Lippo Malls Indonesia Retail Trust

Lippo Malls Indonesia Retail Trust (LMRT SP): 2Q12 DPU of 0.79 cts was in line with StanChart's 0.82 cts estimate, implying an annualized yield of 7.5%. In June, LMRT raised $250m through an MTN program at a blended coupon rate of c.5.1% (versus the c.6.7% all-in cost of the existing facility). LMRT is currently leveraged at 9.3% debt-to-assets and mgt intends to use the MTN proceeds to fund acquisitions and asset enhancement programs – potentially increasing leverage to a still comfortable 21.6%. LMRT began incurring interest expense on the MTN proceeds from July 2012 onwards (a drag on distributions) and focus would be on the timing and initial yields of the next round of acquisitions. StanChart already assumes $200m in acquisitions at a 8.5% yield, completing in Jan 2013. Re-iterates Outperform with TP $0.52.