Lendlease sells down Asian asset ahead of investor showdown

Lendlease has sold half of its stake in the company’s life sciences operations in Asia, simplifying its business ahead of a showdown with angry shareholders clamouring for a complete overhaul of the global property giant.

Dissident high-profile investors led by John Wylie’s Tanarra Capital have called for a shake-up of Lendlease’s complicated empire, management changes, and are manoeuvring to get a seat at the table for the company’s next phase.

Lendlease’s Tony Lombardo will outline his program to simplify the operations in an investor update on May 27.Credit: Renee Nowytarger

With shareholders agitating for change, Lendlease’s global chief executive Tony Lombardo will get to outline his program to simplify the company’s operations on May 27, amid speculation that chairman Michael Ullmer, who joined the Lendlease board in December 2011 and was appointed chairman in November 2018, will announce his retirement on the day.

The group on Friday declined to comment on the speculation, with a spokesman saying: “the board renewal process is underway and well advanced; no decisions have been made, and the market will be informed as appropriate.”

In a statement last week, Tanarra Capital said urgent board renewal was essential at Lendlease. Other investors such as Allan Gray and David Di Pilla’s HMC Capital have also criticised the makeup of Lendlease’s board, which until the appointment of former Mirvac boss Nick Collishaw in 2021, predominantly comprised of bankers such as former CBA chief financial officer David Craig.

Speculation is brewing that Lendlease chairman Michael Ullmer will announce his retirement.Credit: Eamon Gallagher

“We have been equally clear that we expect the next chair of the company to be an external appointment with strong Australian property sector expertise,” the statement from Tanarra said.

“Our firm is always open to board involvement in all our portfolio companies, as we believe we bring a much-needed ownership mindset that is all too often missing in Australian boardrooms.”

Lombardo, who was the head of Lendlease’s Asian business before taking over the top job in May 2021, said on Friday that selling its life sciences interests in Asia to private equity group Warburg Pincus would unlock new opportunities for Lendlease.

Under the terms of the deal, worth $147 million, Lendlease will transfer its life sciences construction operations in Asia and its life sciences investments to a new joint venture entity with Warburg Pincus.

The business delivers infrastructure including laboratories, research centres and manufacturing facilities. It has completed more than 100 projects across Asia for 30 clients. It recently delivered more than 90 per cent of the biotech facilities at the sprawling 182-hectare Tuas Biomedical Park in Singapore.

“This is another example of how we’re realising value from our existing operations, while further simplifying Lendlease to create a more focused company for security holders,” Lombardo said on Friday.

Euree Asset Management’s property director Winston Sammut said Lendlease is a complex business with multiple tentacles across different geographies, a number of which have not come up to expectations.

Lendlease is also embroiled in a stoush with the tax office over a $112 million bill, which is a result of capital gains incurred during the sale of Lendlease’s Retirement Living trust.

“Given the current issues facing the board from disgruntled investors, the timing of the 2028 Tax issue is unfortunate to say the least, particularly as there is some uncertainly about the income tax assessment for the 2021 and 2022 years,” Sammut said.

“Further share price pressure over the short to medium term is expected.”

Lendlease shares were down 1.4 per cent to $6.16 in afternoon trade.

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