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Andrew Nieland: Thank you for joining the Lendlease 2026 Full Year Results Presentation. I'm Andrew Nieland, Joint Interim CEO and Group CFO of Lendlease. With me today is Penny Ransom, Joint Interim CEO and CEO of Investment Management. Sitting here today in Sydney, I acknowledge the traditional custodians of the land on which we are meeting and pay my respects to elders past and present. As an investor, developer, builder and manager of assets across Australia, we also acknowledge the traditional owners of the many lands on which Lendlease operates and value their continuing custodianship of country. Today, I will provide an overview of our FY '26 results, and Penny will present the operational performance of the business, covering investments, development and construction or IDC. I will then take you through the group's financial performance and FY '27 outlook before we open up for questions. Starting on Slide 4. FY '26 was another year of disciplined execution against our strategy. The group continued to simplify its operations, recycle capital, build growth and momentum across IDC and reduce its overheads. IDC earnings of $0.337 per security were delivered for the year at the top end of guidance. Notwithstanding the performance of IDC, the group result was impacted by segment losses in the Capital Release Unit, or CRU, as we continue to execute our strategy to restore Lendlease to a more profitable and sustainable business. During FY '26, $1.2 billion of transactions in CRU were contracted. These include the sale of TRX retail and office interests, which are now complete and the announced divestment of our remaining interest in Keyton Retirement Living. The remaining invested capital balance of CRU post these transactions is $2.5 billion with processes continuing to advance. Post balance date, a U.K. development joint venture with the Crown Estate known as the Impact Partnership joint venture was established with 3 of 6 projects transferred. Operationally, Construction produced a very strong result with the business delivering an EBITDA margin of 4.3%, which is above the target range. This was supported by improved project performance and strong revenue growth, together with a disciplined approach to executing new work. We also continue to secure new opportunities across the development and construction platforms and delivered strong outcomes for our investment partners. On costs, savings initiatives saw net overheads for the group reduced by 22%, while we continue to pursue further savings in FY '27. Balance sheet strengthening, together with driving growth and operational performance remains a key priority. Turning now to Slide 5, our full year financial performance. IDC segment EBITDA was $542 million, reflecting a broadly stable investments result and a strong recovery in Construction's operating performance. As anticipated, development EBITDA was subdued, reflecting limited completions in the year. The group recorded a statutory loss after tax of $749 million. This included $182 million of noncash negative investment property revaluations and impairments. Group operating profit after tax was a loss of $567 million, comprising a positive $233 million contribution from IDC and a loss of $800 million from CRU driven by nonrecurring charges and operating costs. This is obviously a disappointing outcome, which I will cover later in the presentation. Reported gearing was 30.3% at year-end. Lendlease maintains strong financial flexibility with committed and available liquidity of approximately $4 billion to support business operations and orderly recycling of capital. The group's investment-grade credit is stable with both rating agencies confirming their position in recent months. The full year distribution was $0.157 per security. I'd now like to hand over to Penny, who will cover the group's operational performance.
Penelope Ransom: Thank you, Andrew. Starting with the Investments segment on Slide 7. In Investment remains focused on delivering strong outcomes for our partners throughout the year centered on performance, liquidity and growth. The Australian Prime Property Funds, commercial and industrial continue to outperform their benchmarks, including over 3-, 5- and 10-year periods, while the Lendlease Global Commercial REIT delivered a total annual return of more than 20% and the divestment of our first Japanese data center returned an IRR of more than 40%. We facilitated approximately $7 billion of liquidity on behalf of our investment partners with nearly 60% of this activity driven by the successful completion and monetization of development strategies following stabilization. Key strategies included our U.K. multifamily, Japan data center and PLQ Singapore retail Mall development partnerships. Further to our recent announcement, we also exchanged contracts for the sale of the APPF retail assets within 8 months of the fund's liquidity window closing. This reflects a disciplined focus on returning capital to investors while delivering sale outcomes above book value alongside continued above benchmark fund performance. Overall, the number of transactions increased across the platform, particularly in Asia, which included the partial sale of TRX management rights and the Lendlease Global Commercial REIT successful acquisition of the PLQ Retail Mall, enhancing the REIT's portfolio composition