Lendlease Global Commercial REIT (LREIT) has reported a positive retail rental reversion of 11.4% in its latest update for 1QFY2025 ended Sept 30.
Its portfolio committed occupancy remained high at 89.5%% in 1QFY2025, up from 89.1% in the same period last year. This came on the back of new leases committed for Building 3 of the REIT’s Sky Complex.
For the period, the REIT reported a long weighted average lease expiry (WALE) of 7.4 years by net lettable area (NLA), and 4.7 years by gross rental income (GRI).
In the first three months of FY2025, the REIT’s manager adds that its lease expiry profile remains well-staggered with 6.4% by NLA and 12.1% by GRI, which are due for renewal in FY2025.
As at Sept 30, the committed occupancy for the REIT’S retail portfolio remained high at 99.9%, achieving a healthy tenant retention rate of 90.0% by NLA. Rental reversion for the REIT’s retail portfolio stood at 11.4%.
The REIT’s manager says it remains focused on strengthening the tenancy mix and bringing in new offerings to rejuvenate the malls. Currently, new tenants brought onboard include Tims Signature, Eclaire & Savoir Cafe and Slow Green.
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For the period, the REIT’s office tenants accounted for approximately 21% of portfolio GRI with a long WALE of 12.2 years by NLA and 14.5 years by GRI, it says.
The manager adds that it continues to see good leasing interests for Building 3 of Sky Complex. As at Sept 30, committed occupancy rate for Sky Complex saw an increase to 75.0%. The manager is currently in advanced negotiations with potential tenants as it continues to drive leasing of Building 3 at market rental.
For the quarter, the REIT’s gross borrowings stood at $1,554.4 million with a gearing ratio of 40.7%. The weighted average debt maturity was 2.3 years, with a weighted average cost of debt of 3.74% per annum.
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LREIT has an interest coverage ratio of 2.9 times, which provides a “sufficient buffer” from its debt covenants of 2.0 times. All of its debt is unsecured with approximately 70% of its borrowings hedged to fixed rates.
As at Sept 30, LREIT has undrawn debt facilities of $171.1 million to fund its working capital. In addition, approximately 85% of LREIT’s total committed debt facilities are sustainability linked financing, with interest savings tied to the achievement of annual sustainability targets.
The manager has also commenced the process of arranging the refinancing of LREIT’s $360 million borrowings due in FY2025.
Kelvin Chow, CEO of the manager, says: “Improvements in operating performance were broad-based with positive rental reversion and higher portfolio occupancy. Leasing of Sky Complex Building 3 is progressing well, and we continue to receive leasing interest for the space.”
He adds: “We will continue to focus on proactive asset management to strengthen our portfolio and exercise prudence in capital management.”
Units in LREIT closed flat at 56.5 cents on Nov 11.
