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Lippo Malls Indonesia Retail Trust recently agreed to acquire PT Mitra Anda Sukses Bersama’s (PT MASB) entire issued share capital for $33.2 million, reported Singapore Business Review citing OCBC Investment Research.
PT MASB has a 30-year build-operate-transfer (BOT) agreement with the government of Southeast Sulawesi for a four-storey shopping mall. With a net lettable area of 21,000, the Kendari property is yet to reach full market rentalevels.
Vendor PT Metropolis Propertindo Utama (PT MPU), however, will immediately enter into five-year master leases spanning 4,700 sq m for an annual rent of 15.1 billion rupiah prior to the completion of the acquisition, said the brokerage firm.
While the underlying tenants of the would-be master leases accounted for only 36.4 percent of the 15.1 billion rupiah rent in FY2016, it noted that “two independent valuers expect this total underlying revenue to be sustainable from the sixth year onwards”.
This comes as PT MPU committed to convert – at its own cost – part of the existing major tenants area into casual leasing area and specialty tenants area to improve rentals. Notably, the areas set to undergo asset enhancement will form part of the master leases.
“With net property income of $3.0 million in FY2016, the acquisition cap rate is ~9.0 percent.” With this, OCBC Investment Research expects the trust’s portfolio to “increase by ~1.6 percent”.
This article was edited by Denise Djong.
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