Lippo Launches Retail Reit IPO, Aims To Treble Size By End-09

Source : The Business Times, November 13, 2007

Trust comprises 7 Indonesian malls and 7 retail spaces in other malls.

THE Lippo Group aims to triple the portfolio size of its latest real estate investment trust (Reit) to $3 billion by end-2009, the Reit’s manager said yesterday.

Mall exposure: Investors welcome opportunity to participate in Indonesia's growing retail sector, says CEO of the Reit's manager

The Lippo-Mapletree Indonesia Retail Trust (LMIR Trust), which will be the first Singapore-listed Reit to offer exposure to Indonesia’s retail sector, aims to raise $516.4 million from its initial public offering (IPO).

The trust, which has an initial portfolio of seven Indonesian shopping malls and seven retail spaces in other malls, will sell 645.5 million units at 80 cents each.

The trust had earlier gave an indicative range of 78-91 cents a unit for the IPO.

Of the offer, some 625.5 million units have been placed with institutional and other investors - and is 1.6 times subscribed - while the remaining 20 million are being offered to the public.

‘Investors we met during the roadshows welcome this opportunity to participate in Indonesia’s growing retail sector, given Indonesia’s robust economic fundamentals underpinned by a growing and affluent urban middle-class population of about 66 million consumers,’ said Viven Sitiabudi, chief executive of the Reit’s manager.

PT Lippo Karawaci, Indonesia’s biggest listed real estate developer, will hold 27 per cent of the trust after the unit sale, while Singapore’s Mapletree Investments will own 12 per cent, the trust said.

LMIR Trust is projecting a yield of 6.9 per cent for 2007, 7.3 per cent for 2008 and 7.8 per cent for 2009, it said.

The public offer will close at noon on Nov 15 and trading is expected to start on Nov 19 at 2pm.

The trust is listing at a time when market sentiment is poor.

Japanese trust Saizen Reit tumbled 14 per cent on its debut on Friday, while Japan’s Asia Pacific Land delayed its $514.9 million Singapore IPO last week, citing ‘negative market sentiments’.

But Ms Sitiabudi said that she is confident of LMIR Trust’s quality, even as Lippo’s Indonesian hospital trust First Reit, which was listed last December, fell below its IPO price last week.

‘The market goes up and down, but we’re confident of the quality of our product,’ she said.

Lippo president Stephen Riady, who was speaking to reporters at a news conference to launch the trust, said that the group plans to list two to three Reits - worth some $3US-4 billion in all - in Singapore over the next two to three years.

‘These new Reits would most likely be for hotels, offices and for retail malls outside of Indonesia,’ Mr Riady said.