Lendlease REIT Opens 6% Up On SGX Listing Debut

Lendlease Global Commercial REIT’s stellar IPO debut is yet another testament to the hunger for yield among Asian investors.

The real estate investment trust, part of Australia’s Lendlease Group, started trading on the Singapore bourse Wednesday, surging 6.3% at the open from its offer price. This is the biggest jump among the city-state’s REITs in the past six years since SPH REIT opened at 8.8% above its offer price in 2013.

“People are chasing it for the yield,” said Jin Rui Oh, a Singapore-based analyst at United First Partners. “If one looks at the commercial REITS, not many are giving about 6% yield” so people will move into this stock, he said.

The REIT is expected to pay out an annualized dividend yield of 5.8% for the fiscal year 2020 and 6% for 2021. This is at a premium to peers such as CapitaLand Mall Trust and Frasers Commercial Trust, which yield about 4%, said Geraldine Wong, an analyst at KGI Securities Singapore Pte.

Investors have been piling into Singapore REITs as central banks across the globe cut interest rates amid economic growth concerns. The sector was the top institutional net buy for the first eight months of the year, drawing inflows of S$211 million ($152 million), Singapore Exchange Ltd.’s CEO Loh Boon Chye said at a speech during the IPO ceremony.

Adding to its appeal, the REIT attracted 13 cornerstone investors including BlackRock Inc., DBS Group Holdings Ltd., Lion Global Investors Ltd. and Temasek Holdings Pte.’s Fullerton Fund Management.

The healthy take-up from cornerstone and institutional investors was due to the “strong” sponsorship and pipeline, said Eng-Kwok Seat Moey, head of capital markets group at DBS Group Holdings Ltd, the financial adviser for the IPO. She said the offering was more than 9.8 times oversubscribed for both placement and public tranches.

The FTSE Straits Times REIT Index has risen about 18% this year, compared with the 0.3% gain in the city-state’s benchmark index. Shares of the Lendlease REIT closed 4.6% stronger on its debut, and is trading flat Thursday.

Bloomberg