and performance. We also continue to leverage our strength across the Asia Pacific region through the establishment of 2 new partnerships to support future growth. The first introduced a new investor to our platform, Malaysia's largest public sector pension fund through a mandate focused on opportunities across Malaysia and Australia with the potential to invest across multiple sectors. The second partnership builds upon a long-standing wholesale investor relationship. And through this new mandate, we intend to pursue up to $1.1 billion of modernization opportunities across the office and logistics sectors in key Japanese cities. Importantly, this partnership reflects a broader trend that we're seeing across our investor base with capital partners seeking to deepen relationships in markets where managers have specialist expertise, local capabilities and a demonstrated track record of performance. Both opportunities see Lendlease participating as a co-investor at 5% or less maintaining alignment with our investment partners and supporting stronger returns for security holders. Striking this right balance was also evident this year from the recycling of overweight co-investment positions to improve segment returns. Turning to development on Slide 8. A sharp focus on restocking our Australian development pipeline to support future earnings saw high-quality projects added to our pipeline, which grew to $13.2 billion. Complementing this pipeline is the Impact partnership joint venture with the Crown Estate, which includes the first transfer of assets into the joint venture, along with the Comcentre joint venture in Singapore. Major completions in FY '26 included Victoria Cross Tower in North Sydney and West Tower at Melbourne Quarter. Looking ahead, there is a strong completion profile for FY '27 with $1.2 billion of Lendlease gross proceeds to settle across One Circular Quay and Victoria Harbour with associated project margins supporting FY '27 development earnings. Major projects secured in the year were Sydney's Metro Hunter Street West Overstation development with an end value of approximately $2.2 billion and the premium residential partnership at 175 Liverpool Street in Sydney, which has an end value of more than $2.5 billion. We progressed significant origination initiatives during the year, including in-portfolio conversion opportunities at Rozelle Bay in Sydney and the RNA Showgrounds Brisbane. We were also awarded preferred partner status for the development of the Visy site on the Brisbane South Riverfront. Additionally, we have leveraged our development capabilities to act as master developer for seed capital on the Northern Freight precinct in Victoria, securing an option over industrial, logistics and data center land post-rezoning, which is expected to have an end value of more than $4 billion. We will continue to maintain a disciplined approach as we seek to further restock our Australian pipeline with opportunities aligned with our capital allocation framework and return hurdles above the group's cost of equity. Our development model continues to evolve with a strong shift to upfront capital partnering and the continued use of capital-efficient land structures to drive improved portfolio returns and lower capital intensity. Approximately 89% of our work in progress is structured as either joint ventures or fund-throughs, reducing the capital requirements of the Lendlease balance sheet. Our medium-term earnings from FY '27 through to FY '29 are supported by a strong completion profile of more than $8 billion and new earnings streams are anticipated from the Impact partnership joint venture as master planning has progressed and land lots are sold or packaged for vertical development. Importantly, we have high-quality projects secured or controlled within our portfolio that provide future monetization opportunities from early capital partnering. Moving now to Construction on Slide 9. The Construction segment delivered a strong operating performance in FY '26 with growth in revenue and EBITDA margin above the target range and a record level of new work secured. Revenue recorded in the year was $3.9 billion, up 29% on FY '25, with major projects ramping up, including the New Melton Hospital and progress across defense and data center projects. New Work secured was $6.4 billion, up 28% on FY '25 and was achieved through a disciplined approach to origination and includes fee-based work, which balances the risk profile of our backlog. Backlog revenue for the year was $8.4 billion, up 42%. Growth was led by new work secured, adding to existing social infrastructure, defense and data center projects. More than 1/3 of backlog revenue is now fee-based, which is typically less impacted by escalation and supply chain pressures due to the reimbursable nature of the contract. Fixed price work yields higher returns and remains an attractive source of earnings. The preferred work book was $5.2 billion with a further $13 billion of active bids underway across defense, transport, social infrastructure and data center projects to support the future pipeline. The business continues to build a national portfolio that considers regional operating environments, a combination of government and private work, diversity in sectors and clients and a balance in fee versus fixed price work. I will now hand back to Andrew to talk through the financials and outlook for FY '27.
