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 LMIR Trust Unitholders for
the Financial Year ended 31 December
2015 (FY2015).
It was an eventful year for LMIR Trust,
as we completed the acquisition
of two modern retail malls whilst
witnessing a y-o-y DPU growth of 12.3%.
Furthermore, LMIR Trust obtained
its investment grade rating of Baa3
from Moody’s Investors Service for
the first time in June 2015, which had
contributed positively to the refinancing
exercise for the SGD200M unsecured
senior note due in July 2015.
At the same time, the underlying
portfolio of LMIR Trust has delivered
consistent growth and stable
performance, whilst the acquisition
of Lippo Plaza Batu and Palembang
Icon in July 2015 increased the total
property asset value to IDR17.8
trillion (approximately SGD1.8 billion).
On a year-on-year basis, the Gross
Rental Income of the Trust grew by
22.8% in IDR terms, mainly due to the
contribution from the assets acquired
in the past year, as well as from Lippo
Mall Kemang (‘LMK”) which became
part of the portfolio since December
17, 2014.
Despite the volatility of the IDR, growth
of the quarterly Distribution Per Unit
(“DPU”) in 2015 has been generally
stable and improving, resulting in
4Q2015 DPU 14.1% higher than that
for 4Q2014. The contributory factors
include additional effective currency
hedging and capital management
strategies implemented since early
2015.
INDONESIA MACRO ECONOMY:
YEAR IN REVIEW
Indonesia achieved a 4.8% year on
year GDP increase for 2015, which
is commendable compared with the
subdued global economic growth
of just 2.4%. According to the World
Bank forecast, GDP growth in 2016
is expected to be improved to 5.1%,
which is based on the backdrop
of increased public spending in
infrastructure and other governmental
capital expenditures.
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, market
sentiment is improving as evidenced
in the upward trend of the Consumer
Confidence Index (“CCI”) from 97.5 in
September 2015 to 112.6 in January
2016.
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
Throughout 2014, Indonesia saw sharp
volatility in its currency exchange rate,
whereby the average IDR/SGD rate
in 2014 was approximately 11.07%
lower than in the previous year. The
downward trend has slowed during
the past year, so that the IDR/SGD rate
only depreciated by approximately 2%
between January 1 and December 31,
2015. Meanwhile, as a result of the
foreign exchange hedging strategy
implemented since beginning 2015,
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.
LMIR Trust has currently 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.
MAINTAINING A STABLE GROWTH
PATH
Gross Rental Income increased 5.5%
from SGD34.5 million (IDR324.6
billion) in 1Q2015 to SGD36.4 million
(IDR 354.0 billion) in 4Q2015, whilst
Distributable Income grew 5.6%
from SGD21.5 million to SGD22.7
million during the same period. These
were achieved through mainly rental
reversions rate of approximately 14.2%
during the year, and maintaining an
average occupancy of 94% across the
portfolio in 2015.
LETTER TO
UNITHOLDERS
LIPPO MALLS INDONESIA RETAIL TRUST
12
