The Zhitong Finance App learned that Bank of America Securities released a research report stating that it maintains the “buy” rating of Lingzhan Real Estate Fund (00823) and a target price of HK$46, and continues to regard it as one of the industry's top choices. The manager of Lingzhan Asset Management announced that Yingkang Insurance acquired a 50.1% interest in the retail property Eastpoint Mall (Eastpoint Mall) in the eastern suburbs of Singapore for SGD 239.5 million (approximately HK$1.47 billion), and Yingkang Insurance will continue to hold the remaining 49.9% interest. The bank anticipates that the acquisition will slightly increase the distribution per fund unit (DPU), while offsetting some of the dilution effects brought about by the recent sale of assets.
Bank of America Securities pointed out that news of the acquisition has already been reported in the market this week, and since Lingzhan has recently sold three non-core assets, the deal is not surprising. The bank believes that the deal is in line with Leading's “return to basics” strategy and is a supplementary acquisition to expand the layout of the Singapore market, but the asset itself is not necessarily particularly exciting to investors.
The bank estimates that the net yield of such suburban malls is about the mid-range of 4% to 5%, while the borrowing cost is only slightly above 2%, which means that the acquisition can bring a slight increase in value to DPU. The transaction is expected to be completed in the first quarter of 2027. Lingzhan and Yingkang Insurance will launch the Asset Enhancement Program (AEI) in stages. The project is expected to commence in 2027, and the mall will remain open during this period.
Dongfu Square is located next to Simei subway station. It is a six-story shopping mall with about 150 stores. The main tenants include FairPrice supermarket, Mind Stretcher, BreadTalk, and SaizerYIA. The net leasable area of the mall is 208,300 square feet. The land lease period is 99 years since 1993, and there are still about 66 years left.
Bank of America Securities pointed out that the deal will further expand Lingzhan's business footprint in Singapore. Lingzhan currently owns Jurong Point (Jurong Point) locally and manages AMK Hub. Dongfu Square is currently managed by the manager of Frasers Centrepoint Trust (FCT), which may raise questions in the market about why FCT did not acquire related interests on its own. However, media reports indicate that other shopping malls in the region may also sell, providing potential buyers with other acquisition opportunities.
The bank believes that in an uncertain macroeconomic environment, Lingzhan has characteristics such as exposure to non-essential consumer retail business, continuous sale of non-core assets, and attractive valuation.