LETTER TO UNITHOLDERS
During the year, the income capacity of
the portfolio was further boasted by the
acquisitions of two strategically located
malls, being Lippo Plaza Batu and
Palembang Icon, for a total consideration
of SGD106.9 million. Given that the
acquisitions were completed in July
2015, their contribution to the financial
performance of LMIR Trust was limited
in FY2015, and is expected to be fully
realised from 2016.
OPERATIONAL PERFORMANCE
Our portfoliomalls remainwell occupied
at approximately 94.0% at end 2015,
which is well above the industry average.
Leases for 108,811 sqm of total NLA
expired throughout 2015, and we
were able to achieve an average
positive rental reversion rate of
14.3%. Furthermore, as we have been
introducing annual step-up provision
into the renewed and new leases since
late 2009, annual rental growth from
such leases are expected to become
more regular. This will smoothen the
earnings profile and supports overall
rental growth.
These developments together with a
12.3% y-o-y DPU growth between 2014
and 2015, are strong testament to
management’s strategy and a continued
positive outlook on Indonesia.
ACTIVE CAPITAL MANAGEMENT
Leveraging on its favourable credit
profileandprudent capitalmanagement
policies, LMIR Trust secured its first
investment grade debt issuer rating of
Baa3 from Moody’s Investors Service.
At the same time, LMIR Trust was able
to refinance a SGD200M unsecured
senior note due in July 2015 by
the issuance of a SGD100M 3-year
unsecured senior note in November,
as well as drawdown from SGD100M
3-year term loan facility provided by a
syndicate of three international banks
in January 2016. In addition, for the
acquisition of two malls, Lippo Plaza
Batu and Palembang Icon, in July
2015, LMIR Trust successfully issued a
SGD75M 5-year unsecured senior note
under its SGD1,000MEMTS Programme
at a favourable coupon rate of 4.1% in
June 2015.
OUTLOOK
The economy of Indonesia continues to
be supported by burgeoning domestic
demand, increasing foreign investment
and government infrastructure
spending. The middle class continues
to grow in number and with higher
disposable income whilst the urban
population accounts for approximately
50% of the total population.
The sustainable retail spending growth
is expected to provide the basis for
continuing strong performance of
our portfolio. The growth in economic
activities is expected to provide LMIR
Trust with a tremendous platform
from which to further enhance growth
and return to unitholders and we
look forward to benefit from these
opportunities.
Management will continue to look
out for good yield accretive assets in
Indonesia to take advantage of the
GDP growth as well as increasing
consumption by the middle class.
Management will also continue to focus
on improving the tenancies in existing
assets through asset enhancement
initiatives and tenancy mix.
ACKNOWLEDGEMENT
On behalf of the Board of LMIRT
Management Ltd, we wish to express
our thanks to our tenants and business
partners for their loyal support, and
special gratitude to our Unitholders
for the faith and confidence in us as
the Manager for LMIR Trust. Last but
not least, we like to acknowledge the
outstanding contribution from our staff
over the past year. We look forward to
working together with you to achieve
new milestones in 2016 and beyond.
Finally, the Board of LMIRTManagement
Ltd wish to express our appreciation for
the commitment and dedication of Mr
Alvin Cheng, Executive Director & CEO,
in upholding the growth strategy and
sustainability of the REIT for the past 6
years. We wish him success in his future
endeavours.
Albert Saychuan Cheok
Chairman of the Board
& Independent Director
Alvin Cheng
Executive Director
of the Board & CEO
LIPPO MALLS INDONESIA RETAIL TRUST
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