Proceeds will be used to finance the purchase of outstanding 7.5 per cent senior notes due 2026

 

LIPPO Malls Indonesia Retail Trust (LMIRT) upsized its term loan facility to 4.5 trillion rupiah (S$371.8 million) from 2.5 trillion rupiah previously.

 

The original loan &ndash which was obtained in May &ndash came with an average life of about eight years, based on the facility agreement.

 

On Thursday (Jun 27), LMIRT&rsquo s manager said the trust has on Jun 7 drawn down and used 2.3 trillion rupiah to prepay its secured bank loans that are denominated in Singapore dollars.

 

Proceeds from the upsized facility will be used to finance the purchase of outstanding 7.5 per cent senior notes due 2026. They will also be used to pay a consent fee related to the consent solicitation for these notes, as well as other related fees and expenses.

 

The senior notes are unconditionally and irrevocably guaranteed by Perpetual (Asia), the trustee of LMIRT.

 

In a separate announcement, the real estate investment trust (Reit) said it started a consent solicitation process to amend certain provisions related to notes due 2026.

 

In 2021, LMIRT issued US$200 million senior notes at 7.5 per cent. In May this year, it issued another US$17.6 million notes at 7.5 per cent.

 

The proposed amendments include substantially eliminating restrictive covenants and reporting requirements, as well as certain events of default in the contracts of the issued notes.

 

As part of the upsized facility agreement, changes to LMIRT&rsquo s single largest unitholder and LMIRT management&rsquo s shareholder will be considered a mandatory prepayment event.

 

Currently, the Reit&rsquo s single largest unitholder is Lippo Karawaci, a real estate and healthcare platform in Indonesia. Therefore, a change in control of Lippo Karawaci would also trigger a mandatory prepayment event for the Reit.

 

If the prepayment event occurs, the aggregate level of loan facilities that may be affected as at Thursday is about S$260 million, excluding interest.

 

Meanwhile, the aggregate level of loan facilities of LMIRT Capital and the trust&rsquo s other subsidiaries that may be affected as at the date of this announcement is about S$723.4 million.

 

&ldquo This does not take into account the amount of the loan facilities which have not been drawn down, including those in respect of the upsized facility,&rdquo said the manager.

 

On Tuesday, the manager said LMIRT&rsquo s aggregate leverage ratio is estimated to range between 45 and 45.2 per cent, up from the last disclosed 43.7 per cent as at end-March.

 

This came mainly as the rupiah appreciated by a significant 3.5 per cent against the Singapore dollar, reducing the value of LMIRT&rsquo s assets after translation into the latter currency.

 

However, the manager noted that the Reit&rsquo s existing loans do not contain any financial covenants linked to the aggregate leverage limit, and that the trust remains in compliance with financial covenants in its existing loans.

 

The 45 to 45.2 per cent gearing range estimated by the manager remains subject to the finalisation of the Reit&rsquo s unaudited financial statements for the second quarter ending Jun 30.

The manager says this does not breach the aggregate leverage limit as defined in the Singapore Exchange&rsquo s Collective Investment Schemes code

 

LIPPO Malls Indonesia Retail Trust&rsquo s (LMIRT : D5IU +8.33%) aggregate leverage ratio is estimated to range between 45 and 45.2 per cent, up from the last disclosed 43.7 per cent as at end-March 2024.

 

This came mainly as the rupiah appreciated by a significant 3.5 per cent against the Singapore dollar, reducing the value of LMIRT&rsquo s assets after translation into the latter currency.

 

A 0.9 per cent appreciation of the US dollar against the Singapore dollar further contributed to the increase, as the trust&rsquo s outstanding US dollar notes grew in value upon currency translation.

 

On Tuesday (Jun 25), the Indonesian retail real estate investment trust&rsquo s (Reit) manager noted LMIRT&rsquo s latest gearing ratio to be &ldquo marginally&rdquo above the 45 per cent regulatory limit.

 

It also denied breaching the aggregate leverage limit of 45 per cent as defined in the Singapore Exchange&rsquo s Collective Investment Schemes code. 

 

In Singapore, the regulatory gearing limit for Reits is 45 per cent with the exception of those with an interest coverage ratio of at least 2.5 times, which then allows for a maximum limit of 50 per cent. 

 

This limit is not considered to be breached if the limit is exceeded due to circumstances beyond the manager&rsquo s control.  

 

&ldquo A decline in the asset value of LMIRT as a consequence of a depreciation of foreign exchange is a circumstance beyond the control of the manager,&rdquo said LMIRT&rsquo s manager. 

 

&ldquo Under the Property Funds Appendix, if the aggregate leverage limit is exceeded as a result of a depreciation in the asset value of the property fund, the manager should not incur additional borrowings or enter into further deferred payment arrangements. Refinancing of existing borrowings is not construed as incurring additional borrowings.&rdquo

 

The manager also emphasised that the Reit&rsquo s existing loans do not contain any financial covenants linked to the aggregate leverage limit, and that the trust remains in compliance with financial covenants in its existing loans.

