Shareholders postpone redemptions for $2.1 billion Lenders Australian property fund-source. As a weak real estate market hinders sales, investors have decided to defer payment from a Lendlease (LLC.AX.) A$4.2 billion ($2.73 billion) commercial property fund until next year, a source said Monday.
The institutional investor-focused Lendlease Australia Prime Property Fund valued retail-owned malls at A$4.2 billion in 2018 when an unusual withdrawal window opened, and half the fund requested their money back.
A three-year extension given in 2020 when the pandemic halted markets ended on Monday, but investors have agreed to extend the deadline until early 2024, according to a secret source. The fund was valued at A$3.2 billion ($2.1 billion) in September.
Lendlease wouldn’t comment. The delay highlights the issues confronting office and retail real estate, as homework and e-commerce limit the epidemic rebound and cause tenants to reassess floor space. At the same time, rising rates drop building values and boost financing costs.
In September, a spokeswoman claimed Australia’s fourth largest pension fund, A$120 billion UniSuper, was still waiting for around A$30 million of its A$240 million share. UniSuper did not comment on Monday.
UniSuper sought orderly sales of the fund as part of a more significant move from pooled investors to direct ownership, chief investment officer John Pearce told Reuters in September.
“We don’t want managers going in and doing fire sales for the sake of meeting redemptions,” said Pearce. “We hope there’s going to be a sense of orderliness.”
The Lendlease fund sold Craigieburn Central Mall in north Melbourne for A$300 million in April and Caneland Central Mall in Queensland for A$280 million in December.
Last December, S&P Global reduced the fund’s credit rating because it prioritized redemptions over debt, lowering cash flow adequacy.
One of Australia’s leading developers, Lendlease, has A$23 billion in projects underway in June throughout the US, Europe, Asia, and Australia.
Recently, Lendlease concluded a $15 billion San Francisco development contract with Google. Lendlease halted an A$1.9 billion San Francisco office and residential building in August.
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