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Lendlease Global Commercial REIT JYEU -0.75%has acquired a 10.0% stake in Parkway Parade Partnership (PPP) with an investment of $88.9 million.
PPP Indirectly is the owner of 77.09% of the share value of Parkway Parade, an integrated retail and office property situated within Marine Parade.
The purchase price is based on PPP’s net asset values (NAV) that includes the agreed-upon market value of Parkway Parade, which is approximately $1.38 billion.
The market value agreed upon was reached on a willing-buyer and willing-seller basis, with reference on the valuations independently conducted conducted by Savills as well as Jones Lang LaSalle (JLL). It is comparable to JLL’s valuation which is the more expensive of the two on April 30.
With fees included including fees, the acquisition will cost the REIT around $90.5 million.
The acquisition is anticipated to increase LREIT’s dividend per unit (DPU) on an annual basis. If the acquisition had been finished on the 1st of July, 2021, for the FY2022 period that ended in June LREIT’s DPU would have increased to 4.89 cents in comparison to 4.85 cents. In the event that it was concluded on July 1st, 2022, LREIT’s DPU for 1HFY2023 that which ended in March would have increased to 2.47 cents which is an increase from 2.45 cents.
The REIT’s gearing at December 31, 2022 using an average basis it would be 40.4%.
The acquisition was financed with internal resources as well as credit facilities.
“Parkway Parade” is an good integration with our portfolio, as we strive to provide profitable returns for the unitholders of LREIT. The seamless connection between Marine Parade Central and the soon-to-open Marine Parade MRT station and Marine Parade Central, the integrated asset will boost LREIT’s earnings and distributions in the future,” says Kelvin Chow who is the manager’s CEO.
The REIT claims that an asset improvement initiative (AEI) is being scheduled in the vicinity of Parkway Parade to coincide with the construction on the construction of a new MRT station. When it is completed the mall will be able to include a link with the brand new MRT station through the basement. It will be home to new Food and Beverage (F&B) tenants in the wake of the AEI.
Units of LREIT were with a flat 67 cents closing June 5.