Lendlease has maintained its FY26 earnings per security guidance for the Investments, Development and Construction business at 28-34 cents per security, though this comes with a notable caveat around capital structure. The company now expects underlying group gearing to sit in the mid-30% range by June 30, 2026, up from prior expectations, reflecting a confluence of transaction timing delays and more challenging market conditions that have slowed the realization of its capital recycling program.
The asset recycling initiative remains a central pillar of Lendlease’s strategy to reduce net debt and streamline operations. While progress continues, a number of well-advanced transactions are now expected to settle in early FY27 rather than before June 30, 2026. The company notes that the majority of its large, complex transactions are either complete or close to completion, suggesting the bulk of execution risk has passed. However, the timing shift means that some anticipated cash proceeds will land in the next financial year, creating a temporary headwind on gearing reduction.
Specifics on major divestments illustrate the scale of the program. The TRX Retail and Office transaction in Malaysia is anticipated to deliver approximately $400 million in proceeds with cash settlement before June 30, though some conditions precedent remain outstanding. The joint venture with The Crown Estate across six UK development projects is expected to generate roughly $300 million, with partial settlement anticipated during FY26 and FY27 depending on satisfaction of project-specific conditions. Capital Release Unit land holdings, including the sale of MSG North and a TRX commercial parcel, are tracking toward completion in the first half of FY27 with approximately $140 million in proceeds. Beyond these named transactions, Lendlease is pursuing additional major divestments with roughly $1 billion in anticipated cash proceeds across FY26 and FY27, encompassing the Keyton Retirement Living co-investment, the UK Build-to-Rent portfolio transaction, and capital release from the APPF Retail liquidity redemption process.
On the earnings side, Lendlease secured $4.7 billion in new Australian projects during the first half, demonstrating ongoing development momentum despite macro headwinds. Construction new work for the full year is expected to reach approximately $6.5 billion, supported by demand in social infrastructure, defence, transport and data centres, with backlog revenue projected at $8 billion to underpin earnings into FY27.
Investors should monitor the pace at which these divestments convert to cash in the coming months, as this will be the primary driver of gearing trajectory into FY27. The shift in completion timing underscores the tension between achieving valuation in a softer market and executing quickly, a balancing act the company has acknowledged. Watch also for any update on the Crown Estate settlement schedule and the progress of the $1 billion remaining divestment pipeline. This announcement is price sensitive and flagged as material by the ASX.
View the full ASX announcement (PDF)
About Lendlease Group Limited (ASX: LLC)
Lendlease Group is an integrated real estate and investment company that develops, manages and invests in mixed-use residential, commercial, retail, industrial and infrastructure properties. The company operates through investment, development and construction segments across Australia, Asia, Europe and the Americas. Founded in 1957, it is headquartered in Barangaroo, Australia.
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