LREIT’s key objectives are to (i) provide Unitholders with regular and stable distributions, (ii) to achieve long-term growth in DPU and NAV per Unit and (iii) maintaining an appropriate capital structure.
The Manager plans to achieve these objectives through the following key strategies.
Proactive Asset Management and Enhancement Strategy
The Manager will proactively manage LREIT’s property portfolio to maintain and improve their operational performance, so as to optimise the cash flow and the value of the Properties. The Manager will also look to drive organic growth, encourage strong relationships with the tenants of the Properties, implement asset management strategies with the aim of ensuring continued relevance of the Properties and facilitate property enhancement opportunities.
Further, the Manager will seek to maximise returns from LREIT’s property portfolio through some of, but not limited to, the following measures:
- Maintaining above-market occupancy rates;
- Delivering superior services to tenants;
- Implementing asset enhancement initiatives;
- Implementing pro-active marketing plans;
- Continuing to rationalise operating costs.
Investments and Acquisition Growth Strategy
The Manager will pursue opportunities to undertake acquisitions of assets that it believes will be beneficial to LREIT’s portfolio and improve returns to Unitholders relative to LREIT’s weighted average cost of capital, and opportunities for future income and capital growth. In evaluating future acquisition opportunities, the Manager will seek acquisitions that may enhance the diversification of the portfolio by location and tenant profile, and optimise risk-adjusted returns to the Unitholders.
In evaluating future acquisition opportunities for LREIT, the Manager, working with the Asset Managers, will focus primarily on the following investment criteria in relation to the property under consideration:
- Yield requirements;
- Tenant mix and occupancy characteristics;
- Value-adding opportunities;
- Building and facilities specification.
LREIT intends to hold the properties it acquires on a long-term basis. However, in the future, where the Manager considers that any property has reached a stage that offers limited scope for further growth, the Manager may recommend divesting a property and recycling the proceeds into properties that meet its investment criteria. The Manager will also leverage on the Sponsor Group’s experience and track record in investing in real estate and managing property funds, thus assisting to identify investment opportunities.
Capital Management Strategy
The Manager will seek to optimise LREIT’s capital structure and cost of capital within the borrowing limits set out and intends to employ a combination of debt and equity in financing acquisitions and asset enhancement initiatives.
The Manager will also endeavour to:
- Maintain a strong balance sheet;
- Secure diversified funding sources to access both financial institutions and capital markets;
- Optimise its cost of debt financing;
- Utilise interest rate and currency risk management strategies (including hedging) to minimise exposure to market volatility on its income.
The Manager will seek to achieve the above by pursuing the following strategies:
- Optimal capital structure strategy;
- Debt diversification strategy;
- Proactive risk management hedging strategy.