LENDLEASE GROUP — Investor Presentation 2017

Jun 18, 2017

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19 June 2017
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International Operations Market Briefing

Attached is the presentation to be given today by Dan Labbad, Chief Executive Officer, International Operations, 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: Natalie Campbell Mob: 0410 838 914

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: International Operations (Americas, Asia, Europe) Dan Labbad, Chief Executive Officer, International Operations 19 June 2017

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MARKET BRIEFING: INTERNATIONAL OPERATIONS – JUNE 2017

Indigenous engagement and reconciliation

Lendlease’s vision for Reconciliation is one in which all our employees acknowledge and celebrate the proud heritage of Australia’s First Peoples and promote opportunities for career development, sustainable business growth and economic participation of Aboriginal and Torres Strait Islander Australians within our sector

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MARKET BRIEFING: INTERNATIONAL OPERATIONS – JUNE 2017

International Operations – structure and contribution to Group

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CEO International
Operations &
Europe
Dan Labbad
CEO Americas CEO Asia
Denis Hickey Tony Lombardo
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International Contribution1

• Urbanisation development pipeline – 52%

• Construction backlog revenue – 43%

• Funds under management – 28%

• Investments – 15%

• Circa 4,000 employees

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1. International Operations as a proportion of Group metrics as at 31 December 2016

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Diverse pipeline across international gateway cities

Europe[1]

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$8.7b Development pipeline
Americas [1]
Asia [1]
$1.1b Construction backlog revenue
$3.7b Development pipeline
$1.4b Funds under management $5.7b Development pipeline
$6.9b Construction backlog revenue
$0.1b Investments $0.9b Construction backlog revenue
$0.1b Investments
London $5.4b Funds under management
$0.3b Investments
Milan
San Francisco Chicago Boston Rome
Beijing
Los Angeles New York Tokyo
Shanghai
Kuala Lumpur
Singapore
Brisbane
Perth Sydney
Melbourne
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1. As at 31 December 2016

Lendlease targeted international gateway cities

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Development completions

International Development completion profile[1] ($m)

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18 major buildings in delivery with an end value of more than $7 billion Residential for sale
Remaining estimated end value ($m) Commercial
1400 Residential for rent
1200
1000
800
600
400
200
0
IQL E&C Sth E&C Sth IQL IQL R'line W'worth W'worth PLQ PLQ PLQ PLQ 281 5th C'ship 1 C'ship 2 C'ship 3 West # PLQ Resi TRX
Gdns Gdns Office 1 Office 2 Office 1 Office 2 Office 3 Retail Av NY Grove Retail
2H17 FY18 FY19 FY20 FY21
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18 major buildings in delivery with an end value of more than $7 billion

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Origination success illustrates resilience of business model and provides earnings visibility

Existing key projects

• Asia: Paya Lebar Quarter, Singapore; Tun Razak Exchange, Kuala Lumpur

• Europe: Elephant Park, London; International Quarter London; Deptford, London

• Americas: Clippership Wharf, Boston; Riverline, Chicago; 281 Fifth Avenue, New York

New projects/opportunities post HY17

• Europe: Haringey, London; Milano Santa Giulia, Milan

• Americas: Van Ness, San Francisco; US Telco Infrastructure Portfolio

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1. Based on expected completion date of projects, subject to change in delivery program. Not indicative of cashflow or profit recognition * Staged completion expected under current delivery program

2. Two buildings

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Capital, earnings to re-balance towards International from already secured pipeline

HY17 Invested Capital (by region)[1]

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6%
9%
Australia
8%
Asia
$6.4b Europe
Americas
77%
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Capital targets (per Portfolio Management Framework)

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5-20%
Australia
5-20% Asia
Europe
Americas
5-20%
50-70%
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PAT Australia vs International (FY10-HY17)[2]

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FY10-HY17 average 35% International

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57% 45% 64% 66% 43% 74% 77% 89%
3
57%
55%
43%
36%
34%
26%
23% 23%
11%
FY10 FY11 FY12 FY13 FY14 FY15 FY16 HY17
International Australia Invested capital – International proportion
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1. Invested capital by region as a proportion of total Group invested capital, excluding $0.4 billion held at corporate

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1. Proportion of Group operating PAT split between Australia and International, FY10-HY17 average 35% International (31% ex Bluewater) 3. FY14 International 20% ex Bluewater

