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Strong growth for Lippo Malls Indonesia

Lippo Malls Indonesia Retail Trust has reported a 23.7 per cent year-on-year gross rental growth.

A large part of the increased revenue is the result of the addition of the Lippo Mall Kemang by the Singapore-headquartered trust.

Even without Kemang, (pictured), the underlying portfolio performance remained favorable, with year-on-year growth in rental income and net property income both at 2.9 per cent in Indonesian rupees and with occupancy of the shopping malls at 94.2 per cent, “well above” industry average in Indonesia.

Lippo Mall Kemang 515

With Kemang’s contribution included, rental income rose 25.5 per cent and net property income 27.5 per cent.

Alvin Cheng, the REIT manager’s CEO, said that given the growth outlook for the Indonesian economy, the stable business fundamentals of the portfolio and the continuing high occupancy rate, Lippo “looked forward to continually increasing portfolio revenue and distributions to unitholders in the coming quarters”.

LMIRT’s Sponsor, PT Lippo Karawaci, is one of the largest listed property developers and mall operators in Indonesia. With its strategic intention to grow LMIR Trust as the cornerstone of its third pillar of growth, Lippo Karawaci has provided the trust with a right of first refusal over its retail malls to be built across Indonesia.

“LMIRT will continue to explore its Sponsor’s pipeline of quality assets in Indonesia as well as opportunistic third-party acquisitions, to achieve its goal of growing LMIR Trust’s portfolio in the coming years, and to deliver stable long-term returns to our Unitholders,” LMIRT said in its earnings statement.

With a government imposed moratorium on new shopping centre developments, the short term retail space supply in Jakarta will be limited.

“This will create a favourable market condition for existing shopping mall owners as retail space in Jakarta will be keenly sought after in the next few years.

“The outlook for quality retail spaces looks promising in the next 12 months as both local and foreign retail players continue to remain active,” LMIRT said.

“Higher disposable income, coupled with an emerging trend of lifestyle shopping malls are expected to drive the demand for retail space.”

LMIRT currently owns 17 retail malls and seven retail spaces located within other retail malls with a combined net lettable area of 765,273 sqm and total valuation of S$1.85 billion.

The malls are all strategically located in major cities of Indonesia with large middle-income population. Tenants include retail brands such as Matahari Department Store, Debenhams, M&S, H&M, Sogo, Giant Hypermarket, Carrefour, Ace Hardware, Victoria’s Secret, Promod, McDonald’s, Pizza Hut, KFC, A&W, Fitness First and Starbucks.

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