LENDLEASE GROUP — Investor Presentation 2021

Aug 29, 2021

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19 3022 August 2018 August 20 1921
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Lendlease Strategy briefing

Attached is the presentation to be given today by Tony Lombardo, Global Chief Executive Officer, Lendlease.

The presentation will be webcast at 10:30am (AEST) via https://www.lendlease.com

A summary of Lendlease’s Major Urban Projects can be found on the Lendlease website, or by clicking on the link here.

ENDS

FOR FURTHER INFORMATION, PLEASE CONTACT:

Investors: Media: Justin McCarthy Stephen Ellaway Mob: +61 422 800 321 Mob: +61 417 851 287

Authorised for lodgement by the Lendlease Group Disclosure Committee

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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

Level 14, Tower Three, International Towers Sydney Telephone +61 2 9236 6111 Exchange Place, 300 Barangaroo Avenue Facsimile +61 2 9252 2192 Barangaroo NSW 2000 Australia lendlease.com

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Strategy briefing 7

Recalibrating the cost base as we focus on our Core business

Target annualised savings of >$160m, >20% from overhead base[1]

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Composition of savings [2] Composition of savings [2]
10%
20%
20%
45%
>$160m >$160m
70%
35%
Downsizing People
Australia consolidation Occupancy
Group Other
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Downsizing Australia consolidation Group

Downsizing

• c.4,000 non core FTE departures post sale of Engineering and Services

• Reduced ongoing functional support

• Lower Australian occupancy need

• Realigned discretionary/capex spend

• Global application of operating model

Australia consolidation

• Benefits from simplification and regional consistency

• Savings through establishment of Enterprise Services

Group

• Restructure charge estimate of $130m to $170m pre tax expected in H1 FY22 statutory profit

• Benefits of cost savings expected to be realised from H2 FY22

• Streamlined with a focus on global strategy, capital management and governance

• Group management team reduced

1. Overhead represents costs not directly related to projects or assets. 2. Indicative breakdown of targeted cost savings from revised operating structure.

Strategy briefing 8

Conversion of secured pipeline key for >$8b annual production

Phases of development

Targeting >$16b[4] commencements in FY22-23

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Operational stage [1] FY21 Pipeline [1,2] FY21 Capital
Conversion $59b $0.5b
Master planned $40b $1.2b
Work in progress $15b $2.7b
Total $114b $4.4b [3]
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Master planned[1]

• One Sydney Harbour, Tower 3

• Melbourne Quarter

• Victoria Harbour, Melbourne

• The Exchange TRX, Kuala Lumpur

• Certis Cisco Centre, Singapore

• Data Centre, Greater Tokyo

• Milan Innovation District

• Milano Santa Giulia

• Elephant Park, London

• Lakeshore East, Chicago

• Southbank, Chicago

• Shoreline, Queensland

• Averley, Victoria

• Figtree Hill, New South Wales

Conversion[1]

Focus of operational stage

Conversion: Master planning approvals; typically 2-3 years

• High Road West, London • 60 Guest Street, Boston

• • • La Cienega, Los Angeles Pine Valley, Queensland[5]

• • San Francisco Bay project

Master planned: Individual building approvals, investment partnerships, pre-sales/pre-leasing

Work in progress: Delivery, marketing, additional sales and customer experience

Origination

• Renewed focus on Australia and Asia Regions

Target commencements (indicative breakdown)

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14% Residential for sale
36%
12% Commercial
>$16b
Residential for rent
Communities
38%
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1. Status as at 30 June 2021. 2. Total estimated project revenue of all development work to be delivered by Lendlease (representing 100% of the value of project, including joint ventures). 3. Comprised of Urban $3.5b and Communities $0.9b. 4. Key commencements listed below. 5. Not in current pipeline.

Strategy briefing 9

Increased WIP to underpin anticipated >$8b production by FY24

Drivers of >$8b annual production[1] target by FY24

FY24 key production contributors (currently in WIP)

• Anticipated FY24 production (completions) driven by c.$7b of projects currently in delivery

• Barangaroo South Residences One and Two

  • −Significant profit contribution expected on completion

• Production target supported by expected near term commencements, diversified by product type

• Forecast significant increase in work in progress (WIP) critical to achieving and maintaining production target

• Increased production to be supported by existing pipeline conversion, market size, demand for quality assets and investment partner appetite

• Melbourne Quarter Tower

• −Leasing performance to drive final return outcome

• Other contributors

• −Elephant Park, London

• −Southbank, Chicago

• −The Exchange TRX, Kuala Lumpur (Residences, Hotel, and Office)

WIP - future indicator of roduction p

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FY17-21 ave.
c.$13b
c.$4.6b
WIP Production
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FY22-23 ave. [2] FY24 onwards [2]
c.$20b >$20b
>$8b
c.$4.0b
WIP Production WIP Production
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1 . Production represents development completions in the year. 2. Anticipated WIP/production profile based on current estimates and remains subject to change in delivery programs and market conditions.

Strategy briefing 10

Pathway to Development ROIC target of 10-13% anticipated by FY24

Urban ortfolio review com leted p p

Urban ortfolio ca ital and returns p p

Project level assessment highlights quality of portfolio:

• 32 projects, $100b pipeline

• Capital efficient land management models across most projects

• Strong embedded whole of life project returns

Near term returns subdued, reflecting:

• 50% of portfolio in conversion (>40% secured last three years)

• COVID related production delays

• Upfront profit recognition on historical JV projects which remain in delivery

• −Deconsolidated joint ventures

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FY21 capital FY24 estimated capital [2]
Expected to
run off to nil
in FY25
5% 10%
17%
23%
$3.5b $4.5-5b [3]
60% 85%
Deconsolidated JVs Other Urban projects Expected impaired projects
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Portfolio review identified material change in strategy across small number of projects:

• Brisbane Showgrounds; Deptford Landings; Waterbank[1]

• Change in strategy to enable c.$0.5b in capital to be deployed in higher returning opportunities over the medium term

• $230m to $290m pre tax impairment expected in H1 FY22 statutory profit

Anticipated return to target performance by FY24:

• Project conversions and increased production

• Deconsolidated JV project completions and capital run-off

• Work through on expected impaired projects

1. Account for c.90% of estimated expected impairment. 2. Analysis is illustrative only, and represents indicative growth. 3. Includes impact of anticipated impairments.

