Lendlease sees a drop in 1HFY2025 DPU.

Lendlease Global Commercial REIT (LREIT) announced that its distribution per unit (DPU) for 1HFY2025 ended December 2024 has come in at 1.8 cents, 14.3% lower than 2.1 cents in the previous year. The lower DPU was primarily driven by higher finance costs, lower NPI as well as an enlarged unit base.

This comes on the back of a 13.6% y-o-y decline in gross revenue to $103.6 million from $119.9 million a year ago. This brough net property income (NPI) to $74.9 million, 19.8% lower than $93.4 million in the same period last year.

The REIT explains that gross revenue and NPI for 1HFY2024 includes the upfront recognition of the supplementary rent received from the lease restructuring of Sky Complex in December 2023. On a proforma basis after adjusting for the supplementary rent, 1HFY2025 gross revenue was 0.4% higher while NPI was 2.2% lower y-o-y.

For the first six months of FY2025, tenant sales and visitation were lower by 5.2% and 0.6% y-o-y to $403.9 million and 33.8 million respectively. The decline in tenant sales was impacted by an increase in outbound travel on the back of strong Singapore currency.

As at Dec 31, 2024, office tenants account for approximately 21% of portfolio GRI with a long WALE of 11.7 years by NLA and 14.2 years by GRI.

Finance cost in 1HFY2025 is higher on a y-o-y basis on the back of higher weighted average cost of debt at 3.57% per annum, as compared to 3.37% per annum in 1HFY2024, due to the replacement of EURIBOR interest rate hedge at a higher rate in October 2023.

Profit attributable to unitholders came in at $19.6 million, 5.4% lower y-o-y.

The REIT’s portfolio committed occupancy stands at 92.3% (99.9% retail; 86.6$ office), an improvement from 89.5% a year ago, with a weighted average lease expiry (WALE) of 7.2 years by NLA) and 4.6 years (by GRI). Retail rental reversion came in at 10.7%, while office rental uplift was 1.2%.

Gross borrowings as at Dec 31, 2024 were $1.56 billion with a gearing ratio of 40.8% and a weighted average debt maturity of 2.0 years.

Construction of the 48,200 sq ft multifunctional event space adjacent to 313@somerset has commenced. Expected to be completed in 2H2026 with an estimated seating capacity of 3,000, the state-of-the-art music hall will feature multiple rooms and stages set up to host international tours as well as local artistes.

Kelvin Chow, CEO of the manager says, “Our retail portfolio continues to demonstrate resilience with positive rental reversions. In the near-term, we will focus on the continued positive leasing momentum at Sky Complex Building 3, proactive asset management and prudent capital management. Now that construction has commenced at the multifunctional event space, we are looking forward to see our partnership with Live Nation and the Singapore Tourism Board come to fruition when the space is completed in 2H2026.”

Units in LREIT closed at 54 cents on Feb 3.