Firetrail: Lendlease

Lendlease is an integrated real estate developer and manager, with leading positions in Australia and overseas.

The opportunity in Lendlease comes by way of the market’s focus on the engineering division of the business which has lost more than a billion dollars for shareholders. But that is in the past. Lendlease has since sold the majority of the division, which was small relative to the rest of the company.

Lendlease is a market leader in global development of residential, office, and mixed developments. The company has grown its pipeline from $40b to more than $100b since 2014. Lendlease is also increasingly moving towards an investment management model, which produces high-quality, recurring revenue streams. Today assets under management (AUM) are less than $40b, but we see potential for AUM to be $100b in the coming years. Lendlease was de-rated on short term concerns. But it has strong businesses with massive growth potential, and our valuation forecast provides a lot of upside.

The biggest risk for Lendlease is conversion and execution of their $100b pipeline of opportunities. Somewhat mitigating this risk is the quality of the projects and project partners such as Google in San Francisco Bay.

This information has been prepared and provided by Firetrail. To the extent that includes any financial product advice, the advice is of a general nature only and does not take into account any individual’s objectives, financial situation or particular needs. Before making an investment decision an individual should assess whether it meets their own needs and consult a financial advisor. This stock pick was published on 15 October 2020 and is subject to change.