Lendlease Revamps Lease Structure at Sky Complex in Italy

19 Dec, 2023

Lendlease Revamps Lease Structure at Sky Complex in Italy

Lendlease Global Commercial REIT (LREIT) has solidified a significant lease agreement with Sky Italia S.r.l., the long-standing occupant of Milan's Sky Complex. Sky currently occupies three buildings within the complex, and the revised terms of the lease bring notable changes.

The freshly negotiated terms encompass a 1.5% increase in the initial annual rent for Buildings 1 and 2, supplementing the recent positive 5.9% rental surge in May 2023, as confirmed by the REIT.

Under the updated lease, Buildings 1 and 2 will be leased for an initial period of nine years and one month, commencing from December 15, 2023, with an option for the Tenant, Sky, to extend the lease for an additional six years. Notably, this new agreement strips Sky of its prior right to pre-terminate the lease by 2026, adding stability and assurance to the tenure.

Additionally, part of the agreement entails Sky returning Building 3 to Lendlease in the first quarter of 2024 upon the completion of essential reinstatement work. As compensation, Sky will provide Lendlease an amount approximately equivalent to two years of the current annual rent for Building 3.

Lendlease, in its official filing, emphasized that this revised lease arrangement brings various benefits, notably reducing tenant concentration risk. The return of Building 3 presents an opportunity for LREIT to reimagine the space, intending to transform it for multi-tenant use.

The strategic vision behind this transition is to diversify LREIT's tenant base, moving away from a single reliance on tenants like Sky. This shift aligns with LREIT's objective of broadening property occupancy and mitigating risk factors associated with sole tenant dependence.