Lippo Mall Retail Trust’s manager announced that following the Indonesian government’s progressive easing of restrictions in Jakarta and other major cities in Java and Sulawesi due to the improving Covid-19 situation in these areas, 12 of the Trust’s 29 retail malls, are allowed to reopen subject to certain precautionary measures.
The measures include 50% mall capacity, proof of first dose vaccination, F&B dining-in capacity limits with maximum of two persons to a table alongside a 30-minute eating time limit, and age restrictions for those under 12 years old being prohibited from visiting the malls.
The LMRT malls set to reopen are Lippo Mall Puri, Lippo Mall Kemang, Pluit Village, Gajah Mada Plaza, Plaza Semanggi, Tamini Square, Cibubur Junction, Lippo Plaza Kramat Jati, Bandung Indah Plaza, Istana Plaza, Mal Lippo Cikarang and Lippo Plaza Kendari, and two retail spaces, namely WTC Matahari and Depok Town Square
On Aug 17, LMIRT’s manager announced that it will not be calling its $140 million of perpetual securities on Sept 27, but will aim for a reset instead. The reset will be at the prevailing five year swap offer rate on that date plus a spread of 5.245%. This is likely to take the reset coupon lower to 6.1% compared to the currrent coupon of 7%.
The reasons given for a reset rather than a redemption are: uncertainties of the prevailing operating environment and the trust has limited liquidity and cash flow; (ii) assuming new debt for the purposes of the redemption of the Perpetual Securities will increase LMIRT’s leverage and (iii) current market conditions are not favourable for LMIRT for the issuance of perpetual securities at a lower yield than the reset distribution rate.
LMIRT has a high cost of capital and cost of debt because of its Indonesian assets and parentage. LMIRT's all-in cost of debt, as at June 30, excluding perpetual securities was 6.47%, and 6.55% including perpetuals. It has a US$250 bond due 2024 priced at 7.25% and a US$200 million bond due 2026 priced at 7.5%.
