Lendlease Global Commercial REIT - DBS Research 2022-11-08: 313@Somerset Tenant Sales Bloom To ~125% Of Normalised Levels

• See Lendlease REIT's announcement dated 07 Nov 2022 for its 1QFY23 operational update.

Portfolio occupancy remained stable at 99.7%, against 99.8% as at end-FY22.

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• WALE stood at 5.5 years by gross rental income (GRI), with 14.5% of leases by GRI expiring for the rest of the financial year.
• On a portfolio basis, tenant sales continued to surpass pre-COVID levels in 1QFY23, with sales at 313@Somerset surging to ~125% of pre-COVID levels in the quarter, far outpacing our expectations.
• Footfall gap against pre-COVID levels has also moderated at ~90% of pre-COVID levels.
• New portfolio tenants include Japanese fashion brand A Bathing Ape and Ramen chain Kanada-Ya.

Margin compression unlocked with sustainability-linked loans.

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• Sustainable financing accounts for ~63% of total borrowings, which saw some margin compression during the period from Lendlease REIT’s sustainability-linked loans. Lendlease REIT attained net-zero carbon this year, ahead of their original target of 2025.
• ICR ratio stood at 6.9x.
• Loans due in FY23 have been refinanced to FY28, with ~28% of loans denominated in Euro dollars are up for renewal in FY24.

Grange carpark to see potential delays against our forecast; expect higher reversions moving forward.

• Read more at SGinvestors.io.

Geraldine WONG DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2022-11-08 SGinvestors.io

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