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Strategic direction: Scale International integrated model

CURRENT POSITION STRATEGIC FOCUS

		Dev:Initial pipeline secured, entering execution		•	Establish scale platform in five key cities
AMERICAS		Cons:Scale platform in place		•	Higher margin Design & Construct opportunities
		Inv:Established Military Housing business		•	Grow recurring earnings via new sectors
		Dev:Well-established UK position		•	Increase platform with new pipeline opportunities in three key cities across Europe
EUROPE		Cons:Stable business, long history		•	Scale business and target margins
		Inv:Positioning for recurring earning streams		•	Grow recurring earnings through urbanisation platform and new sectors
		Dev:Project-led business in Kuala Lumpur and		•	Establish scale platform and target one to two
		Singapore			additional cities
ASIA		Cons:Internal pipeline focus		•	Focus on internal pipeline
		Inv:Established scale platform		•	Expand investment platform
		COMMON OPERATING PLATFORM			SCALE INTEGRATED MODEL

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Dev: Development segment; Cons: Construction segment; Inv: Investments segment

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Operating model: Disciplined approach to delivery and growth

Promoting Best Practice

• Health & Safety: consistent approach to safety via the Global Minimum Requirements (GMR) framework

• Customer: core focus on customer engagement, differentiation and brand promotion

• People: leadership, role-specific and functional programs

• Sustainability: recognised leadership in environmental, social and economic outcomes

• Financial: Portfolio Management Framework

Governance and risk management

• Enterprise wide risk management: centralised and business independent Group research, continuous macroeconomic and geopolitical analysis

• Common processes: consistent origination, conversion and project execution – Global and Regional Investment Committee process and regular Business Reviews

• Policies: limits of authority, GMRs and Code of Conduct

• Business: diversification by gateway city, sector and segment

• Financial: project return hurdles, capital efficient fund through, residential pre-sales, PLLACes

• Delivery: diversification by contract and client type, regular project reviews, Centre of Excellence independent reviews

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International Quarter London
Elephant Park
London 9
London
EUROPE
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EUROPE
Haringey Milano Santa Giulia
London Milan
Computer Generated Images (ex International Quarter London) for illustrative purposes only
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MARKET BRIEFING: INTERNATIONAL OPERATIONS – JUNE 2017

Europe: Current position and strategic focus[1]

Development: $8.7 billion development pipeline

• Well established development capability – Bluewater, Athletes’ Village, International Quarter London, Elephant Park

• Major urbanisation projects secured 2010 – International Quarter London, Elephant Park, London

• Opportunities emerging through competitive advantage – preferred bidder on Haringey, London

• Origination in additional gateway cities – secured south area of Milano Santa Giulia, Milan

Construction: $1.1 billion backlog revenue

• Well established delivery capability in the UK – Imperial War Museum, Tate Britain and National Theatre and internal pipeline

• Conscious decision in recent years not to pursue pipeline at below target margins

• Growing backlog and healthy pipeline – secured Google Headquarters, London and National Construction Framework, London

Investments: $1.4 billion FUM / $0.1 billion investments

• Current Investments platform sub-scale following major disposals – Bluewater and PFI portfolio

• Leverage integrated model to grow Investments segment

• Exploit new sector opportunities – Private Rental Sector (PRS)

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1. Metrics as at 31 December 2016

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Elephant Park, London[1]

• $3.5 billion remaining estimated end development value

• Partnership with London Borough of Southwark

• Development agreement across three sites

• Secured in 2010, expected completion 2025

• Circa 3,000 homes (25% affordable)

• 55,000 sqm of new public realm (equal to 47% of site)

• Over 30,000 sqm of retail, business, community and leisure uses

• Progress to date

• 519 residential units completed

• Social and environmental achievements[2]

• Circa 2,400 residential units remaining

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Artists’ impression: Elephant Park Masterplan

1. Metrics as at 31 December 2016

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1. 717 local residents employed (302 previously unemployed). One of 19 projects worldwide included in C40 Cities Climate Positive Development Program

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International Quarter London[1]

• $3.4 billion remaining estimated end development value

• Joint venture development between Lendlease and LCR

• Secured in 2010, estimated completion 2026

• 22 acre site

• Circa 270,000 sqm office space

• 333 residential units

• Progress to date

• Circa 73,000 sqm pre-let over two buildings (in delivery)

