LENDLEASE GROUP — Investor Presentation 2017

Sep 18, 2017

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19 September 2017
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Americas Market Briefing

Attached is the presentation to be given today by Denis Hickey, Chief Executive Officer - Americas, Lendlease.

The presentation will be webcast live via www.lendlease.com

ENDS

FOR FURTHER INFORMATION, PLEASE CONTACT:

Investors: Justin McCarthy Mob: 0422 800 321

Media: Mathew Charles Mob: 0422 006 515

Lendlease Corporation Limited ABN 32 000 226 228 and Lendlease Responsible Entity Limited ABN 72 122 883 185 AFS Licence 308983 as responsible entity for Lendlease Trust ABN 39 944 184 773 ARSN 128 052 595

Telephone +61 2 9236 6111 Facsimile +61 2 9252 2192 lendlease.com

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Level 14, Tower Three, International Towers Sydney Exchange Place, 300 Barangaroo Avenue Barangaroo NSW 2000 Australia

Market Briefing: Americas

Denis Hickey, Chief Executive Officer Americas 19 September 2017

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Experience in the Americas spans almost 50 years

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2015
1970
ONE57
Lendlease 2009
2016
expands to Financial close Oceanwide
the US 2001 PAL A
1999 First MHPI
Grand Central Project
Revitalisation Fort Hood, TX 2017
432 Park Avenue,
2015
New York
Secured Riverline 2016
CIRCA
1970s 1990s 2000s 2011 2015 2016 2017
2015 2017
1999
Secured 277 5 [th] Secured
2009 Avenue New York Parallel Portfolio
Citifield
2011
National September
11 [th] Memorial &
Museum
1999 2015 2017
Secured Secured
Clippership Wharf 30 Van Ness
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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Established business

Contribution to Grou p[1]

• $161.9m EBITDA, 12% of Group operating result

• $4.3b Urbanisation development pipeline, 12% of Group

• $7.8b Construction backlog revenue, 38% of Group

• Over 53,000 units and hotel rooms under management in Military Housing

• $0.1b Investments, 3% of Group

• $0.5b invested capital, 8% of Group[2] (target range is 5-20%)

Business model

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Established business – current structure

Development

Construction

Investments

• Urbanisation projects

• Military Housing

• Telecommunications infrastructure

• Construction Management

• Design and Construct (including Military Housing)

  • Military Housing

  • Telecommunications infrastructure

• Development profit and development management from urbanisation projects

• Development management fees from Military Housing

• Development profit from Telco towers

• Construction margins

• Project Management margins

• Asset and Property management on Military Housing

• Equity returns on Military Housing

• Investment income from telecommunications towers

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1. All figures quoted in AUD, FY17 as at 30 June 2017 2. Excluding Corporate invested capital

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Strategy

Group strategic framework

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Lendlease Americas Strate gy

Shift in focus from ‘delivery led’ to ‘development led’

Alignment with Group strategic direction

Urbanisation

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• Urbanisation projects across US gateway cities

• $4.3b Americas pipeline[1]

Infrastructure

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• Established construction business

• Leveraging capability into US telecommunications infrastructure

Funds growth

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• Potential future product from pipeline, including new asset classes of residential for rent and telecommunications

1. Defend and extend core businesses:

• Strategic shift for Construction to fewer markets, broader sectors and higher margin activities

• Continue to grow Military Housing business

2. Diversify into new sectors and income streams:

• Enter sectors that leverage our skills (locally and globally)

• Create a sustainable Development pipeline

• Become a developer/owner in the Telco sector

• Establish an Investment Management platform

3. Research and capability led, with strong governance and risk management:

• Clear framework for all capital investment decisions and performance management

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Sustainability

• One of the first certified LEED neighbourhood developments in the US

• Funds managed by the Group are recognised by GRESB as international leaders[2]

Technology

• Increasing innovation in the design and construction process

• Enabling and facilitating telco infrastructure

Ageing population

• Long term aspiration of exploring entry into the Senior Living space as a developer

• Recruitment of skilled, local, sector experts to drive growth

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1. As at 30 June 2017

2. Global Real Estate Sustainability Benchmark (GRESB) 2017 survey; 5 Lendlease funds achieved no.1 ranking in respective global/ regional category

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Strategic direction: development led, integrated business

