Lendlease Reits Possible Acquisition Plq Mall Overall Positive Dbs

10:35am, 24 Sep 2021Lendlease Global Commercial REIT could soon be the new owner of PLQ Mall, with reports suggesting that the REIT’s sponsor, Lendlease Group, is looking to acquire a 70% stake in the asset. DBS Group Research has maintained its “buy” call and 75 cents target price on Lendlease Global Commercial REIT following this development, saying that it is an “overall positive”.Tony Lombardo, CEO of Lendlease Group, has revealed that the REIT’s sponsor, ADIA, or the Abu Dhabi Investment Authority, is planning to sell its 70% share in PLQ mall. The remaining 30% is currently held by Lendlease group, and the asset is reportedly valued at over $1 billion, as reported by the Australian Financial Review. DBS Group Research has stated that this sale, if realized, could be a huge boon for the REIT.According to DBS, Lendlease Global Commercial REIT had announced the divestment of its JEM office to Keppel two months ago for a whopping $462 million. The sale is projected to be completed by the end of 2025, and if the proceeds are applied to reduce debt, the REIT’s gearing would be reduced to 35% from the current 42.6%. This would leave the REIT with the necessary debt capacity to spur its growth ambitions.PLQ Mall has long been in the spotlight as a potential acquisition for Lendlease Global Commercial REIT, and the asset has recently entered its second renewal cycle. DBS has stated that the mall is now considered to be stable and an excellent addition to the REIT if acquired.DBS estimates that if the acquisition takes place, and is structured with 50% equity and 50% debt, it would pass the DPU hurdle to acquire Adia’s 70% stake in the asset. This would keep the REIT’s gearing at below 40%.DBS believes that the acquisition, if it manifests, would be a significant gain for Lendlease Global Commercial REIT, with the addition of one of the newest and best-built malls in the East of Singapore. The mall would solidify the REIT’s position as a major pure-play retail S-REIT.

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