Lendlease Annual Report 2022

Renewal 25 Converting the pipeline Converting the already secured pipeline is key to achieving our annual completion target. We’ll continue to pursue opportunities with an emphasis on replenishing our pipeline in Asian and Australian cities. Our pipeline is categorised by three phases: In conversion; Masterplanned; and Work in Progress. These phases provide an indication of the likely timing of project commencements given the timeline required to take a project from origination through to completion. In Conversion Approximately half of the pipeline, or $57b, is 'In Conversion'. That is, it has been secured but is yet to receive masterplanning approval from the relevant authorities. As a result, it is not in the potential pool for commencement. The timeframe to achieve masterplanning is typically two to three years from the date the project was secured. On smaller projects, the conversion period may be far shorter. Masterplanned Approximately $42b of the pipeline has masterplan approvals. The focus for this stage is: obtaining individual building consents; launching products to secure income via pre-sales and pre-leasing; and working with our partners on investment opportunities that fit their mandates. Work in Progress The pipeline moves into 'Work in Progress' once delivery of an asset commences. We currently have $18b of Work in Progress which puts us on track to meet our more than $8b completion target in FY24. Maintaining this level of completions is likely to require Work in Progress of more than $20b. Resilient product and places Gateway cities are our future, and our portfolio of projects has improved resilience and liveability in mind. We believe well located and high quality product within amenity rich environments will endure. While most of the development pipeline is comprised of mixed use precincts, the key product categories are: • Apartments for sale c.$38b: affordable to luxury • Apartments for rent c.$28b: offering customers the opportunity to live where they want and rent like they own • Commercial c.$35b: CBD offices, transport hubs, innovation districts, life sciences and data centres • Communities c.$16b: key population growth corridors in Australia The evolving workplace The most significant COVID induced change across our real estate platform has been the evolution of the workplace. The working experience since the start of 2020 has demonstrated the capability, and in many cases, preference to partly work from home. The employee value proposition, heightened by a tight labour market, is becoming more important for employers to attract and retain the best talent. Employees increasingly prioritise a workplace that is well connected, human- centric, socially aware, environmentally proactive, and amenity rich with a focus on health and wellbeing. We believe that highly sustainable and digitally enabled workplaces in well connected locations, will remain in demand. Our focus is to create workplaces that facilitate relationships, collaboration and enhance organisational culture. Occupiers and investors are likely to pay a premium for this product. Funding the pipeline We aim to work our capital harder as development activity accelerates towards, and beyond, our target of more than $8b of annual completions. More investment partnerships are planned, facilitating greater capital efficiency to fund our share of the incremental Work in Progress. The proportions of recent commencements funded by investment partners are: • 1 Java Street, New York: 80% • Data Centre, Tokyo: 80% • 60 Guest Street, Boston: 75% • Certis Cisco Centre, Singapore: 51% Our expectation is that approximately $6b of invested capital is required to consistently fund our share of completions, compared with a current invested capital balance of $5.4b. These investment partner funding strategies complement an already capital efficient business model. Approximately 90 per cent of our development pipeline has been secured on capital efficient terms. It protects downside risks for both ourselves and our investment partners, while providing the flexibility to adjust production as market conditions vary. This unique feature of our development platform enables $2.8b of capital in land and infrastructure to control our $117b development pipeline.