“The company is unfocused and overextended with multiple, often-unrelated activities spread across four continents that arguably draw more disadvantages from common ownership than advantages,” the letter reads.

A Tanarra spokesperson added on Monday that the group had been clear that “urgent board renewal is essential at Lendlease”.

“We have been equally clear that we expect the next chair of the company to be an external appointment with strong Australian property sector expertise,” the spokesperson said.

“Our firm is always open to board involvement in all our portfolio companies, as we believe we bring a much-needed ownership mindset that is all too often missing in Australian boardrooms.”

In a note to clients, Citi analysts said news of the tax bill could turn into yet another earnings downgrade for the 2024 year, after the company’s own downgrade at the half-year results.

Lendlease chief executive Tony Lombardo in February said he had cut earnings expectations and reported a loss of $136 million. He said he would update the company’s investor base on May 27.

Lombardo took over the reins from Steve McCann in 2021 and has focused on cutting costs, which included a 10 per cent reduction in its global workforce. Under his leadership, Lendlease has also sold out of projects such as the $20 billion Google development in San Francisco.

“While investors are looking ahead to the end of May investor day, we believe this announcement could be a further negative and potentially result in negative share price performance,” Citi analysts said.

Citi said other risks included the group’s inability to attract third-party capital and/or tenants, affecting its development pipeline; a wave of settlement defaults that materially slows growth in Australian housing; and material cost overruns on fixed price construction contracts or a slowdown in their construction end markets.

One of the concerns raised by the shareholders is the deterioration in global conditions and a tightening of international credit markets that could affect attempts to sell assets and lead to further downgrades or underperformance in the engineering division.

Loading

In response to the Tanarra letter in early April, Lombardo said the company was making inroads into simplifying its business and “as a management team, we’re working on what the appropriate overhead costs are to manage Lendlease”.

“We’ve simplified the organisational structure and slimmed our management layers, resulting in a sustained reduction to our cost base of $320 million,” he said.

“We also scaled back new development projects to select Australian cities and Singapore, where we have a compelling competitive advantage and with a long track record.”

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.