Company Reports

Lendlease is simplifying, with plans to exit the development and construction businesses overseas to focus on the Australian market. Its offshore interests will be mainly limited to owning and managing mature assets, not development or construction. The strategy shift frees up substantial capital. Cutting debt, which grew substantially in the last two years, is the top priority.

Lendlease operating earnings fell 33% in fiscal 2026 to AUD 0.34 per security for its core businesses. The capital release unit, which includes assets Lendlease intends to sell, reported an operating loss of AUD 0.12 per security. Securities tumbled 11%.

On the first day of the new fiscal year, Lendlease settled two asset sales it previously announced: The Exchange TRX retail mall in Malaysia and its adjacent office tower, and phase one of the joint venture with The Crown Estate for a mixed-use development portfolio in the UK.

Lendlease's lawyers are busy drafting sales contracts in the final week of the fiscal year. Within two days, the company announced the divestment of its 25% interest in Australia's Keyton Retirement Living for AUD 525 million and its UK build-to-rent portfolio for AUD 260 million.

Lendlease is simplifying, with plans to exit the development and construction businesses overseas to focus on the Australian market. Its offshore interests will be mainly limited to owning and managing mature assets, not development or construction. The strategy shift frees up substantial capital. Cutting debt, which grew substantially in the last two years, is the top priority.

Lendlease is simplifying, with plans to exit the development and construction businesses overseas to focus on the Australian market. Its offshore interests will be mainly limited to owning and managing mature assets, not development or construction. The strategy shift frees up substantial capital. Cutting debt, which grew substantially in the last two years, is the top priority.

Lendlease now expects gearing (net debt/tangible assets) to land at mid-30% by the end of June 2026, not at 15% as originally hoped. This reflects timing of cash proceeds from asset sales, more challenging market conditions, and ongoing capital spending in the core business.

Lendlease is simplifying, with plans to exit the development and construction businesses overseas to focus on the Australian market. Its offshore interests will be mainly limited to owning and managing mature assets, not development or construction. The strategy shift frees up substantial capital. Cutting debt, which grew substantially in the last two years, is the top priority.

Lendlease sold the development rights in a mixed-use project in Milan, Italy, for cash proceeds of AUD 90 million. Management expects the below-book sale to result in an aftertax operating loss of AUD 175 million in fiscal 2026.

Lendlease is simplifying, with plans to exit the development and construction businesses overseas to focus on the Australian market. Its offshore interests will be mainly limited to owning and managing mature assets, not development or construction. This involves selling over AUD 4.5 billion in assets, including United States military housing, Australian retirement living and communities, and projects in the early stages.

Lendlease's operating earnings fell 59% year on year to AUD 12.6 cents per security for its core investments, Australian development, and Australian construction segments. The decline largely reflects a skew of development income to the second half. Securities fell more than 7% on the day.

Lendlease has entered into an agreement to sell a 40% stake in The Exchange TRX shopping mall and its full 60% interest in the adjacent office tower in Malaysia to a family office for AUD 400 million. The group is keeping a 20% interest in the mall.

For fiscal 2025, Lendlease generated operating earnings of AUD 55.9 cents per security, or cps, from a loss of AUD 180.0 cps. Distributions of AUD 23.0 cps improved 44% from last year. With the turnaround plan on schedule, management highlighted a brighter outlook from fiscal 2027 onward.

Lendlease is simplifying, with plans to exit the development and construction businesses overseas to focus on the Australian market. Its offshore interests will be mainly limited to owning and managing mature assets, not development or construction. This involves selling over AUD 4.5 billion in assets, including United States military housing, Australian retirement living and communities, and projects in the early stages.

Lendlease sold six UK development assets into a 50:50 joint venture with the Crown Estate. It will commit an additional AUD 125 million to these projects but the transaction is expected to return AUD 300 million capital to Lendlease.

The real estate sector is not immune to the potential economic impact of US tariffs. There is growing uncertainty as the likelihood of slower Australian gross domestic product growth mounts.

Lendlease is simplifying, with plans to exit the development and construction businesses overseas to focus on the Australian market. Its offshore interests will be mainly limited to owning and managing mature assets, not development or construction. This involves selling over AUD 2.8 billion in assets, including United States military housing, Australian retirement living and communities, and projects in the early stages.

Lendlease returned to profit in the first half of fiscal 2025, with operating earnings per share of AUD 0.18, compared with negative AUD 0.02 for the same period last year. This met our expectations. We forecast full-year operating EPS of AUD 0.54, at the bottom of the reaffirmed guidance range of AUD 0.54–0.62. Our estimated distributions of AUD 0.16 per security represent a payout ratio of 30%, which is reasonable given Lendlease’s priority to repay debt.

We transfer coverage of Lendlease and lower our fair value estimate by 6% to AUD 8 per security. We now assume moderating margins in the outer years rather than the previous assumption of continuously improving margins. The 2024 revamp strategy should lift profitability in the near to medium term as the group farewells international developments and constructions, optimizes headcount, and shifts focus to the higher-margin investments segment. In the longer run, however, margin compression is likely to resume due to the competitive nature of the industries Lendlease operates in.

Lendlease is simplifying, with plans to exit the development and construction businesses overseas to focus on the Australian market. Its offshore interests will be mainly limited to owning and managing mature assets, not development or construction. This involves selling over AUD 2.8 billion in assets, including United States military housing, Australian retirement living and communities, and projects in the early stages.