Lendlease Annual Report 2024

Our Business 19 Workplace Comprising 75,000sqm across 34 levels, Melbourne Quarter Tower (MQT), a major workplace development, was completed. MQT tenants currently include Medibank, Beca and the Seven Network. As we begin to emerge from a subdued leasing environment, there has been activity across the portfolio, including Victoria Cross Over Station development and Blue & William in North Sydney and Town Hall Place in Melbourne. We see opportunity in the sector for well located, next-generation assets, with first class sustainability credentials and we are extremely well positioned to leverage our integrated development capabilities in this sector. Retail Part of the 17-acre lifestyle quarter of TRX, The Exchange TRX is strategically located in Kuala Lumpur’s first dedicated international financial district. The project has more than 400 retailers across 1.3 million sqft of net lettable area and was the first retail asset in Malaysia to achieve LEED Gold certification, highlighting a commitment to sustainability. Data centres Located 30km north of central Tokyo in Saitama, the first phase of one of Japan’s largest data centres was completed. Phase 1 of the project is a six-storey, 48 MW facility which has been purpose built for Princeton Digital Group. Delivering the pipeline Our development pipeline is categorised in three phases: In Conversion; Master planned; and Work in Progress (WIP). • In Conversion represents the earliest stage of development when a project is secured but yet to achieve master plan approval. For larger projects, this can take up to three years from the date a project is secured, though for smaller projects the conversion period may be shorter. • The Master planned phase provides security of overall entitlements with development approvals being obtained. This phase allows us to develop, invest, sell down or proceed in phases, accelerate or pause development depending on prevailing market conditions and business priorities. • Once a project begins construction, known as ‘commencement’, it moves into active delivery, progressing to the Work in Progress phase and through to completion. FY24 Development activity includes: Completions • Residences One, Barangaroo, Sydney • Claremont Hall, New York • The Reed, Southbank, Chicago • Park & Sayer, London • Melbourne Quarter Tower • The Exchange TRX, Kuala Lumpur • Data centre, Tokyo • Innovation centre, Yokohama Commencements • Build to sell apartments at Elephant Park and Silvertown, each in London • Luxury build to sell apartments, Victoria Harbour, Melbourne Capital-efficient partnership approach Our Development strategy will be facilitated by a more capital efficient development model. We aim to introduce capital partners early to manage our capital position. This allows us to diversify execution risk and capital allocation for the Group while sharing in project returns. This includes a greater emphasis on joint venture partnerships, managing Lendlease's economic interest per project and providing opportunities for origination, development, performance and long term funds management fees. Communities sale In December 2023, we announced the sale of 12 of our Australian Communities projects. The sale will be a key step in simplifying the Group, allowing the Development segment to focus on urban regeneration. The transaction, which is due to complete in FY25, forms part of the $2.8b of assets being marketed for sale, as referenced in the 'Our strategy' section on page 15 of this Report. Strategic direction With the objective of deploying more capital into our high return Australian business, we are targeting the release of a further $1.7b of net capital primarily from our international development projects. We aim to achieve this in three ways: • Selling land and inventory held on our balance sheet • Progressing land management agreement projects through additional planning and entitlement and working with our existing partners to introduce new partners or sell land to third parties to develop • Completing the eight joint venture projects that are already underway with capital partners and, once complete, transferring them to FUM in the Investments segment and reducing our co-investment position when stabilised. The Development segment will be led by a dedicated Chief Executive who will focus on the following strategic areas: • Expanding the development pipeline in Australia • Increasing capital partnering with a focus on productivity and returns • Originating product aligned to capital partner preferences. Replenishing the pipeline In March 2024, the Gurrowa Place redevelopment project in Melbourne was secured. Part of the Queen Victoria Market precinct, the project has an estimated end development value of $1.3b and is set to comprise a sustainable workplace; build to rent apartments; $0.4b of student accommodation (alongside student accommodation partner, Scape); and a large public park. Our Australian development pipeline has an estimated end value of approximately $12b, including Gurrowa Place. We are in the advanced stages of securing up to $13b of opportunities across five projects, where we are either “one of two” or in exclusive discussions, and are in the early stages on a further $27b of new opportunities which are concentrated on the east coast of Australia and play to our strengths in urban regeneration. Australia’s significant transport infrastructure investment offers the opportunity to unlock prime city locations and deliver highly connected precincts, particularly across the Sydney and Melbourne Metro lines. Lendlease has core capability in this regard, including current integrated development projects at Victoria Cross and Martin Place stations in Sydney and Town Hall Place in Melbourne.