Andrew Nieland: Thank you, Penny. Starting with the group's financial performance on Slide 11. IDC segment operating EBITDA was $542 million for the year. The result reflected a strong recovery and operating performance in construction, another year of material transaction earnings from investments with a broadly stable underlying performance and as anticipated, a period of low completions in development. CRU recorded an EBITDA loss of $500 million, including $196m of operating costs. I'll speak to the segment drivers in more detail on the following slides. Corporate costs of $221 million included an underlying cost base of $107 million and $114 million of additional charges, including restructuring costs relating to international operations as well as finance and ICT transformation initiatives. Operating EBITDA was a loss of $179 million. Depreciation and amortization was lower at $72 million, reflecting the roll-off of IT amortization costs and lower depreciation associated with exited tenancies. Lower net finance costs of $194 million benefited from the issuance of hybrid securities, circa $30 million of higher interest income and a lower average cost of debt. Despite recording an operating loss, the group incurred a material tax expense primarily due to the impairment of deferred tax assets and the nonrecognition of tax benefits relating to FY '26 losses incurred in the U.S. and U.K. Statutory profit was impacted by negative asset movements, predominantly in the CRU portfolio. Investment valuations were lower year-on-year, although movements were positive in the second half of FY '26. Moving to Slide 12 and the IDC segments. In investments, strong liquidity outcomes were delivered for investors throughout the year. A net reduction in FUM of $5 billion impacted fee revenues and margins with management EBITDA reducing to $74 million. Co-investment EBITDA improved, aided by higher earnings from the LREIT. Notably, divestment of lower ROIC co-investment positions in FY '26 enhances the capital efficiency of our portfolio and supports a stronger return profile going forward. Total EBITDA was $297 million, supported by $136 million of other EBITDA derived mostly from transaction earnings. This included the sale of TRX investment management rights and the divestment of PLQ retail assets. Management EBITDA was 35.9% compared with 40.6% in FY '25 due to a lower FUM balance and fees. Inclusive of transaction earnings, total segment margin was 41.1% -- in development, EBITDA was $78 million, reflecting lower anticipated completion scheduled in FY '26, contributing to a development ROIC of 3%. Earnings included development gains on landholdings and completed assets, West Tower at Melbourne Quarter and Exhibition Place in Brisbane and further apartment settlements at One Sydney Harbour. In Construction, revenue increased from $3 billion in the prior year to $3.9 billion as the business continues to grow in scale. EBITDA increased materially to $167 million with challenged construction projects rolling off in FY '25. A strong operational performance was recorded with an EBITDA margin of 4.3%, which is above the target range. Turning to Slide 13 and CRU. The primary purpose of the Capital Release Unit is to accelerate capital recycling. As I mentioned earlier, there were $1.2 billion of transactions contracted in FY '26 with multiple processes underway for the remaining $2.5 billion of CRU invested capital. Committed joint venture projects within CRU are now substantially complete, which greatly reduces capital requirements from the segment going forward. The focus on completed assets is to improve leasing and operational performance ahead of future divestment and to advance sales of completed inventory. CRU's EBITDA loss of $500 million was led by noncash impairments and other charges, most notably $340 million of asset impairments. These included the impairment of Gilead Communities land in Australia and MSG North in Italy. Provisions of $92 million were taken in relation to retained international construction risks. This was more than offset by provision reversals and insurance recoveries in other EBITDA. Underlying operating costs of $196 million for the year are expected to reduce as CRU winds down. Turning to costs on Slide 14. FY '26 saw further productivity improvements as the group becomes a more focused organization. Net overheads reduced from $466 million in FY '25 to $363 million in FY '26, a reduction of more than $100 million or 22%. The largest contributor to the improvement was an $84 million reduction in net employee overhead. With the full benefit of cost actions still to be realized, we have entered FY '27 with an exit run rate for net overheads of circa $350 million, in line with our prior target. Further productivity and cost-saving initiatives will also be pursued across FY '27. These include targeted cost reductions in CRU ahead of asset sales in order to preserve long-term value, along with further cost initiatives to improve group operating performance. As previously flagged, CRU segment overhead is anticipated to unwind as transactions complete. Moving now to net debt on Slide 15. The slide summarizes the key cash flow movements across IDC and CRU. In investments, movements reflected asset divestments, fees and distributions, partially offset by acquisitions such as APPF industrial units and operating costs. In development, there was a net cash outflow of $1.1 billion, led by net Australian production spend and land payments at Victoria Harbour, 175 Liverpool Street and Victoria Cross. This also includes the final land payment at One Sydney Harbour. Construction working capital increased, reflecting higher production and the growth in activity across the work book. Within CRU, development production and operating spend included approximately $600 million of production spend to progress development projects and other operating costs, partially offset by $500 million of capital recycling, settlements and other receipts. CRU construction and other liabilities included operating costs, payments relating to international construction, U.K. building remediation and the runoff of engineering provisions as projects completed. We have entered FY '27 with an elevated net debt