Lendlease Group · ASX:LLC
Lendlease — Investor Day (October 2015)
65 slides from Lendlease's investor day presentation, Oct 15, 2015
Slide 1: Lend Lease Investor Day presentations
15 October 2015 For personal use only Lend Lease Investor Day presentations 15 October 2015 Attached are the presentations to be given today by Lend Lease senior executives at its Investor Day. The event will be webcast live via www.lendlease.com ENDS FOR FURTHER INFORMATION, PLEASE CONTACT: Investo
Slide 2: Lend Lease 2015 Investor Day
For personal use only Lend Lease 2015 Investor Day 15 October 2015
Slide 3: Agenda
2 Agenda 09:00 – 09:45 For personal use only Steve McCann - Group Chief Executive Officer and Managing Director Strategy update 09:45 – 10:45 Dan Labbad - CEO, International Operations International growth Q&A 10:45 – 11:15 Morning tea break 11:15 – 12:30 Bob McNamara - Group Chief Risk Officer Vika
Slide 4: Strategy update, International growth, Risk management, Closing, Appendices
3 For personal use only 1 Strategy update 2 International growth Risk management and capital 3 allocation 4 Closing and final Q&A 5 Appendices Image: International Towers Sydney (ITS) - Tower 2 Lobby
Slide 5: Indigenous engagement and reconciliation
LEND LEASE INVESTOR DAY 2015 4 Indigenous engagement and reconciliation For personal use only Lend Lease’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, sustainab
Slide 6: Strategy update
For personal use only Section 1 Strategy update Steve McCann Group Chief Executive Officer and Managing Director Illustration: 888 Collins Street, Victoria Harbour, Melbourne
Slide 7: Our strategic pathway
LEND LEASE INVESTOR DAY 2015 6 For personal use only Our strategic pathway Integrated DNA Trends model Safety Urban Funds Development regeneration growth Sustainability Ageing Diversity & Infrastructure Construction population inclusion Customer Investment Sustainability Technology focus Management
Slide 8: Moving from Restore Build Lead to Focus & Grow
LEND LEASE INVESTOR DAY 2015 7 Following successful execution of our 5 year ‘Restore Build Lead’ strategy we have moved to a new framework ‘Focus & Grow’ For personal use only Lead 2015+ Key Metrics Restore Build (2009 – 2011) (2012 – 2013) Safety LTIFR 3.1 to 2.9 LTIFR 2.7 to 2.3 LTIFR 2.2 Restruct
Slide 9: Focus
LEND LEASE INVESTOR DAY 2015 8 Focus Development1 Construction1 Investment Management1 For personal use only $44.9b pipeline $17.3b backlog $21.3b FUM 1 As at 30 June 2015 Strong platform established to deliver earnings visibility
Slide 10: Focus - Development
LEND LEASE INVESTOR DAY 2015 9 Focus - Development 2011 2015 For personal use only Pipeline • Strong growth in development pipeline to support future revenue growth Development end value $34.7b $44.9b • Established pipeline allows selective approach to future origination Residential pre-sales and co
Slide 11: Focus - Retirement Living
LEND LEASE INVESTOR DAY 2015 10 Focus - Retirement Living For personal use only Growth in units owned & managed 14,193 12,408 12,417 • Growth through acquisition with a focus on building quality and diversity of the portfolio • Lend Lease is the largest owner and operator of retirement villages in A
Slide 12: Focus - Construction
LEND LEASE INVESTOR DAY 2015 11 Focus - Construction For personal use only Growth in revenue backlog FY15 backlog by business and client $17.3b Services, 7% $16.2b Engineering, 14% $15.3b By business FY11 FY13 FY15 Building, 79% Preferred bidder on ~$7 billion of new work not recorded in backlog rev
Slide 13: Focus - Investment Management
LEND LEASE INVESTOR DAY 2015 12 Focus - Investment Management For personal use only Growth in FUM • Strong growth in FUM supported by global investor $21.3b demand for quality assets - $3 billion2 of future embedded CAGR of 18% FUM growth $15.0b • Investment Management platform supports capital $10.
