LIPPO-MAPLETREE - Lippo Malls Indonesia Retail Trust - Investor ...
LIPPO-MAPLETREE - Lippo Malls Indonesia Retail Trust - Investor ...
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<strong>LIPPO</strong>-<strong>MAPLETREE</strong>INDONESIA RETAIL TRUST<strong>LIPPO</strong>-<strong>MAPLETREE</strong>INDONESIA RETAIL TRUST(A real estate investment trust constituted on 8 August 2007under the laws of the Republic of Singapore)OFFER FOR SUBSCRIPTION BY<strong>LIPPO</strong>-<strong>MAPLETREE</strong>INDONESIARETAIL TRUST MANAGEMENTLTD.645,469,000 Units(Subject to the Over-allotment Option)Offering PriceS$0.80 per UnitProspectus dated 9 November 2007Registered with the Monetary Authority of Singapore on 9 November 2007This document is important. If you are in any doubt as to the action you should take,you should consult your stockbroker, bank manager, solicitor, accountant or otherprofessional adviser.<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd.(Company Registration No.200707703M), as manager (the “Manager”) of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>(“LMIR <strong>Trust</strong>”), is making an offering (the “Offering”) of 645,469,000 units representingundivided interests in LMIR <strong>Trust</strong> (“Units”) for subscription at the offering price (the“Offering Price”) of S$0.80 for each Unit.The Offering consists of (i) an international placement of 625,469,000 Units to investors,including institutional and other investors in Singapore (the “Placement”) and (ii) anoffering of 20,000,000 Units to the public in Singapore (the “Public Offer”). The Offeringwill be underwritten at the Offering Price by UBS AG, acting through its business group,UBS Investment Bank (“UBS”), BNP Paribas Capital (Singapore) Ltd. (“BNP”) and Oversea-Chinese Banking Corporation Limited (“OCBC Bank”, and together with UBS and BNP,the “Joint Lead Managers, Issue Managers and Underwriters”). UBS is the sole financialadviser to the Offering (the “Financial Adviser”).Separate from the Offering, each of <strong>Lippo</strong> Strategic Holdings Inc. (“<strong>Lippo</strong> Strategic”) andMapletree LM Pte. Ltd. (“Mapletree LM”) (collectively, the “Cornerstone <strong>Investor</strong>s”)has entered into a cornerstone subscription agreement with the Manager (collectively,the “Cornerstone Subscription Agreements”) to subscribe for 287,695,000 units and127,250,000 units respectively at the Offering Price (the “Cornerstone Units”), conditionalupon the underwriting agreement in connection with the Offering (the “UnderwritingAgreement”) having been entered into and not having been terminated pursuant to itsterms on or prior to the Listing Date (as defined herein).Prior to the Offering, there has been no market for the Units. The offer of Units under thisProspectus will be by way of an initial public offering in Singapore. Application has beenmade to Singapore Exchange Securities Trading Limited (the “SGX-ST”) for permissionto list on the Main Board of the SGX-ST (i) all the Units to be issued pursuant to theOffering, (ii) all the Cornerstone Units, and (iii) all the units which will be issued to theManager from time to time in full or part payment of the Manager’s management fees,including its acquisition fee and divestment fee. Such permission will be granted whenLMIR <strong>Trust</strong> has been admitted to the Official List of the SGX-ST (the “Listing Date”).Acceptance of applications for Units will be conditional upon issue of the Units and uponpermission being granted by the SGX-ST to list the Units. In the event that such permissionis not granted or if the Offering is not completed for any other reason, application monieswill be returned in full, at each investor’s own risk, without interest or any share of revenueor other benefit arising therefrom, and without any right or claim against LMIR <strong>Trust</strong>,the Manager, HSBC Institutional <strong>Trust</strong> Services (Singapore) Limited, as trustee of LMIR<strong>Trust</strong> (the “<strong>Trust</strong>ee”), PT. <strong>Lippo</strong> Karawaci Tbk (the “Sponsor”), PT. Consulting &Management Services Division (the “Property Manager”) or any of the Joint Lead Managers,Issue Managers and Underwriters.LMIR <strong>Trust</strong> has received a letter of eligibility from the SGX-ST for the listing and quotationof Units on the Main Board of the SGX-ST. LMIR <strong>Trust</strong>’s eligibility to list on the MainBoard of the SGX-ST is not an indication of the merits of the Offering, LMIR <strong>Trust</strong>, theManager, or the Units. The SGX-ST assumes no responsibility for the correctness of anystatements or opinions made or reports contained in this Prospectus. Admission to theOfficial List of the SGX-ST is not to be taken as an indication of the merits of the Offering,LMIR <strong>Trust</strong>, the Manager or the Units.<strong>Investor</strong>s who are members of the Central Provident Fund in Singapore (“CPF”) may usetheir CPF Ordinary Account savings to purchase or subscribe for Units as an investmentincluded under the CPF Investment Scheme — Ordinary Account. CPF members areallowed to invest up to 35.0% of the Investible Savings (as defined herein) in their CPFOrdinary Accounts to purchase or subscribe for Units.LMIR <strong>Trust</strong> is an authorised scheme under the Securities and Futures Act, Chapter289 of Singapore (the “Securities and Futures Act” or the “SFA”). A copy of thisProspectus has been lodged with the Monetary Authority of Singapore (the “MAS”)on 19 October 2007, amended on 22 October 2007 and registered by the MAS on 9November 2007, respectively. The MAS assumes no responsibility for the contentsof this Prospectus. Lodgement with, or registration by, the MAS of this Prospectusdoes not imply that the Securities and Futures Act or any other legal or regulatoryrequirements have been complied with. The MAS has not, in any way, consideredthe investment merits of the collective investment scheme. This Prospectus willexpire on 9 November 2008 (12 months after the date of the registration).See “Risk Factors” commencing on page 65 of this Prospectus for a discussion ofcertain factors to be considered in connection with an investment in the Units. Noneof the Manager, the <strong>Trust</strong>ee, the Sponsor, the Property Manager or the Joint LeadManagers, Issue Managers and Underwriters guarantees the performance of LMIR<strong>Trust</strong>, the repayment of capital or the payment of a particular return on the Units.<strong>Investor</strong>s applying for Units by way of Application Forms or Electronic Applications (bothas referred to in “Appendix G – Terms, Conditions and Procedures for Application for andAcceptance of the Units in Singapore”) in the Public Offer will be required to pay theOffering Price on application, subject to a refund of the full amount or, as the case may be,the balance of the application monies (in each case, without interest or any share of revenueor other benefit arising therefrom), where (i) an application is rejected or accepted in partonly, or (ii) the Offering does not proceed for any reason.In connection with the Offering, the Underwriters have been granted an over-allotmentoption (the “Over-allotment Option”) by <strong>Lippo</strong> Strategic, as unit lender (the “UnitLender”), exercisable by UBS (the “Stabilising Manager”), in consultation with the otherUnderwriters, in full or in part, on one or more occasions, no later than the earliest of (i)the date falling 30 days from the date of commencement of trading of the Units on theSGX-ST, (ii) the date when the Stabilising Manager has bought on the SGX-ST, anaggregate of 96,820,000 Units, representing not more than 15.0% of the total Units offered,to undertake stabilising actions or (iii) the date falling 30 days after the date of adequatepublic disclosure of the final price of the Units, to purchase from the Unit Lender up to anaggregate of 96,820,000 Units at the Offering Price, solely to cover the over-allotment ofUnits (if any), subject to any applicable laws and regulations. The total number of outstandingUnits immediately after the completion of the Offering, including the Cornerstone Units,will be 1,060,414,000 Units. The exercise of the Over-allotment Option will not increasethis total number of Units outstanding.The Units have not been and will not be registered under the U.S. Securities Act of 1933,as amended (the “Securities Act”) and, subject to certain exceptions, may not be offeredor sold within the United States. The Units are being offered and sold only outside theUnited States (including to institutional and other investors in Singapore) in reliance onRegulation S under the Securities Act ("Regulation S").Sole Financial Adviser to the SponsorSole Financial Adviser to the OfferingJoint Lead Managers, Issue Managers and Underwriters
<strong>LIPPO</strong>-<strong>MAPLETREE</strong>INDONESIA RETAIL TRUST<strong>LIPPO</strong>-<strong>MAPLETREE</strong> INDONESIA RETAIL TRUST<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> (“LMIR <strong>Trust</strong>”) is aSingapore-based real estate investment trust (“REIT”) establishedwith the principal investment objective of owning andinvesting on a long-term basis in a diversified portfolio of incomeproducingreal estate in <strong>Indonesia</strong> that are primarily used forretail and/or retail-related purposes, and real estate relatedassets in connection with the foregoing purposes.LMIR <strong>Trust</strong>’s initial asset portfolio will comprise seven retailmall properties (“<strong>Retail</strong> <strong>Malls</strong>”) and seven retail spaces locatedwithin other retail malls (“<strong>Retail</strong> Spaces”, and collectively withthe <strong>Retail</strong> <strong>Malls</strong>, the “Properties”) valued at S$1,004.7 million (1) .The Properties are strategically located in major cities of<strong>Indonesia</strong> with large population catchment areas and areaccessible via major transportation routes and highways.(1) As at 30 June 2007, the Properties were valued at an aggregate of S$1,004.7 millionby Knight Frank / PT. Willson Properti Advisindo, as the Independent Valuer tothe Manager (“Knight Frank”) and at S$1,016.3 million by Colliers International /PT Penilai, as the Independent Valuer to the <strong>Trust</strong>ee (“Colliers”). The Manager hasadopted Knight Frank’s valuation as the basis for determination of the fair marketvalue of the Properties and the net asset value per Unit.
Metropolis Town SquareMall WTC MatahariGajah Mada PlazaThe Plaza SemanggiMal <strong>Lippo</strong> CikarangGrand Palladium MedanMedanDepok Town SquareCibubur JunctionEkalokasari PlazaKalimantanSumatraIstana PlazaPalembang Java SupermalMalang Town SquareJakartaMakassarSulawesiIrian JayaSarmiSemarangJava SurabayaBandungBaliSumbawaPlaza MadiunBandung Indah Plaza<strong>Retail</strong> <strong>Malls</strong><strong>Retail</strong> SpacesThree of the <strong>Retail</strong> <strong>Malls</strong> are located in Jakarta, two in Greater Jakarta (an areaencapsulated by Jakarta, Bogor, Depok, Tangerang and Bekasi) and the remainingtwo in Bandung, the fourth largest populated city in <strong>Indonesia</strong>. As at 30 June2007, the <strong>Retail</strong> <strong>Malls</strong> had an aggregate Net Lettable Area (“NLA”) of 219,382 sqm and a weighted average occupancy rate of 91.6% based on Committed Leases.Supported by their diverse trade mix and strategic locations, the <strong>Retail</strong> <strong>Malls</strong>provide shoppers with comprehensive one-stop shopping, dining andentertainment destinations. Tenants include leading domestic retailers such asMatahari and Rimo Department Stores, as well as international specialty tenantssuch as Fitness First, Starbucks and McDonald’s.The <strong>Retail</strong> Spaces have a total NLA of 94,070 sq m as at 30 June 2007, arepredominantly utilised as department stores, supermarkets, hypermarkets and/oramusement centres and are housed within other retail malls. Three of the <strong>Retail</strong>Spaces are located in Greater Jakarta and the remaining four in the cities ofSemarang, Madiun, Malang and Medan. The <strong>Retail</strong> Spaces are master-leased toPT. Matahari Putra Prima Tbk, <strong>Indonesia</strong>’s largest retailer by sales revenue (2) , foran initial term of 10 years with fixed rental growth of 8.0% per annum for the firstfour years and a revenue sharing formula thereafter.(2) PT. Matahari Putra Prima Tbk is <strong>Indonesia</strong>’s largest retailer by sales revenue withover Rp. 8,487.7 billion (approximately S$1,436.0 million) in annual sales for thefinancial year ended 31 December 2006.
1. Gajah Mada PlazaProminently located in the heart ofJakarta’s Chinatown with a strongleisure and entertainment componento Location : Jalan Gajah Mada,Central Jakarta;o Appraised Value (3) : S$103.8 m;o Gross Floor Area (4) : 66,160 sq m;o Net Lettable Area (4) : 34,278 sq m;o Occupancy Rate (4) : 89.1%.2. Cibubur JunctionLocated in the middle of Cibubur, oneof the most affluent and upmarketresidential areas in Jakartao Location : Jalan JamboreRaya 1, Cibubur,East Jakarta;o Appraised Value (3) : S$94.2 m;o Gross Floor Area (4) : 49,341 sq m;o Net Lettable Area (4) : 34,139 sq m;o Occupancy Rate (4) : 86.4%3. The Plaza SemanggiLocated in the heart of Jakarta’s CBDwithin the city’s Golden Triangleo Location : Jalan Jend.Sudirman,South Jakarta;o Appraised Value (3) : S$214.8 m;o Gross Floor Area (4) : 91,232 sq m;o Net Lettable Area (4) : 58,685 sq m;o Occupancy Rate (4) : 96.4%4. Mal <strong>Lippo</strong> CikarangThe main shopping centre in the <strong>Lippo</strong>Cikarang estate with limited competitionwithin an approximately 10-km radiuso Location : Jalan MH Thamrin,<strong>Lippo</strong> Cikarang;o Appraised Value (3) : S$80.2 m;o Gross Floor Area (4) : 25,767 sq m;o Net Lettable Area (4) : 17,974 sq m;o Occupancy Rate (4) : 96.3%.5. Ekalokasari PlazaLocated south east of the Bogor CityCentre and has recently completed aS$2.0 million expansion and renovationprogrammeo Location : Jalan Siliwangi123, Bogor,Greater Jakarta;o Appraised Value (3) : S$66.0 m;o Gross Floor Area (4) : 39,895 sq m;o Net Lettable Area (4) : 20,587 sq m;o Occupancy Rate (4) : 87.3%.6. Bandung Indah PlazaLocated in the heart of Bandung’s CBDo Location : Jalan Merdeka,Bandung,West Java;o Appraised Value (3) : S$124.5 m;o Gross Floor Area (4) : 55,196 sq m;o Net Lettable Area (4) : 26,472 sq m;o Occupancy Rate (4) : 83.2%7. Istana PlazaLocated in the CBD of Bandung at thejunction between two busy roadso Location : Jalan Pasirkaliki,Bandung,West Java;o Appraised Value (3) : S$125.7 m;o Gross Floor Area (4) : 37,434 sq m;o Net Lettable Area (4) : 27,247 sq m;o Occupancy Rate (4) : 98.9%.1. Gajah Mada Plaza2. Cibubur Junction3. The Plaza Semanggi<strong>Retail</strong> <strong>Malls</strong>As at Listing Date, LMIR <strong>Trust</strong>’sproperty portfolio will compriseseven <strong>Retail</strong> <strong>Malls</strong> with a NLAof 219,382 sq m. Five of the<strong>Retail</strong> <strong>Malls</strong> are located in Bogor,4. Mal <strong>Lippo</strong> CikarangDepok, Tangerang and Bekasi(“Greater Jakarta”) and the remainingtwo in Bandung, thefourth largest populated city in<strong>Indonesia</strong>. As at 30 June 2007,the <strong>Retail</strong> <strong>Malls</strong> had a weightedaverage occupancy of approximately91.6% based on CommittedLeases.5. Ekalokasari Plaza6. Bandung Indah Plaza(3) All appraised values are by Knight Frank as at 30 June 2007.(4) As at 30 June 2007.7. Istana Plaza
KeyInvestmentHighlightsStrong acquisition growth potential The Sponsor has granted LMIR <strong>Trust</strong>, for so long as (i) <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd.remains the manager of LMIR <strong>Trust</strong>; and (ii) the Sponsor and/or any of its related corporations, alone or inaggregate, remains a controlling shareholder of the Manager, a right of first refusal (the “ROFR”) over any retailproperties located in <strong>Indonesia</strong> subject to certain conditions. As at Listing Date, the scope of the ROFRencompasses five properties currently under development by the Sponsor and/or its subsidiaries:Estimated GrossFloor AreaROFR Properties Expected Date of ("GFA") Estimated NLAUnder Development Location Completion (sq m) (sq m)Binjai Supermall North Sumatra Fourth quarter of 2007 23,615 18,300Pejaten Mall South Jakarta Second quarter of 2008 57,948 40,327Kuta Beach Mall Kuta, Bali Second half of 2008 41,562 30,735Kemang City Mall South Jakarta First half of 2009 77,555 56,052Puri "Paragon City" West Jakarta Second half of 2009 196,400 127,660Total 397,080 273,074If LMIR <strong>Trust</strong> acquires all the ROFR Properties, the aggregate NLA of LMIR <strong>Trust</strong>’s initial property portfolio willincrease by over 270,000 sq m, an increase of 87.4% of the aggregate NLA of LMIR <strong>Trust</strong>’s initial property portfolioas at 30 June 2007. The Sponsor is expected to continue developing retail malls across <strong>Indonesia</strong>, further enhancing the acquisitionpipeline for LMIR <strong>Trust</strong>. Ownership of retail malls in <strong>Indonesia</strong> is highly dispersed and fragmented, providing LMIR <strong>Trust</strong> with significantopportunities for such acquisitions. As at the Latest Practicable Date, the Manager has entered into non-bindingmemoranda of understanding in respect of the potential acquisition of the following malls:Estimated dateof acquisitionLocation GFA (sq m) NLA (sq m) by LMIR <strong>Trust</strong>Cosmopolitan Mall Pluit North Jakarta 131,013 88,040 Second half of 2008Within six monthsSun Plaza North Sumatra 73,871 61,348 after the Listing DateSupermal Pakuwon Indah West Surabaya, Within six monthsand Pakuwon Trade Centre East Java 289,563 114,834 after the Listing DateTotal 494,447 264,222Exposure to the growing <strong>Indonesia</strong>n retail sector Real GDP growth in <strong>Indonesia</strong> is forecast to increase from 5.5% in 2006 to 6.0% in 2007 and 6.1% in 2008.Average growth rate from 2007 to 2011 is forecast at 5.7% (5) . Nominal retail sales growth has averaged 11.0% per annum since 1999 with the growth rate forecastto continue from 2007 to 2011 (5) .<strong>Retail</strong> sales have also been boosted by a lifestyle shift towards a higher level of consumerism, particularlyamong the urban middle income group in major <strong>Indonesia</strong>n cities such as Jakarta, Bandung, Semarang and Medan.(5) According to PT Jones Lang LaSalle
Stable andGrowingDistributionsForecast and Projected DPU (7) (Cents)5.846.27Majority of Forecast and ProjectedGross Rent Already Committed (S$ m)84.891.62.7440.180.9% 66.8%91.3%Forecast ProjectionPeriod Year2007 (8) 2008ProjectionYear2009ForecastPeriod2007 (9)ProjectionYear2008ProjectionYear2009(7) Based on the Offering Price of S$[•] and the various assumptions set out in theProspectus under the heading “Profit Forecast and Profit Projection”.(8) Based on the number of Units that are assumed to be in issue as at the Listing Date.It is assumed that the number of Units eligible for distribution is the same throughoutForecast Period 2007.(9) Annualised Figures for Forecast Period 2007 LMIR <strong>Trust</strong>’s distribution policy is to distribute 100% of its tax-exempt incomeand capital receipts for the period from Listing Date to 31 December 2007, theyear ending 31 December 2008 (”Projection Year 2008”) and the year ending31 December 2009 (“Projection Year 2009”) and at least 90% of its tax-exemptincome thereafter. Distributions will be paid on a quarterly basis for the three-month periodsending on 31 March, 30 June, 30 September and 31 December each year.LMIR <strong>Trust</strong>’s first distribution after the Listing Date will be paid by the manageron or before 30 May 2008.Potential for growth through active asset management and tenant re-mixing The Manager intends to undertake active asset management to maximise thevalue and performance of the Properties. Three of the <strong>Retail</strong> <strong>Malls</strong> have recently completed extensive asset enhancementworks and a fourth <strong>Retail</strong> Mall, The Plaza Semanggi, is currently undergoingasset enhancement works. The completion of these asset enhancement works are expected to enhancethe positioning and branding of the <strong>Retail</strong> <strong>Malls</strong> within their respective tradeareas and increase shopper traffic.The Sponsor of LMIR <strong>Trust</strong> is PT. <strong>Lippo</strong> Karawaci Tbk, <strong>Indonesia</strong>’s largestlisted property company The Sponsor is an internationally recognised corporation and is the largestlisted property company in <strong>Indonesia</strong> (6) by market capitalisation. It has a recognised track record and dominant position within the retail andretail property industry in <strong>Indonesia</strong>, with the ability to identify and enhanceunder-valued retail properties and leverage its extensive retail network.(6) Based on its market capitalisation on the Jakarta Stock Exchange (‘‘JSX’’) of Rp. 10,609.2 billion(approximately S$1.8 billion) and a closing price of Rp. 1,790.0 on the JSX as at 18 October 2007The Manager, <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd., isjointly owned by <strong>Lippo</strong> Karawaci and the Mapletree Group The Manager is incorporated in Singapore and indirectly 60.0% owned by theSponsor and 40.0% owned by Mapletree Capital, a wholly-owned subsidiaryof Mapletree Investments Pte Ltd (“MIPL”). The Mapletree Group, which MIPL is a part of, has an asset base of approximatelyS$4.5 billion (as at 30 June 2007) comprising office, logistics, industrial,residential and retail/lifestyle properties.The interests of <strong>Lippo</strong> Strategic, an affiliate of the Sponsor, and the MapletreeGroup are substantially aligned with those of Unitholders <strong>Lippo</strong> Strategic and the Mapletree Group (through MIPL) will each own 27.1%and 12.0%, respectively, of the total issued Units of LMIR <strong>Trust</strong> as at the ListingDate, assuming that the Over-Allotment Option is not exercised.
Locked-in master leases with rental step-ups for the <strong>Retail</strong> Spaces As at the Listing Date, the <strong>Retail</strong> Spaces will be master-leased to PT. Matahari Putra Prima Tbk (”Matahari”) for 10 yearswith an option for the Master Lessee to renew for a further 10 years. Rental income is scheduled to increase by 8.0%per annum for the period from FY2008 to FY2011 and in accordance with a revenue sharing formula thereafter.Hedging strategies to minimise exposure arising from interest rates and currency fluctuations The <strong>Trust</strong>ee has entered into foreign exchange hedges equivalent to 100.0% of LMIR <strong>Trust</strong>’s estimated distributionsfor a total term of five years. Thereafter it intends to continually hedge distributions on a rolling basis.Optimal capital structure LMIR <strong>Trust</strong> will not incur any borrowings as at the Listing Date and will have substantial ability to incur indebtedness tofund future acquisitions and asset enhancement initiatives.Tax exemptions in Singapore Dividends and interest received in respect of the Properties are exempt from Singapore income tax. Distributions madeout of such tax-exempt income are also exempt from tax in the hands of the Unitholders.Competent and experienced personnel LMIR <strong>Trust</strong> intends to leverage on the experience and expertise of its Board to implement its planned strategies.KeyInvestmentHighlights
CompetitiveStrengths The Properties are located in major cities of <strong>Indonesia</strong> amidst a growingand affluent urban middle classThe properties are mainly located within Greater Jakarta and Bandung,<strong>Indonesia</strong>’s fourth most populous city. From 2001 to 2006, total householdexpenditure in Jakarta and Bandung has increased by an average of 12.8%and 11.5% per annum respectively.<strong>Retail</strong> spending in these cities has been further boosted by a shift in lifestyletowards a higher level of consumerism, partially brought about by the introductionof foreign brands and designer labels. High growth potential from favourable demographics of the <strong>Indonesia</strong>npopulationThe share of population of the middle income group in <strong>Indonesia</strong> has steadilygrown from 50.0% in 2001 to 64.0% in 2006. It is estimated that the urbanmiddle income population in <strong>Indonesia</strong> totals approximately 66 million people (10) ,(10) (See “Appendix F - Independent Report on the <strong>Indonesia</strong> <strong>Retail</strong> Property Market”.) <strong>Retail</strong> <strong>Malls</strong> and <strong>Retail</strong> Spaces strategically located within well-establishedpopulation catchment areas.The <strong>Retail</strong> <strong>Malls</strong> are strategically located throughout Greater Jakarta with apopulation range of between approximately 0.4 million and 2.2 million withintheir respective primary catchment areas.The <strong>Retail</strong> Spaces are strategically located throughout Greater Jakarta andin the major cities of Semarang, Medan, Madiun and Malang. Quality <strong>Retail</strong> <strong>Malls</strong> which cater to the daily needs of shoppersThe <strong>Retail</strong> <strong>Malls</strong> are anchored by supermarkets, hypermarkets or departmentstores, which draw significant shopper traffic whilst the specialty, food &beverage and lifestyle and entertainment tenants provide shoppers with awide product offering and a complete shopping experience. Economies of scale through portfolio management of the <strong>Retail</strong> <strong>Malls</strong>The <strong>Retail</strong> <strong>Malls</strong> will be able to leverage upon the Property Manager’s and theSponsor’s experience and will be managed by a specialised team of professionals. Quality tenant baseThe <strong>Retail</strong> <strong>Malls</strong> have a large combined tenant base of over 1,400 tenants (asat 30 June 2007) providing trade as well as product diversification.Top tenants include well-known international and domestic retailers and brandnames such as Giant Hypermarket, Gramedia bookstore, Starbucks, Giordano,Fitness First, Sports Station, Matahari Department Store, Hypermart andStudio 21 Cinema. Advance rental payment structure minimises cashflow volatility<strong>Retail</strong> tenants in <strong>Indonesia</strong> typically pay an advance rental of approximately10% to 20% of the total rent payable for the duration of the lease upon signingthe lease agreement. This advance rental payment helps to minimise LMIR<strong>Trust</strong>’s cash flow volatility due to potential rental arrears.
