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Lippo Malls Indonesia Retail Trust more than halves Q4 DPU to 0.3 S cent

LIPPO Malls Indonesia Retail Trust (LMIRT) slashed its distribution per unit (DPU) for its fourth quarter, under what the manager called "challenging conditions" in results posted on Friday.

The trust's DPU was down to 0.3 Singapore cent for the three months to Dec 31, 2018, less than half of the 0.79 Singapore cent paid out in the same period the year before. This took full-year DPU to 2.05 Singapore cents, against 3.44 Singapore cents previously.

The manager blamed a weaker rupiah, higher income tax costs and a higher realised currency loss, as excess cash in Indonesian subsidiaries was repatriated to partly pay down maturing debts in the quarter.

Distributable income fell by 61 per cent on the previous year, to S$8.69 million, as net property income was lower by 14.5 per cent to S$38.4 million.

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This was even though revenue grew by 29.2 per cent, to S$63.7 million, buoyed by service and utilities recovery charges from tenants and contributions from acquisitions made in 2017.

During the quarter, LMIRT used S$55 million in internal cash resources and S$135 million in an unsecured term loan from five banks to refinance a maturing S$90 million term loan and S$100 million in bonds. The trust notched higher realised currency losses as the internal cash resources came partly from rupiah-denominated cash held by the Indonesia subsidiaries, the manager said in its statements.

For the full year, LMIRT reported a 10.5 per cent drop in net property income, to S$165 million, with revenue up by 16.7 per cent, to S$230.3 million, again on the change to direct collection of service charge and utilities recovery charges from tenants.

Gouw Vi Ven, chief executive of the manager, said in a statement: "Despite the challenging environment caused by the weakening Indonesian rupiah and negative effects of new Indonesian tax regulations, our underlying portfolio continues to show stable operational performance, whilst experiencing growth in gross rental income."

The Singapore-based trust has a portfolio of 23 malls and seven retail spaces in other shopping centres, with a net lettable area (NLA) of 910,749 square metres in all.

The occupancy rate was 92.9 per cent as at end-2018, down from 93.7 per cent the year before, with a weighted average lease expiry by NLA of 4.22 years.

The trust had a gearing ratio of 34.6 per cent as at Dec 31, 2018 - against 33.7 per cent previously - and a weighted average debt maturity of 2.17 years. Moody's cut the trust's credit rating to "Ba1" in March 2018 - a junk rating - before withdrawing the rating for what it said were its own reasons.

LMIRT units closed up by half a Singapore cent, or 2.22 per cent, to S$0.23, before the results were out.