Lendlease REIT Full Year 2025 Results: 3.6 SG cents Dividend, Increase in DPU expected

 Lendlease Global Commercial REIT (LREIT) has released its full year results. Overall, it is an expected results with:

• 3.6 SG cent dividend
• Sale of its JEM Office Space
• Slower uptake of Milan Office Tower 3, improvements need to be done to raise it to 80% from current 31%

Expect Higher DPU Next Year

LREIT has divested JEM office space at 3.5% cap rate. This is good because if LREIT uses the equity portion of the sale to redeem its 4.75% interest perpetuals, there is a 1 million dollar increase in distributable income, this is a 2% increase in DPU. Further, LREIT cost of debt is now declining, factoring all these I expect next year DPU to be 3.7 SG cents with special dividend of 1 SG cent post sale of Singapore office complex.

At 57 SG cents, this translate to a 6.5% dividend yield, which is good. I expect further yield compression to occur until the 5% mark because the risk free SORA rate is declining. Target price is 74 SG cents.

Is it possible for LREIT to reach a target price of 74 SG cents?

The answer is a restounding yes. I feel there are 02 ways- (i) yield compression with the falling Singapore interest rates or (ii) a sale of the Milan office building at current valuation.

If the sale of Milan office goes through, LREIT will become a 100% Singapore mall Trust. And on SGX, we have a 100% SG retail reit which is priced at 1 times P/B with dividend of 5%; it is fraser centrepoint trust.

So all in, I feel it will be easy for LREIT to hit 74 SG cents. 

 

Caveat

The sale of LREIT's office assets is indeed a good way forward, however I will like to caveat to LREIT manager that it should not be buying any more properties from the sponsor. And if it does, it should only be Retail singapore properties like PLQ mall or Parkway at a capitlization rate of 4.75% or more because such a situation means the 4.75% interest perpetuals will not be redeemed. A too low cap rate will be DPU negative to unitholders.

And if it is not a retail property, the chances of fulfilling a one times price book will not be achieved.

August Portfolio Update: Reinvesting Sale Proceeds

Saw 02 of my holdings reach its fair value and hence I have encashed partial stakes. Yangzijiang Financial was a big winner with a $100,000 in profits

Following up from my last month's view, I have bought NTT DC, United Hampshire US Trust, Fraser Logistics Commercial Trust, Far East Hospitality Trust and Asian Pay TV.

Dividend Prospects

As mentioned, NTT DC REIT has a strong portfolio with rental escalations and of course there is a risk that it will revise down its payout ratio from 100% to 90%. Therefore, it is safe to assume, dividends will stay at 7 to 7.5 US cents per year. However, it is still worth at current prices.

For United Hampshire and Asian Pay TV, it needs no introduction for they are dividend titans in their own rights (>8% dividend yield)

Fraser Logistics Commercial Trust (FLCT) is currently plagued with poor occupancy rates especially in Singapore. Singapore's property outlook is in fact weak with low occupancy rates contrary to what many Singapore property agents talk about. The main reason is due to the mismatch in asking rent and what tenants want to pay, resulting in a low occupancy rate. However, I am banking on the REIT to lower their asking rates to fill up their occupancy. ItThe REIT would maintain at least a 6 cents annual dividend. (>6% dividend yield)

Far East Hospitality Trust owns a few 4 and 5 star hotels in Singapore, with a rather healthy cashflow and I am branching out to gain exposure to Singapore's tourism industry (~6% dividend yield)

With the purchase of these shares, it is definite I will be getting cash inflow equivalent to SGD$50,000 per year. If PRIME US REIT reinstates a 90% payout next year, dividend may rise to SGD$60,000 range.

To me the current portfolio has a right mix of dividend and capital gains (mainly Alibaba is the provider for this aspect), I would be happy earning a 6% dividend portfolio with part of it banking on capital gains from the Hong Kong side. Many Singapore REITs are now priced at high yields that outbeat condo purchases in both capital and rental appreciation. 

United Hampshire US REIT

A shout out to this REIT. Since my post in Dec 2024, it has produced 4 cents in returns (2.05 cents dividend and 1.5 cents in share price gain). This netts a remarkable 8% returns in close to a year from the cost base of 45.5 US cents. The recent purchase of a property should raise its DPU by 1%. Definitely not better than doing unit buybacks but as passive investors we cant influence much; UOB wants to make more money so they will increase AUM instead of doing the better corporate action.

