This is mainly due to non-operational accounting adjustments made to Ebitda and interest expenses in Q2 and Q3
LIPPO Malls Indonesia Retail Trust (LMIRT) will “potentially” not be able to meet the minimum interest coverage ratio (ICR) requirement for the financial year ended Dec 31, 2024, said its manager on Tuesday (Jan 14).
This is mainly due to “non-operational accounting adjustments made to both the Ebitda (earnings before interest, taxes, depreciation and amortisation) and interest expenses of LMIRT in the second quarter ended Jun 30, 2024 and the third quarter ended Sep 30, 2024”, said its announcement filed to the bourse after market closed.
However, the manager noted that the breach will not incur negative financial consequences.
The minimum ICR requirement of 1.5 times by the Monetary Authority of Singapore (MAS) was updated in July 2024 to apply at all times to all real estate investment trusts (Reits).
Prior to the change, a 2.5 times ICR requirement was to be met only by Reits which intended to increase their aggregate leverage from 45 per cent to 50 per cent.
The manager clarified that the aggregate leverage ratio of LMIRT as at Dec 31, 2024 will remain below 50 per cent, as the aggregate leverage limit requires.
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It added that LMIRT’s existing financial debt obligations do not contain any financial covenants with reference to the ICR or the aggregate leverage ratio requirement, and thus it expects no negative financial consequences arising from any breaches of such ratios.
The ICR estimate is subject to the finalisation of the financials for FY2024, noted the manager.
Late last year, both Moody’s Investor Service and Fitch withdrew LMIRT’s credit ratings.
Units of LMIRT closed Tuesday up 12.5 per cent, or S$0.002, at S$0.018.
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