The company is working to defend its $10 billion property fund business as investors assess the prospect of transferring management to a competitor. Super funds such as Hostplus have targeted the retail component of the fund, but the independent board has decided to keep Lendlease in charge. The endorsement strengthens Lendlease's position, although concerns about the fund's long-term future remain.
Hostplus and other institutional investors had triggered meetings regarding both the industrial and retail segments of the fund, aiming to appoint rival Mirvac as manager. In response, both fund managers outlined strategic plans. Lendlease promised improved liquidity access and more stable investment structures, which appear to have influenced the board’s decision to remain with the current manager.
Lendlease’s plan features the sale of the Erina Fair shopping centre - valued at over $860 million - in partnership with a South Korean investor. The sale would help meet investor redemptions and fund redevelopment of several properties into mixed-use precincts. In contrast, Mirvac has yet to propose a clear liquidity solution and has included conditions on any capital contribution, making its proposal less attractive to some stakeholders.
Despite the board decision, investors remain divided. Lendlease has committed to offering liquidity through a $200 million funding facility and quarterly withdrawal opportunities. However, there is concern that the retail fund is diminishing in size and may continue losing value if its strategy remains unchanged. Lendlease’s plans to revitalise sites with residential development rely on cooperation from co-owners.
The board's endorsement may stabilise the fund for the time being. However, uncertainty lingers over its potential for growth and the possibility that continued redemptions could eventually force a closure. While Mirvac has indicated it would grow the fund using its existing development pipeline, its lack of liquidity detail remains a barrier to winning investor support.
