Lendlease Reit to raise at least S$573.8m to fund Jem acquisition

THE manager of Lendlease Global Commercial Reit (Lendlease Reit) JYEU is proposing to raise at least S$573.8 million to partly finance the real estate investment trust's (Reit) acquisition of the remaining interest in Jem mall.

The fundraising exercise comprises a private placement of at least 448.3 million new units, subject to an upsize option, and a non-renounceable preferential offering of around 345.6 million new units, the manager said in a bourse filing on Tuesday (Mar 22).

The private placement's issue price will be between S$0.725 and S$0.74. The upsize portion will be for 103.4 million additional units to raise additional gross proceeds of up to S$75 million.

The issue price range for the private placement represents a discount of between 7.1 per cent and 9 per cent to the Reit's volume-weighted average price (VWAP) of S$0.7964 per unit on Mar 21 - the last market day before the underwriting agreement was signed.

Meanwhile, the preferential offering, which aims to raise about S$248.8 million from existing eligible unitholders, will be priced at S$0.72 per new unit on the basis of 29 new units for every 100 existing units. This represents a discount of about 9.6 per cent to the Mar 21 VWAP.

Reit sponsor Lendlease Corporation has given an irrevocable undertaking to, through its relevant entities, accept, subscribe and pay in full its total provisional allotment of preferential offering units. It will also subscribe up to S$117.8 million worth of excess preferential offering units which are not taken up by other unitholders.

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About S$564.9 million of total gross proceeds will be used to part-finance the total acquisition cost of Lendlease Reit's Jem acquisition. The rest will be used to pay the estimated professional and other fees and expenses incurred by the equity fundraising.

The Reit currently holds an indirect 31.8 per cent stake in the prime Jurong East shopping mall. In February, the manager proposed to acquire the remaining interest at an agreed property value of S$2.1 billion.

If the deal goes through, Jem will bump Lendlease Reit's total portfolio net lettable area up by a substantial 70 per cent, to around 2.2 million square feet. The transaction is also expected to provide a 10.5 per cent distribution per unit accretion, based on H1 2022 pro-forma estimates. 

Citigroup Global Markets Singapore, DBS, OCBC and UOB have been appointed joint bookrunners for the equity fundraising.

Lendlease Reit's manager called for a trading halt before the market opened on Tuesday. The counter last closed flat at S$0.795 on Monday.

READ MORE: 

• Lendlease Reit to acquire remaining interest in Jem mall at S$2.08b agreed property value
• Brokers' take: UOBKH and CGS-CIMB positive on Lendlease Reit's acquisition of Jem