Lippo Malls Indonesia Retail Trust (LMIRT) has reported a lower net property income for the FY2024 ended Dec 31, 2024 of $115.7 million, down 5.5% y-o-y. 

 

The trust&rsquo s rental revenue came in 2.2% y-o-y lower for the FY2024 at $108.2 million. In its reporting currency, the trust saw a 4.4% depreciation in Indonesian rupiah against the Singapore dollar. 

 

Gross revenue edged down 1.4% y-o-y to $194.6 million. 

 

For the 4QFY2024 reporting period, the trust saw a 2.8% y-o-y decrease in net property income of $27.8 million. 

 

Rental revenue and gross revenue for the 4QFY2024 saw a 1.5% y-o-y increase and 2.9% y-o-y increase to $26.9 million and $49.3 million respectively, from the previous reporting period. 

 

The trust says that topline growth was mainly due to an increase in carpark income by 70.1% in Singapore dollar terms. In 4Q2024, the trust entered a new carpark management agreement with the operator which resulted in higher gross carpark income. 

 

The group says that net property income dipped largely on net allowance for impairment loss on trade receivables and higher property operating and maintenance expenses. 

 

The trust did not declare any distributions per unit for the FY2024, consistent with the FY2023 reporting period. 

 

As at Dec 31, 2024, the group had a total debt of $735.2 million, and gearing stood at 44.78%. Its weighted average maturity of debt came in at 6.53 years, while all-in cost came in at 8.54%. 

 

As at Dec 31, 2024, the interest coverage ratio (ICR) of LMIRT is 1.36 times. All REITs are subject to a minimum ICR threshold of 1.5 times and aggregate leverage limit of 50% according to the Monetary Authority of Singapore. 

 

The trust says that it will continue to exercise prudence in capital management and does not intend to incur additional borrowings until the breach of ICR is rectified.

This is mainly due to non-operational accounting adjustments made to Ebitda and interest expenses in Q2 and Q3

 

LIPPO Malls Indonesia Retail Trust (LMIRT) : D5IU +12.5% will &ldquo potentially&rdquo not be able to meet the minimum interest coverage ratio (ICR) requirement for the financial year ended Dec 31, 2024, said its manager on Tuesday (Jan 14).

 

This is mainly due to &ldquo non-operational accounting adjustments made to both the Ebitda (earnings before interest, taxes, depreciation and amortisation) and interest expenses of LMIRT in the second quarter ended Jun 30, 2024, and the third quarter ended Sep 30, 2024&rdquo , said its announcement filed to the bourse after market closed.

 

However, the manager noted that the breach will not incur negative financial consequences.

 

The minimum ICR requirement of 1.5 times by the Monetary Authority of Singapore (MAS) was updated in July 2024 to apply at all times to all real estate investment trusts (Reits).

 

Prior to the change, a 2.5 times ICR requirement was to be met only by Reits which intended to increase their aggregate leverage from 45 per cent to 50 per cent. 

 

The manager clarified that the aggregate leverage ratio of LMIRT as at Dec 31, 2024, will remain below 50 per cent, as the aggregate leverage limit requires.

 

It added that LMIRT&rsquo s existing financial debt obligations do not contain any financial covenants with reference to the ICR or the aggregate leverage ratio requirement, and thus it expects no negative financial consequences arising from any breaches of such ratios.  

 

The ICR estimate is subject to the finalisation of the financials for FY2024, noted the manager.

 

Late last year, both Moody&rsquo s Investor Service and Fitch withdrew LMIRT&rsquo s credit ratings.

The agencies also withdraw ratings on notes issued by LMIRT&rsquo s wholly owned subsidiary, LMIRT Capital

 

TWO ratings agencies have withdrawn Lippo Malls Indonesia Retail Trust&rsquo s : D5IU 0% (LMIRT) credit ratings.

 

Moody&rsquo s Investor Service withdrew LMIRT&rsquo s &ldquo B2&rdquo corporate family rating, following a review of the issuer&rsquo s request for it to withdraw its rating.

