Lendlease to Exit U.S., Brighton Lab Tower’s Future Uncertain

Image courtesy of SGA

Australian developer Lendlease announced Monday it’s pulling out of the United States development market to focus on its home turf and select international projects. The decision has put the future an under-construction spec life sciences block in Brighton in question.

In an announcement to investors, the company said it wanted to free up the equivalent in Australian currency of $2.98 billion with its moves, which affect its own projects and joint-venture developments from San Francisco to New York City in the United States and developments as far apart as London and Singapore internationally. The company said it also plans to retain an “international investment management capability.”

The company is also selling its East Coast construction business to Boston-based Consigli Construction. Lendlease announced the deal Wednesday morning, which covers 45 current, under contract and pre-construction projects and “the majority” of Lendlease’s U.S. construction workforce, which will transition to Consigli. Terms of the deal will be released once the transaction is completed, likely in the second half of 2024, Lendlease said.

“We recognise that our security price performance and securityholder returns have been poor as we have faced structural challenges and a prolonged market downturn. We need to take significant action at an accelerated pace to deliver value for our securityholders, capital partners and customers,” company Chairman Michael Ullmer said in a statement.

A slide deck included in the announcement listed the Forum lab tower at 60 Guest St. in Brighton’s Boston Landing development as on the list of joint ventures it planned to complete, but it’s unclear if Lendlease plans to sell its stake in the building.

The 60 Guest St. building is being co-developed by Lendlease and Ivanhoé Cambridge. The project is being financed with a $315 million construction loan from Bank of China, public records show. So far, no leases have been announced for any of the 350,000 square feet of office/lab space in the property, dubbed “The Forum.”

Designed by SGA, the 165-foot-tall block also includes 8,000 square feet of retail or restaurant space and 340 underground parking spaces.

In response to an investment analyst’s question during Monday’s presentation, Lendlease CEO Tony Lombardo suggested the company may not have made a firm decision about how it will move forward with its stake in 60 Guest St. and seven other joint-venture developments in New York City, Los Angeles, Milan, London and Singapore.

“Those [joint venture] projects are all forecast to complete over the next three years. They will all either generate $7 billion of additional funds under management for the group or, at the right time, we’ll be exiting…once those assets are stabilized during that period,” he said.

The Forum will be opening into a market with significant competition for new tenants. Research by brokerage Newmark shows Greater Boston’s inner suburban locales – places like Allston, Brighton, Watertown and Somerville’s Assembly Square – ended the first quarter with a 39.1 percent vacancy rate, not quite 200,000 square feet of positive absorption and a large construction pipeline.

Newmark reported over 850,000 square feet of lab space came online in the inner suburban area that quarter, alone, including two large projects just across the Charles River from the Forum: Spear Street Capital’s redevelopment of the former Tufts Health Plan offices at 705 Mount Auburn St. and 99 Coolidge St., a 255,000-square-foot ground-up project by National Development and Alexandria Real Estate Equities.

The Forum may not be the only Boston-area asset Lendlease could part with. Public land and corporate ownership records indicate Lendlease still owns the rental portion of the 478-unit Clippership Wharf waterfront multifamily project it developed in East Boston. An appendix to its Monday investor slide deck noted that the company planned to seek “efficient and early release of capital” from “other land in Europe and [the] Americas” that it owns on its own.

In an email, a Lendlease spokesperson declined to comment.

Correction 12:25 p.m. May 30, 2024: An earlier version of this story misstated when Lendlease expects the sale of its East Coast construction business to Consiglli Construction. That deal is expected to close in the second half of 2024.

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Image courtesy of SGA
Australian developer Lendlease announced Mo…