Tuesday, October 31, 2023

Lendlease REIT AGM 2023


Lendlease REIT held their AGM on 31 Oct 2023 at 2pm.

Shareholders questions were answered before the actual AGM. You can view Lendlease REIT responses here.

For the AGM slide, you can view them here.

There is nothing special in the AGM slide, so will skip that.

In general, today AGM is quite peaceful as the questions asked in the AGM are quite friendly and Mr Kelvin Chow (CEO) did answer each and every questions well. Well Done Mr CEO :D

Note: What puzzle me is CFO is not seated on stage, not sure if he is present today.

Million dollar question: Will there be any rights issue soon?

Mr CEO mentioned that there wont be any rights issue at this moment as the management team did not even touch base with any banks for such. He understand that there are rumors in the market about potential rights issue due to high gearing ratio and / or buy up the remaining 90% stake of Parkway Parade. He had re-assure shareholders that management are not looking at performing rights at this moment.

What is Management plan to bring down the high gearing ratio?

Mr CEO mentioned that there are various methods such as asset recycling or improve the portfolio valuation. 

Based on Mr CEO response, he seem to be more incline to improve portfolio valuation rather than asset recycling. This make sense to me as Lendlease REIT only have JEM, 313, Sky Complex and 10% of Parkway Parade.

To improve portfolio valuation, Mr CEO gave few examples:

1) There is in built rental escalation (Average 3% pa) in the contract

2) There is around 4% of net lettable area in 313 not deploy yet

3) Tenant Sales is higher than pre-Covid, as such Lendlease can charge higher rents

However, Mr CEO mention they are comfortable with current gearing ratio. He quote an example due to commercials building are many times more expensive compare to industrial building. As such, they will choose the lowest debt interest like perpetual securities. He add on by mentioning banks are confidence in them too as banks are providing unsecure loans to them.

What is the possibility that Sky Italia (Sole tenant for Sky Complex) will exercise its break option in 2026?

Mr CEO mentioned that the possibility is low.

Reasons being:

1) Sky Italia had invested heavily in their CAPEX

2) The rent they are paying now is lower than surrounding building due to first mover advantage. Sky Italia had occupies Sky Complex since 2008 and unfortunately, the annual rental review based on Consumer Price Index (CPI) have not caught up fast enough   

3) Sky Italia credit rating might be even better than Italy rating as a country

Should Sky Italia were to exercise the break option in 2026, they are required to give 1 year advance notice.

To summarize, personally at this point of time after attending the AGM, I do have confident in Lendlease REIT despite the depressing share price. Well, this is a good advantage for shareholder who want to buy more.


Lunchbox for shareholder who attend the AGM

Related post:

1) Added: Lendlease REIT (Jul 2023)

2) SOLD: AIMS APAC REIT & ADDED: Lendlease REIT (Mar 2023)

3) Added: Lendlease REIT (Jan 2023)

4) Keppel DC REIT AGM 2022

5) Frasers Centrepoint Trust (FCT) AGM 2022

6) ComfortDelGro AGM 2021

7) First REIT AGM 2020

8) MM2 AGM 2019

9) Perennial AGM 2019