|
|
 |
13 December 2000
Institutional Investor Briefing Lunch - J.B. Were & Son - David Higgins
Comments made during the luncheon briefing to institutional investors:
State of Real Estate Markets (as outlined in the Global Conference and in Emerging Trends, e.g. slow down in many markets, no major over supply).
UK Shopping Centres pressure on secondary centres valuations.
Flight to quality and credit in US CMBS market.
Credit squeeze by banks, particularly developers in the US and parts of Europe.
Some investors will move to reallocate to real estate e.g. Australia were interest rates are perceived to peaked.
Other investors impacted by the decline in equity markets will put them overweight in real estate and sell down.
Summary –a slow down in the real estate market will flow through to transaction volumes but the next 12-18 months should create good buying opportunities for long-term core investors.
Questions and Answers
If you look at 5 years, what would be the major characteristics of Lend Lease that you would like to see?
Four key success drivers; client focus, innovation, excellence of execution and knowledge management.
What are our biggest risks?
Our biggest risk and what will hamper future growth is getting the right people. We are further down the track at Bovis at Succession Planning than in REI. Gave example – trying to recruit head HR chief who decided not to take the role. Some positions in US companies can not be filled.
In relation to the financial objectives in 5 years time - are we targeting growth?
Yes, we will return to a growth company, which is certainly our objective in the medium term.
We target strong cash generation. Achieving in time a higher return on equity. The strong cash generation could allow us to buyback stock in the future, as this is one of the most efficient ways of returning value to shareholders. Continuity of contracts reduces volatility and lead to high ROE and higher PE, for example AMEY - a UK highway construction company.
Would you consider changing a listing?
Not envisaged at this stage. There is no point in being 99 or 101 in the FT index. If we considered some merger sometime in the future that may change our perspective. If unfairly valued would consider listing to unlock value don’t consider this as the case.
Please detail development activity of the group.
Detailed development activity around the world, Asia little activity, US the San Francisco project, UK detailed Norwich – Norwich decision not yet, progress on Madrid.
Australia – explained what we had done on Fox by taking away the gates and reducing the entry ticket price.
Is the market unfairly valuing the company? This talk of uncertainty and transition is this unfairly impacting the stock price? Has the market got the uncertainty wrong? There are a lot of good reports out on our business model – recent Ords report valued the company anywhere from AU$17 –AU$27 on various scenarios. The market wants to see proof of the model and the uncertainty remains in the market until we deliver proof of the model working. So I think the market has got it right. There will be uncertainty. There will be volatility in this transition period – some shareholders will get spooked at the volatility when they see profit warnings and you saw that recently with the profit warning at our AGM in November.briefing
|