position due to delays in capital recycling and a period of high capital expenditure across major Australian and international development projects. However, peak development spend is now largely behind us. With further cash inflows weighted in the second half from presold apartment settlements, there is a clearer path to lower gearing in FY '27, although note that gearing is anticipated to remain elevated at the half. Given this backdrop, a reduction in net debt for FY '27 is expected from contracted transactions at balance date across CRU and IDC of $1.3 billion, of which circa $500 million has already settled and further CRU and IDC transactions to be announced in FY '27. Turning to group net debt and liquidity on Slide 16. At FY '26, underlying gearing was 37.7%, which excludes the benefit of hybrid securities issued in the year. Taking into account the $1.3 billion of contracted transactions discussed on the previous slide, pro forma underlying gearing was 30.2% -- any additional capital recycling initiatives across CRU and IDC are expected to primarily be directed to further net debt reduction. As gearing remained elevated throughout the year, the repurchase of securities was not undertaken. Until gearing is reduced, this will continue to be the case. The group continues to maintain strong balance sheet flexibility with $4 billion of available and committed liquidity to support business operations and the orderly execution of our capital recycling program. In May of this year, $600 million of U.S. dollar bonds were redeemed. Upcoming maturities in FY '27 are expected to be funded with existing facilities and further capital recycling proceeds. Lendlease will continue to prioritize maintaining investment-grade credit ratings with Moody's and Fitch issuing credit opinions in May and July of this year, respectively. Slide 17 sets out an important transition to Lendlease's capital model across its development and investment segments. Actions undertaken across our business should see capital released from development investments and within CRU. Capital is expected to be unlocked as major development projects complete or near completion. This includes JV assets within CRU that are substantially complete and have been stabilized for sale. We will continue to recycle a further $2.5 billion of invested capital from CRU and divest overweight positions within our Investment segment portfolio, releasing further capital. Our new development model supports greater capital productivity with a focus on upfront capital partnering. Likewise, we will continue to target a 5% to 10% average holding across our co-investment portfolio, and we'll seek to divest further overweight positions to release capital. Finally, we are continuing to grow our Australian construction operations, which is expected to see our working capital benefit increase. These factors will help support a return to more sustainable gearing levels and higher returns on securityholder capital. Moving now to Slide 19 and the FY '27 financial outlook. Lendlease remains focused on growing and improving the performance of the IDC segments while balancing value realization and speed of execution within CRU. IDC earnings per security of $0.37 to $0.41 is anticipated in FY '27, an improvement on FY '26, reflecting circa 16% EPS growth at the midpoint of the range. In investments, lower FUM from divestment activities is expected to reduce income in FY '27, together with the moderation of large transactional profits that were achieved in prior years. Partially offsetting these impacts is the expected deployment of new strategies and mandates throughout the year. Looking ahead, we remain focused on deepening relationships with our investment partners by providing compelling investment opportunities that leverage our specialist expertise, local capabilities and access to attractive market opportunities. In Development, a strong earnings recovery is expected from the settlement of presold apartments at both One Circular Quay and Victoria Harbour with circa $1.2 billion of Lendlease presales achieved to date that have been embedded -- that have embedded development profits. These profits are likely to be weighted to early in the second half of the financial year given settlement timing. Our Impact partnership joint venture in the U.K. is now operational with targeted second phase asset sales expected to contribute additional profits. And in construction, continued growth in revenue is anticipated, supported by a strong backlog and preferred work position. The business continues to target an EBITDA margin of 3% to 4% through the cycle. Group net finance costs allocated to both IDC and CRU are expected to remain elevated due to a higher opening net debt balance with development cash inflows anticipated to be weighted to the second half. Consistent with prior disclosure, no specific FY '27 earnings guidance has been provided for CRU. We remain focused on progressing capital recycling while accelerating CRU cost-saving initiatives. In closing, the group is entering FY '27 with improved operating momentum in IDC, strong liquidity to support its operations and ongoing priorities to delever the balance sheet, drive growth and improve operational performance. Lendlease's depth of capability across the real estate spectrum provides us with a strong competitive position that supports a positive outlook for the group. We will remain disciplined with our capital allocation decisions and focused on creating long-term value and sustainable returns for our security holders. We are pleased to welcome and look forward to working with incoming Group CEO, Nick O'Neil, who commences in the role next week to drive Lendlease and its strategy forward. Finally, we would like to acknowledge the hard work of all our Lendlease people and thank them for their ongoing commitment as we continue to execute the group strategy. We will now open the line for analyst questions.
Operator: [Operator Instructions] Your first question comes from David Pobucky with Macquarie.
David Pobucky: Earnings guidance for...
Andrew Nieland: Sorry, David, we're struggling to hear you. Can you maybe try speaking up?
David Pobucky: Is this better?
Andrew Nieland: That's better. Apologies for that.
