Lend Lease makes £58m write-down at Crosby Homes

The declining state of the British property market has hit Lend Lease. The Australian developer has announced that it has written off £58m off at Crosby Homes, its house-building operation in northern England. Profit is expected to be chopped in half at £126m.

The news comes three weeks before Lend Lease’s full-year results.

As a result of the revelation, Lend Lease's share price was punished, falling 64p by the end of the day to sit at 410p, less than half its 12-month high of 970p in November 2007.
 
Turi Condon, property editor with The Australian, quoted Lend Lease chief executive Greg Clarke who said Crosby Lend Lease would have to discount to sell its excess stock.

"The UK housing market fell off a cliff in 2007," Clarke said to Condon. "There is a lack of liquidity in the UK, where people just can't get mortgages to buy apartments."

Lend Lease yesterday said it had taken a £58m write-down on Crosby's inventory of 800 homes, 400 of which were still in the pipeline. Most are sited in Manchester, Leeds and Sheffield.

Crosby is involved in the London Olympic Village project.

It was the third year Lend Lease has written down assets, but John Freedman, of investment bank UBS, said previous write-downs had been on construction projects.

"Investors have been on the outlook for a repeat of those," he said.

Lend Lease's profit after tax, including these latest revaluations, for the year to June 30 is expected to be £126m, compared with £235m in 2007.

It has downgraded the value of its two British shopping centres. Its 30% stake in Bluewater has fallen by around 12% to £570m, but this was held as an inventory item and will not affect profit.

Despite the latest moves, the company is in a strong position with £380m in cash, low gearing and strong positive cash flow.