S&P/ASX 200 Index (ASX: XJO) stock Lendlease Group (ASX: LLC) is tumbling today.
Lendlease shares closed on Friday trading for $2.72. In early morning trade on Monday, shares are swapping hands for $2.51 apiece, down 7.7%.
For some context, the ASX 200 is down 0.1% at this same time.
Here's what's happening.
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ASX 200 stock sinks on $250 million asset sale
Lendlease shares are falling after the international property developer announced that it has entered an agreement to sell its ownership of the development rights to the Milano Santa Giulia mixed-use development, located in Italy.
The purchaser was reported to be local Italian developer, Bizzi & Partners.
The ASX 200 stock said the divestment is part of its ongoing capital recycling initiatives to simplify its portfolio.
The gross value of the transaction comes out to some $250 million. This includes $90 million in cash Bizzi & Partners will pay to acquire Lendlease's units in the Heartbeat Fund, which holds the development rights to the Milano Santa Giulia.
The buyer will also assume the project's debt of around $160 million, as well as funding future remediation and infrastructure works.
However, Lendlease shares look to be under pressure with the company noting that it is selling the development project at a significant discount to book value. Indeed, management expects the divestment to result in roughly a $175 million post-tax operating loss. That loss will be recognised within the ASX 200 stock's Capital Release Unit (CRU) for the 2026 financial year (FY 2026).
Despite the expected $175 million loss, the company said the sale of mixed-use development in Milan is consistent with its plans to divest its long-dated and complex projects. The sale also removes future capital obligations associated with the development and holding costs.
"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," Lendlease Tony Lombardo said.
Completion of the asset sale remains subject to certain conditions being met.
What other divestments has Lendlease been making?
Lendlease highlighted that it has a number of "major capital recycling transactions" underway. The ASX 200 stock aims to reach a contractual close or completion on a number of these transactions by 30 June.
Management said that Lendlease has "balance sheet flexibility to manage an orderly realisation of CRU asset sales balancing value realisation and speed of execution".
At the end of H1 FY 2026, the company reported more than $3 billion in liquidity.
With today's intraday slide factored in, the Lendlease share price is down 55.6% since this time last year, well behind the 3.5% 12-month gains delivered by the ASX 200.