• 333 residential units to be completed in FY17

• Remaining stages

• Circa 200,000 sqm office

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Artists’ impression: International Quarter London

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1. Metrics as at 31 December 2016 unless otherwise stated

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Haringey, London

• Circa $3.5 billion[1] total estimated end development value – preferred bidder

• Project in conversion

• 50:50 joint venture partnership with Haringey Council

• Twenty year project horizon

• Circa 5,000 new homes across the borough

• Scheme targeting:

• 40% affordable housing

• 60% mix of private rental and for sale housing

• Redefining the Borough of Haringey with town centre enhancements in Wood Green and transforming the Northumberland Park estate

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Artists’ impression: Haringey, London

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1. Current estimate subject to financial close

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Milano Santa Giulia, Milan

• Project in conversion

• 4.5km from the Milan CBD

• Mixed-use scheme including commercial, retail and leisure space

• Potential across entire scheme for circa 2,500 residential units, 110,000 sqm office, 80,000 sqm retail, an arena, park and associated infrastructure works[1]

South Area (Phase 1)

• Secured South Area (end development value circa $200 million) June 2017

• 50:50 joint venture for South Area

• Includes two new office buildings totalling circa 30,000 sqm and associated retail

• Option to acquire the completed Sky Headquarters (circa 120,000 sqm)

• Exclusivity on the North Area

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Artists’ impression: Milano Santa Giulia Masterplan

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1. Current estimates subject to financial close

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MARKET BRIEFING: INTERNATIONAL OPERATIONS – JUNE 2017

International Operations summary

Group capital rebalancing to International regions – targeted gateway cities

• Track record of delivery across International Operations

• Competitive advantage – track record, integrated model, balance sheet strength, customer focus and sustainable solutions

• Focus on establishing scale integrated model in each region

• Increasing capital allocation across International Operations expected to drive future international earnings growth

• Several urbanisation projects secured in the last few years in target gateway cities – London, Milan, Chicago, New York, Boston, San Francisco, Kuala Lumpur and Singapore

• Continue to grow platform by using an enterprise wide approach across International Operations

• Risk management framework

• Disciplined origination and execution excellence

• Rebalancing towards Investments segment – new sectors, residential for rent[1] , telco infrastructure

• Apply disciplined execution under the Group Portfolio Management Framework

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1. Multifamily in US, Private Rental Sector in UK

Appendices

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Global trends influencing our strategy International Operations

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Urbanisation

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• $18.1b[1] international urbanisation pipeline

• Urbanisation projects across 8 international gateway cities

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Infrastructure

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• Established Japanese telecommunications construction business

• Leveraging capability into US telecommunications infrastructure

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Funds growth

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• Product from pipeline, including new asset class of residential for rent

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Sustainability

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• Recognised by GRESB as an international leader[2]

• Group development pipeline targeting 98% green certification[3]

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Ageing population

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• A market leader in retirement living sector in Australia

• • Actively seeking to transfer skills offshore

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Technology

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• A pioneer of new delivery technologies e.g. Cross Laminated Timber, pre-fab and modular; a leader in new safety initiatives

• As at 31 December 2016

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1. Global Real Estate Sustainability Benchmark (GRESB) 2016 survey; 5 funds across the Group achieved no.1 ranking in respective global or regional category

2. As at 30 June 2016

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MARKET BRIEFING: INTERNATIONAL OPERATIONS – JUNE 2017

Contribution to pipeline metrics International Operations

Construction Backlog revenue ($b)[1]

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43% International[2]

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8.8 8.9
7.4
6.6 6.6
6.0
11.9 11.6
9.3 9.6 9.6 9.9
FY12 FY13 FY14 FY15 FY16 1H17
Australia International
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Funds Under Management ($b)[1]

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28% International [2]
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6.8
7.1
7.5
5.4
4.7
3.5
17.9
16.5
13.8
10.3 10.9
8.8
FY12 FY13 FY14 FY15 FY16 1H17
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Australia International
1.
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Development Pipeline ($b)[1]

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Urbanisation pipeline – 52% International[2]

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19.8 18.1
18.0
21.3 23.1 25.0
16.9
14.8 17.5
15.9 14.3 12.7 12.1 11.5 14.0
- - -
FY12 FY13 FY14 FY15 FY16 1H17
Aus (Comm) Aus (Urban) Int (Urban) Total (Urban)
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Investments ($b)[1]

