Stockland recruits Lendlease veteran Tarun Gupta as new CEO

Stockland, the country’s largest listed residential developer, has tapped senior Lendlease executive Tarun Gupta to lead the company, with the outsider tipped to shake up its direction, prompting investors to nudge its shares higher.

The veteran Lendlease chief financial officer, who has significant global experience, could oversee a push by the company into larger mixed use projects, adding to its base in housing development.

The Lendlease executive is also armed with funds management expertise and could take the company into more partnerships and funds deals for large commercial and logistics projects.

Stockland chairman Tom Pockett said Mr Gupta will join Stockland next June. He will succeed Mark Steinert, who has led the company since 2013, and will remain at the helm until Mr Gupta starts.

Stockland shares added 4c to $4.60 on Thursday as Mr Pockett emphasised Mr Gupta’s commercial experience and track record in leading and managing large property operations. “We know that he is highly regarded in the industry and has a strong reputation among property investors,” he said.

Stockland undertook an elongate search process that also drew internal candidates, led by residential head Andrew Whitson.

“Ultimately the board made the decision based on Tarun’s breadth of experience across the property sector including in relation to communities development, retirement living, commercial property and investment management,” Mr Pockett said.

The extended search had prompted speculation of a board split about the approach being taken towards candidates, and Mr Gupta’s arrival in mid-2021 could lead to a further shake up in Stockland’s ranks.

The stock was deserted by investors as the coronavirus pandemic broke out as they questioned its focus on housing and retail property. It has since recovered, partly on the back of fiscal stimulus and also the resilience of its suburban malls.

Like other trusts it has made a push into logistics property but is also undertaking land lease housing and explored tie-ups in areas including storage.

The crisis has also prompted a divergence between direct and listed markets, which may throw up corporate opportunities, which Mr Gupta may pursue after a period in which Stockland did not land major takeovers.

Mr Gupta held a wide range of senior roles during his 26 years at Lendlease including, most recently, as the group CFO. He said it was an “honour” to be appointed to an organisation that has been building communities across Australia for over 65 years.

“I leave my current role with great respect for the team I have worked with and I am excited by the significant opportunities ahead with Stockland,” he said.

His departure will likely spark a contest at Lendlease for the role of permanent CFO, with the deputy CFO Frank Krile stepping in on an interim basis, as senior internal executives also position for the eventual departure of veteran chief executive Steve McCann.

Jefferies senior vice president equity sales Michael Vincent said Mr Gupta brings “a lot more experience across multiple asset classes and will likely execute more transactions including selling down retirement”.

Mr Vincent said Mr Gupta had partially sold down retirement at Lendlease to Dutch company APG and Stockland had been talking about selling its own retirement unit for more than five years. He predicted the Lendlease executive could apply some more “Lendlease-style partnership models which Stockland lacks”.

“Expect cost out at Stockland. Overall not a bad hire, but a little surprising,” he said.

“Based on this we would expect next in line Kylie Rampa to be the next chief executive of Lendlease when Steve McCann likely steps down next year,” he said.

Mr Gupta will start on annual fixed pay of $1.5m and with incentives plans could receive $6.75m in total remuneration.

JPMorgan noted he also had significant retail experience and they expect “slight strategy tweaks” under his leadership, calling a steady hand with a wealth of property experience.

“The key focus for Tarun will be deciding on what is the right asset mix for the significantly diversified group,” JPMorgan analyst Richard Jones said.

Stockland’s $3.5bn residential unit had been a “constant area of strength” for the company and would be a key business moving forward. “The question Tarun will need to answer is will the expansion into medium density accelerate?” he asked.

Stockland has $6bn of retail assets, $1bn of office towers and $2.9bn of industrial assets and has been looking to grow its commercial holdings while selling off small shopping centres.

“It is also looking to improve its overall investment portfolio asset quality. A couple of the office development projects – Piccadilly and Walker Street, North Sydney – are large scale and high risk projects. It will be interesting to see Tarun’s appetite for these projects,” Mr Jones said.

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