David Pobucky: Just the first question on FY '27 IDC earnings guidance. I know you provided a little bit of color on that already. But if you could just talk to the guidance range of $0.37 to $0.41 and the 2 bookends there, please?
Andrew Nieland: So in terms of the bookends and what ends at the lower compared to the upper range, that comes down to investments, how we go in terms of growing that pipeline. In terms of development, it really relates to progress on continuing sales at One Circular Quay and Victoria Harbour and separately those next year and construction its execution and then more broadly, just where interest cost lands with the capital recycling trajectory.
David Pobucky: And on corporate costs, there were $114 million of additional restructuring charges this year. Are there further charges expected to be incurred in FY '27?
Andrew Nieland: Potentially, that comes down to our ongoing restructuring initiatives to reduce cost out. So we look at those each year as to how we can drive those costs down in the group.
David Pobucky: And just on capital recycling, I think there's $2.5 billion of capital still to recycle. If you could provide a little bit of color on the multiple processes currently underway? And what are some of the biggest hurdles that you might face in terms of achieving the next wave of those asset sales?
Andrew Nieland: Sure. So if we look at the breakdown of that $2.5 billion. There's about $600 million, which is in joint venture projects, which have recently completed. So we're focused on stabilizing those projects and working with joint venture partners to realize value out of those. The $1.7 billion in international land and inventory, we've given a breakdown within the appendix of what particular countries those are in, and there's multiple processes underway. That's a mix of projects we are working with joint venture partners on value realization. They're in a variety of different markets, some of which are in recovery, and we're looking at how we move those processes through as those markets recover. And in terms of balance inventory, we're working that through in terms of condo sales in the U.S., for example.
David Pobucky: Yes. And just the last question for me in terms of how that flows through to gearing over the next 12 months. Pro forma is still at 30%, still kind of well above your 15% target. So if you can just help us with how you're thinking about bridging that gap to 15% and the time frame that investors should be assuming?
Andrew Nieland: Yes. So I guess a few comments. We commented in the presentation. We're coming off the back of a very high peak CapEx cycle with production spend going into those 2 projects offshore, along with in development in Australia, projects such as One Circular Quay and Victoria Cross. As we move into FY '27, that CapEx profile really shifts. We've got settlements coming through from One Sydney Harbour and Victoria -- sorry, One Circular Quay and Victoria Harbour. So broadly, the group moves into a more neutral cash profile. In terms of deleveraging pathways and the levers we have, obviously, you've highlighted CRU also within investments and development, we're looking at circa $1 billion to $1.5 billion of capital that can be recycled. I think you've seen us be quite successful over the last 12 months within those segments in reducing capital, and we'll continue to look at that, along with improved working capital and operating performance as we reduce cost base. So we're not really looking at one with CRU on that deleveraging path. There's multiple levers there that we're pursuing.
Operator: Your next question comes from Richard Jones with JPMorgan.
Richard Jones: Just interested in the progress on One Circular key. It's obviously 79% presale is what you're calling out. most of the high-end stuff is still to sell. And I assume that's going to be where most of the margin is. So just interested, one, I guess, on the progress of the high -- the penthouses and sub-penthouses, how the sale process is going and how you're thinking about earnings recognition, whether you hold back margin in your assumptions? Or yes, maybe just some color around how you think about that in your guidance and progress on those remaining sales...
Andrew Nieland: I might ask Penny just to make a few comments on the project progress, and I can cover the rest.
Penelope Ransom: Yes, thanks. As you said, Richard, we're quite a way through sort of over 80% of the way through there. What we're certainly seeing in the market at the moment is still very strong interest. It's fair to say with the uncertainty that is in the market, buyers are taking more time to consider their transactions. But what that also brings is a real focus on quality. What we've produced there is a very unique product. And what we're doing is making sure we're working through with those that are interested. You need to have patience, but we think the rewards will come from that. So the undersupply in the market is generally going to be helping us, especially for that kind of product. As it relates to any sort of guidance.
Andrew Nieland: Maybe I'll comment on the guidance part. I would say a large portion of our earnings from settlements is secured in FY '27. There is a residual to be sold and settled, which is where you might get some variance within that guidance range, but I wouldn't characterize it as the majority of the margin being in the unsold stock. That's not the case.
Richard Jones: Okay. And then just -- you touched on the potential realizations within CRU. Can you touch on within the investment business, a bit more color around sort of the -- I think you said $1.2 billion, I think, was a number around potential realizations within the invested capital you have in that business, which I think is about $2.5 billion.
