Lendlease Group (LLC) Earnings Call Transcript & Summary

Are we running a video? Okay. Thank you. Good morning, everyone. [Presentation]

Well, good morning, everyone, and welcome to our 2025 Annual General Meeting. My name is John Gillam, I'm the Chairman of the Lendlease Group, and it's an absolute pleasure to have you with us here today, particularly if you're here in our office at for in Sydney or you're with us online via the webcast or the platform. I'd like to acknowledge that our meeting is being held on the land of the Gadigal people of the Aurora Nation, the traditional custodians of the land and on behalf of the Board, we extend our respects to their elders past and present. Our Company Secretary has informed me as have my eyes that we do have a quorum present, so I officially declare the meeting open. And the Notice of Meeting was made available to security holders on the 10 of October 2025, and I'll take that notice as read. The online component of today's hybrid meeting has been facilitated by Computershare's online meeting platform, and that allows security holders, proxies and guests to attend the meeting virtually, which is a terrific initiative. All attendees can watch a live webcast of the meeting as well. In addition, security holders and proxies can ask questions and submit votes. So before we turn to how to participate in the meeting because I will need to run through the obligatory instructions, I'd like to welcome my fellow Board members who are in attendance here today. With me is Tony Lombardo, our Group CEO and Managing Director; joining us here in Sydney also are all board members, Lianne Buck, Nicholas Collishaw, Philip Coffey, David Craig, Barbara Knoflach, Margaret Lui, Elizabeth Proust and Bob Welanetz and have a list here that's not in the order they're sitting, but I'm sure you can all work out who's who. And we've also got almost all of our senior leadership team, Simon Dixon, our Group Financial Officer; and Penny Ransom, our Chief Investment Officer; and other members of the leadership team are with us, and we have our company Secretary, as I said, Mary Weaver, and she'll be reading the questions from the platform later on. We also have our auditors, Nigel Virgo and Paul Rogers, representing KPMG and they're available to answer any questions in relation to the audit later in the meeting if you have any. So let's deal with the housekeeping matters before we move to formalities. Hybrid meeting participation: For those attending the meeting online, who wish to submit a written question, you may do so at any time during the meeting via the speech bubble icon on your screen, type your question in the chat box on the right of the screen and then select send. Confirmation your message has been received will appear above. Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting, when I will also take questions from those here with us in Sydney. Please also note that your questions may be moderated or if we receive multiple questions on one topic, we might choose to amalgamate them together. For those security holders participating online, who wish to ask a verbal question, an audio questions facilities available during the meeting and instructions on how to use this facility as shown below the broadcast window on the online platform -- sorry, if you're asking a verbal question, please state your full name before asking a question and please limit your questions to only 1 or 2 at a time and then rejoin the queue to allow others to ask questions. We do expect we'll be able to answer all questions today. In the event that we're not in a position to do so, we will answer them in due course via an e-mail or posting responses on our website. And depending on the questions, I'll make the decision whether I answer them myself or I ask a member of our management or another director or the auditor to respond. Voting today will be conducted by way of a poll on all items of business. And to provide you with enough time to vote, I will shortly open voting for all resolutions. And if you're participating online and you're eligible to vote at this meeting, a voting tab is available for you. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded and you do have the ability, however, to change your vote up until the time I declare voting closed. For those of you in the room, your voting cards will be collected in a normal matter once voting is closed. So I now declare voting open on all items of business. Please submit your votes at any time from now until the end of question time. I will give you a warning before I move to close the voting. And just repeating, I now declare voting open on all items of business. Barry Azzopardi from Computershare will act as our returning officer for the purposes of conducting and determining the results of the poll, and we will, of course, announce the results of the poll to the ASX later this afternoon. And so that deals with all the administrative details of today's meeting, and I will now move to my formal chairs address as lodged on the ASX platform this morning. So a formal good morning to you, again, and welcome to the 2025 Lendlease Annual General Meeting. It's a pleasure to be with you today whether here at our main office in Barangaroo in Sydney or online. Today's meeting is being held in the land of the Gadigal people, traditional custodians of this land, and on behalf of the Board, we extend our respects to the elders past and present. More broadly, I would like to acknowledge country, wherever you are listening to these words and pay respects to the elders who have kept culture and story strong. When I was appointed Chairman 12 months