In 2016 and 2017, LMIRT issued two tranches of perpetual securities, of $140 million at 7% per annum, and $120 million at 6.6% per annum. The first reset or call date is on Sept 27 for the $140 million tranche and on Dec 19, 2022, for the $120 million tranche. LMIRT’s annual report states that there is no fixed redemption date.
Investors appear increasingly comfortable with higher levels of gearing. In April 2020, the Monetary Authority of Singapore (MAS) lifted aggregate leverage levels for locally listed REITs from 45% to 50%. Since then, several REITs have lifted their gearing levels.
The troubled Riady REITs, Lippo Mall Indonesia Retail Trust (LMIRT) and First REIT both raised equity through dilutive rights issues. LMIRT completed its rights issue in January and First REIT in February. Excluding its perpetual securities, LMIRT’s gearing is 41.7%, and its interest coverage ratio is just 1.3% as at March 31, following its rights issue to part-finance the acquisition of Puri Mall in Indonesia.
