Lendlease Global Commercial REIT: Stability Amid Challenges
Lendlease Global Commercial REIT reported its 1H FY2025 distribution per unit (DPU) at SGD 1.8 cents, marking a modest increase of 1.7% half-on-half (HoH) but a significant decline of 14.3% year-on-year (YoY). Despite stable top-line performance, the REIT faced headwinds from higher financing costs and an enlarged unit base, which weighed on its bottom line. However, its financial metrics remained resilient, showcasing stability in operations.
The REIT’s retail malls demonstrated strong performance with near-full occupancy rates, while its office portfolio experienced improved committed occupancy levels. Furthermore, positive rent reversions in the low teens continued to support its revenue base. A notable development is the commencement of construction on a multifunctional event space adjacent to the 313@somerset property, showcasing the REIT’s commitment to enhancing its asset portfolio.
Despite these challenges, Maybank Research maintains a “BUY” recommendation for Lendlease Global Commercial REIT, citing a compelling valuation with an attractive yield of 6.2% and a price-to-book ratio of 0.6x. However, the target price has been adjusted downward based on a discounted dividend model (DDM).
CapitaLand Investment: Strategic Expansion into Japan’s Data Centre Market
CapitaLand Investment (CLI) has made a significant move by acquiring a freehold land parcel in Osaka, Japan, to develop its first data center in the country. The total investment exceeds USD 700 million (SGD 944.3 million), with 50 megawatts (MW) of power capacity already secured for the project. This high-capacity data center is designed to support artificial intelligence (AI) capabilities, incorporating energy-efficient solutions such as advanced cooling technologies and best practices in temperature management.
CLI’s data center initiative aligns with its broader digital transformation and sustainability objectives. The development not only enhances CLI’s geographical footprint in Japan, one of its focus markets, but also strengthens its position in the Asia Pacific data center sector. Japan, being the largest data center market in the region outside of China, is expected to grow at a compound annual growth rate (CAGR) of 10%, reaching USD 38.7 billion by 2038.
CLI has been active in this space, raising USD 600 million for its data center development funds in Asia since October 2020 and adding 23 data centers to its global portfolio since 2021. While the acquisition is strategically aligned, Maybank Research assigns a “NEUTRAL” rating to CLI, reflecting the long-term nature of the investment and the need for execution to unlock its full potential.
Sabana Industrial REIT: Leading the Sustainability Charge
Sabana Industrial REIT has successfully completed a dual-phase project in collaboration with Keppel Ltd.’s Energy-as-a-Service arm to install solar panels across nine of its properties. As of December 31, 2024, all installations are operational, marking a significant milestone in the REIT’s sustainability journey.
This initiative positions Sabana Industrial REIT as a frontrunner in renewable energy adoption, with the majority of its properties now capable of generating sustainable energy. The REIT is on track to become one of Singapore’s first carbon-neutral industrial REITs by 2040, reflecting its commitment to environmental responsibility.
Despite the progress on the sustainability front, Maybank Research assigns a “NEUTRAL” rating to Sabana Industrial REIT, acknowledging the positive strides while recognizing that the full financial benefits of these initiatives may take time to materialize.
