months our focus will on diversting the internation construction operation to focus most profitable market our home market Australia.
“We have largely exited our Asian construction business through the establishment of the life science JV. And we are already well progressed on the divestment of our US construction business.
“In the UK we are in the early stages of preparing the business for sale in an improving market with a strong backlog and preferred work book of more than A$5bn (£2.6bn).
“Finally we have commenced to release A$2.4bn (£1.25bn) of capital from our international development projects, partially offset by forecast expenditure of A$700m (£365m) for engineering and UK building remediation work resulting in a net A$1.7bn (£900m) in capital release.
“This acceleration will focus on three key areas. First, we will look to sell land and inventory held on the balance sheet.
“Second for our land management agreements, we are the master developer and will work with our partners to realise value and accelerate the release of capital through either bringing new partners or land sales.
“Thirdly on eight projects we have commenced as a capital partner, we will take projects through to completion and then divest.”
Lendlease has set up a new Capital Release Unit to strategically maximise embedded value through accelerated recycling of capital and divestment of international construction. This will be under the direct control of Lombardo and will also see out under-construction development projects like Stratford in East London.
