Dear readers, Lendlease Global Commercial Reit is of focus this week, after recent news reports of Marks & Spencer (M&S) closing its store at Parkway Parade (PP) today. PP opened its door in 1983 and M&S has been a tenant at PP for approximately 21 years.
As of yesterday, Lendlease Global Commercial Reit was unchanged at $0.51. The Reit was down by 15.9% year on year or down around 42.7% in the past 5 years.
One other stock which was of focus this week was SGX stock, following news of the initial measures to boost the local bourse by MAS, read more here.
Concerns
Based on news articles which I have read, at least 7 other tenants have vacated from PP in the past year.
One of the tenants cited rental increases of at least 30% following the opening of Marine Parade MRT station on the Thomson East Coast Line in June 2024.
Some other tenants highlighted that the supposedly higher footfall arising from the opening of Marine Parade MRT station opening does not translate into more sales for their business.
Others pointed out how the basement of the shopping mall is currently hoarded up for construction of a direct link from PP to Marine Parade MRT and this will likely affect football. They also questioned why the above link could not have been constructed in parallel during the long construction period of the MRT station to which replies from the management of PP and the authorities were also included in the article: some of the reasons cited included considerations in relation to the age of PP, etc.
Rents
It was also interesting to read the rents cited by PP tenants.
Gadget Solutions, a tenant in PP was offered a rent of $14K per month when his lease expired last month (Jan 25) and decided to close, citing the unsustainable rental costs.
Also, it was reported that the monthly rent of an optical shop in PP has increased from $3,500 in 1983 to about $15,000 now.
Portfolio
PP is one of the shopping malls managed by Lendlease. From Lendlease’s corporate website, other shopping malls managed by the company include 313@Somerset, JEM and Paya Lebar Quarters including PLQ Mall
Not Unique
I believe the closing of M&S, higher rental costs of tenants are not unique to Lendlease. I have also reported of how in recent times, many long existing businesses have decided to close, due to or potentially due to rising rental costs. One such example is the Malaysia Food Street in Resorts World Sentosa.
As a consumer, I also feel the effect of higher business costs when these are transferred to consumers: lower quality and portion of food, longer waiting times and definitely higher ever increasing prices. I will share recent experiences of these in my upcoming posts, so do stay tuned!