Slide 14: The environment and what it means for Lend Lease
LEND LEASE INVESTOR DAY 2015 13 The environment and what it means for Lend Lease Trend Issue Lend Lease competitive advantage For personal use only • Record residential pre-sales of $5.2 billion1 underpinning cash flow over the next few years - ~45 per cent are due to settle before June 2017 • Led b
Slide 15: Leading portfolio of major urbanisation projects across multiple geographies
LEND LEASE INVESTOR DAY 2015 14 Leading portfolio of major urbanisation projects across multiple geographies For personal use only Our operations are centred around four regions. AUSTRALIA ASIA AMERICAS EUROPE Portfolio of 12 major urban regeneration projects delivering a ~10 year pipeline across re
Slide 16: Diversified development pipeline with more integrated projects
LEND LEASE INVESTOR DAY 2015 15 We have diversified our development pipeline with a significant increase in global integrated projects For personal use only An increased focus on integrated Long-term multi-stage integrated projects deliver urbanisation projects consistent multiple income streams, en
Slide 17: Key factors driving success of urbanisation strategy
LEND LEASE INVESTOR DAY 2015 16 The success of our urbanisation strategy is driven by 4 key factors For personal use only Factor Why is it important? Lend Lease competitive advantage • Deep and trusted global investor relationships Accelerates speed to Access to • Strong demand from global capital s
Slide 18: Barangaroo
LEND LEASE INVESTOR DAY 2015 17 Barangaroo Concrete Apron For personal use only Created in 1970s to accommodate bulk offloading for shipping containers Closed in 2003, renamed Barangaroo in 2006 and Lend Lease selected as master developer in 2009 Image: Barangaroo pre-development
Slide 19: Barangaroo
LEND LEASE INVESTOR DAY 2015 18 Barangaroo 490,000 sqm For personal use only Up to 90 new retail outlets Gross Floor Area New headland park and recreated foreshore with 6,600 sandstone blocks Australia’s first large scale 7.7 Hectares Carbon Neutral Mixed Use Development community Artist’s impressio
Slide 20: Broader business growth opportunities
LEND LEASE INVESTOR DAY 2015 19 Beyond urbanisation, we are also progressing broader business growth opportunities in line with our capabilities and market trends For personal use only • Significant track record in delivery of public sector healthcare. Opportunity to leverage Healthcare experience i
Slide 21: Established platform provides strong growth trajectory and earnings visibility
LEND LEASE INVESTOR DAY 2015 20 Established platform provides strong growth trajectory and earnings visibility For personal use only Development Construction Investment Management Forte, Melbourne Regents Place, London Setia City Mall, Malaysia • $5.2 billion1 of pre-sold • $17.3 billion constructio
Slide 22: International growth
For personal use only Section 2 International growth Dan Labbad Chief Executive Officer, International Operations Illustration: River South, Chicago
Slide 23: International development pipeline expansion
LEND LEASE INVESTOR DAY 2015 22 Our international development pipeline has continued to expand, with ~$8 billion of new major urban regeneration projects in 2015 For personal use only Americas Europe London Chicago Boston Milan San Francisco New York Beijing Tokyo Los Angeles Nashville Shanghai Mexi
Slide 24: Urbanisation to underpin our global growth strategy
LEND LEASE INVESTOR DAY 2015 23 Urbanisation to underpin our global growth strategy For personal use only GROWTH Urban population in 2014 Since 1990 ten mega-cities accounted for have now grown to 54% UP 34% SINCE 1960 28 MEGA CITIES ARE EXPECTED TO GROW TO 41 BY 2030 of the global population1 globa
Slide 25: Increased offshore presence in urban regeneration
LEND LEASE INVESTOR DAY 2015 24 Increased offshore presence in urban regeneration For personal use only Image: Trafalgar Place, Elephant & Castle Illustration: Paya Lebar Central, Singapore Illustration: Transport for London Building, The International Quarter Illustration: River South, Chicago
Slide 26: Elephant & Castle - project overview
