The manager of Lendlease Global Commercial Reit (LReit) posted a distribution per unit (DPU) of S$0.0177 for the second half of financial year 2024 (FY2024) ended June 30, down 21.2 per cent from S$0.0225 in the same period a year ago.
The lower DPU was primarily due to higher borrowing costs amidst the higher interest rate environment, expired hedges being refinanced at higher rates and an enlarged unit base, said the Reit manager in a bourse filing on Monday (Aug 5).
Distributable income decreased 19.4 per cent to S$42.1 million, from S$52.2 million compared to the same period a year earlier. Over the same period, gross revenue declined 2.1 per cent to S$101 million while net property income dropped 7.2 per cent from S$77.5 million in H2 FY2023 to S$71.9 million in H2 FY2024.
The Reit manager attributed the lower gross revenue and net property income to the absence of rental income from Building 3 from its Sky Complex property in Milan post the lease restructure.
Including the support from the supplementary rent (which is equivalent to approximately two years of the prevailing annual rent of Building 3 received and recognised upfront), on a pro forma basis, gross revenue was 1.4 per cent higher while net property income was 2.6 per cent lower due to higher property operating expenses in H2 FY2024 as compared to H2 FY2023, it said.
LReit noted that property operating expenses rose to S$29.1 million for H2, S$3.5 million higher than in H2 FY2023. The higher expenses include higher costs of utilities and property tax from the Singapore properties.
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For the full financial year, LReit’s DPU stood at S$0.0387, down 17.7 per cent from the S$0.047 it posted in FY2023.
Net property income increased 7.4 per cent to S$165.3 million, while gross revenue rose 7.8 per cent to S$220.9 million. LReit said this was due to the good operational performance from the retail malls and the recognition of the supplementary rent received from the lease restructuring of Sky Complex in December 2023.
As at end-June 2024, the Reit’s portfolio committed occupancy edged up to 89.1 per cent compared to 88.8 per cent at the end of March with the weighted average lease expiry of approximately 7.5 years by net lettable area.
LReit also saw retail rental reversion of 14 per cent on a weight average basis, as well as office rental uplift of 1.2 per cent at Buildings 1 and 2 of its Sky Complex property, effective from April 2024.
Units of LReit were down 2.5 per cent or S$0.015 to S$0.585 on Monday, before the results were released.
