Lendlease Reit to take full control of PLQ Mall in S$116 million deal

[SINGAPORE] Lendlease Global Commercial Reit is set to acquire the remaining 30 per cent stake in PLQ Mall for about S$116.4 million.

The deal, announced on Wednesday (Feb 25), will grant the real estate investment trust (Reit) full ownership and operational control of the asset.

The move follows the Reit’s initial acquisition of a 70 per cent interest in the mall from PLQM Trust, which owned 100 per cent of PLQ Mall.

The vendor was understood to be sovereign wealth fund Abu Dhabi Investment Authority.

The remaining 30 per cent of the trust was previously owned by the Reit’s sponsor, Australian-listed Lendlease Corp.

The acquisition is priced at an agreed property value of S$885 million, representing a 2.2 per cent discount to the S$905 million average appraised value determined by independent valuers. 

By securing the final stake, the Reit’s total portfolio value will climb to S$4.2 billion, with Singapore-based assets comprising a dominant 90 per cent of its holdings. 

Management expects this shift to bolster “greater resilience and income stability”. The mall maintains a committed occupancy rate of 99.4 per cent.

The transition to 100 per cent ownership allows the Reit to fully refinance existing asset-level borrowings. This move is projected to generate “potential savings in all-in debt costs of approximately S$2 million per annum”. 

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On a pro forma basis, the combined impact of the 100 per cent acquisition is estimated to deliver a 2.1 per cent accretion in distribution per unit.

To fund the purchase and manage its balance sheet, the Reit launched a S$196.6 million preferential offering on Wednesday.

The issue price of S$0.558 per new unit represents a discount of around 6 per cent to the volume-weighted average price of S$0.5934 per unit on the Singapore Exchange as at Tuesday.

About S$113.8 million raised from the preferential offering will be utilised to fund the total acquisition costs.

The remainder is intended to “reduce debt at Lendlease Reit to ensure that consolidated gearing is maintained at a prudent level” of 37.6 per cent. 

Guy Cawthra, chief executive officer of the manager, noted that securing full ownership enables the Reit to “gain full management and operational control enabling (it) to shape the asset’s long-term performance and unlock value for our unitholders”. 

The transaction is expected to be finalised by Jun 30 this year.

The manager of the Reit requested a trading halt on Wednesday after the news, citing the pending release of an announcement.

Units of Lendlease Global Commercial Reit ended 0.8 per cent or S$0.005 lower at S$0.60 on Tuesday.