Lendlease, investors banker up as Mirvac’s $10b land grab kicks off
The tussle over the $10 billion Australian Prime Property Fund empire run by Lendlease is getting serious with heavyweight investors including Hostplus, TCorp and UniSuper bringing on Jarden and Clayton Utz to help advise them on whether to turf the property giant and bring in Mirvac.
The showdown is a painful echo of the brawl between the $8.6 billion Mirvac and Dexus over a $7 billion office tower fund originally run by AMP Capital three years ago. Ultimately, Mirvac won out in a big blow to Dexus, which, at the time, was helmed by Darren Steinberg.
This time around, Lendlease is going all out to convince APPF backers to allow it to remain in charge. The ASX-listed landlord has brought in Rothschild and King & Wood Mallesons to give it advice, dispatching chief executive Tony Lombardo to a meeting last Friday in the hope of swaying investors.
No dice, according to people briefed on the matter. Lombardo said Lendlease was in the midst of a long turnaround, and would perform better, comments that apparently did not quite hit the mark. Now, investors are requisitioning a special meeting intending to turf Lendlease.
To recap, Lendlease’s heavyweight APPF unitholders approached Mirvac earlier this year to step in and are now working with the Campbell Hanan-led business on a formal proposal . While other players like Charter Hall and GPT are interested in running APPF, Mirvac’s push is well progressed, sources say. Investors hope a new manager will increase returns and, just as importantly, transparency and corporate governance.
The APPF unitholders are also hoping a new manager will help stymie the exodus of talent, which most recently involved Micah Schulz, the highly regarded manager of Lendlease’s flagship wholesale office fund, jumping ship.
The APPF portfolio includes almost $6 billion in commercial property including big towers in Sydney’s Barangaroo and Melbourne’s CBD, along with $2.8 billion in retail assets such as shopping centres in regional NSW and Queensland. There are also billions of dollars in industrial real estate.
The loss of those funds would be catastrophic for Lombardo’s efforts at turning around Lendlease, which has been under pressure from its big shareholders like Tanarra Capital, Allan Gray and HMC Capital. The company, in response, has agreed to sell its international construction business and progressively divest development assets abroad, which include major projects slated for the United States, the United Kingdom and Europe.