Andrew Nieland: Yes. I called out $1 billion to $1.5 billion across investments and development. So it did include projects like Victoria Cross, which has been in our development segment. I think in terms of the investments book, we've called it out previously, positions where we have a high co-invest percentage, and we've got an aligned co-investment partner who is looking to also seek liquidity would be where we're looking within that portfolio to rebalance. You've seen us do that recently with the build-to-rent portfolio in the U.K., where you had some high-quality assets, which had stabilized aligned with a joint venture partner who wanted to exit at that point, and we did so, which releases capital back into the group and helps us drive ROIC further and stabilize for our growth. So that's an example I'd point to. There are others across the portfolio.
Penelope Ransom: Yes. And I think importantly, we're also in all of these partnerships aligned with other third-party capital as well, and we will look at going through market processes. It does depend what comes back from the market process and weighing up the recycling against the realization of value.
Richard Jones: Okay. One final question, if you don't mind. Just can you talk about how you price data center construction projects? Are they fee or fixed price?
Andrew Nieland: It depends on the clients as to how they are approaching things. Often our contracting is done in a 2-stage model, which allows us to work with those partners early upfront, progress design to ensure they get the right solution. So that's the kind of model that we're seeing more clients want to work with us on and for us is a very good model, and that then would lead to a fixed price once we progress that design and got to a level of procurement in order to be able to deliver on a good risk-adjusted basis.
Operator: Your next question comes from Simon Chan with Morgan Stanley.
Simon Chan: I just want to circle back on gearing. If I take into account all the stuff that you've contracted and not yet settled, your pro forma gearing is 30.2%, right, which is as per your disclosure today. At one point in time, i.e., 6 months ago, you were aiming for gearing today to be 15%. Can you just explain to me the gap there between the 30%, even if I take into account all the stuff that has spent into F'27 and 15%, like which -- what's the reason for that large gap? What asset sales have been...
Andrew Nieland: Thanks for the call out, Simon. I would say the gap is really driven by transaction timing and the rate of being able to work through those CRU transactions. So that's broadly the comment. So that's the reason behind it.
Simon Chan: Which specific transactions?
Andrew Nieland: I don't really want to get into specifics, Simon. We continue to progress those transactions across the portfolio. I don't think we really want to be calling out specifics.
Simon Chan: Okay. Okay. Fair enough. Can we talk a little bit about the Comcentre and also Darling Points. The target completion date seems to have been moved back to FY '29. What's the reason for that?
Andrew Nieland: Yes. At Comcentre, there have been some in-ground delays. We're working with a third-party contractor there that's pushed out a few months, and that has pushed the completion out into FY '29. One Darling Point, we're working through presales with our JV partner there. It is trading well relative to comparable product in the area. And as we build those up, we'll look to launch those, but that has moved from '28 into '29.
Simon Chan: Has this 1-year delay impacted margins or anything like that?
Andrew Nieland: No.
Penelope Ransom: I'd just add, if anything, both Comcentre and One Darling Point are both product in their markets, which will only benefit, we think, from the market conditions that we've got at the moment in Singapore, the office market conditions are getting more and more favorable from a demand-supply perspective. And similarly, here at the moment in Australia and in Sydney, in particular, we think that will, if anything, enhance the returns that we can get from those assets.
Simon Chan: Cool. And can you just remind us what the timing is for the remaining 2 APPF funds in relation to liquidity?
Penelope Ransom: Yes. So the ACFI and C liquidity windows are coming up in November. The windows that occur every 7 years. We have recently amended the liquidity provisions of both those funds to move from a 7-yearly window to more regular capped windows post this window, but we will go through these windows first.
Simon Chan: Right. So what happens in November? Is November the date when you will have -- when you decide what's going on? Or is that the date when, I guess, the investors need to hand the form -- what's the milestones?
Penelope Ransom: Yes, it's the latter. So the November date is the date on which the investors can decide whether they want to participate in that liquidity window. That liquidity window has a requirement to meet any liquidity redemption requests over a 2-year period. So it's just a line in the sand of which those investors can nominate whether they want to participate in a redemption of their units in the following year -- ensuing 2-year period. Depending on the level of interest there with the investors for redemption requests, we'll then work through those investors to come up with proposed strategies to meet those requests, reflecting the environment that we're in at the moment.
Operator: Your next question comes from Suraj Nebhani with Citi.
Suraj Nebhani: A couple of quick questions from me. So firstly, on the construction business raise, the implied second half margin looks like it was 5%, 4.9% to be precise. Can you just clarify the outlook into FY '27? That's obviously a pretty strong number?
