Image via Macarthur Square
Lendlease is preparing to sell down the remaining assets in its $2.8 billion Australian Prime Property Fund Retail (APPF Retail) following a surge of investor redemption requests, according to a report by The Australian Financial Review. The shift marks a significant moment for the property group, which recently fended off an attempt by major super fund Hostplus to remove it as manager of the long-standing pooled fund.
The redemption window, open to more than 40 institutional unitholders including Hostplus and UniSuper, closed on Monday, with strong demand for withdrawals making a broader portfolio sell-down increasingly likely. The fund had already agreed to sell Erina Fair on the NSW Central Coast for $895 million to help meet redemption obligations.
Investor Pressure Forces Strategic Rethink
Despite winning the management rights dispute with Hostplus last month, Lendlease now faces a different challenge: the need to unwind a portfolio of prime retail assets to satisfy investor liquidity requirements. Hostplus confirmed it had taken advantage of the redemption window, calling on Lendlease to act in the best interests of majority unitholders and support a structured wind-up of the fund.
Lendlease had previously injected $200 million to help ease redemption pressures but has not commented further on the latest wave of withdrawal activity. UniSuper has also declined to comment.
What’s Left in the Portfolio
Beyond Erina Fair, the APPF Retail fund holds half-stakes in several major regional and sub-regional centres, including:
- Sunshine Plaza, Queensland
- Macarthur Square, NSW
- Lakeside Joondalup, Western Australia
- Westfield Carindale, Brisbane
These centres represent some of the most resilient retail assets in the country, offering strong income profiles and strategic long-term value.
Retail Market Recovery Strengthens Asset Values
While the potential loss of the retail fund is a blow to Lendlease’s $10 billion platform of pooled funds and associated fee streams, the group is at least benefiting from favourable market conditions. Retail property values have been rising, with MSCI/Mercer data showing the sector was the best-performing segment in the September quarter, with transaction volumes reaching $2.9 billion, a 32% increase year-on-year.
Lendlease CEO Tony Lombardo highlighted this recovery when discussing the Erina Fair sale, noting that what would have been a discount 12 months ago had become a strong premium. Lombardo emphasised that APPF Retail’s assets were of “very high quality” and capable of attracting premium pricing in the current market.
Link REIT’s Bid Seen as Opportunistic
The improving environment has also drawn interest from international players. Hong Kong–listed Link REIT recently lodged an unsolicited proposal for half-stakes in three APPF Retail centres. Lombardo dismissed the move as opportunistic, suggesting the timing was driven more by visibility than valuation.
A Rare Win That Still Ends in a Wind-Down
The tension between Lendlease and Hostplus culminated last month in a vote where unitholders ultimately supported Lendlease in retaining management. However, the victory appears short-lived as market forces and investor liquidity demands push the fund toward an orderly sell-down. A similar proposal by Hostplus to seize control of Lendlease’s $2 billion industrial fund was halted earlier after Lendlease successfully prevented a quorum.
The unwinding of the APPF Retail marks a pivotal moment for Lendlease’s funds management strategy. While it underscores broader investor caution, it also highlights renewed confidence in high-quality retail assets – a trend Lendlease may leverage as it navigates this transition. The group now faces the dual challenge of maximising value during disposals while reinforcing investor trust in its broader platforms amid shifting market dynamics.
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