The manager of Lendlease Global Commercial REIT JYEU (LREIT) has announced that its distribution per unit (DPU) for FY2024 ended June 30 came in at 3.87 cents, 17.7% lower than 4.70 cents a year ago.
This came on the back of a 15.6% decline in amount distributable to unitholders to $91.4 million.
Revenue for the year end period was 7.8% higher y-o-y at $220.9 million, while net property income (NPI) was 7.4% higher at $165.3 million, mainly attributed to the good operational performance from the retail malls and the recognition of Supplementary Rent received from the lease restructuring of Sky Complex in December 2023.
Excluding the supplementary rent recognised in advance, gross revenue and NPI were 3.2% and 1.3% higher y-o-y on a proforma basis respectively.
Property expenses in FY2024 were $55.6 million, $4.7 million higher compared to FY2023 mainly due to higher property tax and utilities costs from LREIT’s Singapore properties.
For the 2HFY2024 period, DPU was 1.77 cents, 21.2% lower than 2.25 cents the previous year. The lower DPU was primarily driven by higher borrowing costs amidst the higher interest rate environment and expired hedges being refinanced at higher rates (including the replacement of EURIBOR interest rate hedge) as well as the enlarged unit base.
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Gross revenue and NPI for 2HFY2024 were 2.1% and 7.2% lower y-o-y at $71.9 million and $101.0 million, respectively, with the absence of rental income from Building 3 post the lease restructure. Including the support from the supplementary rent, on a proforma basis, gross revenue was 1.4% higher while NPI was 2.6% lower due to higher property operating expenses in 2HFY2024 as compared to 2HFY2023.
Weighted average cost of debt for the year ending June 30 was 3.58% per annum, as compared to 2.69% per annum in the previous financial year.
As at June 30, gross borrowings were $1.56 billion with a gearing ratio of 40.9%. The weighted average debt maturity was 2.5 years. As at the period end, LREIT has an interest coverage ratio of 3.2 times, which provides sufficient buffer from its debt covenants of 2.0 times.
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Post FY2024, the manager has increased its interest hedging to approximately 70% from 61%. All of LREIT’s debt is unsecured and it has undrawn debt facilities of $168.6 million to fund its working capital.
Approximately 85% of LREIT’s total committed debt facilities as at June 30 are sustainability-linked financing. LREIT has achieved interest savings from the sustainability-linked financing since the establishment of its green finance in FY2022.
Kelvin Chow, CEO of the manager, says: “We have delivered positive retail rental reversion of 14.0% in FY2024 with a steady portfolio occupancy of 89.1%. We will continue to remain focused on prudent capital management. On our Milan assets, the repositioning of Sky Complex Building 3 is still in progress and we continue to receive leasing interest for the space. We look forward to providing more updates as we progress.”
Units in LREIT closed 2.5% lower on Aug 5 at 58 cents.
