Lendlease investors to demand answers at Monday showdown

Lendlease investors are bracing for a barrage of changes – which may include staff cuts, asset sales and promises by the board to simplify the business – as embattled chief executive Tony Lombardo outlines the global property giant’s direction.

Lombardo will outline the next phase for the company at its much-anticipated investor strategy update on Monday.

Under pressure: Lendlease chief executive Tony Lombardo.Credit: Eamon Gallagher

Disenfranchised investors are pushing for the group to exit its United States and United Kingdom construction operations, a shift that could result in the shedding of 1000 jobs. Lendlease employs about 6800 people across its global network.

Citi analysts are expecting earnings downgrades after the investor update, marking the importance of the event.

Market commentators have said another main concern was that the global construction sector was under severe pressure and there were not many obvious buyers for Lendlease’s large-scale operations.

Lendlease’s construction arm generated $3 billion in revenue for the first half of this financial year, down 18 per cent on the same time in 2023. The developer exited its $20 billion Google project in San Francisco last year in response to subdued market conditions.

Dissident high-profile shareholders John Wylie’s Tanarra Capital, Allan Gray and David Di Pilla’s HMC Capital, which hold a combined 8 per cent of Lendlease’s register, have been agitating for change from the top down.

Allan Gray chief investment officer Simon Mawhinney told his clients last week at its investor day that Lendlease directors “are too arrogant by half, and they’re trying to take over the world, they’ve expanded into geographies in which they have no competitive advantage”.

“They’ve allocated $4 billion of shareholder capital to those geographies and collectively made zero for shareholders. That’s not a good outcome,” Mawhinney said.

Lombardo is a long-time Lendlease employee. Before taking the reins from Steve McCann in May 2021, he ran its Asian operations.

LendLease developments in Melbourne.Credit: Eamon Gallagher

At his first public press conference, he said he would work to simplify Lendlease sprawling business, slashing one in 10 jobs. There have been calls for Lombardo to be replaced, but other internal prospects have already left including the head of America Denis Hickey.

His efforts to simplify Lendlease have involved selling the Australian Services operations and a sizeable proportion of the US military housing asset management revenue stream.

The sale of its retirement business has incurred a $112 million tax bill, and the company is now involved in a stoush with the Australian Tax Office.

In December last year, it sold 12 Australian master-planned communities projects to Stockland and its capital partner, Supalai Australia Holdings, for $1.3 billion. It has also sold its Life Sciences business in Asia in a joint venture with Warburg Pincus for $147 million.

In Melbourne, its $1.7 billion Queen Victoria Market project has received final planning approval to replenish its pipeline of development projects in Australia.

At the Euston, London project, the UK government recently announced it was fast-tracking the release of land for development at Euston station.

The government listed Lendlease as the master developer and reaffirmed its commitment to delivering Euston, including the life sciences hub, on the back of private financing.

Over in New York, the 1 Java project which is the site of a two-tower, 834-unit project, Lendlease is making great headway on what it has said is its most ambitious sustainable and inclusive multifamily project.

Meanwhile, the core and shell at Tokyo’s Data Centre has been completed for the first data centre development project just outside the main city.

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