# Lendlease Global Commercial REIT — Corporate Connect Webinar Presentation & Dialogue

Event: SIAS Corporate Connect Webinar Presentation & Management Dialogue
Date: 12 August 2025
Issuer: Lendlease Global Commercial REIT (SGX:JYEU)
Provenance: automated speech recognition (asr) of the public webinar recording
Source recording: https://www.youtube.com/watch?v=jEMc1jG-BSo
Official record: https://www.lendleaseglobalcommercialreit.com/investor-relations/
Presenters: Mr. Kelvin Chow — Chief Executive Officer, Lendlease Global Commercial Trust Management
Words: ~9,935

Unofficial machine transcript. Prepared by SMID Research from the public Corporate Connect webinar recording by automated speech recognition, without a full manual check: expect mis-heard names and figures. There is no speaker attribution: the source recording carries no diarisation, so cues are shown as timestamp and text only; timestamps refer to the recording. Not a company publication. Lendlease Global Commercial REIT's own investor relations page (https://www.lendleaseglobalcommercialreit.com/investor-relations/) is the authoritative record. Copyright in the briefing rests with Lendlease Global Commercial REIT / SIAS; contact contact@smidresearch.com for corrections or removal.

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[00:00:00] Hi, good evening, everyone. My name is Gerald, and I'll be your moderator for tonight's Corporate Connect webinar. So we are very pleased to have with us Lenny Suite at tonight's Corporate Connect, as well as the audience from MoomooLife. This Corporate Connect webinar is organized by CRS and supported by the SJX group. So many of us are probably not unfamiliar with Lenny Suite. We probably visit a lot of the assets that they hold in the portfolio, assets such as gem, chuanchui at Somerset. And what we can also tell is that about 90% of the portfolio of Lenny Suite is actually in Singapore. So tonight, we will have a sharing

[00:00:48] from the management of Lenny Suite, where we'll get an update from them about some of their latest developments. And we also welcome questions from the participants. So if you have any questions that you would like to ask the management of Lenny Suite, we welcome them, and you can share some of these questions in the Q&A box. But before we welcome the management of Lenny Suite, what I will do is to provide a very quick market update in terms of some of the developments that we see for the Singapore market, as well as the Singapore REITs market. So what I wanted to do is to first and foremost

[00:01:30] look at how the Singapore market has done. If I were to look at the performance over the past week, we are now back to above the 4,200 level mark, once again for the benchmark trades times index. So this is actually quite near the all-time high of 4,300 points that was just reached a few weeks ago. And what we have seen in the global markets as well is that the S&P 500 is also close to its all-time high, just below the 6,400 mark. And for the TechHavy NestTech index, with a 3.9% gain in the past week, we are actually at record highs. So generally, there is positive sentiment for global stocks.

[00:02:18] And we will also dive deeper to understand what is driving this positive sentiment. So this is the chart for the benchmark trades times index in Singapore. I took a longer time series here to observe the trend in the Singapore market. And what we see here is that after the brief deep in April this year with the Liberation Day Terrace, the Singapore market has recovered very strongly. Part of it is driven by the easing of concerns around the global trade tariffs as some of the negotiations between the different countries and the US have led to a succession in trade deals being announced. But at the same time, the global economy

[00:03:06] has been more resilient than what some investors have feared. So at this point in time, we have exceeded the previous highs that was achieved in 2007 of about 3,800 points. And I think what investors are at this point looking out for would be whether we see the US Federal Reserve continuing to cut interest rates and also whether there are any country-specific factors that will help to drive the STI higher. I think when I look at country-specific factors, apart from the easing of trade concerns, we have also seen measures being announced to support the Singapore market. So just a few weeks ago, we saw the MES coming out

[00:03:55] with an announcement for more measures to be supporting the Singapore stock market. So what you're probably seeing in the newspapers will be the $5 billion equity market development program to strengthen the local fund management ecosystem. And the news that came out would be $1.1 billion of funds that were allocated to three fund managers. And these fund managers would invest in the Singapore stock market. So these measures are meant to drive demand towards the Singapore stocks. And together with other measures, including on the supply side, measures to enhance connectivity and trading. All of it is meant to drive interest towards the Singapore market and enhance the entire ecosystem.

[00:04:47] So we'll continue to look out for more of these measures to be able to drive more interest towards the Singapore market. At the same time, for the $5 billion fund, only $1.1 billion of funds have been announced in terms of how they'll be allocated. We'll continue to keep a lookout for how the remaining $3.9 billion will be allocated between the different fund managers. I think the other factor to keep a lookout for within the Singapore market would be this very short fall in government bond yields. So while we have seen the bond yields in the US remain fairly elevated, the 10-year Singapore government bond yield has come down fairly sharply

[00:05:31] since the start of this year. If you apply for the Singapore savings bond, if you apply for the Singapore T-bill, that's probably something that you would have realized as well, where the bond yields have come down since the start of this year. So currently, the 10-year government bond yield is actually close to the 2% mark, having come down fairly sharply from just about 3% at the start of this year. So with the Singapore market at all-time highs, we often get questions around which are some of the sectors. They are still trading at fairly depressed valuations, of which I think if I look at the Singapore wheat sector,

[00:06:14] it will be one of them. So this is actually the Lyon-Philip S-Weet ETF, which tracks an index of wheat. And that would effectively provide diversified exposure towards various reeds in the Singapore market. And what we see here is that at this point in time, it has recovered from the April lows, but it is still below the levels where it was at in 2021 and 2022. If I were to look at some of the recent trends across the different wheat subsectors, we have the URA data that came out a few weeks ago. I think the retail sector is actually one of the more resilient sectors, despite some of the news flow around tenant issues,

