Dear Unitholders
On behalf of the Board of Directors and management
of LMIRT Management Ltd, as Manager of Lippo Malls
Indonesia Retail Trust (“LMIR Trust”), we are pleased to
PRESENT THE FOLLOWING REPORT TO ,-)2 4RUST 5NITHOLDERS FOR
the Financial Year ended 31 December 2014 (FY2014).
For the year 2014, the underlying portfolio of LMIR Trust
has delivered consistent growth and stable performance,
WHILST THE ACQUISITION OF ,IPPO -ALL +EMANG h,-+v
at the end of the year increased the total asset value to
)$2 TRILLION APPROXIMATELY 3'$ BILLION /N A YEAR
ON YEAR BASIS THE 'ROSS 2ENTAL )NCOME OF THE 4RUST GREW BY
5.5% in IDR terms, mainly from the rental reversions from the
PORTFOLIO MALLS AS WELL AS THE MAIDEN CONTRIBUTION FROM ,-+
commencing from 17 December 2014.
Despite the volatility of the IDR, growth of the quarterly
$ISTRIBUTION 0ER 5NIT h$05v IN
HAS BEEN STABLE AND
IMPROVING RESULTING IN 1 $05
HIGHER THAN
that for 4Q2013. The contributory factors include additional
effective currency hedging and capital management
strategies implemented at end 2013.
LMIR Trust further strengthens its capital structure, through
the issue of SGD45 million of new equity to the Sponsor,
04 ,IPPO +AWARACI 4BK AS PART OF THE CONSIDERATION FOR ,-+
AND THE PRIVATE PLACEMENT OF APPROXIMATELY 3'$ MILLION
of new equity to strategic investors in December 2014.
INDONESIA MACROECONOMY: YEAR IN REVIEW
Indonesia achieved a 5.0% year on year GDP increase
for 2014, which placed Indonesia as one of the leading
South East Asian countries in terms of economic growth.
According to the 2015 State Budget of Indonesia,
'$0 GROWTH IN
IS EXPECTED TO BE
WHICH
is based on the backdrop of a growing population,
mega trend of urbanisation, as well as prospects for
narrowing of the current account deficit and slowing
inflation. Foreign investment remains a core contributor of
GDP growth for Indonesia with the Investment Coordinating
"OARD "+0- ATTRACTING )$2
TRILLION 53$ BILLION
in 2014, a 16.2% increase from the previous year.
Indonesia’s vibrant middle class continues to be the primary
DRIVER OF ECONOMIC ACTIVITIES AND IS EXPANDING WHILST MAJORITY
of the Indonesian GDP is currently coming from domestic
demand, fuelled by a young demographic population profile
and benign inflation. Meanwhile, retail spending has in fact
INCREASED BY APPROXIMATELY TIMES BETWEEN 1 AND
Q42014, and is forecasted to grow at double digits for the
NEXT
YEARS
This retail spending strength will continue to underpin the
performance of LMIRT’s portfolio and more so as the supply
of new retail mall space is projected to remain modest for
the near term.
CURRENCY VOLATILITY
Since the 2nd half of 2013, and throughout 2014, Indonesia
SAW SHARP VOLATILITY IN ITS CURRENCY EXCHANGE RATE WHEREBY
THE AVERAGE )$2 3'$ RATE IN
WAS APPROXIMATELY
11.07% lower than in the previous year. In spite of this, and
AS A RESULT OF THE FOREIGN EXCHANGE HEDGING STRATEGY WE
were able to minimise the negative impact on our operating
results and distributable income and maintained a stable
growth in the Distributable Income for LMIR Trust.
IDR reached its weakest level since the 1998 Asian Financial
Crisis. The current market outlook for 2015 points to
uncertainties and volatility coupled with the prospect of
5 3 INTEREST RATE INCREASES WHICH WILL LIKELY LEAD TO FURTHER
depreciation of the IDR. LMIR Trust has recently entered into
A SERIES OF FOREIGN EXCHANGE HEDGING CONTRACTS TO ENSURE THAT
the distributable income of the Trust will not be significantly
affected by the currency market volatility during FY2015 as
well as FY2016.
MAINTAINING A STABLE GROWTH PATH
Gross Rental Income increased 7.9% from SGD27.9 million
(IDR258.56 billion) in 1Q2014 to SGD30.1 million
(IDR284.00 billion) in 4Q2014, whilst Distributable Income
grew 5.4% from SGD16.7 million to SGD17.6 million
during the same period. These were achieved through rental
REVERSIONS RATE OF APPROXIMATELY
DURING THE YEAR
and maintaining an average occupancy of 95% across the
portfolio in 2014.
At the same time, in order to further enhance the income
capacity of the portfolio, the Trust acquired the strategically
LOCATED ,IPPO -ALL +EMANG FROM 04 ,IPPO +ARAWACI 4BK
in December 2014, for a consideration of SGD362.0 million.
4HIS IS A STOREY SHOPPING CENTER WHICH IS A KEY COMPONENT
OF THE +EMANG 6ILLAGE )NTEGRATED $EVELOPMENT AND LOCATED
in the highly cosmopolitan South Jakarta area. Given that
the acquisition was completed on 17 December 2014,
its contribution to the financial performance of LMIR Trust was
limited during 2014, but will be making its full contributions
from 1Q2015.
13
LIPPO MALLS INDONESIA RETAIL TRUST ANNUAL REPORT 2014
