Distribution Per Unit Increased 3.1% Year-on-Year to 1.85 cents in 1H FY2026

Core Insights - Lendlease REIT has strengthened its portfolio through the divestment of Jem office and the strategic acquisition of a 70% stake in PLQ Mall, enhancing its exposure to resilient suburban catchments in Singapore [1][4]. Financial Performance - In the first half of FY2026, Lendlease REIT reported a gross revenue of S$101.9 million and a net property income of S$74.0 million, reflecting declines of 1.6% and 1.2% year-on-year, respectively, primarily due to the Jem office divestment and the exit of Cathay Cineplexes [5]. - On a like-for-like basis, excluding the Jem office divestment, gross revenue and net property income increased by 0.6% and 1.1%, respectively [5]. - Distributable income grew by 11.7% year-on-year to S$48.6 million, resulting in a distribution of 1.85 cents per unit, driven by lower interest expenses [7][9]. Capital Management - Following the Jem office divestment, net sales proceeds were mainly used to repay borrowings, reducing the gearing ratio to 38.4% from 42.7% [10]. - The weighted average cost of debt decreased to 2.90% per annum, and the interest coverage ratio improved to 1.8 times [10][11]. - Approximately 72% of borrowings are hedged to fixed rates, with S$701.2 million in debt facilities available for working capital needs [11]. Operational Performance - As of December 31, 2025, Lendlease REIT's portfolio committed occupancy was approximately 95%, with a retail portfolio occupancy rate of 99.5% [12]. - The tenant retention rate was 64.5%, which would improve to 76.8% excluding the impact of Cathay Cineplexes [16]. - The retail portfolio achieved a positive rental reversion of 10.4%, with tenant sales and visitation growing by 7.2% and 9.6% year-on-year, respectively [15]. Strategic Initiatives - The reconfiguration of retail spaces at PLQ Mall has commenced, expected to enhance rental rates upon completion [16]. - A two-year energy tariff contract has been secured for the Singapore portfolio, anticipated to reduce electricity expenses by approximately 15% per annum starting July 1, 2026 [10][14].