Key Highlights

  • Lendlease reported an FY26 statutory loss after tax of AUD 749 million, reflecting asset impairments, restructuring costs and losses associated with its Capital Release Unit.
  • The Investments, Development and Construction (IDC) businesses generated operating profit after tax of AUD 233 million, while the Capital Release Unit recorded an operating loss of AUD 800 million.
  • Statutory net Debt reached AUD 3.7 billion at 30 June 2026, with underlying gearing of 37.7%, prompting continued asset sales and Balance Sheet restructuring.
  • FY27 IDC Earnings guidance stands at 37–41 Australian cents per security, supported by anticipated construction earnings growth and Australian development activity.

Lendlease Group (ASX:LLC) is an Australian property investment, development and construction Business operating across funds management, urban regeneration, residential development and infrastructure construction. The company is restructuring its operations to focus on Australian investment, development and construction activities while exiting international and non-core assets. Its FY26 results highlighted the financial impact of restructuring costs, property impairments and delayed divestments. Management is prioritising debt reduction, capital recycling and operational efficiency to improve financial stability and support future earnings.

FY26 Financial Results and Segment Performance

For the financial year ended 30 June 2026, Lendlease reported a statutory loss after tax of AUD 749 million, reflecting continued financial pressure from its restructuring programme.

The group recorded an operating loss after tax of AUD 567 million, comprising a positive AUD 233 million contribution from IDC and an AUD 800 million operating loss from the Capital Release Unit (CRU).

IDC operating earnings reached 33.7 Australian cents per security, at the upper end of the company's FY26 guidance range of 28–34 cents.

Construction delivered an encouraging improvement, with EBITDA increasing to AUD 167 million from AUD 33 million in FY25.

Construction Revenue reached AUD 3.87 billion, while new work secured totalled AUD 6.4 billion.

The construction Backlog increased to AUD 8.4 billion, providing greater visibility over future project activity.

However, Investments EBITDA declined to AUD 297 million, while Development EBITDA fell to AUD 78 million, reflecting lower transaction contributions and the timing of project completions.

The annual distribution decreased to 15.7 Australian cents per stapled security from 23.0 cents in FY25.

Capital Release Unit and Asset Divestment Strategy

Lendlease established its Capital Release Unit to manage the disposal of international and non-core Assets as part of its business simplification strategy.

During FY26, the unit recorded an EBITDA loss of AUD 500 million, including AUD 340 million in non-cash impairments and AUD 92 million in provisions.

These adjustments reflected asset valuation changes, restructuring obligations and other costs associated with exiting selected operations.

Since May 2024, Lendlease has contracted or completed approximately AUD 3.4 billion in capital recycling transactions.

At 30 June 2026, approximately AUD 2.5 billion of invested capital remained within the CRU for future realisation.

The divestment programme has progressed more slowly than initially anticipated, creating additional financing and holding costs.

In November 2026, the proposed sale of Lendlease's Milano Santa Giulia North development rights in Italy was reported to have been terminated.

The proposed transaction had included approximately AUD 90 million in expected cash proceeds and the transfer of associated project debt obligations.

The development illustrates the challenges involved in completing complex international property transactions while managing capital commitments.

Lendlease continues evaluating asset disposal opportunities and restructuring measures to reduce its international exposure.

Debt Position and Balance Sheet Restructuring

At 30 June 2026, Lendlease reported statutory net debt of AUD 3.7 billion, increasing approximately AUD 400 million compared with the December 2025 half-year position.

Underlying gearing reached 37.7%, above the company's longer-term target of 15%.

Statutory gearing stood at 30.3%, reflecting the benefit of hybrid securities.

Contracted asset recycling transactions totalling AUD 1.3 billion were expected to reduce underlying gearing to approximately 30.2% on a pro forma basis, assuming their completion.

The group reported available Liquidity of AUD 4.0 billion, including approximately AUD 800 million in cash.

Management is also progressing cost reductions, with net overheads declining to AUD 363 million during FY26 from AUD 466 million in FY25.

Additional savings are being targeted through organisational simplification and the progressive closure of international operations.

However, the pace of debt reduction remains dependent on divestment proceeds, Operating Cash Flow and the timing of remaining capital commitments.

FY27 Earnings Guidance and Australian Development Pipeline

Lendlease expects IDC earnings of 37–41 Australian cents per security in FY27, compared with 33.7 cents in FY26.

The guidance reflects anticipated contributions from pre-sold residential apartments and improving construction earnings.

The Australian development pipeline reached AUD 13.2 billion at 30 June 2026, compared with AUD 9.8 billion a year earlier.

During FY26, the company secured approximately AUD 4.7 billion in additional Australian development opportunities.

Construction activity is expected to benefit from projects across government infrastructure, defence, healthcare and commercial development.

However, Investments earnings may decline as co-investment holdings are reduced and funds management income is affected by portfolio recycling.

Management has not provided specific FY27 earnings guidance for the Capital Release Unit because transaction timing and asset disposal outcomes remain uncertain.

Business Risks and Operational Priorities

Lendlease remains exposed to property market conditions, borrowing costs, construction execution and asset disposal risks.

Further delays in international divestments could increase Holding Costs and postpone debt reduction.

Property valuation movements may also affect statutory earnings, while elevated gearing creates sensitivity to financing conditions.

Additional risks include legacy construction obligations, development expenditure and uncertainty surrounding overseas project commitments.

The company's immediate priorities include progressing capital recycling, reducing gearing, improving construction profitability and maintaining disciplined development expenditure.

The Annual General Meeting scheduled for 25 November 2026 and the subsequent FY27 half-year results will provide further indications of progress.

Key Insights

Lendlease Group (ASX:LLC) is undertaking a significant restructuring following its AUD 749 million statutory loss in FY26. Although its Australian construction operations delivered improved earnings, losses within the Capital Release Unit and elevated debt continue to affect financial performance. The company's FY27 IDC guidance indicates potential improvement in its continuing operations, while the broader recovery depends on completing asset divestments, reducing gearing and managing legacy obligations. Execution of the capital recycling strategy remains central to Lendlease's financial outlook.