Lendlease Reit raises H1 DPU to S$0.024, revenue dips 5.8%
LENDLEASE Global Commercial Reit's (LReit) distribution per unit (DPU) rose by 2.6 per cent to S$0.024 for its first half ended Dec 31, 2021, from S$0.0234 a year ago.
The amount distributable to unitholders was S$28.6 million, growing by 3.8 per cent year on year from S$27.5 million.
LReit's acquisition of an additional stake in Jem, a retail and commercial development located in Jurong East, gave a boost to the distributable income, the real estate investment trust's manager said in a filing on Friday (Feb 4) after the market closed.
However, gross revenue fell 5.8 per cent to about S$39.2 million for the six-month period, from S$41.6 million in the corresponding period in 2020.
LReit's JYEU manager attributed this to lower rental reversion at the 313@somerset mall in Singapore as well as a drop in revenue from Italy's Sky Complex office buildings due to foreign exchange.
The decline in gross revenue was partially offset by a S$1.7 million or 14.9 per cent decrease in property operating expenses for the half year.
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Net property income (NPI) edged down by 2.5 per cent on the year to S$29.6 million for the half year, from nearly S$30.4 million previously.
The distribution of S$0.024 per unit will be paid out on Mar 14, after the record date of Feb 15.
LReit's manager posted an all-time high portfolio occupancy rate of 99.9 per cent as at Dec 31, 2021, with only 2 per cent of the portfolio's total net lettable area (NLA) due for renewal for the rest of FY2022.
With this, LReit continues to maintain a long weighted average lease expiry of 8.4 years by NLA and 4.4 by gross rental income (GRI).
At 313@somerset, the manager will use about 660 square feet (sq ft) arising from the increase in permissible plot ratio at 2 prime, ground-floor units to expand the leasable unit space.
It said it will deploy the additional gross floor area (GFA) during the fit-out period, to avoid unnecessary hoarding and disruption to the operations of other tenants in the mall.
"With the remaining untapped GFA of approximately 10,200 sq ft, the manager is confident that LReit will be able to maximise the full potential of 313@somerset and bring value to its unitholders," it added.
313@somerset recorded a tenant retention rate of 75.8 per cent as at the end of last year, while its occupancy rate stood at 99.7 per cent.
As for Jem, the office component remains fully leased to Singapore's Ministry of National Development for a 30-year lease term.
The LReit manager said that demand for office space in the city-state's suburban market is likely to stay resilient due to the decentralisation trend as more occupiers look to the suburban areas to save on rental costs and adopt a flex-and-core workplace strategy.
Over in Milan, Sky Complex's Grade A buildings are fully occupied by a single tenant and operate on a triple-net lease structure.
Units of LReit jumped about 3.7 per cent or S$0.03 to finish Friday at S$0.85, before the results were released.
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