1. Mall WTC Matahari Units<strong>Retail</strong> Spaces2. Metropolis Town Square UnitsThe <strong>Retail</strong> Spaces occupy atotal NLA of 94,070 sq m andand are strategically locatedas anchor spaces within retailmalls. Three of the seven<strong>Retail</strong> Spaces are locatedwithin Greater Jakarta andfour are situated in themajor cities of Semarang,Medan, Madiun and Malang.7. Grand Palladium Medan Units3. Depok Town Square Units4. Java Supermall Units5. Malang Town Square Units6. Plaza Madiun1. Mall WTC Matahari UnitsStrategically located on the main road connectingthe BSD residential estate, the largestresidential estate in Greater Jakartao Location : Jalan Raya Serpong,Tangerang,Greater Jakarta;o Appraised Value (3) :S$25.2 m;o Net Lettable Area (4) : 11,184 sq m;o Current Utilisation : Hypermart, MatahariDepartment Store andTimezone2. Metropolis Town Square UnitsA one-stop shopping mall located along oneof the main roads in Tangerango Location : Jalan Hartono Raya,Tangerang,Greater Jakarta;o Appraised Value (3) :S$33.5 m;o Net Lettable Area (4) : 15,248 sq m;o Current Utilisation : Hypermart, MatahariDepartment Store andTimezone3. Depok Town Square UnitsDepok Town Square is located adjacent to theUniversity of <strong>Indonesia</strong> and has direct accessto Pondok Cina Railway Stationo Location : Jalan Margonda Raya,Depok, Greater Jakarta;o Appraised Value (3) :S$25.7 m;o Net Lettable Area (4) : 13,045 sq m;o Current Utilisation : Hypermart, MatahariDepartment Store andTimezone4. Java Supermall UnitsLocated in Semarang, capital of Central Javaprovince and the fifth largest city in terms ofpopulation in <strong>Indonesia</strong>o Location : Jalan MT Haryono,Semarang, Central Java;o Appraised Value (3) :S$26.0 m;o Net Lettable Area (4) : 11,082 sq m;o Current Utilisation : Matahari Department Storeand Foodmart supermarket5. Malang Town Square UnitsConceptualised as an international lifestylemall, the biggest and most comprehensive mallin Malango Location : Jalan Veteran, Malang,East Java;o Appraised Value (3) :S$25.5 m;o Net Lettable Area (4) : 11,065 sq m;o Current Utilisation : Hypermart, MatahariDepartment Store andTimezone6. Plaza MadiunThe biggest mall in Madiun, located alongPahlawan Street, a major road of the cityo Location : Jalan Pahlawan,Madiun, East Java;o Appraised Value (3) :S$33.4 m;o Net Lettable Area (4) : 19,029 sq m;o Current Utilisation : Matahari Department Storeand Foodmart supermarket7. Grand Palladium Medan UnitsLocated within the Medan CBD and surroundedby government and business offices and thetown hallo Location : Jalan Kapt. Maulana Lubis,Medan, North Sumatra;o Appraised Value (3) : S$26.2 m;o Net Lettable Area (4) : 13,417 sq m;o Current Utilisation : Hypermart, MatahariDepartment Store andTimezone
StrategyThe Manager’s key objectives are to deliver regular and stabledistributions to Unitholders and to achieve long-term growth inthe NAV per Unit in order to provide Unitholders with capitalappreciation on their investments. The Manager plans to achievethese objectives through the following strategies:i) Acquisition Growth Strategy LMIR <strong>Trust</strong>’s acquisition growth strategy envisagesinvestments in retail and/or retail-related assets that arein the interest of Unitholdersii) Active Asset Enhancement and Management StrategyImplementing pro-active measures to enhance the returnsfrom existing and future properties. Such measures mayinclude: Addition and alteration works Leveraging and enhancing the properties’ competitivestrengths to optimise rentals Enhancement projects to maintain competitive positioningof the propertiesiii) Capital And Risk Management StrategyThe key aspects of the proposed capital and risk managementstrategy are as follows: Maintain a strong balance sheet by adopting and maintaininga target gearing ratio Secure diversified funding sources from financial institutionsand capital markets Adopt a proactive strategy to manage risks related to interestrate fluctuations Manage the foreign exchange exposure through hedging,where appropriate
Notice to investorsNo person is authorised to give any information or to make any representation not contained in thisProspectus and any information or representation not so contained must not be relied upon as having beenauthorised by or on behalf of LMIR <strong>Trust</strong>, the Manager, the <strong>Trust</strong>ee, the Financial Adviser, the Underwriters,the Sponsor or the Property Manager. Neither the delivery of this Prospectus nor any offer, subscription,sale or transfer made hereunder shall under any circumstances imply that the information herein is correctas at any date subsequent to the date hereof or constitute a representation that there has been no changeor development reasonably likely to involve a material adverse change in the business, affairs, conditionsand prospects of LMIR <strong>Trust</strong>, the Manager, the <strong>Trust</strong>ee or the Units since the date on the front cover of thisProspectus. Where such changes occur and are material or required to be disclosed by law, the SGX-STand/or any other regulatory or supervisory body or agency, the Manager will make an announcement of thesame to the SGX-ST and, if required, lodge and issue a supplementary document or replacementdocument pursuant to Section 298 of the Securities and Futures Act and take immediate steps tocomply with the said Section 298. <strong>Investor</strong>s should take notice of such announcements anddocuments and upon release of such announcements and documents shall be deemed to have noticeof such changes.No representation, warranty or covenant, express or implied, is made by any of LMIR <strong>Trust</strong>, the Manager,the <strong>Trust</strong>ee, the Financial Adviser, the Underwriters, the Sponsor, the Property Manager or any of theirrespective affiliates, directors, officers, employees, agents, representatives or advisers as to the accuracyor completeness of the information contained herein, and nothing contained in this Prospectus is, or shallbe relied upon as, a promise, representation or covenant by any of LMIR <strong>Trust</strong>, the Manager, theUnderwriters, the Sponsor, the Property Manager or the <strong>Trust</strong>ee or their respective affiliates, directors,officers, employees, agents, representatives or advisers.<strong>Investor</strong>s acknowledge that no person has been authorised to give any information or to make anyrepresentation concerning LMIR <strong>Trust</strong> or the Units other than as contained in this Prospectus, and, if givenor made, such other information or representation should not be relied upon as having been authorised byLMIR <strong>Trust</strong>, the Manager, the <strong>Trust</strong>ee, the Sponsor, the Property Manager, the Financial Adviser or theUnderwriters.None of LMIR <strong>Trust</strong>, the Manager, the Financial Adviser, the Underwriters, the Sponsor, the PropertyManager and the <strong>Trust</strong>ee or any of their respective affiliates, directors, officers, employees, agents,representatives or advisers is making any representation or undertaking to any purchaser or subscriber ofthe Units regarding the legality of an investment by such purchaser or subscriber under appropriate legal,investment or similar laws. In addition, this Prospectus is offered solely for the purpose of the Offering andinvestors in the Units should not construe any information contained in this Prospectus as legal, business,financial or tax advice. <strong>Investor</strong>s should be aware that they are required to bear the financial risks of aninvestment in the Units, and may be required to do so for an indefinite period of time. <strong>Investor</strong>s shouldconsult their own professional advisers as to the legal, tax, business, financial and related aspects of aninvestment in the Units.Copies of this Prospectus and the Application Forms may be obtained on request, subject to availability,during office hours, from:UBS AG, acting throughits business group,UBS Investment BankOne Raffles Quay#50-01 North TowerSingapore 048583BNP Paribas,Singapore Branch20 Collyer QuayTung Centre #01-01Singapore 049319Oversea-Chinese BankingCorporation Limited65 Chulia StreetOCBC CentreSingapore 049513and, where applicable, from members of the Association of Banks in Singapore, members of the SGX-STand merchant banks in Singapore. A copy of this Prospectus is also available on the SGX-ST website:http://www.sgx.com.i
The distribution of this Prospectus and the offering, subscription, purchase, sale or transfer of the Units incertain jurisdictions may be restricted by law (see “Plan of Distribution—Distribution and SellingRestrictions”). LMIR <strong>Trust</strong>, the Manager, the <strong>Trust</strong>ee, the Financial Adviser, the Underwriters, theSponsor and the Property Manager require persons into whose possession this Prospectus comes toinform themselves about and to observe any such restrictions at their own expense and without liability toLMIR <strong>Trust</strong>, the Manager, the <strong>Trust</strong>ee, the Financial Adviser, the Underwriters, the Sponsor and theProperty Manager. This Prospectus does not constitute, and the Manager, the <strong>Trust</strong>ee, the Underwriters,the Sponsor and the Property Manager are not making, an offer of, or an invitation to subscribe for orpurchase, any of the Units in any jurisdiction in which such offer or invitation would be unlawful. <strong>Investor</strong>sare authorised to use this Prospectus solely for the purpose of considering the subscription for the Units inthe Offering. Persons to whom a copy of this Prospectus has been issued shall not circulate to any otherperson, reproduce or otherwise distribute this Prospectus or any information herein for any purposewhatsoever nor permit or cause the same to occur. No one has taken any action that would permit a publicoffering to occur in any jurisdiction other than Singapore.In connection with the Offering, the Stabilising Manager (or persons acting on behalf of the StabilisingManager) may, in consultation with the Underwriters, over-allot or effect transactions which stabilise ormaintain the market price of the Units at levels that might not otherwise prevail in the open market. Suchtransactions may be effected on the SGX-ST and in other jurisdictions where it is permissible to do so, ineach case in compliance with all applicable laws and regulations, including the Securities and Futures Actand any regulations thereunder. However, there is no assurance that the Stabilising Manager (or personsacting on behalf of the Stabilising Manager) will undertake any such stabilising actions. Such transactionsmay commence on or after the date of the commencement of trading of the Units on the SGX-ST and, ifcommenced, may be discontinued at any time and shall not be effected after the earliest of (i) the datefalling 30 days from the commencement of trading of the Units on the SGX-ST, (ii) the date when theStabilising Manager has bought on the SGX-ST, an aggregate of 96,820,000 Units, representing not morethan 15.0% of the total Units offered, to undertake stabilising actions or (iii) the date falling 30 days after thedate of adequate public disclosure of the final price of the Units.ii
Forward-looking statementsCertain statements in this Prospectus constitute “forward-looking statements”. This Prospectus alsocontains forward-looking financial information in “Profit Forecast and Profit Projection” and other sections.Such forward-looking statements and financial information involve known and unknown risks,uncertainties and other factors which may cause the actual results, performance or achievements ofLMIR <strong>Trust</strong>, the Manager, the Sponsor, the Property Manager or industry results, to be materially differentfrom any future results, performance or achievements expressed or implied by such forward-lookingstatements and financial information. Such forward-looking statements and financial information arebased on numerous assumptions regarding the Manager’s present and future business strategies and theenvironment in which LMIR <strong>Trust</strong>, the Manager, the Sponsor or the Property Manager will operate in thefuture. Because these statements and financial information reflect the Manager’s current viewsconcerning future events, these statements and financial information necessarily involve risks,uncertainties and assumptions. Actual future performance could differ materially from these forwardlookingstatements and financial information. You should not place any undue reliance on these forwardlookingstatements.Among the important factors that could cause LMIR <strong>Trust</strong>’s, the Manager’s, the Sponsor’s or the PropertyManager’s actual results, performance or achievements to differ materially from those in the forwardlookingstatements and financial information are the condition of, and changes in, the domestic, regionaland global economies including, but not limited to, factors such as political, economic and social conditionsin <strong>Indonesia</strong>, environmental conditions, such as earthquakes and floods, and viral epidemics such as avianflu and severe acute respiratory syndrome (“SARS”) that may adversely affect the performance andoperating results for LMIR <strong>Trust</strong>’s properties or future acquisitions, changes in government laws andregulations affecting LMIR <strong>Trust</strong>, competition in the <strong>Indonesia</strong>n property market, currency exchange rates,interest rates, inflation, relations with service providers, relations with lenders, the quality of tenants,hostilities (including future terrorist attacks), the performance and reputation of LMIR <strong>Trust</strong>’s propertiesand/or future acquisitions, difficulties in identifying future acquisitions, difficulties in completing andintegrating future acquisitions, changes in the Manager’s board of directors and executive officers,risks related to natural disasters, general volatility of the capital markets, the effects of uncertainties inthe <strong>Indonesia</strong>n legal system (which could limit the legal protections available to foreign investors, includingwith respect to the enforcement of foreign judgments in <strong>Indonesia</strong>), general risks relating to retail malls andthe market price of the Units as well as other matters not yet known to the Manager or not currentlyconsidered material by the Manager.Additional factors that could cause actual results, performance or achievements to differ materiallyinclude, but are not limited to, those discussed under “Risk Factors”, “Profit Forecast and ProfitProjection”, “Business and Properties” and “Appendix F—Independent Report on the <strong>Indonesia</strong>n<strong>Retail</strong> Property Market”. These forward-looking statements and financial information speak only as atthe date of this Prospectus. The Manager expressly disclaims any obligation or undertaking to releasepublicly any updates of or revisions to any forward-looking statement or financial information containedherein to reflect any change in the Manager’s expectations with regard thereto or any change in events,conditions or circumstances on which any such statement or information is based, subject to compliancewith all applicable laws and regulations and/or the rules of the SGX-ST and/or any other relevantregulatory or supervisory body or agency.iii
Certain defined terms and conventionsLMIR <strong>Trust</strong> will publish its financial statements in Singapore dollars. In this Prospectus, references to “S$” or“Singapore dollars” are to the lawful currency of the Republic of Singapore, references to “Rp.” or “<strong>Indonesia</strong>nRupiah” are to the lawful currency of the Republic of <strong>Indonesia</strong>, references to “MYR” are to the lawfulcurrency of Malaysia, references to “A$” are to the lawful currency of Australia while references to “US$” or“US dollars” are to the lawful currency of the United States of America. For the reader’s convenience, exceptwhere the exchange rate between the <strong>Indonesia</strong>n Rupiah and the Singapore dollar is expressly statedotherwise, certain <strong>Indonesia</strong>n Rupiah amounts in this Prospectus have been translated into Singaporedollars based on the exchange rate of Rp. 5,908.2 = S$1.00, which was the average exchange rate of Bank<strong>Indonesia</strong> for Singapore dollars on 29 June 2007. However, such translations should not be construed asrepresentations that <strong>Indonesia</strong>n Rupiah amounts have been, could have been or could be converted intoSingapore dollars at that or any other rate (see “Exchange Rates and Exchange Controls”).Capitalised terms used in this Prospectus shall have the meanings set out in the Glossary.Unless otherwise stated, data relating to the unaudited pro forma consolidated balance sheet of LMIR<strong>Trust</strong> as at the Listing Date has been prepared on the bases set out in “Appendix B—IndependentAccountants’ Report on the Unaudited Pro Forma Consolidated Balance Sheet as at the Listing Date”.LMIR <strong>Trust</strong>’s unaudited pro forma consolidated balance sheet as at the Listing Date and its profit forecastand projection have been prepared in accordance with the Singapore Financial Reporting Standards.This Prospectus contains certain information with respect to the trade sectors of LMIR <strong>Trust</strong>’s tenants. TheManager has determined the trade sectors in which LMIR <strong>Trust</strong>’s tenants are primarily involved are basedupon the Manager’s general understanding of the business activities conducted by such tenants in thepremises occupied by them. The Manager’s knowledge of the business activities of LMIR <strong>Trust</strong>’s tenants isnecessarily limited and such tenants may conduct business activities that are in addition to, or differentfrom, those shown herein.The forecast and projected yields and yield growth are calculated based on the Offering Price. Such yieldsand yield growth will vary accordingly for investors who purchase Units in the secondary market at a marketprice different from the Offering Price.Any discrepancies in the tables, graphs and charts included in this Prospectus between the listed amountsand totals thereof are due to rounding. Where applicable, figures and percentages are rounded to onedecimal place and measurements in square metres (“sq m”) are converted to square feet (“sq ft”) and viceversa based on the conversion rate of 1 sq m = 10.7639 sq ft. A “hectare” (“ha”) is a unit of area equal to10,000 sq m, or approximately 2.471 acres. References to “Appendix” or “Appendices” are to theappendices set out in this Prospectus. All references in this Prospectus to dates and times shall meanSingapore dates and times unless otherwise specified.iv
Market and industry informationThis Prospectus includes market and industry data and forecasts that have been obtained from internalsurveys, reports and studies, where appropriate, as well as market research, publicly available informationand industry publications. Industry publications, surveys and forecasts generally state that the informationthey contain has been obtained from sources believed to be reliable, but there can be no assurance as tothe accuracy or completeness of such included information. While the Manager has taken reasonablesteps to ensure that the information is extracted accurately and in its proper context, the Manager has notindependently verified any of the data from third party sources or ascertained the underlying economicassumptions relied upon therein. Consequently, none of LMIR <strong>Trust</strong>, the Manager, the <strong>Trust</strong>ee, theSponsor, the Property Manager or the Underwriters makes any representation as to the accuracy orcompleteness of such information.v
TABLE OF CONTENTSPageSummary . . . . . . . . . . . . . . . . . . . . . . . . . 1Riskfactors ....................... 65Use of proceeds. . . . . . . . . . . . . . . . . . . . 88Ownership of Units . . . . . . . . . . . . . . . . . . 89Distributions....................... 91Exchange rates and exchange controls . . 93Capitalisation...................... 95Unaudited pro forma consolidatedbalance sheet as at the Listing Date . . . 96Profit forecast and profit projection . . . . . . 98Strategy.......................... 112Business and properties . . . . . . . . . . . . . . 118The Manager and corporategovernance. . . . . . . . . . . . . . . . . . . . . . 188The Sponsor. . . . . . . . . . . . . . . . . . . . . . . 208The formation and structure of LMIR<strong>Trust</strong>........................... 214Certain agreements relating to LMIR<strong>Trust</strong> and the Properties . . . . . . . . . . . . 223Overview of relevant laws and regulationsin <strong>Indonesia</strong> . . . . . . . . . . . . . . . . . . . . . 241Taxation.......................... 249Plan of distribution . . . . . . . . . . . . . . . . . . 255Clearance and settlement. . . . . . . . . . . . . 265PageExperts . . . . . . . . . . . . . . . . . . . . . . . . . . 266General information . . . . . . . . . . . . . . . . . 267Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . 271Appendix A—Independent accountants’report on the profit forecast and profitprojection....................... A-1Appendix B—Independent accountants’report on the unaudited pro formaconsolidated balance sheet as at thelistingdate ...................... B-1Appendix C—Independent Singaporetaxation report . . . . . . . . . . . . . . . . . . . C-1Appendix D—Independent <strong>Indonesia</strong>ntaxation report . . . . . . . . . . . . . . . . . . . D-1Appendix E—Independent propertyvaluation summary reports . . . . . . . . . . E-1Appendix F—Independent report on the<strong>Indonesia</strong>n retail property market . . . . . F-1Appendix G—Terms, conditions andprocedures for application for andacceptance of the units in Singapore. . . G-1Appendix H—List of present and pastprincipal directorships of directors andexecutiveofficers ................. H-1vi
SummaryThe following summary is qualified in its entirety by, and is subject to, the more detailed informationcontained or referred to elsewhere in this Prospectus. Investing in the Units involves risks. <strong>Investor</strong>sshould read this Prospectus in its entirety and, in particular, the sections from which the information in thissummary is extracted and “Risk Factors”. The meanings of terms not defined in this summary can be foundin the “Glossary” or in the <strong>Trust</strong> Deed (as defined herein). A copy of the <strong>Trust</strong> Deed can be inspected at theregistered office of the Manager, which is located at 78 Shenton Way, #05-01 <strong>Lippo</strong> Centre,Singapore 079120.Statements contained in this summary that are not historical facts may be forward-looking statements.Such statements are based on certain assumptions and are subject to certain risks, uncertainties andassumptions which could cause actual results to differ materially from those forecast or projected (see“Forward-Looking Statements”). Under no circumstances should the inclusion of such information hereinbe regarded as a representation, warranty or prediction with respect to the accuracy of the underlyingassumptions by the Manager, the <strong>Trust</strong>ee, the Underwriters, the Sponsor, the Property Manager or anyother person or that these results would be achieved or are likely to be achieved.OVERVIEW OF LMIR TRUST—THE FIRST INDONESIAN RETAIL REIT OFFERING IN SINGAPORELMIR <strong>Trust</strong> is a Singapore-based real estate investment trust (“REIT”) constituted by a trust deed dated8 August 2007 (as amended by a first supplemental deed dated 18 October 2007) entered into between the<strong>Trust</strong>ee and the Manager (the “<strong>Trust</strong> Deed”). It is established with the principal investment objective ofowning and investing on a long-term basis in a diversified portfolio of income-producing real estate in<strong>Indonesia</strong> that are primarily used for retail and/or retail-related purposes, and real estate related assets inconnection with the foregoing purposes.<strong>Indonesia</strong>’s real GDP growth has gathered pace, rising from 3.8% in 2001 to 5.5% in 2006 and is forecastto grow by 6.0% in 2007 and 6.1% in 2008. Interest rates and inflation are expected to fall when measurestaken by the <strong>Indonesia</strong>n government to improve the business environment and encourage investmentsbegin to take effect. Spurred by the economic development in <strong>Indonesia</strong>, the share of population within themiddle income group has grown steadily from 50.0% in 2001 to 64.0% in 2006. It is estimated that theurban middle income population in <strong>Indonesia</strong> totals approximately 66 million people. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)As at Listing Date, LMIR <strong>Trust</strong>’s property portfolio will comprise seven retail mall properties (the “<strong>Retail</strong><strong>Malls</strong>”) and seven retail spaces located within other retail malls (the “<strong>Retail</strong> Spaces”, and collectively withthe <strong>Retail</strong> <strong>Malls</strong>, the “Properties”), all of which are located in <strong>Indonesia</strong>. (See “—Information on theProperties”.) It is intended that LMIR <strong>Trust</strong>’s investments will be made on a long-term basis. The Propertiesare strategically located in major cities of <strong>Indonesia</strong> with large population catchment areas and areaccessible via major transportation routes and highways. Three of the <strong>Retail</strong> <strong>Malls</strong> are located in Jakarta,two in Greater Jakarta (an area encapsulated by Jakarta, Bogor, Depok, Tangerang and Bekasi) and theremaining two in Bandung, the fourth largest populated city in <strong>Indonesia</strong>. The <strong>Retail</strong> <strong>Malls</strong> are popular intheir respective population catchment areas. The <strong>Retail</strong> <strong>Malls</strong> are supported by their diverse trade mix andstrategic locations, and provide shoppers with comprehensive one-stop shopping, dining andentertainment destinations. As at 30 June 2007, the <strong>Retail</strong> <strong>Malls</strong> had an aggregate Net Lettable Area(“NLA”) of 219,382 sq m, and a weighted average occupancy rate of 91.6% based on Committed Leases.The tenant profile of the <strong>Retail</strong> <strong>Malls</strong> includes leading domestic retailers such as Matahari and RimoDepartment Stores, Hero Supermarket and Foodmart supermarket (formerly known as MatahariSupermarket) and Hypermart, which are well-complemented by international specialty tenants such asFitness First, Starbucks, McDonald’s, Kentucky Fried Chicken and Pizza Hut as well as other domestictenants.The <strong>Retail</strong> Spaces, which have a total NLA of approximately 94,070 sq m as at 30 June 2007, arepredominantly utilised as department stores, supermarkets, hypermarkets and/or amusement centresand are housed within other retail malls. Three of the <strong>Retail</strong> Spaces are located in Greater Jakarta and theremaining four in the cities of Semarang, Madiun, Malang and Medan. As at Listing Date, each of the <strong>Retail</strong>Spaces will be leased to PT. Matahari Putra Prima Tbk (“Matahari”orthe“Master Lessee”) under masterlease agreements (the “Master Lease Agreements”), for an initial term of 10 years, with an option grantedto Matahari to renew for another 10 years. The Master Lease Agreements contain provisions for increasein rental revenues through step-ups in the base rent of 8.0% per annum commencing from 1 January 2008and ending on 31 December 2011 and thereafter, a fixed percentage of 4.25% over the increase in the1
Master Lessee’s net revenue. (See “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the Master Lease Agreements—Lease Rental”.)Each of the Properties will be wholly-owned by LMIR <strong>Trust</strong> through special purpose companies (“SPCs”)(see “—Structure of LMIR <strong>Trust</strong>”).Key investment highlightsThe Manager believes that an investment in LMIR <strong>Trust</strong> offers the following attractions to Unitholders:LMIR <strong>Trust</strong> is the first <strong>Indonesia</strong>n retail REIT offering in Singapore• LMIR <strong>Trust</strong> will be the first REIT in Singapore to provide exposure to <strong>Indonesia</strong>’s growing retail sector.• The <strong>Retail</strong> <strong>Malls</strong> are anchored by leading <strong>Indonesia</strong> retailers and well-complemented by internationaland domestic specialty tenants, providing shoppers and their families with a wide offering of products.• As at the Listing Date, the <strong>Retail</strong> Spaces will be leased to Matahari, <strong>Indonesia</strong>’s largest retailer by salesrevenue, for an initial term of 10 years with annual rental step-ups.• The <strong>Retail</strong> <strong>Malls</strong> and <strong>Retail</strong> Spaces are strategically located within large population catchmentssupported by neighbouring residential precincts, offices, schools and industrial estates.Exposure to the growing <strong>Indonesia</strong> retail sector, in particular the major cities of Jakarta,Bandung, Semarang and Medan• According to PT Jones Lang LaSalle (the “Independent <strong>Indonesia</strong>n <strong>Retail</strong> Property Consultant”),real GDP growth in <strong>Indonesia</strong> has gathered pace, rising from 3.8% in 2001 to 5.5% in 2006 and isforecast to grow by 6.0% in 2007 and 6.1% in 2008. Average growth rate from 2007 to 2011 is forecast at5.7%.• Interest rates and inflation are expected to fall when measures taken by the <strong>Indonesia</strong>n government toimprove the business environment and encourage investments begin to take effect.• On 26 April 2007, the <strong>Indonesia</strong>n government enacted Law No. 25 of 2007 on Investment (the “NewInvestment Law”) which revokes the previous Foreign and Domestic Investment law. The NewInvestment Law provides and supports, among others, investment incentives and more openinvestments in <strong>Indonesia</strong>. These will include granting longer periods for property ownership andland use rights. The New Investment Law further simplifies the investment procedures and certainother arrangements which the <strong>Indonesia</strong>n government believes will provide <strong>Indonesia</strong> with morecompetitive advantages that will act as incentives to attract increased levels of long-term foreigninvestment to <strong>Indonesia</strong>.• Economic growth in the past few years and the growth of the middle class have contributed to aconsistent growth in retail sales. The retail sector was the first sector to recover from the economic crisiswhich hit <strong>Indonesia</strong> in 1998, with retail trade increasing by over 60.0% in 1999. The rapid recovery wasdriven predominantly by strong domestic consumption, which also served as a primary driver of<strong>Indonesia</strong>’s recovery and economic growth.• Nominal retail sales growth has averaged 11.0% per annum since 1999 with the growth rate forecast tocontinue from 2007 to 2011.• Apart from the favourable macroeconomic conditions, retail sales have also been boosted by a lifestyleshift towards a higher level of consumerism, in particular, among the urban middle income groupcentered in the major <strong>Indonesia</strong>n cities such as Jakarta, Bandung, Semarang and Medan.(See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)Strong acquisition growth potential supported by robust acquisition pipeline from the Sponsorand acquisitions from third parties• The Sponsor has granted LMIR <strong>Trust</strong>, for so long as:2(i)(ii)<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd. remains the manager of LMIR <strong>Trust</strong>; andthe Sponsor and/or any of its related corporations, alone or in aggregate, remains a controllingshareholder of the Manager;
