The manager of Lippo Malls Indonesia Retail Trust (LMIRT) says it estimates its aggregate leverage ratio to be at 44.6% as at Dec 31, 2022. This is 0.9 percentage points higher than the aggregate leverage ratio of 43.7% as at Sept 30, 2022.
The increase is attributable to the “significant depreciation” of the Indonesian rupiah against the Singapore dollar (SGD) during the 4QFY2022 ended Dec 31, 2022 where the exchange rate was $1 to 11,659 rupiah, compared to the exchange rate of $1 to 10,566 rupiah as at Sept 30, 2022. The depreciation reduced the value of LMIRT’s total assets when translated into SGD.
“Notwithstanding the above, should the exchange rates as at Jan 31 of $1 to 11,413 rupiah and US$1 to $1.32 be used in place of the exchange rates as at Dec 31, 2022, the estimated aggregate leverage ratio of LMIRT as at Dec 31, 2022 based on updated approximate asset valuations and other information currently available to the manager would be 42.9%,” says the REIT manager.
“The decrease in the aggregate leverage ratio is mainly due to the appreciation of the SGD against the USD from US$1 to $1.35 to US$1 to $1.32 during the month of January 2023, which reduced the value of the USD-denominated borrowings of LMIRT when translated into SGD,” it adds.
This comes after the REIT’s announcement on Jan 3 that it expects its aggregate leverage ratio to come within the range of 44.25% and 44.75%.
The latest announcement is based on updated approximate asset valuations and other information currently available to the manager.
See also: Changes in ICR, leverage to come into effect immediately, with additional disclosures in March
The manager adds that it is exploring options and measures to “maintain a sustainable capital structure” and reduce the REIT’s aggregate leverage. This includes the “sale of non-strategic non-core properties at acceptable prices and use of excess internal cash resources”. The situation may affect distributions to the REIT’s unitholders and holders of perpetual securities, reveals the manager.
Units in LMIRT closed 0.1 cent higher or 3.13% up at 3.3 cents on Feb 1.
