Jakarta – LMIRT Management Ltd. (“LMIRT”), manager of Lippo Malls Indonesia Retail Trust (“LMIR Trust” or the “Trust”) and a wholly owned subsidiary of PT Lippo Karawaci Tbk (“LPKR” or the “Company”), announce that it has entered into a conditional sale and purchase agreement with NWP Retail for the sale of two malls in Indonesia with a total sale consideration of Rp1,280.7 billion (S$124.3 million). Lippo Karawaci, Indonesia’s largest real estate company by assets and revenues, is also the largest operator of malls in Indonesia with a market share of approximately 25% of all modern lifestyle malls. NWP Retail is a joint venture between Warburg Pincus and PT City Retail Developments.
Lippo’s shift toward an active management strategy unlocks shareholder value and improves REIT valuation by demonstrating its ability to divest assets at attractive valuations. This transaction represents the inaugural transaction following LMIRT’s strategic shift to active management of its portfolio. Historically, LMIRT employed a passive management buy and hold strategy. The divestment provides flexibility through liquidity to invest in new assets, return cash to shareholders or explore other investment opportunities.
Mr. James Liew, Chief Executive Officer of the REIT manager stated, “Moving forward we will continue to optimize our portfolio to unlock shareholder value. This transaction demonstrates the quality of our portfolio and substantiates the valuation of our unit price.”
The sale considerations of Rp997.4 billion (S$96.8 million) for Pejaten Village and Rp283.3 billion (S$27.5 million) for Binjai Supermall amount to a premium of 33.3% and 19.3% over the original purchase considerations of Rp748.0 billion and Rp237.5 billion of the respective properties acquired in 2012. It also represents a nominal 4.1% and 8.3% discount to their latest valuations of Rp1,040 .0 billion and Rp309.0 billion respectively. This is significantly higher than the implied discount to NAV at which the REIT currently trades at.
This transaction substantiates the attractiveness of Indonesia’s retail market, driven by robust economic expansion, a fast growing middle class, and a young demographic with over half the population under 30 years old. With modern retail comprising only 25% of total retail, retail malls represent a huge growth opportunity. Malls in Indonesia have seen strong growth in traffic even as online retail has taken off.
Mr. John Riady, CEO of LPKR, commented: “Lifestyle malls will continue to be a core part of our business and we will continue to work to manage our assets in a proactive manner to improve valuations, identify investment opportunities and unlock shareholder value. Through an active portfolio management strategy, the REIT is better positioned to close its valuation gap by exiting positions at attractive market prices.” Mr. Riady continued, “Our vision is to continue to enhance strategies at our subsidiaries to unlock additional value.”
About Lippo Karawaci (“LPKR”) (www.lippokarawaci.co.id)
Listed on the Indonesia Stock Exchange, Lippo Karawaci (“LPKR”) is Indonesia’s leading integrated real estate company with total assets of US$4.0bn at 30 September 2019. Our core business comprises urban residential developments, lifestyle malls and healthcare. We are also actively involved in integrated developments, hospitality, township development and management, as well as asset management services.
Currently, the Company has a presence in 35 cities, and is a leading Indonesian property developer with 1,461 ha of landbank ready for development. Through our two publicly listed subsidiaries, PT Lippo Cikarang Tbk, and PT Gowa Makassar Tourism Development Tbk, of which LPKR owns 81.0% and 62.7% respectively, LPKR develops and operates urban developments at Lippo Cikarang in Bekasi and at Tanjung Bunga in Makassar. Additionally, LPKR owns 51.05% of PT Siloam International Hospitals Tbk, Indonesia’s leading private hospitals network, with 36 hospitals across 24 cities nationwide.
LPKR also has an ownership stake in two listed REITs in Singapore, namely First Real Estate Investment Trust and Lippo Malls Indonesia Retail Trust with US$1.0bn and US$1.4bn of assets under management respectively, as at 30 September 2019.
For more information please contact:
Investor Relations:
Bret Ginesky
Head of Investor Relations
Bret.Ginesky@lippokarawaci.co.id
Office: +622125669078
Corporate Communications:
Danang Kemayan Jati
Vice President, Head of Corporate Communications
DanangJ@lippokarawaci.co.id
Mobile: +628557801299
This press release has been prepared by PT Lippo Karawaci Tbk (“LPKR”) and is circulated for the purpose of general information only. All opinions and estimations included in this release constitute our judgment as of this date and are subject to change without prior notice. LPKR disclaims any responsibility or liability whatsoever arising which may be brought against or suffered by any person as a result of reliance upon the whole or any part of the contents of this press release and neither LPKR nor any of its affiliated companies and their respective employees and agents accepts liability for any errors, omissions, negligent or otherwise, in this press release and any inaccuracy herein or omission here from which might otherwise arise.
Forward-Looking Statements
Certain statements in this release are or may be forward- looking statements. These statements typically contain words such as "will", "expects" and "anticipates" and words of similar import. By their nature, forward looking statements involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described in this release.
