LMIR – BT

LMIR Trust Q4 DPU 79% below forecast

For 2009 it plans to focus on organic growth instead of adding assets

LIPPO-MAPLETREE Indonesia Retail Trust (LMIR Trust) has announced a distributable income of $3.2 million for the fourth quarter ended Dec 31, 2008, 79 per cent below its forecast of $15.5 million.

Distribution per unit (DPU) for the period is 0.3 cent, also 79 per cent below its forecast of 1.45 cents.

For the financial year ended Dec 31, 2008, distributable income was $59.5 million, 14 per cent lower than its forecast of $68.9 million while DPU was 5.6 cents against its forecast of 6.48 cents.

LMIR Trust, which was listed in November 2007, said the decrease in distributable income for FY2008 was due to the allowance for outstanding receivables of $7 million and the writing off of an upfront arrangement fee of $2.8 million for a $225 million term loan facility that was expected to be syndicated by September this year.

‘The manager will focus on organic growth for 2009 and asset acquisitions are unlikely,’ said LMIR Trust. ‘Coupled with the challenging credit environment, the manager has, as a measure of prudence, decided to write off the $2.8 million fee.’ Legal fee of $0.5 million would also be written off, it said.

The $7 million receivables are outstanding rent from wholesaler tenants. LMIR Trust said that while these tenants have given notice of termination of their leases, it considers these tenants to be in breach of their contractual obligations and will engage all legal means to recover the debts. ‘However, as a measure of prudence, the manager has decided to make specific provisions for the total amount outstanding,’ it said.

Gross revenue for the quarter was $21.4 million, one per cent above forecast. Excluding Sun Plaza, which was acquired in March 2008, gross revenue was $17.6 million, or $3.5 million below forecast.

Property operating expenses for the quarter totalled $9.1 million, which is $7.8 million above its forecast. LMIR Trust said the increase was due mainly to the outstanding receivables of $7 million, higher land rental, additional property management fee arising from the addition of the Sun Plaza property and higher operating expenses.

The lower gross revenue and higher property operating expenses resulted in a net property income of $12.4 million for the quarter, which is $7.4 million or 38 per cent below forecast.

Total loss for the quarter after tax but before distribution was $255.9 million, against a forecast net profit of $14.6 million. This was attributed to a deficit of $301.7 million (net of deferred tax) arising from a change in fair value of investment properties. A significant portion of this was due to the depreciation of the Indonesian rupiah against the Singapore dollar, said LMIR Trust. While LMIR Trust does not have a policy of hedging capital values, rupiah income is substantially hedged in Singapore dollar and this has resulted in unrealised exchange gain of $46.2 million, added LMIR Trust.

LMIR Trust said that as at end-2008, its portfolio was valued at $829.9 million.

Gearing at end-2008 stood at 12.4 per cent, with total borrowing of $125 million. LMIR Trust said no debt is to be refinanced until March 2013.

At the end of trading yesterday, LMIR Trust’s unit price was 24 cents, down 4 cents.