NTT DC REIT IPO View and July Portfolio, Expenditure Update

July Update: Portfolio has grown admirably, in just a month, I have seen an increase of $50,000.

I have taken a small profit off Yangzijiang financial as it is reaching my target price. As a few of my stocks reach my own intrinsic value for them, I am now searching for new undervalued contenders, one of which is the recent IPO'd NCC DC REIT that I will talk more later.

Unitedhampshire US REIT has maintained its price at US$0.465.

Dividend Received

Year to Date (July received Alibaba Dividend)

USD: $3,760

SGD: $13,414.50

HKD: $28,000

Expenditure

I have stopped posting on my Maybank credit card expenditure because it has always been hitting the $800 mark  monthly, resulting in an achivement of 6-7% cash rebate.

NTT DC REIT Short Analysis

NTT DC REIT IPO at US$1 two days ago. Dividend wise, the REIT is guiding for 7.5 US cents.

Debuking the "Tesla" concentration in NTT- Investors have highlighted a concentration risk where 31% of the data centre's property is leased to one tenant, likely Tesla and is up for renewal in 2030. 

A few may be worried of the concentration risk, recalling what happened to Digital Core REIT largest tenant bankruptcy which slashed DPU by 2 cents; however this is different. Digital Core REIT's tenant was in the business of subleasing the space to others for data centre services. Tesla, on the other hand, is in the business of AI and automative segment and needs the data centre space for operational and expansion requirements. It is not speculative as Digital Core's. Hence in term at the stage of IPO, both REITs' risk profile is inherently different.

Possible Overcapacity of US Data Centre Space- This I acknowledge is a risk because too many data centres are now built worldwide. So let's see how this goes, but for now I am personally satsified with NTT DC REIT tenancy rate.

Sponsor- It is NTT, which to me, is as good as Keppel and Mapletree on the global stage so I have no worries. The only difference is most of NTT's REIT assets are in USA which is of lower valuation and occupancy rate compared to Singapore's. This is where Keppel DC REIT shines. This also explains why Keppel DC REIT's yield is at 4+% while NTT is now going at 7%.

With margin of safety, I am looking to buy it at US$1 or lower, because I want a 7.5% dividend on my capital invested. The IPO of this REIT is good in my view and anything US$1 and below is in the area of undervalued to me.

Currently the share price remains at US$1 due to negative sentiments surrounding US REIT + Singapore investors memory of Digital Core. In the foreseeable future as I sell off stakes in existing positions of my portfolio, funds will be channeled to NTT DC REIT. Part of diversification and my plan to increase dividends to $60,000. 

Portfolio Update June 2025: Add Lendlease, Sold Keppel REIT

Keppel REIT has been totally sold off, Lendlease REIT holding has doubled.

No dividend inflow. Dividend is on track to hit $50,000 this year, that's all to update. 

SG listed REITs are still Attractive

With local exposure REITs such as Lendlease going at 7% yield, it is a good value proposition. Low SORA rates are going to benefit due to lower interest expense, especially with liqudiity flushed in Singapore. 

I have never been a fan of condo investing when the yields are so low at 3-4% (before leverage) and investors are subjected to SORA + margin loans. Even operating on leverage, a condo investment now is less superior than that of owning REITs.

What's more, I am getting dividend inflow higher than what property investors get from rental income nett of Agent Commission, Singapore property tax and maintenance fee.

Comparision is simple, just use a $600,000 purchase of Lendlease REIT against a scenario of a $2 million condo which uses $1.4 million loan; mathematically, the dividend earn from Lendlease at $42,000 per year is higher than what condo investors get after netting off all the cost and government taxes.

So yes, I will continue to own REITs to earn a high annual dividend.

Dividend Received

Year to Date

USD: $3,682

SGD: $13,414.50

Portfolio Update end May 2025: Added UnitedHampshire and Lendlease REIT; $50,000 Annual Dividend

As per my thoughts, Lendlease REIT and Unitedhampshire US REIT are bargains. So I have used cash to purchase these shares. As a result, lendlease is a new addition in my portfolio. It is expected for full year 2025, my dividend received will exceed $50,000.

That is a restounding number and mainly thanks to the sell down in Singapore REITs despite the fact local REITs are facing declining interest expense. I am thankful for the market of offering the opportunity to accelerate my income accumulation.

I will continue to accumulate Lendlease REIT due to its 7% dividend yield in Singapore environment. 

