Home Investor Corner Shentonwire: LMIR Trust Dropped 7.8% in 1Q-2019 YoY

Shentonwire: LMIR Trust Dropped 7.8% in 1Q-2019 YoY

Lippo's Assets in Greater Jakarta - Photo by Lippo Karawaci

Jakarta (TheInsiderStories)Lippo Malls Indonesia Retail Trust (LMIR Trust), reported Monday its first-quarter net property income dropped 7.8 percent on-year to US$29.98 million from $40.30 million a year ago.

The decline was due to lower rental income from Lippo Plaza Batu and Palembang Icon on the expiry of the master leases in July 2018, and the perennial weakening of the Indonesian Rupiah by 1.6 percent from first-quarter 2018.

Total gross revenue increased 34.2 percent on-year to $36.34 million in the quarter ended 31 March as the trust took over the collection of service and utility recovery charges from tenants, the trust said in a filing to SGX after the market close Monday.

But gross rental income fell 7.1 percent on-year in the quarter to $27.70 million, the trust said, pointing to lower rental income from Lippo Plaza Batu and Palembang Icon on the expiry of their master leases in July 2018, and as the rupiah continued to weaken.

The distribution per unit (DPU) was 0.55 Singapore cent for the quarter, down 17.9 percent from 0.67 Singapore cent in the year-ago quarter, LMIR Trust said.

But the trust added that on a quarter-on-quarter basis, its results were showing a recovery. Net property income rose 5.5 percent on-quarter in the first quarter, it said.

“Following the gradual recovery of the Indonesian rupiah against the Singapore dollar since the beginning of this year, the trust is also showing improved quarter-on-quarter performance as we continue to actively manage and revamp our portfolio to keep up with changing consumer preferences and to generate higher organic growth,” Gouw Vi Ven, CEO of LMIRT Management, the REIT manager, said in the statement.

She notes that LMIR Trust has also commenced asset enhancement initiatives (AEIs) at Sun Plaza, which is expected to be completed by 2021. The refurbishment works include a total uplift of its façade and interiors, as well as reconfiguration of the mall’s layout to maximize useable space.

The trust is also looking to boost long term growth inorganically with the proposed acquisition of the iconic Lippo Mall Puri for $354.7 million.

“Puri Mall has high growth potential in the long run as it is part of the largest premium mixed-use development in West Jakarta,” says Gouw.” Moreover, with rental support from our sponsor, this property is NPI yield accretive and will generate long-term value for our unitholders.”

As of end-March, the REIT said its portfolio occupancy was at 91.5 percent, compared with an industry average of 80.7 percent. LMIR Trust’s portfolio has 23 retail malls and seven retail spaces in other malls, the filing said. Units of LMIR Trust closed 1.0 percent lower at 19.8 cents on Monday, before the announcement of its first quarter 2019 results.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com

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