OCBC downgrades Lippo Malls REIT to ‘Hold’ over lower market rents

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OCBC Investment Research has downgraded its recommendation on Indonesia-heavy retail REIT, Lippo Malls Indonesia Retail Trust, to ‘Hold’ in the wake of the latter’s 2Q 2017 results.

The REIT reported earlier in the month that it has achieved a distribution per unit (DPU) of SGD0.90 Singapore cents for the second quarter ended 30 June 2017, which is 5.9% higher than the SGD0.85 cents achieved in the corresponding period of 2016.

The REIT’s distribution for the quarter was buoyed by contribution from Lippo Mall Kuta, which was acquired in December 2016, as well as positive rental reversions, it said.

Accordingly, the REIT’s gross revenue and net property income (NPI) for the period rose 6.6% and 8.6% from a year ago, to SGD49.9 million and SGD46.8 million respectively, while distributable income to unitholders gained 6.7% to SGD25.4 million.

OCBC has described the quarter’s results as coming within expectations, and noted that the REIT recorded rental reversions of 13.0% for leases renewed in 2Q 2017, up from the 7.5% recorded in 1Q 2017.

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Ridzwan Rahmat has been analysing Singapore-listed REITs and business trusts, since 2008. For disclosure purposes, Ridzwan is currently vested in Mapletree Greater China Commercial Trust, Mapletree Industrial REIT and Mapletree Logistics Trust.

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