Lippo Malls Indonesia Retail Trust's property, Lippo Malls Kemang. (Photo: Lippo Malls Indonesia Retail Trust)Lippo Malls Indonesia Retail Trust's property, Lippo Malls Kemang. (Photo: Lippo Malls Indonesia Retail Trust)

Indonesia-focused retail Lippo Malls Indonesia Retail Trust’s (LMIRT’s) (SGX:D5IU) issue of 117,647,000 new units from a private placement exercise was listed and quoted on the Singapore Exchange on 17 December.

The units, priced at SGD0.34 per unit, were issued in the exercise to raise gross proceeds of approximately SGD40 million for the REIT.

LMIRT has earlier indicated that it intends to allocate approximately 97% of the gross proceeds to partially fund the acquisition of Lippo Mall Kemang while the remainder will be used to pay the estimated fees and expenses incurred in the placement exercise.

The REIT announced in September 2014 that it was acquiring Lippo Mall Kemang, a five-storey shopping complex in South Jakarta, from Indonesian developer PT Almaron Perkasa for IDR3,600 billion (SGD385.7 million).

The acquisition is expected to increase LMIRT’s total portfolio size in value by approximately 27% to SGD1.79 billion from SGD1.41 billion previously.

LMIRT earlier explained that the issuance of new units in the private placement exercise would avoid a significant increase in LMIRT’s aggregate leverage and provide an allowance for it to remain below the regulatory gearing limit of 35.0%.

The REIT clarified in an official statement that should the acquisition be funded by debt instead of the issuance of new units, the aggregate leverage ratio of LMIRT is expected to increase from 28.3% as at 30 June 2014 to 33.5%. The issuance of new units will allow it to have a lower aggregate leverage at 31.2% instead.

Units of LMIRT are currently listed on the Singapore Exchange at SGD0.32, close to its 52-week low of SGD0.31.

Acquisition of Lippo Mall Kemang is set to increase Lippo Malls Indonesia Retail Trust's portfolio value by more than 20%.
Acquisition of Lippo Mall Kemang is set to increase Lippo Malls Indonesia Retail Trust's portfolio value by more than 20%.

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.