Lendlease Global Reit Q4 DPU misses IPO forecast on circuit breaker, rental reliefs

SINGAPORE (THE BUSINESS TIMES) – Lendlease Global Commercial Reit (Lendlease Global Reit) on Tuesday (Aug 110 posted a distribution per unit (DPU) of 0.48 cent for its fourth quarter ended June 30, 62.7 per cent lower than the manager’s initial public offering (IPO) forecast of 1.28 cents.

Gross revenue stood at $12.5 million for the quarter, missing the IPO forecast of $21.5 million by 42.1 per cent.

The lower revenue was mainly attributed to the effect of Singapore’s circuit breaker measures and rental waivers granted to tenants at 313 @ somerset, the manager said in a regulatory filing on Tuesday. This was partly offset by higher revenue from Lendlease Global Reit’s office asset in Milan, Sky Complex, due to a stronger euro against the Singapore dollar, the manager said.

For Q4, net property income (NPI) of $7.5 million was 53.3 per cent lower than the $16.1 million forecast.

Distributable income came in at $5.7 million for the quarter, 62.2 per cent below the IPO forecast of $15.1 million.

Landlease Global Reit was listed on the Singapore Exchange’s mainboard on Oct 2, 2019, with the real estate investment trust (Reit) jumping 6.8 per cent on its trading debut. The Reit’s IPO had ended with its public offer tranche 14.5 times subscribed.

For the period from Oct 2 to June 30, DPU was 3.05 cents, 19.7 per cent lower than the IPO forecast of 3.80 cents. A distribution of 1.29 cents per unit was paid on March 16 this year. The remaining DPU of 1.76 cents will be paid out on Sept 15, after books closure on Aug 19.

Gross revenue for the period was $55.5 million, 13.1 per cent below the IPO forecast, while NPI stood at $40.3 million, 15.6 per cent below the forecast.

Kelvin Chow, chief executive officer of the manager, noted that safe distancing measures at 313 @ somerset may “inevitably affect footfall and tenant sales”, and that the manager will continue to engage with tenants in meeting their space requirements.

He added that Sky Complex is expected to “remain stable and generate steady revenue” to the Reit, given its long lease term till 2032, assuming that Sky Italia does not exercise its break option in 2026. “Alongside its triple net lease structure, Sky Complex helps to mitigate downside risks during Covid-19,” Mr Chow said.

As at 10.55am on Tuesday, units in Lendlease Global Reit were trading at 62.5 cents, down 2.5 cents or 3.9 per cent.

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