Lendlease Continues Global Retreat With $320M Sale of US Military Housing Business

Lendlease has agreed to sell its US military housing business to American investment firm Guggenheim Partners for A$480 million ($320 million), as the Australian developer carries out a plan to scale back overseas activity and focus on domestic operations.

The disposal represents a significant premium to book value and includes the operating platform and management rights for asset, property, development and construction management, Lendlease said Monday in an ASX filing. About 150 employees will transfer with the sale.

Including this deal, Lendlease has announced A$1.9 billion in transactions towards its goal to recycle A$2.8 billion in capital over the next 12 months, said CEO Tony Lombardo.

“As this transaction demonstrates, we continue to take a disciplined approach to capital recycling, achieving premiums to book value, as we balance speed of execution with achieving value for our securityholders,” Lombardo said.

Righting the Ship

Lendlease anticipates an operating profit after tax of A$105 million to A$120 million on the sale, which is subject to third-party consent from service branches of the US Defence Department. Completion is expected by the end of the first half of the group’s fiscal 2025, which runs to 30 June 2025.

The housing portfolio comprises 40,000 residential units across 24 states, Washington DC and the territory of Puerto Rico, representing the largest share of privatised housing within the US military, according to Lendlease.

The Sydney-based group is undergoing a business overhaul that the company estimates could free up as much as A$4.5 billion in capital. The sales include planned and ongoing transactions such as a deal announced in May to sell half of its Asia Life Sciences unit to private equity giant Warburg Pincus.

Lendlease said Monday that it now expects to complete the sale of the life science interests in the first half of fiscal 2025 and book OPAT of A$260 to A$275 million on the transaction.

Fitch Ratings on Monday affirmed its long-term issuer default rating of BBB- with a stable outlook for the Australian company, saying the successful execution of the change in strategic direction would improve Lendlease’s credit profile over the medium term.

Communities Ruling Due

Lombardo noted that Lendlease’s A$1.3 billion sale of 12 Australian Communities master-planned residential projects to ASX-listed builder Stockland and Thai developer Supalai is awaiting regulatory findings due to be released Thursday.

The exit from US construction is underway and preparations have commenced to sell the UK construction business within the next 18 months, the CEO said. Other deals in process to recycle a further A$1.1 billion in capital include the disposals of The Exchange TRX in Malaysia, the group’s Keyton Australian retirement living investment and a China senior living asset.

“Our priorities remain strengthening our balance sheet, returning capital to securityholders and investing in our high-return Australian operations, while continuing to build on our Australian development pipeline to support future earnings growth,” Lombardo said.