5 Things You Need To Know Before Subscribing Lendlease Global Commercial REIT IPO
Key Highlights:
Lendlease Global Commercial REIT (LGCR) has filed for an IPO, with a targeted listing date of 1st October.
The estimated yield will be 5.8% in the year 2020
The portfolio will comprise of 2 properties, with a total value of S$1.4b
Five Important Pointers On LGCR
The sponsor of LGCR is Lendlease, an ASX-listed property giant, with a strong track record across Australia, Asia, Europe and the US. The REIT is backed by right of first refusal to its sponsor's development pipeline, which is worth more than A$100b.
The REIT has a high risk of asset concentration, with only two properties in the portfolio, the well-known shopping center in Singapore, 313@Somerset and Sky Complex in Italy.
313@Somerset will comprise up to 71.5% of its total portfolio. Both assets are located in the prime area.
LGCR has a high tenant concentration risk. The Sky Complex is leased solely to ONE tenant.
The occupancy rate if high, maintained at 99% for the past three years. However, the weighted-lease-to-expiry of 313@Somerset is short, with an average of 1.8 years. More than 25% of the lease at 313@Somerset is up for renewal next year, which might potentially fetch negative rental reversion due to the slow down of retail sales.
Summary
With all the concentration risk of REIT, we will give it a 2-star rating ( out of 5) for the short to medium term.