At 99.7%, LREIT’s committed occupancy rate remained high

In its most recent 1QFY2023 that ended September’s business update, Lendlease Global Commercial REIT (LREIT) revealed that it was able to keep its portfolio resilient.

The portfolio’s committed occupancy was extremely high with 99.7% with a long weighted average lease expiry (WALE) of 8.5 years, based on Net Lettable Area (NLA) in addition to 5.5 years of the gross rental revenue (GRI).

Lentor Hills Residences showroom is located in one of the most attractive areas exclusively set for residential.

The REIT’s manager removed risk from leases that were due to expire in the current year, reducing them up to 8.0% (from 11.9%) through NLA in addition to 14.5% (from 23.9%) through GRI during the first three months of FY2023.

This REIT boasts a lengthy WALE of 12.7 years as per NLA as well as 15.5 years under GRI in its Office portfolio. It claims that this will provide an ongoing stream of income for unit holders.

The manager also stated that the escalation of office rents by LREIT increased by around 4% in 1QFY2023, and ensures a steady cash flow for unit holders.

Jem is well-positioned to take advantage of the coming change in Jurong Gateway and the surrounding industrial and manufacturing landscape in the context of government’s effort to decentralise. The office building, which is Grade A, is let by the Ministry of National Development till 2044, with a review of the rental annually for five years.

The Milano Santa Giulia business district that is where Sky Complex is situated has been awarded an LEED Gold Neighborhood Development certification. This certification is a world- acknowledged symbol of achievement and is a measure of sustainable living and quality of life.

On the other hand the retail portfolio of the REIT was helped with the return visitors and its ability to withstand the suburban mall.

The retail portfolio of LREIT has continued to maintain its high committed utilization rate, which was 99.3% as at Sept 30. The high occupancy was fueled by a healthy lease momentum and the proactive leasing strategy of the manager that focuses on curating distinctive F&B as well as retail choices to keep the malls lively for the customers.

At the time of the closing at the end of the period, a positive rental reversion of around 1% was observed with a solid retention rate of about 70%. Tenant sales in during the initial three months in FY2023 were able to rise above levels seen prior to Covid-19.

The manager also has noticed an increase in interest for leasing the atrium space in the malls. In the near term the manager will be looking to optimize the remaining untapped gross floor space of 10,200 square feet from the URA Master Plan 2019 to make the most of the potential of 313@somerset. This will generate new value for the unitholders of LREIT.

For Jem although there is no plot ratio The manager is always seeking to convert vacant spaces into leaseable units that can bring in additional revenue.

At the time of Sept. 30 the total gross borrowings stood at $1,451.1 million, with an average gearing ratio at 39.4%. Approximately 63% of its borrowings are sustainability-linked financing, which are expected to generate net interest savings to LREIT’s unitholders. The average maturity of the debt was 2.8 years, with an average weighted price of borrowing at 2.24% per annum. LREIT boasts an interest-coverage ratio of 6.9 percent, and gives sufficient protection against their debt-related covenants of 2.0 times.

At the time of the closing, LREIT has undrawn debt facilities of $172.2 million to finance their working capital. The majority of the company’s debt is non-secured with around 61% of the borrowings being hedged to a fixed rate.

In the future, the manager declares that the company will be alert to maintain the health of its balance sheet as well as efficient control of cash flows.

Kelvin Chow the CEO of the manager states: “We are encouraged to witness the gradual return of visitors and an increase in the number of office workers returning to work. In addition, LREIT’s exposure to retail sector in the suburbs and the significant concentration of essential services, with 59% (by GRI), the positive trend will continue to support the performance of LREIT in FY 2023.”

“In addition we’re looking to increase the non-rental revenue and increase savings by the use of advanced technologies to increase the efficiency of assets, and decrease non-core expenditures to offset the impact of increasing interest rates and utility expenses,” he adds.

Units of LREIT sold for the last time for 70 cents November 4.