ago, I committed to accelerating the delivery of Lendlease's refreshed strategy by working closely with the Board and management team to unlock value, while continuing to deliver strong outcomes for our partners, our people and our security holders. While there is more to do, I'm pleased with the progress we have made to date. We are very focused on further capital recycling to strengthen our balance sheet. Our business is clearly simplified and that has sharpened our attention to our core markets where we see the greatest potential for growth and long-term value creation. When our FY '25 results were announced in August, we noted that over $2.5 billion in capital recycling initiatives had been announced or completed. We noted that our international construction operations were divested ahead of schedule, materially lowering complexity and risk within the group, and we noted that we streamline the group's management structure, significantly reducing costs. Alongside these achievements, the group delivered much improved financial outcomes in FY '25. We recorded statutory profit after tax of $225 million, with operating profit higher at $386 million. The Board was able to declare a full year distribution and dividend payment of $0.23 per security, reflecting a payout ratio of 41% of operating earnings. As I said, there is clearly more to do, and we are committed to building on the good foundational work of FY '25. I'd like to turn now to the topic of board renewal. The board is working closely with management to create a stronger high-performance orientation for Lendlease with a governance framework to match. As mentioned in the letter that accompanied the Notice of Meeting, we have determined that our Board size will reduce to 7 Non-Executive Directors with 5 based in Australia and 2 based internationally. When we meet next year, we would have completed these renewal plans, and these changes are designed to ensure we have the right mix of skills, experience and perspective to support the next phase of our strategy and deliver on our commitments to you. These changes will be phased in an orderly manner to ensure strong governance is maintained. The specific change relevant today relates to Mr. David Craig, who has reached the maximum 9 years tenure as per our Board tenure policy. Accordingly, David will retire from the Board at the conclusion of this AGM, and I'd like to take this opportunity to sincerely thank David for his significant commitment and contributions during his time on the Board, particularly as Chair of the Audit Committee. In July of this year, we welcomed Lianne Buck as a director to the Lendlease Board. Lianne brings significant experience in Australian and global investment markets and stands for election today. We are confident she will add considerable value as we move forward, and you will hear from her shortly. I'm also pleased to confirm that Lianne will succeed David as the Chair of our Audit Committee, and that she possesses the requisite financial experience and expertise to perform this critical role. Along with our focus on the governance framework, we're also aware of broader governance topics around the Australian markets, such as the use of ASX waivers, we will be considering these issues as part of a full review of the group's constitution that is already underway, and we will bring that to security holders at the 2026 Annual General Meeting. Turning now to outlook for FY '26 and beyond. FY '26 is very much a transition year with critical elements to be achieved. The group's operational priorities are clear. We must further strengthen our balance sheet and return capital to security holders, and we must advance plans to replenish the Australian development pipeline and grow the Australian and international investments platforms. Alongside this, we will also grow and strengthen our Australian construction business. The Board remains confident of an on-market securities buyback of up to $500 million. The buyback is expected to commence in the second half of FY '26, once sufficient capital is released to the completion of divestment initiatives. And in that regard, we have 3 significant divestment transactions on foot, and these are all advancing in a manner that should deliver pleasing outcomes. There is much to look forward to when eyes are cast to FY '27 and beyond with strong prospects for attractive, sustainable growth accompanied by healthier returns. The future growth prospects open the door for heightened performance outcomes, and we're very focused on that. There is all -- there is well-placed confidence that we are on the right path, and we will build further momentum through good underlying performance in our investments, development, construction operations in the year ahead. Before I invite our Group CEO, Tony Lombardo, to share more detail on our operational performance and strategic priorities for the year ahead, I would like to take this opportunity to thank my fellow Directors for their commitment and counsel this year. Thank you also to the Lendlease corporate leadership team and for all of our wonderful employees for the passion, energy and focus they bring to executing our strategy. And finally, a sincere thanks to you, our valued security holders, for your continued support and engagement. So I'll now invite Tony to address the meeting and then handing the let turn over to you, Tony, can I just say how much we're looking forward to your leadership delivering on our FY '26 critical outcomes which will open the door for you and your senior team to take Lendlease into the attractive future prospects we see for FY '27, FY '28 and beyond. Tony?