Dividend Received

Year to Date

USD: $3,682

SGD: $13,414.50 (received from Yangzijiang Financial, Olam and Nanofilm)

Thinking Between Lendlease Commercial REIT vs UnitedHampshire US REIT

Following from my portfolio update, I am now stuck in a dilemma.

On one hand, while I am thinking to add UnitedHampshire US REIT (at 9% yield), I have come across a local REIT called Lend Lease Commercial REIT, it is a mid cap REIT which owns 02 Grade A buildings in Jem and 313@Somerset. Its occupancy in Singapore is a solid 99.9% with the Ministry of National Development being on a long term lease with rental escalations of about 2.5-2.6% annually. 

Lendlease Commercial REIT is currently at 51 cents with a dividend of 3.6 cents, giving it a 7% yield.

Why am I torn over it, Compared to my Current Holdings

Lendlease has a good 7% yield with very good assets in Singapore. In a way, barring recession, Lendlease is a dividend stock with growing dividends, its cost of debt is falling due to the falling Singapore SORA rate. I believe this stock will give 4 cents dividend in a few years time as interet rates keeps falling. (Lendlease cost of debt is 3.57%, while SORA is at 2.3%; likely lendlease cost of debt will fall to 3.2%). I expect lendlease DPU to be up 10% due to the falling SORA rates.

I am not bothered by the high gearing of Lendlease because the REIT is mostly backed by Singapore assets. As the saying goes, Singapore property prices will only go up or stay flat, the government does not dare to deflate property prices. 

On the other hand, United Hampshire US REIT has a lower occupancy rate but is in a totally income inelastic segment as opposed to Lendlease whose shop tenants are across the specturm (but of course not as many luxury tenants as seen in Paragon or Starhill Global REIT).

Strong Occupancy in Singapore and Improving Occupancy in Italy

Lendlease has a "building no 3" in Milan which it is trying to lease out after the return of the building by the main tenant. With improving occupancy, this will improve the net property income (NPI) of the Italy office complex.

Second, Lendlease has in built rental esclation for its Singapore Shopping malls and Office towers. This means higher NPI in time to come. This is why I foresee Lendlease will become a growing dividend REIT stock over time.

Extra Funds to Deploy for My portfolio

Right now, I am thinking between Lendlease REIT and Utd Hampshire US. The former has a strong tenancy and occupancy with a Singapore ministry being its largest tenant who will not default on its remaining 20 years lease. The REIT sports a 7% yield with a strong tenant base. On the other hand, if I take the latter, the tenancy profile is weaker and has exchange risk, the benefit is that I get a 9% yield.

The other thing I have to note is my portfolio concentration; with Utdhampshire being a large part of my portfolio, buying more of it puts me into a concentration risk.

Quite a weekend to think where to deploy my extra funds!

May Portfolio Update (2025): Little Movement, Changing Sing Dollar to USD to Earn $50,000 Annual Dividend

 Nothing much has changed in my portfolio except for the sale of a few shares in Olam and Alibaba.

With the weakening of US Dollar relative to Sing Dollar, I sense an opportuity to start accumulating more United Hampshire US REIT to grow my dividend.

Having researched the REIT thoroughly, I do feel it provides a significant amount of recurring dividend. In addition, as it is in the stripe mall and essentials goods area, tenant sales should not be adversely affecting with the looming price hike among US goods. I will be doubling my stake because a 9% dividend is something I will not miss and the cheap US dollar means my Sing Dollar is able to buy more of the same units.

With the accumulation, I may be creating a $50,000 SGD Annual Dividend Portfolio, something I would have found unachieveable, but thanks to the low prices REITs are going and the strong Sing Dollar, it has become real. With so many strong dividend stocks in both Hong Kong (Link REIT) and US (United Hampshire, possibly PRIME US), holding Sing Dollar and placing it in Singapore banks with low deposit rates is not a good value proposition anymore; its better to just change your money to Hong Kong or US Dollars to buy the dividend stocks avaliable in these countries. It will reap much more benefit than holding Sing Dollar.

Another stock I am evaluating is lend-lease REIT. It owns 02 Grade A buildings in Singapore with close to 100% occupancy and is of 7% dividend yield. Currently it's share price is at a low which makes it beneficial to own, of returns even surpassing what condo owners can own from renting out their property. Its largest tenant is Singapore's Ministry of National Development.

Dividend

Year to Date

USD: $3,682

SGD: $5,250