Lendlease Global Commercial REIT (LREIT) has reported a distribution per unit (DPU) of 3.60 cents for the FY2025 ended June 30, down 6.9% y-o-y. For the 2HFY2025, DPU grew 1.8% y-o-y to 1.80 cents.
LREIT’s gross revenue for the full year similarly declined 6.5% y-o-y to $221 million, but grew 1.9% y-o-y to $101 million for the 2HFY2025.
Net property income (NPI) for FY2025 also fell 10% y-o-y to $165.3 million, but grew 2.7% y-o-y to $73.8 million for the 2HFY2025.
The decline in full year revenue and NPI was mainly due to the upfront recognition of supplementary rent in relation to the lease restructuring of Sky Complex that was received in FY2024.
LREIT says that on a proforma basis, after adjusting for the supplementary rent, gross revenue and NPI for FY2025 were 1.1% and 0.1% higher y-o-y respectively.
Property expenses in FY2025 at $57.8 million were S$2.2 million higher compared to FY2024, impacted by the provision of doubtful debts for Cathay Cineplexes. Excluding this one-off provision, expenses remained broadly stable.
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As at June 30, gross borrowings stood at $1.664 billion, and weighted average debt maturity stood at 2.6 years.
As at June 30, LREIT’s debt portfolio remains unsecured, with $135.9 million in undrawn facilities available to support working capital requirements. Approximately 68% of the borrowings are hedged to fixed rates, with weighted average cost of debt for FY2025 at 3.46% per annum. The REIT’s ICR ratio is at 1.6 times as at end June.
LREIT’s portfolio occupancy as at end June was 92.1%, and weighted average lease expiry is 7.2 years by net lettable area and 4.9 years by gross rental income respectively.
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Jem office divestment
The REIT has announced on Aug 4 that it is divesting the office component of Jem, which comprises 12 levels of office space. This decision was made in relation to current gearing levels of the REIT.
The divestment consideration is $462 million, and Keppel's Sustainable Urban Renewal (SUR) strategy is the buyer of the asset. Jones Lang LaSelle is the independent valuation for the office component of Jem for the divestment.
The estimated total cost of the divestment is approximately $5.0 million, comprising the divestment fee of approximately $2.3 million payable to the manager for the divestment; and the estimated professional and other fees and expenses incurred which is about $2.6 million.
The net cash proceeds from the divestment is estimated to be $459.4 million, resulting in an estimated net cash gain over the cost of investment of approximately $8.9 million.
The manager of LREIT intends to use net proceeds to repay certain loans which is expected to reduce its aggregate leverage ratio from 42.6% as at June 30, to approximately 35% on a pro forma basis and potentially distribute net cash gain on disposal.
The manager of LREIT believes that this divestment will improve the REIT’s financial position and strengthen capital structure; enhance financial flexibility to support the REIT’s potential portfolio growth; and increase the REIT’s focus on Singapore retail.
Keppel says that its SUR strategy invests in value-add real estate opportunities with the goal of decarbonising the built environment, while delivering attractive risk-adjusted returns to limited partners. In April 2025, Keppel secured $760 million in new capital commitments for its SUR strategy, including from one of Europe’s largest pension funds, bringing the strategy’s cumulative Funds under Management 1 (FUM) to approximately to approximately $4.3 billion.
Currently, the office asset is fully leased to the Ministry of National Development of Singapore. Keppel intends to explore undertaking targeted upgrading works aimed at reducing the property’s energy use intensity, in line with the SUR strategy’s decarbonisation goals.
Units in LREIT closed 1.5 cents higher or 2.727% up at 56.5 cents on Aug 4.
