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Lippo Malls Indonesia Retail Trust to divest Pejaten Village and Binjai Supermall

THE manager of Lippo Malls Indonesia Retail Trust (LMIRT) has inked conditional agreements to divest two properties, Pejaten Village and Binjai Supermall, for 1,280.7 billion rupiah (S$124.3 million). 

The buyer is NWP Retail, a joint venture between Warburg Pincus and City Retail Developments, LMIRT announced in a Monday bourse filing after trading hours. 

The sale price of Pejatan is 997.4 billion rupiah, representing a 33.3 per cent premium to LMIRT’s original purchase price in 2012. The sale price of Binjai Supermall is 283.3 billion rupiah, 19.3 per cent higher than the 2012 purchase price. 

The sale prices are also however at a slight discount to the properties’ latest valuations. The discount for Pejatan is 4.1 per cent, while that for Binjai is 8.3 per cent. LMIRT’s manager may use the net divestment proceeds of about S$120.2 million to fund growth through reinvestments, make distributions to unitholders or pare down debt.

The sale marks the inaugural divestment of LMIRT since its 2007 listing, noted James Liew, chief executive of the real estate investment trust (Reit) manager, in a press statement. “The sale of these assets clearly demonstrates that despite a relatively illiquid commercial real estate market in Indonesia, the manager is able to capture opportunities to achieve long-term sustainable returns for unitholders,” he said. 

Mr Liew added: “Alongside the proposed Lippo Mall Puri acquisition, we will continue to seek other strategic and opportunistic acquisitions that exhibit attractive growth prospects while concurrently executing asset enhancement initiatives to optimise the value of our portfolio."

Meanwhile, Timothy Daly, CEO of NWP Retail, said that the acquisition marks a milestone in the company's expansion in Indonesia. 

"NWP Retail has executed a clear and consistent strategy since its founding, pillared on Indonesia’s strong consumption growth story... The company continues to seek high-potential, attractively priced retail acquisitions and development opportunities across key markets in Indonesia,” Mr Daly said. 

Units of LMIRT closed flat at S$0.225 on Monday.