Thanks, John, and good morning, everyone. I also acknowledge the Gadigal people and pay my respects to their elders past and present. As the Chairman noted, financial year 2025 has been a year of significant progress for Lendlease, as we continue to position the company for sustainable growth and target returns above the group's cost of equity. Pleasingly, the group returned to statutory and operating profit this year with the actions taken as part of our 2024 strategy update contributing to strong growth in earnings per security. In financial year 2025, we've made strong progress on our stated objectives, including announcing or completing $2.5 billion of specific capital recycling initiatives, simplifying our organizational structure by removing regional management layers and appointing segment CEOs to drive operational performance; materially increasing the productivity with the achievement of per annum run rate cost savings of $141 million, in excess of the target we set ourselves; and improving the financial and risk profile of the group with divestment of international construction. These achievements have provided a solid foundation for the group to build from, with FY '26 anticipated to be the final year of the transition for Lendlease, noting stronger visibility to development earnings for FY '27 and FY '28. These earnings are expected from key developments across one circular key here in Sydney and Victoria Harbour in Melbourne in FY '27 and comp center in Singapore, and one dialing point again here in Sydney in FY '28. Turning now to the performance of our reporting segments in FY '25 and the progress we've made year to date. In investments, we have continued to progress the growth of international -- our international platform with new mandate wins and the introduction of new investors. $2 billion of committed capital is ready to deploy and more than $3 billion of capital raising initiatives across new products such as value-add and our credit strategies. Pleasingly, we've now signed a new partnership with a large U.S. credit specialist, and we're in the final stages of completing $1 billion value-add mandate in Asia with a global investor. We expect these initiatives, together with market growth and new asset creation from our development business, to support strong growth in funds under management in the medium term. Complementing this is anticipated growth is targeted from the improvement both in margins from our platform scaling up, generating new fee streams and a recovery in both performance and transaction fees from the Funds Management business. Earlier this financial year, following proposals for 2 of the Australian Prime Property Funds to change manager, Lendlease retained its position as the responsible entity for the APPF industrial and retail funds. Lendlease's team remains focused on performing for its investors across all its investment products and is committed to the highest standards of governance for all its managed funds and investment vehicles. We've been very active in managing our funds and mandates, realizing $2.7 billion of divestments year-to-date in 2025, all at or above book value. This includes portfolio recycling across retail, office, industrial and data center assets. In development, we've continued to restock our Australian development pipeline with $3 billion of new projects secured in a little over a year.and a pipeline of circa $10 billion at 30 June 2025. In addition, we are bidding on $25 billion of development opportunities and are targeting to secure more than $10 billion of these projects in FY '26 in Australia. Opportunities include projects that we control, such as the RNA show grounds, which is the preferred site for the athletes village in Brisbane, and a herbicide residential land development at Rosal here in Sydney. Additionally, we are in a public tender process for an overstation commercial office development here in Sydney, a Sydney Harborside residential land development project and a residential land project in Melbourne. FY '25 saw the further simplification of the group with the sale of Capella Capital, our infrastructure-facing business. We have also announced an agreement to enter into a landmark joint venture with the Crown Estate in the U.K., the King's Real Estate holdings held in the right of the crown. The transaction remains subject to satisfaction of conditions precedent. The new joint venture with the Crown Estates will provide Lendlease with new development management fee streams and the ability to execute on the $49 billion of development assets across London and Birmingham. Our focus will be on developing up to $24 billion of investment product to support the growth of our international investment platform. In North Sydney, we are approaching the practical completion of our Victoria Cross commercial office tower, and we are exploring options to divest our remaining 75% holding in FY '26. In construction, our business continues to