Image source: Shutterstock

Highlights

  • LendLease sells a 20% stake in 21 Moorfields, London for £64 million (AU$82.74 million) to Japanese investors.

  • Completion of UK construction business sale, marking a shift in strategic focus.

  • Citi maintains a "Neutral" rating, citing near-term earnings uncertainty despite strategic progress.

Shares of LendLease Group (ASX:LLC) rose 1.2% to AU$5.97 on Tuesday following the announcement of key asset sales in the UK. The real estate and infrastructure firm confirmed that Japanese investment firms Sotetsu Urban Creates (a subsidiary of Sotetsu Holdings) and Yasuda Real Estate have acquired a 20% stake in its 21 Moorfields office asset in London for £64 million (AU$82.74 million).

This move comes as part of LendLease’s broader strategy to streamline operations and refocus its portfolio. In addition to the stake sale, the company has also completed the divestment of its UK construction business, marking a significant step in its ongoing restructuring efforts.

Citi's Take: Progress Noted, But Caution Remains

Investment bank Citi acknowledged LendLease’s "decent progress" in executing its strategy but warned of near-term earnings uncertainty due to lower development earnings expected in FY26. The firm also pointed out that LendLease’s AU$500 million share buyback program is dependent on further asset sales, which have been progressing slower than anticipated.

Despite these concerns, Citi has retained its "Neutral" rating on LendLease stock with a price target of AU$7.50.

Market Performance and Outlook

LendLease shares have faced challenges in 2024, with the stock down 4.5% year-to-date (YTD), even after Tuesday’s gains.