Lendlease retreats from US military housing business with $105m windfall

Lendlease retreats from US military housing business with $105m windfall

Photo: Lendlease

Development and construction giant Lendlease Group (ASX: LLC) has taken a major step forward in its plans to capture $4.5 billion in liquidity from overseas investments, striking a deal to sell its US military housing business for $480 million (US$320 million) to Florida-based Omaha Beach Investment Holdings.

Lendlease reports the sale of the business, an entity managed by Guggenheim Partners Investment Management, represents a significant premium to book value with the transaction set to generate operating profit after tax (OPAT) of $105-120 million.

Approximately 150 employees will transfer with the sale, which also includes the operating platform of the business along with the associated management rights for asset, property, development and construction management.

The transaction still requires third-party consents from particular service branches of the US Department of Defense in order to proceed.

This latest deal follows the announced $1.3 billion sale of 14 communities projects, and the planned $147 million sale of the group's Asia Life Sciences interests.

Lendlease notes the exit of its US construction business is  "well underway" with documentation progressing after a non-binding heads of terms for the sale of the business unit’s East Coast operation.

"With $1.9 billion of transactions already announced, including the sale of US Military Housing, we have made significant progress towards our target of recycling $2.8 billion of capital in the next 12 months," says Lendlease Group 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."

He says implementation of the strategy is progressing well, with cost savings being realised across the regions as Lendlease moves to a simplified management structure.

"We are also working to complete the sales of our Life Sciences joint venture and our communities projects," Lombardo says.

"The announced exit from international construction is well progressed, with the sale of our US East Coast operations anticipated to close in the coming months. Preparations have also commenced to sell our UK construction business within the next 18 months.

"Processes to recycle a further $1.1 billion of capital in FY25 are underway, including the sales of The Exchange TRX in Malaysia, our Keyton Australian Retirement Living investment and China Senior Living asset."

He says Lendlease's priorities continue to be strengthening the balance sheet, returning capital to securityholders and investing in our high return Australian operations, while continuing to build on its Australian development pipeline to support future earnings growth.

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