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New structuring approach improves alignment of profit with cash and risk/reward

Change in capital partnering approach across urban projects

Prior JV structuring approach (Deconsolidated JVs)

Example: Victoria Cross integrated station development

• Revaluation profit on retained interest recognised on initial sell down

• 25% sell down to capital partner in FY20

• Refer Victoria Cross integrated station development example

• Deconsolidated JV structure

• −Up front revaluation of retained interest

Improved alignment of profit with cash and risk/reward profile

• Vertical delivery expected to commence in FY22

• Alternate transaction structures to be employed

  • Completion expected in FY25

• −No change in accounting policy or funding profile

• Overall earnings unchanged

• −Improved alignment with cash realisation and risk/reward

• Supports underlying operating cash conversion

• Reduced capital at risk through delivery

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Profit component (pre tax) Actual structure New structure
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Gain on sale (25% sold)	~$30m	~$30m1
Revaluation (75% retained)	~$90m	-
Upfront profit	~$120m	~$30m
Future anticipated earnings	$50-100m	$140-190m
Total profit	~$170-220m	~$170-220m

1. The gain on sale is indicative, and the quantum would have been subject to commercial negotiations and outcomes.

Strategy briefing 12

Repositioning Australian Communities to restore performance

Return to tar et erformance antici ated b FY23 g p p y

Australian Communities ortfolio[2] p

• Underperformed settlement target past three years −Ave. c.2,200 lots settled p.a. vs. target 3,000-4,000 lots p.a.

• • Strategy in place to optimise business operations −Implementation of new leadership team

• −Review of portfolio completed

• Focus on progressing four key projects in FY22 −Shoreline, Averley, Figtree Hill, and Pine Valley[1]

• • Capital of c.$0.9b[2] −Bingara Gorge divestment in FY21, deferred settlement terms

• Assessment of potential alternate capital strategies once performance restored

• $13.1b pipeline[3]

QLD

• c.43,000 lots pipeline

  • c.27,800 land lots • Elliot Springs • Springfield Lakes • Yarrabilba • Shoreline • Pine Valley[1]

• 16 projects

• WA c.1,450 land lots • Alkimos Beach • Alkimos Vista NSW

• VIC c.6,470 land lots

• c.7,500 land lots • Calderwood Valley

• • Atherstone • Figtree Hill • Aurora • Jordan Springs • Harpley • The New Rouse Hill

• • Averley • Kings Central

1. Not in current pipeline, and subject to master planning. 2. As at 30 June 2021. 3. Total estimated project revenue of all development work secured (representing 100% of project value).

Strategy briefing 13

Construction delivery capability drives value

Differentiated ca abilities p

Stable historical returns

• Rich heritage with more than six decades of experience

• −Global scale combined with local capability

Core Construction EBITDA margin

• Project management capabilities critical for origination and delivery of urban projects

• −Fully integrated client proposition

• −Flexibility to adjust masterplan and delivery

• Project management, design and construction excellence across a range of sectors, clients, and markets

• Leading risk, safety, and sustainability processes and credentials

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Target range 2-3%
COVID impact
3.1%
2.6% 2.7%
2.2%
1.3%
FY17 FY18 FY19 FY20 FY21
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Strate ic focus maintained g

Strategy to deliver internal development pipeline and maintain steady backlog position

Sector expertise

Focus on sector expertise, strong market positions and client relationships

Delivery model flexibility Retain flexibility for internal development pipeline, with key construction management capability controlled inhouse

Digital capability Embed digital capability across delivery platform to drive productivity

Strategy briefing 14

Pathway to achieving scale Investments platform

Strate ic direction g

Funds under management

Medium term strategic targets:

• Investments capital >50% from 45%[1,2]

• −Capital in short term expected to be overweight Development

• EBITDA mix 35-45% from 30%[1]

• Targeting FUM >$70b by FY26

• Historical growth of c.11% CAGR[3]

• Targeting growth of >12% CAGR to FY26

• −Development pipeline - c.55%

• −External market - c.30%

Key sources of long term growth underpinned by:

• $55b potential from Development pipeline[1]

  • −Other growth - c.15%

• −Commercial $34b; Apartments for rent $25b

• Expand product offering

• External market opportunities

Investments portfolio:

• Increase co investment stakes from current c.5% of FUM

• Expect strong growth from Global Commercial REIT

• Warehouse assets and seed new products

• Portfolio optimisation

• −Retirement Living

• −Military Housing

• −Recycle co investments

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$70b
c.12% CAGR
$40b
c.11% CAGR
$24b
FY16 FY21 FY26
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1 . As at 30 June 2021. 2. Reflects Investments to Development capital mix. 3. Represents 5 year CAGR: FY16-21.

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Important notice

This document has been prepared and is issued by Lendlease Corporation Limited (ACN 000 226 228) (Lendlease) in good faith. Neither Lendlease (including any of its controlled entities), nor 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.

A reference to FY21 refers to the full year period ended 30 June 2021 unless otherwise stated. All figures are in AUD unless otherwise stated.