Lendlease, Charter Hall, Brookfield and Dexus CEOs prepare for the threat of privatization



The pressing problem that Charter Hall’s Harrison is facing is finding additional space for all of his employees who want to return to the office. He had to rent another floor to meet the new COVID-19 room requirements.

David Harrison, CEO of Charter Hall, speaks at the Financial Review Property Summit in Sydney. Janie Barrett

All CEOs reported a tight job market, but Harrison and Conry wondered if it would stay that way.

Conry said reopening international borders would eventually return power to employers, a shift proposed by Harrison would be aided by technology that would both drive down prices and free the workforce through automation.

Lombardo said that executive influence is important in getting employees back into the office, arguing that when executives return to the office, the next level of management follows and more employees after.

Lombardy has started taking the floor for an hour every Friday to chat with staff and that in itself has had an impact on visitor numbers – perhaps the Lombardy effect will spread across Australia.

Release pressure in the supply chain

Most supported the view of Brookfields Fallman, who argued that inflation is mostly temporary and would ease if the world reopens fully after the pandemic and the pressures in the supply chain eventually ease.

In that regard, Harrison said the recent hikes in bond yields, in response to rising signs of inflation and expectations of official rate hikes, have already been reflected in property valuations. And since real interest rates (taking inflation into account) are still negative, he argues that real estate would continue to be an attractive asset class.

But not just individual real estate investments – the executives of Australia’s largest publicly traded real estate companies are confident that their businesses will continue to be very attractive to the huge private pools of capital that now dominate both global financial markets and Australia in particular, where huge industrial super funds are increasingly looking for the best publicly traded assets.

“Absolutely because nobody is too big to be privatized,” said Harrison, citing the $ 32 billion privatization of Sydney Airport earlier this year as evidence. “I don’t think anyone is safe anymore.”

Steinberg, who said at last year’s real estate summit that real estate investment trusts remaining underwater would be privatized, says his view has not changed.

“If there is a discrepancy between the underlying value of the assets and what they are trading on the ASX, there is only one logical outcome and that is that most of the good assets will be in private capital, they are not going on that ASX to sit. “

Tony Lombardo, Global CEO of Lendlease, at the Financial Review Property Summit. Janie Barrett

Lombardo, who is in the early stages of a strategy reset at Lendlease and has watched the company’s share price fall more than 20 percent this year, was similarly blunt.

“If you don’t perform, you will be taken over,” he said. “As the CEO of a company, the key is to make sure that your company is performing all the time and that the markets value your work.”

Lombardo feels that he has Lendlease along the way. He has completed the sale of the complex engineering services and business areas and is now working on building the development pipeline for the group and making group accounting more transparent.

“We need to regain market confidence. We have a great pipeline and a great team and now it’s all about execution. “

Does this mean our real estate giants are suddenly being swallowed up by super funds and other private sources of capital? Not necessarily, as many of them are a bit more complex than infrastructure systems.

What is interesting, however, is that the CEOs of companies with a total market value of more than $ 25 billion operate on the assumption that they are essentially permanent targets of private capital.

This is a brave new world.



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