Skip Navigation Links
Lendlease GC REIT - perpetual securities
28 May 2021 (561 views)


Lendlease Global Commercial Real Estate Investment Trust (Reit) has issued S$200 million in perpetual securities at 4.20 per cent per annum, for the financing of potential investment opportunities among several other uses. 

Lendlease Global Commercial Trust Management, the Reit's manager, in a regulatory filing  announced that the issuance under Lendlease Global Commercial Reit's S$1 billion multicurrency debt-issuance programme will bear an initial rate of distribution of 4.20 per cent per annum for the first five years.

Here are my views about this perpetual securities

a) The interest rate of 4.2% is attractive. However, it is fixed for five years only. Beyond that, the interest rate may be changed. (I do not know what is the formula)..

b) It is a perpetual security, which does not have a redemption rate. It carries a similar risk to shares.

c) The REIT manager aims to earn a net yield of over 4.2% on the invested assets, so that they can pay the interest on the perpetual securities and give the excess to the unit holders of the REIT. If the net yield is less than 4.2%, the negative spread is born by the unit holders. 

d) The investor in the perpetual security should also look at the debt to equity ratio of the REIT. Normally, it should be less than 1.0, i.e. the debt is lower than the equity (i.e. the value of the units). 

Note - I am not giving any investment advice. If you wish to invest in the perpetual security, you have to do your own due diligence. 

Tan Kin Lian
 


Lendlease GC REIT - perpetual securities
[Back] [Print]



Lendlease Global Commercial Real Estate Investment Trust (Reit) has issued S$200 million in perpetual securities at 4.20 per cent per annum, for the financing of potential investment opportunities among several other uses. 

Lendlease Global Commercial Trust Management, the Reit's manager, in a regulatory filing  announced that the issuance under Lendlease Global Commercial Reit's S$1 billion multicurrency debt-issuance programme will bear an initial rate of distribution of 4.20 per cent per annum for the first five years.

Here are my views about this perpetual securities

a) The interest rate of 4.2% is attractive. However, it is fixed for five years only. Beyond that, the interest rate may be changed. (I do not know what is the formula)..

b) It is a perpetual security, which does not have a redemption rate. It carries a similar risk to shares.

c) The REIT manager aims to earn a net yield of over 4.2% on the invested assets, so that they can pay the interest on the perpetual securities and give the excess to the unit holders of the REIT. If the net yield is less than 4.2%, the negative spread is born by the unit holders. 

d) The investor in the perpetual security should also look at the debt to equity ratio of the REIT. Normally, it should be less than 1.0, i.e. the debt is lower than the equity (i.e. the value of the units). 

Note - I am not giving any investment advice. If you wish to invest in the perpetual security, you have to do your own due diligence. 

Tan Kin Lian