Lendlease Global Commercial REIT Secures Approximately 13% Rental Increase for Jem Office

Lendlease Global Commercial REIT (LREIT) has secured an approximately 13% increase in the base rent for Jem Office, effective from 3 December 2024, for a five-year period. This rental increase, secured with the Singapore's Ministry of National Development (MND), the top tenant contributing 11.2% to LREIT's portfolio by gross rental income (GRI), is expected to increase the GRI contribution from MND to approximately 12% on a proforma basis as at 31 December 2024.

This rental increase comes on top of the existing lease with MND and is expected to have a positive impact on LREIT's overall financial performance and distribution per unit (DPU) growth in both the short and long term. The higher GRI will directly translate into higher net property income (NPI) for LREIT, contributing to an increase in distributable income and, consequently, DPU for LREIT's unitholders.

The 13% rental increase is significantly higher than the average rental growth in the Singapore office market, indicating strong demand and positive rental reversion for the Jem office asset. This positive rental reversion can be attributed to factors such as the strong demand for office space in Singapore, the strategic location of Jem Office in Jurong Gateway, which is earmarked to be the second central business district in Singapore, and the rental review with MND, the anchor tenant.

In the long term, the 13% rental increase is expected to contribute to a more stable and predictable cash flow for LREIT, helping to maintain or even increase DPU growth. The positive rental reversion achieved for Jem Office, along with the strong performance of the retail portfolio, demonstrates LREIT's ability to effectively manage and optimize its assets, boding well for its long-term financial performance.

In conclusion, the 13% rental increase for Jem Office is expected to have a positive impact on Lendlease Global Commercial REIT's overall financial performance and DPU growth in both the short and long term, by contributing to higher NPI and distributable income, and providing a stable and predictable cash flow for the REIT. This rental increase is a testament to LREIT's effective management and the strong demand for office space in Singapore.