a right of first refusal (the “ROFR”) over any retail properties located in <strong>Indonesia</strong> (each such propertyreferred to as a “Relevant Asset”):(a)(b)which the Sponsor or any of its subsidiaries (each a “Sponsor Entity”) proposes to sell or transfer(whether such Relevant Asset is wholly-owned or partly-owned by the Sponsor Entity andexcluding any sale of such Relevant Asset by a Sponsor Entity to any related corporation ofsuch Sponsor Entity pursuant to a reconstruction, amalgamation, restructuring, merger or anyanalogous event) to an unrelated third party; orfor which a proposed offer for sale or transfer of such Relevant Asset has been made to a SponsorEntity.(See “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the Right of FirstRefusal Agreement”.)As at Listing Date, the scope of the ROFR encompasses five properties currently under development bythe Sponsor and/or its subsidiaries, as set out in the table below (the “ROFR Properties”):ROFR Propertiesunder developmentLocationExpected dateof completionEstimatedGross FloorArea (‘‘GFA”)EstimatedNLA(sq m) (sq m)Binjai Supermall . . . . . . . . . . North Sumatra Fourth quarter of 2007 23,615 18,300Pejaten Mall . . . . . . . . . . . . . South Jakarta Second quarter of 2008 57,948 40,327Kuta Beach Mall . . . . . . . . . . Kuta, Bali Second half of 2008 41,562 30,735Kemang City Mall . . . . . . . . . South Jakarta First half of 2009 77,555 56,052Puri “Paragon City” . . . . . . . . West Jakarta Second half of 2009 196,400 127,660397,080 273,074• The ROFR Properties are expected to have an aggregate GFA of approximately 397,080 sq m, and anaggregate NLA of approximately 273,074 sq m. If LMIR <strong>Trust</strong> acquires all the ROFR Properties, theaggregate NLA of LMIR <strong>Trust</strong>’s initial property portfolio will increase by over 270,000 sq m, and willrepresent an increase of approximately 87.4% of the aggregate NLA of LMIR <strong>Trust</strong>’s initial propertyportfolio as at 30 June 2007. The Manager believes that the ROFR granted to LMIR <strong>Trust</strong> provides avisible pipeline of future acquisitions and will greatly enhance LMIR <strong>Trust</strong>’s growth profile and presencein the <strong>Indonesia</strong>n retail market given the estimated size and quality of the ROFR Properties.• In addition to the above ROFR Properties, the Sponsor, the largest listed property developer in<strong>Indonesia</strong> by market capitalisation and a leading retail mall developer in <strong>Indonesia</strong>, is expected tocontinue developing retail mall properties across <strong>Indonesia</strong>. These potential developments furtherenhance the acquisition pipeline for LMIR <strong>Trust</strong>.• The Manager may also acquire retail malls located in <strong>Indonesia</strong> from third party owners that are notrelated to the Sponsor and which satisfy LMIR <strong>Trust</strong>’s investment criteria and strategy. Ownership ofretail malls in <strong>Indonesia</strong> is highly dispersed and fragmented. This provides LMIR <strong>Trust</strong> with significantopportunities for such acquisitions. As at the Latest Practicable Date, the Manager has entered into anon-binding memorandum of understanding with:(i)(ii)(iii)PT. Multi Pratama Gemilang Perkasa (Pikko Group) in respect of the potential acquisition by LMIR<strong>Trust</strong> of Cosmopolitan Mall Pluit, a retail mall located in North Jakarta;Zellwager Enterprise Limited in respect of the potential acquisition by LMIR <strong>Trust</strong> of Sun Plaza, aretail mall located in Medan, North Sumatra; andPT. Pakuwon Permai in respect of the potential acquisition by LMIR <strong>Trust</strong> of Supermal PakuwonIndah and Pakuwon Trade Center, a retail mall located in West Surabaya, East Java.The Manager understands that Cosmopolitan Mall Pluit is currently undergoing asset enhancementworks, with such works scheduled for completion in the second half of 2008. The acquisition ofCosmopolitan Mall Pluit is likely to take place by the second half of 2008.3
Identified propertyLocationEstimatedGFAEstimatedNLA(sq m) (sq m)Estimated date of acquisitionby LMIR <strong>Trust</strong>Cosmopolitan Mall Pluit . . . North Jakarta 131,013 88,040 Second half of 2008Sun Plaza . . . . . . . . . . . . . North Sumatra 73,871 61,348 Within six months after theListing DateSupermal Pakuwon Indahand Pakuwon TradeCenter . . . . . . . . . . . . . . . .West Surabaya,East Java289,563 114,834 Within six months after theListing Date494,447 264,222(See “Certain Agreements relating to LMIR <strong>Trust</strong> and the Properties—Description of Non-BindingMemorandum of Understanding”.)Potential for growth through active asset management and tenant re-mixing• The Manager intends to undertake active asset management to maximise the value and performance ofthe Properties. (See “Business and Properties—Asset Enhancement”.)• As at the Latest Practicable Date, three of the <strong>Retail</strong> <strong>Malls</strong>, Bandung Indah Plaza, Mal <strong>Lippo</strong> Cikarangand Ekalokasari Plaza have recently completed extensive asset enhancement works and a fourth <strong>Retail</strong>Mall, The Plaza Semanggi is currently undergoing asset enhancement works.- Bandung Indah Plaza has recently completed enhancement and renewal works which created anadditional NLA of approximately 3,843 sq m.- Mal <strong>Lippo</strong> Cikarang has recently completed the building of an extension which has increased the NLAof the mall’s hypermarket and specialty space by 10,694 sq m. As at 30 June 2007, 8,539 sq m orapproximately 79.8% of the additional NLA created from such asset enhancement has been precommittedto Hypermart, one of <strong>Indonesia</strong>’s leading hypermarket chains.- Ekalokasari Plaza has recently completed asset enhancement works which created an additionalNLA of 5,013 sq m by adding a third floor and a mezzanine floor. This development incorporates a foodcourt, a proposed fitness centre and potentially a cinema as anchor tenants for the top levels of thecentre. These asset enhancement works are expected to improve shopper traffic throughout all levelsof the mall. As at 30 June 2007, 670 sq m or approximately 13.4% of the additional NLA created fromsuch asset enhancement has been pre-committed.- The Plaza Semanggi is undergoing asset enhancement works to include a new alfresco café areacalled the “Plangi on the Sky” café, which will increase NLA by approximately 3,000 sq m by the end of2007.Each of Bandung Indah Plaza, Mal <strong>Lippo</strong> Cikarang and Ekalokasari Plaza has either obtained, or is in theprocess of obtaining, final local government approval for the recently completed asset enhancement workswhich have created additional NLA.• The completion of these asset enhancement works are expected to enhance the positioning andbranding of the <strong>Retail</strong> <strong>Malls</strong> within their respective trade areas and increase shopper traffic. Further, theManager has also identified several asset enhancement opportunities at some of the <strong>Retail</strong> <strong>Malls</strong>through reconfiguration of retail unit layouts, improvement of tenancy mix in conjunction with therepositioning and re-branding of such malls, conversion of ancillary areas into productive retail spaceand the implementation of other proactive asset management initiatives such as identifying the latestretail trends and offerings.• <strong>Lippo</strong> Strategic has entered into a rental guarantee deed (“Rental Guarantee Deed”) with the relevant<strong>Retail</strong> Mall Singapore SPCs pursuant to which <strong>Lippo</strong> Strategic will (i) provide a rental guarantee to therelevant <strong>Retail</strong> Mall Singapore SPC in respect of existing units and new units in the respective <strong>Retail</strong><strong>Malls</strong> which are untenanted and (ii) undertake to pay to the relevant <strong>Retail</strong> Mall Singapore SPC anyshortfall in the maintenance and operation costs which the relevant Operating Company hasundertaken to bear under the respective Operating Costs Agreement. (See “Certain AgreementsRelating to LMIR <strong>Trust</strong> and the Properties—Description of the Rental Guarantee Deeds”.)4
• The management of all the <strong>Retail</strong> <strong>Malls</strong> will be undertaken by the Property Manager, a wholly-ownedsubsidiary of the Sponsor. The Property Manager will adopt international best practices for all the <strong>Retail</strong><strong>Malls</strong> in order to realise branding, leasing, marketing and operating efficiencies. Being the sole propertymanager of all of the <strong>Retail</strong> <strong>Malls</strong>, the Property Manager will enjoy economies of scale and synergisticbenefits, including increased buying power, a stronger corporate image, improved retailer relationships,and a transfer of knowledge to create additional value.The sponsor of LMIR <strong>Trust</strong> is PT. <strong>Lippo</strong> Karawaci Tbk, <strong>Indonesia</strong>’s largest listed propertycompany by market capitalisation• The Sponsor is an internationally recognised corporation and is the largest listed property company in<strong>Indonesia</strong> by market capitalisation. It had a market capitalisation of Rp. 10,609.2 billion (approximatelyS$1.8 billion) based on the closing price of its shares of Rp. 1,790.0 on the Jakarta Stock Exchange(“JSX”) as at 18 October 2007. Its property portfolio comprises townships and residential developmentsand commercial and retail development properties.• The Sponsor has a recognised track record and dominant position within the retail and retail propertyindustry in <strong>Indonesia</strong>. Its employees have in-depth property management and operating experience,including extensive experience in owning, managing, leasing, marketing and developing retailproperties. As at 30 June 2007, the Sponsor has completed eight retail development projects in<strong>Indonesia</strong> with a total estimated GFA of 581,740 sq m and has six retail development projects with a totalestimated GFA of approximately 483,060 sq m under development.• The Property Manager, being wholly-owned by the Sponsor, will be able to leverage the Sponsor’sextensive experience in property management to enhance the value of the <strong>Retail</strong> <strong>Malls</strong>.(See “The Sponsor”.)• In addition, the Sponsor has the ability to identify and enhance under-valued retail properties andleverage its extensive retail network in <strong>Indonesia</strong>. This is reflected by the Sponsor’s redevelopment ofBandung Indah Plaza. Prior to the Property Manager being appointed as the property manager ofBandung Indah Plaza, the mall had an average monthly Specialty Base Rent of approximatelyRp. 74,203 per sq m as at 1 January 2005. Subsequent to the Property Manager’s appointment asthe property manager, the average monthly Specialty Base Rent increased by approximately 304.3% toapproximately Rp. 300,000 per sq m as at 30 April 2007.The interests of <strong>Lippo</strong> Strategic, an affiliate of the Sponsor, are substantially aligned with thoseof the Unitholders• <strong>Lippo</strong> Strategic, an affiliate of the Sponsor, will hold a strategic interest in LMIR <strong>Trust</strong> by subscribing for287,695,000 Cornerstone Units representing 27.1% of the total issued Units of LMIR <strong>Trust</strong> as at theListing Date, assuming that the Over-allotment Option is not exercised. The interests of <strong>Lippo</strong> Strategicand the Sponsor, through this affiliation with <strong>Lippo</strong> Strategic, will be substantially aligned with those ofUnitholders.As a substantial Unitholder, the Mapletree Group’s interests are substantially aligned withthose of the Unitholders• Mapletree LM, a wholly-owned subsidiary of Mapletree Investments Pte Ltd (“MIPL”), will besubscribing for 127,250,000 Units, representing 12.0% of the total issued Units of LMIR <strong>Trust</strong> as atthe Listing Date. MIPL is a leading Asia-focused real estate company based in Singapore. MIPL and itssubsidiaries (the “Mapletree Group”), have an asset base of approximately S$4.5 billion (as at 30 June2007) comprising office, logistics, industrial, residential and retail/lifestyle properties.Because of the Mapletree Group’s ownership of Units in LMIR <strong>Trust</strong>, its interests will be substantiallyaligned with those of Unitholders.Locked-in master leases with rental step-ups for the <strong>Retail</strong> Spaces• As at Listing Date, each of the <strong>Retail</strong> Spaces will be leased by the relevant <strong>Retail</strong> Space <strong>Indonesia</strong>n SPCto the Master Lessee, pursuant to the terms of the relevant Master Lease Agreement. The term of eachof the Master Lease Agreements is 10 years from the Listing Date, with an option for the Master Lesseeto renew for a further term of 10 years.5
• Under each of the Master Lease Agreements, the relevant <strong>Retail</strong> Space <strong>Indonesia</strong>n SPC will be entitledto receive from the Master Lessee rental payments comprising:- A fixed base rent amount for the period commencing from Listing Date to 31 December 2007.- An annual increment of 8.0% over the lease rental payable for the immediately preceding financialyear for each of FY2008 to FY2011.- For each of FY2012 to FY2016, an amount equivalent to the lease rental payable in respect of FY2011and 4.25% of the amount by which the net revenue of the Master Lessee derived from the <strong>Retail</strong>Spaces for the immediately preceding financial year exceeds the net revenue of the Master Lesseederived from the <strong>Retail</strong> Spaces for FY2010. The Master Lessee’s operations in each of the individual<strong>Retail</strong> Spaces will be audited annually by an international accounting firm.• The Manager believes that the structure of the Master Lease Agreements provides LMIR <strong>Trust</strong> withstable and growing rental income from the <strong>Retail</strong> Spaces.Stable and growing distributions for LMIR <strong>Trust</strong>• LMIR <strong>Trust</strong>’s distribution policy is to distribute 100.0% of its tax-exempt income (after deduction ofapplicable expenses) and capital receipts for the period from the Listing Date to 31 December 2007, theyear ending 31 December 2008 (“Projection Year 2008”) and the year ending 31 December 2009(“Projection Year 2009”) and at least 90.0% of its tax-exempt income (after deduction of applicableexpenses) and capital receipts thereafter. The tax-exempt income comprises dividends received fromthe Target Singapore SPCs (see “—Structure of LMIR <strong>Trust</strong>”). The income of the Target SingaporeSPCs is derived mainly from interest income earned and dividends from the <strong>Indonesia</strong>n SPCs. Capitalreceipts comprise amounts received by LMIR <strong>Trust</strong> from the redemption of its investment in theredeemable preference shares in the Target Singapore SPCs.• The actual proportion of tax-exempt income and capital receipts distributed to Unitholders may begreater than 90.0% if the Manager considers this to be appropriate, having regard to LMIR <strong>Trust</strong>’sfunding requirements, other capital management considerations, and the need to ensure the overallstability of distributions.• Distributions will be paid on a quarterly basis for the three-month periods ending on 31 March, 30 June,30 September and 31 December each year. LMIR <strong>Trust</strong>’s first distribution after the Listing Date will be forthe period from the Listing Date to 31 March 2008 and will be paid by the Manager on or before 30 May2008. Subsequent distributions will be made on a quarterly basis (see “Distributions”).• The table below sets out the percentage of forecast Gross Rent attributable to Committed Leases for(i) the period from 1 July 2007 to 31 December 2007 (“Forecast Period 2007”), (ii) the Projection Year2008, and (iii) the Projection Year 2009.Percentage of forecast and projected Gross Rent attributable to Committed LeasesForecast Period 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91.3%Projection Year 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80.9%Projection Year 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66.8%• The table below sets out the Manager’s forecast and projected distribution yields for the time periodsindicated, which are based on the assumption that LMIR <strong>Trust</strong> distributes 100.0% of its tax-exemptincome (after deduction of applicable expenses) and capital receipts.Distribution yieldBased on theOffering Price(%)Forecast Period 2007 (1) ............................................. 6.9Projection Year 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3Projection Year 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8Note:(1) Annualised figures for Forecast Period 2007.• Such yields will vary accordingly for investors who purchase the Units in the secondary market at amarket price different from the Offering Price. The profit forecast and profit projections from which this6
information was extracted are based on various assumptions set out in “Profit Forecast and ProfitProjection”. There can be no assurance that the profit forecast and profit projection will be met. Theactual yields per Unit may be materially different from the forecast and projected yields (see “RiskFactors”).Hedging strategies to minimise exposure arising from interest rates and currency fluctuations• The value of the <strong>Indonesia</strong>n Rupiah has been subject to fluctuations in the past and may be subject tofluctuation in the future. The Manager has a policy to undertake foreign exchange hedging of theexpected distributions of LMIR <strong>Trust</strong> to insulate against movements in exchange rates (whetherfavourable or unfavourable). The <strong>Trust</strong>ee, as trustee of LMIR <strong>Trust</strong>, has entered into foreignexchange hedges equivalent to 100.0% of LMIR <strong>Trust</strong>’s estimated distributions for a total term offive years, effective as of the Listing Date, and thereafter it intends to continuously hedge on a rollingbasis so as to provide a degree of certainty to Unitholders that changes in the exchange rate betweenthe <strong>Indonesia</strong>n Rupiah and the Singapore dollar will not have a significant impact on the distributions inSingapore to Unitholders.Management fees structured to incentivise and align interests of the Manager with those ofUnitholders• The management fees payable to the Manager have a performance-based element which is designedto align the interests of the Manager with those of the Unitholders, and incentivise the Manager to growrevenues and minimise operating costs. The receipt of Units by the Manager in lieu of the performancefee further aligns the Manager’s interest with the Unitholders.(See “—Structure of LMIR <strong>Trust</strong>—Certain Fees and Charges” and “The Manager and CorporateGovernance—Management Fees”.)Optimal capital structure• LMIR <strong>Trust</strong> will not incur any borrowings as at the Listing Date. As a REIT is generally permitted toborrow up to 35.0% of the value of its Deposited Property (or up to a maximum of 60.0% if a credit ratingfrom Fitch Inc., Moody’s <strong>Investor</strong>s Services, Inc. (“Moody’s”) or Standard & Poor’s Ratings Group, adivision of the McGraw-Hill Companies, Inc. (“Standard & Poor’s”) is obtained and disclosed to thepublic), LMIR <strong>Trust</strong> will have substantial ability to incur indebtedness to fund future acquisitions andasset enhancement initiatives.• To the extent that LMIR <strong>Trust</strong> incurs borrowings after the Listing Date, the Manager aims to optimiseLMIR <strong>Trust</strong>’s capital structure and cost of capital by employing a mix of equity and debt fundingalternatives within the aggregate leverage 1 (“Aggregate Leverage”) limit set out in the Property FundsGuidelines. By the Listing Date, LMIR <strong>Trust</strong> expects to put in place a floating rate secured term loanfacility of up to S$350.0 million (“Debt Facilities”).(See “Strategy—Capital and Risk Management Strategy”.)Tax exemptions in Singapore• Dividends and interest received in Singapore from the <strong>Indonesia</strong>n SPCs will be exempt from Singaporeincome tax under Sections 13(8) and 13(12), respectively, of the Income Tax Act, Chapter 134 ofSingapore (the “Income Tax Act”). Distributions made by LMIR <strong>Trust</strong> out of such income, receivedthrough the Target Singapore SPCs in the form of one-tier (tax-exempt) dividends, will be exempt fromSingapore income tax in the hands of all Unitholders. No tax will be deducted at source from suchdistributions.• Distributions made out of capital receipts comprising amounts received by LMIR <strong>Trust</strong> from redemptionof redeemable preference shares in the Target Singapore SPCs will be treated as a return of capital forSingapore income tax purposes and will not be taxed in the hands of all Unitholders. For Unitholders whohold the Units as trading or business assets and are liable to Singapore income tax on gains arising fromdisposal of the Units, the amount of this portion of the distribution will be applied to reduce the cost of the1 According to the Property Funds Guidelines, this means total borrowings and deferred payments(including deferred payments for assets whether to be settled in cash or in units of the relevant propertyfund).7
Units for the purpose of calculating the amount of taxable trading gain when the Units are disposed of. Ifthe amount exceeds the cost or the reduced cost of the Units, as the case may be, the excess will besubject to tax as trading income of such Unitholders.• The granting of tax exemption on, among others, foreign-sourced interest income under Section 13(12)of the Income Tax Act is part of a package of tax changes introduced by the Singapore government todevelop Singapore as the preferred Asian listing destination for Asian REITs.No capital expenditure requirements with respect to the <strong>Retail</strong> Spaces in the first 30 monthsafter the Listing Date• Under each of the Master Lease Agreements, the Master Lessee is responsible for all land and buildingtax and expenses for property repairs, maintenance and management, all operating expenses andutilities for the duration of the lease term and shall indemnify and keep the relevant landlord indemnifiedfrom the same.• During the first 30 months of the lease term, the Master Lessee shall be responsible for all repair andreplacement works for the mechanical and electrical equipment, whether or not of a capital nature.• After the first 30 months of the lease term, (a) the Master Lessee shall continue to be responsible for allrepair and replacement works for the mechanical and electrical equipment, which are not of a capitalnature, and (b) each relevant landlord shall be responsible for any repair and replacement works inrelation to the mechanical and electrical equipment which are of a capital nature as well as replacementworks which are reasonably required by the Master Lessee in connection with changes to the layout ofthe <strong>Retail</strong> Spaces.Competent and experienced personnel• The board of directors of the Manager comprise individuals who collectively have extensive experiencein areas including, but not limited to, law, accounting, banking, finance, real estate and fundmanagement. The Manager believes that the Unitholders will benefit from the experience of keystaff members of the Manager in fund, asset and property management in the retail propertymarket. LMIR <strong>Trust</strong> intends to leverage such relevant experience and expertise to implement itsplanned strategies (see “The Manager and Corporate Governance”).Competitive strengthsThe Manager believes that the competitive strengths of the Properties include:• The Properties are located in major cities of <strong>Indonesia</strong> amidst a growing and affluent urbanmiddle classThe Properties are mainly located within Greater Jakarta and Bandung, <strong>Indonesia</strong>’s fourth mostpopulous city.Jakarta, <strong>Indonesia</strong>’s capital and largest city, has seen its total household expenditure increase by anaverage of 12.8% per annum from 2001 to 2006, rising from Rp. 19,277 billion in 2001 toRp. 35,273 billion in 2006. Bandung has seen a similar growth in its total household expenditure,rising from Rp. 4,825 billion in 2001 to Rp. 8,317 billion in 2006, an average growth of 11.5% per annumfrom 2001 to 2006.Economic development in <strong>Indonesia</strong> has seen a significant growth of the middle class over the past fiveyears. This middle income group is considered one of the vital contributors to the economy and isperceived as the most prospective target in mass consumer markets. Based on the Social EconomicSurvey (SES) by ACNielsen 1 conducted in nine major cities in <strong>Indonesia</strong>, the share of population of themiddle income group (classified as SES A, B & C) has steadily grown from 50.0% in 2001 to 64.0% in1 Source: ACNielsen Social Economic Survey. ACNielsen has not provided its consent, for the purposes ofsection 249 (read with section 302) of the SFA, to the inclusion of the information extracted from therelevant report issued by it, and is thereby not liable for such information under sections 253 and 254(read with section 302) of the SFA. While the Manager has taken reasonable action to ensure that theinformation has been reproduced in its proper form and context, and that it has been extractedaccurately and fairly, neither the Manager nor any other party has conducted an independent reviewof, nor verified the accuracy of, such information.8
2006. It is estimated that the urban middle income population in <strong>Indonesia</strong> totals approximately66 million people. This particular group is likely to be considered a major target market for modernretail shopping centres.<strong>Retail</strong> spending in these cities has been further boosted by a shift in lifestyle towards a higher level ofconsumerism, partially brought about by the introduction of foreign brands and designer labels. Theseforeign brands and designer labels typically have higher margins and are willing to pay higher rentals forprime and sizeable retail space. The proliferation of hypermarkets and supermarkets over traditionalmarkets has also increased shopper traffic to modern retail malls.In addition, the geographic diversification of the Properties reduces LMIR <strong>Trust</strong>’s dependence on anysingle regional market and, accordingly, contributes to the stability of LMIR <strong>Trust</strong>’s future income.(See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)Gross Regional Domestic Product (“GRDP”) Per Capita by <strong>Indonesia</strong>n City(Current Prices), 2003-2005*60Rp Millions50403020200320042005100<strong>Indonesia</strong> Jakarta Bandung Surabaya Semarang MedanCity* Figures for <strong>Indonesia</strong>, Jakarta & Bandung are for 2003-20052005 figures for Surabaya, Semarang and Medan are not availableSource: “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”Percentage100%90%80%70%60%50%40%30%Socio-Economic Survey in <strong>Indonesia</strong> (1) , 2001-2006Monthlyhousehold expenditureA (Above Rp. 2 mil/month)B (Rp. 1.5-2 mil/month)C1 (Rp. 1.0-1.5 mil/month)C2 (Rp. 0.7-1.5 mil/month)D (Rp. 0.5-0.7 mil/month)E (Below Rp. 0.5mil/month)20%10%0%2001 2002 2003 2004 2005 2006Note:(1) AC Nielsen Socio-Economic Survey is based on monthly household expenditure, not actual income.No standard can be used (or widely accepted) to calculate direct relation between expenditure andincome.Source: “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”9
Total householdexpenditureof the middle class(Rp. billions)Cities 2001 2006Averageannualgrowth2001-2006Jakarta. ................................................ 10,561 17,276 10Bodetabek .............................................. 7,493 25,817 28Bandung ............................................... 2,793 4,304 9Surabaya ............................................... 4,295 6,293 8Semarang .............................................. 1,758 3,691 16Medan ................................................. 3,542 5,103 8(%)Source: “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”• High growth potential from favourable demographics of the <strong>Indonesia</strong>n populationAccording to the Independent <strong>Indonesia</strong>n <strong>Retail</strong> Property Consultant, the <strong>Indonesia</strong>n retail market hashigh growth potential, with 50.0% of <strong>Indonesia</strong>’s estimated population of 222 million in 2006 under theage of 25. Based on the Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market, the share ofpopulation of the middle income group has steadily grown from 50.0% in 2001 to 64.0% in 2006. It isestimated that the urban middle income population in <strong>Indonesia</strong> totals approximately 66 million people.(See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)• <strong>Retail</strong> <strong>Malls</strong> strategically located within well-established population catchment areasThe <strong>Retail</strong> <strong>Malls</strong> are strategically located throughout Greater Jakarta with a population range ofbetween approximately 0.4 million and 2.2 million within their respective primary catchment areas.Located in middle to upper income demographic regions, each of the <strong>Retail</strong> <strong>Malls</strong> has a variety of strongcharacteristics such as:- Gajah Mada Plaza—The only shopping centre located in the Chinatown district of Jakarta with ahypermarket, executive club and a swimming pool;- Cibubur Junction—Located in the heart of Cibubur, one of the most affluent and upmarket residentialareas in Jakarta;- The Plaza Semanggi—Located in the golden triangle of the Jakarta central business district (“CBD”)and accessible from all four directions of the capital city;- Mal <strong>Lippo</strong> Cikarang—Growing residential and industrial <strong>Lippo</strong> township;- Ekalokasari Plaza—A five-minute drive from the Bogor exit gate of the Jagorawi toll road, the highwaywhich connects Jakarta to Bogor;- Bandung Indah Plaza—Strategic location at the heart of Bandung and easily accessible to the greaterBandung population; and- Istana Plaza—Easily accessible from several transportation hubs in the vicinity, such as the HuseinSastranegara Airport, Bandung train station and Pasteur tollgate.The <strong>Retail</strong> <strong>Malls</strong> located within Greater Jakarta, such as Gajah Mada Plaza and The Plaza Semanggi,also enjoy high levels of connectivity via public transportation such as the Transjakarta busway which isa premium form of public transportation in Jakarta, thereby enhancing the ability of these <strong>Retail</strong> <strong>Malls</strong> todraw high volumes of shoppers.• Quality <strong>Retail</strong> <strong>Malls</strong> which cater to the daily needs of shoppersThe <strong>Retail</strong> <strong>Malls</strong> are strategically positioned as “one-stop” shopping destinations for shoppers and theirfamilies, catering to their daily as well as lifestyle and entertainment needs. The <strong>Retail</strong> <strong>Malls</strong> areanchored by supermarkets, hypermarkets or department stores, which draw significant shopper trafficto the malls and provide a comfortable, hassle-free and low-cost environment for shoppers to purchasetheir daily necessities. The specialty, food and beverage and lifestyle and entertainment tenants, whichinclude foreign labels and brands, restaurants, cinemas and entertainment centres provide shopperswith a wide product offering and a complete shopping experience.10
Further, the <strong>Retail</strong> <strong>Malls</strong> are managed by competent professionals with retail expertise and experience,as reflected in the high occupancy rates and the ability of each <strong>Retail</strong> Mall to differentiate itself from itscompetitors within its catchment area. As at 30 June 2007, the <strong>Retail</strong> <strong>Malls</strong> had a weighted averageoccupancy of approximately 91.6%, reflecting the robust demand for space in the <strong>Retail</strong> <strong>Malls</strong>.• <strong>Retail</strong> Spaces strategically located within well-established population catchment areasThe <strong>Retail</strong> Spaces are strategically located throughout Greater Jakarta and in the major cities ofSemarang, Medan, Madiun and Malang. For example, the Mall WTC Matahari Units are located inSerpong which is part of Tangerang, one of the settlement areas on the outskirts of Jakarta. Mall WTCMatahari is strategically located along a main road which connects to Bumi Serpong Damai City (“BSDCity”), the largest residential estate in Greater Jakarta. It has a proposed development area of 6,000 hawith currently 1,500 ha developed and is occupied by over 15,000 households. In recent years, BSD Cityhas experienced rapid growth in terms of the number of housing units and retail shop houses which havebeen built. Another example is the Malang Town Square Units which are located in the city of Malang inthe East Java province. Malang is the second largest city in East Java province with a population ofapproximately 0.8 million and a regency population of approximately 2.4 million people. The region is apopular tourist destination due to its natural attractions (for example, Mount Bromo, one of Java’slargest volcanoes), cool climate and colonial history. Malang also has a large student population, beinghome to five universities (Brawijaya, State, Muhammadiyah, Widya Gama and Merdeka Universities).• Economies of scale through portfolio management of the <strong>Retail</strong> <strong>Malls</strong>The Property Manager, a wholly-owned subsidiary of the Sponsor, will manage the <strong>Retail</strong> <strong>Malls</strong> after theListing Date. As the <strong>Retail</strong> Spaces are master-leased to Matahari, there is no property managerappointed for the <strong>Retail</strong> Spaces. The Property Manager believes that there are opportunities to realiseefficiencies and economies of scale so as to maximise the performance of each <strong>Retail</strong> Mall.The Property Manager comprises a specialised team of professionals managing the key areas ofoperations, leasing, marketing and finance. Best practices are standardised and strictly adhered toacross all assets under its portfolio.The <strong>Retail</strong> <strong>Malls</strong> will be able to leverage upon the Property Manager’s and the Sponsor’s experience inareas including contractor management, retailer relationships and key negotiations, cost controlmechanisms and strategic leasing, marketing and management initiatives.• Quality tenant baseThe <strong>Retail</strong> <strong>Malls</strong> benefit from the quality of their tenants. The <strong>Retail</strong> <strong>Malls</strong>’ top tenants include wellknowninternational and domestic retailers and brand names such as Giant Hypermarket, Gramediabookstore, Starbucks, Giordano, Fitness First, Sports Station, Matahari Department Store, Hypermartand Studio 21 Cinema.The Manager is of the view that the <strong>Retail</strong> <strong>Malls</strong>’ rental values are predominantly at or below marketlevels. This will allow the Manager to capture growth on lease expiries while maximising the retail mix ofthese malls.The <strong>Retail</strong> <strong>Malls</strong> have a large combined tenant base of over 1,400 tenants (as at 30 June 2007). Thesetenants represent a wide variety of mass retailers and specialty stores and provide trade and productdiversification for the <strong>Retail</strong> <strong>Malls</strong>.• Advance rental payment structure helps to minimise cash flow volatility due to potential rentalarrears<strong>Retail</strong> tenants in <strong>Indonesia</strong> typically pay an advance rental of approximately 10% to 20% of the total rentpayable for the duration of the lease upon signing of the lease agreement. This advance rental paymenthelps to minimise LMIR <strong>Trust</strong>’s cash flow volatility due to potential rental arrears, thus enhancing LMIR<strong>Trust</strong>’s cash flow stability.(See “Business and Properties”.)11
