LMIRT to pay perp coupon due in June; reopens most malls

Singapore

THE manager of Lippo Malls Indonesia Retail Trust (LMIRT) on Monday said it will pay the upcoming distribution for its S$120 million, 6.6 per cent perpetual securities.

The trust has deposited S$3.97 million with the London branch of Citibank NA to satisfy the coupon payment which is due on June 19, the manager said.

Meanwhile, credit rating agency Moody's downgraded the trust from Ba3 to B1, citing weaker liquidity levels, increased refinancing risk and challenges with fund-raising.

This comes after LMIRT said last month that it had not yet decided if it would defer the upcoming distribution to its perp holders.

The Indonesian retail landlord was addressing concerns then over how it would manage its cash-flow uncertainty as Covid-19 has caused it to forgo 1.5 months of rental income, with no guarantee as to when its malls could reopen.

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LMIRT has a S$120 million tranche of 6.6 per cent perps callable in December 2022, as well as a S$140 million tranche of 7 per cent perps callable in September 2021. Perp holders have the right to receive semi-annual distributions, but LMIRT can elect not to pay any distribution for each period, as long as it gives the perps trustee three business days' notice.

On Monday, the manager said it will be making the distribution payment in view of the Indonesian government easing Covid-19 restrictions, amid a "stabilisation in the situation around the pandemic in Indonesia"; majority of the trust's malls and spaces resuming operations; as well as "adequate financial resources" backed by key relationship banks including CIMB Bank Berhad, Singapore branch, and BNP Paribas.

All of LMIRT's 23 malls and seven retail spaces were shuttered from April 1 to May 13 amid the Covid-19 pandemic.

In a separate bourse filing on Monday, the manager said that 21 of the trust's malls and six of its retail spaces across Indonesia have resumed operations with social distancing measures in place.

The retail landlord's eight malls and two retail spaces within greater Jakarta reopened on Monday, while another 13 malls and four retail spaces outside greater Jakarta have reopened on different dates since May 13.

Most retail stores, including dine-in at food and beverage outlets, have reopened. Entertainment outlets such as cinemas and kids' entertainment outlets, however, remain closed due to existing government regulations, according to the manager.

LMIRT's two remaining malls - Mal Lippo Cikarang and Lippo Plaza Ekalokasari Bogor - are scheduled to reopen on July 3, while one retail space, Depok Town Square, is set to reopen on June 16, after the lifting of the large-scale social restrictions in their areas.

The manager said it is working with the property manager Lippo Malls Indonesia on retailer engagements, with occupancy rate and future collections being the prime focus, and also rolling out marketing campaigns together with retailers to drive footfall.

It added that it has seen an uptick in the number of consumers within the malls that have reopened since May 13, and is "cautiously optimistic" about the recovery of the trust's mall operations.

Still, Moody's maintained a negative outlook on the trust's ratings, with analyst Tan Junling pointing to "our expectation that LMIRT's credit metrics will weaken in 2020 because of the softer operating conditions caused by the coronavirus outbreak".

Units in LMIRT closed at 13.9 Singapore cents on Monday, down 0.4 cent or 2.8 per cent.