The manager of Lendlease Global Commercial REIT (LREIT) says that the portfolio “continues to remain resilient” in its 3QFY2021 ended March business update.
Portfolio occupancy stood at 99.7% as at March 31, with a weighted average lease expiry of 9 years by net lettable area (NLA) and 4.6 years by gross rental income (GRI). The manager has completed renewals for approximately 98% (by NLA) and 97% (by GRI) of the expiring leases in FY2021.
Occupancy at 313 @Somerset stood at 98.6%, with tenant retention rate at 62%. The manager notes that tenant sales continue to recover faster than visitation.Tenant sales for the quarter were $46 million, a 94% recovery compared to last year. In contrast, visitation came in a 6.6 million, or about 77% compared to the previous year.
The manager notes that the Singapore government introduced the Code of Conduct (CoC) pertaining to the leasing of retail premises, which will be adopted on June 1. No significant impact is foreseen on the expiring leases in the coming quarter, which account for some 3% of portfolio GRI.
The multifunctional event space adjacent to 313 @Somerset has been “substantially leased” to new anchor tenant Live Nation. Development works to revamp the space, which is intended to hold lifestyle and entertainment events that run throughout the year, are expected to commence in the second half of 2021 and complete in 2022.
For Jem, the manager notes that new anchor tenant IKEA has opened its first small-store concept in Southeast Asia at the mall, spanning over 6,500 sqm across three levels. Other new tenants at Jem include Tsui Wah, Scoop, Pizzakaya, iSteak and simpleBurger, while Muji will be expanding its store.
For SkyComplex, the REIT’s three grade-A offices in Milan, the manager notes that live broadcasting with limited audience numbers continued to take place in Sky Complex. The buildings are 100% occupied by Sky Italia, with a WALE of 11.1 years.
LREIT’s gearing ratio stood at 35.4% as of March, which the manager notes provides “comfortable headroom” to grow the portfolio.
LREIT intends to make distributions to unitholders semi-annually. LREIT intends to distribute 100% of its adjusted net cashflow from operations for the period to the end of June 30.
In terms of its market outlook, the manager highlights that leasing demand for the retail segment is expected to remain weak in the short term, though this may be offset by little supply expected in the Orchard Road micromarket over the next three years, which should support “modest leasing activities” in the midterm.
For the Milan office industry, the manager notes that investment activities could be held back by uncertainty surrounding the future demand for office space as businesses rationalise operations due to changes in strategy.
Units in LREIT close 1 cent or 1.3% higher at 78 cents on May 6.
