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Australian development and construction giant Lendlease (ASX: LLC) has stepped up its scaleback of international operations after selling its UK development assets into a new joint venture with The Crown Estate, an independent commercial business tasked with returning its profit to the UK government.
The sale includes six of Lendlease’s UK development projects, comprising land holdings and capital efficient land management agreements, in a deal that will free up more than $300 million in capital for the development group.
The joint venture will also halve the group’s future funding commitments to $125 million to meet its existing obligations for master planning and site enablement of these projects.
The partial exit from the UK comes on the heels of Lendlease announcing in May last year that it planned to scale back and simplify its business by selling its international development activities – a move aimed at recycling $4.5 billion in capital.
The Crown Estate has more than $30 billion of core land and asset holdings across the UK and Lendlease says the joint venture will create an industry-leading alliance with deep sector experience in delivering sustainable, city-shaping projects. It is also expected to fast-track planning and project delivery to meet a shortage of housing supply for Greater London.
“This partnership will create an industry leading alliance that is expected to unlock value within our high-quality UK development portfolio, while accelerating the release of capital for the group,” says Lendlease group CEO Tony Lombardo.
“With our expertise in delivering city shaping urban regeneration projects, the joint venture aims to deliver positive outcomes for our securityholders, communities and partners.”
Lombardo says that since Lendlease announced its global exit strategy in May last year, the company has made “strong progress to simplify the group, reduce our risk profile, and recycle capital to be a more focused organisation”.
“While we have completed or announced $2.5 billion of capital recycling initiatives, achieved our cost out target and exited international construction, we have also grown our network of global capital partners,” he says.
“The group is well positioned for future performance and growth for our securityholders.”
The joint venture projects span several London boroughs and Birmingham, and they comprise about 26,000 new residential dwellings and more than 900,000sqm of office and life sciences space. Lendlease will be development manager of these projects.
“With strong support from local and national government, we look forward to working with Lendlease and others to realise the potential of these projects to create jobs, stimulate growth and positively impact lives, while also generating income for the UK,” says Dan Labbad, CEO of The Crown Estate.
“As a country, we face challenges to unlocking growth. To support this, we need to spark investment in sectors like science, technology, and housing, alongside deep collaboration across communities, government, and the private sector.
“This joint venture is an example of how The Crown Estate is harnessing its mandate to act in the UK’s long-term national interest, supported by new investment powers, and stepping up its ambition to support inclusive growth for the nation.”
The Crown Estate is an independent commercial business acting in the UK’s long-term national interest. The group’s portfolio of rural and urban land and property around England, Wales and Northern Ireland occupies a space between the public and private sectors.
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