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)

Managers for Singapore-listed First REIT (SGX:AW9U) and Lippo Malls Indonesia Retail Trust (SGX:D5IU) announced late on 3 February that they have entered into a joint venture to acquire an integrated development property in Yogyakarta, Indonesia from PT Lippo Karawaci.

The 10-storey property comprises of Siloam Hospitals Yogyakarta and a retail mall component known as Lippo Plaza Jogja. Siloam Hospitals Yogyakarta will be acquired by First REIT for SGD40.82 million while Lippo Plaza Jogja will be acquired by Lippo Malls Trust for SGD51 million.

PT Lippo Karawaci is the sponsor for both REITs. Lippo Malls Trust and First REIT will hold separate economic rights to all the assets and revenue of the retail mall and hospital respectively.

“The property is held under one ‘right to build’ title certificate and currently, in Yogyakarta, there are no regulations permitting the regional government of Yogyakarta to subdivide the property and issue separate strata titles for Siloam Hospitals Yogyakarta and Lippo Plaza Jogja”, said First REIT in its statement. “First REIT and Lippo Malls Indonesia Retail Trust have therefore decided to jointly acquire this attractive asset”, it added.

First REIT will finance its portion of the acquisition by a combination of a drawdown from the REIT’s debt facilities and internal cash while Lippo Malls Trust will rely on debt.

The acquisition will require unitholders’ approval from the respective REITs. Circulars related to the proposed joint acquisition and notices for EGMs are expected to be issued in due course.

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.