Lendlease chair John Gillam starts succession talks with CEO Tony Lombardo

Lendlease has announced or completed $2.5 billion of capital recycling initiatives and Gillam expects to be able to share news on a further three divestments at the AGM.

“My expectation is that we’ve built on that shareholder support, and I’m looking forward to talking to security holders about what’s been achieved, but more importantly, what’s coming next,” Gillam told The Australian Financial Review.

But he acknowledged that the Lendlease share price, which has fallen almost 19 per cent over the past 12 months, has failed to reflect the group’s turnaround efforts.

“I think we’ve made great strides in dealing with some of the underlying criticisms, but there’s much more to do. The performance isn’t where we want it. When you think about our share price and how that’s lagging behind our progress, that just shows the wariness of the wider market to believe that we can, and we accept the challenge to prove that we can.”

The Lendlease board has had two major streams of work this year, in addition to overseeing the asset sale program. Gillam has led a project to “really look hard into why there’s been almost a decade of underperformance” at the company and determine how to improve governance processes and the flow of information to make sure Lendlease is making the right capital allocation decisions.

“We have to lift the velocity on our capital,” Gillam said. “The proof will be in the pudding, but I’m feeling comfortable that we’ve had the right debates, and we brought the right elements in. Basically, it’s about having a return on equity focus as deep into the organisation as you can possibly push it so that we can be very disciplined around allocation and have a strong line of sight across the year you’re in and the next couple.”

This flows through the second stream of work: planning Lendlease’s growth initiatives for the next few years. Gillam said Australia’s housing shortage, its large infrastructure pipeline, the need for new commercial and industrial projects and the Brisbane Olympic Games provides a backdrop for Lendlease to grow, given its renewed focus on the Australian market.

“That becomes the dominant theme as we move into the next financial year. There’s a lot of excitement and opportunity for a Lendlease performing at its best to play into. We’re capable of really making a strong contribution across all of those areas.”

Who leads Lendlease into the 2027 financial year and beyond is now a live consideration, with a succession process well under way.

“It’s a very active discussion, and very open discussion between myself and Tony and the board. This is his fifth year, and it may well be his most challenging when you think of what he needs to lead and land,” Gillam said.

“His energy and his passion are admirable, and he’s earned the right to continue to drive this company forward. As I said, it’s an active discussion when we then think about the who, what and how of leading Lendlease into that 2027-28 period.”

Gillam said Lendlease’s executive bench strength is “good, but we’d like to see it enhanced”. He would welcome a return to the days when former Lendlease executives were a common sight across corporate Australia.

“It’d be wonderful to play back into that reputation. We’ll know we’re really healthy in a few years’ time, if that’s what people are saying about us. Our employment brand, like our investability brand, needs to lift.”

Lendlease has just emerged from a brutal and very public battle for control of its $10 billion Australian Prime Property Fund empire, in which disgruntled investor Hostplus had sought to dump Lendlease as its fund manager, replacing it with Mirvac.

While Lendlease fought off the push, it had been “disappointing to have a unit holder of that significance that dissatisfied”, Gillam said, and efforts to mend that relationship were under way.