Lendlease Global Commercial REIT: will its price breakout to the upside?

Having listed just last year, Lendlease fell by more than 50% during the March 2020 crash and is presently trading at a crucial $0.80 point. This is a key resistance zone for the REIT as it has been tested by traders almost 5 times in the past 6 months.

With the dine-in restrictions being ‘lifted’ on Monday, we could experience a temporary relief as mall traffic increases in the coming days.

As a trader at heart, I’ll be focusing on the technicals of this REIT as well as its future growth potential given its extremely small portfolio of properties in Singapore in this article.

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Lendlease Global Commercial REIT (SGX : JYEU) – what do they do?

Most REITS in Singapore would fall within one or more of the following categories,

• Retail – Malls
• Office – Office Space
• Residential – Home
• Hospitality – Hotel (Hospitality is NOT HOSPITAL!)
• Industrial – Manufacturing
• Healthcare – Hospital, Elder Care etc.

In the case of Lendlease Global Commercial REIT, their portfolio in Singapore is made up of 3 retail properties at present. (1 of them still in the works)

Most of us here would be quite familiar with their retail properties and would have visited them at least once in the past.

Though there are many ways to measure the success of a REIT, I like the old school method – visual observation. If the mall is bustling with people and all the shops inside are occupied with tenants, at the most basic level, that is always a good sign of a well-managed property.

Of course, as investors, we want to look deeper into things so let’s swing over to my Technical Analysis of JYEU, as of 21st of June 2021.

Technical Analysis – What the charts say about Lendlease price now

Consolidation at $0.80 Resistance

Whenever I see price action consolidating at resistance, it is often a bullish indicator to me. It suggests that investors are now willing to accept prices at that level.

The longer the consolidation, the more significant the breakout will be.

And this is the situation for Lendlease currently:

Referring to the chart above, we can see that a persistent resistance at $0.80. Price action have been constantly testing resistance about 5 times in the past 6 months.

If we add in a linear support line, what we would have is a series of higher lows which to me, indicates a healthy trend forming.

Clear correlation between Covid-19 restrictions and the price action

If we look at the events of March 2021, we had our first circuit breaker which caused this stock to crash from its $0.9 levels all the way down to $0.432.

Subsequently, as the situation improved, the stock rallied right up to ~$0.81. This held on until we went back into Phase 2 Heightened Alert back in May which cause the stock to dip again.

In my opinion, so long as the Covid-19 situation continues to improve (with controlled cases, vaccination process etc.), we should see this stock rally further.

However, in the short-term, with the uncertainty surrounding the new variant, it is likely that this stock will continue to consolidate at resistance (but keep a lookOUT for a breakOUT!)

Catalyst for Retail Properties

A key unknown with any business is that no one really knows if you will succeed until you open your doors. You can get the best analyst to conduct the best research but success is never guaranteed.

With Lendlease, I can’t help but feel that they have an amazing “acumen” when it comes to their retail portfolio.

Almost all their retails malls seem to have some kind of positive catalyst that could spurring their growth forward.

1. 313 @ Somerset – Grange Road Carpark Tender
2. JEM – High-Speed Rail (haw been canceled at the time of writing but possible catalyst in the near future)

Redevelopment of Grange Road Open Air Carpark

Grange Road Carpark used to be my favorite place to park in Orchard as it was the cheapest.

But with the joint tender to redevelop the carpark by Singapore Land Authority (SLA), Singapore Tourism Board (STB) and Urban Redevelopment Authority (URA) in October last year, this space now set to be a multi-use concept.

Mainboard-listed Lendlease Global Commercial Reit (LReit) announced these plans on Saturday (June 13), after winning a tender to redevelop the open-air carpark at the junction of Grange Road and Somerset Road into a multi-functional event space.

“Lendlease Reit to redevelop Grange Road open-air carpark into event space with cinema, hawker stalls”- 13th June 2020

Initially, the idea of a hawker in the middle of Orchard road didn’t strike me as anything out of the ordinary.

However, after putting some thought into it, we don’t often come across scenarios where hawkers go out of business (in pre-Covid times). In fact, of all the business models out there, I’m most bullish on F&B-related stocks as I consider them to be the most defensive next to utility stocks (electricity, water etc.)

Concluding Thoughts: Would Lendlease’s price breakout?

To me, Lendlease Global Commercial REIT is a “cyclical” stock.

Meaning to say that if the Covid situation in Singapore gets worst, we can expect the price to retreat and for the stock to lose momentum. The linear support level may even be broken causing a reversal in trend.

In my opinion, the chance of a complete circuit breaker happening again is highly unlikely given that we’re now better equipped to handle the virus today. However, the chance of us going back into the “heightened” stage of restrictions still remains.

Qualitative factors aside, I have always interpreted consolidation at resistance as a bullish indicator and believe that we may be on the verge of an impending breakout.

That said, if you’re a short term trader who can’t hold a long position, this may not be the best counter for you as even with a breakout, we’re not looking at a 200% rally. Do manage your expectations accordingly.

I am vested into this REIT at the time of writing.