[00:07:07] as well as some of the F&B companies actually facing challenges. So if we were to look at the retail renter index in the second quarter, that actually rose by 0.9% compared to the previous quarter, and 1.3% compared to the previous year. If you look at the retail vacancy across both the central area as well as outside central area, all of them have remained fairly resilient. Next, we look at the office market. This is where there have been a bit more hate wins compared to the retail market, where we see that the renter index has come down by about 0.3% compared to the previous quarter, and 1.4%

[00:07:55] compared to the previous year. This is largely driven by the increase in supply that we see for Singapore's office market, and that has also led to some of the pressures that we see for the office rents. OK, next we look at the industrial segment. This is also one of the more resilient subsegments within the various subsectors, where we see that for the all industrial property renter index, that went up by 0.7% quarter on quarter, as well as 2% year on year. However, it is worth noting that the renter growth for industrial subsector is actually coming down. So after the COVID-19 pandemic, we saw that the industrial rents went out very sharply,

[00:08:44] partly driven by the very strong growth in e-commerce demand. And I think in the past few quarters, while the rents are still growing, they have moderated compared to the growth that we saw in 2022 and 2023. At this point in time, if you were to look at the year to date performance of the Singapore REITs, they have been very divergent, really depending on the performance of the individual REITs, whether they've been able to grow their distributions, whether their balance sheet is strong. So at this point in time, we can actually understand more about the different REIT fundamentals, given that the divergence of the Singapore REITs performance

[00:09:32] has been fairly wide. It's also worth noting that the price to book valuation of the Singapore REITs has also been very divergent. So we actually have a few REITs that are trading significantly above book value. Those are generally the REITs that have got more defensive assets, or seem to have some structural growth drivers, such as the data centers. But at the same time, we also have quite a number of REITs that continue to trade below their price to book value. So at this point in time, the average of the 40 S REITs and property trusts in Singapore offer an average dividend yield of about 6.8%.

[00:10:16] That is above the dividend yield of the STI index, and also the 10-year Singapore government bond yield. So with that as a backdrop, I think it's interesting to find out more about individual REITs, given the divergence in performance that we have seen across different subsectors, across different individual REITs. And at the same time, with the fall in the 10-year Singapore government bond yield, the yields that some of these REITs can potentially offer is actually above what we get for the STI index, as well as the 10-year Singapore government bond yield. So with that, I will end my sharing on the Singapore REITs, and I would also then like to welcome the management team

[00:11:04] of Lenny's REIT to be able to provide an update around some of their recent developments. So we have a very pleased to have with us the CEO of Lenny's REIT, Mr. Guy Kultra, as well as a Miss Thioulay Thing, Executive General Manager, Finance of Lenny's REIT. So I'll hand over to the management team of Lenny's REIT to provide us with an update. Thanks, Gerald, and good evening, everybody. Thank you for joining us on a Tuesday evening. I know you have choices as to how you spend your free time, so thank you for joining to hear from us. I'll start with just a brief introduction to Lenny's REIT,

[00:11:47] so that we all have a common understanding of the REIT before I run through a presentation. So as you can see on the screen, we've outlined pictures of some of our assets. So Lenny's REIT was listed in 2019, and as you heard from Gerald, about 90% of our portfolio is in Singapore, and that really comprises two very large assets. So there's Gen in Jurong East, and 313 at Somerset on Orchard Road. The portfolio value is about $3.8 billion Singapore dollars, and as I mentioned, was listed in 2019. Lenny's is the sponsor of Lenny's REIT, and has been active in Singapore for more than 50 years,

[00:12:26] and I was appointed on the 1st of April, 2025, as the CEO of the manager. A bit about myself, I'm originally from the UK, but I've lived and worked in Singapore for 18 years now, and I've worked with Lenny's, the sponsor, for more than a decade in Singapore. So maybe we go to the key highlights. So this presentation that we'll run through today is one of a number of materials that we published online last week. So our calendar year, sorry, our financial year ends June, 2025, and so last week we announced our financial year results for the full year, and also for the second half.

[00:13:09] On the same day we announced a number of things, we put out this presentation, which you can find on our website. We put out a press release. We also provided the SGX announcement in relation to the divestment at the GEM office, which I'll talk about today. We published our unaudited financial statements and also a valuation statement on our portfolio. Today we'll just run through this presentation, but we're happy to answer questions on all of those materials if you have. So just running through the highlights to start off with. So last week we announced the sale of the GEM office, and the sales price was $462 million Singapore dollars,

[00:13:46] which is in line with the latest valuation. We plan to use the proceeds from the sale to substantially repay debt, and there's a modest gain on this disposal of approximately $9 million, which we intend to make available for distribution to our unit holders. There are many benefits of this transaction, which I'll elaborate on, but the primary objective is really to reduce the gearing. And just to put some numbers to that, so after the transaction, we expect the gearing to fall from 42.6% to 35%. In terms of our active capital management, so over the period, we've seen a reduction in our cost of debt, and we've seen an improvement of our interest coverage ratio

[00:14:27] from 1.5 times to 1.6 times, and we'll talk more about that in the presentation. The key focus for us is really on growing our earnings, and over the period, we've seen a rise of 1.8% year on year in our DPU, or distribution per unit, to 1.8 cents. The performance at the property level has been resilient, and the valuations have risen by 2.2% over the year, and this is largely driven by our Singapore assets. The rental reversion in the retail portfolio is just over 10% for the year, and we've also seen a positive uplift in our properties in the land of 1.7% over the period, in line with inflation.

