The leaking variable is UInstancedStaticMeshComponent::InstanceDataBuffers.
The memory block is passed to InitPerInstanceRenderData() via InstanceDataBuffers.Release(). But the function doesn't manage the passed memory block.
Following workaround works.
InstancedMesh LLM counter keeps increasing.
There's no existing public thread on this issue, so head over to AnswerHub just mention UE-109898 in the post.