ValuationAs at 30 June 2007, the Properties were valued at an aggregate of S$1,004.7 million by Knight Frank /PT. Willson Properti Advisindo, as the Independent Valuer to the Manager (“Knight Frank”) and atS$1,016.3 million by Colliers International / PT Penilai, as the Independent Valuer to the <strong>Trust</strong>ee(“Colliers”). The Manager has adopted Knight Frank’s valuation as the basis for the determination ofthe fair market value of the Properties and the net asset value (“NAV”) per Unit. (See “Unaudited ProForma Consolidated Balance Sheet as at the Listing Date”.)The following table sets forth the key statistics relating to the valuation of the Properties and the Offering:Appraised value by Knight Frank as at 30 June 2007 . . . . . . . . . . . . . . . . . . . . . . . S$1,004.7 millionAppraised value by Colliers as at 30 June 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . S$1,016.3 millionImplied NAV per Unit based on valuation by Knight Frank at the Offering Price . . . . S$0.91At the Offering Price, the Units under the Offering and the Cornerstone Units will be issued at a 12.1%discount to the NAV.12
Key Information on the PropertiesA summary of key information on the Properties is set out below:<strong>Retail</strong> Mall LocationPeriod 2007 2007 (1) 2007 (1) Year 2008 Year 2009 by Knight Frank by Colliers 2007 20072007Frank)AnnualisedAnnualisedPercentage ofNetpropertyincome(‘‘NPI”) for Forecast NPI for Projection NPI for Projection Appraisedvalue byKnight Frankas at 30 JuneForecastPeriod 2007 NPI yield on valuation Appraised value by Colliers as at 30 June ForecastPeriod2007 NPIyield on valuation GFA as at 30 June NLA as at 30 June Occupancy as at 30 June aggregatevalue of theProperties (asdeterminedby Knight(S$’000) (S$’000) (S$’000) (S$ million) (%) (S$ million) (%) (sq m) (sq m) (%) (%)Gajah MadaPlaza . . . . . Jakarta 3,726 8,319 10,253 103.8 7.2 117.0 6.4 66,160 34,278 89.1 10.3CibuburJunction . . . Jakarta 4,233 8,895 8,943 94.2 9.0 101.8 8.3 49,341 34,139 86.4 9.4The PlazaSemanggi . . Jakarta 8,572 17,356 18,274 214.8 8.0 211.1 8.1 91,232 58,685 (2) 96.4 21.4Mal <strong>Lippo</strong>Cikarang . . . Cikarang,Greater Jakarta2,589 5,548 5,729 80.2 6.5 79.7 6.5 25,767 17,974 (3) 96.3 8.0EkalokasariPlaza . . . . . Bogor,Greater Jakarta2,296 5,798 7,503 66.0 7.0 68.1 6.7 39,895 20,587 (4) 87.3 6.6BandungIndahPlaza . . . . . Bandung,West Java5,668 11,756 12,811 124.5 9.1 135.1 8.4 55,196 26,472 (5) 83.2 12.4Istana Plaza . . Bandung,West Java4,286 8,958 9,285 125.7 6.8 114.7 7.5 37,434 27,247 98.9 12.5Total for<strong>Retail</strong><strong>Malls</strong> ..... 31,371 (6) 66,629 (6) 72,800 (6) 809.2 7.8 827.4 (6) 7.6 365,025 219,382 91.6 (7) 80.5 (6)13
<strong>Retail</strong> Space LocationPeriod 2007 2007 (1) 2007 (1) Year 2008 Year 2009Knight Frank by Colliers 2007 Knight Frank)NPI for Forecast NPI for Projection NPI for Projection Appraised value by Knight Frank as at 30 June AnnualisedForecast Period 2007NPI yield on valuation by Appraised value by Colliers as at 30 June AnnualisedForecastPeriod 2007NPI yield on valuation NLA as at 30 June Percentage ofaggregatevalue of theProperties (asdetermined by(S$’000) (S$’000) (S$’000) (S$ million) (%) (S$ million) (%) (sq m) (%)Mall WTC Matahari Units . . . Tangerang, Greater Jakarta 843 1,742 1,770 25.2 6.7 24.3 6.9 11,184 (8) 2.5Metropolis Town SquareUnits................ Tangerang, Greater Jakarta 1,156 2,382 2,420 33.5 6.9 32.2 7.2 15,248 (9) 3.3Depok Town Square Units . . Depok, Greater Jakarta 861 1,778 1,807 25.7 6.7 24.8 7.0 13,045 (9) 2.6Java Supermall Units ...... Semarang, Central Java 836 1,726 1,754 26.0 6.4 25.0 6.7 11,082 (8) 2.6Malang Town Square Units . . Malang, East Java 834 1,723 1,751 25.5 6.5 25.8 6.5 11,065 (9) 2.5Plaza Madiun ........... Madiun, East Java 1,081 2,228 2,264 33.4 6.5 31.8 6.8 19,029 3.3Grand Palladium MedanUnits................ Medan, North Sumatra 886 1,829 1,859 26.2 6.8 25.2 7.0 13,417 (9) 2.6Total for <strong>Retail</strong> Spaces .... 6,497 13,408 13,626 (6) 195.5 6.6 188.9 (6) 6.9 94,070 19.5 (6)Total for Properties ...... 37,868 (10) 80,037 (10) 86,426 (10) 1,004.7 7.5 1,016.3 7.5 313,452 100.0Notes:(1) Based on exchange rate adopted at S$1 = Rp. 5,900(2) Current ongoing asset enhancement works to include a new alfresco café area called the “Plangi on the Sky” café will increase NLA by an estimated 3,000 sq m, bringing total NLAto approximately 61,685 sq m by the end of 2007.(3) Recently completed asset enhancement works to expand the retail space at Mal <strong>Lippo</strong> Cikarang have increased the NLA by 10,694 sq m, bringing the total NLA to 28,668 sq m.(4) Recently completed asset enhancement works for the third floor and mezzanine floor have increased the NLA by 5,013 sq m, bringing the total NLA to 25,600 sq m.(5) Recently completed asset enhancement works have increased the NLA by 3,843 sq m, bringing the total NLA to 30,315 sq m.(6) Due to rounding differences.(7) Weighted average occupancy as at 30 June 2007.(8) Based on Strata Titles Ownership Certificates.(9) Based on Kiosks Sale and Purchase Binding Agreements (See “Business and Properties—Information Regarding the Title of the Properties—The <strong>Retail</strong> Spaces—Kiosks Sale andPurchase Binding Agreement.”).(10) Does not tie in with the NPI in the consolidated statement of total return for the Forecast Period 2007, Projection Period 2008 and Projection Period 2009 as the NPI in theconsolidated statement of total return for these respective periods include the operating expenses of the Singapore SPCs.14
Location of the Properties in <strong>Indonesia</strong>15
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INFORMATION ON THE PROPERTIESThe <strong>Retail</strong> <strong>Malls</strong>The <strong>Retail</strong> <strong>Malls</strong> are all located in <strong>Indonesia</strong> and have a total NLA of 219,382 sq m as at 30 June 2007. The<strong>Retail</strong> <strong>Malls</strong> are strategically located within Greater Jakarta and Bandung and are centrally located withintheir respective trade areas, with a total population catchment ranging between 0.8 million and 3.7 million.(See “Business and Properties”.)A summary of the key features of each <strong>Retail</strong> Mall is as follows:Gajah Mada PlazaJaIan Gajah Mada 19-26, Central JakartaBrief description . . . . . . . . . . . . . . . .Population catchment . . . . . . . . . . . . 429,298 households (1)Gajah Mada Plaza is a seven storey with one basement levelshopping centre and a carpark comprising 885 parking lots. Themall is located prominently in the heart of Jakarta’s Chinatown,an established and well-known commercial area in the city.Situated along Jalan Gajah Mada, one of the main roads inJakarta, Gajah Mada Plaza is positioned as a one-stopshopping, dining and entertainment destination for middle toupper income families as well as professional executives andstudents from the offices and schools within its vicinity. The 222tenancies in the mall provide a diverse and complementarytenant mix anchored by Hypermart and Rimo DepartmentStore. The mall’s strong leisure and entertainmentcomponent, which includes a cinema, restaurants, familykaraoke outlets, a discotheque, video game centres, a fitnesscentre and a swimming pool, adds to the overall attractiveness ofGajah Mada Plaza.Title . . . . . . . . . . . . . . . . . . . . . . . . . . Strata Titles as evidenced by certificates :• No. 438/I/S Kel Petojo Utara, registered under the name ofPT Graha Baru Raya;• No. 440/II/S Kel Petojo Utara, registered under the name ofPT Graha Baru Raya;• No. 442/III/S Kel Petojo Utara, registered under the name ofPT Graha Baru Raya;• No. 325/-I/S Kel Petojo Utara, registered under the name ofPT Graha Baru Raya;• No. 326/-I/S Kel Petojo Utara, registered under the name ofPT Graha Baru Raya;• No. 328/I/S Kel Petojo Utara, registered under the name ofPT Graha Baru Raya;• No. 330/II/S Kel Petojo Utara, registered under the name ofPT Graha Baru Raya;• No. 332/III/S Kel Petojo Utara, registered under the name ofPT Graha Baru Raya;• No. 333/IV/S Kel Petojo Utara, registered under the name ofPT Graha Baru Raya;• No. 334/V/S Kel Petojo Utara, registered under the name ofPT Graha Baru Raya;17
Year of building completion . . . . . . . . 1982Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$103.8 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$117.0 million• No. 335/V-VI-VII/S Kel Petojo Utara, registered under thename of PT Graha Baru Raya;• No. 336/VI-VII/S Kel Petojo Utara, registered under the nameof PT Graha Baru Raya;• No. 337/VII/S Kel Petojo Utara, registered under the name ofPT Graha Baru Raya; and• No. 338/VIII/S Kel Petojo Utara, registered under the name ofPT Graha Baru Raya.The above strata titles are constructed on HGB underlyingcommon land, valid until 24 January 2020 and are extendablefor another term of up to 20 years. Following the expiration of thisadditional term, a renewal application may be made. (See“Overview of Relevant Laws and Regulations in <strong>Indonesia</strong>—Rights to Own and/or to Use—Strata Titles”.)(See “Business and Properties—Gajah Mada Plaza”.)Strata Titles Area . . . . . . . . . . . . . . .GFA as at 30 June 2007 . . . . . . . . . .NLA as at 30 June 2007 . . . . . . . . . .37,501 sq m66,160 sq m34,278 sq mNPI for Forecast Period 2007,Projection Year 2008 andProjection Year 2009 (S$’000) . . . . . . Forecast Period 2007—3,726Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 10.5%Number of tenants as at 30 June2007 . . . . . . . . . . . . . . . . . . . . . . . . . 222Occupancy rate as at 30 June 2007. . 89.1%Projection Year 2008—8,319Projection Year 2009—10,253Key anchors/tenants . . . . . . . . . . . . .Millennium International Executive Club, Hypermart, RimoDepartment Store, McDonald’s and Inul Vizta KaraokeCar parking lots . . . . . . . . . . . . . . . . . 885Motorcycle parking lots . . . . . . . . . . . 665Note:(1) The figure comprises the number of households within the primary trade area of the relevant <strong>Retail</strong>Mall. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)18
Pictures of Gajah Mada Plaza19
Cibubur JunctionJalan Jambore Raya 1, Cibubur, East JakartaBrief description . . . . . . . . . . . . . . . .Cibubur Junction is a five storey with one basement level andpartial roof top level shopping centre with a carparkcomprising 611 parking lots. The mall is located strategicallyin the middle of Cibubur which is one of the most affluent andupmarket residential areas in Jakarta. The mall is situatedfive km south of Jakarta’s Jagorawi toll road and is easilyaccessible and visible from the main road.Population catchment . . . . . . . . . . . . 422,862 households (1)Being the only retail mall with a NLA of above 20,000 sq m withinan approximately 10-km radius, Cibubur Junction is the only mallwithin its locality that offers a one-stop shoppingexperience. Its anchor tenants, Hypermart andMatahari Department Store are well complemented byinternational and local specialty tenants which includerestaurants, fashion labels, a cinema, bookstores, a videogame centre and a fitness centre.Title . . . . . . . . . . . . . . . . . . . . . . . . . .Cibubur Junction is owned by PT Cibubur Utama and was builtpursuant to a BOT Scheme based on the deed of cooperationagreement and its amendments, between PD PembangunanSarana Jaya DKI Jakarta as BOT Grantor and PT CibuburUtama as BOT Grantee.Year of building completion . . . . . . . . 2005Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$94.2 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$101.8 millionThe Cibubur Junction BOT arrangement between PT CibuburUtama and PD Pembangunan Sarana Jaya DKI Jakarta shall bevalid until 28 July 2025 and may be extended.The underlying BOT land, on which Cibubur Junction isconstructed, is represented by HGB title No. 01210/Cibuburwhich is valid until 23 December 2021 and is extendable foranother term of up to 20 years. Following expiration of thisadditional term, a renewal application may be made. (See“Overview of Relevant Laws and Regulations in <strong>Indonesia</strong>—Rights to Own and/or to Use—Hak Guna Bangunan (HGB/Right to Build”).(See “Business and Properties — Cibubur Junction”.)Land Area . . . . . . . . . . . . . . . . . . . . .GFA as at 30 June 2007 . . . . . . . . . .NLA as at 30 June 2007 . . . . . . . . . .31,987 sq m49,341 sq m34,139 sq mNPI for Forecast Period 2007,Projection Year 2008 andProjection Year 2009 (S$’000) . . . . . . Forecast Period 2007—4,233Projection Year 2008—8,895Projection Year 2009—8,94320
Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 11.2%Number of tenants as at 30 June2007 . . . . . . . . . . . . . . . . . . . . . . . . . 163Occupancy rate as at 30 June 2007. . 86.4%Key anchors/tenants . . . . . . . . . . . . . Hypermart, Matahari Department Store, Fitness First, SportWarehouse and Studio 21 CinemaCar parking lots . . . . . . . . . . . . . . . . . 611Motorcycle parking lots . . . . . . . . . . . 500Note:(1) The figure comprises the number of households within the primary trade area of the relevant <strong>Retail</strong>Mall. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)Pictures of Cibubur Junction21
The Plaza SemanggiJalan Jend. Sudirman Kav.50, South JakartaBrief description . . . . . . . . . . . . . . . . The Plaza Semanggi is a modern shopping centre comprisingseven storey and two basement levels shopping centre and 13levels of office floors, with a carpark comprising 1,100 parkinglots. The Plaza Semanggi is strategically located in the heart ofJakarta’s CBD within the city’s Golden Triangle at the Semanggiinterchange, which is a junction channeling north-south andeast-west traffic across central Jakarta. The centre is situatedamong many commercial buildings and adjacent to AtmajayaUniversity, one of Jakarta’s most prominent universities.Anchored by Centro Department Store and GiantHypermarket, the 479 tenants (as at 30 June 2007) provideall categories of shoppers with a diverse and comprehensivetenant mix. The Plaza Semanggi offers both destination andconvenience shopping, and is supported by its central location,which is easily accessible by cars and public transport.Population catchment . . . . . . . . . . . . 270,387 households (1)Title . . . . . . . . . . . . . . . . . . . . . . . . . .Year of building completion . . . . . . . . 2003Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$214.8 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$211.1 millionLand Area . . . . . . . . . . . . . . . . . . . . .GFA as at 30 June 2007 . . . . . . . . . .The Plaza Semanggi was built pursuant to a BOT Schemebased on the introductory agreement of revitalisation,management and transfer (Perjanjian Pengikatan Revitalisasi,Pengelolaan dan Pengalihan) and its amendments, betweenYayasan Gedung Veteran Republik <strong>Indonesia</strong> as BOT Grantorand PT Primatama Nusa Indah as BOT Grantee.The BOT agreement is valid for 30 years from 8 July 2004.PT Primatama Nusa Indah as BOT Grantee has an option toextend the term of the BOT Agreement for a period of 20 years,with a notification to the BOT Grantor at least six months prior tothe expiration date. Upon this notification, the BOT Grantor thengrants its approval for the extension.The underlying BOT land, on which Plaza Semanggi isconstructed, is represented by HP title No. 133/KaretSemanggi, and is valid as long as the land is being used.(See “Business and Properties—The Plaza Semanggi”.)19,000 sq m91,232 sq mNLA as at 30 June 2007 . . . . . . . . . . 58,685 sq m (2)NPI for Forecast Period 2007,Projection Year 2008 andProjection Year 2009 (S$’000) . . . . . Forecast Period 2007—8,572Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 20.4%22Projection Year 2008—17,356Projection Year 2009—18,274
Number of tenants as at 30 June2007 . . . . . . . . . . . . . . . . . . . . . . . . . 479Occupancy rate as at 30 June 2007. . 96.4%Key anchors/tenants . . . . . . . . . . . . . Centro Department Store, Giant Hypermarket, ElectronicSolution <strong>Indonesia</strong>, Kentucky Fried Chicken and X LoungeCar parking lots . . . . . . . . . . . . . . . . . 1,100Motorcycle parking lots . . . . . . . . . . . 750Notes:(1) The figure comprises the number of households within the primary trade area of the relevant <strong>Retail</strong>Mall. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)(2) Current ongoing asset enhancement works to include a new alfresco café area called the “Plangi onthe Sky” café will increase NLA by an estimated 3,000 sq m, bringing total NLA to approximately61,685 sq m by the end of 2007.Pictures of The Plaza Semanggi23
Mal <strong>Lippo</strong> CikarangJalan MH Thamrin, <strong>Lippo</strong> Cikarang, Greater JakartaBrief description . . . . . . . . . . . . . . . . Mal <strong>Lippo</strong> Cikarang is a two-level retail mall located within the<strong>Lippo</strong> Cikarang estate. The estate is approximately 40 km east ofJakarta and is connected to Jakarta via the Jakarta-Cilkampektoll road. Comprising industrial, commercial and residentialcomponents, the <strong>Lippo</strong> Cikarang estate is home to25,000 residents and approximately 65,000 jobs. Mal <strong>Lippo</strong>Cikarang is the main shopping centre in the estate and haslimited competition within an approximately 10-km radius. Themall is anchored by Matahari Department Store, Hypermart andHero Supermarket, complemented by a cinema, a bookshop, avideo game centre, restaurants and dining outlets. The mall hasrecently completed a S$4.7 million expansion and renovationprogramme which has increased its NLA by more than 50.0%.Population catchment . . . . . . . . . . . . 84,962 households (1)Title . . . . . . . . . . . . . . . . . . . . . . . . . .Year of building completion . . . . . . . . 1995Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$80.2 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$79.7 millionLand Area . . . . . . . . . . . . . . . . . . . . .Mal <strong>Lippo</strong> Cikarang was built on a plot of land of 49,250 sq mbased on measurement letter No. 19128/1994 dated 25 August1994 and Certificate of Right to Build (HGB title) No. 627/Kelurahan Cibatu, registered under the name of PT GrahaNusa Raya, issued by Bekasi Land Office on 9 December1994, and valid until 5 May 2023 and is extendable foranother term of up to 20 years. Following the expiration ofthis additional term, a renewal application may be made. (See“Overview of the Relevant Laws and Regulations in <strong>Indonesia</strong>—Rights to Own and/or to Use—Hak Guna Bangunan (HGB/Rightto Build)”.)(See “Business and Properties—Mal <strong>Lippo</strong> Cikarang”.)49,250 sq mGFA as at 30 June 2007 . . . . . . . . . . 25,767 sq mNLA as at 30 June 2007 . . . . . . . . . . 17,974 sq m (2)NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—2,589Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 6.8%Number of tenants as at 30 June2007 . . . . . . . . . . . . . . . . . . . . . . . . . 116Occupancy rate as at 30 June 2007. . 96.3%Key anchors / tenants . . . . . . . . . . . .24Projection Year 2008—5,548Projection Year 2009—5,729Matahari Department Store, Hypermart, Hero Supermarket,Studio 21 Cinema, Batik Keris and Toko Buku Utamabookstore (3)
Car parking lots . . . . . . . . . . . . . . . . . 513Motorcycle parking lots . . . . . . . . . . . 950Notes:(1) The figure comprises the number of households within the primary trade area of the relevant <strong>Retail</strong>Mall. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)(2) Recently completed asset enhancement works to expand the retail space at Mal <strong>Lippo</strong> Cikaranghave increased the NLA by 10,694 sq m, bringing the total NLA to 28,668 sq m.(3) Following the completion of the asset enhancement works stated in (2), Hypermart has precommittedto lease 8,539 sq m of the extended area.Pictures of Mal <strong>Lippo</strong> Cikarang25
Ekalokasari PlazaJalan Siliwangi 123, Bogor, Greater JakartaBrief description . . . . . . . . . . . . . . . . Ekalokasari Plaza is a six storey with three basement levelsretail mall with a carpark comprising 390 parking lots. The mall islocated approximately two km south east of the Bogor CityCentre on a major road, Jalan Siliwangi, and approximately3.5 km south or five minutes drive from the Bogor exit of theJagorawi toll road which connects Jakarta to Bogor. Bogor isapproximately 50 km south of Jakarta and had a population ofapproximately 855,000 as at 2002. Ekalokasari Plaza ispositioned as the retail mall of convenience and choice for itspopulation catchment. It provides a comprehensive retail mixanchored by Matahari Department Store, Foodmartsupermarket, two large bookstores and a concentration offashion labels and outlets. Ekalokasari Plaza has recentlycompleted S$2.0 million expansion and renovationprogramme for the third and mezzanine floors. The newexpanded area will house a food court, and is also intendedto include a fitness centre and a cinema.Population catchment . . . . . . . . . . . . 144,451 households (1)Title . . . . . . . . . . . . . . . . . . . . . . . . . .Year of building completion . . . . . . . . 2003Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$66.0 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$68.1 millionLand Area . . . . . . . . . . . . . . . . . . . . .Ekalokasari Plaza is owned by PT Indah Pesona Bogor and wasbuilt pursuant to a BOT Scheme based on the cooperationagreement (Perjanjian Kerjasama) between Institut PertanianBogor (“IPB”) represented by PT Bogor Life Science andTechnology as BOT Grantor and PT Indah Pesona Bogor(“PT IPB”).The BOT Scheme relating to Ekalokasari Plaza is valid from27 June 2001 to 27 June 2032 and may be extended.The underlying BOT land, on which Ekalokasari Plaza isconstructed, is represented by HP title No. 1/Sukasari whichis valid as long as the land is being used.(See “Business and Properties—Ekalokasari Plaza”.)10,500 sq mGFA as at 30 June 2007 . . . . . . . . . . 39,895 sq mNLA as at 30 June 2007 . . . . . . . . . . 20,587 sq m (2)NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—2,296Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 5.8%Number of tenants as at 30 June2007 . . . . . . . . . . . . . . . . . . . . . . . . . 10726Projection Year 2008—5,798Projection Year 2009—7,503
Occupancy rate as at 30 June 2007. . 87.3%Key anchors / tenants . . . . . . . . . . . . Matahari Department Store, Foodmart supermarket, Gramediabookstore, Karisma, Number 61 and Kentucky Fried ChickenCar parking lots . . . . . . . . . . . . . . . . . 390Motorcycle parking lots . . . . . . . . . . . 382Notes:(1) The figure comprises the number of households within the primary trade area of the relevant <strong>Retail</strong>Mall. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)(2) Recently completed asset enhancement works for the third floor and mezzanine have increased theNLA by 5,013 sq m, bringing the total NLA to 25,600 sq m.Pictures of Ekalokasari Plaza27
Bandung Indah PlazaJalan Merdeka No. 56, Bandung, West JavaBrief description . . . . . . . . . . . . . . . . Bandung Indah Plaza is a four storey with three basement levelsretail mall with a carpark comprising 602 parking lots. It is locatedstrategically in the heart of the CBD of Bandung, the fourth mostpopulous city in <strong>Indonesia</strong>. The retail mall is easily accessiblefrom Jalan Merdeka, a major road which connects NorthBandung to South Bandung, and is surrounded bycommercial buildings and middle to upper income residentialareas. It is also attached to Hyatt Regency Hotel, one of theleading five-star hotels in Bandung. Bandung Indah Plaza isanchored by Matahari Department Store, Hypermart, YogyaSupermarket, a bookstore, a cinema and supported by a listof international and local tenants. It has recently completed aS$12.6 million expansion and renovation programme.Population catchment . . . . . . . . . . . . 124,947 households (1)Title . . . . . . . . . . . . . . . . . . . . . . . . . .28Bandung Indah Plaza is owned by PT Megah Semesta Abadiand was built pursuant to a BOT Scheme based on cooperationagreement on the renovation, development and management ofHotel Pakunegara, Bandung (Perjanjian Kerjasama PemugaranPembangunan dan Pengelolaan Hotel Pakunegara) betweenPerusahaan Daerah Jasa Dan Kepariwisataan Propinsi JawaBarat, and formerly known as Perusahaan Daerah Kerta WisataJawa Barat) and PT Bhuwanatala Indah Permai Tbk (formerlyknown as PT Bandung Indah Plaza Permai) (“Bandung IndahPlaza Cooperation Agreement”) and was novated by anovation agreement to PT Megah Semesta Abadi fromPT Bhuwanatala Indah Permai Tbk. on 29 December 2003.The Bandung Indah Plaza Cooperation Agreement, itsamendments and the novation agreement are jointly referredto as the “Bandung Indah Plaza BOT Agreement”.The term of the Bandung Indah Plaza BOT Agreement is for30 years as of the commencement of commercial operation andwill expire on 31 December 2030 and may be extended.The BOT Grantor has granted the BOT Grantee, the owner ofBandung Indah Plaza, the right to apply for a HGB title on top ofits HPL title. (See “Business and Properties—InformationRegarding the Title of the Properties—Hak Pengelolaan(“HPL”) titles”.)Bandung Indah Plaza was built on the following:(a)(b)HGB title No. 26/Citarum valid up to 19 August 2010; andThe HGB titles on top of HPL titles are as follows:(i)(ii)(iii)HGB titles No. 130/Citarum, No. 131/Citarum, andNo. 64/Citarum, valid up to 20 October 2017;HGB titles No. 65/Citarum and No. 69/Citarum,valid up to 8 September 2019; andHGB titles No. 89/Merdeka and 90/Merdeka, validup to 30 January 2021.Upon the expiry of the above HGB titles, the term of the HGBtitles can, subject to the provisions of the BOT Agreement, beextended for another term of up to 20 years. (See “Overview ofRelevant Laws and Regulations in <strong>Indonesia</strong>—Rights to Own
Year of building completion . . . . . . . . 1990Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$124.5 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$135.1 millionand/or to Use—Hak Guna Bangunan (HGB/Right to Build)” and“Overview of Relevant Laws and Regulations in <strong>Indonesia</strong>—Rights to Own and/or to Use—Hak Pakai (HP/Right to Use)”.)The HPL titles are valid as long as the land is being used.(See “Business and Properties—Bandung Indah Plaza”.)Land Area . . . . . . . . . . . . . . . . . . . . .GFA as at 30 June 2007 . . . . . . . . . .15,779 sq m55,196 sq mNLA as at 30 June 2007 . . . . . . . . . . 26,472 sq m (2)NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—5,668Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 14.4%Number of tenants as at 30 June2007 . . . . . . . . . . . . . . . . . . . . . . . . . 180Occupancy rate as at 30 June 2007. . 83.2%Projection Year 2008—11,756Projection Year 2009—12,811Key anchors / tenants . . . . . . . . . . . .Matahari Department Store, Hypermart, McDonald’s, YogyaSupermarket and Toko Gunung Agung bookstoreCar parking lots . . . . . . . . . . . . . . . . . 602Motorcycle parking lots . . . . . . . . . . . 700Notes:(1) The figure comprises the number of households within the primary trade area of the relevant <strong>Retail</strong>Mall. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)(2) Recently completed asset enhancement works have increased the NLA by 3,843 sq m, bringing thetotal NLA to 30,315 sq m.Pictures of Bandung Indah Plaza29
Istana PlazaJalan Pasirkaliki No. 121-123, Bandung, West JavaBrief description . . . . . . . . . . . . . . . . Istana Plaza is a four storey with two basement levels retail mallwith a carpark comprising 700 parking lots. It is locatedstrategically in the CBD of Bandung, the fourth most populouscity in <strong>Indonesia</strong>. Situated at the junction between two busyroads of Jalan Pasir Kaliki and Jalan Pajajaran, it is easilyaccessible by car and public transport. Anchored by RimoDepartment Store and Hero Supermarket, the 205 tenanciesin Istana Plaza provide one-stop shopping experience for themiddle to upper income residents within its populationcatchment. Istana Plaza’s many popular international fashionlabels have also helped to attract the young and trendy shopperbase.Population catchment . . . . . . . . . . . . 99,525 households (1)Title . . . . . . . . . . . . . . . . . . . . . . . . . .Istana Plaza is owned by PT Suryana Istana Pasundan and wasbuilt pursuant to BOT scheme based on the cooperationagreement, dated 9 May 1997 between, Gereja KristenPasundan, Ginawan Chondro, Edi Sukamto Josana, ChandraTambayong, Wirawan Chondro, Heryanto Gunawan, andSubagya Putra Prawira (as investors), and TK GunawanPrihatna, Stepanus Tedjasentosa, Tatang Budiarto, andAbrijanto Effendi (as consultants) (the “Istana PlazaCooperation Agreement”).The Istana Plaza Cooperation Agreement and its amendmentsshall be jointly referred to as the “Istana Plaza BOTAgreement”.The Istana Plaza BOT Agreement is valid for 32 years fromJanuary 2002.The underlying BOT land, on which Istana Plaza is constructed,is held by the BOT Grantor under the following HGB titles:(i) No. 43/Pamoyanan, valid until 24 September 2032;(ii) No. 58/Pamoyanan, valid until 24 September 2032;(iii) No. 177/Pajajaran, valid until 24 September 2032;(iv)Year of building completion . . . . . . . . 2001Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$125.7 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$114.7 millionLand Area . . . . . . . . . . . . . . . . . . . . .GFA as at 30 June 2007 . . . . . . . . . .30No. 59/Pamoyanan, valid until 24 September 2036; and(v) No. 60/Pamoyanan, valid until 24 September 2036.The above HGB titles can be extended for another term of up to20 years. Following the expiration of this additional term, arenewal application may be made (See “Overview of RelevantLaws and Regulations in <strong>Indonesia</strong>—Rights to Own and/or toUse—Hak Guna Bangunan (HGB/Right to Build)”.)(See “Business and Properties—Istana Plaza”.)13,082 sq m37,434 sq m
NLA as at 30 June 2007 . . . . . . . . . .27,247 sq mNPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—4,286Projection Year 2008—8,958Projection Year 2009—9,285Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 12.0%Number of tenants as at 30 June2007 . . . . . . . . . . . . . . . . . . . . . . . . . 205Occupancy rate as at 30 June 2007. . 98.9%Key anchors/tenants . . . . . . . . . . . . .Rimo Department Store, Ace Hardware, Gramedia bookstore,Game Master and Planet SportCar parking lots . . . . . . . . . . . . . . . . . 700Motorcycle parking lots . . . . . . . . . . . 500Note:(1) The figure comprises the number of households within the primary trade area of the relevant <strong>Retail</strong>Mall. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)Pictures of Istana Plaza31
The <strong>Retail</strong> SpacesThe <strong>Retail</strong> Spaces are all located in <strong>Indonesia</strong>. The <strong>Retail</strong> Spaces occupy a total NLA of 94,070 sq m andare strategically located as anchor spaces within retail malls. Three of the seven <strong>Retail</strong> Spaces are locatedwithin Greater Jakarta and four are situated in the major cities of Semarang, Madiun, Malang and Medan.(See “Business and Properties”.)A summary of each <strong>Retail</strong> Space is as follows:Mall WTC Matahari UnitsJalan Raya Serpong, Pondok Jagung, Serpong, Tangerang, Banten, Greater JakartaBrief description . . . . . . . . . . . . . . . .Locality information . . . . . . . . . . . . . .Title . . . . . . . . . . . . . . . . . . . . . . . . . .32The Mall WTC Matahari Units comprise four strata units on partof the ground floor, upper ground floor, mezzanine and secondfloor of Mall WTC Matahari which are currently occupied byHypermart, Matahari Department Store and Timezone.Mall WTC Matahari is located along Jalan Serpong Raya,Serpong within the administrative area of Tangerang regency,Banten province. It is situated approximately 18 km west ofJakarta’s CBD.Tangerang is renowned as an industrial and manufacturing cityin Greater Jakarta, being home to seven industrial estates with atotal area of approximately 1,700 ha.Due to its proximity to Jakarta, Tangerang benefits from theurban expansion of Jakarta and is home to commuters who workin Jakarta. In recent years, residential estates and satellite citieswith their facilities have been developed in Tangerang.Mall WTC Matahari is strategically located along the main roadconnecting the BSD residential estate, the largest residentialestate in Greater Jakarta. It has a proposed development area of6,000 ha with currently 1,500 ha developed and occupied by over15,000 households. In recent years, BSD City has experiencedrapid growth in terms of the number of housing units and retailshop houses which have been built.Mall WTC Matahari was built on plots of land covering an area of:(i)(ii)3,470 sq m with Strata Titles Ownership CertificateNo. 428/Desa Pondok Jagung dated 17 December 2004;5,892 sq m with Strata Titles Ownership CertificateNo. 00153/Desa Pondok Jagung dated 17 December2004;(iii) 873 sq m with Strata Titles Ownership CertificateNo. 00372/Desa Pondok Jagung dated 17 December2004; and(iv) 949 sq m with Strata Titles Ownership CertificateNo. 00197/Desa Pondok Jagung dated 17 December2004,all of which are registered under the name of Matahari and itsunderlying HGB common land will expire on 8 April 2018 but isextendable for another term of up to 20 years. Following theexpiration of this additional term, a renewal application may bemade. (See “Overview of Relevant Laws and Regulations in<strong>Indonesia</strong>—Rights to Own and/or to Use—Hak Guna Bangunan(HGB/Right to Build)”.)(See “Business and Properties—Mall WTC Matahari Units”.)
