Lendlease Group (LLC) Investor Update summary

Strategic partnership and joint venture formation

• Entered a 50/50 joint venture with The Crown Estate for six UK development projects, including land holdings and management agreements, aiming to accelerate capital release and simplify the group structure.

• The partnership is expected to release over $300 million of capital at slightly above book value, contributing to a total of $2.5 billion in capital recycling initiatives for FY 2025, nearing the $2.8 billion target.

• The joint venture will halve future funding commitments, reducing capital requirements by $125 million, with remaining commitments expected to be self-funded through land sales.

• Both partners retain the right to sell down a further 25% interest after three years and may pursue vertical development if it meets return thresholds; there is no obligation for future vertical development.

• The JV aims to deliver 26,000 new homes and 900,000 sqm of sustainable office and life sciences space across London and Birmingham.

Financial and operational impacts

• Proceeds from the transaction will be used to pay down debt, supporting deleveraging and progress toward a security buyback.

• Development management fees will have a margin of approximately 30%, and the transaction is anticipated to lower the group’s cost of funding.

• Lendlease will act as master developer, earning development and asset management fees, with potential for performance fees, and the arrangement is expected to be earnings accretive in year one.

• Gearing is expected to trend lower, with a target to return to the 5%-15% range by the end of FY 2026.

• JV could generate up to $24 billion in new investment product across various asset classes.

Investment management and platform growth

• Secured a $1.2 billion investment mandate for Aurora Place in Sydney, increasing Australian office assets under management to about $20 billion.

• No equity investment is required for the Aurora Place mandate, which will run for approximately five years.

• Recent introduction of new investment partners in London, including 21 Moorfields, highlights global capital partner growth and ongoing focus on scaling the investment management platform internationally.