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Lendlease Global Reit withdraws profit and distribution forecasts for FY20 and FY21

LENDLEASE Global Commercial Reit (Lendlease Global Reit) on Thursday said that it is withdrawing its profit and distribution forecasts for the financial years ending June 30, 2020 and June 30, 2021 as set out in its initial public offering (IPO) prospectus. Its move was triggered by its portfolio being hit by the Covid-19 outbreak.  

The manager said that due to the various measures enforced by the Singapore government in response to the outbreak, there will be an impact on the contribution by 313@somerset to the Reit’s distributable income from April 2020.

Lendlease Global Reit had initially forecast a loss of S$15.6 million and a distribution per unit (DPU) of 3.82 Singapore cents for FY2020, and a profit of S$45.1 million and DPU of 5.29 Singapore cents for FY2021.

The manager added that Sky Italia, which leases 100 per cent of Sky Complex, has to date made all its rental payments in a timely manner. It contributed 33.9  per cent of the Reit’s net property income for the period from its listing date Oct 2 to Dec 31, 2019.

As at Dec 31, 2019,  Lendlease Global Reit had a gearing ratio of 34.9 per cent and a cash balance of S$88.5 million. Its weighted average running cost of debt was 0.86 per cent per annum, with an interest coverage ratio at 10.8 times.

The Reit’s borrowings are fully hedged with no debt maturities until its financial year ending June 30, 2023. Its weighted average debt maturity was 3.6 years.

Separately, CDL Hospitality Trusts (CDLHT) said on Thursday that it has extended the operations of Novotel Singapore Clarke Quay by another three months due to demand for its rooms to be used for isolation purposes during the pandemic.

The hotel was initially meant to cease operations early this month, with its lease agreement to be terminated on April 23. 

Following the extension, the hotel is expected to cease operations only in early July,  and the completion of the divestment is expected to take place some time in July 2020.

The completion of the W Singapore – Sentosa Cove (W Hotel) acquisition will similarly be postponed to July.

As at March 31, 2020, CDLHT's gearing was about 37.3 per cent and its cash reserves stood at  about S$100 million, which does not include amounts that can be drawn on under its committed revolving credit facility line.

The cash reserves do not include the net cash inflow expected on the completion of the divestment of Novotel Singapore Clarke Quay and the acquisition of W Hotel.

A total of 6.4 billion yen (about S$83 million) or the equivalent of 7.5 per cent of its total borrowings mature in September. Discussions are underway for the refinancing of debt.

CDLHT is utilising this period of low occupancy to carry out critical guest-related asset-enhancement works, while deferring non-essential capital expenditures.

In an update on Thursday, Ascott Residence Trust (ART) said 15 out of its 88 properties have temporarily closed, either in response to government mandates and health recommendations, or to optimise resources.

Among its markets with higher transient demand, Australia, Japan, Europe and the US experienced a greater decline in occupancy in March, while properties catering to the longer-stay segment in countries like China, Vietnam and Singapore were less badly hit.

Alternative sources of revenue during this period have been pursued, including providing accommodation to those on self-isolation, healthcare personnel on the frontline, workers looking for alternate work-from-home locations and workers affected by border shutdowns.

The managers said they expect ART’s financial performance to be adversely impacted, prompting a potential review of the distributions to stapled securityholders “at a level determined to be prudent”.

They added that ART has the financial capacity to weather the downturn.

“We started the year on firm financial footing, with a relatively low gearing of 33.6 per cent and a well-staggered debt-maturity profile. In addition, there is sufficient cash on hand to meet our current operating requirements and unutilised credit facilities, which we can draw down on in times of need.”

ART does not foresee issues in refinancing the debt maturing in 2020.

With the completion of the divestment of partial gross floor area in Somerset Liang Court Singapore expected this year, ART will receive about S$163 million in cash proceeds.

Lendlease Global Reit's counter closed at 53.5 Singapore cents on Thursday, up 3.5 Singapore cents or 7 per cent.

CDLHT's counter closed at 89.0 Singapore cents, up 7.5 Singapore cents or 9.2 per cent.

ART's counter closed at 85.5 Singapore cents, up 7.5 Singapore cents or 9.62 per cent.

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