Year of building completion . . . . . . . . 2003Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$25.2 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$24.3 millionNLA as at 30 June 2007 . . . . . . . . . . 11,184 sq m (1)NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—843Projection Year 2008—1,742Projection Year 2009—1,770Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.5%Note:(1) Based on Strata Titles Ownership Certificates. (See “Business and Properties—Mall WTC MatahariUnits—Relevant Information relating to the Mall WTC Matahari Units—Title”.)Picture of the Mall WTC Matahari Units33
Metropolis Town Square UnitsJalan Hartono Raya, Modernland Cikokol, Tangerang, Banten, Greater JakartaBrief description . . . . . . . . . . . . . . . .The Metropolis Town Square Units comprise three strata unitson part of the ground floor, first floor and second floor ofMetropolis Town Square, a one-stop shopping mall locatedalong one of the main roads in Tangerang.The Metropolis Town Square Units are currently occupied byHypermart, Matahari Department Store and Timezone.Locality information . . . . . . . . . . . . . .Metropolis Town Square is located in Tangerang city, Bantenprovince, approximately 20 km west of Jakarta’s CBD. TheCBD’s strategic location near the main road connecting thetoll road to Tangerang city provides easy access to theJakarta—Merak toll gate and surrounding residential areas inTangerang.Tangerang is an industrial and manufacturing city in GreaterJakarta, home to seven industrial estates with a total area ofapproximately 1,700 ha.Due to its proximity to Jakarta, Tangerang is a popular residentiallocation for commuters who work in Jakarta. In recent years,residential estates and satellite cities (for example, <strong>Lippo</strong>Karawaci, Bumi Serpong Damai, Kota Modern, Alam Sutra,Summarecon Serpong and Bintaro Jaya) have beendeveloped in Tangerang.Metropolis Town Square is located along Jalan Hartono Rayawithin the Kota Modern residential estate, about 2.6 km south ofthe city centre of Tangerang.Tangerang’s strategic location between Jakarta and theSoekarno-Hatta International Airport makes it a popularchoice for offices and factories. The <strong>Indonesia</strong>n governmenthas continuously been improving the quality of infrastructurebetween the city and the nation’s capital to accommodate theever increasing road traffic.Title . . . . . . . . . . . . . . . . . . . . . . . . . .Metropolis Town Square Units are constructed on HGB titles andare currently exclusively controlled by Matahari pursuant toKiosks Sale and Purchase Binding Agreement:(i) No. 093/AGR/DM/MPP/IX/03, dated 10 September 2003;(ii)No. 054/AGR/DM/MPP/VI/03, dated 23 June 2003; andYear of building completion . . . . . . . . 2004(iii) No. 084/AGR/DM/MPP/VIII/03, dated 25 August 2003,all between Matahari and Coldwell Banker Dwimustika Mas.These Kiosks Sale and Purchase Binding Agreements areevidence of the parties’ intention to effect the sale andpurchase of Strata Units, but do not have the effect oftransferring ownership. The strata titles are in the process ofbeing issued by the local land office. Upon issuance, the stratatitles will be purchased by the relevant <strong>Retail</strong> Space <strong>Indonesia</strong>nSPC.(See “Business and Properties — Metropolis Town SquareUnits”.)34
Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$33.5 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$32.2 millionNLA as at 30 June 2007 . . . . . . . . . . 15,248 sq m (1)NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—1,156Projection Year 2008—2,382Projection Year 2009—2,420Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 3.3%Note:(1) Based on Kiosks Sale and Purchase Binding Agreements. (See “Business and Properties—Metropolis Town Square Units—Relevant Information relating to the Metropolis Town SquareUnits—Title”.)Picture of the Metropolis Town Square Units35
Depok Town Square UnitsJalan Margonda Raya No. 1, Pondok Cina Beji, Depok, Greater JakartaBrief description . . . . . . . . . . . . . . . .The Depok Town Square Units comprise four strata units on partof the lower ground floor, first floor and second floor of DepokTown Square, one of the newest and most comprehensive mallsin Depok.The Depok Town Square Units are currently occupied byHypermart, Matahari Department Store and Timezone.Locality information . . . . . . . . . . . . . .Depok is located in the West Java province, situated betweensouthern Jakarta and the northern side of Bogor regency. Thecity is located approximately 16 km south of Jakarta’s CBD.Depok is renowned as the city of students, being home to fourlarge universities (University of <strong>Indonesia</strong>, GunadarmaUniversity, Tugu Polytechnic and Jakarta Polytechnic).Depok’s population is estimated at 1.5 million in 2007 and hasshown strong population growth, averaging 3.3% per annumbetween 2000 and 2005.In line with city population growth, the commercial area of Depokhas been growing rapidly for the last few years, as evidenced bya number of modern shopping centre developments andcommercial buildings built along the main road of Depok,Jalan Margonda Raya.Depok Town Square is located on Jalan Margonda Raya,adjacent to the south eastern side of University of <strong>Indonesia</strong>,a prominent university in <strong>Indonesia</strong>. The centre has directaccess to Pondok Cina Railway Station at its rear entrance,and therefore connects the station to Jalan Margonda Raya.Title . . . . . . . . . . . . . . . . . . . . . . . . . .Depok Town Square Units are constructed on HGB titles and arecurrently exclusively controlled by Matahari pursuant to KiosksSale and Purchase Binding Agreement:(i) No. 031/AGR/DM/MPP/XII/02, dated 19 December 2002entered into between Matahari and Coldwell BankerDwimustika Mas; and(ii)No. 012/JPN-PPJB/II/04, dated 11 February 2004, enteredinto between Matahari and PT Jagat Pertala Nusantara.Year of building completion . . . . . . . . 2005Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$25.7 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$24.8 millionNLA as at 30 June 2007 . . . . . . . . . . 13,045 sq m (1)These Kiosks Sale and Purchase Binding Agreements areevidence of the parties’ intention to effect the sale andpurchase of strata units, but do not have the effect oftransferring ownership. The strata titles are in the process ofbeing issued by the local land office. Upon issuance, the stratatitles will be purchased by the relevant <strong>Retail</strong> Space <strong>Indonesia</strong>nSPC.(See “Business and Properties—Depok Town Square Units”.)36
NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—861Projection Year 2008—1,778Projection Year 2009—1,807Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.5%Note:(1) Based on Kiosks Sale and Purchase Binding Agreements. (See “Business and Properties—DepokTown Square Units—Relevant Information relating to the Depok Town Square Units—Title”.)Picture of the Depok Town Square Units37
Java Supermall UnitsJalan MT Haryono No. 992-994, Jomblang, Semarang, Central JavaBrief description . . . . . . . . . . . . . . . .Locality information . . . . . . . . . . . . . .Title . . . . . . . . . . . . . . . . . . . . . . . . . .Year of building completion . . . . . . . . 2000Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$26.0 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$25.0 millionNLA as at 30 June 2007 . . . . . . . . . . 11,082 sq m (1)NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . Forecast Period 2007—836Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.4%38The Java Supermall Units comprise four strata units on the semibasement,first floor and second floor of Java Supermall.Java Supermall is located within the vicinity of a middle to upperclass residential area, which is easily accessible from mostareas in Semarang.The Java Supermall Units are currently occupied by MatahariDepartment Store and Foodmart supermarket.Semarang is the capital city of the Central Java province and thefifth largest city in terms of population in <strong>Indonesia</strong>. With itslocation along the northern coast of Java, Semarang is animportant trading port for the region.Semarang had a population of 1.3 million in 2000 and isestimated to have grown annually at 2.6% per annum,registering a total increase of approximately 1.5 million peopleover the last seven years.Java Supermall was built on a plot of land covering an area of:(i) 3,839 sq m with Strata Titles Ownership Certificate No. 1/Desa Lamper Kidul dated 23 November 1998;(ii) 3,201 sq m with Strata Titles Ownership Certificate No. 2/Desa Lamper Kidul dated 23 November 1998;(iii) 3,772 sq m with Strata Titles Ownership Certificate No. 22/Desa Lamper Kidul dated 23 November 1998; and(iv) 270 sq m with Strata Titles Ownership Certificate No. 45/Desa Lamper Kidul dated 18 April 2000,all of which are registered under the name of Matahari and itsunderlying HGB common land will expire on 24 September 2017and is extendable for another term of up to 20 years. Followingexpiration of this additional term, a renewal application may bemade. (See “Overview of Relevant Laws and Regulations in<strong>Indonesia</strong>—Rights to Own and/or to Use—Hak Guna Bangunan(HGB/Right to Build)”).(See “Business and Properties—Java Supermall Units”.)Projection Year 2008—1,726Projection Year 2009—1,754
Note:(1) Based on Strata Titles Ownership Certificates. (See “Business and Properties—Java SupermallUnits—Relevant Information relating to the Java Supermarket Units—Title”.)Picture of the Java Supermall Units39
Malang Town Square UnitsJalan Veteran No. 2, Malang, East JavaBrief description . . . . . . . . . . . . . . . .Locality information . . . . . . . . . . . . . .Title . . . . . . . . . . . . . . . . . . . . . . . . . .Year of building completion . . . . . . . . 2005Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$25.5 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$25.8 millionNLA as at 30 June 2007 . . . . . . . . . . 11,065 sq m (1)NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—834Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.4%40The Malang Town Square Units comprise three strata units onpart of the ground floor, upper ground floor, first floor and secondfloor of Malang Town Square, a mall conceptualised as aninternational lifestyle mall as well as the biggest and mostcomprehensive mall in Malang.The Malang Town Square Units are currently occupied byHypermart, Matahari Department Store and Timezone.Malang is the second largest city in the East Java province with apopulation of approximately 0.8 million and a regency populationof approximately 2.4 million people.The region is a popular tourist destination due to its naturalattractions (for example, Mount Bromo, one of Java’s largestvolcanoes), cool climate and colonial history. Malang also has alarge student population, being home to five universities(Brawijaya, State, Muhammadiyah, Widya Gama andMerdeka Universities).Malang Town Square, in which Malang Town Square Units arelocated, is a mall conceptualised as an international lifestyle mallas well as the biggest and most comprehensive mall in Malang.The centre has easy access to public transportation and issurrounded by exclusive residential communities and severaluniversities which have more than 50,000 students.Malang Town Square Units are constructed on HGB land titlesand are currently exclusively controlled by Matahari pursuant toKiosks Sale and Purchase Binding Agreement No. 031/PN-PPJB/X/03, dated 7 October 2003 between Matahari andPT Pendopo Niaga.The Kiosks Sale and Purchase Binding Agreement is evidenceof the parties’ intention to effect the sale and purchase of strataunits, but do not have the effect of transferring ownership.The strata titles are in the process of being issued by the localland office. Upon issuance, the strata titles will be purchased bythe relevant <strong>Retail</strong> Space <strong>Indonesia</strong>n SPC.(See “Business and Properties—Malang Town Square Units”.)Projection Year 2008—1,723Projection Year 2009—1,751
Note:(1) Based on Kiosks Sale and Purchase Binding Agreements. (See “Business and Properties—MalangTown Square Units—Relevant Information relating to the Malang Town Square Units—Title”.)Picture of the Malang Town Square Units41
Plaza MadiunJalan Pahlawan, Madiun, East JavaBrief description . . . . . . . . . . . . . . . .Plaza Madiun comprises retail spaces on the basement, firstfloor, second floor and third floor. Plaza Madiun is currentlyoccupied by Matahari Department Store and Foodmartsupermarket.Plaza Madiun is located along Pahlawan Street, a major road ofthe city. The mall is the biggest in Madiun.Locality information . . . . . . . . . . . . . .The city of Madiun, with a total population of 0.2 million (basedon a 2005 census), is the capital city of Madiun regency in theEast Java province. The Madiun regency has a total land area of1,011 sq km and its population exceeds 0.6 million (based on a2001 census).Madiun has benefited from its position which connects majorcities in Central and East Java. It is the home of <strong>Indonesia</strong>’s firstand largest train manufacturer and is a major sugar producer inJava.The industrial sector and trade, hotel and restaurant businessesare key revenue generators for the city, having contributedaround 27.0% and 20.0%, respectively, to Madiun’s GRDP(based on economic statistics in 2004).Plaza Madiun is located along Jalan Pahlawan, a major road ofthe city which is also the primary thoroughfare in the city ofMadiun. The street is positioned in the centre of the commercialand administrative zone, at the crossroad of three existingsubdistricts of Madiun. Most of the prominent buildings inMadiun are included in this precinct, including the City Hall,Merdeka Hotel, Tentara Hospital and Pasaraya ShoppingCentre. Jalan Pahlawan is accessible from Jalan Sudirman,another major thoroughfare in the city.Plaza Madiun enjoys high pedestrian traffic from JalanPahlawan and is in close proximity to various forms of publictransportation options.Title . . . . . . . . . . . . . . . . . . . . . . . . . .Plaza Madiun was built on a plot of land covering an area of:(i)5,501 sq m with HGB Certificate No. 186/KelurahanPangongangan dated 3 June 1997, registered under thename of Matahari and will expire on 10 February 2012; andYear of building completion . . . . . . . . 2000Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$33.4 million(ii) 82 sq m with HGB Certificate No. 188/KelurahanPangongangan dated 12 February 1998, registeredunder the name of Matahari and will expire on10 February 2012.Both HGB titles are extendable for another 20 years. Followingthe expiration of this additional term, a renewal application maybe made. (See “Overview of Relevant Laws and Regulations in<strong>Indonesia</strong>—Rights to Own and/or to Use—Hak Guna Bangunan(HGB/Right to Build)”.)(See “Business and Properties—Plaza Madiun”.)42
Appraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$31.8 millionNLA as at 30 June 2007 . . . . . . . . . . 19,029 sq mNPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—1,081Projection Year 2008—2,228Projection Year 2009—2,264Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 3.1%Picture of Plaza Madiun43
Grand Palladium Medan UnitsJalan Kapt. Maulana Lubis, Medan, North SumatraBrief description . . . . . . . . . . . . . . . .The Grand Palladium Medan Units comprise four strata units inpart of the basement, lower ground floor, upper ground floor, firstfloor and third floor of Grand Palladium Medan.The Grand Palladium Medan Units are currently occupied byHypermart, Matahari Department Store and Timezone.Locality information . . . . . . . . . . . . . .Medan, the provincial capital of North Sumatra, is the largest cityin Sumatra and the third most populous city in <strong>Indonesia</strong> afterJakarta and Surabaya. It is a cosmopolitan city with a populationof over 2.0 million.Medan is a growing commercial centre in the region, mainly withagriculture and industry businesses. The city was transformedfrom a tobacco plantation village in the 19th century to a majorgovernment and commercial centre at present.Grand Palladium Medan is conveniently located within theMedan CBD and is only 2.5 km from the Polonia InternationalAirport. The mall is located in the centre of Medan, hencedrawing shoppers from all around the city. It is surrounded bygovernment and business offices and the town hall, andtherefore benefits from regular crowds of government andbusiness visitors.Title . . . . . . . . . . . . . . . . . . . . . . . . . .The Grand Palladium Medan Units are constructed on HGBtitles and are currently exclusively controlled by Mataharipursuant to Kiosks Sale and Purchase Binding AgreementNo. 011/UPI-PPJB/IX/04, dated 14 September 2004 betweenMatahari and PT Unitech Prima Indah.Year of building completion . . . . . . . . 2005Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$26.2 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$25.2 millionNLA as at 30 June 2007 . . . . . . . . . . 13,417 sq m (1)NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—886This Kiosks Sale and Purchase Binding Agreement is evidenceof the parties’ intention to effect the sale and purchase of strataunits, but does not have the effect of transferring ownership.The strata titles are in the process of being issued by the localland office. Upon issuance, the strata titles will be purchased bythe relevant <strong>Retail</strong> Space <strong>Indonesia</strong>n SPC. (See “Business andProperties—Grand Palladium Medan Units”.)Projection Year 2008—1,829Projection Year 2009—1,85944
Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.6%Note:(1) Based on Kiosks Sale and Purchase Binding Agreements. (See “Business and Properties—GrandPalladium Medan Units—Relevant Information relating to the Grand Palladium Medan Units—Title”.)Picture of the Grand Palladium Medan Units45
STRUCTURE OF LMIR TRUSTThe following diagram illustrates the relationships among LMIR <strong>Trust</strong>, the Manager, the <strong>Trust</strong>ee, theMaster Lessee, the Singapore SPCs, the <strong>Indonesia</strong>n SPCs, the Operating Companies, the PropertyManager and the Unitholders as at the Listing Date.UnitholdersSingaporeHolding of UnitsDistributions<strong>Lippo</strong>-Mapletree<strong>Indonesia</strong> <strong>Retail</strong><strong>Trust</strong> ManagementLtd.(the “Manager”)ManagementfeesManagementservicesLMIR <strong>Trust</strong>Acts on behalfof Unitholders<strong>Trust</strong>ee’s feesHSBC Institutional<strong>Trust</strong> Services(Singapore)Limited(the “<strong>Trust</strong>ee”)Ownership of ordinary andredeemable preference shares (2)14 <strong>Retail</strong> Mall SingaporeSPCs (1)Dividendsand/orredemptionproceeds (2)Dividendsand /orredemptionproceeds (2)Ownership of ordinary andredeemable preference shares (2)7 <strong>Retail</strong> Space SingaporeSPCs (3)<strong>Indonesia</strong>Ownership andshareholders’ loansDividends, interest incomeand principal repayment ofshareholders’ loansDividends, interest incomeand principal repayment ofshareholders’ loansOwnership andshareholders’ loansExistingPropertyManagementAgreements7 <strong>Indonesia</strong>n SPCs (4)<strong>Retail</strong> <strong>Retail</strong>100.0%<strong>Malls</strong> SpacesManager”) (8) ownership100.0%ownershipRental Tenancypayments agreementsTenanciesTenantsMasterOperating ServiceleasesCostscharge (7)AgreementOperatingCompanies (6)(the “OperatingCompanies”)PropertymanagementfeesPropertymanagementPT. Consulting &servicesManagement ServicesDivision (the “PropertyMaster LeaseAgreements7 <strong>Indonesia</strong>n SPCs (5)RentalpaymentsPT. Matahari PutraPrima Tbk(the “Master Lessee”)46
Notes:(1) These 14 Singapore SPCs (collectively, the “<strong>Retail</strong> Mall Singapore SPCs”) comprise the Tier 1<strong>Retail</strong> Mall Singapore SPCs and the Tier 2 <strong>Retail</strong> Mall Singapore SPCs. Seven of these 14 <strong>Retail</strong> MallSingapore SPCs (the “Tier 1 <strong>Retail</strong> Mall Singapore SPCs”) will be acquired by LMIR <strong>Trust</strong> on theListing Date. Each of these Tier 1 <strong>Retail</strong> Mall Singapore SPCs in turn, wholly-own another SingaporeSPC (collectively, the “Tier 2 <strong>Retail</strong> Mall Singapore SPCs”). (See “Certain Agreements Relating toLMIR <strong>Trust</strong> and the Properties—Summary of Ownership Structure of the <strong>Retail</strong> <strong>Malls</strong>”.)(2) LMIR <strong>Trust</strong> will own ordinary and redeemable preference shares in, and receive dividends and/orredemption proceeds from, the Tier 1 <strong>Retail</strong> Mall Singapore SPCs and not from the Tier 2 <strong>Retail</strong> MallSingapore SPCs. LMIR <strong>Trust</strong> will also own ordinary and redeemable preference shares in, andreceive dividends and/or redemption proceeds from, the <strong>Retail</strong> Space Singapore SPCs.(3) These seven Singapore SPCs (collectively, the “<strong>Retail</strong> Space Singapore SPCs”) will be acquired byLMIR <strong>Trust</strong> on the Listing Date.(4) As at the Listing Date, the entire share capital in each of the seven <strong>Indonesia</strong>n SPCs (the “<strong>Retail</strong> Mall<strong>Indonesia</strong>n SPCs”) will be owned by two of the 14 <strong>Retail</strong> Mall Singapore SPCs. Each of the <strong>Retail</strong>Mall <strong>Indonesia</strong>n SPCs owns one of the seven <strong>Retail</strong> <strong>Malls</strong> and receives rental payments from thetenants of the respective <strong>Retail</strong> Mall. (See “Certain Agreements Relating to LMIR <strong>Trust</strong> and theProperties—Summary of Ownership Structure of the <strong>Retail</strong> <strong>Malls</strong>”.)(5) The entire share capital in each of these seven <strong>Indonesia</strong>n SPCs (the “<strong>Retail</strong> Space <strong>Indonesia</strong>nSPCs”) is owned by two of the seven <strong>Retail</strong> Space Singapore SPCs. Each of these <strong>Retail</strong> Space<strong>Indonesia</strong>n SPCs will acquire one of the seven <strong>Retail</strong> Spaces from Matahari on the Listing Date andwill, pursuant to the terms of the Master Lease Agreements, lease it to Matahari, as the MasterLessee, in consideration for rental payments from the Master Lessee.(6) The Operating Companies comprise PT Multi Nusantara Karya, PT Selaras Maju, PT Sarana KaryaMegah, PT Antara Nusa Permai, PT Primatama Kreasi Bersama and PT Kharisma Abadi Selaras.(7) A service charge for the expenses incurred during each lease agreement shall be payable by eachtenant to the relevant Operating Company for three years commencing from 1 January 2007.(8) A fee for property management services in respect of the <strong>Retail</strong> <strong>Malls</strong> shall be payable to the PropertyManager for an initial term of four years from the date of the relevant Existing Property ManagementAgreement. (See “—Certain Fees and Charges”.)The Manager: <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd.The Manager was incorporated in Singapore under the Companies Act, Chapter 50 of Singapore (the“Companies Act”) on 3 May 2007. As at the Listing Date, it has a paid-up capital of S$1.0 million and itsregistered office is located at 78 Shenton Way, #05-01 <strong>Lippo</strong> Centre, Singapore 079120. The Manager is40.0% owned by Mapletree Capital and 60.0% owned by Peninsula Investment Ltd. Peninsula InvestmentLtd is in turn 100.0% owned by Jesselton Investment Ltd, a wholly-owned subsidiary of the Sponsor.Mapletree Capital, a wholly-owned subsidiary of MIPL, is a private limited company incorporated inSingapore under the Companies Act on 6 October 2004. As at 30 June 2007, it has a paid-up capital ofS$2.00 and its registered office is located at 1 Maritime Square, #13-01 HarbourFront Centre, Singapore099253. MIPL is a leading Asia-focused real estate company based in Singapore. The Mapletree Grouphas an asset base of approximately S$4.5 billion (as at 30 June 2007) comprising office, logistics,industrial, residential and retail/lifestyle properties. (See “Strategy—Acquisition Growth Strategy—LMIR<strong>Trust</strong>’s relationship with the Mapletree Group”.)The board of directors of the Manager (the “Board”) is made up of individuals with a broad range ofcommercial experience and expertise in areas including, but not limited to, law, accounting, banking,finance, real estate and fund management. The Board consists of Mr Tan Bar Tien, Mr Lim Ho Seng,Mr Lok Vi Ming, Ms Viven G. Sitiabudi, Mr Yeo Cheow Tong, Mr Tan Boon Leong and Mr Wong Mun Hoong.Generally, the Manager will provide the following services to LMIR <strong>Trust</strong>:• Investment strategy. Formulate and execute LMIR <strong>Trust</strong>’s investment strategy, including determiningthe location, sub-sector type and other characteristics of LMIR <strong>Trust</strong>’s property portfolio.• Acquisitions and divestments.divestment of properties.Make recommendations to the <strong>Trust</strong>ee on the acquisition and47
• Strategic asset planning and reporting. Formulate strategic asset/property plans, including assetenhancement initiatives, marketing plans, budgets and reports, relating to the performance of LMIR<strong>Trust</strong>’s properties.• Financing. Formulate plans for equity and debt financing for LMIR <strong>Trust</strong>’s property acquisitions,distribution payments, expense payments and property maintenance payments.• Administrative and advisory services. Perform day-to-day operational services as LMIR <strong>Trust</strong>’srepresentative, including providing administrative services relating to meetings of Unitholders whensuch meetings are convened.• <strong>Investor</strong> relations.Communicate and liaise with Unitholders, media and investment community.• Compliance management. Make all regulatory filings on behalf of LMIR <strong>Trust</strong> and ensure that LMIR<strong>Trust</strong> is in compliance with the applicable provisions of the Securities and Futures Act and all otherrelevant legislation, the Listing Manual, the Code on Collective Investment Schemes (including theProperty Funds Guidelines) of Singapore (the “CIS Code”), the <strong>Trust</strong> Deed, any tax ruling and allrelevant contracts.• Accounting records.reports.Maintain books and prepare or cause to be prepared accounts and annual(See “The Manager and Corporate Governance—The Manager of LMIR <strong>Trust</strong>”.)The Manager’s key objectives are to deliver regular and stable distributions to Unitholders and to achievelong-term growth in the NAV per Unit in order to maximise Unitholders’ return.The Manager plans to achieve its key objectives through the following:Acquisition growth strategyLMIR <strong>Trust</strong>’s acquisition growth strategy envisages investments in retail and/or retail-related assets thatare in the interests of Unitholders. The assets in LMIR <strong>Trust</strong>’s initial portfolio are all located in <strong>Indonesia</strong>.LMIR <strong>Trust</strong> has the principal investment objective of owning and investing on a long-term basis in adiversified portfolio of income-producing real estate in <strong>Indonesia</strong> that are primarily used for retail and/orretail-related purposes, and real estate related assets in connection with the foregoing.LMIR <strong>Trust</strong> will benefit from the Sponsor’s ability to identify and enhance under-valued retail propertiesand leverage its extensive retail network in <strong>Indonesia</strong>. LMIR <strong>Trust</strong> will also benefit from the track record ofthe Mapletree Group, with its experience in managing yield-accretive assets in various markets such asMapletree Logistics <strong>Trust</strong> (“MapletreeLog”) and other private real estate funds in Asia. The MapletreeGroup’s total assets under management as at 31 March 2007 is S$1.7 billion.Active asset enhancement and management strategyImplementing pro-active measures to enhance returns from existing and future properties in LMIR <strong>Trust</strong>’sportfolio. Such measures may include addition and alteration works, including re-zoning, tenancy remixingand work carried out for the purpose of expanding size and capacity (in relation to properties to beacquired by LMIR <strong>Trust</strong>), leveraging and enhancing the properties’ competitive strengths to optimiserentals and enhancement projects to maintain the competitive positioning of such properties. TheManager will work with the relevant <strong>Indonesia</strong>n authorities to obtain the necessary approvals toundertake such active asset enhancement works.(See “—Key Investment Highlights—Potential for growth through active asset management and tenant remixing”.)Capital and Risk Management StrategyWhile LMIR <strong>Trust</strong> will not be drawing down on the Debt Facilities as at the Listing Date, to the extent thatLMIR <strong>Trust</strong> incurs borrowings in the future, the Manager will employ an appropriate mix of debt and equityin the financing of future acquisitions. The Manager has a policy to undertake foreign exchange hedging ofthe expected distributions of LMIR <strong>Trust</strong> to insulate against movements in exchange rates (whetherfavourable or unfavourable). The <strong>Trust</strong>ee, as trustee of LMIR <strong>Trust</strong>, has entered into a currency hedgingarrangement, effective as of the Listing Date, to optimise risk-adjusted returns to the Unitholders as atListing Date.48
(See “Strategy—Capital and Risk Management Strategy”.)The Master Lessee: PT. Matahari Putra Prima TbkThe Master Lessee, Matahari, is a publicly listed company on the JSX and the Surabaya Stock Exchange(the “SSX”). It is <strong>Indonesia</strong>’s largest retailer by sales revenue with over Rp. 8,487.7 billion (approximatelyS$1,436.0 million) in annual sales for the financial year ended 31 December 2006. This is a 22.7%increase compared to the Matahari’s annual sales of Rp. 6,916.1 billion (approximately S$1,170.6 million)for the financial year ended 31 December 2005. Matahari is listed on the JSX and the SSX with a marketcapitalisation of Rp. 3,628.2 billion (approximately S$582.9 million) on the JSX as at 18 October 2007. Asat 30 June 2007, Matahari operated 83 department stores, 9 Kids2kids specialty stores, 30 hypermarkets,36 supermarkets and 96 Timezone amusement centres, in addition to 36 Boston drugstores located withinHypermart and/or Matahari supermarkets, all of which are located throughout <strong>Indonesia</strong>. Matahari wascontrolled by the Darmawan family until 1997, when the <strong>Lippo</strong> Group acquired a controlling interestthrough PT Multipolar Corporation Tbk.The Sponsor: PT. <strong>Lippo</strong> Karawaci TbkPT. <strong>Lippo</strong> Karawaci Tbk is an internationally recognised corporation and is also the largest listed propertydeveloper in <strong>Indonesia</strong>, based on its market capitalisation on the JSX, of Rp. 10,609.2 billion(approximately S$1.8 billion) and on the closing price per ordinary share on the JSX of Rp. 1,790.0 asat 18 October 2007. The Sponsor’s property portfolio comprises townships and residential developmentsand commercial and retail development properties.(See “The Sponsor”.)The <strong>Trust</strong>ee: HSBC Institutional <strong>Trust</strong> Services (Singapore) LimitedHSBC Institutional <strong>Trust</strong> Services (Singapore) Limited is a company incorporated in Singapore andregistered as a trust company under the <strong>Trust</strong> Companies Act 2005, Chapter 336 of Singapore, with itsplace of business located at 21 Collyer Quay, #14-01 HSBC Building, Singapore 049320.The <strong>Trust</strong>ee’s powers and duties include:• acting as trustee of LMIR <strong>Trust</strong>;• holding the properties of LMIR <strong>Trust</strong> for the benefit of the Unitholders; and• exercising all the powers of a trustee and the powers accompanying ownership of the properties ofLMIR <strong>Trust</strong>.(See “The Formation and Structure of LMIR <strong>Trust</strong>—The <strong>Trust</strong> Deed—The <strong>Trust</strong>ee”.)Singapore SPCs: the Tier 1 <strong>Retail</strong> Mall Singapore SPCs, Tier 2 <strong>Retail</strong> Mall Singapore SPCs and the<strong>Retail</strong> Space Singapore SPCsOn the Listing Date, LMIR <strong>Trust</strong> will, pursuant to the terms of the Singapore SPC Share PurchaseAgreements, complete the acquisition of all of the ordinary shares and redeemable preference shares ineach of the Tier 1 <strong>Retail</strong> Mall Singapore SPCs and the <strong>Retail</strong> Space Singapore SPCs (collectively, the“Target Singapore SPCs”) from the Vendors. Each of the seven <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs is owned bya Tier 1 <strong>Retail</strong> Mall Singapore SPC and a Tier 2 <strong>Retail</strong> Mall Singapore SPC (wholly-owned by the relevantTier 1 <strong>Retail</strong> Mall Singapore SPC), while each of the seven <strong>Retail</strong> Space <strong>Indonesia</strong>n SPCs is owned by twoof the <strong>Retail</strong> Space Singapore SPCs.The <strong>Retail</strong> Mall Singapore SPCs comprise two tiers whereas the <strong>Retail</strong> Space Singapore SPCs compriseone tier. The difference in the holding structures of the <strong>Retail</strong> Mall Singapore SPCs and the <strong>Retail</strong> SpaceSingapore SPCs is due to the fact that the majority of the <strong>Retail</strong> <strong>Malls</strong> were owned by different parties whileall of the <strong>Retail</strong> Spaces were owned by the same party. The use of the two-layer structure for the <strong>Retail</strong><strong>Malls</strong> is used to simplify the acquisition by LMIR <strong>Trust</strong> on the Listing Date.49
