LMIR Trust delivered 16.2% Year-On-Year growth in DPU for 1Q 2015

Looks like Lippo going to cross above 200MA soon.

Close at 0.365 today (21-May-2015)

52 Weeks Range:	0.305 - 0.420

Lippo Malls acquiring 4 properites

• First two in Palembang
• Rental guarantee for one mall
• Maintain FV of S$0.45

Proposed acquisitions
Yesterday, LMIRT announced the proposed acquisitions of four properties from non-interested parties. The first property is Palembang Square, which is currently undergoing AEI that will increase its NLA by ~30%. The second property is Palembang Square Extension, a new one-level underground retail mall which opened in 2Q12. It is directly connected with the first property. These properties, which would be LMIRT’s first in Palembang, South Sumatra, are part of a mixed-use development that also consists of a hotel and a proposed hospital. The third and fourth properties are Tamini Square and Kramat Jati Indah Plaza (KJI), which are located in East Jakarta. All four properties are to be purchased at a discount to book value. Including the aggregate purchase consideration of ~S$180.7m and the acquisition fee payable to the manager, as well as professional fees and other expenses, the total acquisition cost is expected to be S$188.1m.

Rental guarantee for KJI
As at Jun 2012, the occupancy rate at KJI was ~51%. Management indicates that as of Aug the AEI at KJI has been completed and as of the beginning of

Lippo Malls ample resource for growth

Fair value S$0.43


Notes from MTN programme to provide financial flexibility
Lippo Malls Indonesia Retail Trust’s (LMIRT) financial flexibility and debt maturity profile is expected to be enhanced with the proposed issuance of two fixed-rate notes under its S$750m guaranteed Euro MTN programme. The REIT announced last evening that the S$200m notes and S$50m notes will mature on 6 Jul 2015 and 6 Jul 2017 respectively, and will bear a competitive rate of 4.88% and 5.875% to its existing S$147.5m secured borrowing rate of ~4.6%. This is despite the notes being unsecured obligations of LMIRT. According to the announcement, proceeds will be utilized for corporate funding purposes, including financing acquisitions and asset enhancement works. We believe LMIRT will first use the funds on major refurbishments of Gajah Mada Plaza and Ekalokasari Plaza, as announced in its 2011 annual report.

Good performance likely to be sustained
For FY12, we are positive that LMIRT will continue to

LMIRT’s portfolio occupancy had remained steady

Fair value S$0.43



NPI boosted by newly acquired retail malls
Lippo Malls Indonesia Retail Trust’s (LMIRT) 1Q12 gross revenue of S$45.6m (+39.0 YoY) and NPI of S$30.9m (+38.0% YoY) were in line with our expectations, meeting 25.1-25.6% of our full-year estimates. The strong performance was primarily driven by a full-quarter contribution of the two retail malls that were acquired in 4Q11. Distributable income, however, was slightly lower than expected at S$15.0m, due to higher tax expenses and one-off charges of ~S1.7m associated with the refinancing and acquisition activities in prior quarter. As a result, DPU for the quarter registered 0.69 S cents, forming 18.6% of our FY12F DPU (20.9% of consensus). This is lower than the DPU of 1.17 S cents seen a year ago due to a 1-for-1 rights issue in 4Q11, but represents a significant QoQ improvement of 30.2%. The DPU will be payable on 24 May.

Positive outlook
As at 31 Mar, LMIRT’s portfolio occupancy had remained steady at

LMIRT further growth opportunities

• Demand likely to stay sturdy
• Strong contribution from new additions
• No immediate refinancing needs

Fair value - S$0.45

Demand for retail malls/spaces to remain strong.
We remain positive on Lippo Malls Indonesia Retail Trust’s (LMIRT) financial performance in 2012. Retail sales in Indonesia have been treading along a positive trend line since 1Q11, based on survey by Bank Indonesia. In Jakarta and Medan where the most of LMIRT’s retail malls/spaces are located, we note that Oct retail sales accelerated by 41.1% and 22.3% YoY respectively, following Sep sales growth of