Indonesia-focused Retail REIT Lippo Malls Indonesia Retail Trust (LMIRT) (SGX: D5IU) has announced that it will offer up to 246,913,000 new units to investors at an issue price range of between S$0.405 and S$0.410 per unit.

Lippo Malls Indonesia Retail Trust has more than 3 million square meters of retail space to tap on the growth of Indonesia's middle class. 

At the indicative issue price, the placement is expected to yield the REIT approximately S$100 million. Net proceeds from the exercise will amount to approximately S$95.0 million after deducting estimated fees and expenses. LMIRT has indicated that it will use the funds to finance asset acquisitions, asset enahcements and existing debts. However it has provided no further details on the assets that it may be acquiring directly from the proceeds.

Indonesia is expected to see significant growth in its middle class segment, fuelling the demand for malls and other retail properties across the country. GDP growth in 2013 for Indonesia is expected to go beyond 6.5 per cent. LMIRT currently has over 3 million square meters of retail space in Jakarta alone.

The Issue Price of S$0.405 per new unit represents a discount of 5.8 per cent to the volume weighted average price of S$0.4298 per unit in LMIRT.

Trading of the new units on the SGX is expected to commence at 9.00 a.m. on 29 November 2013. But the market has not taken to kindly to the announcement of the placement. Units of LMIRT fell by more than 4.6 per cent at the close of the trading week to end at S$0.41 on worries of dilution.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.