The table below shows the corresponding Vendor for each of the Target Singapore SPCs whose ordinaryshares and redeemable preference shares will be acquired by LMIR <strong>Trust</strong> upon completion of theSingapore SPC Share Purchase Agreements:VendorTier 1 <strong>Retail</strong> Mall Singapore SPCsDellmore Investment Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Belilios International Pte. Ltd.Dominion Capital Pte. Ltd.Market Holdings Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Greenlot Investments Pte. Ltd.Victoria Investment Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tangent Investments Pte. Ltd.Millennium Capital Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Magnus Investments Pte. Ltd.Golden Acres Investment Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Thornton Investments Pte. Ltd.Superior Asset Investment Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pierbridge Investments Pte. Ltd.(See “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Summary of Ownership Structureof the <strong>Retail</strong> <strong>Malls</strong>”.)VendorTristar Capital Ltd. (“Tristar”) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .<strong>Retail</strong> Space Singapore SPCsSerpong Properties Pte. Ltd.Metropolis Properties Pte. Ltd.Matos Properties Pte. Ltd.Detos Properties Pte. Ltd.Palladium Properties Pte. Ltd.Java Properties Pte. Ltd.Madiun Properties Pte. Ltd.(See “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Summary of Ownership Structureof the <strong>Retail</strong> Spaces”.)All the Vendors, with the exception of Tristar, are not related to the Sponsor or the Manager.(See “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the Singapore SPCShare Purchase Agreements”.)<strong>Indonesia</strong>n SPCs: the <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs and the <strong>Retail</strong> Space <strong>Indonesia</strong>n SPCs<strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs: PT Graha Baru Raya, PT Graha Nusa Raya, PT Cibubur Utama,PT Megah Semesta Abadi, PT Suryana Istana Pasundan, PT Indah Pesona Bogor, PT PrimatamaNusa IndahUnder the terms of each <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC Share Purchase Agreement, each of the seven <strong>Retail</strong>Mall <strong>Indonesia</strong>n SPCs will, on the Listing Date, be acquired by two of the 14 <strong>Retail</strong> Mall Singapore SPCs.The <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs lease the <strong>Retail</strong> <strong>Malls</strong> to tenants in consideration for rental paymentsfrom the tenants under lease agreements. As at Listing Date, the <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs will alreadyhold the <strong>Retail</strong> <strong>Malls</strong>. As a result, upon completion of its purchase of the 14 <strong>Retail</strong> Mall Singapore SPCs, onthe Listing Date, LMIR <strong>Trust</strong> will also indirectly own the seven <strong>Retail</strong> <strong>Malls</strong>.<strong>Retail</strong> Space <strong>Indonesia</strong>n SPCs: PT Dinamika Serpong, PT Gema Metropolis Modern, PT MatosSurya Perkasa, PT Megah Detos Utama, PT Palladium Megah Lestari, PT Madiun Ritelindo,PT Java Mega JayaUnder the terms of each <strong>Retail</strong> Space <strong>Indonesia</strong>n SPC Share Purchase Agreement, each of the seven<strong>Retail</strong> Space <strong>Indonesia</strong>n SPCs will, on the Listing Date, be acquired by two of the seven <strong>Retail</strong> SpaceSingapore SPCs. Under the terms of each Property Purchase Agreement, each of the seven <strong>Retail</strong> Space<strong>Indonesia</strong>n SPCs, which is owned by two of the seven <strong>Retail</strong> Space Singapore SPCs will, on the ListingDate, complete the acquisition of one of the seven <strong>Retail</strong> Spaces from Matahari. As a result, uponcompletion of its purchase of the seven <strong>Retail</strong> Space Singapore SPCs on the Listing Date, LMIR <strong>Trust</strong> willalso indirectly own the seven <strong>Retail</strong> Spaces.The <strong>Retail</strong> Space <strong>Indonesia</strong>n SPCs will lease the <strong>Retail</strong> Spaces to the Master Lessee in consideration forrental payments from the Master Lessee under each of the Master Lease Agreements.50
Operating Companies: PT Multi Nusantara Karya, PT Selaras Maju, PT Sarana Karya Megah,PT Antara Nusa Permai, PT Primatama Kreasi Bersama and PT Kharisma Abadi SelarasPursuant to each of the operating costs agreements entered into between the relevant <strong>Retail</strong> Mall<strong>Indonesia</strong>n SPC and Operating Company (collectively, the “Operating Costs Agreements”), eachOperating Company has the right to collect, through the Property Manager, a service charge from thetenants of the relevant <strong>Retail</strong> Mall. The Operating Companies will utilise this service charge to cover thecosts directly related to the maintenance and operation of the <strong>Retail</strong> <strong>Malls</strong>. The Operating CostsAgreements will be valid for a period of three years commencing 1 January 2007.Each of the Operating Companies is an affiliate of the respective Vendor of the relevant <strong>Retail</strong> Mall.The table below shows the corresponding Operating Company for each <strong>Retail</strong> Mall:<strong>Retail</strong> MallOperating CompanyGajah Mada Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Cibubur Junction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .The Plaza Semanggi. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Mal <strong>Lippo</strong> Cikarang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Ekalokasari Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Bandung Indah Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Istana Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .PT Multi Nusantara KaryaPT Selaras MajuPT Primatama Kreasi BersamaPT Multi Nusantara KaryaPT Sarana Karya MegahPT Antara Nusa PermaiPT Kharisma Abadi SelarasProperty Manager: PT. Consulting & Management Services DivisionThe Property Manager, a wholly-owned subsidiary of the Sponsor, was incorporated in <strong>Indonesia</strong> on23 March 2006. Its registered office is located at <strong>Lippo</strong> Cyber Park, 2121 <strong>Lippo</strong> Karawaci Utara,Tangerang. Since 2006, the Property Manager has been engaged in the business of managingproperties in <strong>Indonesia</strong>.The Property Manager has entered into a property management agreement with each of the <strong>Retail</strong> Mall<strong>Indonesia</strong>n SPCs holding the relevant <strong>Retail</strong> Mall (collectively the “Existing Property ManagementAgreements”) under which the Property Manager will provide, among other things:• retail management services for the relevant <strong>Retail</strong> Mall including advising and developing a strategicmanagement policy for tenants and service providers, reviewing and implementing human resourcespolicies, accounting and finance procedures, maintenance, safety, security, cleaning and parking for therelevant <strong>Retail</strong> Mall, reviewing and providing input on vehicular and pedestrian flows and customerconveniences, public relations and customer services, insurance and tenancy mix policies;• advertising and promotion services;• lease documentation and monitoring systems and a management reporting system; and• building documentation system.(See “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of Existing PropertyManagement Agreements”.)51
Certain fees and chargesThe following is a summary of the amounts of certain fees and charges payable by the Unitholders inconnection with the subscription for the Units (so long as the Units are listed):Payable by the Unitholders directlyAmount payable(a) Subscription fee or preliminary charge . . . N.A. (1)(b) Realisationfee..................... N.A. (1)(c) Switchingfee...................... N.A. (1)(d) Any other fee . . . . . . . . . . . . . . . . . . . . . . Clearing fee for trading of Units on the SGX-ST at therate of 0.04% of the transaction value, subject to amaximum of S$600.00 per transaction.Note:(1) As the Units will be listed and traded on the SGX-ST and Unitholders will have no right to request theManager to redeem their Units while the Units are listed, no subscription fee, preliminary charge,realisation fee or switching fee is payable in respect of the Units.The following is a summary of certain fees and charges payable by LMIR <strong>Trust</strong> in connection with theestablishment and ongoing management and operation of LMIR <strong>Trust</strong>:Payable by LMIR <strong>Trust</strong>Amount payable(a) Management fees . . . . . . . . . . . .(b) <strong>Trust</strong>ee’s fee . . . . . . . . . . . . . . . .Base Fee0.25% per annum of the value of the Deposited Property.Performance Fee4.0% per annum of LMIR <strong>Trust</strong>’s NPI in the relevant financialyear (calculated before accounting for this additional fee in thatfinancial year).Authorised Investment Management Fee0.5% per annum of the value of Authorised Investments whichare not real estate (whether held directly by LMIR <strong>Trust</strong> orindirectly through one or more Special Purpose Vehicles(“SPVs”)). Where such Authorised Investment is an interest ina property fund (either a REIT or private property fund) whollymanaged by a wholly-owned subsidiary of the Sponsor, noAuthorised Investment Management Fee shall be payable inrelation to such Authorised Investment.Management Fee to be paid in cash or UnitsThe Manager may elect to receive the management fees in cashor Units or a combination of cash and Units (as it may in its solediscretion determine). For Forecast Period 2007, Projection Year2008 and Projection Year 2009, the Manager has opted toreceive 100% of the Performance Fee in the form of Units.(See “The Manager and Corporate Governance—ManagementFees”.)A maximum of 0.03% per annum of the value of the DepositedProperty, subject to a minimum of S$15,000 per month,excluding out-of-pocket expenses and GST.LMIR <strong>Trust</strong> will also pay the <strong>Trust</strong>ee a one-time inception fee ofS$25,000.The <strong>Trust</strong>ee’s fee will be subject to review three years from theListing Date.52
Payable by LMIR <strong>Trust</strong>(c) Any other substantial fee orcharge (i.e. 0.1% or more of LMIR<strong>Trust</strong>’s asset value)(i) Acquisition fee (payable to theManager) . . . . . . . . . . . . . . . . .(ii)Divestment fee(payable to the Manager) . . . . .(iii) Property Manager’s fee(payable to the PropertyManager) . . . . . . . . . . . . . . . . . .Amount payableFor any Authorised Investment acquired directly or indirectlyfrom time to time by the <strong>Trust</strong>ee on behalf of LMIR <strong>Trust</strong>, theacquisition fee payable to the Manager shall be 1.0% of thepurchase price of such Authorised Investment acquired by LMIR<strong>Trust</strong>.No acquisition fee is payable for the acquisition of the initialproperty portfolio of LMIR <strong>Trust</strong>.The acquisition fee is payable to the Manager in the form of cashand/or Units (as the Manager may elect in its sole discretion) atthe then prevailing market price provided that in respect of anyacquisition of real estate assets from interested parties, such afee should, if required by the applicable laws, rules and/orregulations, be in the form of Units issued by LMIR <strong>Trust</strong> atprevailing market price(s) and subject to such transferrestrictions as may be imposed. At present, the PropertyFunds Guidelines prescribe that such Units should not besold within one year from the date of their issuance.Any payment to third party agents or brokers in connection withthe acquisition of any Authorised Investment for LMIR <strong>Trust</strong> shallbe paid by the Manager to such persons out of the DepositedProperty of LMIR <strong>Trust</strong> or the assets of the relevant SPV, and notout of the acquisition fee or the divestment fee received or to bereceived by the Manager.0.5% of the sale price (after deducting the interest of any coownersor co-participants) of any Authorised Investment directlyor indirectly sold or divested from time to time by the <strong>Trust</strong>ee onbehalf of LMIR <strong>Trust</strong>.The divestment fee is payable to the Manager in the form of cashand/or Units (as the Manager may elect in its sole discretion) atthe then prevailing market price provided that in respect of anysale or divestment of real estate assets to interested parties,such a fee should, if required by the applicable laws, rules and/orregulations, be in the form of Units issued by LMIR <strong>Trust</strong> atprevailing market price(s) and subject to such transferrestrictions as may be imposed. At present, the PropertyFunds Guidelines prescribe that such Units should not besold within one year from the date of their issuance.Any payment to third party agents or brokers in connection withthe sale or divestment of any Authorised Investment for LMIR<strong>Trust</strong> shall be paid by the Manager to such persons out of theDeposited Property of LMIR <strong>Trust</strong> or the assets of the relevantSPV, and not out of the acquisition fee or the divestment feereceived or to be received by the Manager.Under the Existing Property Management Agreements inrespect of each <strong>Retail</strong> Mall, the Property Manager will provideretail management services, advertising and promotion53
Payable by LMIR <strong>Trust</strong>Amount payableservices, lease documentation and monitoring systems, and abuilding documentation system in relation to that <strong>Retail</strong> Mall. TheProperty Manager is entitled to the following fees:• 2.0% per annum of the gross revenue for the relevant <strong>Retail</strong>Mall;• 2.0% per annum of the net property income for the relevant<strong>Retail</strong> Mall (after accounting for the fee of 2.0% per annum ofthe gross revenue for the relevant <strong>Retail</strong> Mall); and• 0.5% per annum of the net property income for the relevant<strong>Retail</strong> Mall in lieu of leasing commissions otherwise payable tothe Property Manager and/or third party agents.It is currently intended that the same fees will be paid to theProperty Manager under the Master Property ManagementAgreement for any other properties to be acquired by LMIR<strong>Trust</strong> after the Listing Date and managed by the PropertyManager.In relation to Authorised Investments in the form of real estate owned or held, or to be owned or held, eitherdirectly or indirectly, by a SPV, the fees payable to the Manager shall be calculated on the same basis as ifsuch real estate, or the pro-rated share of such real estate in the case where the interest of LMIR <strong>Trust</strong> inthe SPV is partial, had been held directly by the <strong>Trust</strong>ee.54
The offeringLMIR <strong>Trust</strong> . . . . . . . . . . . . . . . . . . . .The Manager . . . . . . . . . . . . . . . . . . .The <strong>Trust</strong>ee . . . . . . . . . . . . . . . . . . . .The Sponsor . . . . . . . . . . . . . . . . . . .The Master Lessee . . . . . . . . . . . . . .The Vendors . . . . . . . . . . . . . . . . . . .Cornerstone <strong>Investor</strong>s . . . . . . . . . . . .The Unit Lender. . . . . . . . . . . . . . . . .The Offering . . . . . . . . . . . . . . . . . . .The Placement . . . . . . . . . . . . . . . . .The Public Offer . . . . . . . . . . . . . . . .Clawback and Re-allocation . . . . . . .Cornerstone Units . . . . . . . . . . . . . . .<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>, a REIT established inthe Republic of Singapore and constituted by the <strong>Trust</strong> Deed.<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd.HSBC Institutional <strong>Trust</strong> Services (Singapore) Limited.PT. <strong>Lippo</strong> Karawaci Tbk.PT. Matahari Putra Prima Tbk.The Master Lessee is a publicly listed company on the JSX andthe SSX, and was controlled by the Darmawan family until 1997,when the <strong>Lippo</strong> Group acquired, and still retains, a controllinginterest through PT Multipolar Corporation Tbk.Golden Acres Investment Ltd., Market Holdings Ltd., MillenniumCapital Ltd., Superior Asset Investment Ltd., Victoria InvestmentLtd., Dellmore Investment Ltd and Tristar, companiesincorporated in the Federal Territory of Labuan, Malaysia.Tristar is a wholly-owned subsidiary of Matahari. TheVendors, with the exception of Tristar, are not owned, whetherwholly or partially, directly or indirectly, by the Sponsor.<strong>Lippo</strong> Strategic and Mapletree LM. <strong>Lippo</strong> Strategic has alsogranted the Stabilising Manager the Over-allotment Option.<strong>Lippo</strong> Strategic.645,469,000 Units offered under the Placement and the PublicOffer, subject to the Over-allotment Option.625,469,000 Units offered by way of an international placementto investors, including institutional and other investors inSingapore.The Units have not been and will not be registered under theSecurities Act and, subject to certain exceptions, may not beoffered or sold within the United States. The Units are beingoffered and sold only outside the United States (including toinstitutional and other investors in Singapore) in reliance onRegulation S.20,000,000 Units offered to the public in Singapore.The Units may be re-allocated between the Placement and thePublic Offer at the discretion of the Underwriters (subject to theminimum unitholding and distribution requirements of the SGX-ST), such as in the event of an excess of applications in one anda deficit of applications in the other.Separate from the Offering, <strong>Lippo</strong> Strategic and Mapletree LMhave subscribed for an aggregate of 287,695,000 Units and127,250,000 Units respectively at the Offering Price underCornerstone Subscription Agreements, subject to certainconditions, including that the Underwriting Agreement hasbeen entered into and shall not have been terminatedpursuant to its terms on or prior to the Listing Date. TheCornerstone Units will in aggregate constitute approximately39.1% of the total issued Units as at the Listing Date(assuming no exercise of the Over-allotment Option). TheOffering is conditional upon the completion of subscription ofthe Cornerstone Units by each of the Cornerstone <strong>Investor</strong>s.55
Subscription for the Public Offer . . . .<strong>Investor</strong>s applying for Units by way of Application Forms orElectronic Applications (both as referred to in “Appendix G—Terms, Conditions and Procedures for Application for andAcceptance of the Units in Singapore”) in the Public Offer willpay the Offering Price on application, subject to a refund of thefull amount or, as the case may be, the balance of the applicationmonies (in each case, without interest or any share of revenue orother benefit arising therefrom) where (i) an application isrejected or accepted in part only, or (ii) the Offering does notproceed for any reason. For the purpose of illustration, aninvestor who applies for 1,000 Units by way of an ApplicationForm or an Electronic Application under the Public Offer willhave to pay S$800.00, which is subject to a refund of the fullamount or the balance thereof (without interest or any share ofrevenue or other benefit arising therefrom), as the case may be,upon the occurrence of any of the foregoing events.The minimum initial subscription is for 1,000 Units. An applicantmay subscribe for a larger number of Units in integral multiples of1,000.<strong>Investor</strong>s in Singapore must follow the application proceduresset out in “Appendix G—Terms, Conditions and Procedures forApplication for and Acceptance of the Units in Singapore”.Subscriptions under the Public Offer must be paid for inSingapore dollars. No fee is payable by applicants for theUnits, save for an administration fee of S$1.00 for eachapplication made through ATMs of the Participating Banks.OfferingPrice ..................Over-allotment Option . . . . . . . . . . . .Stabilisation. . . . . . . . . . . . . . . . . . . .S$0.80perUnit.In connection with the Offering, the Stabilising Manager (onbehalf of the Underwriters) has been granted the Over-allotmentOption by the Unit Lender. The Over-allotment Option isexercisable by the Stabilising Manager, in consultation withthe other Underwriters, in full or in part, on one or moreoccasions, no later than the earliest of (i) the date falling30 days from the commencement of trading of the Units onthe SGX-ST, (ii) the date when the Stabilising Manager hasbought on the SGX-ST, an aggregate of 96,820,000 Units,representing not more than 15.0% of the total Units offered,to undertake stabilising actions or (iii) the date falling 30 daysafter the date of adequate public disclosure of the final price ofthe Units, to purchase from the Unit Lender up to an aggregate of96,820,000 Units at the Offering Price, solely to cover the overallotmentof Units (if any) subject to any applicable laws andregulations. The total number of outstanding Units immediatelyafter the completion of the Offering, including the CornerstoneUnits, will be 1,060,414,000 Units. The exercise of the OverallotmentOption will not increase this total number of Unitsoutstanding. The total number of Units subject to the OverallotmentOption will not exceed more than 9.1% of the totalnumber of Units under the Offering.In connection with the Offering, the Stabilising Manager (orpersons acting on behalf of the Stabilising Manager) may, inconsultation with the other Underwriters, over-allot or effecttransactions which stabilise or maintain the market price ofthe Units at levels which might not otherwise prevail in theopen market. Such transactions may be effected on the SGX-ST and in other jurisdictions where it is permissible to do so; in56
Lock-ups . . . . . . . . . . . . . . . . . . . . . .each case, in compliance with all applicable laws andregulations, including the SFA, and any regulationsthereunder. However, there is no assurance that theStabilising Manager (or persons acting on behalf of theStabilising Manager) will undertake stabilisation action.Such transactions may commence on or after the date ofcommencement of trading in the Units on SGX-ST and, ifcommenced, may be discontinued at any time and shall notbe effected after the earliest of (i) the date falling 30 days fromthe date of commencement of trading of the Units on the SGX-ST, (ii) the date when the Stabilising Manager has bought on theSGX-ST an aggregate of 96,820,000 Units, representing notmore than 15.0% of the total Units offered to undertakestabilising actions or (iii) the date falling 30 days after thedate of adequate public disclosure of the final price of the Units.(See “Plan of Distribution—Over-allotment and Stabilisation”.)<strong>Lippo</strong> Strategic (also the Unit Lender), <strong>Lippo</strong> Holdings Inc, <strong>Lippo</strong>Capital Limited, <strong>Lippo</strong> Cayman Limited, Lanius Ltd, MIPL,Mapletree Dextra Pte Ltd and Mapletree LM on 9 November2007 have each agreed to (i) a lock-up arrangement in respect oftheir direct or indirect interests (as the case may be) in theCornerstone Units, as at the Listing Date during the FirstLock-Up Period and (ii) a lock-up arrangement in respect oftheir direct or indirect interests (as the case may be) in 50.0% ofthe Cornerstone Units as at the Listing Date during the SecondLock-Up Period, subject to certain exceptions.The Manager has also on 9 November 2007 agreed to a lock-uparrangement in respect of any offer, issue or contract to issueany Units, and the making of any announcements in connectionwith any offer, issue or contract to issue any Units during the FirstLock-Up Period, subject to certain exceptions.(See “Plan of Distribution—Lock-up Arrangements”.)Capitalisation. . . . . . . . . . . . . . . . . . . S$963.3 million (based on the Offering Price) (see“Capitalisation”).Use of Proceeds . . . . . . . . . . . . . . . .Unitholders’ Meetings . . . . . . . . . . . .Based on the Offering Price and estimated issue costs of theOffering, the gross proceeds from the Offering, assuming thatthe Over-allotment Option has not been exercised, areestimated to be approximately S$848.3 million.The Manager intends to apply the total proceeds from theOffering and from the issuance of Cornerstone Units towardsthe following:(i)payment of the purchase consideration to the Vendors forthe acquisition of all of the ordinary shares and redeemablepreference shares in the Target Singapore SPCs atcompletion under the Singapore SPC Share PurchaseAgreements; and(ii) costs and expenses related to the Offering and the issuanceof the Cornerstone Units.(See “Use of Proceeds” and “Certain Agreements Relating toLMIR <strong>Trust</strong> and the Properties”.)The Manager and the <strong>Trust</strong>ee may (and the Manager shall at therequest in writing of not less than 50 Unitholders or theUnitholders with not less than one-tenth in number of issued57
Units, whichever is the lesser) at any time convene a meeting ofUnitholders in accordance with the provisions of the <strong>Trust</strong> Deed.No Redemption by Unitholders . . . . .Distribution Policy . . . . . . . . . . . . . . .Singapore Tax Considerations . . . . . .Unitholders have no right to request the Manager to redeemtheir Units while the Units are listed. It is intended thatUnitholders may only deal in their listed Units throughtrading on the SGX-ST. Listing of the Units on the SGX-ST does not guarantee a liquid market for the Units.LMIR <strong>Trust</strong>’s distribution policy is to distribute 100.0% of its taxexemptincome (after deduction of applicable expenses) andcapital receipts for Forecast Period 2007, Projection Year 2008and Projection Year 2009 and at least 90.0% of its tax-exemptincome (after deduction of applicable expenses) and capitalreceipts thereafter. Distributions will be paid on a quarterlybasis to Unitholders, except for the first distribution, which willbe paid for the period from the Listing Date to 31 March 2008 andwill be paid by the Manager on or before 30 May 2008 (see“Distributions”).Unitholders will be exempt from Singapore income tax ondistributions made by LMIR <strong>Trust</strong> out of its tax-exempt income.Unitholders will not be subject to Singapore income tax ondistributions made by LMIR <strong>Trust</strong> out of its capital receipts,comprising amounts received from redemption of redeemablepreference shares in the Target Singapore SPCs. Thesedistributions will be treated as returns of capital for Singaporeincome tax purposes. For Unitholders who hold the Units astrading or business assets and are liable to Singapore incometax on gains arising from disposal of the Units, the amount ofsuch distributions will be applied to reduce the cost of the Unitsfor the purpose of calculating the amount of taxable trading gainwhen the Units are disposed of. If the amount distributedexceeds the cost or the reduced cost of the Units, as thecase may be, the excess will be subject to tax as tradingincome of such Unitholders (see “Taxation”).<strong>Indonesia</strong> Tax Considerations . . . . . .The income received by the <strong>Indonesia</strong>n SPCs solely from rentalpayments by the Master Lessee and the tenants is subject tofinal income tax in <strong>Indonesia</strong> at the rate of 10.0%.The <strong>Indonesia</strong>n SPCs charge value-added tax (“VAT”) at therate of 10.0% on the rental income from the Master Lessee andthe tenants.The income received by LMIR <strong>Trust</strong> through the TargetSingapore SPCs in the form of dividends and interestpayments is subject to tax in <strong>Indonesia</strong> at the rate of 10.0%based on the provisions of the Singapore-<strong>Indonesia</strong> tax treaty.The withholding tax on the dividends and interest payments ispayable when it is accrued or paid, whichever comes first.Termination of LMIR <strong>Trust</strong> . . . . . . . . .LMIR <strong>Trust</strong> can be terminated if the Unitholders’ approval isobtained by passing a resolution proposed and approved by amajority consisting of 75.0% or more of the total number of votescast for and against such resolution (an “ExtraordinaryResolution”) at a Unitholders’ meeting duly convened andheld in accordance with the provisions of the <strong>Trust</strong> Deed. Asspecified in the <strong>Trust</strong> Deed, the Manager or the <strong>Trust</strong>ee mayterminate LMIR <strong>Trust</strong> under certain circumstances such asLMIR <strong>Trust</strong> being delisted permanently from the SGX-ST (see58
Listing and Trading . . . . . . . . . . . . . .Governing Law . . . . . . . . . . . . . . . . .RiskFactors ...................“The Formation and Structure of LMIR <strong>Trust</strong>—The <strong>Trust</strong> Deed—Termination of LMIR <strong>Trust</strong>”).Prior to the Offering, there has been no market for the Units.Application has been made to the SGX-ST for permission to liston the Main Board of the SGX-ST all the Units comprised in theOffering, all the Cornerstone Units as well as all the Units whichmay be issued to the Manager from time to time in full or partpayment of the Manager’s management fees, including itsacquisition fee and divestment fee (see “The Manager andCorporate Governance—Management Fees”). Suchpermission will be granted when LMIR <strong>Trust</strong> is admitted to theOfficial List of the SGX-ST.The Units will, upon their issue, listing and quotation on the SGX-ST, be traded in Singapore dollars under the book-entry(scripless) settlement system of The Central Depository (Pte)Limited (“CDP”). The Units will be traded in board lot sizes of1,000 Units.The <strong>Trust</strong> Deed, pursuant to which LMIR <strong>Trust</strong> was constituted,is governed by Singapore law. The (i) Deeds of Indemnity,(ii) Singapore SPC Share Purchase Agreements and(iii) Rental Guarantee Deeds are governed by Singapore lawwhile the (i) Master Lease Agreements, (ii) Property PurchaseAgreements, (iii) Operating Costs Agreements, (iv) <strong>Indonesia</strong>SPC Share Purchase Agreements, (v) Master PropertyManagement Agreement and (vi) Existing PropertyManagement Agreements are governed by <strong>Indonesia</strong>n law.Prospective investors should carefully consider certainrisks connected with an investment in the Units, asdiscussed under “Risk Factors”.59
Indicative timetableAn indicative timetable for the Offering is set out below for the reference of applicants for the Units:Date and timeEvent12 November 2007, 9.00 a.m. . . . . . . . . . . . . . . . Opening date and time for the Offering.15 November 2007, 12 noon . . . . . . . . . . . . . . . . Closing date and time for the Offering.16 November 2007. . . . . . . . . . . . . . . . . . . . . . . . Balloting of applications, if necessary. Commencereturning or refunding of application monies tounsuccessful or partially successful applicants.19 November 2007, at or before 2.00 p.m. . . . . . Completion of the acquisition of the Properties.19 November 2007, 2.00 p.m. . . . . . . . . . . . . . . . Commence trading on a ‘‘ready” basis.22 November 2007. . . . . . . . . . . . . . . . . . . . . . . . Settlement date for all trades done on a ‘‘ready”basis on 19 November 2007.The above timetable is indicative only and is subject to change. It assumes (i) that the closing of theapplication list for the Public Offer (the “Application List”) is 15 November 2007; (ii) that the Listing Date is19 November 2007; (iii) compliance with the SGX-ST’s unitholding spread requirement; and (iv) that theUnits will be issued and fully paid up prior to 2.00 p.m. on 19 November 2007. All dates and times referredto above are Singapore dates and times.Trading in the Units through the SGX-ST on a “ready” basis will commence at 2.00 p.m. on 19 November2007 (subject to the SGX-ST being satisfied that all conditions necessary for the commencement oftrading in the Units through the SGX-ST on a “ready” basis have been fulfilled), as the completion of theacquisition of the Properties not already owned by LMIR <strong>Trust</strong> is expected to take place at or before2.00 p.m. on 19 November 2007 (see “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties”). IfLMIR <strong>Trust</strong> is terminated by the Manager or the <strong>Trust</strong>ee under the circumstances specified in the<strong>Trust</strong> Deed prior to, or the acquisition of the Properties is not completed by, 2.00 p.m. on 19 November2007 (being the time and date of commencement of trading in the Units through the SGX-ST), the Offeringwill not proceed and the application monies will be returned in full (without interest or any share of revenueor other benefit arising therefrom and at each applicant’s own risk and without any right or claim againstLMIR <strong>Trust</strong>, the <strong>Trust</strong>ee, the Manager, the Underwriters, the Unit Lender or the Sponsor).In the event of any early or extended closure of the Application List or the shortening or extension of thetime period during which the Offering is open, the Manager will publicly announce the same:• via SGXNET, with the announcement to be posted on the Internet at the SGX-ST website:http://www.sgx.com; and• in one or more major Singapore newspapers, such as The Straits Times, The Business Times andLianhe Zaobao.<strong>Investor</strong>s should consult the SGX-ST announcement on the “ready” listing date on the Internet (at theSGX-ST website), InTv or the newspapers, or check with their brokers on the date on which trading on a“ready” basis will commence.The Manager will provide details and results of the Public Offer through SGXNETand in one or more majorSingapore newspapers, such as The Straits Times, The Business Times and Lianhe Zaobao.The Manager reserves the right to reject or accept, in whole or in part, or to scale down or ballot anyapplication for Units, without assigning any reason for it, and no enquiry and/or correspondence on thedecision of the Manager will be entertained. In deciding the basis of allotment, due consideration will begiven to the desirability of allotting the Units to a reasonable number of applicants with a view toestablishing an adequate market for the Units.Where an application is rejected or accepted in part only or if the Offering does not proceed for any reason,the full amount or the balance of the application monies, as the case may be, will be refunded (withoutinterest or any share of revenue or other benefit arising therefrom) to the applicant, at his own risk, andwithout any right or claim against LMIR <strong>Trust</strong>, the <strong>Trust</strong>ee, the Manager, the Underwriters, the Sponsor orthe Unit Lender.Where an application is not successful, the full amount of the application monies will be refunded (withoutinterest or any share or revenue or other benefit arising therefrom) to the applicant, at his own risk within24 hours after the balloting of applications (provided that such refunds in relation to applications in60
