Lendlease Global Commercial REIT JYEU has acquired a 10.0% stake in Parkway Parade Partnership (PPP) at a purchase consideration of around $88.9 million.
PPP indirectly holds 77.09% of the share value in Parkway Parade, an integrated office and retail asset located in Marine Parade.
The purchase consideration is based on PPP’s net asset value (NAV), which takes into account the agreed market value of Parkway Parade, which is around $1.38 billion.
The agreed market value was negotiated on a willing-buyer and willing-seller basis with reference to the independent valuations by Savills and Jones Lang LaSalle (JLL). It is equivalent to JLL’s valuation, which is the higher of the two as at April 30.
Including fees, the acquisition will cost the REIT some $90.5 million.
The acquisition is expected to be accretive to LREIT’s distribution per unit (DPU) on a pro forma basis. If the acquisition was completed on July 1, 2021 for the FY2022 ended June, the REIT’s DPU would have improved to 4.89 cents, up from 4.85 cents. If the acquisition was completed on July 1, 2022, LREIT’s DPU for the 1HFY2023 ended March would have improved to 2.47 cents, up from 2.45 cents.
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The REIT’s gearing as at Dec 31, 2022, on a pro forma basis, would be at 40.4%.
The acquisition was financed through internal resources and debt facilities.
“Parkway Parade is a strategic fit with our existing portfolio as we continue to drive sustainable returns for LREIT's unitholders. With the seamless connection from the upcoming Marine Parade MRT station and Marine Parade Central, the integrated asset is expected to improve LREIT's earnings and distributions moving forward,” says Kelvin Chow, CEO of the manager.
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The REIT says an asset enhancement initiative (AEI) has been planned for Parkway Parade to coincide with the completion of the new MRT station. Upon its completion, the mall will have a proposed link to the new MRT station via the basement. The mall will also see new retail and food and beverage (F&B) tenants following the AEI.
Units in LREIT closed flat at 67 cents on June 5.
