LMIRT posted 4Q12 gross rental income of S$33.0m, up 35% YoY. The increase was primarily due to the contributions from Pluit Village and Plaza Medan Fair (acquired in 4Q11) and marginal contributions from the six acquisitions made in 4Q12. Results for the quarter were generally in line with our expectations; DPU of 0.74 S cents formed 97% of our estimate. NAV per unit rose 6.3% QoQ to 56.16 S cents, giving a current P/B of 0.93x. Gearing remains healthy at 24.5%. Management indicates that the average weighted all-in cost of debt for FY13 is likely to be 5.5%-5.7%. We maintain our fair value of S$0.52. Since the current unit price is near our fair value, we downgrade LMIRT to a HOLD. We estimate a FY13F yield of 6.9%.
4Q12 in line
LMIRT posted 4Q12 gross rental income of S$33.0m, up 35% YoY. The increase was primarily due to the contributions from Pluit Village and Plaza Medan Fair (acquired in 4Q11) and marginal contributions from the six acquisitions made in 4Q12. Total revenue (equivalent to gross rental income in 4Q12) fell 11% YoY to S$33.0m. This is because of the absence of the service charge and utilities recovery following the outsourcing of the operational services to a third-party operating company with effect from 1 May 2012. Net property income margin was at 93.4%, down 3.2 ppt QoQ. Management communicated that 4Q12 NPI margin is more reflective of future margins. Finance costs more than doubled to S$6.5m (+106% YoY), chiefly from additional interest expense and amortisation of transaction costs as a result of the issuance of S$250m and S$75m of notes under the EMTN Programme in Jul 2012 and Nov 2012 respectively. 4Q12 results were generally in line with our expectations; DPU of 0.74 S cents formed 97% of our estimate.
Healthy balance sheet
NAV per unit rose 6.3% QoQ to 56.16 S cents, giving a current P/B of 0.93x. Gearing remains healthy at 24.5%. The weighted average maturity of debt facilities at end FY12 was approximately three years, with no refinancing required until June 2014. 68% of LMIRT’s S$1.75b asset portfolio remains unencumbered. Management indicates that the average weighted all-in cost of debt for FY13 is likely to be 5.5%-5.7%. Management intends for LMIRT to amass a S$4b portfolio over the next three to five years. The portfolio occupancy rate of 94% as at 4Q12 is significantly above Indonesia’s retail industry average rate of ~88%.
Downgrade to HOLD
We maintain our fair value of S$0.52, however, since that is near the current unit price, we downgrade LMIRT to a HOLD. We estimate a FY13F yield of 6.9%.
LMIRT posted 4Q12 gross rental income of S$33.0m, up 35% YoY. The increase was primarily due to the contributions from Pluit Village and Plaza Medan Fair (acquired in 4Q11) and marginal contributions from the six acquisitions made in 4Q12. Total revenue (equivalent to gross rental income in 4Q12) fell 11% YoY to S$33.0m. This is because of the absence of the service charge and utilities recovery following the outsourcing of the operational services to a third-party operating company with effect from 1 May 2012. Net property income margin was at 93.4%, down 3.2 ppt QoQ. Management communicated that 4Q12 NPI margin is more reflective of future margins. Finance costs more than doubled to S$6.5m (+106% YoY), chiefly from additional interest expense and amortisation of transaction costs as a result of the issuance of S$250m and S$75m of notes under the EMTN Programme in Jul 2012 and Nov 2012 respectively. 4Q12 results were generally in line with our expectations; DPU of 0.74 S cents formed 97% of our estimate.
Healthy balance sheet
NAV per unit rose 6.3% QoQ to 56.16 S cents, giving a current P/B of 0.93x. Gearing remains healthy at 24.5%. The weighted average maturity of debt facilities at end FY12 was approximately three years, with no refinancing required until June 2014. 68% of LMIRT’s S$1.75b asset portfolio remains unencumbered. Management indicates that the average weighted all-in cost of debt for FY13 is likely to be 5.5%-5.7%. Management intends for LMIRT to amass a S$4b portfolio over the next three to five years. The portfolio occupancy rate of 94% as at 4Q12 is significantly above Indonesia’s retail industry average rate of ~88%.
Downgrade to HOLD
We maintain our fair value of S$0.52, however, since that is near the current unit price, we downgrade LMIRT to a HOLD. We estimate a FY13F yield of 6.9%.
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