Current position Strategic focus

Development

Construction

Investments

Investing phase

• Initial pipeline secured, entering execution phase

• Strong skills in Development including residential build to sell, multifamily (residential for rent) and office sectors

• Ongoing development opportunities in Military Housing business

Mature platform

• Market leader in residential high rise construction

• Focused six city strategy

• Construction Management focus (lower margin, lower risk)

Opportunity to grow

• Established mature Military Housing business

• Entry into multifamily sector

• Entry into telecommunications sector

• Establish scale urbanisation platform in target gateway cities ( focus on large scale, mixed use, phased developments )

• Unlock outer-year development scope and adjacent development opportunities in Military Housing

• Increase telecommunications infrastructure development

• Explore opportunity for deploying the military housing model into adjacent sectors

• Maintain targeted six city strategy

• Diversify sector exposure across residential, office, education, civic and healthcare

• Strengthen skills in Design & Construction

• Greater proportion of revenue from internal projects

• Maintain strong Military Housing investment, grow Lodging platform and explore adjacent opportunities

• Establish strong capital partnering capability in “develop to core” investments, leveraging global and local capital partners

• Create scale funds management products in multifamily (residential for rent) and telecommunications infrastructure

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Development led

Delivery led

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Development: urbanisation opportunities in gateway cities

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Boston
Chicago
New York
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San Francisco
Los Angeles
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Lendlease targeted gateway cities

Target market attributes

Focused strategy

Lendlease value proposition

• Population density and growth

• Economic output and diversity

• Growth in and diversity of employment

• Educated workforce

• High barriers to entry

• Significant public infrastructure

• Dominant share of US capital flows

• Strategy focused on gateway cities

• Large scale, mixed use, phased developments

• Primary focus on residential, office and mixed use retail

• Capability led with strong local team knowledge mixed with Lendlease global experience

• Co-investment and capital partner opportunities accelerate scale and growth

• Strong local knowledge and expertise in all identified gateway cities

• Global perspective/capability for customers/clients that value place creation/masterplanning and product innovation

• Integrated model/delivery capability

• Co-investment ability creates strong alignment between parties

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

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|||||
|---|---|---|---|
|our urbanisation pipeline|[[1]]|
|•|Mixed condominium and multifamily|[2]|residential product|
|•|
|$0.4 billion estimated end development value|
|Clippership Wharf|
|Boston|•|Two phase mixed use development across 478 residential units|
|•|Phase 1 estimated completion FY19|
|•|Residential mid-luxury condominium project|
|•|
|$0.7 billion estimated end development value|
|277 Fifth Avenue|
|New York|•|130 residential units in one tower|
|•|Under construction, estimated completion FY19|
|•|Large urbanisation mixed use development|
|•|
|$2.5 billion estimated end development value|
|Riverline|
|Chicago|•|3,750 residential apartments|
|•|First multifamily|[2]|building under construction, estimated completion FY19|
|•|Entire city block development of 584 residential apartments|
|•|
|$0.4 billion estimated end development value|
|845 West Madison|
|Chicago|•|Mix of apartments and townhouses|
|•|Project currently in planning|
|•|Large scale mixed use opportunity|
|•|Existing zoning permits a mixed use office and residential tower|
|30 Van Ness|
|San Francisco|•|Potential for rezoning to increase building height and density|
|•|Project currently in planning|

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Development: our urbanisation pipeline[[1]]

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1. Project value, size and timing are an estimate and are subject to change 2. Residential for rent

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Development: telecommunications infrastructure Existing portfolio

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423 135 288
Towers Completed In development
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Opportunity

Business economics

Lendlease value proposition

• Forecast growth in data usage is driving greater densification of network

• 5G rollout will drive greater demand

• Leverage carriers’ desire for alternate providers to big three tower companies

• Become a preferred partner for the development of new towers and rooftops

• Align with investors to leverage Lendlease capital and drive growth

• All new towers/rooftops have minimum one anchor tenant (no speculative development)

• Average tenants per tower across the industry is around 2[1 ] (improved economics via multiple tenants)

• Ground leases c.25 years with rolling options, carrier leases c.5-10 years with rolling options

• Infrastructure deployment and project management capability

• Group scale and integrated platform

• Strong relationships with major carriers

• Strategic intent to co-invest in a long term ownership vehicle

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1. Source: Industry Company Filings

