Lippo-Mapletree Indonesia Retail Trust (LMIR Trust) says it achieved distributable income of $54 million for the year ended 31 December 2009 (FY 2009), 2.1% above the distributable income of $52.9 million recorded in the year ended 31 December 2008 (FY 2008). DPU for FY 2009 is 5.04 cents compared to 4.96 cents in FY 2008, up 1.6%.

Revenue was 14.2% lower year-on-year due to lower casual leasing, carpark and miscellaneous income as the portfolio felt the impact of the global economic crisis in the form of retailers reducing the amount of expenditure on promotional activities. In addition, the average Indonesian Rupiah (IDR)/Singapore Dollar (SGD) rate adopted in FY2009 was 5.4% weaker than the average rate adopted in FY2008. Had the average IDR/SGD rate adopted been at the same level as FY 2008, revenue in FY2009 would have been $4.3 million higher. However, LMIR Trust has entered into foreign exchange forward contracts to hedge income denominated in IDR into SGD.

Although revenue was lower, property operating expenses and administrative expenses were considerably lower this year as there were two significant one-off items expensed in FY2008 related to provisions to doubtful debts and the write off of some of expenses related to a Deutsche Bank loan. But in December, IDR 2 billion ($279,000) was received by LMIRT as the first instalment payment for one of the doubtful debts. Due to the effects of the above, distributable income increased 2.1% year on year, and DPU was 1.6% higher.

LMIR Trust portfolio occupancy remains significantly better than the industry average, with an occupancy rate of 96.9% as at 31 December 2009. Matahari Department Store (MDS) completed its fitout of both Gajah Mada Plaza (GMP) and Istana Plaza (IP) following the premature lease termination of the department store operator PT RIMO Catur Lestari TBK. Both new leases to MDS commenced in December 2009 resulting in the occupancy of GMP and IP to return to 96.1% and 99.5% respectively.

LMIR Trust’s property portfolio comprises retail malls and retail spaces for daily essentials, food outlets and family entertainment located in Indonesia’s major cities with large urban middle-class population catchment areas that are easily accessible. Therefore, occupancy levels are significantly higher than average. LMIR Trust also says it expects very few lease expiries in 2010, and occupancy levels being significantly higher than average.

Annual valuations for LMIR Trust’s portfolio were carried out by CB Richard Ellis Indonesia as at 31 December 2009. The portfolio increased in capital value by $226.1 million to $1.056 billion — a 27.2% appreciation compared to FY2008. 56% of this increase is attributed to the appreciation of the IDR against the SGD in the past year, and the remainder represented revaluation gains on the properties largely due to lower discount rates adopted by CBRE in light of Indonesia’s improving economic fundamentals.