DEEP DIVE Lendlease ON
ACKNOWLEDGEMENTS
EDITOR IN CHIEF: William Tsui
AUTHORS: Olivia Luu, Nicola Casaclang, Erin Seo, Fei Fei Gao, Kyan Nikkah, Sanuda Godakandage
DESIGNERS: Olivia Luu, Nicola Casaclang, Erin Seo, Fei Fei Gao, Helen Guo
DISCLAIMER
1. The information in this free guide is provided for the purpose of education and intended to be of a factual and objective nature only. REISA makes no recommendations or opinions about any particular financial product or class thereof
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01 COMPANYOVERVIEW
Lendlease Group is an ASX-listed ~A$3.7 billion market cap Australian integrated real estate investor, developer, and manager with three main operating arms: (1) Investment, (2) Development, and (3) Construction. Lendlease’s business model enables it to invest in, develop, and deliver major real estate and infrastructure projects across multiple sectors, including commercial, residential, mixed-use, defence, and social infrastructure. Lendlease operates both domestically and internationally, with a core focus on Australian assets.
INVESTMENTARM
Lendlease’s Investment arm strategically manages a diversified portfolio of highquality real estate assets across office, retail, residential, and mixed-use sectors to deliver sustainable, long-term financial returns. Investment earnings primarily consist of management and performance fees, alongside returns from coinvestments and partnerships Key drivers of Lendlease’s investment performance include enhancing asset quality through active portfolio management, strengthening capital partnerships, and expanding funds under management through selective acquisitions and developments aligned with sustainability objectives.
As of FY25, Lendlease manages $48 9 billion in funds under management and a $3.1 billion co-investment portfolio, comprising both listed and unlisted mandates across Australia, Asia, and select international markets. The portfolio features premium-grade office buildings, retail and residential assets, and data centres, supported by long-term institutional partnerships. Lendlease continues to leverage its integrated investment and development platform to generate stable income and deliver long-term returns
DEVELOPMENTARM
Lendlease’s Development arm strategically focuses on the creation of largescale mixed-use precincts and residential projects across Australia’s key urban markets. Development earnings primarily consist of development management fees, joint venture revenues, gains or losses from project sales, and net income from property revaluations. Key drivers of development performance include the scale and quality of the project pipeline, effective cost management, and the continued access of capital partnerships to fund new opportunities.
As of FY25, Lendlease’s Development arm manages an Australian development pipeline valued at approximately $9 8 billion, comprising a mix of residential, commercial, and build-to-rent projects. Notable projects in FY25 include Residences One and Watermans Residences at One Sydney Harbour in Sydney, as well as build-to-rent and build-to-sell apartments in Victoria Harbour, Melbourne. Lendlease continues to leverage its integrated investment and construction capabilities, to capitalise on strengthening market conditions, particularly across the residential and mixed-use sectors
Australian Development Pipeline
CONSTRUCTIONARM
Lendlease’s Construction arm provides external project management, design, and construction services. As a tier-one Australian contractor, Lendlease is recognised for delivering large-scale defence, social infrastructure, and commercial projects for government and corporate clients across Australia Construction earnings are generated primarily through management and delivery fees, with performance driven by project execution efficiency, risk management, and returning partnerships.
As of FY25, the Construction arm reported a backlog revenue of $5.9 billion and $8 8 billion in preferred projects Recent completions include the Wyndham Law Courts and Mernda Community Hospital in Victoria, the CIT Woden Campus in the Australian Capital Territory, and the Nambour General Hospital Redevelopment in Queensland, alongside a forward-looking pipeline for FY26 managing approximately $5 billion in new projects for government and corporate partners across key sectors including defence, health and social infrastructure, and data centres
FY25 Backlog Revenue
02 INVESTMENT HIGHLIGHTS
Financial recovery and strengthened balance sheet
Lendlease has achieved a strong turnaround, with a statutory profit of A$225 million in FY25 after a major loss the previous year Distributions rose 44%, and net debt fell by A$0.4 billion, reducing gearing to ≈26.6%. This balance sheet improvement gives Lendlease room to reinvest while many peers remain financially constrained by high gearing risks.
Strategic refocus through targeted portfolio simplification
Lendlease has streamlined its operations, divesting its UK construction arm and selling the Jem office component in Singapore for S$462 million. These disposals free capital for reinvestment into higher-return domestic projects. Lendlease’s deliberate focused shift to a more Australia centric model enhances efficiency and capital recycling.