[00:15:10] In terms of our strategies, so when I met with investors at the last quarter through our Q3 update, I committed to review and assess our strategy, and I'm pleased to note that we will continue to focus on our core strengths, and we consider that to be really our competitive advantage of our focus on Singapore, as we've mentioned a couple of times, where nearly 90% of our portfolio is in Singapore. We're really focused on the high-quality assets, which are the best assets in their precincts, and those are precincts which we would want to own assets for the long term. In addition to that, we'll look to focus,

[00:15:44] or sort of look to collaborate with our sponsor, and as I mentioned, they've been in Singapore for 50 years, and they actually have quite a large portfolio of assets in Singapore, which at the right time, we could work with them on potential acquisitions. And the final element, just to mention on this, we'll look to continue to recycle capital from our non-core assets, and so if we consider Singapore to be our core portfolio, those assets outside of Singapore, we would look to divest at the right time, depending on the market conditions. So in terms of the investment of Gem Office, so this is really important milestone for Lend Lease Reef,

[00:16:20] and something which the market has speculated about for some time. So we announced last week that we've entered into agreements to sell the asset for $462 million, which is in line with the latest valuation from Jones Lang LaSalle, as at the 31st of July. As I mentioned, the net sales process will be utilized to repay borrowings, and that transaction is anticipated to complete before the end of this calendar year, so before December 2025. There's a gain, which will come from divestment, of about $9 million, and this is calculated on the basis of, distributable basis, and so we intend to make that available for distribution to our unit holders.

[00:16:59] The key rationale for the divestment is to reduce our gearing. So our gearing has been relatively high compared to some of the other REITs in the market, 42.6%, and after the transaction, we expect it to fall to 35%. The results of the transaction will really mean that our portfolio is very focused on Singapore retail, which is a sector which we feel passionately about, and we feel has got good, strong fundamentals going forwards. Maybe I run to the next slide, which is the key portfolio metrics. So as you'd expect, if you follow Lend Lease Reef on a quarter by quarter basis, these metrics remain largely unchanged over the period.

[00:17:36] So our portfolio occupancy remains very strong at just over 90%, so 92%. Slightly lower in the office portfolio that's driven by the leasing work that's taking place in one of our buildings in Milan. The weighted average lease expiry, or whale as we call it, is more than seven years, which is one of the strongest in the market. We've got great tenant retention at more than 80%. In terms of our office rental uplift, so we've enjoyed a 1.7% increase in rentals there, and in the Singapore retail portfolio, the retail rental reversion is more than 10%. There's no change in our sales. Unfortunately, the sales are down 5% year-on-year,

[00:18:16] and we'll talk through that later in the presentation. I'm gonna hand over to Leiting, who will just run you through a couple of slides on the key financial metrics and capital position. Thanks, Guy. So if you look at this slide here, the table at the bottom there lays out the key financial metrics that we have for FY25, second half, as well as the full year. So maybe if we look at the second half results first, which is the darker green columns here, registered gross revenue of 103 million and NPA of 74 million are respectively 1.9% and 2.7% higher on a year-on-year basis. Unfortunately, our NPA for the second half

[00:18:54] had been impacted when we terminated the CAD day lease earlier in March this year. However, we are fully provided for the outstanding arrears at 30, June 25. For the second half of 25, we will be distributing 1.8 cents, as Guy mentioned just now, which is 1.8% higher on a year-on-year basis. This is supported by the overall higher NPA despite the impact from CAD day, as well as coupled with lower interest rates in the second half and both were contributed to the higher DPU. Then if you sort of look on to the next two columns on the white columns, so these are the full year results.

[00:19:28] Gross revenue and NPA look slower because back in 2024, there was an upfront recognition of supplementary rent from Sky Italia. So maybe a bit of background for those who are less familiar with Lally Street. Back in December, 23, we had restructured the lease that we have at Site Complex in Milan, which is well-established. Sky Italia, who was the tenant of all the three buildings there back then, handed back one of the buildings and in return, they paid us an upfront amount equivalent to two years of rent. From an accounting perspective, this was recorded in full in FY24. But for a more like-for-like comparison because it's supposed to cover

[00:20:03] two years of rent, if you straight line this supplementary rent over the two years, gross revenue in FY25 would have been 1.1% higher, while NPA is 0.1% higher. DPU for the full year is 360 cents, which is 6.9% lower compared to FY24. So besides the negative impact I mentioned just now from Caddy, one of the key reason is because FY24 still had a quarter of an old Uribe or hatch, which was a very favorable fixed rate. That Uribe or hatch has since been replaced in October 23. Maybe if we turn to the next slide. So this lays out the total assets and liabilities as well as the asset as to June 25.

[00:20:45] Total assets at 3.9 billion is higher mainly due to revaluation of properties that we have on annual basis. In FY25, we have revaluation surplus from our investment property, which is contributed mainly by the Singapore assets. The increase in total liabilities, on the other hand, is due mainly because we had an 80 million loan draw down to part finance, one of the clubs, which was maturing in 25, which you can see in the row below under perpetual securities holders funds, you will see that it dropped from 400 million to about 320 million. I can talk through a bit more on this when we get to the capital management slide.

[00:21:20] Overall, the assets remain pretty stable at about $2.1 billion. And the number of units issued is standing at about 2.5 billion, which brings us to NAV per unit of 75 cents. So if you flip to this one, capital management. During FY25, we undertook a key capital management initiative in relation to a tranche of about 200 million pubs which was maturing April 25. As a strategic move to optimize our capital structure, we refinanced these 200 million pubs partially with 120 million new issuance, as well as remaining 80 million with loans. And consequently, the overall cost of financing has been lower as the old pub was at 5.25%.

