The Lendlease Group (ASX: LLC) share price has risen 3% after the business announced the sale of its US military housing business.
Another asset sale
Lendlease recently announced it would be retreating from overseas markets and this sale represents another step in executing on the strategy.
The business has reached an agreement to sell its US military housing business for $480 million, or US$320 million, which is expected to deliver an operating profit after tax (OPAT) of between $105 million to $120 million in the first half of FY25.
The sale price for the US military housing business reportedly represents a “significant premium to book value” and includes the operating platform of the business.
It also announced that completion of the sale of its life sciences interests into a new Asia Pacific joint venture is expected to be in the first half of FY25.
Lendlease has revised its FY24 OPAT to between $260 million to $275 million is now expected, which primarily reflects the revised timing for the life sciences transaction.
The business pointed out that the transactions announced to date are expected to generate FY25 OPAT of between $275 million to $335 million. Combined with contracted settlements, these are expected to deliver cash receipts of $1.8 billion in the first half of FY25, with a further $0.4 billion early in the second half of FY25.
Management commentary
Lendlease Group CEO Tony Lombardo said:
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. 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.
Implementation of our strategy is progressing well, with cost savings being realised across the regions as we today move to a simplified management structure. We are also working to complete the sales of our Life Sciences joint venture and our Communities projects.
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.
Final thoughts on Lendlease shares
Lendlease is making the right moves to unlock value for shareholders, and the market seems to like it. I wouldn’t call it a buy, but I appreciate the moves the business is making. I’m not sure how much earnings growth potential it has, so there are other ASX growth shares I’d rather buy.
