The management of Lendlease REIT ("LREIT") announced this morning that it will acquire the remaining 30% of PLQ Mall and will launch a $196.6 mil rights issue priced at 55.8 cents each. Finally, the management listened after the previous private tranche placement in November 2025 whereby the same PLQ property acquisition leads to dilution of existing loyal unit-holders. I hope that the management continues to offer retail investors preferential rights first before tapping on new investors as a form of basic courtesy.
1. Subscribe or Not?
Personally, I will be taking up the issuance given the very attractive entry price of S$0.558 per unit relative to the market closing rate before the announcement of S$0.60 per unit. This will be a more than 6% distribution yield for the new units.
The only uncertain risk here is the opening of the RTS which will grant Singaporeans more convenient access to Malaysian shopping malls and the extent of the adverse impact on Singapore retail scene. This is somewhat similar to Hong Kong retail which had went downhill for the past few years as shopper flocked to Shenzhen. But I am optimistic that the impact will be minimal on Singapore retail scene given that our local shopping malls have mostly pivoted to F&B outlets and education centres as tenants to complement retail grocery (NTUC Fairprice, Cold Storage etc). For example, parents will not send their kids over to Malaysia for tuition centres right? Another illustrative will be that, one will not want to expend too excessive time to go over Malaysia just to have McDonalds.
2. Key Dates For Investors
Parting Thoughts
At the current low offered pricing of the new units at S$0.558 per unit, I think that the best option out there is to take it up. Interestingly, the previous private placement was done at S$0.602 per unit which is 7% more expensive. Most likely, I will also be subscribing for the excess. Also, guess, I no longer need to go to LREIT's 2026 AGM to pick a bone with their CEO and CFO on the unfair treatment of existing unit-holders which is very disrespectful and high handed in their previous fund raising exercise.
Hi, the ratio they produce results in odd lots for many investors. As a large portion of the fund raising is used for debt, I had inquired why did the REIT choose such a unique ratio of 119 shares for every 1000 shares. 100 shares for every 1000 shares would have been the best to prevent odd lots for many investors. Getting stuck with odd lot results in us minority having to pony up $40 more unless your broker is willing to waive + for moomoo etc, you are stuck with it and cant sell because they have no access to the odd lot market and they dont hold shares in your name under CDP for their normal cash route
ReplyDeleteHi Choon Yuan, you are right, it will unfortunately result in odd lots from their prescribed allocation ratio. Lendlease REIT management as seen in their last year private placement tranche actually gave little considerations to existing unit-holders and focused more on achieving their own agenda.
DeleteMy personal thoughts are to subscribe to the excess in order to even out the odd lots issue to avoid trading in the odd lot market, which in itself, lacks liquidity and may even offer a very wide spread in terms of the bid and sell relative to normal trading market.