Lendlease shares surge on asset sale, share buyback plans
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More news: Shares in Lendlease have jumped more than 9% to $6.43 after the real estate company unveiled major changes to its strategy.
It outlined asset sales worth $4.5 billion, including its US and UK construction operations, announced a $500 million on-market share buyback, and said it would undertake pre-tax cost savings of $125 million within 12 months with more cuts to follow.
Lendlease to offload $4.5b in assets as it outlines cost cuts, buyback
The news: Beleaguered real estate giant Lendlease has outlined a strategy to offload billions of dollars worth of assets from its international operations, simplify its management structure and undertake cost cuts.
The numbers: Lendlease will undertake asset sales worth $4.5 billion, including its US and UK construction operations. Of this, $2.8 billion is likely to be completed by the end of FY25 with the proceeds to be used to pay down debt and return capital to shareholders. The strategy will result in pre-tax impairments in the range of $1.15 billion to $1.475 billion in FY24, it said.
The company will also undertake pre-tax cost savings of $125 million within 12 months with more cuts to follow. It also unveiled a $500 million on-market share buyback.
The context: Lendlease said the new strategy would result in the group having a stronger balance sheet with significantly reduced gearing to within a revised target range of 5% to 15% by the end of FY26.
The company has been under pressure from shareholders to boost returns from its sprawling international holdings, including those in Europe and the US. In December, it had announced the sale of 12 Australian communities projects to a consortium of Stockland and Supalai Australia for $1.3 billion.
Last week, fund manager Allan Gray called for the company to cull 75% of its corporate staff and shutter its Americas, Asia and Europe developments.
What they said: “By reshaping the portfolio, concentrating on our core competencies in markets where we have proven we have the right to play, and the competitive advantage to win, the financial and operational risk profile will be lower, and we believe the quality of our earnings ultimately higher and more sustainable,” Lendlease CEO Tony Lombardo said.
The source: ASX announcement