gain momentum following a strong second half operating performance in FY '25. Our outlook for construction business is robust, underpinned by $5 billion of new work secured in FY '25 and $15 billion of secured and preferred work at 30 June 2025. This is anticipated to deliver strong revenue growth in future years. In FY '26 year-to-date, circa $3 billion of new work has already been secured, as the business momentum continues to build. Around 2/3 of our external construction work is on behalf of government clients across areas such as defense, social infrastructure with strong fundamentals underpinned by further expected growth in these sectors. And we continue to improve the earnings profile of this segment with a higher proportion of cost-plus contracts and more rigorous pricing of fixed price contracts. In the Capital Release Unit, or CRU, our focus remains on balancing the speed of execution with value realization. Notwithstanding this, all capital recycling initiatives announced in FY '25 were achieved at or above the book values, generating significant profits for the group. These initiatives included the sale of 12 Australian community projects; the sale of our U.S. Military housing investment; the establishment of a new life sciences joint venture, Veda Partners; and the announcement of the U.K. development joint venture with the Crown Estates that I mentioned earlier. Looking ahead for FY '26, we continue to position the group for profitable growth across our core operating segments and to strengthen the group's balance sheet through asset sales and further deleveraging, noting $2 billion of CRU asset recycling is targeted by the end of FY '26. The group is currently in that stages to realize circa $1 billion of this target through the sale of its investments in TRx Malaysia and the Retirement Living Australian. Key commercial terms have been agreed for both transactions with due diligence being undertaken at the moment and documentation being finalized. Proceeds from these transactions plus circa $300 million from the completion of the Crown Estates joint venture are anticipated to be received in FY '26. Recycling process is well advanced, however, delays in transaction completion and together with planned capital expenditure and other commitments, we'll see net debt elevated at the half compared to FY '25. This is not expected to limit our targeted growth initiatives with investments expected to be self-funding through portfolio recycling and development origination undertaken in a capital-efficient manner. Planned capital expenditure on current growth initiatives include progressing key developments across One Circular Key and Victoria Harbour, noting strong presales and future profits from both these projects. These projects are to contribute more than $1 billion of net proceeds upon settlement in FY '27. The group is targeting to achieve gearing of 15% by the end of FY '26. We also reiterate our FY '26 earnings per security guidance for our IDC segments of $0.28 to $0.34 per security with the IDC segment earnings skewed to the second half of FY '26. No earnings guidance has been provided for the Capital Release Unit consistent with prior disclosures given uncertainty around transaction timing and valuation outcomes. Looking beyond FY '26, we have strong conviction in our growth trajectory with FY '27 seeing the benefits of our strategic repositioning, which includes lower debt levels, lower costs and stronger business operations. In investments, we are anticipated improving margins and funds under management growth to deliver scale benefits across the platform, in addition to further investment capital recycling to rebalance our investment portfolio and drive improved security holder returns. In development, higher completions in FY '27 and FY '28 provide visibility to improve medium-term earnings, while the establishment of the Crown Estates joint venture will deliver development fee streams, profits in short term from the plot sales and unlocking potential future development opportunities. In construction, annual revenues are expected to grow strongly over the medium term, delivering EBITDA margins of 3% to 4% in our target range. Additionally, the group is anticipated to benefit from working capital inflows as revenues grow in construction. The foundations we have laid through capital recycling, cost reduction and operational simplification will position us to deliver the targeted returns above our cost of equity in the medium term and grow security holder value. I'd like to thank the Lendlease people for their dedication, hard work and commitment through the past year. Their efforts in delivering on our key strategic priorities have played a critical role in advancing the turnaround of our organization. Finally, I'd like to thank you, our security holders, for your ongoing support as we execute on the strategy to restore this great Australian company. I'll now hand back to the Chairman.

