Thai developer Supalai in talks on Lendlease stake

The Lendlease portfolio of 14 land estates is one of the largest in the country, with a pipeline of about 45,000 lots.

Thai real estate developer Supalai is believed to be in talks with Lendlease about taking a 50 per cent stake in its communities business in a deal that could be worth over $850m.

The Southeast Asian company says on its website that it develops all forms of land, including housing estates, and works in residential, office and retail.

It is listed in Thailand with a $1.78bn market value.

Supalai struck a deal in 2020 with Lendlease’s rival Stockland, backing one of its residential land estates in Melbourne’s north.

The understanding is that discussions have centred on a 50-50 deal between Supalai and Lendlease over its Australian communities unit.

The Lendlease portfolio of 14 land estates is one of the largest in the country, with a pipeline of about 45,000 lots. The focus is on outer suburban masterplanned communities.

DataRoom also understands that Singaporean multinational Frasers Property was keen to buy the communities business as a whole, as was Stockland, but the price wasn’t right.

But the understanding is that both parties have not offered a price high enough, and that Lendlease’s preference is to sell a stake.

Frasers in 2014 purchased the Australian residential developer Australand.

Daiwa House, which recently emerged as partner with Lendlease on its build-to-rent apartment development at Melbourne Quarter, might also be interested. It’s Japan’s largest home builder and one of its largest property developers, with over six decades of experience in single-family housing, rental housing, commercial facilities, logistics and apartments.

The Lendlease Communities business is on offer through investment bank Macquarie Capital and is believed to be worth about $1.7bn, so a half-sale could bring in about $850m and there would probably be no need to raise capital.

Yet sources say Lendlease’s investment assets have more capital against them than in the past, which makes its debt level of 16.8 per cent and its net debt of $2.6bn as of December more sustainable that previously.

The $5.9bn listed real estate group, which counts David Di Pilla of HomeCo and John Wylie of Tanarra Capital among its shareholders, is due to report its results on August 14.

In May, Lendlease sold 21 per cent of its US Military Housing asset management income stream for $126m.

It has also struck a deal to bring forward the payment of about $600m in proceeds from residential developments at Sydney’s Barangaroo South project.

Other initiatives to boost returns include cutting 740 jobs, with about 5 per cent of its local workforce affected.

The cuts are expected to save $80m-$100m on an annualised basis from fiscal 2025. Lendlease maintains its earnings guidance and plans to complete $8bn of projects annually.