Lendlease Global Commercial REIT – Retail strength continues, AEI upside next August 6, 2026 2

PSR Recommendation: BUY Status: Maintained
Last Close Price: 0.585 Target Price: 0.77
  • 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.

 

 

 

 

 

The positives
+ Strong operational performance. Retail rental reversion stood at 11.7% (FY25: 10.2%), with
committed occupancy at 98.5% (down 1% YoY). Tenant sales grew 24.0% YoY (up 4.0% ex-PLQ
Mall), and cumulative visitation rose 16.4% YoY (up 5.2% ex-PLQ Mall), reflecting resilient
suburban retail demand. The F&B, sports, and jewelry/watches tenants had strong retail
performance, while gifts and ancillary-use tenants lagged. Management is reconfiguring c. 16,000
sq ft at PLQ Mall, Levels 1 and 2 (former H&M, Uniqlo, and Foot Locker space), into 3-5 new
tenancies, including two anchor F&B concepts in advanced discussions, targeting high-teens rental
reversion on completion by Dec 26.

+ Strong capital management. S$120mn of the S$200mn perp securities maturing in Jun26
were refinanced at 4.28% (from 4.2%), with the remaining S$80mn funded through cheaper
bank debt. The cost of debt of 2.75% (down 71 bps YoY) also came in lower than the 2.9%
guidance provided by management. Weighted average debt maturity is extended to 2.8 years
(from 2.6 years), with no substantial refinancing till FY28 (EUR223.0mn of term loans and
S$100mn of loans are due). Management expects potential interest savings from future
refinancing, as the euro-denominated debt hedges (expiring at the end of FY28) were locked
in during 2023 when base rates were elevated. However, we have not modelled any savings
given rate uncertainty.

 

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