Analysis of LMIR (With new Acquisition and Rights Issue)

Current Price on 29th Sept 2011 = $0.53 ($0.42 after rights issue)
Data is assumed that rights issue is completed.

• Current Yield = 8.83% (Assumed to be the same because there are no details)
• Price-to-book Ratio = 0.671
• Assets per unit = $0.759
• Debt per unit = $0.156 
• Gearing = 20.9% (include current liabilities which are not loans)
• Secured NAV = $0.413

I did not expect that they would have a major announcement immediately after my post yesterday. They are making their acquisition of $388 million worth of Indonesian malls which I believe is yield accretive. At the same time, they have announced a 1-for-1 rights issue at $0.31 per share for investors which would raise a total of $337 million.

The most important thing to note in this announcement is that these two properties will be unencumbered. This would adjust its secured NAV to $0.413 after rights issue which is about 98% of its current market price. This means that even if it default on its loans, we are very sure that we have $0.413 per share worth of properties.

It has been a while since such an opportunity comes along. Compared to CCT which I am also considering, I will invest in this REIT. Hopefully I am allocated a few more lots during the rights exercise to bring my cost down.