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  • Global development giant Lendlease (LLC) downgrades its operating earnings guidance as COVID-19 bites
  • The company lowered its operating earnings guidance to between $375 million and $410 million, below the market expectation of around $460 million
  • Driving the downgrade is the impact of the pandemic on its operating business, particularly on its operations in the UK
  • The company expects its FY21 statutory profit to be within the range of $200 million to $320 million after tax
  • Lendlease is down 2.97 per cent with shares trading at $11.12 in a $7.9 billion market cap at 2:00 pm AEST

Lendlease (LLC), a global property developer and investor, has issued a profit downgrade, citing financial losses as a result of the pandemic.

The company lowered its operating earnings guidance to between $375 million and $410 million, below the market expectations of around $460 million.

“The challenging operating conditions associated with COVID-19 continue to affect each of the segments in which the group operates globally,” the company said in an announcement.

The company said while a range of mitigating actions has been taken to navigate the murky waters, “the unpredictability of the pandemic has meant global cities have been forced into extended lockdowns or re-entered lockdowns during FY21”.

Multiple lockdowns in London have impacted commercial and residential customers from inspecting new products which in turn has impact their commitment to leasing and purchasing, with investment partners also delaying investment decisions.

The company said it is struggling to secure an investment partner for its International Quarter London project as well as witnessing weaker rental demand and lower rents on the recently completed build-to-rent buildings at Elephant Park in London, impacting the profitability of its first two residential for rent buildings.

New global CEO Tony Lombardo has plenty on his plate, with the new boss undertaking a wide-ranging review of the operations, including a restructure, review of core-business operations and reviewing the impact the pandemic may have in the short to medium term.

Also dragging on the earnings outlook are new claims relating to historical projects completed prior to the sale of the engineering arm of the business to Spanish group Acciona.

While these claims are subject to dispute proceedings which take time to evaluate, the group anticipates accounting for an additional provision in the range of $90 million to $175 million after tax in FY21.

The company said that the remaining engineering project, Melbourne Metro is progressing well.

The company announced some good news. A new investment partner, Mitsubishi Estate, has been brought on board for the second residential tower at One Sydney Harbour.

Anchor tenant Medibank was secured for the office tower at Melbourne Quarter which was then forward sold to the National Pension Service of Korea and the company also found a new investment partner for the Milan Innovation District project in Milan.

The company expects its FY21 statutory profit to be within the range of $200 million to $320 million after tax.

Lendlease is down 2.97 per cent with shares trading at $11.12 with a $7.891 billion market cap at 2:00pm AEST.

LLC by the numbers
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