[00:22:01] It's now replaced with new pubs at 4.75% and loans at a lower borrowing cost. With this refinancing, our gearing has said that June has increased to 42.6%. However, part and parcel of our capital management strategy is to undertake capital recycling as well through targeted asset divestment, which as Guy mentioned just now last week, we announced the sale of the gem office component. So when completed, we are going to utilize the net cash proceeds to predominantly repay loans, which will henceforth bring the gearing down to 35% on a pro forma basis. Maybe other key metrics to point out in the table, with the average cost of debt for the full year

[00:22:38] is 3.46% and has been marginally lower because we have benefited from yet another quarter of lower interest rate. And together, refinance pub, the ICR, is also higher at 1.6 times. We will continue to work actively to improve the ICR ratio, and we laid out our steps in the two white boxes to the right of the table. Maybe a bit of information as well. This ICR ratio is stipulated by MES to be calculated on the rolling 12 month basis, meaning that this ICR is calculated for the period from 1st July, 24th to 30th June, 25th. Henceforth, some of the positive contribution from the steps have taken,

[00:23:13] when did time to build in essentially? For example, the perp refinancing we did back in April 25 will take another three quarters or so to actually see the full year upside. And as laid out in the second box, we will continue to engage in active asset management strategy. We will continue to drive performance of the Singapore malls as well as push forward on the listing of building 3A Mainland to drive the ICR further up. If we turn to the next slide. So this chart here on the slide provides an overview of our debt maturity profile, which you can see that it's well spread out to minimise refinancing risk.

[00:23:48] In terms of activities during the year, back in December 24, we secured 516 million loan facilities to target the refinancing of loans in calendar year 2025. So 420 has now been drawn during April 25, which was to refinance maturing loans as well as the perp I mentioned just now. A remaining 140 million remains available to refinance borrowings maturing in September 25, which is about a third of the first bar that you see in a chart here. The other two third is a 200 million loan, which is only maturing in April 26, which is more than half a year away now. We don't foresee any issues in refinancing,

[00:24:27] especially given that our available debt facility with significantly higher post-agem office sale. So I think the next slide just lay out some dates in terms of distribution, which I wouldn't go through here. Maybe I might hand over back to Guy to talk about the portfolio performance. Thanks, Leiting. So we've just commenced the year, as I mentioned our financial year ends 30th of June. And so some of the numbers here are just reset. So when we look at our least expiring profile, we have about 10% by NLA and 16% by GRI, G for renewal in this period, which is a fairly typical year for us. And as you would imagine,

[00:25:06] we've already commenced at least renewals so far. Our whale, as I mentioned earlier, is just over seven years by NLA. After the sale of the gem office, we would expect that to drop to just under five years or so. We still remains very strong. And as you can see from our tenant base, the government is our second largest group or tenant specifically at 12%. And when the gem office is sold since the lease is to the Ministry of National Development, then you'd expect those statistics to change as well. In terms of the retail portfolio, so this is reporting numbers quite similar to what we reported in the last quarter.

[00:25:47] So our rental reversion on the retail portfolio is over 10%, which is a good year, and reflects the quality of our assets in the portfolio. In terms of our sales, and unfortunately the sales is down 5%, so this is the underlying tenant sales, and maybe just a recap on how we calculate our sales. So we calculate our sales for the assets on a light for light basis. So the total sales in one year compared to the total sales in the previous year, we don't make adjustments for tenancies, which are under refurbishment or under vacancy, nor do we add in or take away properties which have been acquired or divested over the period.

[00:26:26] So when we compare some of the REIT sales numbers, it's not always easy to compare light with light. I think as we explained previously, probably the key reason for the reduction in sales is a couple of things, and we would probably attribute a large amount of that to be the tourism. So Singapore has not yet fully recovered in terms of the tourism arrivals, inbound tourism, and then given the strength of the Singapore dollar, we've experienced a lot of outbound tourism as well. And so those sort of flows of people, visitation and spend impacts on retail. And I think this is a consistent theme you'll see across the market.

[00:27:04] In terms of our visitation, so we had quite a strong quarter actually in the last quarter, particularly driven by visitation at 3-1-3 at Somerset. So over the year, we ended slightly up. And I think if we look at the last quarter, a number of things happened, visitation due to tourism was higher, and part of that was driven by a number of concerts that took place in Singapore over that period. I think we now move on to some of our new offerings and new retail offerings. So we've welcomed a number of new tenants and promotions over the period, which is all part of our asset management strategy

[00:27:38] to keep them all refreshed and relevant to shoppers. In particular, you'll note a number of F&B tenants there. As I mentioned earlier, F&B is a key, key part of our portfolio. It's also from a marketing perspective, it's the fourth year of You Won't Believe It's Trash, which is our collaboration with local artists to promote recycling. And this year, the theme is cosmetics. In terms of the office portfolio, I mentioned the gem office sale on the left-hand side, on the right-hand side. So just for context, we own three buildings in Milan to our lease to Skye, and one of them is under lease at present. We were hoping to announce more progress

[00:28:15] in leasing on the building three. It's currently leased about 31%, but we've now hit the Italian summer. So we look forward to announcing some more progress after the summer. In terms of valuation, so the portfolio grew or the valuation rose by 2.2% year on year, which equates about 81 million Singapore dollars. I think more than half of this came from gem retail, which really reflects some of the strong rental reversions that we've touched on in this presentation. We also saw an increase in valuation in the Italian properties. Part of that was driven by the strength of the euro, and part of that was effectively the value