Thanks, Tony. We can now move to the discussion on the formal items of business as set out in the Notice of Meeting. And I remind you that the poll is open for voting. And if you have not already done so, I do encourage you to vote now. The Notice of Meeting contains all the material information in the Board's possession to assist you in determining how you wish to vote. This includes the Board's recommendation for security holders to vote in favor of all resolutions. Lianne Buck is standing for election at this AGM for the first time as required by our Constitution. Margaret Lui, Bob Welanetz are standing for reelection at this meeting. Details of each Director's skills and experience are contained in the explanatory notes to the Notice of Meeting. And I'd now like to invite Lianne to address the meeting.

Thank you, John. Good morning, fellow security holders and guests. My name is Lianne Buck, as John has said, and I've joined the Board as an Independent Non-Executive Director in July of this year and if elected today, I will become the Chair of the Audit Committee. It is a privilege to stand before you today for election as a Non-Executive Director of Lend Lease, a company with a proud legacy. As outlined in the notice of meeting, I trained as a chartered accountant, and my career spans over 25 years in global infrastructure and real estate investment, covering a variety of areas, including funds management, capital markets, superannuation, long-term investments and risk management. I've worked in Australia as well as globally. I have started my career in Canada and I've also worked in the United States and I'm now based here in Sydney. I have served as a Non-Executive Director and Audit Committee Chair of ASX listed and unlisted companies and are currently serve on the Board of Argo Investments, St. George Community Housing and AusNet Services. I previously have sat on the Board as a Nonexecutive Director of Australia Pacific Airport Corporation, Spark Infrastructure, ISPT, Charter Hall Retail REIT and Utilities Trust of Australia. In my executive roles at New South Wales Treasury Corporation, Hastings Funds Management and Macquarie Group, I partnered with institutional investors to deliver investment programs as a co-investor and a joint venture partner. My experience in these roles included managing investment portfolios, evaluating capital allocation and driving performance in large-scale projects. Those roles have honed my knowledge of investment markets and investor expectations in real assets. I have the capacity to commit to the Board, and I believe that I have the skills to make a valuable contribution to Lendlease. I'm excited by the opportunity to contribute to Lendlease's next chapter, supporting the Board and management in executing on the refreshed strategy, driving sustainable growth and delivering value for all security holders. Thank you for your consideration and support.

Thanks, Lianne. Margaret, would you like to address the meeting?

Good morning. I'm Margaret Lui. Thank you for joining us here today. I first joined the Lendlease Board on December 2022. Today, I am seeking your support for reelection. It has been an honor for me to serve on the Board of Lendlease, which is not only an iconic name in Australia but a brand name, very known internationally, very strong reputation for building excellence, good governance and a focus on sustainability. 2025 has been a year of significant progress following management's concrete steps. Over the past couple of years, in recreating the foundation of growth and financial returns. The Board and management team remain deeply committed to creating long-term value for you, our security holders. On a personal note, early this year, I retired from my Chief Executive Officer role at Assalia Investment Management, a Singapore-based fund management company. I was the founding CEO and I led its global growth of financial investments over 10 years to more than USD 11 billion. Throughout my career and as a Board member on a number of major companies, both listed and unlisted over the last 40 years. My emphasis has always been on ensuring the company's are positioned for growth and resilience. And as a Board member at Lendlease, I have advocated for strategies that leverage Lendlease's strength to drive sustainable growth. I have my experience I believe my experience and skills in corporate transformation, fund management and international investments will continue to bring value to the Board as Lendlease delivers on this transformation. Lendlease has an excellent Board with a wide range of expertise. I seek to further enhance its diversity across multiple dimensions. Coming from Singapore with decades of international investment experience, I will contribute further to the diversity in perspectives, views and strengthen inclusivity. I am committed to work with the management and fellow board members to drive long-term success and create value for our security holders. I look forward to your support and the opportunity to continue serving as a Director of Lendlease. Thank you very much. Over to you, John.

Thanks, Margaret. And last, Bob, please.

