After a few months since rumour began circulating, Lendlease Global Commercial REIT ("LREIT") finally revealed on August 4, 2025, that it will indeed be divesting Jurong East Mall ("JEM") office for S$462 Mil. The buyer of the office tower is Keppel Ltd.
1. Big Strategic Mistake To Sell off JEM Office.
LREIT should have sold off the underperforming Sky Complex buidling in Milan. Instead it sold off a high yielding office building at JEM with stable government agency tenant. I recalled that they just got a 13% rental reversion after the recent 5 years review in 2024. JEM's area is currently still undergoing transformation and development and LREIT will be missing out on potential future capital appreciation. This is actually the worst time to be selling off the JEM office.
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| Screen Extract of Rationale of Sales |
2. Market Reaction
Strangely, the market reacted positively (August 5, 2025) to the upcoming disposal as there is a +S$8.9Mil gain over book value that LREIT may use to distribute back to unit-holders. Short term view of "get rich quick" distribution among investors seems to be driving the rally in unit price of LREIT to S$0.575 per unit (+1.77%) since the release of the divestment announcement.
Personal Thoughts and Views
As an existing unit-holder of LREIT, I am extremely disappointed with LREIT management team's decision to sacrifice a good asset with 100% occupancy just for short term gains instead of cuting losses with Milan Sky Complex. In addition, we have not seen any concrete executionary results with regard to Sky Complex where occupancy remains in the doldrum at 81.6%.
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