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

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Development: growth opportunities from Military Housing

Redevelopment of existing portfolio

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• Periodic redevelopments across all installations

• Island Palm Communities – c.US$250 million (FY17 financial close)

• Privatized Army Lodging (PAL) – c.US$500 million extension to initial development period (FY17 financial close)

• Significant surplus NOI estimated across portfolio life to fund future redevelopment

Growth opportunity

• Exclusive partner with US Army on Lodging, well positioned to benefit from additional privatisation in the other services

• Opportunity to grow lodging portfolio across Airforce, Navy and Marines, which are not yet privatised

• Exploring potential opportunities in adjacent markets

Island Palm Communities, Hawaii

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Construction: successful business, sharpening focus

$7.8 billion backlog revenue[1]

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Boston/
Princeton
San $0.4b
Francisco Chicago New York
$0.5b $1.0b $4.1bn
Los
Angeles Washington
$0.7b $0.5b
Other
$0.6b
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Strategic focus
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• Maintain focus on six key markets

• Build out design and construct capabilities to achieve higher margins

• Diversification by sector and client

• Increased proportion of work from internal pipeline

• Financial and resource strength to undertake major projects

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1. As at 30 June 2017

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Construction: execution excellence Strong existing pipeline of high rise residential projects

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Investments: Military Housing portfolio

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Across
25
States
Homes total
over
40,500
Hotel rooms
total over
12,500
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• Established 1999

• Over 50 installations across 25 states developed and/or financed

• Remaining portfolio life 39 years

• Asset Management, Property Management, Development Management, Construction Management for over 40,500 homes (housing) and 12,500 hotel rooms (lodging)

• Portfolio revenue of c.$1.4 billion in FY17

• Surplus NOI is re-invested into new development work over the contract period, creating ongoing development pipeline

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Outlook

Leveraging the Lendlease Group

• Competitive advantage - track record, integrated model, balance sheet strength and capabilities

• Apply disciplined approach under the Portfolio Management Framework to drive future earnings growth and diversification

• Operating model that promotes best practice governance and risk management

Repositioning the Americas for future success

• Strategic shift to become ‘development led’, in line with the Group strategy, and leverage our integrated model

• Consolidate and extend market leading Construction and Military Housing businesses

• Reposition Construction to target higher margins over time with greater diversity by client and sector

• Annuity earnings and growth opportunities in lodging and adjacent sectors

• Establish scale urbanisation platform in target gateway cities with focus on large scale, mixed use developments

• Demonstrate credentials in telecommunications infrastructure and leverage market opportunity

• Build out Investments segment – potential new sectors including multifamily and telco infrastructure

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Appendix

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Riverline, Chicago

• $2.5 billion remaining estimated end development value

• Partnership with CMK Companies

• Secured in 2015, estimated completion FY26

• 3,750 residences

• Mix of condominium, townhouses and multifamily

• River Walk and public parks

Current status

• 452 unit rental tower in delivery

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Artists’ impression: Riverline, Chicago

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Clippership Wharf, Boston

• $0.4 billion remaining estimated end development value

• 100% ownership

• 12-acre waterfront location

• Two phase mixed use development

• Secured in 2015, estimated completion FY21

• c.440,000 sqft of residential and amenity

• c.8,000 sqft of retail

Current status

• 398 units in delivery for rent

• 80 units in one condominium building in delivery, 100% presold (including sales post 30 June 2017)

• Phase 1 estimated completion FY19

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Artists’ impression: Clippership Wharf, Boston

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

277 Fifth Avenue, New York

• $0.7 billion remaining estimated end development value

• Joint venture (40%) with Victor Group

• Located on the south-east corner of Fifth Avenue & East 30th Street in the emerging residential neighbourhood, NoMad

• 130 residential units in one tower

• Retail at the base

• Construction commenced in 2017

• Presales anticipated to be launched in H1 FY18

• Estimated completion in FY19

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Artists’ impression: 277 Fifth Avenue, New York

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Construction track record New York

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Selection of completed projects and projects under construction

MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

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Construction track record Boston

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Selection of completed projects and projects under construction

MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

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Construction track record Chicago

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Selection of completed projects and projects under construction

