Lendlease Global Commercial REIT FY2025 Financial Analysis

Financial Metrics Highlighted in the Report

• Distribution Per Unit (DPU): 2H FY2025 DPU grew 1.8% YoY to 1.80 cents [[1]].
• Cost of Debt: 3.46% per annum for FY2025 [[1]].
• Interest Coverage Ratio (ICR): Improved to 1.6 times as at 30 June 2025, up from 1.5 times as at 31 December 2024 [[1]][[2]].
• Portfolio Valuation: Increased 2.2% YoY to S\$3.76 billion [[1]][[2]].
• Gross Revenue: S\$206.5 million for FY2025, 6.5% lower YoY [[2]].
• Net Property Income (NPI): S\$148.8 million for FY2025, 10.0% lower YoY [[2]].
• Property Expenses: S\$57.8 million for FY2025, S\$2.2 million higher YoY [[2]].
• Borrowings: S\$1,664.3 million as at 30 June 2025 [[2]].
• Unsecured Debt Portfolio: S\$135.9 million in undrawn facilities [[2]].
• Portfolio Occupancy: 92.1% as at 30 June 2025 [[2]].
• Retail Portfolio Occupancy: >99% [[3]].
• Retail Rental Reversion: 10.2% positive as at 30 June 2025 [[1]][[3]].
• Tenant Retention Rate: 83.3% by NLA for FY2025 [[3]].
• WALE: 7.2 years by NLA, 4.9 years by GRI [[2]].

Year-on-Year and Quarter-on-Quarter Comparison

• Year-on-Year (YoY):
  • DPU up 1.8% [[1]].
  • Gross revenue and NPI down 6.5% and 10.0%, respectively, due to an exceptional one-off in FY2024 (supplementary rent from Sky Complex). Adjusted for this, gross revenue and NPI were 1.1% and 0.1% higher YoY [[2]].
  • Portfolio valuation up 2.2% YoY [[1]].
  • Retail rental reversion strong at 10.2% [[3]].
  • Tenant sales down 5.1% YoY, visitation up 1.3% YoY (due to macro tourism trends and asset management transition) [[3]].
• Quarter-on-Quarter (QoQ): The report provides limited direct QoQ figures, but notes the improvement in ICR from 1.5x as at 31 Dec 2024 to 1.6x as at 30 Jun 2025 [[2]].

Historical Performance

• Portfolio valuation and DPU have both increased YoY. However, headline gross revenue and NPI are lower due to a large one-off supplementary rent booked in the previous year. Adjusted for that, core operations are stable or slightly improved [[1]][[2]].

Asset Revaluation or Delay

• There was an asset revaluation: Portfolio valuation rose 2.2% YoY to S\$3.76 billion, mainly from positive outlook for Singapore assets [[1]][[2]].

Exceptional Earnings and Expenses

• Exceptional income in FY2024 from supplementary rent related to Sky Complex lease restructuring (equivalent to approx. two years’ rent, recognized upfront in FY2024) [[2]].
• One-off provision for doubtful debts for Cathay Cineplexes increased property expenses by S\$2.2 million in FY2025 [[2]].

Early or Delayed Profit or Loss Recognition

• Profits relating to Sky Complex supplementary rent were recognized upfront in FY2024, causing distortion in YoY comparisons [[2]].

Potential Divestment or Fund-Raising Events

• Jem office divestment agreed post FY2025-end for S\$462 million, proceeds to be used to repay borrowings. This would reduce leverage from 42.6% to approx. 35% [[1]].

Proposed Dividend

• 2H FY2025 DPU: 1.80 cents, up 1.8% YoY [[1]].
• Distribution to be paid on 24 September 2025 [[2]].

Details Investors Need to Know

• Jem office divestment will significantly lower leverage, increase financial flexibility, and strengthen the capital structure [[1][3]].
• Singapore retail will comprise over 85% of portfolio by valuation after Jem office divestment [[3]].
• Retail occupancy remains robust (>99%), with positive rental reversions [[3]].
• Exposure to Milan office market via Sky Complex, with some risks (Building 3 only 31% committed occupancy) [[3]].
• Interest rate outlook is more favorable, expected to boost distribution performance [[1][3]].

Forecasted Events or Developments

• Jem office divestment is expected to complete and positively impact leverage and interest expense [[1][3]].
• Continued focus on Singapore retail assets, which are performing strongly [[3]].

Full Extract of CEO Statement and Analysis

Mr. Guy Cawthra, Chief Executive Officer of the Manager, said, “The divestment of Jem Office marks an important milestone in reducing our leverage, strengthening our capital structure and reducing our interest expense. Upon completion of the transaction, Singapore retail exposure will comprise over 85% of our portfolio by valuation. Our core Singapore portfolio of 313@somerset and Jem have delivered robust operational performance in FY2025. A more favourable interest rate outlook is expected to contribute positively towards distribution performance.” [[3]]

Analysis: The statement is positive, emphasizing the benefits of the Jem office divestment (lower leverage, stronger capital structure, cost savings), the strength of the Singapore retail portfolio, and optimism regarding the interest rate environment.

Insights and Overall Assessment

• Positive Aspects:
  • Leverage will be significantly reduced after Jem office sale, improving financial stability and flexibility.
  • Core Singapore retail assets are performing very well, with high occupancy and strong rental reversions.
  • Interest rate environment is anticipated to be supportive in the near term.
• Risks:
  • Headline revenue and NPI declines are due to exceptional items, not underlying performance, but some may see this as a negative without proper context.
  • Milan asset (Sky Complex) has some occupancy risk, especially in Building 3 (31% committed occupancy).
  • Retail tenant sales are slightly down YoY, though visitation is up; possible macro pressures.
• No evidence of errors in the financial report – all adjustments and exceptional items are clearly disclosed and explained [[2]].
• No evidence of share dilution, buybacks, or unusual fund flows or related party transactions in this report.
• No mention of natural disasters, disputes, court cases, loss of tax benefits, or similar material events impacting current results.

Conclusion

The report indicates a solid underlying operational performance, prudent capital management, and a clear strategic focus on its strongest assets. While headline figures are impacted by exceptional items, adjusted results show stability or improvement. The Jem office divestment is a major positive for the balance sheet. The outlook, especially for Singapore retail, is favorable. Risks remain around the Milan office asset and macroeconomic factors, but overall, the report is positive for investors seeking yield and stability.

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