LEND LEASE INVESTOR DAY 2015 25 Elephant & Castle - project overview For personal use only • In partnership with the London Borough of Southwark (LBS), a £2.0 billion regeneration program on 28 acres of land across 3 sites (Elephant Park, Trafalgar Place, and One The Elephant) in the centre of Eleph
Slide 27: Elephant & Castle - origination phase
LEND LEASE INVESTOR DAY 2015 26 Elephant & Castle - origination phase For personal use only • 1974 - Heygate Estate in Elephant & Castle, Central London completed housing over 3,000 tenants • 2002 - Elephant & Castle identified as a key area for growth in London and a framework for more jobs and hom
Slide 28: Elephant & Castle - key success factors
LEND LEASE INVESTOR DAY 2015 27 Elephant & Castle - key success factors For personal use only Origination • Complex long-term scheme in a densely populated part of Central London • Multiple stakeholders with differing objectives: − Stakeholder support and coordination key • Successfully worked throu
Slide 29: The International Quarter - project overview
LEND LEASE INVESTOR DAY 2015 28 The International Quarter - project overview For personal use only • Central pillar in the post Games regeneration of East London, located at the gateway to the Queen Elizabeth Olympic Park in Stratford • The project comprises 4 million square feet of Grade A office,
Slide 30: The International Quarter - origination phase
LEND LEASE INVESTOR DAY 2015 29 The International Quarter - origination phase For personal use only • Strong relationship formed with the Olympic Delivery Authority and London and Continental Railways during the successful delivery of the Athletes Village • Established a joint venture with London an
Slide 31: The International Quarter - key success factors
LEND LEASE INVESTOR DAY 2015 30 The International Quarter - key success factors For personal use only • Single architect to deliver the commercial buildings (key learning from Barangaroo) • Innovative energy network minimising the need for plant • Exclusion of basements reducing risk and increasing
Slide 32: Urban regeneration origination process
LEND LEASE INVESTOR DAY 2015 31 Urban regeneration origination process For personal use only Countries ranked on: Cities ranked on: Countries screened on: • Economic indicators City shortlist created on: • Demographic factors • Scale of economy Cities then tiered for • Urban regeneration • City popu
Slide 33: International origination
LEND LEASE INVESTOR DAY 2015 32 International origination For personal use only • Two new urban regeneration opportunities secured in Asia • 60% JV stake in the TRX Lifestyle Quarter, Kuala Lumpur ($2.8 billion end development value) comprising a retail centre of ~1.35 million square feet, 1,800 res
Slide 34: Paya Lebar Central - project overview
LEND LEASE INVESTOR DAY 2015 33 Paya Lebar Central - project overview For personal use only • Government land sale site in Paya Lebar Central released for tender in October 2014 • Lend Lease, in partnership with Abu Dhabi Investment Authority (ADIA), submitted the winning bid in March 2015 • Site ea
Slide 35: Paya Lebar Central - origination phase
LEND LEASE INVESTOR DAY 2015 34 Paya Lebar Central - origination phase For personal use only • Significant capital requirements to bid • Tight tender timeline • Mixed development project comprising 165,000 square metres of GFA across office, retail, and residential • Complex site attributes and tend
Slide 36: Paya Lebar Central - key success factors
LEND LEASE INVESTOR DAY 2015 35 Paya Lebar Central - key success factors For personal use only • Experience in delivery of complex developments • Integrated model and in-house construction capabilities meant design and planning work could be undertaken pre bid • Ability to provide capital solution •
Slide 37: Growing, geographically diversified urban regeneration projects
LEND LEASE INVESTOR DAY 2015 36 Growing and geographically diversified portfolio of urban regeneration projects For personal use only 2011 Urbanisation developments by region 2015 International, Australia, 77% 23% Australia, 45% $15.7b $32.8b International, 55% Key principles 1• Deep understanding o
Slide 38: Q&A - International growth
37 For personal use only Q&A International growth
