Lendlease: Balance Sheet to Keep Deteriorating? No, We Expect It to Improve

We remain confident Lendlease’s earnings should improve, but we think the balance sheet is one of the concerns that depressed Lendlease’s security price to new depths in calendar 2024. Lendlease’s 23% gearing, revealed in February, breached its target of 10%-20% gearing, and interest cover worsened to 2.2 times, down from 3.0 times in June 2023. Management declined to disclose the covenant minimum, but 2.2 times would be a low ratio for a property trust, let alone Lendlease’s huge development and construction commitments.