Lippo-Mapletree Indonesia Retail Trust Management, the manager of Lippo-Mapletree Indonesia Retail Trust (LMIR Trust), announced increased distributable income of $11.7 million for the three months ended 30 September 2010 (3QFY2010) compared to the last quarter. The distribution equates to DPU for 3Q 2010 of 1.09 cents and an annualised yield of about 8.6% based on the closing price on Sept 30, 2010.

Revenue was 53% higher year-on-year. The manager says this was largely due to additional income from service charges receipt and utilities cost recovery from tenants at seven of the malls (excluding Sun Plaza) since January, subsequent to the expiry of the operating costs agreements with third-party operators (Opcos) on Dec 31, 2009. Previously, under the agreements, the Opcos were given the rights to the service charges receipt and utilities cost recovery, while the Opcos become responsible for, but not limited to, the costs related to the maintenance and operation of the malls.

Meanwhile, the LMIR Trust portfolio has also benefited from:

• Average rate increase in renewed leases was 16% higher than the ones that have expired during the quarter;
• Foreign exchange rates used for translating revenues denominated in Indonesian Rupiah (IDR) into Singapore Dollars (SGD). The average SGD/IDR exchange rate adopted in the 3Q 2010 financial statements was 6,621, compared to 7,283 used in 3Q 2009.

In 3Q 2010, there was a realised loss on foreign exchange forward contracts of $2.9 million as the cross currency swap remained “out of the money”, compared to 3Q 2009 when a realised loss of $0.4 million was recorded as the IDR was weaker at that time. The Trust has entered into the foreign exchange forward contracts as a prudent measure to mitigate its exposure to fluctuations of income denominated in IDR from :

• Dividends received or receivable from the Indonesian subsidiaries; and
• Capital receipts from the redemption of redeemable preference shares by the Indonesian subsidiaries. The cost or benefit from fixing the forward foreign exchange rates is recorded in the other gains and losses line below net property income.

LMIR Trust has continue to maintain a conservative gearing and its aggregate leverage as at Sept 30, 2010, was 10.8%, with total borrowings stable at $125 million.

The trust’s property portfolio comprises retail malls and retail spaces located in Indonesia’s major cities with large urban middle-class population catchment areas, that are easily accessible via major transportation routes and highways. The portfolio features a well diversified tenant mix where no particular trade sector accounts for more than 17% of total NLA and no single property contributed more than 18% of total net property income. LMIR Trust portfolio occupancy remains significantly better than the industry average, with an occupancy rate of 98.1% as at Sept 30, 2010.