Lippo Malls Indonesia Retail Trust’s (LMIRT) agreement to acquire the West Jakarta-based Lippo Mall Puri from Lippo Karawaci has been adjusted in the wake of the COVID-19 pandemic’s disruptions, the Singapore-listed REIT said Monday.
The deal is now priced at 3.5 trillion rupiah, or around S$330.2 million ($243.2 million), compared with the March 2019 announcement’s pricing of 3.7 trillion rupiah, which at the time was around S$325.4 million. The price compares with LMIRT’s net asset value of S$1.08 billion as of end-2019, the trust said.
The price change was due to revaluations by two independent valuers to account for the pandemic’s impact, with the new deal pricing at a 3.47 per cent discount to the average of the two valuations, LMIRT said in a filing to SGX.
The seller, PT Mandiri Cipta Gemilang, a wholly-owned subsidiary of the REIT’s sponsor PT Lippo Karawaci, will also provide rental support for unleased space from the deal’s date of completion through the end of 2024, the trust said.
In the March 2019 announcement of the acquisition, LMIRT said Puri Mall had an occupancy rate of 89.6 per cent as of end-2018, above the average 83.2 per cent for the industry at the end of 2018’s third quarter.
LMIRT told DealStreetAsia via email that the deal hadn’t yet closed as the mall is part of the larger St. Mortiz Integrated Development and underlying land titles needed to be split into smaller titles to the property; the process had been expected to be completed by the end of 2019, but it faced delays, which were further exacerbated by the pandemic in the first half of this year, the REIT said. The title process is now expected to be completed by the end of this year, it added.
The deal will be funded in Singapore dollars via a combination of up to S$120 million in debt financing, including a loan facility from the mall’s seller and bank debt, and via a rights issue to raise around S$280 million.
For the rights issue, LMIRT said sponsor Lippo Karawaci, which holds around 32.32 per cent of the trust, including concert parties, will take up its full allotment, plus any other excess units.
The decision to finance the deal via a rights issue comes as the REIT’s unit price has tumbled this year, closing at S$0.12 on Friday, compared with around S$0.23 at the start of 2020.
The seller will provide a loan facility of up to S$40 million at 3.65 per cent a year, to buffer against the pandemic’s impact, the statement said.
“Although the Asian banking and debt capital markets have stabilised, they have yet to recover fully to the levels seen before the outbreak of the Covid-19 pandemic,” the statement said. “LMIR Trust will look to repay this vendor financing with new borrowings from the banking or debt capital markets when raising further financing from these markets become more conducive.”
Editor’s note: This article has been updated with comments from LMIRT and to correct the quantum of the deal.