Company is grappling with a sluggish economy and a decline in demand
Lendlease, the prominent property developer, has implemented a hiring freeze in response to challenging conditions in the property sector and growing concerns about rising industry costs.
The company is grappling with a sluggish economy, exacerbated by major infrastructure projects in Australia, and a decline in demand for homes in land estates due to higher interest rates, The Australian reported.
Despite these challenges, Lendlease has managed to offset some of the setbacks through successful sales of luxury apartments in Sydney's Barangaroo South and One Circular Quay, as well as significant project wins like the $1.7 billion revitalization of Melbourne's Queen Victoria Market. However, as part of CEO Tony Lombardo's strategy to permanently reduce head office expenses while expanding projects globally, cost-cutting measures are being implemented, The Australian reported.
According to internal messages obtained by the publication, Lendlease has announced a six-month global recruitment freeze due to severe economic conditions. Exceptions may be made for project-related roles, but other positions will require approval from the CEO.
“As part of our always-on focus on managing costs and overheads, we’ve paused recruitment for particular roles within the company,” a Lendlease spokesman told The Australian. “In line with our stated targets to grow funds under management, execute against our development pipeline and manage our construction backlog, the recruitment pause does not apply to budgeted project roles.”
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This move follows a previous restructuring effort by Lendlease two years ago, which involved downsizing the workforce by approximately 300 to 400 employees worldwide, with a significant portion of the cuts made at the company's Sydney headquarters. The aim was to achieve approximately $160 million in annual cost savings.
In addition to financial challenges, Lendlease is facing pressure from activist shareholders who are advocating for further cost reductions and balance-sheet restructuring, The Australian reported. The company has already divested a stake in its $17 billion land estates business and is planning to sell a portion of its retirement business.
Lendlease had previously warned of difficult conditions in the local housing estates market, as it continued to reduce its exposure to US military housing assets. Recently, the company sold a 21% interest in its US military housing asset management income stream to an existing partner for $126 million in cash.
The developer is under scrutiny from activist investors, including HMC Capital, Allan Gray, and Tanarra Capital, who hold stock in the company and are pushing for operational simplification, according to The Australian.
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