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15% International[[2]]

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[[2]]
0.5
0.6 0.5
0.4
1.3
1.2
2.8
2.4 2.5
2.2
1.4
1.1
3
FY12 FY13 FY14 FY15 FY16 1H17
Australia International
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1. Rounded to the nearest $0.1 billion

2. Reflects Bluewater sale

3. As at 31 December 2016

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Development: Project summary[3] International Operations

Project	Project secured	Delivery commenced	Expected completion date1	Residential units backlog	Commercial sqm backlog ‘000s	Total remaining end value $b2
Tun Razak Exchange, Kuala Lumpur 2014 - - 2,400 246 2.7
Paya Lebar Quarter, Singapore 2015 2016 2019 429 137 3.0
Elephant and Castle, London 2010 2012 2025 2,410 18 3.5
International Quarter London 2010 2014 2026 219 273 3.4
The Wharves, Deptford, London 2014 2016 2022 1,130 7 1.1
Riverline, Chicago 2014 2016 2025 3,750 1 2.0
Major Projects 10,338 682 15.7
Other Projects 2,535 383 2.4
Total Projects 12,873 1,065 18.1

1. Based on expected completion date of buildings, subject to change in delivery program

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1. Reflects the remaining estimated total project end development value. Values for any project can vary and are subject to change 3. As at 31 December 2016

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Construction: Backlog International Operations

Backlog revenue ($b)

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8.8 8.9
7.4
6.6 6.6
6.0
FY12 FY13 FY14 FY15 FY16 HY17
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Backlog revenue by client [1,2]
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Lendlease
20%
Corporate
8%
Government
72%
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1. As at 31 December 2016

Backlog revenue by region ($b)[1]

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Asia
Europe
$0.9
$1.1
$6.9
Americas
Backlog revenue by sector [1,2]
Other
Commercial 2%
20%
Defence 7%
Residential
3%
Hotel / 68%
Entertainment
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1. Includes all Construction projects greater than $100 million, which represents 70% ($6.2 billion) of secured backlog

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Investments International Operations

FUM ($b)

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7.5 7.1 6.8
5.4
4.7
3.5
FY12 FY13 FY14 FY15 FY16 HY17
Asia Europe
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International	Funds Management Platform6	Funds Management Platform6	Funds Management Platform6
	ARIF1 1 (Somerset)	ARIF1 3 (Jem)	PPPL2	LLRP3
Total assets ($bn)	0.8	1.4	1.2	1.4
Gearing (%)	66.0	47.0	40.0	2.3
LLC co-investment (%)	10.1	20.1	6.1	4.3
LLC co-investment ($m)	27	150	39	62
Region	Asia	Asia	Asia	Europe
Asset class	Retail	Retail and Commercial	Retail and Commercial	Retail
Number of assets	1	1	1	2
Occupancy (%)	93.2	99.1	96.0	95.9
Weighted average cap rate (%)	5.0	5.0	5.7	4.2

1. Asian Retail Investment Fund

2. Parkway Parade Partnership Limited

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1. Lendlease Retail LP

Investments ($b)

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1.2 1.3
0.6 0.5 0.5
0.4
FY12 FY13 FY14 FY15 FY16 HY17
Asia Europe Americas
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Assets Under Management6	Assets Under Management6
Asia (retail)	GLA Sqm/000s4	Market Value Dec 2016 A$b5
Jem,Singapore	108.8	1.8
ParkwayParade,Singapore	52.5	1.2
313@somerset,Singapore	27.1	1.0
Setia CityMall,Malaysia	124.8	0.2
Total	312.6	4.2
Europe (retail)	GLA Sqm/000s4	Market Value Dec 2016 A$b5
Touchwood,Solihull	60.4	0.5
Queensgate,Peterborough	81.3	0.4
Total	141.7	0.9
Americas (military housing)	Units Under Management	Invested Equity
17projects	53,105	111.7

1. Represents the gross lettable area of the centres

2. Represents the Group’s assessment of the market value

3. As at 31 December 2016

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MARKET BRIEFING: INTERNATIONAL OPERATIONS – JUNE 2017

Important notice

This document (including the appendices) 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 presentation 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.

The 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 HY17 refers to the half year period ended 31 December 2016 unless otherwise stated. All figures are in AUD unless otherwise stated.

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