REIT-TIREMENT - REITs Investing & Personal Finance

A blog about REITs investment & personal finance

Thursday, February 18, 2021

Lendlease Global Commercial REIT @ 18 February 2021

Basic Profile & Key Statistics

Lendlease Global Commercial REIT (LREIT) invests in Retail and Office properties and owns 2 properties in Singapore and Italy.

Performance Review

Gross revenue, NPI, distributable income and DPU increased YoY by 3.2%, 1.6%, 1.4% and 0.8% respectively. However, note that the 1H FY2020 is based on annualized results from 2 October 2019 to 30 June 2020 and then deducting for the results from 1 January 2020 to 30 June 2020. Due to the income drop between Apr to June 2020, the figure shown is lower than the annualized figure for the period of 2 October 2019 to 31 December 2019.
Tenant sales recovered to 73.4% of pre-COVID level despite traffic recovered only to 61.4%.
LREIT has acquired a 5.0% stake in Lendlease Asian Retail Investment Fund 3 Limited which holds a 75.0% indirect interest in JEM in October. The authorities have handed over grange road car park for the development of a new multi-functional event space which is expected to complete by 2022.

Lease Profile

  • Occupancy is high at 99.7%
  • WALE is long at 4.9 years
  • Highest lease expiry within 5 years is high at 36% which falls in FY2024 and beyond, without breakdown
  • Weighted average land lease expiry is long at 89.48 years


Debt Profile

  • Gearing ratio is moderate at 35.5%
  • Cost of debt is low at 0.88%
  • All debts are fixed debts.
  • All debts are unsecured debts
  • WADE is slightly short at 2.7 years 
  • Highest debt maturity within 5 years is high at 81.7% which falls in FY2024
  • Interest coverage ratio is high at 4.5 times


Diversification Profile

  • Top geographical contribution is high at 65.9%
  • Top property contribution is high at 65.9%
  • Top tenant contribution is high at 34.1% 
  • Top 10 tenants contribution is high at 53.8% 

Key Financial Metrics

  • Property yield is low at 3.6%
  • Management fees over distribution is moderate at 13.9% in which unitholders receive S$ 7.19 for every dollar paid 
  • Distribution on capital is slightly low at 3%
  • Distribution margin is high at 63.6% 

Trends

  • Flat - NAV per Unit
  • Downtrend - DPU, Interest Coverage Ratio, Property Yield, Distribution on Capital, Distribution Margin

DPU at 4Q 2019 is annualized to 6 months to have an apple to apple comparison.

The interest coverage ratio for 4Q 2019 and 1Q 2020 are estimated to reflect a more closer figure in accordance with the Property Funds Appendix of the Code on Collective Investment Schemes.


Relative Valuation

  • Dividend Yield - Past 4 quarters DPU @ 4.1 cents / average yield @ 6.17% = S$ 0.665
  • Price/NAV - NAV @ S$ 0.845 x average P/NAV @ 0.89 = S$ 0.75


Author's Opinion

 Favorable Less Favorable
Diversified SectorConcentrated Debt Maturity
High OccupancyTop Geographical Contribution
Long WALETop Property Contribution
Long Weighted Average Land Lease ExpiryTop Top Tenant & Top 10 Tenants Contributions
Low Cost of DebtLow Property Yield
100% Unsecured DebtDPU Downtrend
High Interest Coverage RatioInterest Coverage Ratio Downtrend
High Distribution MarginProperty Yield Downtrend
 Distribution on Capital Downtrend
 Distribution Margin Downtrend

It is unfortunate that LREIT performance is impacted by COVID 19 after 6 months of listing, thus the downtrend of metrics. However, performance and fundamentals have seen improvement in 1H FY2021. Moving forward, the phase 3 opening and vaccination are expected to have a positive impact on LREIT performance.


For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

REIT-TIREMENT Patreon - Support this blog as a Patron and get SREITs Dashboard PDF

REIT Investing Community - Facebook Group where members share and discuss REIT topic


*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.

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