Lippo Malls Reit proposes $280m rights issue to fund acquisition of Jakarta mall

Lippo Malls Indonesia Retail Trust is looking to acquire the strata title units of Lippo Mall Puri for a purchase consideration of about $330.2 million.
Lippo Malls Indonesia Retail Trust is looking to acquire the strata title units of Lippo Mall Puri for a purchase consideration of about $330.2 million.PHOTO: PT LIPPO KARAWACI TBK

SINGAPORE (THE BUSINESS TIMES) - The manager of Lippo Malls Indonesia Retail Trust (LMIRT) on Friday (Sept 18) proposed to raise $280 million through a non-underwritten renounceable rights issue to partly finance its planned acquisition of Lippo Mall Puri.

The manager expects to issue about 4.68 billion rights units on a pro rata basis of 160 rights units for every 100 LMIRT units, at an indicative issue price of six Singapore cents per rights unit.

The indicative issue price is at a discount of 47.8 per cent to the closing price of 11.5 cents on Sept 17, the counter's last trading day prior to the announcement.

LMIRT is looking to acquire the strata title units of Lippo Mall Puri for a purchase consideration of about 3.5 trillion rupiah ($330.2 million) from Mandiri Cipta Gemilang, a wholly owned subsidiary of Lippo Karawaci, which is LMIRT's sponsor.

Lippo Karawaci has undertaken to take up its full pro rata stake in the rights issue and apply for all the excess rights units.

Should Lippo Karawaci be allocated 72.5 per cent or more of the excess rights, LMIRT will effectively become a subsidiary of the sponsor.

The rest of the acquisition cost will be paid through debt financing of up to $120 million, comprising bank debt and a $40 million loan facility from Mandiri Cipta Gemilang, the manager earlier said.

The manager said the Jakarta mall, once acquired, will become LMIRT's flagship asset.

It added that the short-term impact of the Covid-19 pandemic presents an opportunity to acquire a quality asset with long-term capital appreciation potential, at a substantially reduced price.

 

The manager said it believes the mall will continue to maintain occupancy levels and attract new tenants as businesses gradually recover, and expects rental rates to show stable or moderate growth from late 2021.

LMIRT units were trading at 11 cents as at 9.45am on Monday, down 0.4 cent or 3.5 per cent.