Brokers’ take: Maybank initiates Lendlease Global Reit with ‘buy’ on retail rebound
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Vivienne Tay
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LENDLEASE Global Commercial Reit is “poised to benefit” from resilient domestic consumption and the steady recovery in tourism, Maybank said on Monday (Jul 17).
The research team has initiated a “buy” on the counter with a target price of S$0.80, representing a potential upside of 17.6 per cent from Lendlease Global Reit’s last trading price of S$0.68 as at 11.18 am. Its units were up 0.7 per cent or S$0.005 at the time.
Although funding metrics and macroeconomic conditions are challenging, Maybank believes these obstacles are offset by the real estate investment trust’s (Reit) 7 per cent yield and its 15 per cent discount to book value.
The Reit’s two Singapore assets – JEM and 313@somerset – will likely gain from plans to make Orchard Road the destination of choice for youths and for the Jurong area to be the Republic’s second central business district.
Having a supportive sponsor will also provide ample acquisition opportunities, the research team said. The sponsor, Lendlease Group, has a development pipeline of A$120.6 billion (S$108.8 billion) for the half year ended Dec 31, 2022. It also has A$48 billion of funds under management.
Lendlease Global Reit is the sponsor’s only listed Reit. It also has right-of-first-refusal agreements for any stabilised retail or office assets. Notably, the sponsor owns 30 per cent of Paya Lebar Quarter.
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The Reit’s lease structure also offers growth and stability, Maybank said. It highlighted that reversions are up 3.3 per cent in the year to date, based on a business update for the Q3 period ended March.
The research team also expects a 1 per cent accretion in the Reit’s distribution per unit after the repurposed Grange Road car park becomes operational next year.
Units of Lendlease Global Reit closed at S$0.68, up S$0.005 or 0.7 per cent on Tuesday.
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