Lippo Malls Indo Retail Trust (LMIRT) - OCBC Investment 2017-06-14: Proposed Issuance Of S$120m Perpetual Securities

LIPPO MALLS INDO RETAIL TRUST D5IU.SI

Lippo Malls Indo Retail Trust (LMIRT) - Proposed Issuance Of S$120m Perpetual Securities

Lippo Malls Indonesia Retail Trust (LMIRT) recently announced that it intends to issue S$120m worth of fixed rate perpetual securities. The perpetual securities will come with a fixed rate of 6.60% per annum, with the first reset date falling on 19 Dec 2022 and subsequent resets occurring every five years thereafter.

LMIRT’s decision to issue new perpetual securities does not come as a surprise, as it had previously issued S$140.0m 7.0% perpetual securities on 27 Sept 2016.
We believe that the net proceeds from the issuance will be used in part to fund the S$33.2m Kendari acquisition, as well as to temporarily refinance the S$50m 5.875% bond due in 6 Jul 2017 and the S$75m 4.48% bond due 28 Nov 2017.
As such the perp issuance is expected to offer LMIRT greater headroom to fund future acquisitions while maintaining its Baa3 Moody’s rating and keeping below the regulatory limit of 45% gearing.
Maintain BUY on LMIRT with a fair value of S$0.435.

Deborah Ong OCBC Investment | http://www.ocbcresearch.com/ 2017-06-14

OCBC Investment SGX Stock Analyst Report BUY Maintain BUY 0.435 Same 0.435