SINGAPORE (May 5): Lendlease Global Commercial REIT (LREIT) has reported a distribution per unit of 1.28 cents for 3QFY2020 ended March, 0.7% above its forecast of 1.27 cents. Distributable income of $15.0 million was 0.2% above its forecast of $14.9 million.
Year-to-date ended March 31, LREIT reported a DPU of 2.57 cents, 1.9% higher than its forecast, and a distributable income of $30.0 million, 1.3% higher than expected.
At this level, LREIT’s annualised distribution yield stands at 5.85% - slightly higher than the 5.81% forecasted.
The REIT owns the 313@Somerset mall and also the Sky Complex commercial office building in Milan, Italy.
Gross revenue for the period was $21.7 million, 2.2% higher than its forecast, partly due to the higher exchange rate in the Euro against the Singapore dollar.
Net property income (NPI) came in at $16.6 million, 4.0% above forecast; property operating expenses of $5.1 million, 3.4% lower than forecasted. Year-to-date, LREIT’s NPI grew 3.6% to $32.8 million.
However, LREIT, like every property owner, is bracing for tougher months ahead, no thanks to the Covid-19 outbreak, which has hurt tenants’ operations and sales at 313@Somerset.
Bulk of the leases by net lettable area had already been renewed for FY2020 and only about 5% by NLA is up for renewal come FY2021. However, rental reversion for the coming quarters may be flat or negative due to weak demand.
In addition, rent relief measures, which have been extended to 313@Somerset’s tenants, will potentially weigh down LREIT’s performance in the coming quarters.
“The COVID-19 outbreak is an unprecedented crisis which has impacted many people and disrupted businesses in varying ways. We want to ensure the health and safety of our shoppers, tenants and employees are protected. The measures implemented will inevitably affect footfall and tenant sales at 313@somerset,” says Kelvin Chow, CEO of the manager.
“To assist affected tenants, we have rolled out a Tenant Support Package in March and will pass on full savings from the property tax rebates by the Singapore government to all tenants. With stricter containment measures implemented, we are providing rental relief for tenants during this period,” he adds.
LREIT’s other asset, the Sky Complex in Milan, will benefit somewhat from stimulus packages from the Italian government totalling €80 billion (S$123.85 billion). Sky Italia, the only tenant, has made all its rental payments; rental is expected to remain flat for FY2021. As Sky Complex’s business operations are considered to be under essential services, operations are still taking place within the premises.
“Sky Complex is expected to remain resilient given its triple-net lease structure which minimises operational costs and risks for the REIT. While majority of the tenant’s employees are working from home, broadcasting – without live audiences – is still taking place in the buildings,” says Chow.
LREIT’s gearing ratio stood at 35.9%, with a weighted average debt maturity of 3.3 years.
LREIT’s collective portfolio has maintained a high committed occupancy of 99.8%, and a weighted average lease expiry (WALE) of 9.9 years as at March 31. Some 80% of its leases will expire in 2024 and after.
As at 10.29am, units in Lendlease REIT traded at 2.5 cents up, or 4.5% higher at 58.5 cents.