[00:28:53] as recognizing the capex that's been spent on those assets over that period. In terms of sustainability, so we look at sustainability across a number of different metrics, but one of them that we actually look at is regarding safety. And we have what's called the global minimum requirements. So people often think about safety as being a key matter affecting properties under construction or under development, but given the number or the huge volume of people that come through the retail malls, and every year we take safety of our visitors incredibly serious. So we just announced the new 2025 global minimum requirements. We put those online, we make them available to all parties,

[00:29:32] including our competitors, so they can look at how we think about safety and what we do to ensure that we have a safe visitation in our properties. In terms of strategy and key priorities, did we skip a slide? There we go. Okay, so one of the things I mentioned when I took over the role of the CEO, the manager was that I would review our strategy and our competitive advantage. I've just outlined some points here. So as we've said a few times, so we're really Singapore focused, 87% of the portfolio after the set of gem office will be in Singapore. We're very focused on asset quality and precinct dominance.

[00:30:10] So 313 at Somerset dominates it, precinct gem in Jurong East, and both of those are very strong precincts that we would like to invest in and grow. In terms of long leasehold tenure, so the assets in Milan are freehold assets. The assets in Singapore are leasehold assets. We think it's important to have a high leasehold tenure. We think we have one of the highest leasehold tenures in the re-market. We think that's important. It reflects the age of our assets as well. They're both relatively new compared to others. In terms of operating expertise, so Lend Lease has been operating retail malls in Singapore for more than 20 years.

[00:30:49] We're very proud of the team that we have. Our leasing team is about 20 people or so. We do most of the leases ourselves on the retail portfolio. And that sort of contributes to one of our points of difference from an operating perspective. In terms of our sponsors, so Lend Lease is the sponsor of Lend Lease Week. Lend Lease owns just under 30% of Lend Lease REIT. And as I mentioned earlier, has been active in Singapore for more than 50 years. And we're very fortunate that we have a pipeline or they have a pipeline which we can live to acquire in due course market conditions and permitting.

[00:31:25] So that's probably our competitive advantage. And I think that it just reiterates the fact that we will be focusing on Singapore for the foreseeable future in our business. In terms of our key priorities, so I think that probably the one to spend, to re-trade the most is just the focus on sustainable income growth. So as you've seen, we've got good resilient earnings within our core portfolio. And really our priority is to drive those and continue to grow those earnings. Specifically in Singapore, but also in Milan, as I mentioned, the building three, we need to work hard to lease up over the coming months. In terms of our strategy,

[00:32:06] so as I mentioned, we're very much focused on Singapore, which has two elements. So one is exploring opportunities to exit the Milan assets at the right time, capital markets can permitting, but also to look at at the right time potential acquisitions within in Singapore, which is our real focus. And as we mentioned earlier from late team, the active capital management. So just managing our interest rate exposures and managing our interest coverage ratio is really important as well. So I think that sums up the key priorities. Very happy to take questions on this presentation or the other materials. Hand back to Gerald, who I think will facilitate for us.

[00:32:47] Yes, thank you Guy and Lating for the presentation. I really see quite a number of questions coming in through the Q&A. So once again, for the participants who have joined us today, if you'd like to ask a question, do put in your live question in the Q&A box and we'll be taking some of these questions during the Q&A session. Okay, so I think you gave quite a comprehensive update around your portfolio, some of the key strategic plans. So I will start with some questions around your Singapore portfolio, since that represents the bulk of your assets. There's a pre-submitted question here about pathway parade. You currently have a 10% interest in pathway parade.

[00:33:33] What are the plans relating to this? Any intention to be able to raise your stake towards pathway parade? Thanks Gerald. So Parkway is one of, I guess one of many people in Singapore's favourite properties. It's a property that we, the Lend Lease Group has managed and owned for I think 25 years, since we acquired that. And over that period of time, we've really added value to that property through a series of asset enhancements where we've created new precincts and really responded to, I guess changing preferences within the trade area. And if you go to Parkway, you'll see that the trade area or the immediate vicinity

[00:34:13] has become more dense and has become more affluent over that time. And Parkway really hasn't had much competition. Also in the last 12 months, we've seen the opening of the Marine Parade, MRT, which has been really helpful and I think will benefit them all in the future. So if you go back in time, I think it was about two years ago, the Lend Lease REIT acquired a 10% interest in Parkway Parade. And really the rationale was such that, sorry, let me start again. So Parkway Parade is owned by a number of investors and Lend Lease REIT acquired the interest with the intention that if those investors

[00:34:50] look to sell their interest in the future, Lend Lease REIT would be in a position to buy. And so therefore increase its stake in Parkway Parade in the future. I think just to manage expectations, the other two large investors who own that asset have actually owned that asset for quite a long time. And I don't think that they would be in a position to sell in the immediate future, but notwithstanding that it retains, I guess, some kind of option value for the REIT to acquire in future. So I think when you look at the size of that investment, it's quite small compared to the size

[00:35:20] of our overall portfolio, but it gives us that opportunity in future. Okay, so we have gone through one of your assets and I think you're right that it's very popular amongst those who are staying in the East. Yes. But I think what we have observed generally within the retail segment in Singapore is that if I were to read the news, there seems to be pressure amongst tenants within particular segments. We see quite a number of FNB companies actually closing down. So there's this question about one of our participants here, just relating to your general outlook on the retail segment in Singapore, how do you see that actually developing

