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Lend Lease Mulls U.K. PPPs, Singapore Somerset Stake Sales

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Aug. 26 (Bloomberg) -- Lend Lease Group, Australia’s largest property developer, will consider exiting some of its investments in the U.K. and Singapore over the coming year.

The group, which today reported a 43 percent increase in full-year profit to A$492.8 million ($516.5 million), will look to sell some of its public private partnership positions to its U.K. infrastructure fund, and its 25 percent stake in the Somerset Retail Center in Singapore, Chief Executive Officer Steve McCann said.

“We will, every year, recycle quite a bit of capital,” McCann said today in an interview. “We’ve got some PPP equity positions in London, and the Somerset retail asset in Singapore, so we’ll test the market on that.”

Lend Lease last year created a 220 million pound ($359 million) U.K. infrastructure fund in partnership with Dutch investment manager PGGM Vermogensbeheer B.V. to invest in health care, education and accommodation projects previously owned by the company. The fund gave the company an opportunity to offload the equity it held in public private partnerships and to buy more Lend Lease projects during its 28-year life, the group said at that time. Lend Lease still owns 10 percent of the fund and manages it.

Lend Lease shares dropped 3.7 percent to A$7.89 at the close of trade in Sydney.

Barangaroo

The group will soon start work on the site of the Barangaroo South redevelopment in Sydney’s city center, and plans to make announcements about investors in the project and tenants for its first commercial tower before the end of the year, McCann said.

The company’s focus will be on “making sure we don’t delay at all on the delivery of the commercial tower, and maintaining our commercial position” even as it negotiates with the government on the location of its planned hotel, he said.

The hotel, which Lend Lease intends to build on a pier jutting into the harbor, has been one of the most controversial parts of the A$6 billion redevelopment, with opponents calling for it to be relocated inland or scrapped altogether.

Lend Lease is considering “a couple of very good internal candidates” to replace Chief Financial Officer Brad Soller, who will step down at the end of January, as well as possibilities outside the organization, McCann said.

Lend Lease’s operating earnings rose to A$485.3 million in 2011 from A$323.6 million a year ago. The company will pay a full-year dividend of 35 Australian cents, it said.

To contact the reporter on this story: Nichola Saminather in Sydney at Nsaminather1@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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