Embattled real estate business Lendlease is believed to be working with investment bank Macquarie Capital to assess its options, in a week when its earnings result sent its shares down more than 14 per cent.
Concerns have been building for some time surrounding the performance of Lendlease, with the property investor and developer selling assets to drive down debt as it operates globally in a tough economy.
Macquarie Capital worked with Lendlease to sell the property group’s masterplanned communities business to Stockland and Supalai last year for almost $1.1bn, but the understanding is that the bank is also assisting the company in other ways.
A Lendlease spokesman said the company worked with a range of advisers, including Macquarie.
Macquarie could be weighing options for other asset sales such as the share it owns in Retirement Villages, formerly known as Lendlease Retirement, or assets offshore. But it could also be providing strategic advice.
Anticipation is building of a full Lendlease exit from the US market over time, where it has had a mixed record of success, although the company said it remained committed to the US at this time, while exiting some parts of the construction market in the central US and California.
Lendlease shares fell 14 per cent on the day of its result, and fell a further 3.4 per cent on Tuesday.
Lendlease, which has $3.7bn of net debt against a $5bn market value and gearing of 22.9 per cent, has previously ruled out raising equity and believes cash inflows of about $1.5bn expected in the second half of the financial year provide a clear pathway to deleveraging and returning gearing to the targeted range.
Lendlease told the market in December that its market guidance for the 2024 financial year remained unchanged with the group core operating return on equity expected at the lower end of the 8-10 per cent range.
But on Monday it said ROE guidance was 7 per cent for the 2024 financial year, reflecting the lower certainty of transaction timing and higher execution risks given the challenging capital markets backdrop, fuelling anger among investors.
Market experts say the company is one of the hardest in the real estate sector to run because of its global reach and complexity, while some shareholders have called for the business structure to be simplified and a retreat back to Australia.
But the verdict among market participants is that the business is not easily broken up, with suggestions that there have been efforts in the past to sound out buyers of its construction unit.
Part of the problem is that it is limited in terms of options in a tough market.
Still, CEO Tony Lombardo is under pressure to improve performance quickly.
Lendlease reported a $136m loss for the six months to December, down 4 per cent on the previous corresponding period, as property values fell and global real estate capital market conditions were difficult.
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