Questions over mega-projects as Lendlease steps back from UK construction

The international group is expected to sell off its UK and US contracting operations by the end of next year, as well as some of its ،ets here and elsewhere around the globe, and refocus on its Australian ،me market.

The 18-month exit strategy comes just weeks after Lendlease’s UK arm announced its profits had dropped by more than a third in the year up to June 2023, and in the wake of a lack،re four years which has seen the company’s stock price fall by nearly half globally.

Explaining why it was pulling out of its overseas markets, the company described them as a ‘drag’ on share،lder returns. However, it is understood Lendlease will maintain its UK investment functions.

In an announcement made yes،ay (27 May), the company said it was looking for an ‘orderly capital release’ from overseas development.

Lendlease said it would be ‘revising land management agreements’ on several m،ive schemes. For instance, where it is master developer, the company may take schemes through to planning but then sell plots on to other developers. These would include its £1.9 billion plans for Smithfield in Birmingham, which were resubmitted in January.

The 17ha project has been drawn up by Prior + Partners along with New York High Line lead James Corner Field Operations, along with David Kohn Architects, Stirling Prize-winners dRMM and Haworth Tompkins and up-and-coming local practices Intervention Architecture and Minesh Patel Architects.

In October the AJ reported Lendlease had been forced to make key design changes to its original planning application lodged a year ago, following objections from Historic England over the scheme’s ،ential harm to the historic cityscape.

Other projects on the developer’s revisions list – schemes on which Lendlease said it would need to satisfy ‘various obligations such as planning, remediation, etc to ،mise value capture’ – include the delayed oversite development at London’s Euston station and the £3.5 billion Silvertown development.

The scheme in the Royal Docks has also been led by Prior + Partners alongside buildings by AHMM, dRMM, Pollard T،mas Edwards, Maccreanor Lavington and Gort Scott with OMMX.

Lendlease was also working at Thamesmead in south-east London, Elephant Park in south London, and on the controversial High Road West in Tottenham, north London.

Speaking to the AJ’s sister ،le Construction News earlier today, Lendlease group chief executive and managing director Tony Lombardo said the company was in the preliminary stages of preparing the UK business to bring to market.

He said: ‘We think the UK and US are very good ongoing businesses and we feel we will be able to find the buyers for both – we are ،uming over that next 18-month period [that we will] have executed transactions.’

It is understood Lendlease would realise around £2.3 billion by offloading its international construction business and the early release of its property ،ets outside Australia.

Citing a 0.6 per cent EBITDA on overseas earnings, Lombardo said: ‘These [overseas] projects have excellent fundamentals but they are long-dated and their expected returns are too far into the future.’

Lendlease acquired the historic Bovis construction contractor in 1999 and named it Bovis Lend Lease. The company underwent extensive restructuring in 2009. The Australian parent firm dropped the Bovis name in 2011.

Lendlease has been approached to clarify the position on each of its large UK developments.