Andrew Nieland: Yes, it's a strong number. It reflects some really good work by our project teams as they've closed out projects in the book this year. Looking forward, you've seen construction grow quite well this last 12 months. It's heading into FY '27 with the largest revenue backlog it's had, I think, quite some time as long as I can remember of $8.4 billion. So in terms of revenue outlook, you could expect that to be circa 4.5% mark. We continue to target 3% to 4% as the target range through the cycle.
Suraj Nebhani: Got it. And maybe one question, Andrew, on the CRU side. I know there's no guidance, but does tend to swing things around a lot. What are you budgeting firstly in terms of CRU overheads heading into next year? And then maybe other key items to call out? Or if you can help us with any sort of guide there?
Andrew Nieland: Sure. Look, we don't provide guidance on CRU. But to, I guess, help you along there, we've given our starting point for FY '26, which is circa $190-odd million of sort of an underlying cost base. We're looking to take costs out of that ahead of asset sales, and then that will wind down with asset sales. In terms of other outflows, we called that the majority of CapEx spend is complete. There's circa a couple of hundred million to go there would be the other thing I'd flag. But consistent with our comments, we don't provide guidance on more specifics in that segment as it's dependent upon the rate of those capital transactions in the...
Suraj Nebhani: Just on the corporate costs, trying to understand that jump that we're seeing versus last year. Is that just a restructuring charge that was flagged? Or is there something else happening there in CRU?
Andrew Nieland: Not something else happening. It largely relates to finance and ICT transformation initiatives, which we've called out previously, that would be just under half of that and then other restructuring expenses to break contracts and accelerate cost out.
Suraj Nebhani: And just one final one on the co-investment side. I noticed that the co-investment is now 11%. I had it at a slightly lower number previously. What's the strategy going forward? It sounds like some of the newer funds, you guys are more like 5% equity stakes. I'm just wondering what's driving that 11% number that Ly share in FUM? And how should we think about that going forward?
Penelope Ransom: Yes, that 11% number is just the average of our funds co-investment rather than across all our co-investments across the entire business, probably the best comment there. We definitely are looking to continue to reduce that. The 2 new mandates that we launched in the last 12 months actually have us at 5% or less. But typically, investors might want us to be up to 10% for alignment purposes. So the assumption going forward is that we would be either 10% or less in our co-investment going forward. And so some of those recycling that we're looking to do in the next 12 months is where we do hold a greater proportion of that in our stabilized assets.
Operator: Your next question comes from James Druce with CLSA.
James Druce: Can we go through just a really simple overview of the major cash flow movements in '27. So just the committed CapEx from CRU, the committed CapEx from IDC, what's definitely coming back from CRU, what's definitely coming back from IDC and the pool of sort of transactions, which is more uncertain?
Andrew Nieland: So if we break it down a bit, investments as a segment is net cash flow producing. Development next year has some committed spend to complete across Victoria Harbour and One Circular Quay and other projects. It also has some incentives and leasing payments to pay across the projects, but they're roughly offset by expected inflows from settlements at One Circular Quay in Victoria Harbour. So if you go investments and development, roughly neutral. Construction should be broadly positive as it continues to grow. If you then work into the development -- sorry, the net production spend along with outside of CRU corporate costs and interest would be largely offset by the secured inflows that we have. So really, what that leaves is the transaction inflows from CRU from investments and development, which is the deleveraging path that I spoke to before, along with further working capital improvements and operating performance improvements.
James Druce: Okay. So the range of gearing outcomes for '27 is what?
Andrew Nieland: We're not giving guidance on a specific gearing outcome for FY '27. What we're pointing to what our starting point is, what our levers are to reduce it, and we continue to be focused on that. What we have called out is that the cash inflows are weighted to the second half. So we expect it to remain elevated at half before reducing in the second half.
James Druce: Okay. And I appreciate you're not going to give guidance on the operating cost for CRU for '27. But how do we sort of think about the trajectory though just in very broad terms?
Andrew Nieland: The brief on the operating cost is downward. I appreciate that's not overly helpful, but we've got actions underway to reduce those, as I said, ahead of exits. Perhaps to give you some helpful points, which might be one way to think through it. If you look at those underlying costs we call out in CRU, approximately half are in the U.S. and there's circa just over 30% in Europe. So our focus is on ensuring that we are very focused on getting efficient in how we deliver and exit CRU over the coming period in those areas.
Operator: Your next question comes from Ben Brayshaw with Barrenjoey.
