FY25 Lendlease REIT's DPU declined by 6.9% y-o-y to 3.6 cents, in line with our estimates and meeting 100% of our FY25e forecast.
The drop was mainly due to a 10% y-o-y decrease in NPI, driven by rental arrears from Cathay, and a higher Euribor rate. However, 2H25 DPU rose 1.8% y-o-y to 1.80 cents, supported by a 9.8% y-o-y decline in financing costs.
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JEM Office contributes 12.5% of FY25 GRI, and the income vacuum from the divestment is expected to be partially offset by higher occupancy at Sky Complex Building 3 and capital top-up.
The Positives
Robust rental reversion.
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JEM outperformed 313@Somerset, supported by more resilient suburban demand amid a net outflow of outbound travellers versus inbound tourists.
Sky Complex secured an office rental uplift of 1.7%, and LREIT expects occupancy for Building 3 to improve to ~50% by end-2025 (4Q25: 31%).
We expect rental reversions to moderate in FY26e, with the Singapore retail portfolio posting mid to high single-digit growth, supported by muted new supply and sustained occupier demand.
De-gearing after JEM divestment.
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Above is an excerpt from a report by Phillip Securities Research. Clients of Phillip Capital may be the first to access the full PDF report @ https://www.stocksbnb.com/.
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