3 Things Investors Should Know From Lippo Malls Indonesia Retail Trust’s Latest 2016 Results

Lippo Malls Indonesia Retail Trust (SGX: D5IU) Is the first and currently only real estate investment trust in Singapore’s stock market that focuses on Indonesian retail properties. It was listed over nine years ago on 19 November 2007.

As of 31 December 2016, its real estate portfolio consists of 20 retail malls and seven retail spaces. These have a collective value of S$1.9 billion and are all located in Indonesia.

The REIT reported its 2016 full year results in mid-February. Let’s look at three useful pieces of information from the announcement:

1. The overall result

Here’s a table showing some of the important numbers from Lippo Malls Indonesia Retail Trust’s income statement for the quarters and years ended 31 December 2015 and 2016:

Lippo Malls Indonesia Retail Trust income statement 2016
Source: Lippo Malls Indonesia Retail Trust 2016 full year earnings release

In all, the REIT delivered a positive performance for the whole of 2016 and the last quarter of the year – it achieved growth in all the metrics shown when compared to the same periods a year ago.

2. The rental reversion rate

The following chart shows the rental reversion rates that Lippo Malls Indonesia Retail Trust has enjoyed in its portfolio since the first quarter of 2011 (see the red line):

Lippo Malls Indonesia Retail Trust rental reversion chart
Source: Lippo Malls Indonesia Retail Trust 2016 full year earnings presentation

What’s useful to note here is that the REIT’s rental reversion rates have ranged between 5% and 27.1%, with rates of between 7% and 9% being the most common. This shows that the REIT’s rents have been steadily improving since 2011.

3. What lies ahead

As investors, we rely on many tools, including management’s forecasts, to help us gain insight on what to expect for the near to long term performance of our investments’ business.

With regard to Lippo Malls Indonesia Retail Trust, this is what the REIT’s Manager said about its future in the 2016 full year earnings release:

“Going forward, we will continue to work with the mall operator to improve footfalls to our malls and optimise rental returns. Acquisition opportunities remain strong in Indonesia, especially with our right-of-first-refusal to the growing pipeline of high-quality retail properties from our sponsor, PT. Lippo Karawaci Tbk.

In addition, with prudent capital management during the year, we ended FY 2016 with a gearing of 31.5%, well below the regulatory limit of 45%, providing the Trust with ample headroom for further acquisitions.”

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.