Singapore are made in accordance with the procedures set out in “Appendix G—Terms, Conditions andProcedures for Application for and Acceptance of the Units in Singapore”).In respect of partially successful applications using printed Application Forms, the balance of theapplication monies is expected to be refunded (without interest or any share of revenue or otherbenefit arising therefrom) to applicants by ordinary post at their own risk, within 14 Market Days afterthe closing date for the Offering, provided that the remittance accompanying such application which hasbeen presented for payment or other processes has been honoured and the application monies receivedin the designated unit issue account.In respect of partially successful applications via ATM, the balance of the application monies is expected tobe refunded (without interest or any share of revenue or other benefit arising therefrom) through thecrediting of the relevant amount to the applicants’ accounts with their Participating Banks, or by ordinarypost at their own risk within 14 Market Days after the close of the Offering provided that the remittanceaccompanying such application which has been presented for payment or other processes has beenhonoured and the application monies received in the designated unit issue account.61
Profit Forecast and Profit ProjectionThe following is an extract from “Profit Forecast and Profit Projection”. Statements in this extract that arenot historical facts may be forward-looking statements. Such statements are based on the assumptionsset out on pages 100 to 108 of this Prospectus and are subject to certain risks and uncertainties whichcould cause actual results to differ materially from those forecast and projected. Under no circumstancesshould the inclusion of such information herein be regarded as a representation, warranty or predictionwith respect to the accuracy of the underlying assumptions by LMIR <strong>Trust</strong>, the Manager, the Underwriters,the Sponsor, the Property Manager, the <strong>Trust</strong>ee, the Financial Adviser or any other person, nor that theseresults will be achieved or are likely to be achieved. (See “Forward-Looking Statements” and “RiskFactors”). <strong>Investor</strong>s in the Units are cautioned not to place undue reliance on these forward-lookingstatements which are valid only as at the date of this Prospectus.None of LMIR <strong>Trust</strong>, the Manager, the Financial Adviser, the Underwriters, the Sponsor, theProperty Manager, the <strong>Trust</strong>ee and the Unit Lender guarantees the performance of LMIR <strong>Trust</strong>,the repayment of capital or the payment of any distributions, or any particular return on the Units.The forecast and projected yields stated in the following table are calculated based on (i) theOffering Price, and (ii) the assumption that the Listing Date is 1 July 2007. Such yields will varyaccordingly since the Listing Date will be after 1 July 2007 and in relation to investors whopurchase Units in the secondary market at a market price that differs from the Offering Price.The following table below sets forth LMIR <strong>Trust</strong>’s forecast and projected consolidated statements of totalreturn for Forecast Period 2007, Projection Year 2008 and Projection Year 2009 respectively. The financialyear-end of LMIR <strong>Trust</strong> is 31 December. For the purpose of the profit forecast and profit projection, LMIR<strong>Trust</strong>’s first accounting period is assumed to be the period from 1 July 2007 to 31 December 2007. Theprofit forecast and profit projection will be different if the date of establishment differs from 1 July 2007 or ifthe end of the first financial period differs from 31 December 2007. The profit forecast and profit projectionshould be read together with the report set out in “Appendix A—Independent Accountants’ Report on theProfit Forecast and Profit Projection” as well as the assumptions and the sensitivity analysis set out in“Profit Forecast and Profit Projection”. The following table sets forth LMIR <strong>Trust</strong>’s forecast and projectedConsolidated Statement of Total Return for Forecast Period 2007, Projection Year 2008 and the ProjectionYear 2009 prepared based on the Offering Price.Forecast and Projected Consolidated Statement of Total ReturnForecast Period2007Projection Year2008Projection Year2009(S$’000) (S$’000) (S$’000)Gross RevenueGrossRent................................. 35,018 74,660 81,632Carpark income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,782 7,356 7,053Other income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,346 2,804 2,895Total Gross Revenue. ........................ 40,146 84,820 91,580Property Operating ExpensesLand rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (661) (1,618) (1,836)Property management fees . . . . . . . . . . . . . . . . . . . . . (1,475) (3,134) (3,423)Other property operating expenses . . . . . . . . . . . . . . . (461) (583) (447)Total Property Operating Expenses ............. (2,597) (5,335) (5,706)Net Property Income ......................... 37,549 79,485 85,874Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 789 1,157 796Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . (201) (365) (339)Administrative expensesManager’s management fees. . . . . . . . . . . . . . . . . . . . (2,883) (5,942) (6,198)<strong>Trust</strong>ee’s fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (191) (332) (332)Other trust operating expenses . . . . . . . . . . . . . . . . . . (607) (830) (848)Total administrative expenses ................. (3,681) (7,104) (7,378)62
Forecast Period2007Projection Year2008Projection Year2009(S$’000) (S$’000) (S$’000)Total return for the period before tax anddistribution and revaluation ................. 34,456 73,173 78,953Surplus on the revaluation on investment properties . . 207,887 — —Total return for the period before tax anddistribution ............................... 242,343 73,173 78,953Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,173) (8,714) (9,317)Withholding tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,893) (5,940) (6,520)Deferredtax ................................ (62,366) — —Total return for the period after tax beforedistribution ............................... 172,911 58,519 63,116Distribution to UnitholdersForecast Period2007Projection Year2008Projection Year2009(S$’000) (S$’000) (S$’000)Total return for the period after tax before distribution . . . 172,911 58,519 63,116Add back/(less) non-cash items:—Management fees (1) .......................... 1,503 3,180 3,435—Surplus on revaluation of investment properties net ofdeferred tax (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (145,521) — ——Reversal of FRS adjustment on rental deposit (3) . . . . . 201 365 339Total Unitholders’ distribution ................... 29,094 62,064 66,890Unitholders’ distribution:—as distributions from operations . . . . . . . . . . . . . . . . . . 23,035 48,044 55,487—as return of capital (4) .......................... 6,059 14,020 11,403Total Unitholders’ distribution ................... 29,094 62,064 66,890Notes:(1) This relates to the portion of the management fees which are payable in the form of Units.(2) It is assumed that all of the Properties are purchased at a total consideration of approximatelyS$796.8 million based on the Offering Price. The purchase consideration of the Properties isdetermined by the difference between the purchase consideration of the Singapore SPCs (see“Certain Agreements relating to LMIR <strong>Trust</strong> and the Properties—Description of the Singapore SPCShare Purchase Agreements” for the formula of determining this purchase consideration) and the fairvalue of all the net identifiable assets and liabilities of the Singapore SPCs acquired save for theProperties. The surplus on revaluation of the investment properties relates to the revaluation of theProperties to their fair value of S$1,004.7 million immediately upon their acquisition and the capitalexpenditures expected to be incurred in the Forecast Period 2007. The fair value of S$1,004.7 millionis based on the value appraised by Knight Frank as at 30 June 2007. It is assumed that the fair valueof the Properties will only increase by the amount of capital expenditure expected to be incurred in theForecast Period 2007, the Projection Year 2008 and the Projection Year 2009 and that there is nochange in the exchange rate between the Singapore dollar and the <strong>Indonesia</strong>n Rupiah as at the endof Forecast Period 2007 and the Projection Year 2008 and the Projection Year 2009. Notwithstandingwhether the valuation of Knight Frank or Colliers is adopted, such adoption has no impact on thedistribution to Unitholders.(3) This relates to notional interest expense which has no impact on the distribution to Unitholders.(4) The return of capital comprises the amounts received by LMIR <strong>Trust</strong> from the redemption of itsinvestment in the redeemable preference shares in the Target Singapore SPCs (see “Profit Forecastand Profit Projection—Assumptions—(IX) Distributable Income” and “Distributions”).63
Forecast and Projected Distributions to UnitholdersForecast Period 2007 Projection Year 2008 Projection Year 2009Based on theOfferingPriceBased on theOfferingPriceBased on theOfferingPriceNumber of Units eligible for distribution (’000) (1) . . . 1,060,414 (2) 1,062,291 (3) 1,066,266 (4)Distribution per Unit (cents) . . . . . . . . . . . . . . . . . 2.74 5.84 6.27Offering Price per Unit (S$) . . . . . . . . . . . . . . . . . 0.80 0.80 0.80Distribution yield (%) .................... 6.9 (5) 7.3 7.8Notes:(1) The increase in the number of Units in Projection Year 2008 and Projection Year 2009 are due to theissue of Units to the Manager for the payment of 100.0% of the Manager’s Performance Fees forForecast Period 2007 and Projection Year 2008 in the form of Units. These Units are assumed to beissued at the Offering Price.(2) Based on the number of Units that are assumed to be in issue as at the Listing Date. It is assumed thatthe number of Units eligible for distribution is the same throughout Forecast Period 2007.(3) Based on the number of Units that are assumed to be in issue on 1 January 2008. It is assumed thatthe number of Units eligible for distribution is the same throughout Projection Year 2008.(4) Based on the number of Units that are assumed to be in issue on 1 January 2009. It is assumed thatthe number of Units eligible for distribution is the same throughout Projection Year 2009.(5) Annualised for Forecast Period 2007.64
Risk factorsProspective investors should consider carefully, together with all other information contained in thisProspectus, the factors described below before deciding to invest in the Units.This Prospectus also contains forward-looking statements (including profit forecast and profit projection)that involve risks, uncertainties and assumptions. The actual results of LMIR <strong>Trust</strong> could differ materiallyfrom those anticipated in these forward-looking statements as a result of certain factors, including the risksfaced by LMIR <strong>Trust</strong> as described below and elsewhere in this Prospectus.As an investment in a REIT is meant to produce returns over the long-term, investors should not expect toobtain short-term gains.<strong>Investor</strong>s should be aware that the price of Units, and the income from them, may fall or rise. <strong>Investor</strong>sshould note that they may not get back their original investment.Before deciding to invest in the Units, prospective investors should seek professional advice from theirrelevant advisers about their particular circumstances.RISKS RELATING TO LMIR TRUST’S OPERATIONSLMIR <strong>Trust</strong>’s strategy of investing primarily in retail assets may entail a higher level of riskcompared to other types of unit trusts that have a more diverse range of investments.LMIR <strong>Trust</strong> is a Singapore-based REIT constituted by the <strong>Trust</strong> Deed. It is established with the principalinvestment objective of owning and investing on a long-term basis in a diversified portfolio of incomeproducingreal estate in <strong>Indonesia</strong> that are primarily used for retail and/or retail-related purposes, and realestate related assets in connection with the foregoing.As such, LMIR <strong>Trust</strong> will be subject to risks inherent in concentrating on investments in a single real estatesector. The level of risk could be higher compared to other types of unit trusts that have a more diverserange of investments.A concentration of investments in a portfolio of specific real estate assets primarily in <strong>Indonesia</strong> exposesLMIR <strong>Trust</strong> to both downturns in the real estate market as well as the retail industry in <strong>Indonesia</strong>.In addition, the nature of the retail industry makes it particularly susceptible to a downturn in the economy.A lagging economy could lead to retrenchments and job losses, which, in turn, would lead to a reduction inconsumer spending. Such downturns could also lead to a decline in occupancy for retail propertiesincluding those in LMIR <strong>Trust</strong>’s portfolio thereby affecting LMIR <strong>Trust</strong>’s rental income from the MasterLessee and the tenants and/or a decline in the capital value of LMIR <strong>Trust</strong>’s portfolio.Any decline in the overall retail sector may cause higher levels of non-renewals of leases or vacancies as aresult of failures or defaults by tenants or the market pressures exerted by an increase in available retailspace. There can be no assurance that the tenants of LMIR <strong>Trust</strong>’s operating retail properties will renewtheir leases or that the new lease terms will be as favourable as the existing leases. In the event that atenant does not renew its lease, a replacement tenant or tenants would need to be identified, which couldsubject LMIR <strong>Trust</strong>’s operating retail properties to periods of vacancy and/or costly refittings, during whichperiods LMIR <strong>Trust</strong> could experience reductions in rental income.Such downturns may have an adverse impact on distributions to the Unitholders and/or on the results ofoperations and the financial condition of LMIR <strong>Trust</strong>.LMIR <strong>Trust</strong> is dependent on the Master Lessee for rental payments for the <strong>Retail</strong> Spaces.LMIR <strong>Trust</strong> is dependent on rental payments from the Master Lessee for the <strong>Retail</strong> Spaces, as LMIR <strong>Trust</strong>does not directly operate the <strong>Retail</strong> Spaces. The Master Lessee is the sole tenant of each of the <strong>Retail</strong>Spaces. The <strong>Retail</strong> Spaces are expected to contribute more than 15% of LMIR <strong>Trust</strong>’s rental revenue.Therefore, LMIR <strong>Trust</strong>’s revenue and ability to make distributions to the Unitholders will depend largelyupon the ability of the Master Lessee to make rental payments. As such, the prospects of the MasterLessee’s other businesses, aside from those relating to LMIR <strong>Trust</strong>, could impact on the Master Lessee’sability to make rental payments to LMIR <strong>Trust</strong>.65
Risk factorsFactors that affect shoppers’ volume at the <strong>Retail</strong> Spaces and, thereby, the ability of the Master Lessee tomeet its obligations include, but are not limited to:• the financial position of the Master Lessee;• unemployment levels in <strong>Indonesia</strong>;• the local economies;• seasonal retail cycles;• local retail competitors and competition in the retail industry;• the Master Lessee’s ability to attract and retain successful tenants;• unfavourable publicity;• material losses in excess of insurance proceeds;• a possibility of union activities disrupting the operations of the <strong>Retail</strong> Spaces, severely impacting on itsreputation and ability to function normally;• social unrest; and• natural disasters.There can be no assurance that the Master Lessee will have sufficient assets, income and access tofinancing in order to enable it to satisfy its obligations under the respective Master Lease Agreement.The Master Lessee may not renew its leases of the <strong>Retail</strong> Spaces.No assurance can be given that the Master Lessee will exercise any option to renew its leases of the <strong>Retail</strong>Spaces upon the expiry of the initial 10-year term of the Master Leases. If the Master Leases are notrenewed, LMIR <strong>Trust</strong> may not be able to find a suitable purchaser of the <strong>Retail</strong> Spaces or a suitablereplacement master lessee, as a result of which LMIR <strong>Trust</strong> may lose a significant source of revenue. Inany event, it may not be possible to replace the Master Lessee immediately upon the expiry of the MasterLeases and this may lead to temporary vacancy.The failure to renew the Master Lease Agreements, or the termination of any of these Master LeaseAgreements, may have a material adverse effect on LMIR <strong>Trust</strong>’s Gross Revenue.The Master Lessee may terminate its leases of the <strong>Retail</strong> Spaces due to change in law.Under the Master Lease Agreements, the Master Lessee is entitled to terminate the leases if, as a result ofany change in the laws or regulations, it is prohibited from carrying out its current operations at the <strong>Retail</strong>Spaces. In the event of such termination, the security deposit of the Master Lessee will be forfeited to thelandlord but no compensation is payable by the Master Lessee.The termination of the leases will have a material adverse effect on LMIR <strong>Trust</strong>’s Gross Revenue.The loss of key tenants of any of the <strong>Retail</strong> <strong>Malls</strong> or a downturn in the businesses of any ofthe <strong>Retail</strong> <strong>Malls</strong>’ key tenants could have an adverse effect on LMIR <strong>Trust</strong>’s financial conditionand results of operations.Based on Committed Leases as at 30 June 2007, the 10 largest tenants of the <strong>Retail</strong> <strong>Malls</strong> (in terms of theircontributions to the total Gross Rent) accounted for approximately 37.5% of the total Gross Rent of the<strong>Retail</strong> <strong>Malls</strong>.LMIR <strong>Trust</strong>’s financial condition and results of operations and ability to make distributions may beadversely affected by the bankruptcy, insolvency or downturn in the businesses of one or more ofthese tenants, as well as the decision by one or more of these tenants not to renew its lease or to terminateits lease before expiry. The Manager expects that LMIR <strong>Trust</strong> will continue to be dependent upon thesetenants for a significant portion of its Gross Revenue. There is a risk that an anchor tenant terminates itslease or does not renew its lease at expiry. It may not be feasible to operate such large-scale retail malls in<strong>Indonesia</strong> without an anchor tenant. It may be difficult to secure replacement tenants at short notice or on66
Risk factorssimilar tenancy terms. In addition, the amount of rent and the terms on which lease renewals and newleases are agreed may be less favourable than those of current leases.The loss of key tenants in any one of LMIR <strong>Trust</strong>’s Properties or future acquisitions could result in periodsof vacancy, which could therefore adversely affect the revenue of the relevant Property, consequentlyimpacting the <strong>Indonesia</strong>n SPCs’ ability to make distributions to LMIR <strong>Trust</strong>.There are potential conflicts of interest amongst LMIR <strong>Trust</strong>, Mapletree Capital, the Sponsorand the Master Lessee.The Manager is 40.0% owned by Mapletree Capital and 60.0% owned by Peninsula Investment Ltd.Peninsula Investment Ltd is in turn 100.0% owned by Jesselton Investment Ltd, a wholly-owned subsidiaryof the Sponsor. The Sponsor, Mapletree Capital, their respective subsidiaries and associates are, or maybe, engaged in, among other things, portfolio management, investment in, and the development,management and operation of, retail properties in <strong>Indonesia</strong> and elsewhere in the region.The strategy and activities of LMIR <strong>Trust</strong> may be influenced by the overall interests of the Sponsor and/orMapletree Capital. The Sponsor does not have any direct or indirect interest in any Units or any directeconomic interest in LMIR <strong>Trust</strong>, other than through its relationship with the Manager and <strong>Lippo</strong> Strategic,which is an affiliate. Mapletree Capital is a wholly-owned subsidiary of MIPL. The Sponsor and/orMapletree Capital may in the future sponsor, manage or invest in other REITs or other vehicles whichmay compete directly with LMIR <strong>Trust</strong>. There can be no assurance that conflicts of interest will not ariseamong LMIR <strong>Trust</strong>, the Manager, the Sponsor and/or Mapletree Capital in the future, or that LMIR <strong>Trust</strong>’sinterests will not be subordinated to those of the Sponsor and/or Mapletree Capital whether in relation tothe future acquisition of properties or property-related investments or in relation to competition for tenantswithin the <strong>Indonesia</strong> market or regionally (see “The Manager and Corporate Governance—Related PartyTransactions”).Mapletree Capital confirms that currently, the Mapletree Group does not own, invest or intend to developany retail malls in <strong>Indonesia</strong>. However, there is no assurance that this may not change in the future giventhat this is a future commercial decision. In the event that the Mapletree Group decides to undertake anyfuture investments and/or development of retail malls in <strong>Indonesia</strong>, any potential conflicts of interest thatmay arise will be addressed together with the Manager.There can be no assurance that the Sponsor and/or Mapletree Capital will not favour properties that it hasretained in its own property portfolio or which it manages or operates over those owned by LMIR <strong>Trust</strong>.The Master Lessee, its subsidiaries and associates are engaged in, and/or may engage in, among otherthings, portfolio management, investment in, and the development, management and operation of, retailproperties in <strong>Indonesia</strong> and elsewhere in the region.Any conflicts of interests could have an adverse impact on LMIR <strong>Trust</strong>’s operating results, as well asdistributions made to Unitholders.There are potential conflicts of interest amongst LMIR <strong>Trust</strong> and the Property Manager.The Property Manager has entered into an Existing Property Management Agreement with each of the<strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs holding the relevant <strong>Retail</strong> Mall under which the Property Manager willoperate, maintain, manage and market the relevant <strong>Retail</strong> Mall. (See “Summary—Structure of LMIR<strong>Trust</strong>—Property Manager: PT. Consulting & Management Services Division”.)The Property Manager is a full service property management company which is engaged in the businessof managing properties in <strong>Indonesia</strong>. Therefore, the Property Manager may manage retail propertiesowned by other clients. There can be no assurance that the Property Manager will not favour otherproperties which it manages or operates over those owned by LMIR <strong>Trust</strong>.In addition, the Property Manager is a wholly-owned subsidiary of the Sponsor. The Sponsor, itssubsidiaries and associates are engaged in, among other things, portfolio management, investmentin, and the development, management and operation of, retail properties in <strong>Indonesia</strong> and elsewhere in theregion. There can be no assurance that conflicts of interest will not arise among LMIR <strong>Trust</strong>, the PropertyManager and the Sponsor in the future, or that LMIR <strong>Trust</strong>’s interests will not be subordinated to those of67
Risk factorsthe Sponsor in relation to the management of other retail properties which may compete directly with thoseowned by LMIR <strong>Trust</strong>. (See “—There are potential conflicts of interest amongst LMIR <strong>Trust</strong>, MapletreeCapital, the Sponsor and the Master Lessee”.)Any conflicts of interests could have an adverse impact on LMIR <strong>Trust</strong>’s operating results, as well asdistributions made to Unitholders.The <strong>Retail</strong> Spaces, which are located within and are part of retail malls, are subdivideddevelopments, and there is no assurance that the other owners or tenants of strata lots inthese retail malls will not vote against the interests of the <strong>Retail</strong> Spaces in matters relating tothe common area, common land and common property.The <strong>Retail</strong> Spaces are part of retail malls which are subdivided developments comprising strata lots,common area, common land and common property. The common area, common land and commonproperty are jointly owned or used by owners or tenants of the strata lots as tenants-in-common inproportion to the rights to use attributable to their respective strata lots.Under the <strong>Indonesia</strong>n law on multi-storey buildings (Undang-Undang Rumah Susun), the ownership of thestrata lots are evidenced by strata titles which include the right to the common area, common land andcommon property which constitutes an inseparable part of the ownership of the strata lots. In order topreserve the common interest among the owners and/or tenants on the use of the common area, commonland and common property, the owners or tenants must establish a tenants association. Subject to therules and regulations of the tenants association, certain matters require prior consent of the tenantsassociation, including, for example, the use or the service charge payable in respect of the common area,common land and common property.The term ‘common property’ is known in multi-storey building concepts. According to <strong>Indonesia</strong>n law andregulations concerning common property, common property (such as infrastructure and area of land) isdefined as properties of a multi-storey building, with such properties being used by the owners or tenantsin the said multi-storey building. Therefore, each of the owners of strata lots in a multi-storey building has aproprietary interest, collectively, as the owners of such multi-storey building and as such, all rights,obligations and responsibilities arising thereof shall be borne by these owners.All of the owners or tenants must vote on certain matters as described in the rules and regulations of thetenants association in the meeting of the tenants association. As the aggregate share value of each of the<strong>Retail</strong> Spaces ranges from 35.0% to 60.0% of the total rights value of the strata lots comprised in therespective retail malls within which it is located, there is no assurance that the other owners or tenants willnot vote against the interests of LMIR <strong>Trust</strong> as represented by the <strong>Retail</strong> Spaces. Further, LMIR <strong>Trust</strong>cannot freely deal with the common area, common land and common property of the retail malls withinwhich the <strong>Retail</strong> Spaces are located, unlike in the case of a development which is wholly-owned by it.LMIR <strong>Trust</strong> will operate substantially through the Singapore SPCs and the <strong>Indonesia</strong>n SPCs andits ability to make distributions to Unitholders is dependent on the financial position of theSingapore SPCs.LMIR <strong>Trust</strong> will operate substantially through the Singapore SPCs and the <strong>Indonesia</strong>n SPCs and will relyon payments and other distributions from the Singapore SPCs and the <strong>Indonesia</strong>n SPCs for its income andcash flows. The ability of the Singapore SPCs to make such payments may be restricted by, among otherthings, the Singapore SPCs’ and the <strong>Indonesia</strong>n SPCs’ respective business and financial positions, theavailability of distributable profits, applicable laws and regulations and the terms of agreements to whichthey are, or may become, a party.There can be no assurance that the Singapore SPCs will have sufficient distributable or realised profits orsurplus in any future period to make dividend payments or make advances to LMIR <strong>Trust</strong>. The level of profitor surplus of each Singapore SPC available for distribution by way of dividends to LMIR <strong>Trust</strong> may beaffected by a number of factors including:• operating losses incurred by the Singapore SPCs in any financial year;68
Risk factors• losses arising from a revaluation of any of the Properties following any diminution in value of any of therelevant Properties. Such losses would adversely affect the level of profits from which the relevantSingapore SPC may distribute dividends;• accounting standards that require profits generated from investment properties to be net of depreciationcharges before such profits are distributed to LMIR <strong>Trust</strong>;• changes in accounting standards, taxation regulations, corporation laws and regulations relatingthereto; and• insufficient cash flows received by the Singapore SPCs from the <strong>Indonesia</strong>n SPCs.The occurrence of these or other factors that affect the ability of the Singapore SPCs to pay dividends orother distributions to LMIR <strong>Trust</strong> may adversely affect the level of distributions paid to Unitholders.LMIR <strong>Trust</strong> may not be able to secure funding to fund future acquisitions or significant capitalexpenditure which the Properties or any future properties may require.The Properties and properties to be acquired by LMIR <strong>Trust</strong> may require periodic capital outlay for thepurpose of refurbishments, renovation and improvements in order to remain competitive. Acquisitions orenhancement of existing properties by LMIR <strong>Trust</strong> may require significant capital expenditure.The Master Lease Agreements provide that LMIR <strong>Trust</strong> will have to bear capital expenditure relating to the<strong>Retail</strong> Spaces, subject to certain conditions, after the first 30 months of the lease terms. LMIR <strong>Trust</strong> maynot be able to fund future acquisitions, capital improvements or expenditure, solely from cash derived fromits operating activities and LMIR <strong>Trust</strong> may not be able to obtain additional equity or debt financing or beable to obtain such financing on favourable terms or at all. Further distributions to Unitholders may also beadversely affected as a result.LMIR <strong>Trust</strong> may face risks associated with future debt financing.As at Listing Date, LMIR <strong>Trust</strong> has not incurred any borrowings. In the event that LMIR <strong>Trust</strong> incurs anyborrowings, it will be subject to risks associated with debt financing, including the risk that its cash flow willbe insufficient to meet required repayments of principal and interest and to make distributions toUnitholders.LMIR <strong>Trust</strong> will distribute 100.0% of its tax-exempt income (after deduction of applicable expenses) andcapital receipts for Forecast Period 2007, Projection Year 2008 and Projection Year 2009 and at least90.0% of its tax-exempt income (after deduction of applicable expenses) and capital receipts thereafter. Asa result of this distribution policy, LMIR <strong>Trust</strong> may not be able to meet all of its obligations to repay anyfuture borrowings through its cash flow from operations. As such, LMIR <strong>Trust</strong> may be required to repaymaturing debt with funds from additional debt, or equity financing, or both. There can be no assurance thatsuch financing will be available on acceptable terms, or at all.The Manager can give no assurance regarding the amount and timing of the payment of distributions, theextent of payout ratios or the composition of distributions or the material income tax considerations ofdistributions, as actual events may differ from the assumptions used in assessing the ability of LMIR <strong>Trust</strong>to pay these distributions.In the event of any borrowings incurred, LMIR <strong>Trust</strong> will also be subject to the risk that the terms of anyrefinancing undertaken will be less favourable than the terms of any such borrowings. In addition, LMIR<strong>Trust</strong> may be subject to certain covenants in connection with any future borrowings that may limit orotherwise adversely affect its operations and its ability to make distributions to Unitholders. Suchcovenants may also restrict LMIR <strong>Trust</strong>’s ability to acquire properties or undertake other capitalexpenditure or may require it to set aside funds for maintenance or repayment of security deposits.If prevailing interest rates or other factors at the time of refinancing (such as the possible reluctance oflenders to make loans in relation to retail and/or retail-related properties) result in higher interest ratesupon refinancing, the interest expense relating to such refinanced indebtedness would increase, whichmay adversely affect LMIR <strong>Trust</strong>’s cash flow and the amount of distributions it could make to Unitholders.69
