SG Stock: Lendlease REIT listing – Yay or Nay?

Last week, it was published that Lendlease is preparing for an S-REIT listing. We know how property-crazy Singapore is (and hey, we love properties too!) and what’s more, REITs also scream dividends, dividends, dividiends! So I got down to checking it out.

I’m not an extremely technical person who can rattle off technical financial terms and analyzing REITs, so this is really for the layperson.

The sponsor – Lendlease

Lendlease is an international company with headquarters in Australia, Singapore, New York and London. It originally started in Australia and expanded to managing properties around the world. Its properties in Singapore include 313@Somerset, JEM, Paya Lebar Quarters, POMO, Parkway Parade, and the industrial building for Infineon Technologies. I would say their portfolio is quite ok – I’m pretty pleased with the crowds at JEM and 313@Somerset.

Properties in the IPO

REITs are usually a collection of properties managed by the entity. For this IPO, they are proposing 1 property in Singapore and 1 property in Milan, Italy. The Singapore property is likely to be 313@Somerset, while the one in Italy will be some Grade A office building.

I just find it quite difficult to accept that these are 2 very different fields with different concepts. One is in bustling Singapore, and its a shopping mall. The other is in Italy where the pace is much slower, land is quite abundant, and its an office building.

Purpose of the IPO

Companies IPO for various reasons, and chiefly, IPO provides funding. Which means if you lack / require funding and you are willing to give away some equity, doing an IPO is an option.

To me, this IPO seems to be one for raising funds. I know that starting out in Australia, Lendlease probably already has many properties in Australia. The property market in Australia is not doing very well, and the strength of the Australian dollar is falling. Could that be a reason to plan an IPO in Singapore?

Bottomline

I’m not too sure about the reasons behind their supposed plans to prepare for S-REIT, but it just seems like a mixed bag of properties with no clear focus. At this moment, I haven’t seen much of a track record from the REIT management team yet since it hasn’t IPO-ed. Looks like I’ll be taking a wait-and-see approach for at least a few years.

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