Slide 39: Risk management and capital allocation
For personal use only Section 3 Risk management and capital allocation Bob McNamara Vikas Kaul Group Chief Risk Officer Group Head of Research Tony Lombardo Group Chief Financial Officer Illustration: Paya Lebar Central, Singapore
Slide 40: Enterprise risk management framework
LEND LEASE INVESTOR DAY 2015 39 Enterprise risk management framework For personal use only • The Lend Lease Enterprise Risk Management Framework identifies, evaluates, addresses, Key monitors, quantifies, and reports material risks objectives Identification to Lend Lease Management and the Risk Mana
Slide 41: Core components of risk management
LEND LEASE INVESTOR DAY 2015 40 Core components of risk management For personal use only Development Construction Investment Management • Robust investment • Disciplined approach to • Strong focus on maintaining committee process underwriting new work best-in-class governance structure • Portfolio d
Slide 42: Business specific risks and how we are addressing them
LEND LEASE INVESTOR DAY 2015 41 Business specific risks and how we are addressing them For personal use only Risk What we mean Lend Lease response • Strong diversification across product location and buyer profile • Projects predominately in gateway cities that offer higher levels of resilience in d
Slide 43: Group Research: History and mandate
LEND LEASE INVESTOR DAY 2015 42 Group Research: History and mandate For personal use only History • Group Research function was established in April 2011 with a small team of 6 team members • It was created to form forward looking views to enable informed decision-making • It now covers every market
Slide 44: Research coverage
LEND LEASE INVESTOR DAY 2015 43 Research coverage Macro views across Lend Lease footprint markets and sectors For personal use only Markets Sectors Level of coverage Economics ECON Australia MACRO VIEWS Country level AUS Capital flows New Zealand Market / city level CONST Building construction AMR U
Slide 45: Diverse team of research professionals
LEND LEASE INVESTOR DAY 2015 44 Diverse team of 11 research professionals With a cumulative 100 man-years of property and infrastructure research experience For personal use only Team profile by specialisation Team profile by years of research experience Economics Residential Retail 0-5 Years Office
Slide 46: Our suite of research offer
LEND LEASE INVESTOR DAY 2015 45 Our suite of research offer Designed to decipher how the future might look like and what it means for Lend Lease For personal use only Core research Special assignments Thematic pieces House views Bespoke strategic pieces Analysis of contemporary issues on our footpri
Slide 47: How do we influence business outcomes?
LEND LEASE INVESTOR DAY 2015 46 How do we influence business outcomes? By identifying opportunities and market risks that inform our strategic choices For personal use only Opportunity identification Market risk identification 1 2 3 Growth Portfolio Efficient strategy management capital allocation
Slide 48: Australia leading indicators - economic growth
Momentum Outlook Weighted avg. Australia Leading indicators - Economic growth For personal use only Indicator Measure 10yr avg 3yr avg Year ago Prev qtr Latest qtr Momentum Outlook Consumer sentiment Consumer confidence (neutral = 100) 102.4 100.2 94.9 99.4 95.7 Consumption Housing affordability Mor
Slide 49: United States leading indicators - economic growth
Momentum Outlook Weighted avg. United States of America Leading indicators - Economic growth For personal use only Indicator Measure 10yr avg 3yr avg Year ago Prev qtr Latest qtr Momentum Outlook Consumer sentiment Consumer confidence (neutral = 100) 75.2 77.6 78.4 91.4 97.8 Consumption Housing affo
Slide 50: Case study: Chinese development opportunity
LEND LEASE INVESTOR DAY 2015 49 Case study: Chinese development opportunity Advising Global and Regional Investment Committees on new acquisitions For personal use only • Our Asian business was looking at a retail development opportunity in Shanghai, China in early 2014 • The bid team had a very com
Slide 51: Where our capital sits today and our approach
