Lendlease Global Commercial REIT – PLQ Mall strengthens suburban retail portfolio February 23, 2026 5

PSR Recommendation: BUY Status: Maintained
Last Close Price: 0.615 Target Price: 0.73
  • 1H26 DPU of 1.85 cents rose 3.1% YoY, forming 51% of our full-year FY26e forecast. The resilient performance of the retail portfolio (rental reversion up 10.4% YoY) and strong capital management (gearing down 430 bps to 38.4%) resulted in a 11.7% YoY increase in distributable income to S$48.5mn.
  • Retail rental reversion was 10.4% (c.7% ex-PLQ Mall). PLQ Mall had a strong reversion contribution given that the asset has been under-rented since its Covid-period opening, when occupancy was prioritised over rent optimisation. Portfolio tenant retention was 64.5% by NLA, weighed by the Cathay Cineplexes exit (ex-Cathay: 76.8% retention).
  • We maintain BUY with a higher DDM-based TP of S$0.73 (prev. S$0.70), taking into account PLQ Mall’s contribution and associated c. S$234.5mn private placement. Upside catalysts include a potential accretive divestment of Milan Building 3 and a larger-than-expected distribution from the S$8.9mn Jem office divestment gain yet to be deployed. Rental reversion is expected to trend at double digits for the remaining of FY26. LREIT currently trades at a FY26e yield of 5.9% and is at a c. 28% discount to NAV.

 

 

 

 

 

 

The positives
+ PLQ Mall acquisition strengthens retail portfolio. The 70% acquisition of PLQ Mall from
ADIA for S$885mn (a 2.1% discount to appraised value) is 2.5% DPU accretive. PLQ Mall has
over 200 tenants with a committed occupancy of 99.7% and a WALE of 2.3 years. The
acquisition lifts the suburban retail portfolio to 63% of total portfolio value at S$3.9bn (from
55% at S$3.3bn). The retail portfolio’s rental reversion was 10.4% (c.7% ex-PLQ Mall), with
occupancy at 99.5%. PLQ Mall has been under-rented since its Covid period opening, and
ongoing reconfiguration works are expected to drive rental uplift from single digits to the high
teens per cent range.

+ Disciplined capital management. Gross debt has fallen S$500mn to c.S$1.2bn, compressing
gearing 430 bps to 38.4% and expanding ICR from 1.6x to 1.8x. This was driven by the
refinancing of S$200mn of perpetual securities with S$120mn of new issuance at a lower
coupon (down to 4.75% from 5.25% p.a.), and by cheaper loan funding, which compressed
the cost of debt by 19bps to 2.90%. 72% of borrowings are fixed-rate hedged. Near-term
refinancing risk is minimal, with FY26 debt maturity of S$100mn well covered by S$701.2mn
of available facilities.

+ Room for sustained rental reversion. Jem’s acquisition in FY2022 compressed portfolio
occupancy cost by over 600 bps to 23.7%, as seen from Figure 1. This is likely due to suburban
malls typically having lower occupancy costs than prime retail destinations such as
313@somerset. The addition of PLQ Mall could lead to a similar effect, particularly given that
the mall opened during Covid when occupancy was prioritised over high rental rates. The
potentially lower occupancy cost for the portfolio provides greater headroom for rental
upside without straining tenants.

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About the author

Profile photo of Hashim Osman

Hashim Osman
Research Analyst
PSR

Hashim graduated from the National University of Singapore with a degree in Business Administration.

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