That's what happens when you have a last name that starts with W. Good morning. It's a pleasure to be attending the 2025 Lendlease Annual General Meeting. My name is Bob Welanetz, and I have the honor and privilege to serve as a Non-Executive Director on the Lendlease Board since February 2020, immediately before COVID. In my first 2 years on the Board, we're actually on screen before rolling into in person meetings and discussions and there's no replacement for being together as a Board working with management to accomplish these tasks. In my duties as a Director of Lendlease, I have relied on and benefited greatly from my time as a Lendlease employee, when Stuart Horner he was Chairman and CEO of the organization. My executive time at Lendlease, coupled with my other real estate company affiliations, including JLL, Pan-Pacific Development and Blackstone to name a few, contributed significantly to my diverse 40-plus year career in real estate development and investment. The skills and perspectives acquired while doing business and projects in 47 countries around the world has been incredibly helpful in executing my role on your behalf as a Director of Lendlease. During the past 5 years, the real estate industry has been deeply challenged by a perfect storm of a global pandemic, macroeconomic weakness, capital market reluctance and disruptive geopolitics. Management and the Board have worked cohesively and diligently in recalibrating the firm's focus, resetting the firm's strategy during this challenging period with one goal in mind: return the firm to its former stature as a high-performance industry-leading real estate firm, which produces top-tier returns for all its security holders and investors. Today, you have heard an expansive update on Lendlease's progress against its reset journey, which will be executed as expeditiously as possible without compromising shareholder value. As the firm ships aggressively towards its growth agenda, I can assure you that I and other members of the Board will continue to lever on our depth of business experience and commercial insight to help support and guide and counsel management to ensure appropriate levels of risk and return with the execution of our forward strategies. I've appreciated the support it afforded me during my tenure to date with the Board and with your approval, I look forward to continuing my service and optimizing the firm's performance on behalf of all our security holders and investors. I could go on, as most people know, but I will now turn it back over to John. Thank you.

Thanks, Bob. Terrific words from Lianne, Margaret and Bob. Thank you all. We will now take questions on all items of business in the order or on any general questions relating to the Lendlease Group that you have. I encourage you to submit your question via the online platform, if you've not already done so. And as I mentioned earlier, the poll is open on all items of business, and as a matter of transparency, the proxy results for all items of business are now being shown on the screen, and it is very pleasing to see a high level of support for all that is before the meeting, and I thank security holders who have voted in that manner.

Okay. I'll start with questions that were submitted in advance AGM. And we had a handful of questions that were all on the same topic, and it's an obvious topic of concern for everyone regarding historical security holder returns and the trailing COVID impacts in construction particularly. And basically, a challenging us and asking us what can be done to improve the stock price. And the short answer is, we are trying our darndest to make sure that this great company has very sound foundations and is improving its investability. And you heard the efforts we're making in FY '25 and the foundations we've built to then take on a critical year, where our aim is to both advance and substantially complete the balance sheet repair work and then at the same time, build into a much stronger growth and performance profile and Tony did a good job of laying that out. So it's very top of mind to us. The share price is a lag. We're working very hard to make sure that we turn everything that we can do into the winning post that puts us in the best position for long-term performance and a much healthier security price. So I'm sure everything we will do, it will be done so that this time next year, we're in a more favorable position, which is all in our best interests. We also received a question as to what more can be done to reduce our carbon footprint? And the firm has a very strong position in this regard. So I thought it might be a good time to let Tony update you all on just where we are and what might be next.

Yes. On our carbon footprint. In 2020, we set ourselves a mission to net 0 by 2025, and we have accomplished that. And within that our carbon footprint used to be 200 kilotonnes back in 2020. As of today, we're sitting at 22 kilotonnes. So that's an 89% reduction in the emissions that Lendlease contributes both on the Scope 1 and 2. We'll continue to remain focused on that as an organization. Our next focus is on our target to be absolute by 2040. We believe it's a smart business to be delivering sustainable product. We're delivering business that are more energy efficient, and we'll continue to do that going forward through our organization.

Thanks, Tony. So now we'll move to questions from the floor here in Sydney. Please -- and make your way to the microphone, and we'll look forward to hopefully answering whatever it is, it's on your mind. It looks like we have 3 heading towards us, which is great.

