SINGAPORE (EDGEPROP) - Lendlease Group, the Australian-listed developer, has launched the IPO of its global commercial REIT on the Mainboard of the Singapore Exchange, after registering its prospectus on Wednesday.
The REIT manager is selling 387.5 million Lendlease Global REIT units at an offer price of $0.88 each. This consists of 364.7 million placement units and 22.7 million units for the Singapore public.
In addition, cornerstone investors including BlackRock Inc, DBS Bank and Fullerton Fund Management Company, have agreed to subscribe to an aggregate of 453.8 million units.
The public offer will open at 9pm on Sept 25 and close at noon next Monday (Sept 30). Trading of the units will start on Oct 2, at 2pm.
Based on the offer price, Lendlease Global REIT will have a market cap of $1 billion immediately upon its trading debut.
313@Somerset (Photos: Lendlease Global Commercial Trust Management Pte. Ltd.)
The REIT’s initial portfolio, which is valued at $1.4 billion, comprises two properties: 313@somerset, the prime retail property on Orchard Road, and Sky Complex, a Grade A office in Italy.
REIT manager Lendlease Global Commercial Trust Management plans to distribute 100% of the adjusted net cash flow from operations of the two property from Sept 25, 2019, till 2021, and at least 90% of its adjusted net cash flow from operations for each financial year.
The REIT is forecast to have a yield of 5.8% for the FY2020 ended June 30, 2020, and 6% for FY2021.
In FY2018, the occupancy rate of 313@somerset was 99.6% versus the average 94.8% occupancy rate of malls in the Orchard Road shopping belt. The property also saw strong annual shopper traffic averaging 45.5 million over FY2017 to FY2019.
The leases in 313@somerset are structured with three-year tenures comprising base rent and turnover rent, which is calculated as a percentage of tenants’ gross turnover.
As of June 30, 2019, 58.9% of leases by NLA for 313@somerset have step-up structures for FY2020, with an average rental escalation of 3.0%, which will provide a stable and growing rental income stream.
Sky Complex
Sky Complex in Milan comprises three Grade-A, freehold office buildings located in one of the city’s office precincts in the Milano Santa Giulia area, and is connected by major rail, city metro and road infrastructures, with easily accessible to Linate Airport.
The property is 100% leased to Sky Italia, owned by Sky Limited, which is part of broadcast giant Comcast Corporation. The lease is until 2032, with the option for early termination in 2026 by Sky Italia.
The tenant is responsible for the operating expenses of the property, which Lendlease believes will minimise operational costs and risks for the REIT. The tenancy agreement also has a rental step-up clause that is tied to variations in the country’s consumer price index.
Lendlease has operations in Australia, Asia, Europe and the Americas and is listed on the ASX with a market cap of A$9.5 billion ($8.9 billion).
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