LENDLEASE Global Commercial Reit : JYEU 0%’s (Lendlease Global Reit) commercial Italy fund has restructured a lease at Milan portfolio property Sky Complex, originally due to expire in 2032, with an option for termination by the tenant in 2026.

The move will not only reduce tenant concentration risk, but also result in higher rent for two of the property’s buildings, on top of a recent 5.9 per cent rental increase in May 2023, the manager said on Monday (Dec 18).

Sky Complex comprises two buildings located at Via Luigi Russolo 4, and a third building located at Via Luigi Russolo 9 in Milan, Italy.

Under the terms of the new lease, the first two buildings will be leased for an initial term of nine years and one month starting Dec 15, with an option for renewal for an additional six years.

Rental for the first two buildings will be 1.5 per cent higher than the existing in-place rent based on the original lease. The new lease also includes a tenant incentive in line with market standards.

Additionally, the tenant will return the third building in Q1 2024 to the landlord – Lendlease Global Reit’s Italy fund – who will then redesign the building for multi-tenancy use. The move will reduce the real estate investment trust’s (Reit) single-tenant exposure to Sky Complex while broadening its tenancy base.

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The manager does not expect the new lease to have any material impact on the Reit’s distribution and net asset value for the financial year ending Jun 30, 2024.

The supplementary rent at Sky Complex’s third building will add to the property’s total revenue while being leased to new tenants. The third building accounted for 3.9 per cent of the Reit’s portfolio monthly gross rental income as at Sep 30, 2023.

Units of Lendlease Global Reit ended 2.3 per cent or S$0.015 higher at S$0.655 on Friday.