Lendlease Global Reit posts 33 per cent increase in H2 DPU amid retail recovery

LENDLEASE Global Commercial Reit JYEU (Lendlease Global Reit) on Tuesday posted a distribution per unit (DPU) of 2.34 Singapore cents for the half-year ended June 30, up 32.8 per cent from 1.76 cents a year ago on the back of recovery in retail activity.

Gross revenue was up 8.5 per cent to S$37 million, from S$34.1 million a year ago.

The manager attributed this rise to the lower rental waivers granted to tenants at 313@somerset as the economy reopens, as well as higher revenue from its Sky Complex development in Milan due to foreign exchange.

At 313@somerset, the manager also noted that tenant sales rose by 33.7 per cent to S$81.5 million, while visitation rose by 6.2 per cent to 11.5 million during the same period as sales at fashion & accessories and food & beverage (F&B) tenants improved by 37 per cent year on year.

Net property income (NPI) grew to S$26.5 million from S$24.1 million the year before, up 10 per cent.

Distributable income rose 33.5 per cent to S$27.6 million, from S$20.7 million the previous year.

The distribution will be paid out on Sep 14, after books closure on Aug 18.

Meanwhile, for the full year ended June 30, DPU rose 14.6 per cent to 4.68 cents from 4.08 cents a year ago, and distributable income rose 15.3 per cent to S$55.1 million from S$47.8 million. Gross revenue was up 5.6 per cent to S$78.7 million from S$74.5 million, while NPI rose 5.4 per cent to S$56.9 million from S$54 million in the same period.

Going forward, the Reit manager expects tenant sales and visitation at 313@somerset to remain muted as the government adopts a targeted approach to calibrate the resumption of economic and community activities.

"Demand for retail space will likely remain soft with the continued safe distancing measures being implemented and border closures. In the short term, the weak demand may continue to weigh on rental performance," it said.

As for the office sector in Milan, the Reit manager noted that vacancy rates in Milan remained stable at 9.6 per cent in Q1 2021. It also noted growing interest from small and medium-sized enterprises as more than 60 per cent of transactions recorded were for spaces under 1,000 square metres.

Still, it cited a Cushman & Wakefield report showing that the office absorption rate for the next five years is expected to be lower than in the past five years.

"Businesses, in the short term, will continue to assess the structural impacts of Covid-19 on future demand for office space and how the space could be transformed from being just a place to work to becoming a place where employees gather to interact and collaborate," it said.

Overall, the manager noted that the Reit's portfolio occupancy remained high at 99.8 per cent as at June 30, with a long weighted average lease expiry of 8.8 years by net lettable area and 4.5 years by gross rental income.

Units of Lendlease Global Reit closed at 86.5 Singapore cents, down 0.6 per cent or 0.5 cent on Friday.

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