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Lippo Mall Indonesia Retail Trust - Challenging Time Ahead

Key Highlights:

  • Lippo Mall Indonesia Retail Trust (SGX: D5IU)'s 3Q19 grew 14.3%

  • The annualised yield and price to book ratio are 9.3% and 0.8 respectively

1. Dividends

Net property income grew 11.8% to $44.1m. This was contributed by:

  • Positive rental reversion

  • Stronger IDR currency

  • Collection of service and utilities recovery charges directly from tenants

  • Prudent cost management and improvement on rental collections.

The annualised yield is 9.3%. While the DPU grew in the last quarter, the overall trend is still trending downwards. With the challenging environment ahead, we should continue to see some negative impact on the DPU.

2. Portfolio

The portfolio leverage is currently at the healthy side of 34.7%. The interest cost is at 6.32%,

It is currently trading at a price to book ratio of 0.8.

3. Growth Catalyst

Moving forward, the outlook for the REIT is mixed:

  1. The expiry of master leases for Lippo Mall Kemang in December 19 will have an impact on the rental income. The REIT manager is currently actively managing the tenancy mix of the mall and converting the affected area of the master lease to specialty and entertainment outlets. This will have some impact on the DPU next quarter.

  2. On the bright side, the trust is looking to boost performance in other assets through asset enhancement at Sun Plaza in Medan and Gajah Mada Plaza. Besides, the management is looking to capitalise on inorganic growth opportunities to acquire new properties.

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