Lendlease preparing for S-Reit listing that will include Orchard mall

Singapore

AUSTRALIA-listed property developer Lendlease Group is injecting a shopping mall in Orchard Road into its upcoming global commercial real estate investment trust (Reit) listing worth at least S$1 billion in market capitalisation.

The Business Times understands the initial public offering (IPO) portfolio will comprise one property each in Singapore and Milan, Italy with a total net lettable area of 1.3 million square feet and an appraised value of S$1.4 billion.

It is targeting mid-September for the IPO to take place.

None of the properties were named, based on what BT has learnt, but the retail property in Singapore is said to be located in the Orchard area.

313@somerset is the only shopping mall in the heart of Singapore's shopping belt that is managed by Lendlease.

Annualised distributable income for the Reit for FY2020 is estimated to be about S$60 million based on the nine-month forecast from Oct 1 to June 30, 2020, with the retail property in Singapore expected to contribute 65 per cent of the sum.

Currently, the portfolio buildings have 150 tenants across 14 trade sectors and an occupancy rate of over 99 per cent while more than 90 per cent of the leases feature built-in rental increase for FY2020.

Weighted average lease expiry is 10 years by net lettable area, and 29 per cent of the portfolio is freehold, with the rest having an average remaining tenure of 86 years.

The shopping mall in Singapore has a net lettable area of about 300,000 sq ft and an appraised valuation of S$1 billion. The commercial property has an average annual footfall of 46 million and boasts of a committed occupancy of over 99 per cent, with more than 60 per cent of net lettable area featuring built-in rental hike for FY2020.

As for the unnamed Milan Grade A office-retail property, it is located in Santa Giulia and has about one million sq ft of net lettable area and is valued at S$400 million. The property is fully leased to a blue chip tenant through a long-term master lease of 12 years plus 12 years beginning 2008.

The commercial Reit sponsor touts the benefits of global and sector diversification as well as the potential to increase exposure to the over 15 global gateway cities the sponsor has a presence in.

Asked by BT, Lendlease declined to confirm or deny about its IPO plans. Instead, it said: "Lendlease's circa A$100 billion development pipeline will require significant capital partner support over the coming decade. To support our strategy, we regularly explore various initiatives to diversify our sources of capital across the region. We have multiple strategies we are exploring to grow our funds under management in Asia."

No prospectus has been lodged yet.

DBS Bank is the sole financial adviser and issue manager for the listing while its joint global coordinator, bookrunner and underwriter is Citigroup Global Markets Singapore.

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