🚀 1-Min Stock Rundown

📌 Lendlease Global Commercial REIT: Balance Sheet Reset & Yield Resilience

📈 Distribution Momentum
DPU for 2H FY2025 rose 1.8 % YoY to 1.80 cents, supported by a more constructive interest rate outlook and disciplined cost management.

🏢 Strategic Divestment
Post-year-end, LREIT agreed to divest the JEM office component for S$462 million - aligned with valuation. This move is expected to reduce aggregate leverage from ~42.6% to approximately 35% and bolster financial flexibility.

💰 Revenue Recovery (Pro Forma)
On a reported basis, FY2025 revenue and NPI were down 6.5 % and 10.0 % YoY, respectively (S$206.5 m and S$148.8 m), largely due to upfront recognition of supplementary rent. However, on a pro forma basis (straight-lined), revenue edged up 1.1 %, and NPI held flat at +0.1% YoY.

📊 Operational Upside in Milan
Rental reversions in Singapore retail rose 10.2%, while Milan’s Buildings 1 & 2 saw a 1.7 % uplift in April 2025. Buildings 1 & 2 remain leased to Sky Italia until Jan 2033. Committed occupancy for Building 3 stood at ~31% as at 30 June 2025.

📈 Portfolio Valuation & Capital Efficiency
Portfolio valuation increased 2.2 % YoY, reflecting ongoing strength in Singapore assets. Cost of debt remained manageable at ~3.46 % per annum, with trailing interest coverage ratio improving to 1.6×.

🌐 Competitive Context
In a landscape featuring peers such as CapitaLand Integrated Commercial Trust (CICT) and Mapletree Commercial Trust (MCT), LREIT stands out for its refined portfolio mix - with over 85% exposure to Singapore retail post-divestment.

While CICT and MCT benefit from scale and diversified asset bases across more sectors or geographies, LREIT’s leaner structure and lower gearing may provide a sharper yield focus for income-seeking investors.

⚙ Leverage & Growth Outlook
The equity raise from the JEM office divestment enables potential redemption of high-cost perpetual securities (e.g. FY26 perps at ~4.2 % coupon), with accretion potential to DPU. With a stronger balance sheet, pipeline reinvestment into Singapore retail (e.g. incremental stakes in Parkway Parade) is a credible strategic lever.

📈 Conclusion
With deleveraging underway, resilient retail performance and earnings stability, LREIT offers an appealing yield proposition - especially for income-focused investors seeking capital discipline in a mid-sized Singapore-listed REIT.

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Cheers,

James -Dissecting-Stocks-in-1-min- Yeo