REITs can't fully camouflage gearing with perpetual securities

The Edge Singapore
The Edge Singapore 10/6/2021 9:45 AM GMT+08  • 9 min read
REITs can't fully camouflage gearing with perpetual securities
Perpetual securities have been used to camouflage gearing but will be unable to do so with ICR to be implement in 2022.
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Despite the recent curbs on socialising implemented on Sept 27, Jem, which is adjacent to Jurong MRT interchange, continues to be a crowded mall at weekends. As one of the more successful suburban malls, Jem is likely to be a desirable addition to the portfolio of Lendlease Global Commercial REIT (LREIT).

As it stands, LREIT’s manager says through various announcements that LREIT now holds 28.05% of Jem for $337.3 millioin which it acquired through equity stakes in Lendlease Jem Partners Fund (LLJP) and Lendlease Asian Retail Investment Fund 3 (ARIF3) for $153.1 million and $178.2 million respectively.

“The manager intends to finance approximately 40% of the total acquisition cost (excluding the acquisition fee units) through debt facilities and the remaining funding through its existing cash balance, including the proceeds from issuance of perpetual securities and/or such other methods of financing as the manager may determine,” a circular in July, ahead of an EGM, stated.

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