Market-leading asset performance and leasing execution
Within its REIT portfolio, Lendlease achieved a 10.7% retail rental reversion and 99.9% retail occupancy (1H25), with office occupancy improving to 86.6%. These results highlight strong active management and design-led appeal, unlike passive REIT peers relying purely on yield stability.
Integrated funds platform reinforcing investor confidence
Lendlease recently retained management of its flagship A$2.8 billion retail fund following a challenge from super funds. Managing ≈A$10 billion in funds with co-investment alignment, Lendlease’s integrated development-investment model provides a diversified and defensible income stream, demonstrating a strategic edge over traditional REITs.
03 REALESTATE PORTFOLIOOVERVIEW
NotableOfficeAssets
$1.1b portfolio, 4.5% gross asset yield, 53% of investment management platform
Address: 21 Moorfields
Country: United Kingdom Interest:Valuation: $155m
Address: Comcentre
Country: Singapore
Interest: 49%
Valuation: $309m
Address: Victoria Cross
Country: Australia
Interest: 75%
Valuation: $369m
Address: IQL Office LP
Country: United Kingdom
Interest: 50% Valuation: $97m
NotableRetailAssets
Address: Paya Lebar Quarter
Country: Singapore Interest: 30% Valuation: $339m
Address: The Exchange TRX
Country: Malaysia Interest: 60% Valuation: $815m
Address: MSG South
Country: Italy
Interest: 50% Valuation: $108m
Address: MSG North Heartbeat
Country: Italy Interest: 17 6%
: $217m
$0.6b portfolio, 4.8% gross asset yield, 8% of investment management platform
Address: Americas Residential Partnership
Country: United States Interest: 50.1% Valuation: $72m
Address: Sydney Harbour R2 Trust
Country: Australia Interest: 75% Valuation: $105m
Address: One Circular Quay Country: Australia
: 33.3%
: $259m
Address: Victoria Drive Wandsworth
Country: United Kingdom
: $15m
NotableMixed-UseAssets
Address: Vita Partners
Country: Singapore Interest: 50%
: $115m
Address: Milano Innovation District
Country: Italy
Address: Podium
Country: Singapore Interest: 53 5%
: $44m
Address: LRIP 2 LP
Country: United Kingdom Interest: 50%
05 TRADING PERFORMANCE
13 Jul 23: Shares lifted as management outlined early restructuring focus and cost discipline ahead of FY23 results +6.23% change
14 Dec
:
27 May 24: Lendlease revealed plan to sell $4.5 bn of offshore assets and refocus on core Australian development; market reacts positively to reset +8.4% change 04 Apr 25: Market reacts to slower asset disposal and weak REIT sentiment. -6.96% change
10 Apr 25: Shares rebounded after
SHAREPRICEVSASX200
3 YEAR TRADING PERFORMANCE
06 TRADINGCOMPS
Trading comparables, or “trading comps” , are a valuation method used to compare the value of a company or part of a company by comparing it to similarly publicly trading companies. The idea is similar to how real estate agents determine house prices by looking at recent listings of similar quality homes in the same area. In financial markets, analysts look at key financial ratios or metrics to gauge how a particular company is valued compared to its peers.
FUNDSMANAGEMENTCOMPS
07 INVESTMENT RISKS
Exposure to global construction and development market volatility
Lendlease operates across multiple international markets, exposing it to fluctuations in construction costs, supply chain instability, and project delivery challenges Despite its recent resilience, supply chain risks remain elevated due to labour shortages, geopolitical disruptions, and natural disasters, all of which increase project timelines and costs while eroding margins.
Balance-sheet and market-rate risk
Lendlease reports explicit exposure to interest rate, liquidity, foreign currency and credit risks, managed within Treasury Policy limits. FY25 Year-end cash was $621 million (down from $1.0 billion in FY24) and borrowing and financing arrangements were $4,054 million Higher rates and refinancing conditions can lift debt costs and pressure valuations and distributions.
Capital-recycling and divestment execution risk
Lendlease created a Capital Release Unit to recycle $4.5 billion and exit international construction In FY25 it announced a completion of $2 3 billion of the program and now targets a further $2.0 billion in FY26. The UK and US construction sales include earn-out arrangements through FY27. If timing or pricing slips, balance-sheet goals and buy-backs could be constrained
Construction margin and delivery risk
FY25 Construction revenue was $3.0 billion (down 13% YoY) with Operating EBITDA $33 million and an EBITDA margin of 1.1% after first-half project losses Although new work secured rose to $5 0 billion and backlog to $5 9 billion, thin margins mean cost overruns or delays (which are currently a risk) can quickly erode earnings.
