Lippo Malls Indonesia Retail Trust DPU dips 43% in Q3

LIPPO Malls Indonesia Retail Trust (LMIRT) posted a distribution per unit (DPU) of 0.49 cents in the third quarter, down 43 per cent from the same period a year earlier, on the back of higher operating expenses and a weak rupiah.

The Indonesia rupiah had weakened 9.4 per cent against the Singapore dollar since a year ago. 

Gross revenue in the three months ended Sept 30 rose 30.7 per cent to S$64.8 million, as a fall in rental and carpark income was offset by a S$27.8 million collection of service and utilities recovery charges directly from tenants (instead of through a third-party service provider previously), compared to S$8.8 million collected in the same period a year earlier.

New contributions from Lippo Plaza Jogja and Kediri Town Square acquired in December last year were offset by lower rental income from the seven retail spaces following the expiry of their master leases.

Net property income fell 15 per cent to S$39.5 million due to a jump in property operating expenses after the retail malls and retail spaces undertook direct maintenance and operations of their premises, dragged lower by a S$2.1 million net allowance for doubtful debts.  

A new tax ruling in Indonesia, which levies a 10 per cent tax on service charges and utilities recovery charges, also led to an increase in income tax expense to S$7.8 million from S$5.2 million in the third quarter last year.

In the nine months to Sept 30, DPU was 1.75 Singapore cents, down from 2.64 Singapore cents in the first nine months of 2017, as distributable income fell 33.4 per cent to S$49.7 million. 

Average rental reversion in third quarter was 2.9 per cent. Portfolio occupancy was 92.6 per cent as at Sept 30, above the industry average of 83.8 per cent. Weighted average lease expiry by net lettable area was 3.81 years.

Gearing ratio was 37.1 per cent as at Sept 30, up from 33.7 per cent as at Dec 31 last year.

Net asset value per unit was 27.55 Singapore cents as at Sept 31, down from 35.38 Singapore cents as at Sept 30 last year.

LMIRT fell half a Singapore cent or 2.04 per cent to close at S$0.24 on Friday before results were announced after market close.

Books closure date for the distribution is Nov 19, payable on Nov 30.