LMIRT unitholders give green light for Lippo Mall Puri purchase, rights issue

LIPPO Malls Indonesia Retail Trust (LMIRT) can now proceed to acquire the majority of the strata titles within a West Jakarta mall for about 3.5 trillion rupiah (S$336.5 million) from its sponsor, despite recent opposition from some unitholders.

At an extraordinary general meeting (EGM) on Monday morning, unitholders approved the deal with about 78.6 per cent of the total number of votes cast in favour of it, above the 50 per cent requisite.

The real estate investment trust's (Reit) manager had proposed to buy the strata titles, spanning about 175,146 square metres, from Mandiri Cipta Gemilang (MCG), a wholly-owned subsidiary of LMIRT sponsor Lippo Karawaci.

The manager and the seller in August lowered the purchase price to 3.5 trillion rupiah, from 3.7 trillion rupiah previously, following an update revaluation of the property to account for the impact of the Covid-19 outbreak. Still, the deal is a sizeable one, considering LMIRT's market capitalisation of some S$245.9 million.

Some unitholders in early December asked to postpone the voting on the acquisition by at least three months so that a new valuation can be commissioned for the property.

Among the issues raised by the dissenters was the early termination of certain leases after valuations were completed; they contended that the circular's use of a headline occupancy rate of 91.9 per cent painted a rosier picture than warranted of the mall's prospects.

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A Dec 2 virtual dialogue also saw unitholders questioning the size and timing of the acquisition.

Last week, the Reit manager denied the postponement request, saying that the reasons given by the unitholders were "without merit" and that there was insufficient time to provide valid notice on an additional resolution.

At Monday's EGM, the three other resolutions were also passed by unitholders by way of submission of proxy forms. About 89.9 per cent approved a US$281 million rights issue while 80.3 per cent voted in favour of an up to S$40 million loan, both of which will fund the acquisition.

The non-underwritten renounceable rights issue, proposed in September, will be done on a pro rata basis of 160 rights units for every 100 existing LMIRT units, at an illustrative issue price of S$0.06 apiece. Up to 4.68 billion rights units will be issued, equivalent to about 160 per cent of the total number of LMIRT units in issue.

As for the loan, the Reit will obtain it from the mall's seller MCG. The final amount to be drawn under this facility will be determined at the Lippo Mall Puri deal's completion.

Close to 77 per cent of unitholders also gave the green light for the whitewash resolution. This waives the independent unitholders' right to receive a mandatory offer from LMIRT's manager and Bridgewater International - both wholly owned by the sponsor - and their concert parties in the event that the latter group incurs an obligation to make such an offer under Singapore's takeover code.

LMIRT's manager earlier said that the issue of the allotted and excess rights units could result in the manager, Bridgewater and their concert parties holding more than 49 per cent of the Reit's voting rights.

The EGM on Monday saw a record turnout of more than 1,550 minority unitholders, representing about 13.5 per cent of the Reit's unitholder base.

James Liew, chief executive of the Reit manager, said the support of the majority of minority unitholders "reflects their confidence in the merits and long-term value of this iconic asset".

On the concerns raised by some unitholders, Mr Liew reiterated that the deal is a strategic move by LMIRT to acquire a strong asset which will help reposition and anchor the trust for sustainable long-term growth to maximise returns for unitholders.

Lippo Puri Mall has a net lettable area exceeding 120,000 square metres. It will be the Reit's flagship and largest asset in its portfolio.

The property is located within the St Mortiz mixed-use development, and has access to a large catchment population of middle-upper class residents, office workers, schoolchildren and hotel guests, the manager said.

"Since the easing of restrictions in the Jakarta region, Puri Mall has shown strong recovery in shopper traffic and secured new tenants, including a premium supermarket that will commence operations early next year," Mr Liew noted.

Units of LMIRT fell 0.1 Singapore cent or 1.2 per cent to trade at 8.3 cents as at 1.33pm on Monday.