Lippo-Mapletree Indonesia Retail Trust says it achieved a distributable income of $13.1 million for the quarter ended Sept 30, 2009 (3Q 2009), 23.1% below the distributable income of $17.0 million recorded in the quarter ended Sept 30, 2008 (3Q 2008). DPU for 3Q 2009 is 1.22 cents compared to 1.60 cents in 3Q 2008.
Lippo-Mapletree says the lower distributable income year-on-year is due to lower specialty, casual leasing, carpark and miscellaneous income as the portfolio felt the impact of the global economic crisis in the form of retailers reducing the amount of expenditure on rent and promotional activities.
In addition, the depreciation of the Indonesian Rupiah (IDR) against the Singapore Dollar (SGD) when compared to 3Q 2008 also added to the decrease in SGD revenue. The Trust has entered into foreign exchange forward contracts to mitigate its exposure to fluctuations of income denominated in IDR from (a) dividends received or receivable from the Singapore subsidiaries and (b) capital receipts from the redemption of redeemable preference shares by the Singapore subsidiaries.
In 2009, the IDR has continued to appreciate against the SGD, albeit at a less robust rate in 3Q 2009 compared to Q2 2009, resulting in an unrealised loss of $19.2 million in relation to the mark to market of the Trust’s financial derivatives, chiefly cross-currency derivatives swapping IDR into SGD.
Accounting rules require these swaps to be marked to fair value each quarter, and the IDR strength over the last quarter reversed unrealized gains recorded in previous quarters. The unrealised loss does not affect distributable income as it is a non-cash item. Movements in IDR generally do not affect distributable income for LMIR Trust because the cross currency swaps fixes the rate at which IDR earnings are converted into SGD, however they do have an impact on certain component parts of the statement of comprehensive income.
Lippo-Mapletree says portfolio occupancy remains significantly better than the industry average, with the occupancy rate of 93% for LMIR Trust Malls as at 30 September 2009. The reduction in occupancy in 3Q 2009 came as a result of the premature lease termination of the department store operator RIMO which has temporarily reduced the occupancy rates of Gajah Mada Plaza and Istana Plaza in which RIMO was a tenant. Fortunately Matahari Department Store has agreed to tenant the space in both malls and the spaces are currently undergoing fitout, with commencement of rent expected to be in December 2009.
Property diversification is well-balanced with no single property accounting for more than 18% of the total income, while tenant diversification is good with no single trade sector accounting for more than 17% of the total net leasable area.
Lippo-Mapletree’s gearing as at Sept 30, 2009 is 11.8%, with total borrowings remaining at $125 million.
Source : The Edge – 4 Nov 2009