LMIRT's Q1 DPU down 78.2% on cash conservation

LIPPO Malls Indonesia Retail Trust (LMIRT) posted a 78.2 per cent drop in Distribution Per Unit (DPU) to 0.12 cents for the first quarter ended March. The DPU represents 24.1 per cent of the amount available for distribution of S$14.6 million.

The decision to withhold the remaining income is a "prudent contingency" against the impact of Covid-19, LMIRT said, given the loss of rental income with the closure of all its retail malls and spaces in Indonesia amid the pandemic. 

Gross revenue for the quarter dipped 1.5 per cent to S$64.9 million. Gross rental income during the period fell 2.3 per cent to S$36.6 million, following the expiry of master leases under Lippo Mall Kemang (LMK) in December 2019, shaving off about S$2.1 million in rental income. This was partially offset by positive rental reversions. 

Meanwhile, LMIRT's carpark income for Q1 was down by S$1.9 million from the expiry of the LMK master leases, as well as due to the increasing use of ride-hailing apps and the impact of Covid-19. This was partially offset by the increase in service charge and utility recovery. 

In line with the topline contraction, LMIRT's Q1 net property income fell 1.9 per cent to S$39.8 million. Its total property operating expenses for the quarter dipped 0.9 per cent to S$25.2 million, amid slightly higher property operating and maintenance expenses of S$20.8 million. 

As at end-March, LMIRT's gearing ratio stood at 42.1 per cent, up from 35.9 per cent as of end-2019, due to the sharp depreciation of the Indonesian rupiah against the Singapore dollar in Q1. LMIRT has an interest cover of 4.3 times. 

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LMIRT expects a greater financial blow from Covid-19 in Q2, said James Liew, chief executive of the trust's manager. "During the temporary closure period, the Trust will not be collecting rent from those tenants unable to operate their businesses in the mall," he said.

"Despite reducing operating costs by 30 to 40 per cent... net property income is expected to be significantly lower in Q2 2020, due to the mall closures. Nevertheless, the Trust remains in compliance with its debt financial covenants and has adequate financial reserves to fulfil its obligations into the foreseeable future," he added.

On March 27, LMIRT announced the temporary closure of 11 retail malls within the Greater Jakarta region, Bandung and Bali up to April 9. This was extended to its entire portfolio of 23 retail malls and seven retail spaces on April 1; the closures will continue until May 13.

Units of LMIRT closed at S$0.145 on Thursday, up by S$0.004.