Lendlease Global Commercial REIT Buys Stake In Parkway Parade
SINGAPORE – Lendlease Global Commercial REIT (LREIT) has purchased a 10 percent interest in Parkway Parade Partnership (PPP) for about S$88.9 million. Including fees, the acquisition will cost about S$90.5 million, reported The Edge on Monday evening (5 June, SGT).
Notably, PPP indirectly owns 77.09 percent of the share value in Parkway Parade, a mixed-use project in Marine Parade consisting of office space and retail units. The selling price is based on the entity’s net asset value (NAV) that took into account the commercial property’s agreed total market value of about S$1.38 billion.
The overall market value was agreed upon on a willing-buyer and willing-seller basis, considering the independent valuations as of 30 April 2023 conducted by two property consultancies, namely Jones Lang LaSalle (JLL) and Savills. In particular, it is equivalent to the former’s valuation, which is the higher of the two.
“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,” explained Kelvin Chow, Chief Executive of LREIT’s manager.
Moreover, LREIT revealed that Parkway Parade is poised to undergo an asset enhancement initiative (AEI) to coincide with the completion of a new nearby MRT station. Upon the completion of the enhancement, the mixed-use commercial property will be connected to the station via the basement. The development will also add new retail and food and beverage (F&B) tenants after the AEI.
The acquisition of a partial stake in Parkway Parade is expected to increase LREIT’s distribution per unit (DPU) on a pro forma basis. If the acquisition was concluded on 1 July 2021 for the FY2022 ended June, the REIT’s DPU would have risen from 4.85 cents to 4.89 cents. If the acquisition was completed on 1 July 2022, the DPU for the 1H FY2023 ended March would have climbed from 2.45 cents to 2.47 cents.
The purchase was funde via internal resources and debt facilities. As of 31 December 2022, LREIT’s leverage stood at 40.4 percent on a pro forma basis.