Acquired for IDR310 billion ($32.3 million), LPK will be LMIRT’s first property in Sulawesi.
The four-storey shopping mall with a net lettable area of 21,008 sqm is located in a residential area with major tenants including Matahari Dept Store, Hypermart, Pizza Hut, Solaria, Cinemaxx and Timezone.
In June, the trust raised $120 million via the issue of 6.6% five-year perpetual securities.
In a Thursday report, analyst Lock Mun Yee says the proceeds are likely to fund the purchase of LPK.
“Assuming the remainder funds are used to repay part of the debt due this year, gearing could likely decline from 33.2% to 27.5%, after taking into account the latest acquisition. This puts the trust in a strong position for further inorganic growth,” says Lock.
LMRT also saw a 7.2% rise in 1Q17 DPU to 0.89 cents, led by the maiden contribution from Lippo Mall Kuta and positive rental reversions of 7.5% in 1Q17.
Portfolio occupancy stayed at 93.8%, while towards end-2017, a remaining 20% of portfolio NLA is scheduled to be re-contracted.
“We expect these to enjoy higher average rents on renewal. Besides Istana Plaza, Gajah Mada Plaza, Plaza Semanggi and Sun Plaza are slated for asset enhancement initiatives (AEI). This should provide some income uplift upon completion,” adds Lock.
Catalysts for the stock would be higher than expected rental renewal growth rate and new acquisitions, while risks include a weakening of the INR to SGD.
Units of LMRT are trading at 43 cents flat at 12.09pm.
