- 2H26/FY26 DPU met 50%/98% of our expectations (up 2.7% YoY). 2H26 GRI/NPI rose 6.8%/6.6% YoY to S$110.0mn/S$78.7mn, forming 57%/55% of our FY26e forecast. This was supported by i) full-half contribution following the acquisition of PLQ mall, ii) strong rental reversion of 11.7% and portfolio occupancy of 98.5% across the Singapore retail portfolio.
- Gearing has improved from 42.6% to 38.9% from i) partial equity funding of PLQ acquisition (funded via S$280.0mn private placement and S$196.6mn preferential offering), which expanded equity while limiting incremental leverage, ii) repaying debt using proceeds from JEM Office sale (sold at S$462mn). Adjusted gearing was also reduced to 44.3% from 50.8%, as outstanding perpetual securities declined from S$319.5mn to S$240.6mn, with S$200mn of 4.20% perps redeemed and replaced by S$120mn of new 4.28% perps issued.
- We maintain our BUY recommendation and increase our target price to S$0.77 (prev. S$0.73) as we roll forward our forecasts. We have incorporated full-year PLQ mall contribution from FY27e onwards, with DPU estimate unchanged for FY27e. LREIT is trading at a FY27e P/NAV of 0.84x, with a dividend yield of c. 6.89%. Future performance depends on i) the PLQ AEI completing on schedule (16,000 sq ft across Level 1 & 2, targeting completion by Dec 26), (ii) successful divestment and capital recycling of Sky Complex Building 3 divestment proceeds, (iii) Singapore retail reversions continuing at a strong pace.
Continue Reading
