The Positives
+ Robust retail rental reversion of 15.3% with 313 achieving c.20% and Jem delivering resilient performance of c.10%. Rental reversion for offices saw a slight cooling down, landing at 1.5% in 3Q24. However, stable support comes from tenants with long lease periods, contributing to c.22% of the total gross rental income. We expect rental reversion for the whole year FY24e to be c.15% (FY23: 4.8%).
+ Potential rental uplift from Jem and Sky Complex. We anticipate rental upside from Building 3 Sky Complex Milan, driven by healthy office demand in the surrounding area and lower-than-average rental rates previously signed by Sky Italia. In 3Q24, LREIT secured 8.1% of the net lettable area (NLA) leases through internal sourcing. LREIT expects backfilling to be completed by 50% by the end of 2024, with the rental reversion of c. 30-40% to match current market rates. Jem is also reviewing its rental at the end of 2024, and the current market rental is c.20% higher than the previous rent signed five years ago. We expect rental escalation to be in the high-teens, resulting in an improvement in revenue by c.2% upon successful negotiation.
The Negative
– NIL
Miaomiao mainly covers the Singapore REITs sector and graduated from Singapore Management University with a Bachelor’s degree in Business Management.