Revenue falls 13.6% to S$103.6 million for the half-year period

 

LENDLEASE Global Commercial Real Estate Investment Trust&rsquo s (LREIT) distribution per unit (DPU) fell 14.3 per cent to S$0.018 for its first half ended Dec 31, 2024, from S$0.021 in the corresponding period in the year before.

 

The lower DPU was driven by higher finance costs, lower net property income (NPI), as well as an enlarged unit base, the manager of the Reit in a bourse filing on Monday (Feb 3).

 

Revenue was down 13.6 per cent at S$103.6 million for the half-year period, from S$119.9 million in the year-ago period.

 

This was due to the absence of supplementary rent from Sky Complex, an office building in Milan, Italy, due to a lease restructuring exercise. The supplementary rent was received and recognised upfront in December 2023.

 

NPI dropped 19.8 per cent on the year to S$74.9 million for the half year, from S$93.4 million previously.

 

On a pro forma basis after adjusting for the supplementary rent, revenue for the half-year period was up 0.4 per cent, while NPI was down 2.2 per cent year on year, said the Reit manager.

 

Distributable income declined 11.8 per cent year on year to S$43.5 million, from S$49.3 million in the year-ago period.

 

The distribution will be paid out on Mar 28, after books closure on Feb 11.

 

Property expenses was widened 8.1 per cent to S$28.7 million, from S$26.5 million previously. The Reit manager attributed this to equipment replacement expenditure for Sky Complex, as well as higher property operating expenses for the Reit&rsquo s Singapore properties.

 

LREIT&rsquo s portfolio committed occupancy improved to 92.3 per cent as at Dec 31, 2024, compared to an occupancy rate of 89.5 per cent as at Sep 30, 2024. The Reit&rsquo s lease expiry profile remained well-spread with 3.9 per cent by net lettable area and 6.4 per cent by gross rental income due for renewal in FY2025.

 

&ldquo While Singapore&rsquo s retail market can continue to be supported by global brands with prime retail spaces seeing rising rents due to healthy demand, there could be near-term challenges on manpower shortages, competition from e-commerce and higher operating costs,&rdquo said the Reit manager in its outlook for the Singapore retail market.

 

A strong Singapore currency could also fuel outbound travel by locals, impacting local consumption, the manager added.

 

Meanwhile, for the Singapore office market, occupiers remain cautious on global economic uncertainties, elevated fit-out costs and interest costs. Pre-commitment levels for new offices also remain low.

 

&ldquo Nevertheless, limited new supply in the next four years may provide potential support for rental growth in the office sector,&rdquo said the Reit manager.

 

In Milan, office buildings with green credentials continue to be a key consideration factor alongside strong preference to be in well-connected areas with good access to amenities, it noted.

 

Furthermore, with the limited availability of Grade A green office spaces &ndash accounting for only 19 per cent of the overall Milan market &ndash Building 3 of Sky Complex could potentially benefit from the strategy to reposition it for multi-tenancy to secure market rentals, it added. 

The Reit&rsquo s portfolio weighted average lease expiry stood at 7.4 years by net lettable area, and 4.7 years by gross rental income

LENDLEASE Global Commercial Reit (Lendlease Global Reit) on Monday (Nov 11) posted a committed portfolio occupancy of 89.5 per cent for the first quarter ended Sep 30, up from 89.1 per cent in the previous quarter.

 

This came from new leases committed for Building 3 of the Sky Complex property in Milan, Italy, the real estate investment trust (Reit) manager said in a business update for Q1 FY2025.

 

As at Sep 30, the Reit&rsquo s retail portfolio stood at 99.9 per cent, with a positive rental reversion of 11.4 per cent and a tenant retention rate of 90 per cent. Tenant sales in Q1 FY2025 continued to trend above pre-Covid levels on average, its manager said.

 

In spite of the high occupancy rate, the Reit manager said it would continue to strengthen the tenancy mix and bring in new offerings to rejuvenate the malls. It has brought on board new tenants such as Tims Signature, the largest Tim Hortons outlet in Singapore, and the Hermes-themed Eclaire & Savoir Cafe.

 

In addition, the renovation of the Food Republic food court in 313@somerset will be completed by end-2024, unveiling a refreshed look and new dining options.

 

Office tenants accounted for about a fifth (approximately 21 per cent) of the Reit&rsquo s portfolio by gross rental income (GRI), with a long weighted average lease expiry (Wale) of 12.2 years by net lettable area (NLA) and 14.5 years by GRI.

 

The rental review for the Jem office tower in Jurong has begun.

 

As at Sep 30, the committed occupancy rate for the Milan property, Sky Complex, had improved to 75 per cent the manager is now in advanced negotiations with potential tenants.

 

Kelvin Chow, chief executive officer of the Reit manager, said: &ldquo The leasing of Sky Complex Building 3 is progressing well, and we continue to receive leasing interest for the space.&rdquo

 

As at Sep 30, the Reit&rsquo s portfolio Wale stood at an estimated 7.4 years by NLA, and 4.7 years by GRI.

 

Gross borrowings were S$1.6 billion, with a gearing ratio of 40.7 per cent and weighted average debt maturity of 2.3 years.

 

Chow noted that improvements in operating performance were broad-based, with positive rental reversion and higher portfolio occupancy.

 

&ldquo We will continue to focus on proactive asset management to strengthen our portfolio and exercise prudence in capital management.&rdquo

 

Units of Lendlease Global Commercial Reit closed at S$0.565 unchanged on Monday, before the release of the business update.