[00:36:04] over the next three to five years? And in particular with the RTS that is coming up, maybe those who are staying in the East may not be going up to Malaysia that often, but how would that actually impact the general retail scene across Singapore? Yeah, thanks for the question. There's two parts there. One, I'll take on the general outlook and some of the articles recently in the press. One, regarding trading of certain FNB and certain other retails. And secondly, regarding RTS and the impact that might have on retail in Singapore. So just in terms of your first question. So our job as a retail mall owner

[00:36:43] is to make sure that our malls are vibrant and respond to the interest and consumer needs. And those evolve and they evolve over time and they evolve quite quickly at some instances as well. So we obviously take great care in our retailers performing well. If they perform well, then we perform well, and that's a win-win, that's a success as well. But unfortunately, not all retail tenants will be able to sustain performance. Particularly in the FNB industry, we often see brands will come and not succeed and then move on. I think our portfolio with a few exceptions has been quite stable in terms of our talent resilience.

[00:37:30] I think not all retail malls are equal. Some retail malls are better than others, which can be as a function of their size, their scale, their catchment area, their connectivity, and their management as well. So I think not all retailers are equal. Not all retail malls are equal. We take great care to work with our tenants to help them when they struggle. And if they can't continue, then we look to replace and improve our offering. I think with regards to your second question, which is about the RTS. So we don't know exactly how that will play out just yet. We do know that at the moment,

[00:38:12] the sort of the opportunity that Malaysia offers to shoppers is really probably one for the service industry. And it's probably more of a destination just given the time that it takes to get there. So it probably means that certainly malls which are closer to the border might be more impacted than those which are not. Those where you would look to spend the whole day there might be more impacted than those where people will frequent them more often for a convenience basis as well. And certainly if we look at, if it's hair salon or nails or massage, those kinds of services are cheaper in Malaysia, but that doesn't mean that all experiences

[00:38:50] in Malaysia are cheaper. So I think we have to watch that space. It's again, another reminder why we need to keep on our toes and make sure that we really listen to our retailers and listen to our consumers and keep our offering fresh. But it's something that we'll be monitoring as we move forward with the RTS in due course. Okay, next we move on to Somerset Tree. I think we have got a number of participants who actually follow your portfolio fairly closely. So two questions here around any updates on the multifunctional event space at Somerset? Yeah, so we will be working on the name, multifunctional event space.

[00:39:30] It's not the most snappy name but that's sort of the internal name. I think internally it's called Project Live, which is what we use as a code name, but externally it's the multifunctional event space. So just for those who are not so familiar, this is the car park, which is open air car park, just next to H&M, between H&M and 313 at Somerset. So we have a partnership with Live Nation to develop a concert venue. I think the capacity is about 3000 people. Live Nation's plan is to have events most evenings and during the week. I think it's super exciting for the Orchard Precinct, super exciting for 313 at Somerset.

[00:40:06] It's from our perspective, it's a relatively modest financial investment, but just in terms of bringing people to the precinct, bringing new shoppers, new diners, that's really why we're doing it. Live Nation's a fantastic partner. I don't know how well you know them, but they really are one of two concert promoters globally. So we're excited about the events that they'll bring. In terms of the latest status, so I think my last update was that the piling work had been completed, which is great progress, so we'll start to see more coming out of the ground in the coming months. And I believe that they're on track to complete the project

[00:40:43] in the second half of calendar year 2026, a year or so from now. All right, so we'll await your updates on future corporate connects as to the status of the multifunctional event space. Yeah. I think one of the key developments that you mentioned earlier was really the sale of the gem office. In the past few months, we have actually seen a number of other reads actually acquiring assets, given the expected decline in interest rates, but you have got the other way to actually sell this asset at this point in time. Can you maybe share a bit of your thoughts around why divest this asset at this point in time?

[00:41:27] What was the process around it? And how will this potentially impact your future rental income? Yeah, okay, great question. So thank you, there's a few components to that. So we really like the gem office. Lendly's developed gem both retail and office. We effectively built the building to the MNDs requirements. So we're very proud of that and have a great relationship with the MND and the BCA who's the existing user of the space. Why are we selling rather than buying? So I took over the role on the 1st of April. And from my perspective, it's really important to listen to our investors. I consider our investors to be our clients.

[00:42:07] And I think the overwhelming feedback that we received was that the REIT's gearing was too high. I think in the REIT industry, 40% is really a key threshold for REIT investors in terms of that tolerance level. And our gearing, as you can see here, was standing at just above that. So we took the decision that we needed to bring that down to really address the concerns that investors had. And in terms of our assets, we felt that this asset, given that we just been through the rent review, given the deal size wasn't so large, and given that perhaps the future growth might be different to what you'd expect from a retail portfolio,

[00:42:42] we thought that it could be a good transaction to really improve our gearing. So we ran a process. We appointed a number of agents, and we haven't announced, but there's a separate announcement made by the Kepel Group, that the Kepel Group and parties associated with them have bought the asset. They participated in the process, and the terms and price was attractive. And so we accepted those terms. And then over quite a short period of time, we converted that from an offer to a sale contract, and they were a great pleasure to work with. So we announced the signing of the contract in last week, so 4th of August,

[00:43:24] and that transaction will close towards the end of the year. And we put out a separate document, which is the SGX requirement for the divestment. So if you refer to that, there is included in it a pro forma impact. And the way that that's calculated is referring to FY25, and the assumption is that the asset is sold on the 1st of July, 2024, and that's per the SGX rules. And on that basis, the transaction is mildly diluted. So I think the number is 2.2% diluted to the period. Okay, maybe then to explain what this potentially means to investors would be that if this sale of the asset

[00:44:10] had taken place at the point in time, then we might be looking at potentially a lower distribution per unit versus what was actually reported. Yeah, Leng-Ting, do you wanna take that one? Yeah, I think like what I mentioned, this is per the listing requirement that we have to assume that the sale happens on the 1st day of the financial year, which is 1st July, 2024, and hence for the pro forma, I would calculate it on that basis. So imagining on the 1st day we have sold the asset, then the DPE would be, as Guy mentioned, 2.2% marginally lower than what we actually distributed in actual.

