The former CEO of Bunnings—Australia’s home improvement behemoth—will take over as chair of besieged construction group Lendlease. John Gillam will replace Michael Ullmer, a long-time target for shareholder activists who will step down after the November annual general meeting.
Mr Gillam, who helped turn Bunnings into an Australian retail powerhouse and more recently oversaw the turnaround and eventual sale of CSR as chairman of the building products group, will oversee Lendlease’s plan to sell off $4.5 billion in UK and North American assets – and instead consolidate operations inside Australia.
“Lendlease made a very clear commitment to pay down debt and to return funds to security holders,” Mr Gillam told The Australian Financial Review yesterday. “That is a huge priority … to restore trust by turning those words into real actions that investors can believe in.”
Mr Gilliam’s appointment—which will now go to a shareholder vote—comes just weeks after Australia’s competition watchdog approved a deal that will see Lendlease sell off 12 master-planned community assets to Stocklands.
Other planned divestments—including the sale of its UK construction business and the sale of the remaining stake in its retirement business—are also progressing.
“There’s a whole raft of other things that we are working through,” Mr Ullmer told the Australian Financial Review. “We’re all about simplification. We’re about not going off-piste and just sticking with the things where we have a strong competitive advantage and not getting ahead of our skis.”
According to Mr Gilliam, one of the most important tasks would be to work out how it would again focus on growth after the current turnaround process was complete: “That will be an important part of the next 12 to 18 months of internal work and challenging the executive team in constructive ways to think out how we best leverage the great strengths of Lendlease.”
The next 12-18 months is about “Maintaining momentum.”
That could involve tapping into the build-to-rent market—with more than 2,800 Lendlease units already under construction—and building more tall timber buildings, including the 55-storey “Halo development” in downtown Sydney, which, when completed, will become the world’s tallest building constructed using mass timber.
In June, Lendlease agreed to terms with US builder Consigli Construction Co (Consigli), which will take on 45 current, under-contract, and pre-construction projects across America’s east coast.
“Consigli and Lendlease have a successful and long-standing relationship working as partners on many projects, and this acquisition is a natural fit,” according to Consigli Construction’s CEO Anthony Consigli, with Lendlease CEO Tony Lombardo claiming the sale was another step in simplifying the Lendlease business model: “It’s the culmination of more than 12 months’ work refining our US construction activities to focus on the US East Coast where we have a clear competitive advantage,” he said.
Last week, Lendlease announced plans for a new $500 million, 499-unit build-to-rent complex in Melbourne’s Docklands, its third in Australia, in a 60/40 partnership with Japanese steel conglomerate Nippon Steel Kowa Real Estate (NSKRE):
“The launch of our first-ever partnership with NSKRE to deliver a new build-to-rent development on Melbourne’s waterfront represents a strategic opportunity to leverage our shared global expertise,” according to Tom Mackellar, Lendlease’s head of development. “This announcement also highlights the continuing demand from our Japanese partners for high-quality opportunities from our Japanese partners for high-quality opportunities across our development pipeline.
- To learn more about Lendlease’s new strategy, visit Wood Central’s special feature.
