Lendlease Global Commercial REIT 2HFY23 - UOB Kay Hian 2023-08-10: Enlarging Scale In Home Base Singapore

• Jem and 313@Somerset achieved rental reversion estimated at +6.1% in 2HFY23 and the positive momentum is expected to sustain into FY24.
• Lendlease REIT will focus on capturing the upside from 313@Somerset due to the tourism recovery and increased shopper traffic from the multi-functional event space at Grange Road Car Park. Management intends to continue expanding in Singapore.
• - Read this at SGinvestors.io -

Lendlease REIT's 2HFY23Results

• Lendlease Global Commercial REIT (Lendlease REIT, SGX:JYEU) reported 2HFY23 (Jan to Jun 2023) DPU of 2.25 cents (-8.4% y-o-y), which is in line with our expectations. See Lendlease REIT's dividend date.
• - Read this at SGinvestors.io -
• Sky Complex benefitting from higher inflation. Sky Complex in Milan achieved rental escalation of 5.9% effective May 23. Sky Complex maintained full occupancy of 100%. It is on a long-term lease to Sky Italia until 2032 and annual rental escalation is based on 75% of the changes in ISTAT consumer price index (CPI).
• Resiliency with stable margins and long WALE. NPI margin was stable at 75.2% in 2HFY23, which demonstrates Lendlease REIT’s ability to weather the negative impact from higher cost of utilities. Lendlease REIT has long portfolio WALE of 8.2 years by NLA and 5.5 years by GRI as of Jun 23.
• Rise in capital values anchored by Singapore. Portfolio valuation has increased by 1.4% y-o-y to S$3.7b due to higher market rents and improved sentiment in the retail sector. Valuation for Jem and 313@Somerset increased 2.5% and 4.0% respectively. Valuation for Sky Complex dropped 9.2% as terminal cap rate expanded 75bp to 5.75%.

Weathering impact of higher interest rates.

• Read more at SGinvestors.io.

Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2023-08-10 SGinvestors.io

---