Lendlease Posts $204m IDC EBITDA, Targets $2b Capital Recycling in FY26

Navigating a Transitional Half

Lendlease Corporation has released its half year results for the period ending 31 December 2025, revealing a statutory loss after tax of $318 million. This headline figure is largely influenced by non-cash impairments and negative revaluations of investment properties primarily located in the US, UK, and Singapore. Despite this, the company’s core operating segments; Investments, Development, and Construction (IDC); delivered an EBITDA of $204 million, maintaining the full-year guidance for FY26.

Core Operations Show Strength

The IDC segment’s performance reflects solid operational momentum, with a 1H FY26 earnings per security (EPS) of 12.6 cents. Construction earnings were a standout, supported by a 22% increase in revenue and improved project delivery. The company secured $4.7 billion worth of new Australian development projects and $4.0 billion in new construction work, underpinning a robust pipeline for future growth. Funds under management remained stable at $48.7 billion, with $1.8 billion raised for existing vehicles and new mandates across Australia and Asia.

Capital Release Unit Challenges

The Capital Release Unit (CRU), tasked with accelerating capital recycling, reported a segment EBITDA loss of $284 million. This was driven by significant write downs, including a $95 million post-tax impairment on Communities land parcels and provisions related to exited international construction businesses. While no EPS guidance is provided for CRU, the company has announced or completed $2.8 billion of capital recycling transactions since May 2024, with a further $1.5 billion targeted for FY26.

Balance Sheet and Capital Management

Lendlease’s net debt decreased slightly to $3.3 billion, with reported gearing stable at 25.8%, factoring in a 7.1% benefit from hybrid securities issued during the period. The group aims to reduce underlying gearing to 15% by the end of FY26, contingent on the completion of targeted capital recycling initiatives. Liquidity remains strong at $3.3 billion, providing flexibility as the company progresses its strategic priorities. The board has reiterated its commitment to returning surplus capital to securityholders, including through an on-market buyback, which will be considered once gearing targets and other pre-conditions are met.

Outlook: Building Momentum into FY27

Management describes FY26 as a transitional year, expecting stronger IDC earnings in the second half and into FY27. The outlook is supported by anticipated project completions such as One Circular Quay and Victoria Harbour, alongside growth initiatives within the Investments platform and a strong construction pipeline. Variables including transaction timing, interest rates, and foreign exchange movements remain factors to watch. The company’s strategic focus remains on balance sheet strength, capital recycling, and profitable growth across its core segments.