SINGAPORE (Nov 26): On Nov 5, Lippo Karawaci revealed two likely restructurings that affect its Singapore-listed real estate investment trusts: It plans to divest Jakarta’s largest mall to Lippo Mall Indonesia Retail Trust (LMIRT), and to sell its remaining stake in First REIT. In a response to a Fitch Ratings downgrade announcement on the same day, Lippo Karawaci said: “The company regrets the decision of Fitch to lower LPKR [Lippo Karawaci]’s rating from B to CCC+ and believes that the decision was unsubstantiated.” Lippo Karawaci is the sponsor and major unitholder of LMIRT. LMIRT’s share price has fallen by half this year, from 40 cents on Jan 2 to 20 cents on Nov 22.  

Jakarta Exchange-listed Lippo ­Karawaci added: “While we acknow­ledge Fitch’s concerns around liquidity expressed in May this year, LPKR has successfully delivered on its asset divestment plan with the completion of the sale of First ­REIT’s manager and a partial sale of its First REIT shares, generating IDR2.2 trillion [$206.8 million] in proceeds. Together with the upcoming sale of Lippo Mall Puri into our own Lippo Mall REIT, the divestment of our remaining stake in First REIT, and our stake in a hospital in Myanmar, the company will raise way in excess of IDR6 trillion in net cash. These asset divestment projects are in advanced stages of completion, and while execution risks remain, we believe the quality of assets make completion a high certainty even amidst current volatility.” 

Lippo Mall Puri has a gross floor area of 165,172 sq m (1.78 million sq ft) and a net lettable area of 115,061 sq m. ­“LMIRT has not shared the property value of Lippo Mall Puri, though we think the acquisition could be to the tune of $300 million to $500 million, judging from the value of LMIRT’s malls in Jakarta,” an OCBC report says. LMIRT holds the right-of-first-refusal to Lippo Karawaci’s pipeline of malls, which include 17 malls in Indonesia (not already owned by ­LMIRT) and another 38 planned malls in the pipeline, OCBC adds.

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