JAKARTA (TheInsiderStories) – Real estate company, PT Lippo Karawaci Tbk (IDX: LPKR), continues its plans to divests one of it assets in Indonesia, Puri Mall, said the CEO today (03/30). In addition, the company continues to actively pursue further options to increase financial flexibility.
“We have proactively taken steps over the past three months to strengthen our financial flexibility, in turn this should help us navigate effectively through this unprecedented situation,” said John Riady, CEO of Lippo Karawaci in a written statement.
He continued, Lippo Karawaci is committed to maintaining its existing 30.7 percent stake in LMIRT by participating in the potential future equity fundraising by LMIRT associated with the acquisition of Puri Mall. Its estimated that this would require approximately $60 million of funding from the company.
So far, said Riyadi, the investment company has successfully implemented several precautionary measures to strengthen its financial position. These measures have put LPKR in a position to respond effectively in the rapidly changing market uncertainty created by the COVID-19 pandemic.
At the holding company level, Lippo Karawaci currently has over Rp3.5 trillion ($218.75 million) equivalent in cash, substantially held in US and Singapore Dollar. The net debt to equity level remains the lowest among our peers at only 21 percent, ensuring the developer is well positioned to withstand the impact of the global pandemic.
Riyadi elaborated, the company has completed the divestment of its entire stake in First REIT in February 2020. Since commencing in June 2019, the total sale raised Rp851.7 billion. The property player also adjusted their hedging strategy in early first quarter of 2020 when the Rupiah against the Greenback was at 13,700.
“We raised around $60 million by moving our hedges out to Rp15,000 to Rp17,500 for the principal value of our bonds,” he claimed.
Lippo Karawaci also has cleared up all maturities of bonds until 2025 by refinancing our $425 million 2022 bonds. Secured a working capital loan with a large local bank for Rp700 billion in March, executed a number of cost saving initiatives that believed will allows to lower operating costs in fiscal year 2020.
“This includes targeting further reductions in operating expenses, capital expenditures and working capital,” said the CEO.
Currently, Lippo Karawaci have a total assets of $4.0 billion at Sept. 30, 2019. Its core business comprises urban residential developments, lifestyle malls and healthcare. We are also actively involved in integrated developments, hospitality, township development and management, as well as asset management services.
Currently, the company has a presence in 35 cities, and is a leading Indonesian property developer with 1,461 hectares of land bank ready for development. The company owned 81.0 percent of PT Lippo Cikarang Tbk (IDX: LPCK) shares, PT Gowa Makassar Tourism Development Tbk (IDX: GMTD) 62.7 percent, 51.05 percent of PT Siloam International Hospitals Tbk (IDX: SILO) shares.
Lippo Karawaci also has an ownership stake in two listed REITs in Singapore, namely First Real Estate Investment Trust and Lippo Malls Indonesia Retail Trust with $1.0 billion and $1.4 billion of assets under management respectively until 3Q of 2019.
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