The Lendlease Group (ASX: LLC) share price has fallen slightly today after the company advised its earnings for FY21 will still be subdued due to uncertainties surrounding COVID-19. At the time of writing, the Lendlease share price is trading 1.62% lower at $14.59. During Lendlease’s annual general meeting (AGM) this morning, the company also announced that it has multiple pipeline projects to be executed in FY21 and beyond.
What’s in the pipeline?
Landlease says that while the financial result announced in August was disappointing, it has made substantial progress on its strategic agenda, including the development of its project pipeline, and creating new investment partnerships.
The company says it added two new major residential projects to its portfolio – Thamesmead Waterfront in London and a partnership with Alphabet Inc‘s (NASDAQ: GOOGL) (NASDAQ: GOOG) Google in the San Francisco Bay Area. These projects have a combined estimated end development value of $37 billion.
Landlease also announced today that several other pipeline projects have emerged that will produce profit and investment grade product beyond FY21. The most notable is the major urbanisation project, Java Street New York, alongside its partner, Aware Super. This project, with an estimated end value of $1 billion, will transform a full city block into more than 800 residential for-rent apartments. The company says it is also making good progress in securing additional projects in Los Angeles and Singapore.
The group says its plan to divest non-core assets was executed after the sale of its engineering business to Acciona in September. This sale follows separate divestments in United States telecommunications and energy businesses. Potential buyers of Landlease’s services business are also in the pipeline for the the new year after the sales process was paused in the wake of COVID-19.
Despite all these upcoming projects, Lendlease still expects earnings in the first half of FY21 to be subdued due to the pandemic.
However, Lendlease Chief Executive, Steve McCann, remains optimistic for the year ahead, saying:
Despite these impacts, we remain confident that the significant growth in the secured pipeline, the achievement of planning milestones, and expected investment partner appetite, provides the foundation for accelerating development activity to our target of more than $8 billion of completions per annum. That is an increase of more than 80 per cent on our historical completion rate of $4.3 billion per annum over the last 5 years.
How has the Lendlease share price performed in 2020?
In August, Lendlease posted a net loss of $310 million in its full year results for FY20. Like most property companies with international operations, this was mainly due to its exposure to markets with mandated coronavirus shutdowns. The company also said that, at the time, about 207 of its workers had tested positive to the virus, but fortunately none had died.
The Lendlease share price has lost almost 19% in 2020, as the depressed property market took its toll on the company’s business model. The Lendlease share price began the year at $17.95 before dropping to $9.50 in March during the height of the pandemic. Based on its current share price, Lendlease commands a market capitalisation of $9.9 billion.
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