Jakarta. Shares of property developer Lippo Karawaci, one of the biggest such companies in Indonesia, rose by 1.5 percent on Tuesday, after the announcement of a plan to move the assets of its shopping center in Bali into an affiliated real estate investment trust in Singapore, the Lippo Malls Indonesia Retail Trust (LMIRT).
In a listing on the local stock exchange on Tuesday, Ketut Budi Wijaya, president director of Lippo Karawaci, said the company, through an indirect subsidiary called Pamor Paramita Utama, had signed a conditional sales and purchase agreement with Kuta1, a subsidiary of LMIRT, on Jan. 8 to sell the Lippo Mall Kuta shopping center.
“The transaction will be done at a price of Rp 800 billion [$58 million],” Ketut said in a statement.
Lippo Karawaci’s shares, traded under LPKR, went up by 1.5 percent to Rp 1,025 on Tuesday, amid a 1.05 percent increase in the main stock index.
LMIRT is a form of Real Estate Investment Trust, which refers to investment companies that own, operate and profit from real estate through property or mortgages. REITs are also often trading on exchanges, like the Singapore Stock Exchange.
Lippo Karawaci has had a track record of moving its property assets to its Singapore-listed REIT while maintaining ownership of the assets — the prior being a Rp 3.6 trillion sale of shopping center Lippo Kemang in 2014 — in a strategy to reduce costs and maximize profits.
The Indonesian government recently dropped a double taxation rule on REITs as part of its fifth stimulus package that was released in October last year — a move that prompted Lippo to consider moving its REIT fund to Indonesia from Singapore.
The Jakarta Globe and Lippo Karawaci are affiliated under the Lippo Group.
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