[00:44:47] Okay, so given the sale of this asset and the potential impact to your distribution per unit, is there any way that you can drive growth in your distribution per unit through your remaining portfolio of assets? Yeah, it's a great question. So we don't provide, I guess, forward-looking statements or guidance on earnings. It's something which, I guess, the Singapore industry generally doesn't. But what we can say is probably the following. So the portfolio is dynamic, there's many parts to it. And there are risks and opportunities to earnings. And as you mentioned, one of the risks to earnings is the diluted impact of the gem office sale.

[00:45:29] And then there are opportunities to the earnings. And so the opportunities to earnings are resilience in the retail portfolio, the core portfolio in Singapore. It's also the reduction or further decline in interest rates as well. And then finally, we've got the potential, or sorry, we've got the disposal gain on the transaction and those things together to create opportunities. And I think as management, we are confident that the opportunities exceed the risks as we look forward. And also to mention the refinancing of the purpose that I was explaining just now. So in FY25, that per most of the year, like nine months, almost 10 months of the year,

[00:46:10] it was still at 5.25% for 200 million. So now refinance out of 200 million, now we only have 120 million at 4.75%, which is slightly lower than the 5.25. And also 80 million is refinance with loans, which is at a lower cost of borrowing. Okay, so I think we have gone through your Singapore portfolio. Next we'll go to the other 10%, which is the Milan asset. I think there are quite a number of questions here around what is the outlook like for the Milan asset? They appear to be fairly challenged. Is there any way that you can actually bring up the occupancy rate for this asset,

[00:46:54] particularly the leasing activity for building tree? Yeah, so just to put it in context, so as you mentioned, roughly 10% of the portfolio is in Milan. It's good to explain, I guess, the context of why we have the Milan assets in the portfolio. So when the portfolio was listed back in 2019, the cost of funds in Europe was very low. And by adding European assets with a lot of whale, it was able to boost the distribution per unit and increase the whale-awaited average lease expiry on the portfolio and create more of a bond-like income. That was three buildings, and they were all originally leased to the Sky Group

[00:47:35] as the Sky Italia headquarters. I think a couple of years ago, there was a lease restructuring. Sky decided that they needed two of the three buildings and a deal was effectively done around that, which meant that they provided a supplementary rent to cover the vacancy which was taking place. And that supplementary rent expires relatively soon. So since that point, the team have been focused on refurbishing the property and then releasing the property, which is what they're doing now. So just for clarity, there's three buildings. Two of them are fully leased to Sky and a long-term lease. The third building, which is the so-called Building 3,

[00:48:14] is about 30% leased at present, and the team are working hard to lease that up. So when you put it in context, it's a relatively small exposure in the portfolio. Maybe you can share with us some updates around the leasing activity that you see for Building 3. What are the kind of tenants that you're looking at? How do the rents compare to the existing rents that you have for Building 1 and 2? Yeah, so for those who've been to Milan, you probably went downtown to the Duomo or the city centre, which is really comprising of fairly old buildings, which are relatively small and have been through refurbishment processes and so on.

[00:48:56] The buildings that we have are in a decentralized area. I guess you can think about it a little bit like how PLQ is relative to, or high labour is to Singapore, to the CBD. So you've got grade A buildings, big floor plates, you've got great connectivity through the train and through the underground, and you've got great sustainability characteristics. So probably the target tenants for the Forami Land buildings are slightly different to what the target tenants would be downtown in Milan. It's a larger user. It's someone who needs a bigger floor plate and so on. So in terms of the current leasing of 30%, we've got tenants which include, I think, commodities.

[00:49:38] We've got a school. We have a co-working or flexible office space. In terms of prospective tenancies, we're looking at all sectors, so it includes technology, we use telecommunications, real estate, construction. So it's quite diverse in terms of its pool. But probably more catering for those tenants who are in surrounding areas who want to consolidate or surrounding cities, as opposed to sort of pulling people from the city, that city centre. In terms of numbers, which is the next question, so the rent which when we leased the building to Sky, was lower than the rent that we are getting when we leased to other tenants, but the floor area when leased to Sky is greater

[00:50:19] because they took the whole building. When we leased to multiple tenants, the floor area is less. And so if you take the higher rent of a lower floor area on Building 3, I think net net, it's roughly the same as, or it will be, but we target it to be roughly the same compared to the previous tenants. Le Ting, have I explained that correctly? Yeah. Okay, and I think previously you said that you considered divesting this asset if the conditions are right. So you said what was your thought process behind divesting gem office. What are some of the considerations that you would actually bear in mind when thinking about

[00:50:59] whether it is the right time, right price to be selling the Milan asset? Yeah, so with the exception of Building 3, Buildings 1 and 2 give great, great income and they've got a strong way of it. So we need to balance the income and we need to balance the market situation. So the Italian markets are perhaps not as liquid as the Singapore market is today. Even the European markets more broadly, even the London market is still not back to its full liquidity. So I think we need to balance sort of liquidity in the market versus portfolio income. But I think ultimately those on this call,

[00:51:39] I'm guessing most people would appreciate that the REIT is largely focused on Singapore. And I suspect we'd like to see that happen more going forwards. Okay, so we have covered Singapore, we have covered Milan. We have quite a number of questions around capital management, which we briefly touched on earlier. I think you mentioned the perpetuals. So I think first and foremost, if we were to look at the cost of debt, how are we thinking about debt going into the second half of this year, 2026? Any sensitivity that you can share around how that can potentially help to lower your financing cost? Great thing, I'm gonna ask you to check that one.

