Lendlease REIT’s Strategic Jem Office Divestment and Strong Operational Results Signal Resilient Growth Ahead

Key Highlights for Investors

• Jem Office Divestment Nears Completion: Expected by 12 November 2025, unlocking approximately S\$8.9 million in disposal gains for distribution to Unitholders and materially lowering leverage.
• Positive Retail Rental Reversion: 8.9% uplift in rents year-to-date, signaling robust demand and pricing power in the retail portfolio.
• Portfolio Occupancy Strength: Overall committed occupancy at 95.0%, with retail assets exceeding 99% and Milan office occupancy jumping to 88.5%.
• Improved Debt Metrics: Weighted average cost of debt down to 3.09% p.a., with 68% of borrowings hedged to fixed rates and a strong sustainability-linked debt portfolio.
• Global Recognition: Inclusion in iEdge Singapore Next 50 Index and crowned Regional Sector Leader (Retail Asia Listed) in GRESB 2025 with a 5-Star ESG rating.
• Significant Trading Activity: Average daily trading volume doubled in 2025; unit price up 14% year-to-date, outperforming the FTSE ST REIT Index by 5 percentage points.

Strategic Jem Office Divestment: A Game Changer for Balance Sheet and Investor Returns

Lendlease Global Commercial REIT is set to complete the divestment of its Jem office asset by 12 November 2025. The transaction is particularly significant as it fulfills all precedent conditions, paving the way for the release of net sales proceeds. These proceeds will be primarily used to repay borrowings, reducing aggregate leverage to an estimated 35% on a proforma basis—a level that enhances financial flexibility and resilience.

The divestment will also terminate associated hedges, further streamlining the capital structure. Critically, a disposal gain of approximately S\$8.9 million will be available for direct distribution to Unitholders, representing an immediate value unlock and potential income boost. Portfolio committed occupancy will stand at 94.1% post-divestment, with lease expiry and WALE metrics adjusted moderately but remaining robust.

Operational Performance: Resilient Retail and Milan Office Surge

As of 30 September 2025, Lendlease REIT’s portfolio demonstrated solid operational metrics. The retail portfolio continues to outperform, with occupancy above 99% and a highly attractive 8.9% rental reversion, confirming the strength of its prime assets and tenant mix. The Milan office portfolio, long viewed as a turnaround opportunity, saw occupancy jump to 88.5%, up from 81.6% in June, driven by active leasing at Building 3.

The lease expiry profile is well-distributed, with 7.9% of net lettable area (NLA) and 11.6% of gross rental income (GRI) due for renewal in FY2026. The overall WALE is a healthy 7.0 years by NLA and 4.8 years by GRI, supporting income stability. Post-divestment, lease expiry and WALE will adjust but remain supportive of long-term visibility.

Retail Momentum: Tenant Mix Evolution and Footfall Growth

Tenant retention for the retail portfolio registered at 52.2%, impacted by Cathay Cineplexes’ exit, replaced by Shaw Theatres. Excluding this one-off, retention would stand at 72.9%. Visitation improved by 7.7% year-on-year, supported by targeted government and marketing initiatives, signaling growing consumer demand and international interest in Orchard Road. Tenant sales dipped 0.8% YoY, but remained stable when excluding Cathay Cineplexes’ impact.

These trends reinforce the resilience and attractiveness of Lendlease REIT’s retail portfolio, especially with strategic tenant replacements and activations designed to drive footfall and sales.

Capital Management: Lower Funding Costs and High Sustainability Credentials

During the quarter, S\$115.5 million of loans were refinanced, bringing total gross borrowings to S\$1,668.9 million with an average debt maturity of 2.6 years. The debt portfolio is fully unsecured, and S\$136.1 million in undrawn facilities enhance liquidity. Notably, 93% of total debt facilities are sustainability-linked, aligning with global ESG best practices.

68% of borrowings are hedged to fixed rates, and the weighted average cost of debt improved to 3.09% per annum. The interest coverage ratio stands at 1.6 times, with covenant headroom exceeding required thresholds.

Award and Recognition: Elevating Profile and Investor Appeal

In September 2025, Lendlease REIT was included in the iEdge Singapore Next 50 Index—a move that has doubled average daily trading volumes and further expanded its investor base. The unit price has risen 14% year-to-date, outperforming benchmarks.

On the ESG front, Lendlease REIT continues to shine, earning Regional Sector Leader status (Retail Asia Listed) in the 2025 GRESB assessment and a top-tier 5-Star rating for the sixth consecutive year. The REIT also received an “A” for Public Disclosure, underscoring its commitment to transparency and stakeholder engagement.

Portfolio Overview & Strategic Focus

As at 30 June 2025, Lendlease REIT’s portfolio includes leasehold properties in Singapore—Jem and 313@somerset—and freehold interest in Sky Complex (Milan). The portfolio’s appraised value stands at S\$3.76 billion, with a total NLA of approximately 2.0 million square feet. Other investments include Parkway Parade and the development of a multifunctional event space adjacent to 313@somerset.

Lendlease REIT’s manager is a subsidiary of Lendlease Corporation Limited, a leading Australian real estate group with integrated capabilities in investments, development, and construction.

Investor Takeaways & Price Sensitive Considerations

• Jem Office Divestment: The completion is imminent and unlocks immediate distributable gains, lowers leverage, and enhances capital structure—a direct positive for share value.
• Retail Rental Reversion: Continued positive rental growth highlights underlying asset strength and income potential.
• Milan Office Uptick: Significant occupancy improvement could drive future valuation upside.
• Strong Trading and Index Inclusion: Boosted liquidity and investor interest could further support unit price appreciation.
• ESG Credentials: Sustained top-tier performance in global ESG rankings attracts institutional capital and supports premium valuations.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or an offer or solicitation to buy or sell any securities. The value of investments may fall as well as rise. Past performance is not indicative of future results. Investors should consult their own financial advisors before making any investment decisions. The information herein is based on the latest public disclosures and may contain forward-looking statements subject to risks and uncertainties.

View Lendlease Reit Historical chart here