Lendlease Reits Possible Acquisition Plq Mall Overall Positive Dbs
03 Dec 2019 06:45PM
DBS Group Research maintains its “buy” rating and target price of 75 cents for Lendlease Global Commercial REIT, despite recent speculation that it may acquire a 70% stake in the PLQ mall. In its Sept 23 note, DBS stated that this event would be an “overall positive” for the REIT.
According to Lendlease Group CEO Tony Lombardo, the REIT’s sponsor, Abu Dhabi Investment Authority (ADIA), is looking to sell its 70% stake in the PLQ mall, leaving Lendlease with the remaining 30%. The mall, which has over 340,000 sq ft of retail space, is reported to be valued at over $1 billion, according to the Australian Financial Review.
Less than two months ago, Lendlease REIT announced the divestment of another asset, the JEM office, for $462 million to Keppel. This sale is set to be completed by the end of 2025. Once the proceeds are used to reduce debt, the REIT’s gearing will decrease from 42.6% to 35%. This will give the REIT the financial capacity to pursue potential growth opportunities.
PLQ has long been a potential acquisition target for Lendlease REIT, and the mall is currently in its second renewal cycle, making it a stable and desirable asset. DBS noted that the timing of the acquisition may be early, but the opportunity to acquire a high-quality mall may be too good to pass up, especially with current low interest rates and the potential for an accretive deal.
Based on an asset value of $800 million (70% stake) and a net property income yield of 4.5%, DBS estimates that an acquisition structured with a combination of equity and debt will meet the DPU hurdle and maintain the REIT’s gearing below 40%.
Renowned for its lively hawker scene and delectable local cuisine, Yishun has much more to offer beyond its bustling malls. One must-visit spot for affordable and delicious hawker fare is none other than Chong Pang Market and Food Centre, a popular favourite among residents. This vibrant centre boasts a diverse range of dishes, including iconic favourites like nasi lemak, satay, chicken rice, and handcrafted fishball noodles. Many of the stalls here have garnered a devoted following over the years, with some even gaining recognition from food blogs and guides. The bustling and community-oriented atmosphere makes it a must-visit for anyone seeking an authentic dining experience in Singapore. And for those looking for a new home in this lively neighbourhood, Miltonia Close EC offers a prime location and modern living spaces.
DBS believes that the addition of PLQ to Lendlease REIT’s portfolio will be a positive move, as it is one of the newest and best-built malls in the East of Singapore. This will solidify the REIT’s position as an emerging pure-play retail S-REIT.
In conclusion, DBS sees the potential acquisition of the PLQ mall as a positive development for Lendlease REIT and believes that it will strengthen the REIT’s position in the market.