 

The rating agency has also withdrawn the &ldquo Caa1&rdquo backed senior unsecured rating on the US dollar notes issued by LMIRT&rsquo s wholly owned subsidiary, LMIRT Capital.

 

Prior to the withdrawal, the outlook on all of LMIRT&rsquo s ratings were stable, said the manager in a bourse filing on Tuesday (Sep 17) evening.

 

Separately, Fitch plans to withdraw the ratings on LMIRT and the unsecured notes issued by LMIRT Capital on or about Sep 30, citing commercial reasons.

 

Fitch&rsquo s international ratings on LMIRT&rsquo s long-term issuer default rating stands at &ldquo CCC+&rdquo and &ldquo CCC-&rdquo on the senior unsecured US dollar notes issued by the subsidiary, with a recovery rating of &ldquo RR6&rdquo .

 

The manager said that noteholders of the residual US$22.6 million senior unsecured US dollar notes issued by LMIRT Capital, due on Feb 9, 2026, can continue to rely on its disclosures or any information related to the real estate investment trust.

 

Leverage ratio remains at &lsquo elevated level&rsquo of 44.96%, notes chief executive of the manager

 

LIPPO Malls Indonesia Retail Trust : D5IU 0% (LMIRT) posted a 9.2 per cent drop in net property income (NPI) to S$29.4 million for the second quarter ended Jun 30, amid a challenging interest rate and foreign exchange rate environment.

 

The trust also withheld distributions to unitholders and perpetual securities holders in the quarter, as it has done in recent quarters. LMIRT will continue to do so &ldquo pending an improvement in the trust&rsquo s financial and cash flow position&rdquo , its manager said in the earnings report on Monday (Jul 29).

 

The trust&rsquo s Q2 NPI fall came as rental revenue decreased 4.3 per cent to S$27 million, while gross revenue was down 5.1 per cent to S$48.1 million. In Indonesian rupiah terms, however, rental revenue and gross revenue were up 2.6 per cent and 1.7 per cent, respectively.

 

&ldquo The prevailing high interest rates and volatile foreign exchange environment continue to pose challenges for the trust,&rdquo the manager said.

 

Nevertheless, chief executive of the manager, James Liew, said strategic and active asset management initiatives have led to &ldquo positive operational recovery&rdquo , with the trust maintaining a &ldquo stable&rdquo portfolio occupancy rate of 79.9 per cent.

 

This is due to overall shopper traffic recovering to 70 per cent of pre-Covid levels in 2019, as well as rental renewals and new leases secured.

 

&ldquo The shopping mall landscape in Indonesia remains highly competitive with the rapid growth of online shopping and newer malls in certain regions. Nonetheless, the social and experiential value of malls continues to be significant to shoppers,&rdquo said Liew.

 

&ldquo We are actively managing our tenant mix to incorporate more entertainment and dining options, creating a diverse and interesting environment and choices to attract shoppers.&rdquo

 

Looking ahead, foreign currency risk has been reduced, LMIRT&rsquo s manager said. This is because sponsor Lippo Karawaci introduced the trust to Indonesian relationship banks and LMIRT has largely transited into an IDR-denominated financing structure. This acts as a natural hedge against its IDR-denominated asset base.

 

With 8.5 trillion rupiah (S$700 million) of IDR loan facilities, LMIRT fully repaid its SGD-denominated bank loans in early June. It also repurchased or fully redeemed its 2024 Notes due in June, and reduced its outstanding 2026 Notes due in February 2026 to US$22.6 million.

 

As such, the trust&rsquo s weighted average maturity of debt increased from 2.75 years as at end-December 2023 to 6.94 years. That said, its leverage ratio remains at an &ldquo elevated level&rdquo of 44.96 per cent as at Jun 30, Liew noted.

 

&ldquo (The) trust will need to continue to exercise prudence with its distributions to unitholders and holders of perpetual securities,&rdquo he said, also citing the need to meet the monthly principal loan repayments and fund expenditures and asset enhancement initiatives.