LMIRT Q1 DPU falls 18% as rental income drops on lease expiry

LIPPO Malls Indonesia Retail Trust (LMIRT) has slashed its first-quarter payout to unitholders by 17.9 per cent, as rental income slid year-on-year.

Distribution per unit (DPU) will be 0.55 Singapore cent for the three months to March 31 against 0.67 Singapore cent previously, the manager said in unaudited results released on Monday.

Distributable income for the real estate investment trust (Reit) was down by 15.5 per cent altogether to S$16.1 million, as net property income fell by 7.8 per cent to S$40.5 million.

Rental income was down by 7.1 per cent to S$37.4 million, partly because of lower contributions from Lippo Plaza Batu and Palembang Icon, where master leases expired in July 2018.

While gross revenue rose by 34.2 per cent to S$65.9 million, mainly on the direct collection of service and utilities recovery charges from tenants, this was eroded by property operating costs, which nearly quintupled on a surge in spending on maintenance and operations.

LMIRT's portfolio, which is wholly based in Indonesia, spans 23 shopping centres and seven retail spaces in other malls.

The occupancy rate stood at 91.5 per cent as at March 31, a shade lower than the 92.9 per cent recorded at end-2018, while weighted average lease expiry by net lettable area was 4.17 years.

Still, Gouw Vi Ven, chief executive of the manager, said in a statement that as the rupiah recovers against the Singdollar, "the trust is also showing improved quarter-on-quarter performance as we continue to actively manage and revamp our portfolio to keep up with changing consumer preferences and to generate higher organic growth".

She pointed to plans for a new food court in 2019 at Pluit Village in North Jakarta, as well as the refurbishment of Sun Plaza in Medan, which is due for completion in early 2021.

LMIRT is also looking to buy West Jakarta's Lippo Mall Puri from the Reit sponsor, Lippo Karawaci, for 3.7 trillion rupiah (S$356.6 million) by the second half of 2019.

Ms Gouw added that, with rental support from the trust's sponsor, Puri Mall - which is part of the St Moritz Jakarta mixed-use project - will be yield-accretive for net property income "and will generate long-term value for our unitholders".

Q1's DPU, which includes capital distribution of 0.28 Singapore cent per unit, will be paid out on May 16, with books closing on Apr 30.

The counter shed 0.2 Singapore cent or 1 per cent to S$0.198 on Monday before the results were announced.