Lendlease Global Commercial REIT (LREIT) has announced the sale of its Jem office for $462 million as part of its capital recycling strategy. The transaction, revealed on 4 August 2025, is expected to reduce LREIT’s gearing from 42.6% to 35% by using the proceeds to pay down debt, CGS International said in a report. This move is anticipated to improve the REIT’s financial flexibility and enable it to pursue future growth opportunities, the report added.
The sale of the Jem office is projected to result in a divestment gain of $8.9 million, which could potentially be distributed to unitholders. Following the divestment, LREIT’s portfolio will see an increased focus on Singapore retail, which will account for 85% of its portfolio value, up from 60%.
LREIT’s recent financial performance showed a 1.9% year-on-year increase in revenue and a 2.7% rise in net property income for the second half of the financial year ending June 2025. Despite a 5.1% decline in retail tenant sales, rental reversions remained robust at +10.2% for FY25. The REIT also reported a 4.8% year-on-year growth in distributable income, translating into a distribution per unit (DPU) of 1.8 Singapore cents.
The REIT’s average cost of debt decreased by 8 basis points quarter-on-quarter to 3.46%, with an improved interest coverage ratio of 1.6 times by the end of FY25. The divestment is expected to create an income vacuum, leading to a reduction in DPU estimates for FY26 and FY27 by 6.95% to 8.64%.
LREIT maintains an “Add” rating with a revised target price of $0.67, reflecting the potential for growth following the balance sheet improvements post-divestment.
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