Packer team takes gripe to VCAT; more than a little turbulence in Virgin departure lounge

James Packer and wealthy associates have taken local town planners to VCAT over a $100m development in Geelong.

After more than a year of conflict with local authorities, billionaire James Packer and his wealthy associates have taken their battle to develop a $100m-plus townhouse project in Geelong’s down-market Corio to the next level.

Having liaised with the City of Greater Geelong since November 2022, the developing consortium Edenville Corio Pty Ltd last Friday took its fight to build the 100-plus residence suburban project to the Victorian Civil and Administrative Tribunal.

The consortium also includes the property development arm of Cromwell Property director and former ABC director Joe Gershe’s South-Yarra-based Gershe Funds Management, Crown Resort’s former executive Todd Nesbit and successful Melbourne residential developer and businessman Deniz Sivasli.

Last year the group twice amended its development plans for the ambitious project, first in April then in September, but this failed to persuade council authorities. They’ve repeatedly rejected Edenville’s proposition.

James Packer’s consortium has taken its dispute to the Victorian Civil and Administrative Tribunal.

The group owns more than 3ha of land zoned for residential development. It’s a former state primary school site that was sold by Victoria’s Department of Treasury and Finance.

VCAT heard both sides of the dispute at a hearing on Friday in Melbourne, with a decision pending.

Packer’s broader investments are said to be worth about $4.2bn, with the Corio deal just one of several smaller-scale property plays the billionaire has made over the past year with Nesbit – way smaller than his sharemarket punts of late.

Plans for the Edenville residential development in Corio.

Last week Margin Call revealed his latest suite of investments, which amount to roughly a quarter of his total wealth, including stakes in chipmaker Nvidia and Mark Zuckerberg’s Meta Platforms, the owner of Facebook.

Turbulence in Virgin departure lounge

Jayne Hrdlicka’s departure as Virgin CEO late on Tuesday was framed in all the soothing tones and corporate cliches one might expect of a high-profile exit, her statement leaning heavily on the word “transition” to describe what’s clearly looking like a sudden dash.

One so abrupt and unexpected, in fact, that there wasn’t even word of a finishing date from either Hrdlicka or private equity firm Bain, owner of the airline. Margin Call has some ice to sell to anyone who thinks they see orderly transition in that.

Her announcement was the talk of the town, of course, and what’s plain enough is that this was anything but a ripe moment for baton-passing and more than likely the climactic point in a longstanding fraying of relations between Jayne and Bain.

Among the gripes, we’re told, was Hrdlicka’s double-hatting as the chair of Tennis Australia, a perceived distraction from her substantive role running the airline. Workplace culture was another sore point, and readers will note the loss of two senior members of management in recent months.

David Marr, Virgin’s chief development officer and the person tasked with preparing the airline’s IPO ambitions, left the business in October, less than three years after joining from Woolworths. Sister column ­DataRoom revealed this week that Chris Vagg, head of Virgin’s Investor Relations, is leaving shortly to join packaging group Orora.

Exit interviews are mandatory at Bain, and there are many others who’ve left the airline during Hrdlicka’s four years of “heavy lifting” as CEO, as she termed it.

Virgin may have returned to profitability in 2023, but management wouldn’t be without some concern at the airline’s significantly lower revenue pull on Melbourne to Sydney flights. The Australian reported a fortnight ago that Qantas has been amassing in the range of $92m every month, according to JPMorgan’s Anthony Longo, against Virgin’s $44.7m.

In a climate of higher airfares, Qantas seemed to increase its yield on this route since the pandemic while Virgin’s fell markedly, a consequence, it would appear, of the airline’s pivot to mid-market, lower airfares. And this clearly hasn’t paid off as everyone had hoped under Hrdlicka’s stewardship.

Bain was approached for comment, but suffice to say none of the above augurs well for a refloat of the airline any time soon.

Lendlease lambasted

John Wylie of Tanarra Capital gave a right old serve to Lendlease boss Tony Lombardo on Tuesday over the building company’s lacklustre half-year results, announced to the market one day earlier.

Wylie didn’t hold back, telling media the company’s running on a “broken business model” that “clearly needs restructuring”. He wasn’t done there, either. “Lendlease has a reputation of building fine buildings, but it is also a serial destroyer of shareholder value,” he said.

It’s all a remarkable change of tune from Wylie, who barely 24 months ago was banging on about Lendlease’s potential for shareholders, predicting that with a few tweaks the company could more than double its share price to $25.

Per an investor presentation distributed in April 2022: “We regard Lendlease as a fundamentally high-quality global company with real competitive advantages,” it said. “We believe Lendlease hit an earnings trough in 1H22, and should now be on a strong growth trajectory out to FY24.”

And how accurate was that assessment?

Wylie slapped a great big buy on the company as it was trading at $11.10 per share. The prediction for FY24 was a valuation of $20 per share and even as high as $25.20, based on targets fully achieved. The bear case for the company was $8.40.

Sadly, even the worst case scenario was way off, with the share price closing fathoms lower at $6.20.

Tanarra Capital’s John Wylie has changed his tune about Lendlease. Picture: Stuart McEvoy

This was after Tanarra backed Lendlease’s 2021 strategic vision for the company but said shareholder value would be further enhanced if only the company started “building out exiting exposures to Australian markets”.

And now? He’s saying the exact opposite! Ditch the “empire building” overseas, he told the Fin, and refocus on the Australian market where the company has traditionally been most profitable.

There’s more. Two years ago he seemed to wholly embrace management’s strategic target of hitting $8bn in development production and reaching a target of $70bn in funds under management by FY26. And now? He’s telling them to drop what he calls “growth for growth’s sake”, with both merely relics of a time when money was cheap.