Chairman, I'd like to introduce Peter Gregory on behalf of the Australian Shareholders Association.

Good morning, Peter.

Good morning, John, and thank you for hosting at this wonderful location this morning. As I said, Peter Gregory is my name, I'm representing the Australian Shareholders Association, which is a volunteer organization that looks after the interest of individual shareholders. Today, I have proxies from 96 shareholders, totaling just under 400,000 shares, which equates to about $2 million in value. I also note that about 90% of Lendlease's security holders own less than 5,000 shares. So we're effectively representing a significant part of your share register I'd like to start by congratulating the company on its achieving net 0 target for 2025 and also achieving 100% renewable energy goal in 2025. So that's great, and that was 5 years ahead of schedule. Also, I'd like to thank you for hosting the meeting as a hybrid AGM, enabling all shareholders to participate whether they're in Sydney or Tamworth or Perth, wherever. Now some questions. Lendlease, as we've talked about, is going through an enormous transformation into a very different kind of organization. And shareholders are trusting that all of the people in Lendlease will work to deliver a better future for them. But we note that in the STI scorecard last year, the comment that said employee engagement has broadly been maintained but did not achieve targeted improvement. Could you comment if that's still the case, if you know it, and also what's being done to get better engagement from the people who are at the front face here really make the difference?

It's an insightful question. Thank you, Peter, and thank you for your kind remarks preceding that. I think one of the most important indicators that shareholders can be -- security holders can take comfort from is that our safety standards remain very strong. And in very trying conditions, particularly the period involved, still owning before we divested international construction companies and within the broader operations that we have to maintain that strong focus on safety shows that our team is still caring and the care factor is the most important engagement level for mine. Personally, with my own experience over time with the different things I've done in my career, I wasn't surprised that there was a little downtick in engagement when you just return your mind to the sort of commentary that the company was swept up in across 2023 into 2024, that does have an effect on morale. And then you've got the significant challenges of divesting and downsizing and putting quite sweeping changes through the organization. So I was comforted that it hadn't fallen further. We have done a lot to make sure that we are listening to the team and Tony and the senior team have got good programs in place. We have briefed at our Board meeting this week on the the pulse survey that's in the field at the moment, but quite advanced across our wider leadership team and there are good signs of improvement there. So -- but we're keeping a very close eye on it. It's an important part of turning that care factor into a high energy and a high-performance culture to get the outcomes that we're seeking and it's a very demanding environment at the moment. So we're very conscious that we need to keep close to this issue.

Okay. I'd like to ask about the CRU activity. I understand that part of the CRU is getting partners into projects where Lendlease is effectively overweight in terms of its ownership of that project. I think you said before that the $2 billion that's coming in, in this financial year, half of it is overseas. But can you advise shareholders how much of the $1 billion that's effectively domestic fits into that bucket? And also talk about when that kind of activity ceases to be CRU and becomes business as usual as just part of the normal work that Lendlease does?

Yes. Perhaps so I'll do the latter and you do the former. For example, with the Crown Estate, once that we move through the conditional elements of it and it goes live, which is hopefully we're able to announce that in the near future, certainly before -- hopefully, before we're talking about our full year -- half year results, then those assets will move back into the IDC platform segments because they're out of crew, the restructuring will have completed that. And in terms of just how the proceeds are being lined up, Tony?

So when you look at the $2 billion target, and John did touch on the $300 million that's due from the joint venture from Crown Estate. So in the U.K., we had some $700 million of development capital assigned to the development already in Crown Estate. So we'll get half that capital back and that will come back that $300 million and then the remainder of that capital does move aside to the IDC. Of the other $2 billion of capital recycling, circa $1.5 billion is international, $500 million is here in Australia with the retirement which we own, which is 25%. On TRx, which we are well advanced in divesting both the retail asset and the office asset, Lendlease will continue to hold a 20% interest in the retail asset and manage that asset going forward so that will move across for the remaining 20%, but some $500 million of capital will come back in for both the retail and the office asset we are divesting at the moment. The transaction, that's some circa $500 million of capital that's that is here in Australia. And then there's $1 billion of other transactions across the U.S., Asia and Europe that's underway.

