Lippo Malls REIT (LMIR)

[ksir]

Lippo DPU falls to 0.56 cents

It is due to several results
1) currency weakness affecting revenue conversion back to S$
2) Some one off finance expenses due to the MTN notes which was repayed in Q1

I am not overly concerned with the above reasons, because 1) while valid is not something that company can control, 2) should fall to more reasonable level for Q1 onwards, when gearing fall back to 26%.

I am more concerned about its operation and is rather puzzled with the following:

Operating wise, occupancy rate is stable at 95% overall, NLA has a small 1% increase due to completion of AEI, from 719695 m2 to 725601 m2. It is still having positive rental revision with lease renewed. SO net net gross revenue for LMRT in IDR dollars should be stable or increasing.

YET, it falls from 326,105 million IDR in Q3 to 315065 million IDR in Q4

How is this possible? Any impact on revenue due to AEI should not contribute to a 5% decrease in total revenue, since Ekakokasari mall which is going through AEI has NLA of only 26000 m2

Anyone can explain?

Technically, almost all mall rentals in Indo are quoted in US$.
So again, technically, the rental revision should go up with the strength of US$.

On the rental lease, one have to be mindful about the customer (lessees) force (from 5 Porter forces).
The retailers in Indonesia are dominated by few big FISHES (MAPI, Trans Fashion etc).
Generally they command bigger say, as the economics of scale rules.

And for better or worse, 2 of its biggest anchor tenants are Matahari and Hypermart, which are owned by its parent company (Lippo Group).

You should explore more on that aspect and form our own judgement.

(Not vested)
Just my 2k rupiah.