LRI unlocks Rs. 2.26 b through strategic transfer of Unity Plaza investment to Lee Hedges PLC

From left: Chairman Sarravanan Neelakandan, Executive Directors Hardy Jamaldeen and Archie Warman

• Landmark transaction strengthens two listed companies, establishes dedicated commercial property platform and positions Group for next phase of sustainable growth

Lanka Realty Investments PLC (LRI PLC) has successfully completed the strategic transfer of its 50.88% controlling stake in On’ally Holdings PLC to Lee Hedges PLC for approximately Rs. 2.26 billion, marking a significant milestone in the Group’s long-term strategy of creating a focused listed commercial property platform while enhancing financial flexibility across the Group.

Creating value through active asset management

LRI PLC acquired its investment in On’ally Holdings PLC during a challenging period for the commercial property sector with the conviction that Unity Plaza possessed significant untapped potential. Over Rs. 400 million was invested in renovating and modernising the property, upgrading infrastructure, enhancing common areas and optimising the tenant mix.

During LRI PLC’s stewardship, revenue increased from Rs. 181.70 million to Rs. 413.85 million, occupancy improved from 86.90% to 96.37%, retail rental rates increased from Rs. 332.53 to Rs. 966.73 per sq. ft. and office rental rates increased from Rs. 122.25 to Rs. 289.12 per sq. ft., demonstrating the Group’s ability to create substantial shareholder value through active asset management.

Delivering strong returns to shareholders

Including dividends of approximately Rs. 525.31 million received during ownership, the investment generated approximately Rs. 2.79 billion in cash value for LRI PLC and is expected to deliver an estimated separate-company gain of approximately Rs. 834.09 million before transaction costs, taxation and final audit adjustments.

Lee Hedges PLC becomes Group’s flagship commercial property company

The acquisition significantly strengthens Lee Hedges PLC by adding one of Colombo’s most recognisable income-producing commercial assets to its portfolio.

Unity Plaza has remained Sri Lanka’s leading technology retail and office destination for more than three decades, attracting consistent customer traffic, a diverse tenant base and resilient recurring rental income. Its addition enhances the scale, earnings visibility and long-term growth prospects of Lee Hedges PLC while creating an ideal platform for future commercial property acquisitions.

Strategic benefits for Lee Hedges PLC

• Acquisition of a landmark income-producing commercial property.

• Stronger recurring rental income and enhanced earnings visibility.

• Increased scale to support future commercial property acquisitions.

• Greater operational efficiencies and shareholder value creation.

• Enhanced positioning as the Group’s dedicated listed commercial property platform.

Strengthening LRI PLC through disciplined capital recycling

For LRI PLC, the transaction releases approximately Rs. 2.26 billion of capital, substantially improving liquidity and creating additional financial flexibility to reduce borrowings, optimise the balance sheet and pursue new strategic investment opportunities.

Importantly, LRI PLC continues to retain an indirect strategic interest in Unity Plaza through its controlling shareholding in Lee Hedges PLC, allowing shareholders to continue participating in the future growth of this landmark asset while benefiting from a simplified and more efficient corporate structure.

Strategic benefits for LRI PLC

• Unlocks approximately Rs. 2.26 billion in capital.

• Improves liquidity and strengthens the balance sheet.

• Provides capacity to reduce finance costs.

• Creates flexibility to pursue strategic acquisitions and investments.

• Demonstrates disciplined capital allocation and active portfolio management.

• Continues indirect participation in Unity Plaza’s future growth through Lee Hedges PLC.

Lanka Realty Investments PLC Chairman Sarravanan Neelakandan said: “This transaction reflects the culmination of a disciplined, multi-year approach to asset management and value creation, while positioning the Group for its next phase of growth. By consolidating Unity Plaza within Lee Hedges PLC, the Group has established a dedicated listed commercial property platform with meaningful scale, recurring income and future acquisition potential. At the same time, LRI PLC has strengthened its balance sheet, released significant liquidity, and enhanced its ability to recycle capital into new investment opportunities. The Group continues to retain exposure to this iconic asset, while achieving a simpler and more focused corporate structure that the Board believes will support sustainable long-term value for shareholders. The Board acknowledges the contribution of the management team, led by Executive Directors Hardy Jamaldeen and Archie Warman, in delivering this outcome.”

This transaction represents another important milestone in the Group’s long-term strategy of disciplined investment management, active asset enhancement and capital recycling.

With Lee Hedges PLC now established as the Group’s dedicated listed commercial property company and LRI PLC benefiting from enhanced financial flexibility, both companies are well positioned to capitalise on future opportunities, expand their investment portfolios and continue delivering sustainable long-term value for shareholders.