 

The 45 to 45.2 per cent gearing range estimated by the manager remains subject to the finalisation of the Reit&rsquo s unaudited financial statements for the second quarter ending Jun 30.

 

The manager said it will make the necessary announcement once information on the actual aggregated ratio is available.

This comes after Fitch Ratings&rsquo downgrades

 

LIPPO Malls Indonesia Retail Trust (LMIRT) has obtained a secured amortising term loan facility of up to 2.5 trillion rupiah (S$209.5 million).

 

The loan comes with an average life of about eight years based on the facility agreement dated May 28, 2024, said LMIRT&rsquo s manager on Wednesday (May 29).

 

About 2.3 trillion rupiah of the proceeds will be used to prepay the trust&rsquo s Singapore dollar-denominated secured bank loans in June.

 

The manager noted that the balance proceeds will likely be available for drawdown in the third quarter upon satisfaction of certain conditions.

 

It added that the facility agreement requires a mandatory prepayment if Lippo Karawaci ceases to be the single largest unitholder of LMIRT and is no longer the ultimate shareholder of LMIRT&rsquo s manager.

 

If the prepayment event occurs, the aggregate level of loan facilities of LMIRT that may be affected as at Wednesday is about S$357.3 million, excluding interest.

 

Additionally, the aggregate level of loan facilities of LMIRT&rsquo s subsidiaries that may be affected as at the date of this announcement is around S$633.5 million.

 

&ldquo This does not take into account the amount of the loan facilities which have not been drawn down,&rdquo noted the manager, referring to the new 2.5 trillion rupiah facility.

 

Fitch Ratings recently downgraded the long-term issuer default rating of LMIRT to &ldquo C&rdquo from &ldquo CC&rdquo .

 

It also downgraded the rating on LMIRT&rsquo s senior unsecured notes, due 2024 and 2026, to &ldquo C&rdquo from &ldquo CC&rdquo , with a recovery rating of &ldquo RR4&rdquo . 

 

A rating of &ldquo C&rdquo indicates an issuer is near default, and that a default or default-like process has begun a &ldquo CC&rdquo rating indicates very-high levels of credit risk, with a default of some kind appearing probable.

 

A recovery rating of &ldquo RR4&rdquo suggests average recovery prospects if a default were to take place. Such securities have characteristics consistent with securities historically recovering 31 to 50 per cent of their current principal and related interest.

The drop was largely due to a 2.1 per cent depreciation in the Indonesian rupiah against the Singapore dollar, the manager said.

 

In Indonesia rupiah terms, rental revenue edged up 1.2 per cent to 321 billion rupiah, compared to 317.1 billion rupiah in Q1 FY2023.

Watch out this reit. 

Gross revenue for the three months inches up 0.7%, while rental revenue slips 0.9%

 

LIPPO Malls Indonesia Retail Trust : D5IU 0% (LMIRT) on Friday (Apr 26) posted a 3.1 per cent decline in net property income to S$29.9 million for the first quarter ended Mar 31, from S$30.8 million in the corresponding year-ago period.

 

Net property income dropped due to higher property operating and maintenance expenses, as well as lower net reversal for impairment loss on trade receivables, said the trust&rsquo s manager in a media release accompanying the results.

 

Gross revenue for the three months inched up 0.7 per cent to S$49.2 million, from S$48.9 million year on year. This was attributed to higher revenue from its carpark, and service charge and utilities recovery segments.

 

Meanwhile, rental revenue for the quarter fell 0.9 per cent to S$27.5 million, from S$27.8 million. The drop was largely due to a 2.1 per cent depreciation in the Indonesian rupiah against the Singapore dollar, the manager said.

 

In Indonesia rupiah terms, rental revenue edged up 1.2 per cent to 321 billion rupiah, compared to 317.1 billion rupiah in Q1 FY2023.

 

No distribution was declared for the quarter.

 

The trust had previously announced it had ceased distributions to the holders of its S$140 million and S$120 million perpetual securities in a bid to conserve cash.

 

In Friday&rsquo s release, the manager said it will focus on addressing its other maturing debt obligations in the next 12 months, particularly the outstanding 2024 notes, and continues to be in active discussions with banks to explore potential liability management alternatives.

 

&ldquo Pending a clear resolution on its debt obligations maturing in 2024 and potentially in 2026, as well as achieving a sustainable capital structure, the trust will continue to exercise prudence regarding any distributions to be made to both unitholders and holders of the perpetual securities,&rdquo it said.

 

The average portfolio occupancy for the quarter edged up to 79.5 per cent from 79 per cent as at Dec 31, 2023. This was due to the trust securing new leases for 19,140 square metres and renewing 61.8 per cent of its expiring leases.

 

Shopper traffic for the three months has also rebounded to around 75.4 per cent of pre-Covid levels in 2019. There was also a year-on-year improvement of 10.7 per cent over Q1 FY2023.

 

James Liew, the manager&rsquo s chief executive, said: &ldquo We have earmarked a total of nine properties for refurbishment works over the next two years.

 

&ldquo While the positive effects of these initiatives will require time, we aim to attract an interesting mix of tenants from various sectors to offer shoppers a holistic and enriching experience.&rdquo