Developer Lendlease Group has released its results for the half year ended 31 December 2025.
Lendlease has continued to deliver operational progress in HY26 with strong construction earnings, $4.7bn of new Australian development schemes secured and $4.4bn of active portfolio management in Investments.
Capital recycling is progressing with $3.0bn of CRU and IDC transactions announced and underway for FY26. The Board and management team remain committed to the May 2024 strategy.
The focus remains on strengthening the balance sheet and returning capital to securityholders, alongside profitably growing the Investments platform, restocking the Australian development pipeline and winning high quality work in Australian construction.
Group financial result
- Statutory Loss after Tax of $(318)m includes non-cash negative investment property revaluations and impairments of $118m primarily in the US, UK and Singapore.
- Operating Profit after Tax (OPAT)1 of $(200)m is comprised of $87m from Investments, Development and Construction (IDC) and $(287)m from the Capital Release Unit (CRU).
- CRU OPAT includes a $(95)m write-down of Communities land parcels and further provisions in the exited international construction businesses of $(44)m.
- Interim distribution of 6.2 cents per security2 IDC Performance.
- Segment EBITDA of $204m; 1H FY26 IDC EPS of 12.6 cents per security.
- $1.8bn raised for existing vehicles and new investment mandates across Australia and Asia.
- $4.7bn of new Australian development pipeline secured.
- $4.0bn of new construction work secured CRU Performance.
- $2.0bn of capital recycling targeted for FY26, including $0.5bn of announced and completed transactions.
- Segment EBITDA of $(284)m.
- No FY26 EPS guidance will be provided for CRU, consistent with prior disclosure Balance Sheet.
- Reported statutory net debt of $3.3bn, down $0.1bn on FY25.
- Group statutory gearing of 25.8%, including ~7.1% hybrid benefit.
- Available liquidity of $3.3bn.
“FY26 is a transitional year, with our core operating segments performing in line with expectation. We anticipate stronger Investments, Development and Construction earnings in the second half and into FY27. The Group continues to make considerable progress on its strategy with momentum building across its core operations.
“Our Development and Construction pipelines remain strong, and we are seeing continued growth in investor partnering and mandate activity.
“Our focus remains on driving long-term value creation for our securityholders, with enhanced earnings visibility from FY27, and a material reduction of net debt through further capital recycling.”
Tony Lombardo, Group Chief Executive Officer, Lendlease
As Lendlease anticipated, with limited completions in development and lower transaction earnings in investments, Segment EBITDA of $204m was down from $341m in the prior period, with an improved performance from construction being a highlight.
Investments
- Segment EBITDA of $101m reflected a stable underlying operating performance, with the prior period including transaction earnings associated with the formation of the Vita Partners joint venture of $129m.
- Funds under management (FUM) of $48.7bn remains stable, with $1.5bn of new additions offset by active portfolio management on behalf of investors.
- Management EBITDA margin of 40.7%, was stable with FY25 margin of 40.6%.
- Co-investment EBITDA decreased 14% to $42m primarily due to a lower share of recurring distributions following asset divestments and recapitalisations.
Development
- Segment EBITDA of $34m reflected the timing of major completions, with the prior period including $118m from Residences Two, One Sydney Harbour.
- The Australian development pipeline closed the half at $13.6bn, up from $9.8bn at FY25, with $4.7bn of new projects secured and a further $5.3bn plus of origination targeted for FY26.
Construction
- Segment EBITDA of $69m, driven by 22% higher revenues and improved project performance.
- EBITDA margin of 3.7% improved on the prior period, with challenging projects now substantially completed.
- $4.0bn of new work secured, up from $3.8bn in the prior period.
- Backlog revenue $8.0bn, up 36% on FY25, with a preferred book of $6.9bn and a further $9bn (approximate) of active bids underway.
The primary purpose of CRU is to accelerate capital recycling. As such, CRU is not a guided earnings segment. Announced or completed capital recycling initiatives of $0.5bn in the period, with $2.8bn of total CRU capital recycling announced and completed since May 2024 (refer to Appendix).
A further $1.5bn of capital recycling transactions in CRU are targeted in FY26. CRU segment EBITDA of $(284)m was down from a prior period gain of $34m, reflecting non cash write-downs and provisions of $180m (pre-tax), and the limited completion of capital recycling transactions.
CRU costs will continue to be closely managed and should reduce as capital recycling transactions in CRU complete, although are expected to remain elevated in 2H FY26.
Throughout the half, de-risking of the balance sheet continued, with Melbourne’s Metro Tunnel project now substantially complete and further provisions taken against tail risks in exited international construction businesses.
Reported statutory net debt of $3.3bn, down $0.1bn on FY25. Reported gearing of 25.8% includes a 7.1% benefit from hybrid issuance and reflects the timing of capital recycling transactions that are anticipated to complete during 2H FY26.
The Group continues to target underlying gearing of 15% by the end of FY26 and will continue to balance value realisation and speed of execution. However, this is subject to completion of targeted capital recycling initiatives across IDC and CRU.
There are $3.0bn of CRU and IDC transactions announced and underway, to support a reduction in gearing, including:
- Targeted completion of announced transactions; joint venture with The Crown Estate, and the sale of TRX retail and office investments; transactions under exclusivity; sale of Keyton Retirement Living, UK Build to Rent assets, and the recapitalisation of APPF Retail; and o Capital recycling on Victoria Cross Tower.
- Liquidity of $3.3bn provides balance sheet flexibility as gearing is progressively reduced and working capital conditions for our construction operations improve.
The Board remains committed to returning surplus capital to securityholders, including through an on-market buyback. This will occur once there is more certainty that underlying gearing will be sustainably at 15% and previously stated pre-conditions have been met.
FY26 is a transitional year, with IDC earnings guidance maintained at 28 to 34 cents per security. The second half EPS contribution from IDC is expected to be higher than the first half, supported by a similar underlying operating performance and transactional profits.
Consistent with prior disclosure, no specific FY26 earnings guidance is provided for CRU. The Group remains focused on balancing value realisation and speed of execution within CRU. Variables that may impact IDC guidance and CRU earnings include transaction timing, interest rate and foreign exchange movements, capital markets, valuation outcomes and other external factors.
In IDC segments, a strong visibility to earnings from project completions is anticipated to drive improved earnings in FY27, anchored by One Circular Quay and Victoria Harbour completions.
FY28 should be supported by One Darling Point and Comcentre completions, and anticipated earnings from the joint venture with The Crown Estate. This improved earnings visibility is also supported by a strong construction pipeline, and growth initiatives within the Investments platform.
Earlier in the month, Group Chief Executive Officer (CEO) and Managing Director Tony Lombardo decided to step down. This will commence in August 2026, following Lendlease’s full-year financial results. Tony will be relocating to South-East Asia to take on a new career opportunity.
Despite this, the Group appointed Claire Johnston as Chief Executive Officer (CEO) Development. Claire is a highly experienced executive that has held numerous senior positions during her almost 30-year career at Lendlease.
