Lendlease US Exit Puts $1.2B San Francisco Project in Play

In a strategic shift announced this week, Australia-based developer Lendlease said it will pull out of international construction and development within the next 18 months to focus on its domestic market.

The company expects to free up about $3B by exiting international projects and selling assets, including its largest U.S. investment, the $1.2B Hayes Point tower in San Francisco.

In August, Lendlease halted construction on Hayes Point, a 47-story mixed-use tower that was originally set for completion in 2026.

In its announcement on Monday, Lendlease said it is offloading the burden of “overweight long-dated” projects, adding that more than 80% of its international projects currently underway are not scheduled for completion before 2030.

“By reshaping the portfolio, concentrating on our core competencies in markets where we have proven we have the right to play, and the competitive advantage to win, the financial and operational risk profile will be lower, and we believe the quality of our earnings ultimately higher and more sustainable,” said Tony Lombardo, Lendlease Group CEO, in the statement.

Lendlease said it will honor its commitments to capital partners to finish their joint venture projects. The company will sell land and inventory in San Francisco, Chicago and London, including Hayes Point, Lakeshore East in Chicago and Deptford Landings in London.

Lendlease was building 300 condos and more than 300K SF of office space at the Hayes Point tower. In August, Lombardo said the project was being paused to “de-risk” the company’s investment until the development secured more tenants or a capital partner.

In November, Google withdrew from a partnership with Lendlease to develop four campuses in the Bay Area, including an 80-acre campus in San Jose known as Downtown West; a campus known as Moffett Park in Sunnyvale; and campuses in Middlefield Park and North Bayshore in Mountain View.

Last July, Lendlease laid off about 10% of its global workforce. At the time, the company said it did not expect the layoffs to impact any of its project deliveries.

Lendlease was the lead contractor on the largest unfinished project in Downtown Los Angeles, the three towers of Oceanwide Plaza, which are heading for a bankruptcy sale. Contractors led by Lendlease filed an involuntary bankruptcy petition against the limited liability company for Oceanwide Plaza in February.