Cbus Property is in advanced discussions to take a significant position in Lendlease’s troubled A$2.4 billion retail property fund, a move that could stabilise the vehicle after months of investor unrest and redemption pressure.

The proposed transaction would see the superannuation-backed property group acquire units in the wholesale fund, effectively giving it exposure to several major shopping centres held within the portfolio. The deal is currently subject to due diligence but is widely viewed as a lifeline for Lendlease, which had previously flagged plans to wind up the fund and sell its assets following heavy withdrawal requests from investors.

The retail vehicle sits within Lendlease’s broader A$10 billion Australian Prime Property Fund platform. Tensions escalated last year when large super funds, including Hostplus and UniSuper, attempted to replace Lendlease as manager of the APPF funds and install Mirvac instead. That campaign ultimately fell short after failing to secure enough backing in a formal proxy contest.

The dispute left a number of investors dissatisfied, particularly within the retail-focused fund, where redemption requests mounted. In response, Lendlease began exploring asset sales to generate liquidity. In one high-profile move, the fund and its co-owner, South Korea’s National Pension Service, sold Erina Fair on the New South Wales Central Coast to Fawkner for A$895 million.

Under the proposed Cbus transaction, most of the remaining assets would stay within the fund rather than being sold off piecemeal. The portfolio includes 50 per cent stakes in Macarthur Square in Sydney and Lakeside Joondalup in Western Australia, as well as a half share in Westfield Carindale in Queensland. A 50 per cent interest in Sunshine Plaza in Maroochydore is expected to be excluded from the arrangement, with GPT, which manages the centre, likely to take control of that stake.

Lendlease currently holds about 15 per cent of the fund. By bringing in a new cornerstone investor, the company would be able to provide liquidity to exiting unitholders without embarking on a drawn-out asset disposal programme. While the financial terms have not been disclosed, market sources suggest the pricing reflects continued demand for high-quality retail assets.

Retail property performance has strengthened over the past year, with APPF Retail delivering a 12.6 per cent return across the last 12 months. The rebound in large regional shopping centres has renewed interest from institutional investors seeking stable income and exposure to consumer spending.

It is understood that JLL was appointed to advise on liquidity options, and other parties also expressed interest. Last year, Hong Kong-listed Link REIT made an unsolicited approach for half stakes in Sunshine Plaza, Macarthur Square and Lakeside Joondalup.

Lendlease investment management managing director Vanessa Orth said the fund had evaluated several avenues to return capital to investors before entering into an exclusive due diligence period with an unnamed party to acquire all units in the fund. She said the approach was designed to provide liquidity in a timely and measured way while preserving value.

If completed, the transaction would allow investors seeking to exit to do so more quickly, with a targeted completion around mid-2026. For Lendlease, it would mark a reset for a fund that has endured a turbulent period, while keeping the group involved in Australia’s prime retail property market.