Concerns over £1.9bn Smithfield scheme as developer pulls out of UK

Lendlease is stepping away from the UK and selling its overseas construction business in order to focus on its Australian operations. 

The New South Wales-headquartered developer is looking to free up AD $4.5bn (£2.35bn) of capital, to pay down debt and realise value for its security holders. 

Profits had dropped by more than a third in the year up to June 2023 for Lendlease’s UK arm, adding to a difficult four years where the share price has fallen by nearly half.

Lendleases regional management structures are now set to be removed over the next year and the construction business will be solely focussed on Australia by the second half of 2025.

However, the developer says it remains committed to its UK projects, including the £1.9bn Smithfield scheme, and is hoping to secure planning permission as soon as possible.

The company’s European chief executive officer Andrea Ruckstuhl told Estates Gazette that the business was not “stepping away from any of our projects in Europe” but in some instances, they might look to “sell some of the plots” to other developers and investors.

The huge project in Digbeth is set to provide 82,000 sq m of office space, 3,079 apartments and 44,000 sq m of retail when complete. 

Plans include a new home for the city’s historic Bull Ring markets, new leisure and cultural spaces, including a festival square and landscaped park.

Birmingham City Council planning officers deferred their decision on the Smithfield masterplan again this month.

Concerns were raised over the scheme’s open spaces and the connectivity currently proposed, causing another setback. 

Objections from Historic England and pending changes to fire safety regulations meant Lendlease already revised plans that were submitted at the end of January.

Group chief executive Tony Lombardo said: “This new Lendlease will be more easily understood by our people and customers, and transparent and predictable for security holders. 

“By reshaping the portfolio, concentrating on our core competencies in markets where we have proven we have the right to play, and the competitive advantage to win, the financial and operational risk profile will be lower, and we believe the quality of our earnings (will be) ultimately higher and more sustainable.”

Lombardo reassured that Lendlease would not walk away from existing commitments and would “treat our people around the world with the care and respect they deserve as our business changes.”

But he said the restructure would be a “profound change” that has been based on “some very tough but necessary decisions”.