Lendlease REIT To Buy Remaining Stake In Jem
SINGAPORE – Lendlease Global Commercial REIT plans to purchase the remaining interest it doesn’t yet own in Jem, a mixed-use development in Jurong comprising a shopping centre and an office block on top of the retail podium, reported The Business Times on Tuesday morning (15 February, SGT).
Currently, the trust indirectly owns a 31.8 percent interest in the prime commercial property situated in 50 and 52 Jurong Gateway Road adjacent to the Jurong East MRT Station and bus interchange.
The real estate investment trust (REIT) is buying the 68.2 percent stake it does not yet own at a price that values the whole asset at S$2.079 billion. Notably, Jem was appraised by CBRE to be worth S$2.063 billion, while Jones Lang LaSalle (JLL) valued it at S$2.086 billion.
Lendlease REIT is expected to fork out S$2.015 billion in all for the purchase, which is expected to be completed as early as 15 May 2022.
If the transaction pushes through, the overall net lettable area (NLA) of the trust’s portfolio will jump by 70 percent to approximately 2.2 million sq ft.
The enlarged portfolio is also expected to increase the trust’s net property income (NPI) for fiscal year 2021 to S$147.8 million, from S$56.9 million previously. This will lead to a NPI yield of 4.2 percent.
According to Lendlease Global Commercial REIT’s manager, the acquisition is expected to increase the trust’s distribution per unit (DPU) by 10.5 percent.
Also, given that Jem consists of 6 storeys of retail space and 12 floors of office space, which is fully leased by Singapore’s Ministry of National Development (MND), the manager said that Lendlease REIT will gain from the 30-year master lease with a rent review every 5 years with the ministry, which will provide a “strong and stable” cashflow to unitholders.
The acquisition is a “natural transition” from the benefits and resiliency that the mall had shown throughout the COVID-19 pandemic, said Kelvin Chow, CEO of the manager of Lendlease Global Commercial REIT.
“The suburban retail market continues to perform well, and we believe that the Jurong region and its upcoming development plans will provide a great catchment for Jem,” he added.