Lendlease posted a statutory loss of $749 million in FY26, weighed down by impairments in its Capital Release Unit, while its core Investments, Development, and Construction segments delivered solid operating profits and secured significant new projects.
- Statutory loss of $749 million driven by CRU impairments
- IDC segments deliver $233 million operating profit after tax
- Development pipeline grows to $13.2 billion with $4.7 billion secured
- Construction segment rebounds with $6.4 billion new work secured
- New CEO Nick O’Neil to start on 24 August 2026
Statutory Loss Overshadows Strong IDC Performance
Lendlease Group (ASX:LLC) reported a statutory loss after tax of $749 million for the financial year ended 30 June 2026, primarily due to non-cash impairments and provisions linked to its Capital Release Unit (CRU). The CRU, tasked with accelerating capital recycling from long-dated offshore projects and divesting international construction operations, recorded a segment EBITDA loss of $500 million, including $340 million in impairments and $92 million in provisions.
Despite this, the Group’s core Investments, Development, and Construction (IDC) segments delivered an operating profit after tax of $233 million, with IDC earnings per security hitting 33.7 cents, the top end of guidance. The CRU’s losses overshadowed these gains, resulting in the overall statutory loss.
Development Pipeline Expansion and Construction Recovery
The Development segment replenished its Australian pipeline to $13.2 billion, up from $9.8 billion in the prior year, securing $4.7 billion in new projects including the premium residential development at 175 Liverpool Street and the Sydney Metro Hunter Street West Over Station Development. However, development segment EBITDA fell to $78 million from $316 million last year, reflecting the timing of major completions and increased invested capital.
Construction bounced back strongly with a 29% revenue increase to $3.9 billion and an improved EBITDA margin of 4.3%, well above the target range. The segment secured $6.4 billion in new work, up from $5 billion in FY25, with a backlog of $8.4 billion, including $5.2 billion in preferred projects. Key sectors driving growth include defence, social infrastructure, transport, and data centres.
Investments Segment Focuses on Performance and Liquidity
The Investments segment reported EBITDA of $297 million, down slightly from $313 million the previous year, impacted by a $7.2 billion reduction in funds under management (FUM) due to active portfolio recycling. FUM ended the year at $43.9 billion, with $2 billion of new capital additions. The co-investment portfolio decreased to $2.5 billion, reflecting asset sales including UK and US build-to-rent portfolios and retail interests.
Transaction earnings remained a highlight, including $54 million from the partial sale of TRX management rights. The segment’s management EBITDA margin declined to 35.9% from 40.6% due to lower FUM.
Balance Sheet and Capital Recycling Progress
Reported net debt increased to $3.7 billion, with gearing rising to 30.3% (including a 7.4% benefit from hybrid securities issued in FY26). The Group maintains strong liquidity of $4.0 billion, supporting balance sheet flexibility. Capital recycling initiatives contracted or completed $3.4 billion to date, including $1.2 billion in FY26, with further transactions expected to complete in the first half of FY27.
Notably, the Group established the Impact Partnership Joint Venture with The Crown Estate on 1 July 2026, a £24 billion UK development platform aimed at accelerating master planning and land entitlement of high-quality UK assets. This strategic JV is expected to unlock significant capital and development opportunities for Lendlease’s international investment platform Lendlease and The Crown Estate Launch £24 Billion UK Development Joint Venture.
Leadership Transition and Board Renewal
In June 2026, Lendlease announced the appointment of Nick O’Neil as Group CEO and Managing Director, effective 24 August 2026. O’Neil brings over 25 years of global experience in real asset management, mergers and acquisitions, and capital markets. The interim leadership team of Andrew Nieland (CFO) and Penny Ransom (CIO) will continue until O’Neil’s commencement.
The Board continued its renewal process with the retirement of long-serving directors including David Craig and Philip Coffey during FY26, and upcoming retirements of Elizabeth Proust and Barbara Knoflach at the 2026 AGM. Philippa Kelly joined the Board in August 2026, bringing expertise in capital markets and funds management.
Distribution and Market Reaction
Lendlease declared a full year distribution of 15.7 cents per security, comprising Trust distributions only, with no company dividend declared due to the operating loss. The Distribution Reinvestment Plan (DRP) remains open for eligible securityholders.
The Group’s statutory earnings per security fell sharply to a negative 108.4 cents, reflecting the CRU impairments, while operating EPS was negative 82.1 cents. Despite the challenging results, the Group maintains an investment grade credit rating from Moody’s (Baa3 stable) and Fitch (BBB- stable).
Sustainability and Safety Achievements
Lendlease continued to advance its sustainability agenda, maintaining net zero Scope 1 and 2 carbon emissions and progressing towards an Absolute Zero target by 2040. The Group published its first AASB S2-aligned Sustainability Report, embedding climate-related disclosures and risk management into governance frameworks.
Safety performance remained strong, with no fatalities recorded and the lowest ever Lost Time Injury Frequency Rate. The Australian War Memorial Anzac Hall team received the Lendlease Employee Excellence Award for Safety.
Bottom Line?
Lendlease’s FY26 results spotlight a core business gaining traction amid heavy CRU losses, setting a pivotal FY27 where capital recycling and CEO leadership will be tested.
Questions in the middle?
- How will Nick O’Neil’s leadership shape Lendlease’s strategy execution and capital recycling pace in FY27?
- What impact will the UK Impact Partnership Joint Venture have on Lendlease’s international growth and capital allocation?
- Can the Group sustainably reduce gearing toward its 15% target amid ongoing capital expenditure and market volatility?