Deal will be financed by proposed private placement of units priced at S$0.597 to S$0.616 each

 

[SINGAPORE] The manager of Lendlease Global Commercial Real Estate Investment Trust (Lendlease Reit) said on Wednesday (Nov 5) that it signed an agreement to acquire 70 per cent of the units in PLQM Trust, which owns 100 per cent of PLQ Mall.

 

The vendor is understood to be sovereign wealth fund Abu Dhabi Investment Authority. The remaining 30 per cent of the trust is owned by the Reit&rsquo s sponsor, Australian-listed Lendlease Corp.

 

About S$270 million or more will be raised from a private placement of units priced at S$0.597 to S$0.616 each to fund the acquisition. The manager of the Reit said this move will help to fully finance the proposed transaction.

 

The issue price range represents a discount of between about 3.5 and 6.5 per cent to the volume weighted average price of S$0.6386 per unit in Lendlease Reit. 

 

The deal is largely made up of a total equity consideration of S$234.3 million. The acquisition fee payable to the manager is around S$6.2 million, and other acquisition-related fees and expenses are valued at around S$6.3 million. 

 

The agreed property value of PLQ Mall is S$885 million, at a 2.1 per cent or S$19 million discount to the appraised value by Knight Frank. The net property income yield is 4.5 per cent, based on the agreed property value. 

 

Post-acquisition and completion of the Jem office divestment by Nov 12, Lendlease Reit&rsquo s total asset value will increase to S$3.9 billion, with Singapore representing 89 per cent of its portfolio. Gearing will stand at 38.3 per cent on a pro forma basis, while distribution per unit is expected to increase 2.5 per cent. 

 

The manager said that the enlarged portfolio will be well-positioned to deliver consistent growth, with the proportion of essential services expected to rise from around 57.7 per cent to 59.9 per cent of the retail gross rental income. 

 

In addition, the suburban retail component will expand to 62.7 per cent, supported by consumer demand for essential services and the stable, recurring income generated by well-allocated suburban malls.