A PRUDENT CAPITAL
MANAGEMENT STRATEGY
The Manager pursues a prudent
capital management strategy
through adopting and maintaining a
conservative gearing level as well as
an active currency and interest rate
management policy.
This strategy aims to:
• Optimize Unitholder’s returns;
• Provide stable returns to
Unitholders;
• Minimize refinancing risks;
• Maintain flexibility for working capital
requirements; and
• Retain flexibility in the funding of
future acquisitions.
HEDGING AGAINST INTEREST RATE
RISKS
It is the policy of the Manager to work
towards delivering stable and growing
returns through sourcing attractively
priced capital and adopting appropriate
hedging strategies.
LMIR Trust has in place interest rate
swap contracts for a period of 3.75
years commencing March 2015 to
hedge against the floating interest rate
of the borrowings of S$145 million.
As at 31 December 2015, more than
85% of LMIR Trust borrowings of S$695
million are on fixed rates.
HEDGING AGAINST FOREIGN
EXCHANGE RISKS
LMIR Trust has entered into foreign
exchange hedges to hedge its
estimated quarterly cash flows in
CAPITAL
MANAGEMENT
**
Based on total deposited assets as at 31 December 2015
Amount
Coupon
Maturity Date
$150,000,000
4.250%
4 October 2016
$50,000,000
5.875%
6 July 2017
$75,000,000
4.480%
28 November 2017
$100,000,000
4.500%
23 November 2018
$75,000,000
4.100%
22 June 2020
Indonesian Rupiah until the end of
2016. The foreign exchange hedges
are entered into so as to provide a
degree of certainty that changes in the
exchange rate between the Indonesian
Rupiah and the Singapore Dollars will
not have a significant negative impact
on the distributions in Singapore
Dollars to Unitholders.
As at 31 December 2015, the mark
to market valuation of the foreign
exchange hedges is approximately
S$8.2 million.
MODERATE GEARING LEVEL
PROVIDES STABILITY IN CURRENT
TIGHT CREDIT MARKET
In September 2015, LMIR Trust
established a new S$1,000,000,000
Guaranteed Euro Medium Term
Securities Programme (EMTS
Programme), in addition to an existing
S$750,000,000 Guaranteed Euro
Medium Term Note Programme
(EMTN Programme) it established in
July 2012. The new S$1,000,000,000
EMTS Programme allows LMIR Trust to
issue notes and/ or perpetual securities
from time to time, thereby providing
LMIR Trust greater flexibility for its fund
raising whenever necessary.
The following notes had been issued
under the two Programmes to date :
During the financial year, a S$200
million 6-month bridging loan was drew
down to refinance the S$200 million
4.88% p.a. notes due in July 2015.
Such bridging loan was subsequently
refinanced by issuance of S$100million
notes in November 2015 and a S$100
million 3-year unsecured loan drew
down in January 2016.
At the same time, in June 2015, LMIR
Trust repaid S$10 million of a S$155
million 4-year loan which was used to
part finance the acquisition of Lippo
Mall Kemang in December 2014.
As at 31 December 2015, LMIR Trust’s
gearing ratio stood at 35%**, which is
well below the allowed leverage limit
of 60% for a REIT with credit rating.
Following the Monetary of Singapore’s
(MAS) regulatory changes to regime
governing REITs in Singapore, a REIT
is permitted to borrow up to 45.0% of
the value of its Deposited Property with
effect from 1 January 2016, regardless
of whether a credit rating is obtained.
LMIR Trust has continued to perform
in accordance with the debts provision
and have met all covenants to date.
The Manager will continue to focus on
prudent capital management strategy
by conserving cash through and
effective controls over operating and
capital expenditure.
LIPPO MALLS INDONESIA RETAIL TRUST
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