LEND LEASE INVESTOR DAY 2015 50 Where our capital sits today and our approach For personal use only Infrastructure Development Retirement Investment Management Development Urban regen Qld, 17% WA, 9% Europe, 5% Communities, Australia, 66% offshore, 24% 22% Americas, 28% Asia, 37% NZ, 13% Vic, 31% $1
Slide 52: Development capital
LEND LEASE INVESTOR DAY 2015 51 Development capital For personal use only Total development inventories $b1 • Significant increase in production capital since FY12 - delivering strong growth in the $1.9b $2.3b $2.3b $2.4b $3.2b number of apartment projects and 100% commercial towers at major urban r
Slide 53: Indicative net cash flow from major projects
LEND LEASE INVESTOR DAY 2015 52 Indicative net cash flow from major projects In-delivery / conversion at 30 June 2015 For personal use only Overview FY15 FY16 FY17 FY18 Net cash proceeds Cash Cash Cash Cash Communities Assuming >2,000 annual lot settlements Positive Positive Positive Positive Net ca
Slide 54: Progress at Victoria Harbour and Elephant & Castle on new project launches
LEND LEASE INVESTOR DAY 2015 53 Further progress made at Victoria Harbour and Elephant & Castle on new project launches For personal use only Pre-sold Pre-sold Pre-sold and in delivery / conversion %1 revenue $m1 FY15 FY16 FY17 FY18 FY19 • 2 apartment buildings: Anadara and Alexander Barangaroo Sout
Slide 55: Apartment settlement outlook - low default risk
LEND LEASE INVESTOR DAY 2015 54 Apartment settlement outlook - low default risk For personal use only Pre-sales (by value, as at 30 June 2015)1 By location By customer location China buyer run-off profile Brisbane, Other FY16, 14% 9% FY19, 26% London, offshore, 32% 25% Local, 55% Sydney, FY17, 17% 3
Slide 56: PLLACes
LEND LEASE INVESTOR DAY 2015 55 PLLACes For personal use only • In FY15 Lend Lease completed two PLLACes (Pre-sold Lend Lease Apartment Cash flows) transactions: − Forward sale of apartment pre-sales to third party investors (comprising Lend Lease relationship banks and institutional fixed income in
Slide 57: Pre-sales book provides strong visibility on profit and cash
LEND LEASE INVESTOR DAY 2015 56 Our residential and commercial pre-sales book provides strong visibility on profit and cash For personal use only $5.2 billion1 pre-sold residential revenue ~$3.0 billion Barangaroo contracted Other major cash opportunities - indicative cash receipt profile commercial
Slide 58: Q&A - Risk management and capital allocation
57 For personal use only Q&A Risk management and capital allocation
Slide 59: Closing and final Q&A
For personal use only Section 4 Closing and final Q&A Steve McCann Group Chief Executive Officer and Managing Director Illustration: One The Elephant, Elephant & Castle, London
Slide 60: Outlook
LEND LEASE INVESTOR DAY 2015 59 Outlook For personal use only • Lend Lease has a consistent and proven strategy with embedded growth in our pipeline • Business model is both resilient and diversified, with significant barriers to entry • Unrivalled access to third party capital to support our urbani
Slide 61: Q&A
For personal use only Q&A 60
Slide 62: Appendices
For personal use only Section 5 Appendices Image: Artrworks, Elephant & Castle, London
Slide 63: Group overview by segment
LEND LEASE INVESTOR DAY 2015 62 Group overview by segment Development For personal use only Construction Investment Management Property Infrastructure FY15 FY14 FY15 FY14 FY15 FY14 FY15 FY14 Revenue 1,927.0 2,384.5 204.2 259.2 10,936.9 11,016.0 212.2 294.6 EBITDA 502.1 862.5 131.0 22.6 279.0 271.5 2
Slide 64: Depth of management experience
LEND LEASE INVESTOR DAY 2015 63 Depth of management experience For personal use only Steve McCann Dan Labbad Group Chief Executive Officer and Managing Director Chief Executive Officer, International Operations • Joined Lend Lease in 2005 as CEO Investment Management. • Joined Lend Lease in 1997. Fr
Slide 65: Important notice
LEND LEASE INVESTOR DAY 2015 64 Important notice For personal use only This presentation has been prepared in good faith, but no representation or warranty, express or implied, is made as to the accuracy, adequacy or reliability of any statements, estimates, opinions or other information contained i