Lend Lease ready to motor now Crosby’s in the bag

Adrian Chamberlain, the chief executive of Lend Lease’s Europe, Middle East and African operations, has spoken for the first time of his plans for Crosby Homes, which the Australian developer has just bought from Berkeley Group for £261m.

The purchase of the regeneration specialist, which was first predicted in Building (10 June, page 11), was finalised last week. Chamberlain said the deal enabled Lend Lease to break into the housing and urban regeneration market. Crosby has offices in Manchester, Leeds, Birmingham, Cardiff and Bristol.

Five Crosby directors led by chairman Geoff Hutchinson will together make about £10m from the deal. The team, who are expected to remain with the company, are set to make a further £15m if they meet set performance targets.

Chamberlain said: “We see masterplanning as big business in the UK in the next five to 10 years. We ruled out conventional housebuilders, which generally go for greenfield developments, because that would not fit in with government policy.”

Chamberlain said he was not concerned that Lend Lease was buying a housebuilder at a time when the market was slowing. He said: “We know there is a short-term wobble, but Crosby’s earnings in the next two years are protected. We’ve anticipated the trend.”

The deal means that contractor Bovis, owned by Australian parent Lend Lease, once again has a housing arm. P&O, its former owner, floated Bovis Homes on the stock market eight years ago.

The acquisition will benefit Bovis, which will pick up contracting work from Crosby, although Chamberlain said this would be a gradual process.

Obviously, there are opportunities for Bovis to be a contractor for Crosby

Adrian Chamberlain

He said: “Obviously there are opportunities for Bovis to be a contractor for Crosby, and Berkeley already uses Bovis. Bovis will have to earn it though; it will not be something imposed on Crosby.”

Chamberlain said it would take roughly three years for the two companies to reach that stage.

Berkeley was also upbeat about the sale. The firm said it had a strategy of slimming its business and returning capital to shareholders. Announcing its results for the year ended 30 April the firm revealed that pre-tax profit had fallen 11.7% to £203m. This was largely a result of returning £12 a share to shareholders over six years.

Tony Pidgley, Berkeley chief executive, said: “Berkeley is committed to this strategy. This is in part a consequence of our focus on large-scale regeneration schemes, principally in London and the South-east.”

Berkeley said demand for homes had dropped but that “the fundamentals look very encouraging” in the long term.