Lendlease shares climb 4% following landmark Google deal
News of a A$20 billion deal with tech giant Google saw shares in Lendlease rise as much as 4.75% during Thursday’s trading session.
On Thursday, Lend Lease Group, the A$8 billion construction, property and infrastructure company announced a landmark development deal with tech-giant Google.
The deal, valued at approximately A$20 billion, will see Lendlease work closely with Google to ‘develop up to 15 million square feet of residential, retail, hospitality, and other associated community uses’ in the San Francisco Bay Area, California.
Unsurprisingly, off the back of this promising news, the share price of Lendlease rose 4.75% during Thursday’s trading session. Momentum behind the stock continued this morning, with Lendlease’s shares opening 2.71% higher as the market further digested the news.
What does this A$20 billion deal involve?
The partnership, set to span 10 to 15 years, centrally aims at easing some of the housing issues facing San Francisco Bay’s residents.
Specifically, with the ambition of adding 15,000 new homes to the area, Google’s Vice President of Real Estate and Workplace Services, David Radcliffe said that the agreement:
‘Expands on an existing and successful partnership that will help us deliver on two important objectives: our commitment to accelerate the production of residential units in the Bay Area, and our plan to build mixed-use developments.’
The development deal has an estimated final value of $15 billion (A$20 billion).
Finally, the media release noted that 'subject to planning approval, development work could commence as early as 2021.'
Implications for Lendlease
Denis Hickey, Lendlease’s CEO of the Americas segment, said that:
‘We’re eager to contribute our world-class approach to creating unique urban communities, and we are focused on delivering outstanding places that redefine how people choose to live, work, connect and contribute to creating an active community.’
As the news of the agreement fully ripples throughout the market, it will be interesting to see how the Lendlease share price performs in the short to mid-term.
Disappointingly for investors, Lend Lease Group has performed less than ideally in the last couple of years, with the share price falling from a high of A$21.6 in August 2018, all the way down to A$11.30 in January 2019.
However, this deal may be a sign that investors are finally warming back up to the stock.
Year-to-date, Lendlease’s share price has risen 32%.
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