Lendlease has sold its ownership of the development rights to the Milano Santa Giulia mixed-use development (MSG North) in Milan, Italy to local developer Bizzi & Partners, at a discount of A$175m (€108m) to book value.
The transaction has a gross value of A$250m, including the purchaser acquiring Lendlease’s units in the Heartbeat Fund, the holder of the development rights, for cash and assumed debt of around A$160m, in addition to funding future remediation and infrastructure works.
Lendlease launched a long-term strategic partnership with Canadian pension fund PSP Investments in 2020 to undertake the massive urban regeneration of Milano Santa Giulia covering more than 110 hectares in the southeast of Milan.
At the time, the €2.5bn project was intended to split the site into two areas to the north and south of a new mixed-use development with the potential for up to 2,500 homes, alongside office, retail and entertainment space.
The company said that, while the transaction was expected to result in a loss, the strategic sale continued Lendlease’s capital release from long-dated and complex projects, while also removing future capital obligations associated with the development and holding costs.
Lendlease has several major capital recycling transactions announced or in advanced stages, including several targeted to reach contractual close or completion by 30 June 2026.
Lendlease CEO Tony Lombardo said: “The sale of the commercially challenged MSG North project is consistent with our strategy to reduce long-dated international development capital and simplify the group.”
