Lendlease Files for Singapore IPO of S$1.4B Commercial REIT

Lendlease has filed to list a commercial real estate investment trust on the main board of the Singapore stock exchange, according to a preliminary prospectus lodged and registered with the Monetary Authority of Singapore.

Including subscriptions from cornerstone investors and Lendlease itself as the REIT’s sponsor, the Sydney-based developer expects to raise just over S$1 billion ($750 million) from the initial public offering.

The REIT, which was constituted eight months ago as the Lendlease Global Commercial REIT, is backed by an office complex in Italy and a retail asset in Singapore valued at a combined S$1.41 billion.

Lendlease’s filing comes just two months after Keppel Capital filed paperwork for an $813 million Singapore IPO for its REIT of US commercial properties, which if successful will become the exchange’s largest initial public offering of the year.

BlackRock, AEW and DBS Join S$399M Cornerstone Group

As sponsor of the REIT, Lendlease plans to raise $341 million by selling over 387 million units in the trust to investors at a price of S$0.88 per unit, in an offering scheduled to open on 25 September and close on 30 September of this year, according to Lendlease Global Commercial Trust Management, the REIT’s manager.

The developer has already signed up as cornerstone investors AEW, BlackRock, and DBS Bank, which together have entered into subscription agreements on behalf of wealth management clients for nearly 454 million units at the offering price, equating to S$399 million.

Concurrently, but separate from the offering, Lendlease SREIT, in its capacity as trustee, will take up over 318 million units at the same price for a total of just under S$280 million.

The net asset value per unit is forecast to be S$0.8134 at the proposed listing date of 2 October.

Based on a projected distributable income of S$44.9 million next year, distributions per unit are expected to be 3.82 cents and distribution yield is predicted to be 5.8 percent.

The proceeds of the offering will be used to finance the acquisition of the real estate assets and to cover the costs of the initial public offering, as well as to provide working capital, according to the REIT’s manager.

DBS Bank is the sole financial advisor and sole issue manager for the offering, while DBS Bank and Citigroup are the joint global co-ordinators, bookrunners and underwriters.

Trust Seeded by Fully Occupied Assets

The REIT will offer unit holders the benefit of cashflows from 313@Somerset, a 99-year leasehold property on Singapore’s Orchard Road, and Sky Complex, a freehold office project in Milan, Italy.

313@Somerset, which Lendlease would sell to the REIT for S$1 billion, has 288,277 square feet of net leasable area and is currently 99.6 percent occupied.

Connected directly to Somerset MRT station in Singapore’s best known shopping district, the mid-range property is home to tenants including Zara and Food Republic with a weighted annual lease expiry by rental income of 1.6 years.

The grade A Sky Complex, which the REIT is acquiring for S$400.3 million, has 999,116 square feet of net leasable area across three office buildings.

Located in the city’s Milano Santa Giulia area, a 1.2 million-square-foot new business district and residential area in southeastern Milan, the complex is fully occupied by broadcaster Sky Italia and has a weighted annual lease expiry of 12.9 years by rental income.

REITs on the Rise

Lendlease’s REIT is the latest in a series of real estate investment trusts that have listed in Singapore over the past four months or have filed for an IPO in the city state.

Just two months ago, Keppel’s Prime US REIT was 20 percent oversubscribed as it raised S$841.87 million in its initial public offering.That deal came after Eagle Hospitality Trust’s market debut, which was also oversubscribed, raised S$620.40 million.