Highlights

  • Lendlease reported a FY26 statutory net loss of AUD 749 million, compared with a AUD 225 million profit a year earlier.
  • The full-year distribution fell to 15.7 cents per security from 23 cents.
  • FY27 guidance for the core IDC Business is 37-41 cents per security, above the FY26 range.
  • Development settlements and construction Backlog are expected to support FY27, but gearing remains elevated.

Lendlease Group (ASX:LLC) ended FY26 with a sizeable statutory loss as the cost of exiting international and legacy Assets continued to weigh on the group. The result reflects a business still in transition rather than one operating on a clean base. Management is nevertheless pointing to stronger FY27 Earnings from its Australian-focused Investments, Development and Construction operations, placing asset sales, gearing and project settlements at the centre of the next phase.

Legacy Exits Drive the Statutory Loss

Lendlease reported a statutory net loss of AUD 749 million for FY26, reversing a AUD 225 million profit a year earlier. The loss reflects property revaluations, impairments and transaction losses associated with assets being sold through the Capital Release Unit.

One major item was the agreed sale of the Milano Santa Giulia development rights, which was expected to generate a post-tax operating loss of about AUD 175 million.

Core Australian Business Remains the Focus

The group’s strategy separates the core Investments, Development and Construction operations from international and legacy assets held for sale. The core business produced positive earnings during the year, but these were outweighed by losses from the Capital Release Unit.

FY27 guidance for the core IDC operations is 37-41 cents per security, above the FY26 guidance range of 28-34 cents.

Development and Construction Carry the FY27 Load

Development is expected to benefit from significant apartment settlements, including One Circular Quay and Regatta at Victoria Harbour. At the half year, gross apartment pre-sales were AUD 3.3 billion and the Australian development pipeline stood at AUD 13.6 billion.

Construction backlog had also risen to AUD 8.0 billion at the half, providing forward Revenue visibility as the group seeks to scale the business.

Gearing Remains the Main Balance-Sheet Constraint

Lendlease warned in June that underlying gearing was likely to finish FY26 in the mid-30% range, above its previous 15% target. That limits flexibility for capital returns and increases sensitivity to transaction timing.

Management has continued to pursue capital recycling and asset disposals, with proceeds expected to reduce Debt and fund the turnaround.

What to Watch

Asset-sale settlements, gearing, delivery of apartment pre-sales, construction earnings and the transition to incoming CEO Nick O’Neil are the key areas to monitor. Progress toward lower Capital Release Unit outflows will also be important.

Risks

Lendlease remains exposed to high gearing, execution risk on asset sales and development settlements, property-market conditions and Leadership transition. Further delays in capital recycling could slow balance-sheet repair.