SINGAPORE (Dec 31): Lippo Malls Indonesia Retail Trust (LMIR Trust) is divesting two retail shopping malls in Indonesia – Pejaten Village in South Jakarta and Binjai Supermall in North Sumatra – for a total sale consideration of 1.28 trillion rupiah ($124.3 million).

This marks LMIR Trust’s first divestment since its listing in 2007.

The manager announced Monday that LMIR Trust has entered into conditional sale and purchase agreements to sell the properties to NWP Retail, a joint venture between Warburg Pincus and PT City Retail Developments.

The sale considerations of 997.4 billion rupiah for Pejaten Village and 283.3 billion rupiah for Binjai Supermall represent discounts of 4.1% and 8.3% respectively to their latest valuations conducted by Savills Valuation and Professional Services as at June 30, 2019.

However, the sales considerations are premiums of 33.3% and 19.3% respectively compared to the original purchase considerations when the properties were acquired in 2012.

The manager says the net divestment proceeds of approximately $120.2 million will increase the its financial flexibility to fund growth through reinvestments, make distributions to unitholders, or pare down debt.

“The sale of these assets clearly demonstrates that, despite a relatively illiquid commercial real estate market in Indonesia, the manager is able to capture opportunities to achieve long-term sustainable returns for unitholders,” says James Liew, CEO of the REIT manager.

Liew adds that the divestment is in line with the manager’s ongoing portfolio optimisation strategy.

“Alongside the proposed Lippo Mall Puri acquisition, we will continue to seek other strategic and opportunistic acquisitions that exhibit attractive growth prospects while concurrently executing asset enhancement initiatives to optimise the value of our portfolio,” he says.

Following the completion of the two divestments, expected in 2Q20, LMIR Trust’s portfolio will comprise 28 properties valued at a total of $1.7 billion.

As at 11.23am, units in LMIR Trust are trading flat at 22.5 cents.