Lippo Malls Indonesia Retail Trust (LMIRT): Despite some uncertainties over Indonesia’s economic outlook, retail sales momentum remained solid, increasing 23.6% YoY in Apr, after growth of 10.9%-19.3% in Jan – Mar. LMIRT recent 1Q15 results reflected this positive trend with rental reversions coming in at 9.56% and portfolio occupancy at 94.2%. Its sponsor Lippo Karawaci has plans to expedite the development of its 15 malls which are in the pipeline as well as asset enhancement projects in existing malls.
Meanwhile, management has sought to reduce risks for unitholders, by hedging 93% of its estimated net cash flows in IDR for the next 2 years. 100% of its borrowings are also on a fixed rate basis or hedged with interest rate swaps. LMIRT is in the process of refinancing their S$200m of debt maturing in July with either a term loan or fixed rate note issuance. Cost of debt is expected to remain stable.
OCBC reiterates their HOLD rating with no changes to their forecasts and TP of $0.35. KMIRT is currently trading at FY15F P/B ratio of 0.86x and offers a distribution yield of 8.2%.
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