Diversified developer Lendlease is asking investors for $1.15 billion to shore up its balance sheet and protect its global pipeline of developments from the expanding ravages of the coronavirus pandemic.
More problems in the engineering and contracting sector yesterday - RCR Tomlinson shares were suspended yesterday on fears about its earnings, while shareholders again sold off Lendlease shares for a second day.
Lendlease has raised up to $1.15bn. UBS assesses the proceeds will be used to strengthen the balance sheet and also allow the company to take a larger share in development pipeline/profits and acquire opportunistically.
The outbreak of coronavirus has shifted the economic outlook and funding markets in a negative direction, UBS notes. The broker calculates Lendlease requires $150-200m in transaction earnings to reach FY20 consensus forecasts.
Citi believes Lendlease has the potential for a multi-year re-rating as it evolves into a global real estate developer and fund manager. Critical to this is the sale of the engineering & services business.