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Construction: Backlog Americas

Backlog revenue ($b)

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Backlog revenue ($b)

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7.8
6.7
5.4 5.5
4.9
FY13 FY14 FY15 FY16 FY17
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(4.6)
5.8
(0.1)
7.8
6.7
FY16 New work Revenue Other FY17
secured realised
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Backlog revenue by client[1,2]

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Backlog revenue by sector[1,2]

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6%
13% [2%]
Residential
Lendlease
20%
7%
Defence
Government
Commercial
Corporate Other
74% 78%
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1. As at 30 June 2017

2. Includes all Construction projects greater than $100 million, which represents 78% ($6.1 billion) of secured backlog

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Fundamental Drivers of Residential for Rent (Multifamily)

Structure of US housing market[1]

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2015 annual by market

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100%
80% 23% 28% 34% 33% 36% 43%
60%
40%
20%
0%
USA Chicago San Boston Los New York
Francisco Angeles
Owner Occup SF Owner Occup MF Renter SF Renter MF
SF = Single Family MF = multifamily
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Estimated population growth and household formation[2]

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CAGR 2016-21 (Estimate)

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1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
Boston Chicago Los New York San
Angeles Francisco
Population Growth Household Formation
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US national asking rent[3]

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Median quarterly index, June 97=100

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220
200
180
160
140
120
100
80
Jun-97 Jun-00 Jun-03 Jun-06 Jun-09 Jun-12 Jun-15
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Multifamily investment volumes[4] (annual US$b)

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45
40
35
30
25
20
15
10
5
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD
2Q17
NY Metro Chicago SF Metro LA Metro Boston
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1. Source: US Census Bureau, Lendlease Research 2. Source: IHS Markit, Lendlease Research

2. Source: Real Capital Analytics, Lendlease Research

3. Source: CEIC, US Census Bureau, Lendlease Research

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US telco towers

Total market

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250,000
200,000
150,000
100,000
50,000
0
2000 2005 2010 2015 2020 f 2025 f
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Market structure[1]

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Market dominated by top three companies

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‘000s
50
45
40
35
30
25
20
15
10
5
0
American Crown Castle SBA
Tower
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1. US tower counts only
Source: Industry Research
Source: Industry Company Filings
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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Military Housing

• Average annual Investments EBITDA over FY14 – FY17 of circa $50m[1]

• Invested equity position at FY17 $101.9m

Portfolio structure

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SPV Income SPV Expenses
Housing Opex
allowance Less Management fees
Interest Income Interest expense
SPV NOI (surplus)
Surplus to fund
future Equity Returns
redevelopment
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1. Includes Asset Management and Property Management EBITDA and Returns on Invested Equity.

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MARKET BRIEFING: AMERICAS – SEPTEMBER 2017

Important notice

This document has been prepared and is issued by Lendlease Corporation Limited (ACN 000 226 228) ( Lendlease ) in good faith. Neither Lendlease, nor any of its controlled entities including Lendlease Trust (together referred to as the Lendlease Group ) makes any representation or warranty, express or implied, as to the accuracy, completeness, adequacy or reliability of any statements, estimates, opinions or other information contained in this document (any of which may change without notice). To the maximum extent permitted by law, Lendlease, the Lendlease Group and their respective directors, officers, employees and agents disclaim all liability and responsibility (including without limitation any liability arising from fault or negligence) for any direct or indirect loss or damage which may be suffered, howsoever arising, through use or reliance on anything contained in or omitted from this document.

This document has been prepared without regard to the specific investment objectives, financial situation or needs of any recipient of this presentation. Each recipient should consult with, and rely solely upon, their own legal, tax, business and/or financial advisors in connection with any decision made in relation to the information contained in this presentation.

Prospective financial information and forward looking statements, if any, have been based on current expectations about future events and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from the expectations expressed in or implied from such information or statements.

Lendlease Group’s statutory results are prepared in accordance with International Financial Reporting Standards (IFRS). This document also includes material that is not included in Lendlease Group’s statutory results and contains non-IFRS measures. Material that is not included in Lendlease Group’s statutory results has not been subject to audit.

A reference to FY17 refers to the full year period ended 30 June 2017 unless otherwise stated. All figures are in AUD and as at 30 June 2017 unless otherwise stated.

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