Lippo Malls REIT disposes two Indonesian malls at discount to valuations

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The manager of Lippo Malls Indonesia Retail Trust (LMIRT) has entered into separate sale and purchase agreements to divest two mall properties in Jakarta and North Sumatra.

The assets are namely the six-storey retail mall known as Pejaten Village, and the three-storey shopping complex known as Binjai Supermall respectively.

The properties will be sold to NWP Retail, a joint venture between Warburg Pincus and PT City Retail Developments, for a collective consideration of IDR1280 billion (USD91 million, or SGD124 million).

The sale considerations of IDR997.4 billion for Pejaten Village and IDR283.3 billion for Binjai Supermall represent a premium of 33.3% and 19.3% over the original purchase considerations respectively.

However, these represent discounts of 4.1% and 8.3% to the properties’ latest valuations respectively.

The net divestment proceeds of approximately SGD120.2 million will increase LMIRT’s financial flexibility to fund growth through reinvestments, make distributions to unitholders, or pare down debt, said the REIT’s manager.

“Alongside the proposed Lippo Mall Puri acquisition, we will continue to seek other strategic and opportunistic acquisitions that exhibit attractive growth prospects while concurrently executing asset enhancement initiatives to optimise the value of our portfolio”, said James Liew, CEO of the REIT’s manager.

The divestments will complete in 2Q 2020, and will shave approximately 66,000 square metres of net lettable area from LMIRT’s portfolio.

The REIT will then own 28 properties collectively valued at SGD1.7 billion.

LMIRT was last done on the Singapore Exchange (SGX) at SGD0.225, with implied yield of more than 9% based on data from our Singapore REITs fundamentals table.

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