The firm expects to offload its UK construction arm within the next 18 months and said it is already well advanced in plans to sell its US construction operations.
The plan to simplify and restructure the global development and construction business comes after a disappointing four years in which Lendlease shares have fallen by around half.
Group chief executive Tony Lombardo said Lendlease would realize A$4.5bn (£2.3bn) from the sale of international construction and the imminent release of global assets.
The sale of the international construction business will affect 1,400 employees, while the real estate exit is expected to bring in A$2.8bn (£1.5bn).
He said: “Over the next 18 months we will focus on divesting the international construction operation to focus on our most profitable domestic market in Australia.
“We largely exited our Asian construction business with the establishment of the Life Science JV. And we are already well advanced in divesting our US construction business.
“In the UK, we are in the early stages of preparing the business for sale in an improving market with strong backlog and a preferred workbook of over A$5bn (£2.6bn).
“Finally, we have begun to release A$2.4 billion (£1.25 billion) of capital from our international development projects, partially offset by anticipated spending of A$700 million (£365 million) on engineering works and building rehabilitation in the United kingdom, resulting in a net A$1.7 billion (£900 million) in capital release.
“This acceleration will focus on three key areas. First, we look at the sale of land and inventory held on the balance sheet.
“Secondly, in terms of our land management agreements, we are the lead developer and will work with our partners to realize value and accelerate capital release either by bringing in new partners or selling land.
“Thirdly, on the eight projects that we have started as an equity partner, we will see the projects through to completion and then divest.”
UK Development Portfolio
Land for sale
- Deptford Landings (London)
- Elephant Park (London)
- Potato Wharf (Manchester)
JV to complete
- Stratford Cross (Office), London
- Elephant Park (Daiwa House, London)
Reworked land management
- Thamesmead (London)
- Euston Station (London)
- Silvertown (London)
- Smithfield (Birmingham)
- Stratford Cross (London),
- London High Road West (London)
Lendlease has established a new Capital Release Unit to strategically maximize added value through accelerated capital recycling and international construction divestitures.
This will be under the direct control of Lombardo and will also take place in the construction of development projects such as Stratford in East London.
Lendlease said the sale plan would include non-cash write-downs of around £260m related to goodwill associated with the US and UK construction businesses from the 1999 acquisition of Bovis.
The latest accounts from Lendlease Europe, which largely represents the UK, revealed that construction revenue fell 17% to £380m, with EBITDA rising from £2m to £5.6m in the year to June 2023.
The pre-tax value reached a loss of £124m due to additional write-downs for building security. The total workforce is just over 1,200 employees, with approximately two-thirds involved in construction.
One City analyst said: “To some extent, Lendlease Construction in the UK looks like an in-house contractor for the development business. So the question arises as to who would buy the business at the moment.
“Lendlease say they are confident they will find a buyer but at what price without development.