[00:52:23] So I think maybe the first thing to mention is that the number that we see in this site is about 3.5% for FY25. It's for the average REIT for the full year, which is from 1st July, 24 to 30, June 25. And Gerad, I want to mention just now, the interest rate in Singapore, the Yew, Bonyew, or even the Sorer, only probably started coming down towards the later part of 24, and most significantly in the first half of this year. So that number of the average debt cost still has about four or five months of high-year rates, essentially. So going forward, I can't really predict

[00:52:58] where the interest rate might go, but based on current levels, definitely we have savings. If you look at the table again, I think 68% as 30 June is hatched, borrowings. So we still have about 32% which can benefit from lower interest rates, which will be based on the current rates. So if you ask me about the average cost, we are hoping that with the benefit of the lower floating rates, you will go to the lower end of the 3%. And I think the other thing to mention is probably that when we repay the loans from the gem sales proceeds, one other thing that we'll do

[00:53:32] is also to review the overall hatch portfolio as well and think about strategies to optimize that. Okay, I think there's one question relating specifically to your 285 million term loan due in FY26. How are you looking at the refinancing for this particular term loan? Any expected cost savings when you refinance this term loan? So out of the 285, as I was explaining just now, 120 million, we have already secured the refinancing. So if you look at that bullet point there, we actually have secured the refinancing back in December last year. So there's still another 140 million which is going to kickstart soon so that we can refinance out part of the first bar

[00:54:21] in your 285 dimension here. The other 200 million is only coming due in April 26. If you ask me whether there are savings or not, at least based on the 140 million we have secured, I can't exactly share the exact rates because these are negotiated with banks which the banks will not let us share due to confidentiality, but we do have some savings in terms of the margins that we get from the banks when we refinance out this 120 to 140 million. So the other 200 million is only due much later in April 26. So I do expect that we can get some savings, but then as I mentioned,

[00:54:58] we are going to have sufficient debt facilities when we repay the jam office, when we use the jam office sales process to repay loans. So potentially we actually don't need to go out and secure another new facility. Okay, thank you for sharing more about your capital management strategies. I think we have gone through the Singapore portfolio, Milan asset, capital management. I think maybe just to round up to the next session, I think quite a number of the participants would not have noticed that your share price is still trading at fairly low levels. So maybe to round up, can we get some thoughts around how we can potentially unlock value for unit holders?

[00:55:39] How can we think about being able to drive DPU growth going forward and allowing the retrading to trade closer to its book value? Yeah, thanks for the question. So we obviously have no control over our unit price. We can only take on board the feedback that we receive from investors and execute upon that feedback and then look to see what happens with the unit price. So as I mentioned on the 1st of April, I took over the role. The key feedback was that our gearing was too high. So we've taken decisive steps to bring down our gearing. And so when those proceeds come in, that will reduce the gearing.

[00:56:20] That's the first thing that we can do. The second thing is you touched on, and then actually what's the second feedback we received was to stabilize DPU and that the DPUs grow going forward. So that's the key part of the work that I'm doing, working with late team and the team upon. So as you mentioned earlier, when we look at the outlook, we feel positive about the outlook. We think that the opportunities are greater than the risks. So we feel positive about that. And then the third thing that we can do, what we are doing is engaging with investors and a wide group of investors to share

[00:56:53] what we think is good news and good results and a good outlook. So we can do that today. We do that with institutions. We do that with the research analysts. And in fact, I think we're covered by eight research analysts. I think six are now by to our neutral. Last week, one of the analysts converted from neutral to buy. So that's good progress as well. So then you then touch on our unit price. So I think we feel positive. We feel optimistic as we go forward. We are trading a material discount to put value. We are a smaller REIT than some of the other REITs.

[00:57:29] So we're probably a mid-cap REIT, I would say. And if you look at, I think earlier Gerald, you had a slide that showed some of the performance in the last 12 months or so of the REITs in sector. And certainly we've seen some of the bigger REITs, more liquid REITs have performed well. And I guess the question is at what point does that liquidity flow down to the mid-cap REITs and so on and does the good news get recognised. So we'll watch this space on that. Okay, so I think we have answered all the questions for tonight's session. Guy and Leiting, any final words for our participants tonight?

[00:58:05] Look, thanks for taking the time today. Always appreciate it. And we very much value your feedback. It's your trust. If you are a unit holder, you're a unit holder of the trust, we consider you to be our client and we value your feedback. We take on board that and we'll act upon the feedback that we receive. So thanks for your time and we look forward to speaking again. Okay, thank you Guy for sharing the updates. Even though you've just come on board since April, I think it's good to hear your thoughts around the assets of the REIT and some of the strategies going forward. Thank you Leiting as well for giving us an update

[00:58:43] around the financials and answering the questions relating to the financials of LEMI Suite. So I hope the participants of tonight's Corporate Connect session found the session informative. If you missed any part of tonight's session, you can rewatch the webinar on CR's YouTube channel. Our next Corporate Connect session will be this Thursday, the 4th of August and that will be with 1.7 live limited. So thank you once again for joining us this evening and I hope you have a very pleasant evening. Thank you. Thanks Joe, thanks everyone.