Lippo Malls: (S$0.36) 1Q15 DPU buoyed by rental reversion and new mall acquisition
1Q15 distributable income for the Indonesian retail trust soared 28.4% y/y to $21.5m, lifting DPU to 0.79¢ (+16%). The smaller increase in DPU was attributed to dilution from 301m new units issued to acquire its Kemang mall in Sep '14.
Gross revenue and NPI leapt to $42m (+24.7%) and $39m (+25.6%) respectively, driven by maiden contributions from Lippo Mall Kemang and positive rental reversions (+9.5%) across its portfolio.
Overall occupancy slipped to 94.2% (4Q14: 95.0%), with weighted average lease expiry of 4.9 years, while aggregate leverage improved q/q to 31.6% (-2.7 ppts), with average debt to maturity shortened to 1.86 years from 2 years.
Management sees favourable market conditions for existing retail mall owners, underpinned by the moratorium on new mall development since 2011, which limits future supply.
According to Savills property consultant, Jakarta's retail occupancy level is expected to reach 95-96% by 2018, from 92% at end-2014, driven by the robust expansion of local and foreign retailers among various sectors.
At $0.36, LMIR trades at an attractive forward yield of 8.9% and 0.86x P/B.
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