The manager of Lendlease Global Commercial REIT (LREIT) has reported a distribution per unit (DPU) of 0.48 cents for 4Q20 ended June, 62.7% below its IPO forecast of 1.28 cents. The lower-than-forecasted DPU was mainly due to the rent waivers given to the REIT’s retail tenants.
Distributable income for the quarter came in at $5.7 million, 62.2% lower than its IPO forecast of $15.1 million.
This translates to an annualised distribution yield of 2.19%, 3.7 percentage points lower than its IPO forecast of 5.86%.
For FY20, LREIT reported a total DPU of 3.05 cents, 19.7% lower than the IPO forecast of 3.80 cents.
Distributable income for the FY20 came in at $35.7 million, 20.1% lower than the IPO forecast of $44.7 million.
Gross revenue for 4Q20 was $12.5 million, 42.1% lower than forecasted, due to lower rental income from 313@Somerset that came about from the implementation of relief measures and rent waivers to tenants.
LREIT says the impact was cushioned by the stable revenue contributed by the Sky Complex commercial office building in Milan, Italy.
Property operating expenses for the quarter stood at $0.5 million, 8.7% lower than forecast, mainly attributable to lower repair and maintenance expenses, salary, and other related expenses.
As a result, net property income (NPI) for the period stood at $8.6 million, or 53.3% lower than its IPO forecast.
As at June 30, LREIT’s portfolio occupancy rate stood at 99.5% with a weighted average lease expiry (WALE) of 9.7 years by net lettable area (NLA). Some 77% of LREIT’s leases by NLA will expire beyond FY2025.
Over 95% of 313@Somerset has resumed operations since the Phase 2 in June. The manager says footfall has recovered some 40% of pre-Covid-19 levels. As at June 30, the property has a high tenant retention rate of some 87%.
LREIT’s Sky Complex in Milan is projected to provide a stable income stream to the portfolio due to its long lease term until 2032 to Sky Italia.
See also: LREIT kept at 'buy' on new tender win to redevelop Grange Road carpark
Looking ahead, LREIT says retail space market fundamentals in Singapore continue to look encouraging with little supply expected over the next two to three years.
In Milan, the impact from Covid-19 is expected to weigh on the demand for office space, which may drag on rents with capital values and investment returns to come under pressure.
Units in LREIT closed flat at 65 cents on Aug 7.
