Singapore Company Focus LendLease Global Commercial REIT Bloomberg: LREIT SP | Reuters: LEND.SI Refer to important disclosures at the end of this report DBS Group Research . Equity 5 Dec 2019 BUY Gem in the making (Initiating Coverage) • Core assets - 313@somerset and Sky Complex - well- Last Traded Price ( 5 Dec 2019): S$0.92 (STI : 3,174.19) positioned in submarkets with long growth runways Price Target 12-mth: S$1.05 (14% upside) • Fine balance between income visibility and inbuilt rental escalations Potential Catalyst: DPU exceeding IPO forecasts and/or acquisitions • Attractive pipeline of properties from reputable sponsor, Analyst Lendlease group Derek TAN +65 6682 3716
[email protected] • Initiating coverage with BUY and TP of S$1.05 Singapore Research Team
[email protected] Initiate coverage with BUY, TP of S$1.05. We are positive on Lendlease Global Commercial REIT (LLGCR), the recently listed Price Relative retail REIT on the SGX. Initial portfolio includes dominant properties such as 313@somerset (Singapore) and Sky Complex (Milan) that offers a good mix of resilience, growth and visibility. Approximately 92.8% of leases by gross rental income have inbuilt rental escalations. LLGCR’s forward yield of 5.6% is attractive against retail peers that are trading at yields below 5%. Properties to benefit from long term rejuvenation plans. LLGCR’s assets are well positioned in locations with favourable trade characteristics, with further rejuvenation to underpin longer term Forecasts and Valuation resilience. 313@somerset is located at Orchard Road, which is FY Jun (S$m) 2020F 2021F 2022F poised to benefit from its repositioning as a vibrant lifestyle Gross Revenue 87.7 89.2 91.6 destination, while Sky Complex is located along Santa Giulia, Net Property Inc 65.4 66.6 68.5 which is being transformed into an innovative business and Total Return 45.5 46.6 48.3 Distribution Inc 61.4 63.8 63.7 residential district.