Why a REIT That Stopped Paying Its Perps Is Asking Holders to Reprice Them

Landmark REIT, a Singapore-listed trust that owns malls in Indonesia, has stopped paying distributions to the holders of its S$120 million in perpetual securities. And yet it is asking those same holders to consent to a benchmark reset on those very instruments. That is the kind of sentence that makes you pause for a second. Why ask people to amend a contract you've already told them you aren't going to honor?

The short answer is that the benchmark Landmark's perpetuals are tied to - SOR, the Singapore Overnight Rate - has been discontinued. The contract cannot mechanically calculate its own distribution rate if the reference number no longer exists. The longer answer is stranger and more revealing: this is a company that is simultaneously trying to keep a funding machine legally operable, signal that it intends to restart payments someday, and renegotiate the economics of its most senior unsecured capital without the formality or cost of a full restructuring.

Perpetual securities in the Singapore REIT market are basically debt that never matures. They carry a floating distribution rate that resets periodically - typically every five years. The reset formula is usually something like a benchmark rate plus a spread. When these were originally issued, in 2016 and 2017, SOR was the standard benchmark for SGD floating-rate instruments. No one thought twice about it.

Then the Monetary Authority of Singapore began phasing SOR out. SOR was a bank-funded rate - banks quoted it based on what it would cost them to fund themselves. It was vulnerable to manipulation and didn't reflect actual transactions. SORA - the Singapore Overnight Rate Average, which is calculated from real overnight borrowing in the interbank market - replaced it. The official transition timeline pushed wholesale markets to convert out of SOR by the end of 2021. SOR as a published benchmark ceased to exist.

If your perpetual securities still reference SOR at their next reset date, you have a problem. The rate simply isn't there. The Steering Committee for the SOR-to-SORA transition told issuers of resettable securities to begin consent solicitation processes "as soon as practicable." A consent solicitation is a formal request to bondholders to approve an amendment to the terms of the security. You need a majority - sometimes a supermajority - to consent, and the process can take months.

The thing is, most issuers with SOR-linked perpetuals addressed this years ago. Banks did. Well-funded REITs did. The ones still sitting with this problem tend to be the ones that didn't have the luxury of sorting it out when things were normal.

Landmark REIT - formerly Lippo Malls Indonesia Retail Trust until it rebranded in March 2026 - falls into that second group. The trust has been through a rough stretch. Fitch put it into Restructuring Default in June 2024 after it missed payments on its senior unsecured notes. The 2024 and 2026 notes were eventually dealt with through tender offers and consent solicitations. The remaining US$22.6 million of 2026 notes were redeemed in February 2026, after a rights issue raised S$63 million from unitholders in January.

Then in June 2026, the trust announced it was skipping the scheduled distribution on its S$120 million perpetual securities and activated what is called a "dividend stopper." That mechanism is a standard feature in perpetual securities. When the issuer elects not to pay a distribution, it can't pay unitholders either. It's supposed to protect the perpetual holders by making them senior to equity. When you stop paying the perps, you stop paying everyone below them.

So the consent solicitation for a benchmark reset is landing in a universe where the perpetual holders haven't been paid in months and the unitholders haven't been paid either. The manager's own language from the H1 2026 results says distributions will resume in FY2027, "subject to continued improvements" and, notably, "subject to the resumption of distributions to holders of its S$140 million and S$120 million perpetual securities." That's the contractual order of priority speaking: unitholders don't see a cent until the perpetual holders do.

The distribution rate on these securities was last reset to 6.4751% on September 27, 2021. That was the reset that - presumably - still carried a SOR reference. When the next reset comes around, the formula needs a new anchor. Hence the consent request.

Here's where the incentive picture gets interesting. The consent solicitation to swap SOR for SORA isn't inherently hostile to holders. In principle, SORA is the direct successor to SOR. The economic function is the same: it's the overnight funding rate for SGD. The basis between them should be small. This is supposed to be a technical fix.

But it's not just a technical fix. It's an amendment to the terms of the security, and any amendment is a moment of leverage. The issuer gets to set the agenda. Holders get to say yes or no. If the issuer frames the amendment narrowly - just change SOR to SORA, nothing else - holders have little reason to object. But if the issuer is trying to attach other changes to the same vote, that's a different story. The consent solicitation process is a lighter-touch version of a restructuring: cheaper than a tender offer, less formal, but still a way to change terms.

The simplest model is this: Landmark needs the benchmark reset because the contract requires one and the old benchmark is gone. At the same time, the company is in a position where it wants the perpetual holders to be cooperative - not hostile - as it works toward eventually resuming payments. Getting holders to consent to an amendment is, in a very real sense, getting them to participate in the life of the instrument rather than sit back and wait for a recovery or a sale. It's a soft test of whether holders will engage constructively.

Think of it as a tiny dialogue:

Perpetual holder: We haven't been paid in months.

Issuer: We know. We're asking you to approve a benchmark update so the contract stays mechanically functional. We also intend to resume distributions when we can.

Perpetual holder: Why should we say yes?

Issuer: Because the alternative is the contract being broken and unclear. And because if we ever get to the point where we can pay, you want the terms to be clean.

It's not a bad argument, on its face. But it's also worth asking what the holders are really being asked to agree to. Is the amendment purely technical, or does it do other work - adjusting the spread, changing reset frequency, modifying conditions around the dividend stopper, or tightening the issuer's discretion? I couldn't confirm the exact scope of the amendment from the filings available. That's the sort of detail that lives in the consent solicitation circular itself, and it's the sort of thing that determines whether this is a benign plumbing update or a Trojan horse for a repricing.

The broader context doesn't make this look like a crisis. Landmark's underlying fundamentals have been improving. Net property income rose 4.9% year on year to S$61.1 million in the first half of 2026. Gearing has come down to 39.6% from the low 40s at year-end. The trust redeemed its last tranche of maturing debt. Occupancy is around 87%. The manager is doing asset enhancement work at its malls. These are not the numbers of a company in freefall.

But they're also not the numbers of a company that can simply go back to paying everyone without conditions. The trust is running a tight ship, and the manager has been careful to tie any return of distributions to "continued improvements in financial position and cash flow generation" and - critically - to IDR exchange rate movements. Landmark's rental income is in rupiah; its debt and distributions are in SGD. When the rupiah depreciated 7.8% against the Singapore dollar in H1 2026, it hit the SGD-reported results hard. The FX risk is structural, not cyclical.

The basic point is that this consent solicitation sits at the intersection of two stories. One is old infrastructure catching up: the SOR-to-SORA transition is nearly complete, and Landmark is one of the last SGD perpetual issuers still dealing with it. The other is more specific: a REIT that has been through a restructuring is asking its most senior unsecured investors to cooperate with a change to the contract while distributions remain suspended.

What the machine is, stripped of the label, is a company trying to keep its capital structure administratively alive while it rebuilds its way back to being able to pay. The benchmark reset is the plumbing. The consent solicitation is the diplomacy. The real question for holders isn't whether SORA is the right replacement for SOR - it almost certainly is - but whether the amendment is doing only the work it says it's doing, or whether it's quietly changing the deal.

Until the circular is public and we can see the exact terms, the conservative read is to assume this is mostly technical and to watch for whether it gets tagged with anything else. If it's just the benchmark swap, holders who believe distributions will resume eventually have little reason to resist. If there's more in there, the calculus changes. That's how these things work: the weird part isn't the benchmark change. The weird part is doing it while you're still sitting on the other side of a dividend stopper. That tells you something about where the issuer thinks it is on the way back.