Australia's largest property developer has slashed its profit forecast as it has been unable to sell assets that would have accounted for 30% of its 2009 operating profit. The company now expects AU$300 million in net operating profit for the fiscal year ending June 30, down 25% from the top of its previous forecast of AU$380 to AU$400 million.
Chief executive Steve McCann said that up to 15 of its public private partnership projects including hospitals, mostly in Britain, had been earmarked for sale. He said that there had been offers for the properties but at 15 to 20% below expectations. 'We are not a distressed seller. We will sell at the right price at the right time and it won't be this financial year,' he declared.
In February the builder and developer announced that it would cut up to 2,000 jobs and sideline about $2 billion worth of projects globally. But despite the downturn McCann said Lend Lease would continue with its bid for the massive $3 billion Barangaroo project in Sydney.
But it is the company's struggle to find private financing for the Olympic project that is causing concern. Reports in the UK suggest that the government is considering taking a second considerable chunk from its Olympic contingency fund to bail out the project. It is estimated that a further £400 million may be needed.
The £1 billion village is the most costly construction project on the Olympic Park. The 3,000 apartment project was conceived as a public-private partnership with the Olympic Delivery Authority funding the infrastructure and the private sector funding the vertical build.
But Lend Lease has been unable to raise the required investment because of the financial crisis and the government is already thought to be considering delaying any finance deal until early next year.
The government has already stepped in with contingency funds once this year, providing £326 million in January to ensure that work on the project could continue. A further £268 million is expected to come from social landlord Triathlon Homes.
