LendLease Global Commercial REIT has reported a 10% year-on-year decline in its net property income (NPI) to SGD148.8 million for the full year, according to a recent report by DBS Group Research. The decline was attributed to a bad debt provision for Cathay, aligning with DBS’s estimates. Additionally, the distribution per unit (DPU) decreased by 6.9% to 3.60 Singapore cents.
The REIT’s strategic move to divest its JEM office for SGD462 million is expected to reduce its debt to 35% and improve its interest coverage ratio to 2.0 times. This divestment represents approximately 12% of the portfolio at book value, potentially re-rating the stock from its current 0.74 price-to-book ratio. Portfolio valuations saw a 2.2% increase, driven by an uplift at Sky Complex.
DBS Group Research maintains a “BUY” rating for LendLease Global Commercial REIT, with a target price of SGD0.75. The forward yields are considered attractive at 6.7%, presenting a promising opportunity for investors. The report highlights the REIT’s potential for growth and stability despite recent challenges.
The divestment and improved financial metrics are seen as positive steps towards enhancing the REIT’s overall performance and investor appeal. As the market continues to evolve, LendLease Global Commercial REIT’s strategic decisions could play a crucial role in its future trajectory.
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