Lendlease Global Commercial REIT (LREIT) is a retail/commercial REIT with properties spanning across Singapore and Italy, Milan. Its portfolio consists of three retail malls in Singapore, including Jem, 313@somerset and PLQ mall. It also holds 3 grade A commercial offices in Milan. The REIT’s overall portfolio is valued at S$3.9 billion as of 31 December 2025.
LREIT plans to issue new SGD NC3.0 perpetuals at an initial price guidance (IPG) of 4.600% for accredited and institutional investors only. These perpetuals come with reset dates at the end of 23 April 2029 and every 3 years thereafter, based on the prevailing SGD 3Y SORA-OIS (1.57% as of 14 April 2026) and an estimated initial spread of about 3.03%.
The bonds are expected to be unrated, while the issuer is also unrated. Net proceeds will be used to refinance the issuer’s existing perpetuals: LREIT 4.200% Perpetual Corp (SGD).
Operational highlights
The REIT saw positive retail rental reversion of 10.4%, on the back of increased visitor footfall (up 9.6% YoY) and tenant sales (up 7.2% YoY), highlighting the quality of its assets.
Portfolio occupancy strengthened to 94.1% in 1HFY2026 (compared to 92.1% as of 30 June 2025). This improvement is due to the strengthening of the Milan portfolio occupancy (up to 89.1% from 88.5% as of 30 June 2025), while the portfolio occupancy for its Singapore retail malls remains robust at 99.5%.
Financial Highlights
Overall, the REIT displayed resiliency in its financial performance. In the first half ending 31 December 2025 (1HFY2026), net property income (“NPI”) softened 1.2% year on year (YoY) to S$74.0m (1HFY2025: S$74.9m), mainly due to the divestment of its Jem office and the exit of Cathay Cineplexes from its retail malls. Excluding these one-off items, NPI (S$74.0m) saw stability, up 1.1% YoY.
LREIT’s NPI stability is anchored by the resilient performances across all its retail malls, and the Milan offices, which more than offset the divestment of its Jem office and the loss of Cathay Cineplexes. We believe LREIT’s profitability is well-supported moving forward given its large exposure to the suburban retail malls, alongside its recent acquisition of a 70% interest in PLQ mall in November 2025.
Looking ahead, management expects positive operating tailwinds from both Singapore and Milan. For Singapore, the increase in prime retail rents and demand should provide a continued tailwind for the REIT’s prime retail malls, while the Milan office market is expected to improve modestly, with leasing activity staying above 2025 levels.
In conclusion, we continue to like LREIT as a decent issuer. Its portfolio of prime retail malls in Singapore should continue serving as the REIT’s core earnings anchor, supporting the group’s decent credit profile.
Credit Highlights
LREIT reported a lower gearing ratio of 38.4% as of 31 December 2025 (42.6% as of 30 June 2025), following the divestment of its Jem office. Similarly, interest coverage ratio improved slightly to 1.8x compared to 1.6x as of 30 June 2025. Overall, we like how both credit metrics have shown improvement compared to FY2025 (ending 30 June 2025), and that both metrics are above MAS’ regulatory requirements of 50% and 1.5x respectively. However, we note that current ICR of 1.8x is quite close to the MAS requirement.
We like the REIT’s continued ability to reduce its blended funding cost, now at 2.9% compared to 3.5% in FY2025. We note that approximately 72% of borrowings are hedged to fixed rates. These improvements are likely due to the environment of lower interest rates experienced in the last year.
LREIT’s debt maturity profile remains manageable, with roughly 58.3% of its debt due over the next 4 years (FY2026 to FY2029). We remain comfortable with the REIT’s ability to meet its upcoming obligations, given its steady ability to generate operating cash flows (S$140m annually over the past 4 years), and healthy available liquidity of S$727.1 million in cash and undrawn facilities (S$701.2 million in available facilities).
Table 1: Peer comparison
|
Bond Name |
Issuer Name |
Years to Call |
Ask Price |
Yield to Worst |
|
LREIT 4.600% Perpetual Corp (SGD)* |
Lendlease Global Commercial REIT |
3.00 |
100.00 |
4.60% |
|
Frasers Centrepoint Trust |
4.21 |
101.62 |
3.56% |
|
|
Starhill Global REIT |
4.49 |
99.43 |
3.37% |
|
|
Mapletree Logistics Trust |
3.36 |
102.73 |
3.43% |
|
|
ESR-REIT |
3.35 |
104.73 |
4.46% |
|
|
*Bond is not yet issued, final price guidance is not yet confirmed Source: Bondsupermart, iFAST Compilations. Data as of 14 April 2026. |
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Overall, LREIT’s credit profile is stable and has improved compared to FY2025. Our analysis below takes the 4.60% IPG as our reference, though the final price guidance (FPG) is likely to come in below the 4.60% IPG level.
In Table 1 shown above, we compare these new perpetuals with the perpetuals of LREIT’s closest peers (Frasers Centrepoint Trust and Starhill Global REIT). In general, we note that LREIT’s new perpetual will provide a decent yield pickup of roughly 100bps.
We also compare the newly issued perpetuals against perpetuals issued over the last year or so, by LREIT’s peers in the property space (MLTSP, EREIT). Do note that these issuers have different business focuses but are still within the broader property space. We note that the implied initial spread of LREIT (roughly 3.03%) is lower than ESR-REIT (3.55%). Compared against its other outstanding perpetual: LREIT 4.750% Perpetual Corp (SGD), with 1.9y to call, the new implied initial spread is higher than this older issue’s 2.19%.
In general, these new LREIT perpetuals will offer a higher yield pickup compared to most of the other bonds seen in Table 1 above.
Finally, we emphasise that perpetual bonds in general (including these new perpetuals) may be subject to several risks, including non-call risks, considering the smaller initial margin for this issue relative to those of LREIT’s outstanding perpetuals. Other typical clauses include non-cumulative deferral and dividend-stopper clauses. Investors who are comfortable with these perpetual-related risks may consider this new issuance attractive, considering LREIT’s solid outlook and the decent yield pickup relative to peers.
Disclosure: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a NIL position in the abovementioned securities. The analyst who produced this report holds a NIL position in the abovementioned securities.
