Lend Lease Full-Year Profit Surges 50% on U.K. Mall Sale

Lend Lease Group, Australia’s biggest listed property developer, said full-year profit jumped 50 percent after selling its stake in a U.K. mall.

Net income was A$823 million ($767 million) in the 12 months ended June 30, compared with A$549 million a year earlier, the Sydney-based company said today. The developer will pay a full-year dividend of 71 Australian cents a share, compared with 42 cents a year earlier, it said. The shares rose 1.5 percent to A$13.96 at 1:57 p.m. in Sydney, heading for the highest close since February 2008.

Over the last four years, “our return on equity has grown from 14 percent to 18.2 percent,” Chief Executive Officer Steve McCann said in a telephone interview today. The share price “is a reflection of the market starting to rerate us off the back of the growth.”

Lend Lease said in June it would record a A$480 million profit from the sale of the Bluewater Shopping Center in Kent. The company said in April it will start building a third office tower at its A$6 billion Barangaroo South development in Sydney with funding from existing sources after signing PricewaterhouseCoopers LLP and HSBC Holdings Plc as tenants.

Barangaroo Tower

While the company still intends to bring in additional capital sources to fund the tower, “we’re not quite ready to do that yet,” McCann said. With 34 percent of the building pre-leased, “the universe of people who would buy is still quite strong. But with 50 percent, it would be stronger.”

Profit from Lend Lease’s Australian business fell 12 percent as the prior year’s income included earnings related to its first two towers at Barangaroo, the company said. By contrast, settlements in its development division in the country were up 32 percent, it said.

“The residential market has been very strong and there’s no sign of that slowing down,” McCann said. “Having said that, the reality is that it’s been strong for awhile now and we’re very, very conscious of that.”

In Europe, profit more than quadrupled due to the Bluewater sale, and in the Americas it jumped 47 percent following an asset sale and increased income from construction, it said.

The company said the outlook for London is positive. It is doing more residential developments in the city in addition to its Elephant & Castle regeneration and The International Quarter redevelopment.

“There’s a significant amount of offshore buying support, from the Middle East, Russia, Asia,” McCann said. “We’re keeping a close eye on it, but there’s still a significant shortage of housing in London, so we expect that market will stay strong.”

Lend Lease shares have surged 25 percent this year, compared with a 5.4 percent gain in the benchmark S&P/ASX 200 Index.

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