SINGAPORE (THE BUSINESS TIMES) - Lendlease Global Commercial Reit has proposed to raise its stake in Jem mall to up to 31.8 per cent for a purchase consideration of between $204.1 million and $337.3 million, the Reit's manager said on Monday (June 7).
The Reit's trustee has entered into sale and purchase agreements with various vendors to acquire stakes in two private funds, Lendlease Jem Partners Fund Limited (LLJP) and Lendlease Asian Retail Investment Fund 3 Limited (ARIF3). They own 25 per cent and 75 per cent of Jem, respectively.
Lendlease Global Reit currently holds an indirect interest in Jem through its 5 per cent interest in ARIF3 acquired in October 2020.
As part of the proposed acquisition, the Reit's trustee will acquire a 53 per cent interest in LLJP for $159.1 million from third-party vendors. The trustee will also acquire a 5 per cent interest in ARIF3 from Lendlease International for $45 million.
It may raise its stake in ARIF3 to 19.8 per cent from other third-party investors for $178.2 million, assuming the amount paid to these investors does not exceed ARIF3's net asset value per share.
If the trustee acquired 19.8 per cent interest in ARIF3, the total acquisition cost will be $347.1 million. The total acquisition cost comprises the purchase consideration of up to $337.3 million, subject to post-completion adjustments, up to $3.4 million acquisition fee payable to the manager, as well as up to $6.4 million in other fees and expenses.
The manager said the proposed deal will be funded through debt, or a combination of debt and proceeds from the issuance of perpetual securities. The proposed acquisition is also conditional on unitholders' approval and is expected to complete by Sept 30, 2021.
Mr Kelvin Chow, chief executive of the manager, said the proposed acquisition will enhance Lendlease Global Reit's income diversification.
"The enlarged portfolio size of $1.8 billion will have a diversified asset base and an increased exposure to more resilient suburban retail and decentralised office segments," he said.
Moreover, the single largest asset by aggregate value of the enlarged portfolio would also have decreased to 55.1 per cent from 67.6 per cent.
Units of Lendlease Global Reit were trading at 77.5 cents as at 9.44am on Monday after the announcement, up 0.5 cent or 0.7 per cent.