Just if I can pick up on the discussion about the Crown Estate. As I understand it, the process that's been gone through there of Lendlease putting in a big hunk of capital to get it started and then moving into a situation where you can get joint ventures, that sounds to me like it's just a business as usual kind of activity rather than a specific capital recycling in the context that it's being put to us.

The first half of that is we had that $600 million, $700 million of capital. Half of those proceeds do come back then it does go into business as usual, which we can then have the optionality to put further capital in to create further development products that will sit in international Investment Management going forward. So we will control $49 billion of future development. Of some of that, we will just continue to sell some land plots that we can sell back to other developers and then we'll look to vertically develop some of those buildings. And that's about $24 billion, which will relate to yielding assets going forward. And those projects span 10, 15 years of time frame. So it allows us to generate fees from our partner, development profits from land sales and then vertical development profits going forward. So the most significant thing there, Peter, is that there's a significant change, that will be a normal kind of business activity.

Correct. There will be core operations going forward.

I've got a couple more questions, but I might let others have...

Okay. Yes, please, you can come back when we've got through to the others. Thanks, Peter.

Chairman, I'd like to introduce shareholder, [ Robert Salsberry ].

Good morning, Robert?

First of all, let me say I'm a massive fan of Lendlease, you build the best buildings in the world.

Thank you.

I'd like, though, to just air a concern over the global trend of avoiding and quitting the net 0. Recently, the Net Zero Banking alliance has had a number of major players quit, Goldman Sachs, Wells Fargo, Citigroup, Bank of America, Morgan Stanley, HSBC, Barclays and Macquarie Group. We've had the Liberal Party and the nationals abandoned net 0. What reaction is Lend Lease going to make? Do you have plans to recalibrate to profit optimize based in this culture?

I'll take most of what you put there as a statement and given it's a bit of a political issue at the moment, I'm not going to put our company's name into the local politics. But what I can point to, Robert, is the answer to the question that we had before, and you can see how strongly we are positioned. And what's very important is that we're dealing with any bidding for new projects. Our track record and our future commitments are very clearly in the mind of our customers for the delivery of the buildings and the spaces that we are shaping.

Chairman, I'd like to introduce shareholder [ Diana Pride ].

My questions relate to Gilead, that's in Southwest Sydney. In your conservation plan at Gilead 2022, Lendlease promised to gift 2 parcels of land to the Georges River Koala Reserve. In that conservation plan, item 16, was the land at will be gifted; and Item 18, 28 hectares of land at Browns Bush at Bulla so that they can be included in the Georges River Koala Reserve. Are you still gifting these parcels of land as promised in your Kuala conservation plan at Gilead? And will you formally notify the government that you are doing so? That's the first part.

Thank you for your question, [ Dianna ]. We still have 1 element with that project where we're dealing with the original land owner. And obviously, there's been a major component that's moved to a new owner. And the new owner is taking up responsibilities for all those items you're talking about and the remaining bit that what we call that the Mount Gilead remaining element that we're working on, we've still got to work through where those responsibilities will lie. But we will not walk away from anything that we're committed to, and we'll make sure that everything we've said we do will be done.

It's been widely reported that Lendlease denied access to Stocklands in order for them to complete the Koala so are you able to guarantee access for the second -- sorry, why did Lendlease delay giving access to stockers to complete this underpass, Koala underpass and will in lease guarantee access to the second under Browns Bush's a matter of urgency, given that the survival of the Koala depends on their ability to disperse and access their west of Appen Road.

Yes. It was as the transaction completed, there was some misunderstandings of who needed to do what regarding those underpasses and access. And they've now been all resolved, and I'm sure there'll be no issues arising on these going forward. Thank you for your attendance. Peter, yes, please. And we've got 2 questions online as well, 3 actually, I can see. But we'll just go back to Peter Gregory.