Benjamin Brayshaw: I was wondering if you could talk about the factors that contributed to the decline in the management EBITDA margin for the second half and whether you think the margin will bounce back in FY '27?
Andrew Nieland: I might open up with a couple of comments and then Penny has got any adds. I'd say the reductions are really linked to the FUM reductions that we've seen in the main. So we're sitting at circa 35% now. If you include transaction earnings, the margin is 40 -- we are quite strong on margin in Australia and Asia. It's closer to mid-40s for those businesses. So that's the margin picture in terms of where we're at. But really, it's been a driver of fund reductions and asset sales. Looking forward, we would look to see that stabilize and look to grow from there. But Penny, do you take?
Penelope Ransom: Yes. So because FUM over the period reduced by $5 billion. And look, 60%, as I mentioned in my speech, 60% of that was actually just because of natural development partnerships coming to an end, those assets were stabilized. And together with our partners, we agreed to recycle capital out of those stabilized development partnerships. So a combination of reduced FUM and then also some reduced fees. As you know, across the APPF funds, our fees is now the most competitive in the market. And what we've had to do across our platform is also just look at how are we working better, how can we be more efficient in how we leverage the expertise we've got on the table and in the business. So we're doing that. And our focus going forward is whilst we still anticipate some recycling to come, we are focused on growth and the 2 opportunities in Asia, one in Malaysia and one in Japan are very key examples of that, together with working with our existing investors to do more with them in the areas where we've got some really strong track record and capability.
James Druce: Terrific. Just on the development revenue guidance for FY '27, -- just having a bit difficulty reconciling the $1.2 billion -- are you including the 3 Victoria Harbour projects due to settle in FY '27 in that revenue number? Or are you making other adjustments there around One Circular Quay in terms of the repayment of places, for example. Could you just expand on the composition of that, please?
Andrew Nieland: So I just want to clarify. The $1.2 billion you're referring to, is that the presales, do you mean?
James Druce: That was, I think, Penny's comment earlier around One Circular Quay and Victoria Harbour development revenue expectation for FY '27.
Andrew Nieland: Okay. And you're trying to bridge that through to earnings for FY '27...
James Druce: I was just trying to understand the assumptions on the revenue that are included in the $1.2 billion, noting that you have a 1/3 interest in One Circular Quay with $3.3 billion of revenue and you have 3 Victoria Harbour projects coming online with $1.2 billion of revenue, 2 of which are build to sell and one of which is build-to-rent, which you have a 50% interest in.
Andrew Nieland: So part of it, and we can perhaps help you with the math later in the day. Part of it may be the hotel in the revenue at One Circular Quay, which we've sold down. I think as you do the math between the revenue and both inflows and earnings, a couple of things to consider would be the construction debt that we've got on One Circular Quay and also the Victoria Harbour projects have places against them. We can give you more details and help you reconcile that later today.
Operator: Your next question comes from Yingqi Tan with Morningstar.
Yingqi Tan: Just a follow-up question on potential capital recycling in investment in development because previously, you alluded to that being the main path of bringing gearing down. Just wondering how many -- in terms of how many percentage points reduction in gearing can we expect from that, assuming that you can execute that entire $1 billion, $1.5 billion divestment investment in development assets?
Andrew Nieland: I think I gave some broad building blocks before. But if you take that broadly neutral position that I outlined, we have $4.6 billion net debt at the end of 30 June. There's $2.5 billion in CRU, $1 billion to $1.5 billion in investments and development. So that can total down that net debt in the main along with working capital improvements and operating performance. So that's the outline to it. I won't put percentages or timing on it, but that's the deleveraging path that we're focused on.
Yingqi Tan: Right. And looking at some specific projects that you previously said you're going to looking to sell down, for example, for Victoria Cross, could you just give an update on the leasing conditions there and what kind of -- the level of interest that you're gathering from your potential buyers there?
Penelope Ransom: Yes, maybe I'll take that one. So yes, look, at the moment, we're about just over 40% leased in the office and over 95% in the retail. We have quite a bit of interest in the remaining space. The asset is now hit PC. So it's very much something that you can touch and feel. I think the positioning of the asset above this new station there is very, very unique and very attractive. The type of tenants that we've got that are interested are a range and a full cross and also coming from a range of different types of locations. So it's just up for us to convert on the remainder, but we're really quite enthused by the interest we've got on the remaining space now that the asset is complete.
Operator: There are no further questions at this time. I'll now hand back to Andrew for closing remarks.
Andrew Nieland: Thank you. That concludes our call for this morning. I'd like to thank you all for joining us today, and we look forward to talking to you all further during the...