DISTRIBUTION per unit (DPU) for Lendlease Global Commercial Real Estate Investment Trust (LREIT) 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 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 reported 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.
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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 rose 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’s Singapore properties.
LREIT’s portfolio committed occupancy improved to 92.3 per cent as at Dec 31, 2024, up from 89.5 per cent as at Sep 30, 2024. The Reit’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.
“While Singapore’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,” 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.
“Nevertheless, limited new supply in the next four years may provide potential support for rental growth in the office sector,” 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 – accounting for only 19 per cent of the overall Milan market – Building 3 of Sky Complex could potentially benefit from the strategy to reposition it for multi-tenancy to secure market rentals, it added.
Units of LREIT closed 1.8 per cent or S$0.01 lower at S$0.545 on Monday, before the announcement.
