LREIT's NPI down 53.3% to $7.51m from IPO forecast

It posted lower revenue on the back of lower rental income from 313@somerset.

Lendlease Global Commercial REIT (LREIT) saw its net property income plunge 53.3% to $7.51m in Q4 from its IPO forecast of $5.42m, an announcement revealed. Likewise, revenue crashed 42.1% YoY to $12.46m.

The lower revenue came on the back of lower rental income from 313@somerset in Q4 FY2020 due to the implementation of relief measures and rent waivers provided to retail tenants. The impact was cushioned by the stable revenue contributed by Sky Complex.

Property expenses of $4.95m was 8.7% better compared to its forecast, mainly attributable to lower maintenance, operating and utility costs.

As a result, the distribution per unit (DPU) dropped 62.7% in Q4 to 0.48 cent from 1.28 cents in the forecast. Distributable income to shareholders likewise fell 62.2% to $5.69m.

In addition, LREIT’s gross borrowings stood at $545.3m as at 30 June, equating to a gearing ratio of 35.1%. The weighted average running cost of debt was 0.86% per annum, whilst its weighted average debt maturity was 3.1 years.

LREIT hedged 100.0% of its floating rate debt to fixed rate through interest rate swaps and options. To mitigate foreign currency risks, it has substantially hedged its projected Euro-denominated income for FY2021. All of LREIT’s debt is unsecured debt, claiming that it ensures that it has balance sheet flexibility.

As at 30 June, LREIT has $83.7m of cash and cash equivalents, and has an uncommitted undrawn debt facility of $20m to fund its working capital. To date, LREIT has received further offers of uncommitted bank debt facilities, which increased its uncommitted undrawn debt facilities to approximately $97m.

Further, LREIT’s interest coverage ratio was 9 times in accordance with requirements in its debt agreements, and 4.6 times in accordance with the Property Funds Appendix of the Code on Collective Schemes.

Portfolio occupancy stood at 99.5% with a long WALE of 9.7 years by NLA and 4.9 years by GRI. Approximately 77% of its leases by NLA will expire only beyond FY2025.