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LREIT reports portfolio occupancy of 99.8% for 1QFY22, says increased stake in Jem will bring stable income

Atiqah Mokhtar
Atiqah Mokhtar • 3 min read
LREIT reports portfolio occupancy of 99.8% for 1QFY22, says increased stake in Jem will bring stable income
LREIT now holds a 31.8% indirect interest in Jem.
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The manager of Lendlease Global Commercial REIT (LREIT) has announced its 1QFY2022 ended September operations update on Nov 5.

In the update, the manager highlights that the completion of LREIT’s acquisition of an additional stake in Jem during the quarter has increased its exposure in the suburban retail segment, which is expected to provide stable income. Following the transaction, LREIT now owns a 31.8% indirect interest in Jem.

LREIT’s portfolio occupancy stood at 99.8% as of Sept 30, with a weighted average lease to expiry (WALE) of 8.5 years by net lettable area (NLA) and 4.4 years by gross rental income (GRI).

See: 'A year to forget' for retail S-REITs as restrictions drag on, with extensions 'highly likely': DBS

According to the manager, leases expiring in FY2022 have been de-risked to 4% by NLA and 11% by GRI respectively during the 1QFY2022.

The occupancy rate for 313@somerset stood at 98.9% with a tenant retention rate of 90% as of Sept 30. New tenants brought onboard include Marks & Spencer, Miniso, Playmade and Super Coconut.

See also: Cordlife posts net loss of $11.57 mil for 1QFY2024 due to refund fulfilment

Notwithstanding the Covid-19 restrictions implemented by the Singapore government, tenant sales continued to improve 14.1% y-o-y to $118.1 million in the first nine months of 2021.

At Jem, new brands will be welcomed in the coming months, namely coffee brands Huggs Collective and Flash Coffee, as well as and food & beverage concept store Coco.cado.

Enhancement works were carried out at Jem to create additional leasable space to unlock value. The space is currently occupied by Clippers Barber, an old-school barbershop with a modern revamp.

See also: Changi Airport Group reports FY2024 earnings of $431 mil, 13.1 times higher y-o-y

For its office portfolio, the manager highlights that Sky Complex has continued to maintain its resiliency and generate stable income. The property is 100% leased until 2032, excluding a break option for its tenant, Sky Italia, in 2026. Sky Italia has been making timely rental payments and there are no rental arrears to-date.

Based on the Manager’s observations on the ground, more employees have been returning to Sky Complex with safe distancing measures continuing to be in place. There is also an increase in the number of enquires on application of season parking in the buildings, which the manager says is a positive signal that more people are returning to the workplace.

Gross borrowings stood at $677.6 million as at Sept 30, with a gearing ratio of 34.3%.

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LREIT intends to make distributions to unitholders semi-annually and will distribute at least 90% of its adjusted net cashflow from operations for each financial year.

Units in LREIT closed up 0.5 cents or 0.57% higher at 88.5 cents on Nov 3.

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