Embattled Lendlease faces $100m slug over western Sydney land dispute

The developer’s plans to build a housing estate neighbouring one it sold off to Stockland last year have been caught up in a legal dispute.

Lendlease CEO Tony Lombardo has announced a major restructuring of its operations offshore back to Australia after its shares plummeted. Picture: Jane Dempster/The Australian

Property heavyweight Lendlease lost ground on Wednesday after revealing it faces a potential $100m earnings hit this financial year as a result of a dispute about the development rights to a key land parcel next to its Figtree Hill Estate in Sydney.

The company’s shares were driven down by 6.4 per cent to $5.15 as investors were surprised by the prospect of losses on a land parcel that the had been carved off from the sale of its local housing estate unit.

The long-running dispute between Lendlease and landowners, including a branch of the famed Macarthur-Onslow family, stems from an agreement they made a decade ago over land that was to be developed adjacent to the estate.

The land in the western Sydney suburb of Campbelltown is presently farmland and was once part of a larger property which the family had sold off, some of which Lendlease developed into the neighbouring housing estate.

The dispute concerns the balance of the original holding and while Lendlease accepted it could no longer buy some of the property, it believed it held rights to key parcels which it had proposed buying for about $120m.

Lendlease had told the market last November when it sold off 12 housing estates nationally to a Stockland venture that certain land parcels had been excluded from that overall $1.3bn deal.

The Figtree Hill project.

These parcels were recognised as part of the company’s capital release unit in this half, as it was required to meet conditions in order to secure the land.

Lendlease said the rights to the land parcels had been acquired in 2015 as part of the overall Figtree Hill project. It added that while discussions with the landowner over its rights to secure a revised agreement had been ongoing, the matter ended up in the NSW Supreme Court.

A judgment handed down on Tuesday did not back Lendlease’s ability to exercise its rights over the land parcels. But the developer said that a revised agreement was still in the best interest of both parties, and discussions between it and the landowner continued. At the same time, the company will also appeal the court’s ruling against its rights.

Lendlease said the value at risk if were unable to secure the land parcels through a court appeal or via a revised agreement over the land was estimated to be up to $100m after tax. This relates to costs incurred over the last decade in relation to the planning, rezoning and site-wide infrastructure spending.

Lendlease said the land parcels had been impacted by environmental issues, which delayed timing, including maintaining the site and construction, as well as building movement corridors for the local koala population.

The developer said if the matter was resolved before it hands down its full year result in August, there would be no impact to earnings guidance.

It had affirmed its earnings per security guidance of 54c to 62c for fiscal 2025 in February. The range includes about 18c secured in the first half, with between 36c and 44c expected in this half.

Originally published as Embattled Lendlease faces $100m slug over western Sydney land dispute