After the results, Lombardo said Lendlease would not build any more apartments for sale to third-party investors or external projects less than $150 million in value, with the focus firmly on boosting the build-to-rent segment, which has a $28 billion worth of projects in the pipeline globally.

“We expect a pick-up in sales for the residential business as there is more clarity on the direction of interest rates and inflation. But we are de-risking the business,” he said.

Winston Sammut, property manager for Euree Asset Management, said Lendlease expected a healthy improvement in earnings in 2024, benefitting from its low gearing, currently at 14.8 per cent, and a sound contribution from its development division.

“However, a number of provisions, being $74 million in the US from the 2021 sale of the Americas Telecommunication business and a $95 million additional provision in the UK detracted from the bottom line,” Sammut said.

The group’s return on earnings is forecast at the lower end of 8 to 10 per cent. Lendlease maintained its full-year distribution at 16¢ with the final payment of 11¢ due on August 18.

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For diversified group GPT, despite the challenging conditions for the office segment, the retail segment recovered strongly, and the logistics business continued to benefit from robust demand.

Shoppers have returned to its malls, particularly Melbourne Central which was hard hit during pandemic lockdowns, and sales are up 26 per cent on the first half of 2022. New Asian-food focussed supermarkets, athleisure and cosmetics were the main drivers of sales.

In the December half, GPT’s funds from operations, being a more accurate measure for real estate investment trusts, was down 3 per cent to $316.7 million, due to a drag from higher financial costs and a 4 per cent decline in asset values.

Outgoing GPT chief Bob Johnston said the office sector remained challenging due to elevated levels of market vacancy, and the reduction in workspace requirements as a result of remote and hybrid working. GPT is selling its half share of the Australia Square Tower in Sydney.

“Office use is still in the mid-week time slot for most companies, but there is clearly a flight to quality, as businesses use both flexibility and their workplace to attract talent,” Johnston said.

The $8.04 billion ASX-listed GPT will pay an interim distribution of 12.5¢ on August 31.

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