SINGAPORE - Lippo Malls Indonesia Retail Trust (LMIRT) is looking to acquire Lippo Mall Puri in West Jakarta for 3.70 trillion rupiah ($354.7 million), financed with a combination of debt and equity financing, the Reit's (real estate investment trust) manager said in a regulatory filing.
LMIRT Management, the Reit manager of LMIRT, has entered into a conditional sales and purchase agreement (CSPA) with PT Mandiri Cipta Gemilang for the proposed acquisition of Lippo Mall Puri. PT Mandiri Cipta Gemilang is a wholly owned subsidiary of PT Lippo Karawaci Tbk, which is the sponsor of LMIRT.
Through the move, LMIRT looks to boost its assets by 19 per cent to 23.21 trillion rupiah from 19.51 trillion rupiah. It will also increase its total net lettable area (NLA) by 12.69 per cent to 1.0 million square metres (sq m), from 910,749 sq m.
Vendor PT Mandiri Cipta Gemilang has also agreed to provide support after the acquisition is completed, as Lippo Mall Puri is "still maturing in terms of shopper recognition, tenant performance and passing rents", said the Reit manager. This is with a guaranteed level of net property income (NPI) of 348 billion rupiah up to December 2019, increasing to 356 billion rupiah in December 2023. With vendor support, Lippo Mall Puri is expected to generate an NPI yield of about 9.41 per cent.
The acquisition is conditional on the completion of the segregation of the existing land titles and issuance of strata title certificates for Lippo Mall Puri, and LMIRT securing sufficient financing for the buyout.
Gouw Vi Ven, chief executive officer of LMIRT Management, said the group aims to complete the acquisition in the second half of 2019 after the issuance of strata title certificates for Lippo Mall Puri.
"To ensure a smoother completion process and to better protect the interest of the unitholders, the timing of any fundraising exercise to finance this acquisition will take into account the timing of the issuance of the strata title certificates for the mall," Ms Gouw said.
The decision regarding the timing of the fundraising to finance the acquisition will be made by the LMIRT Management at the appropriate time, taking into account prevailing market conditions and confirmation of the issuance of the strata title certificates.
Lippo Mall Puri, which is LMIRT's "largest acquisition to date", has a total NLA of about 115,600 sq m. It comprises two eight-storey buildings and two lower ground floors, with its retail space distributed over five floors and the two lower ground floors. The remaining floor area is occupied by a car park and two retail walkways, which will not be part of this acquisition, according to the statement.
As at Dec 31, 2018, the mall has an occupancy rate of 89.6 per cent, with 324 tenants ranging from retail, dining, entertainment and leisure options. They include brands such as Cinema XXI, Matahari, Parkson and Time Zone, and over 100 renowned international brands such as adidas, Best Denki, H&M, Marks & Spencer, Uniqlo and Zara.
Since it started operations in July 2014, average footfall has grown from 176,000 visitors per month in Q3 2014 to nearly 1.22 million visitors per month in Q4 2018, a compounded growth rate of 62 per cent across its five years of operations, the statement said.