Risk factorsBorrowing in certain currencies, such as the <strong>Indonesia</strong>n Rupiah, may incur relatively high interest rates.LMIR <strong>Trust</strong> may incur such high interest rates should it require funds in these currencies (see “Strategy—Acquisition Growth Strategy”).The amount LMIR <strong>Trust</strong> may borrow is limited, which may affect the operations of LMIR <strong>Trust</strong>.Under the Property Funds Guidelines, LMIR <strong>Trust</strong> is generally permitted to borrow only up to 35.0% of thevalue of its Deposited Property at the time the borrowing is incurred. The Property Funds Guidelines alsoprovide that the Aggregate Leverage of a REIT may exceed 35.0% of the value of its Deposited Property(up to a maximum of 60.0%) only if a credit rating of such REIT from Fitch Inc., Moody’s or Standard &Poor’s is obtained and disclosed to the public. A REIT should maintain and disclose a credit rating so longas its Aggregate Leverage exceeds 35.0% of its Deposited Property. Upon its listing on the SGX-ST, LMIR<strong>Trust</strong> will not have incurred any indebtedness but may, from time to time, require debt financing to achieveits investment strategies as well as make distributions to Unitholders. A decline in the value of theDeposited Property may affect LMIR <strong>Trust</strong>’s ability to make future borrowings as discussed above.Adverse business consequences of this limitation on borrowings may include:• an inability to fund capital expenditure requirements in relation to LMIR <strong>Trust</strong>’s existing portfolio or inrelation to the acquisition by LMIR <strong>Trust</strong> of further properties to expand its portfolio; and• cash flow shortages (including with respect to making distributions) which LMIR <strong>Trust</strong> might otherwisebe able to resolve by borrowing funds.Occurrence of any acts of God, war and terrorist attacks may adversely and materially affectthe business and operations of the Properties.Acts of God such as natural disasters are beyond the control of LMIR <strong>Trust</strong> or the Manager and maymaterially and adversely affect the economy, infrastructure and livelihood of the local population in thecommunities in which LMIR <strong>Trust</strong> operates. LMIR <strong>Trust</strong>’s business and income available for distributionmay be materially and adversely affected should such acts of God occur. There can be no assurance thatany war, terrorist attack or other hostilities in any part of the world, potential, threatened or otherwise, willnot, directly or indirectly, have a material and adverse effect on the operations of the Properties and henceLMIR <strong>Trust</strong>’s income available for distribution.Neither LMIR <strong>Trust</strong> nor the Manager, as new entities, has an established operating history.LMIR <strong>Trust</strong> was established on 8 August 2007 and the Manager was incorporated on 3 May 2007. As such,neither LMIR <strong>Trust</strong> (as a REIT) nor the Manager (as the manager of LMIR <strong>Trust</strong>) has a relevant operatinghistory by which their past performance may be judged. This will make it difficult for investors to assessLMIR <strong>Trust</strong>’s likely future performance. There can be no assurance that LMIR <strong>Trust</strong> will be able to generatesufficient income from operations to make distributions or that such distributions will be in line with thoseset out in “Profit Forecast and Profit Projection”.The Manager may not be able to implement its investment strategy for LMIR <strong>Trust</strong>.LMIR <strong>Trust</strong>’s strategy is to own and invest on a long-term basis in a diversified portfolio of incomeproducingreal estate in <strong>Indonesia</strong> that are primarily used for retail and/or retail-related purposes, and realestate related assets in connection with the foregoing purposes. There can be no assurance that theManager will be able to implement its investment strategy successfully or that it will be able to expandLMIR <strong>Trust</strong>’s portfolio at all, or at any specified rate or to any specified size. The Manager may not be ableto make acquisitions or investments on favourable terms or within a desired time frame. LMIR <strong>Trust</strong> facesactive competition in acquiring suitable properties, especially in a low interest rate environment whereother investment vehicles are highly leveraged. As such, LMIR <strong>Trust</strong>’s ability to make new propertyacquisitions under its acquisition growth strategy may be limited.LMIR <strong>Trust</strong> will rely on external sources of funding to expand its asset portfolio, which may not be availableon favourable terms, or at all. Even if LMIR <strong>Trust</strong> were able to successfully make property acquisitions orinvestments, there can be no assurance that LMIR <strong>Trust</strong> will achieve its intended return on suchacquisitions or investments. Since the amount of borrowings that LMIR <strong>Trust</strong> can incur to finance70
Risk factorsacquisitions is limited by the Property Funds Guidelines (described in more detail above), suchacquisitions are likely to be largely dependent on LMIR <strong>Trust</strong>’s ability to raise equity capital, whichmay result in a dilution of Unitholders’ holdings. Potential vendors may also take a negative view towardsthe prolonged time frame and lack of certainty generally associated with the raising of equity capital to fundany such purchase and may prefer competing purchasers.There may be significant competition for attractive investment opportunities from other property investors,including commercial property development companies and private investment funds. There can be noassurance that LMIR <strong>Trust</strong> will be able to compete effectively against such entities.Future acquisitions may not yield the returns expected, resulting in disruptions to LMIR <strong>Trust</strong>’sbusiness, a strain on management resources and dilution of holdings.LMIR <strong>Trust</strong>’s external growth strategy and its market selection process may not be successful and may notprovide positive returns to Unitholders. Acquisitions may cause disruptions to LMIR <strong>Trust</strong>’s operations anddivert management’s attention away from day-to-day operations. New Units issued in connection with anynew acquisition could also be substantially dilutive to Unitholders. In addition, the acquisitions themselvesmay not be yield accretive to Unitholders.LMIR <strong>Trust</strong> depends on certain key personnel, and the loss of any key personnel may adverselyaffect its operations.LMIR <strong>Trust</strong>’s performance depends, in part, upon the continued service and performance of key staffmembers of the Manager. These key personnel may leave the Manager in the future and compete with theManager and LMIR <strong>Trust</strong>. The loss of any of these individuals, or of one or more of the Manager’s other keyemployees, could have a material adverse effect on LMIR <strong>Trust</strong>’s financial condition and results ofoperations.LMIR <strong>Trust</strong> may suffer material losses in excess of insurance proceeds.The Properties face the risks of suffering physical damage caused by fire or natural disaster or othercauses, as well as potential public liability claims, including claims arising from the operations of theProperties, all of which may not be fully compensated by insurance proceeds. LMIR <strong>Trust</strong> will remain liablefor any debt or other financial obligation related to a particular Property if there are material losses inexcess of insurance proceeds. No assurance can be given that material losses in excess of insuranceproceeds will not occur in the future.LMIR <strong>Trust</strong>’s properties could suffer physical damage caused by tsunamis, fire or other causes, or LMIR<strong>Trust</strong> may suffer public liability claims, all of which may result in losses (including loss of rent) that may notbe fully compensated by insurance proceeds. In addition, certain types of risks (such as damage causedby earthquakes, war risk and losses caused by the outbreak of contagious diseases and contamination orother environmental breaches) may be uninsurable or the cost of insurance may be prohibitive whencompared to the risk. Currently, LMIR <strong>Trust</strong>’s insurance policies for the Properties do not cover certaintypes of risks including acts of war and outbreaks of contagious diseases.Should an uninsured loss or a loss in excess of insured limits occur, LMIR <strong>Trust</strong> could be required to paycompensation and/or lose capital which it had invested in the affected Property as well as anticipatedfuture revenue from that Property. LMIR <strong>Trust</strong> will also remain liable for any debt or other financialobligation related to that Property. No assurance can be given that material losses in excess of insuranceproceeds will not occur in the future.All of the Properties are subject to various types of taxes in <strong>Indonesia</strong>.The Properties are subject to real and personal property taxes. This will change as property tax rateschange and as the Properties are assessed or reassessed by the relevant tax authorities. If LMIR <strong>Trust</strong>’sproperty tax liabilities increase, its ability to make distributions to the Unitholders could be adverselyaffected.71
Risk factorsIn addition, if LMIR <strong>Trust</strong> disposes of the Properties at the level of the <strong>Indonesia</strong>n SPCs holding theProperties, the <strong>Indonesia</strong>n SPCs may be subjected to <strong>Indonesia</strong>n capital gains taxes. In such a situation,LMIR <strong>Trust</strong> may be indirectly liable to pay these capital gains taxes.Possible change of investment strategies, policies and capital structure, may adversely affectthe Unitholders’ investments in LMIR <strong>Trust</strong>.The principal investment strategy of the Manager is owning and investing on a long-term basis in adiversified portfolio of income-producing real estate in <strong>Indonesia</strong> that are primarily used for retail and/orretail-related purposes, and real estate related assets in connection with the foregoing purposes.According to the Listing Manual, this investment strategy must be adhered to for at least three yearsfollowing the Listing Date. However, the <strong>Trust</strong> Deed and the Property Funds Guidelines permit theManager to alter LMIR <strong>Trust</strong>’s investment strategies and policies, if it determines that such a change is inthe best interests of LMIR <strong>Trust</strong> and its Unitholders. The methods of implementing LMIR <strong>Trust</strong>’s investmentstrategies and policies may vary as new investment and financing techniques are developed or otherwiseused. Any such changes may adversely affect the Unitholders’ investment in LMIR <strong>Trust</strong>.The appraisals of the Properties are based on various assumptions and the price at which LMIR<strong>Trust</strong> is able to sell a property may be less than the initial acquisition value of the property.LMIR <strong>Trust</strong> will use the net proceeds of the Offering to complete its acquisition of all of the ordinary sharesand redeemable preference shares in the Target Singapore SPCs on the Listing Date. The considerationpaid by LMIR <strong>Trust</strong> is based on the acquisition value of each of the Properties, which represent a certainlevel of discount to the appraised value of each of the Properties as determined by Knight Frank andColliers (the “Independent Valuers”).There can be no assurance that the assumptions relied on are accurate measures of the market, and thus,the values of the Properties may have been evaluated inaccurately. In addition, the Independent Valuersmay have included a subjective determination of certain factors relating to the Properties such as theirrelative market positions, financial and competitive strengths, and physical conditions.The appraised value of any of LMIR <strong>Trust</strong>’s Properties is not an indication of, and does not guarantee, asale price at that value at present or in the future. The price at which LMIR <strong>Trust</strong> may sell a Property may belower than its purchase price.Epidemic diseases in Asia and elsewhere may adversely affect LMIR <strong>Trust</strong>’s operations.Several countries in Asia, including <strong>Indonesia</strong>, have suffered from outbreaks of communicable diseasessuch as SARS and avian flu. A new and prolonged outbreak of such diseases may have a material adverseeffect on LMIR <strong>Trust</strong>’s business and financial condition and results of operations. Although the long-termeffect of such diseases cannot be predicted, previous occurrences of SARS and avian flu had an adverseeffect on the economies of those countries in which they were most prevalent. In the event a mutant strainof the avian flu virus allowing for easy human-to-human transmission is discovered, the consequence forLMIR <strong>Trust</strong>’s business could be severe. An outbreak of a communicable disease, like SARS, in <strong>Indonesia</strong>may affect LMIR <strong>Trust</strong> in a number of ways, including, but not limited to, a decline in demand for consumergoods, a reduction in the number of visitors to the retail property, a decline in revenue of tenants of the retailproperty and increased costs of cleaning and maintaining the public facilities in the retail property. Theimpact of these factors on the operations of the retail property could materially and adversely affect thebusiness, financial condition and results of operations of LMIR <strong>Trust</strong>.The Manager’s plan to undertake asset enhancement on some of the Properties may notmaterialise.The Manager intends to work with relevant <strong>Indonesia</strong>n authorities to gain the necessary approvals toundertake active asset enhancement works which are currently ongoing, on some of the Properties. (See“Business and Properties—Asset Enhancement”.)In the event that the necessary approvals are not obtained from the relevant <strong>Indonesia</strong>n authorities, thereis a risk that such proposed plans for asset enhancement will not materialise. There is also a risk that even72
Risk factorsafter the proposed plans for asset enhancement materialise, the proposed plans may not achieve theirdesired results or may incur significant costs unnecessarily.Triggering events may not occur for the ROFR.The Sponsor has granted LMIR <strong>Trust</strong>, for so long as (a) <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong><strong>Trust</strong> Management Ltd. remains the manager of LMIR <strong>Trust</strong> and (b) the Sponsor and/or any of itsrelated corporations, alone or in aggregate, remains a controlling shareholder of the Manager, a ROFRover any Relevant Asset (i) which any Sponsor Entity proposes to sell or transfer (whether such RelevantAsset is wholly-owned or partly-owned by the Sponsor Entity and excluding any sale of such RelevantAsset by a Sponsor Entity to any related corporation of such Sponsor Entity pursuant to a reconstruction,amalgamation, restructuring, merger or any analogous event) to an unrelated third party or (ii) for which aproposed offer for sale or transfer of such Relevant Asset has been made to a Sponsor Entity.This ROFR is only triggered if, among others, the foregoing events occur. There is a risk that suchtriggering events may not occur or that no suitable properties may be available during the validity period ofthe ROFR. There is also a risk that even after the ROFR is triggered, the <strong>Trust</strong>ee may not enter into abinding agreement with the relevant vendor within the stipulated deadline. (See “Certain AgreementsRelating to LMIR <strong>Trust</strong> and the Properties—Description of the Right of First Refusal Agreement”.)RISKS RELATING TO INVESTING IN REAL ESTATELMIR <strong>Trust</strong> may be adversely affected by the illiquidity of real estate investments.LMIR <strong>Trust</strong> invests primarily in real estate and real estate-related assets. This involves a higher level of riskas compared to a portfolio which has a diverse range of investments. Real estate investments, particularlyinvestments in high value properties such as those in which LMIR <strong>Trust</strong> has invested or in which it intendsto invest, are relatively illiquid. Such illiquidity may affect LMIR <strong>Trust</strong>’s ability to vary its investment portfolioor liquidate a portion of its assets in response to changes in economic, real estate market or otherconditions. For instance, LMIR <strong>Trust</strong> may be unable to sell its assets on short notice or may be forced togive a substantial reduction in the price in order to ensure a quick sale. Moreover, LMIR <strong>Trust</strong> may facedifficulties in securing timely and commercially favourable financing in asset-based lending transactionssecured by real estate due to the illiquid nature of real estate assets. These factors could have an adverseeffect on LMIR <strong>Trust</strong>’s financial condition and results of operations, with a consequential adverse effect onLMIR <strong>Trust</strong>’s ability to deliver expected distributions to Unitholders.There is no assurance that the HGB, strata titles on HGB underlying common land or HGB ontop of HPL titles of the land on which the Properties are sited, can be renewed.Cibubur Junction, Mal <strong>Lippo</strong> Cikarang, Istana Plaza and Plaza Madiun are sited on land with HGB titles,while Gajah Mada Plaza is held via strata titles on HGB underlying common land.Bandung Indah Plaza is sited on land with HGB titles on top of HPL titles. (See “Business and Properties—Information Regarding the Title of the Properties—Hak Pengelolaan (“HPL”) titles”.)A HGB title is granted for a maximum initial term of 30 years. By application to the relevant local land officeupon the expiration of this initial term, a HGB title may be extended for an additional term not exceeding20 years. Following expiration of this additional term, a renewal application may be made. (See “Overviewof Relevant Laws and Regulations in <strong>Indonesia</strong>—Rights to Own and/or to Use”.)Under <strong>Indonesia</strong>n land law, there is no limitation on the number of extensions and renewal cycles for HGBtitles. However, there is no assurance that there will be approval for such renewal or extension in the future.The non-renewal of these HGB titles, for any reason, could either adversely affect the operations of theProperties or result in LMIR <strong>Trust</strong> losing its ownership of the Properties.There is no assurance that the BOT Agreements can be extended.Cibubur Junction, The Plaza Semanggi, Ekalokasari Plaza, Bandung Indah Plaza and Istana Plaza will beindirectly held by LMIR <strong>Trust</strong> pursuant to the respective BOT Agreement or the Cooperation Agreement.The BOT Agreement does not amount to a legal title and is essentially a contractual arrangement andgoverned by <strong>Indonesia</strong>n Civil Code. Pursuant to Article 1338 of the <strong>Indonesia</strong>n Civil Code the contracting73
Risk factorsparties are free to arrange their relationship in the BOTAgreement or Cooperation Agreement (freedom ofcontract) subject to, among others, the prevailing laws and regulations, the good faith of the contractingparties and public policy principles.The terms of the BOT Agreements range from 20 years to 30 years. Since the BOT Agreement is acontractual arrangement, the term of the respective BOT Agreement may be extended based onagreement between the BOT Grantor and the BOT Grantee. Except for the BOT Agreement relating toThe Plaza Semanggi, which provides for automatic extension for an additional term of 20 years, upon sixmonths prior written notification, there is no assurance that the respective BOT Grantor will agree to extendthe term of the BOTAgreements. If there is no agreement to extend the BOTAgreement(s), the operationsof the Properties could be adversely affected or LMIR <strong>Trust</strong> could lose its indirect ownership of theProperties.If the ownership of the BOT land is transferred, there is no assurance that the transferee of theland will recognise the right of the BOT Grantee.Five of the seven <strong>Retail</strong> <strong>Malls</strong>, namely, Cibubur Junction, The Plaza Semanggi, Ekalokasari Plaza,Bandung Indah Plaza and Istana Plaza, are held via BOT Schemes. Pursuant to BOT Schemes, the BOTGrantor has granted the relevant <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC (as the BOT Grantee), a right to build andoperate the <strong>Retail</strong> Mall for a particular period of time as stipulated in the BOT Agreement. Based on theBOT Agreement, the BOT Grantor is obliged to provide the BOT Land and the BOT Grantee is obliged tobuild and operate the building over the BOT Land and to pay a certain amount as compensation to the BOTGrantor. Therefore, if the BOT Grantor transfers the BOT Land to another party (the “Transferee”) duringthe term of the BOT Agreement, the BOT Grantee can make a claim against the BOT Grantor based on abreach of contract.Under the <strong>Indonesia</strong>n Civil Code, there are four principal sanctions to a breach of contract:(i) compensation of costs, damages and lost profits; (ii) cancellation of the contract; (iii) transfer of riskor responsibility for the object of the contract; and (iv) payment of court costs (which would usually excludelegal expenses) in the event of a court claim.Damages may include consequential damages unless expressly excluded by agreement. The partiesmay, by specific contractual provision, limit damages to a certain amount, or they may agree on a particularmethod of calculating damages. In all cases, the existence of monetary damages suffered and the amountof such must be proven.Under Articles 1247, 1248 and 1250 of the <strong>Indonesia</strong>n Civil Code, the following limitations apply to thetypes of costs, damages and interest recoverable:(a)(b)(c)damages which could have been foreseen or anticipated at the time the contract was formed.According to case law, the scope of the loss as well as the possibility of injury must have beenforeseeable;damages directly and immediately flowing or resulting from the breach of contract; andin a case where performance involves the payment of money, damages may include interest.According to generally accepted rules of jurisprudence in <strong>Indonesia</strong>, a creditor is required to do what canreasonably be done to prevent or to reduce the damages (i.e. mitigate damages).Should the BOT Grantor be wound up, any claims by the BOT Grantee may not be satisfied in part or at allby the BOT Grantor. In addition, there is no assurance that the Transferee of the BOT Land will recognisethe right of the BOT Grantee to build and operate a <strong>Retail</strong> Mall on the BOT Land. Under suchcircumstances, the BOT Grantee may be required to surrender the ownership of the <strong>Retail</strong> Mall to theTransferee of the BOT land and this could have a material adverse effect on LMIR <strong>Trust</strong>’s financialcondition and results of operations. (See “Profit Forecast and Profit Projection—Sensitivity Analysis—<strong>Retail</strong> <strong>Malls</strong> held via BOT Schemes”.)74
Risk factorsIf the tenure of the underlying BOT land is less than the term of the BOT Agreement, there isno assurance that the BOT Grantor will be able to renew the title of the BOT land.The term of BOT Agreements ranges from 20 years to 30 years. In respect of the BOT Agreement relatingto Cibubur Junction, the title of the underlying BOT Land will expire on 23 December 2021 and can beextended in accordance with the prevailing laws and regulations, while the BOT Agreement will expire on28 July 2025 and may be extended. Based on the BOT Agreement, the BOT Grantor undertakes that it willextend the term of the title of the BOT Land and the cost incurred for such extension will be borne by theBOT Grantor.There is no assurance that the BOT Grantor will be able to renew the title of the BOT Land. If the BOTGrantor for whatever reason is not able to extend the term of the BOT Land, the relevant <strong>Retail</strong> Mall<strong>Indonesia</strong>n SPC as BOT Grantee will have to deliver the <strong>Retail</strong> Mall situated on the BOT Land without anycompensation from the BOT Grantor. This can result in a material adverse effect on LMIR <strong>Trust</strong>’s GrossRevenue. If the BOT Grantor cannot renew the term of the BOT land, the BOT Grantee would have the rightto make a claim against the BOT Grantor for a breach of contract.LMIR <strong>Trust</strong> is dependent on the underlying titles to the Properties.Due to the nature of <strong>Indonesia</strong>n property law and the variety of land titles in <strong>Indonesia</strong>, there is potential fordisputes over the quality of title purchased from previous land owners. In addition, there is a need tonegotiate with the actual owner of the land each time land is acquired under a licence, which may result inpurchases of property (and thereby the obtaining of title to the relevant land) being delayed or obstructed inthe event that negotiations are unsuccessful. Such delays in acquiring properties required fordevelopment activities could have an adverse effect on LMIR <strong>Trust</strong>’s business, financial condition andresults of operations.Each of the strata units comprising the relevant <strong>Retail</strong> Space at the Metropolis Town Square Units, theDepok Town Square Units, the Malang Town Square Units and the Grand Palladium Medan Units, areowned pursuant to a “Kiosks Sale and Purchase Binding Agreement”, which is evidence of the parties’intention to effect the sale and purchase of the relevant strata units, but do not have the effect oftransferring ownership. Any dispute over the enforceability of these agreements or the transferability of thebenefit thereunder could have an adverse effect on LMIR <strong>Trust</strong>’s business, financial condition and resultsof operation.LMIR <strong>Trust</strong>’s acquisition of all of the ordinary shares and redeemable preference shares in theTarget Singapore SPCs may be subject to risks associated with the acquisition of newproperties and shares in property holding companies.While the Manager believes that reasonable due diligence investigations have been conducted withrespect to the ordinary shares and redeemable preference shares in the Target Singapore SPCs and theProperties prior to acquisition of the ordinary shares and redeemable preference shares in the TargetSingapore SPCs, there can be no assurance that such shares in the Target Singapore SPCs or theProperties will not have certain defects or deficiencies. The management or condition of some of theProperties may be in breach of laws and administrative regulations including those in relation to real estateor be subject to building defects and deficiencies which the Manager’s due diligence investigations did notuncover or may not comply with certain regulatory requirements. As a result, LMIR <strong>Trust</strong> may incuradditional financial or other obligations in relation to such defects or deficiencies.In particular, the representations, warranties and indemnities granted in favour of LMIR <strong>Trust</strong> by theVendors are subject to limitations as to their scope and as to the amount and timing of claims which can bemade thereunder. There can be no assurance that LMIR <strong>Trust</strong> will be entitled to be reimbursed under suchrepresentations, warranties and indemnities for any and all losses or liabilities suffered or incurred by it asa result of its acquisition, via the Singapore SPCs and <strong>Indonesia</strong>n SPCs, of the Properties.75
Risk factorsLMIR <strong>Trust</strong> will be subject to the operating risks inherent in the retail property industry.The Properties will all be indirectly owned by LMIR <strong>Trust</strong> as at Listing Date. As such, LMIR <strong>Trust</strong> will besubject to the operating risks inherent in the retail property industry. The risks that LMIR <strong>Trust</strong> facesinclude:• cyclical downturns arising from changes in general and local economic conditions;• periodic local oversupply of retail malls, which may adversely affect the results of operations of LMIR<strong>Trust</strong>;• the recurring need for renovation, refurbishment and improvement of the retail malls;• changes in wages, prices, energy costs and construction and maintenance costs that may result frominflation, governmental regulations, changes in interest rates or currency fluctuations;• availability of financing for operating or capital requirements;• increases in operating costs due to inflation which may not necessarily be offset by correspondingincreases in rental payments from the Properties; and• other factors, including outbreak of communicable diseases, acts of terrorism, natural disasters,extreme weather conditions, labour shortages and work stoppages or disputes.The Gross Revenue earned from, and the value of, the Properties may be adversely affected bya number of factors.The Gross Revenue earned from, and the value of the Properties may be adversely affected by a numberof factors, including:• vacancies following expiry or termination of leases leading to reduced occupancy rates which, in turn,reduce revenue;• the Manager’s ability to collect rent from tenants on a timely basis or at all;• the amount and extent to which the Manager is required to grant rebates on rental rates to tenants dueto market pressure;• tenants seeking the protection of bankruptcy laws which could result in delays in receipt of rentpayments, inability to collect rentals at all or delays in the termination of the tenant’s lease, or whichcould hinder or delay the sale of a Property or the re-letting of the space in question;• the amount of rent payable by tenants and the terms on which lease renewals and new leases areagreed being less favourable than current leases;• the national and international economic climate and property market conditions (such as oversupply of,or reduced demand for, retail space, the release of land for retail development, changes in market rentalrates and changes in operating expenses for the Properties;• the Manager’s ability to procure adequate management and maintenance or to purchase adequateinsurance;• competition for tenants from other similar properties which may affect rental levels or occupancy levelsat the Properties; and• changes in laws and governmental regulations in relation to property, including those governing usage,zoning, taxes and government charges. Such revisions may lead to an increase in managementexpenses or unforeseen capital expenditure to ensure compliance. Rights related to the relevantProperties may also be restricted by legislative actions, such as revisions to the building standards lawsor the town planning laws, or the enactment of new laws related to condemnation and redevelopment.76
Risk factorsThe Properties may be subject to increases in operating and other expenses.LMIR <strong>Trust</strong>’s ability to make distributions to the Unitholders could be adversely affected if operating andother expenses increase without a corresponding increase in revenues. Factors which could increaseoperating and other costs include:• increase in property tax assessments and other statutory charges;• change in statutory laws, regulations or government policies which increase the cost of compliance withsuch laws, regulations or policies;• increase in sub-contracted service costs;• increase in labour costs;• increase in repair and maintenance costs;• increase in the rate of inflation;• increase in insurance premiums; and• increase in cost of utilities.LMIR <strong>Trust</strong> will not have a right of first refusal to purchase the ROFR Properties if the Sponsorand/or any of its related corporations cease to be a controlling shareholder of the Manager.The Sponsor has granted LMIR <strong>Trust</strong>, for so long as (a) <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong><strong>Trust</strong> Management Ltd. remains the manager of LMIR <strong>Trust</strong> and (b) the Sponsor and/or any of itsrelated corporations, alone or in aggregate, remains a controlling shareholder of the Manager, a ROFRover any Relevant Asset (i) which any Sponsor Entity proposes to sell or transfer (whether such RelevantAsset is wholly-owned or partly-owned by the Sponsor Entity and excluding any sale of such RelevantAsset by a Sponsor Entity to any related corporation of such Sponsor Entity pursuant to a reconstruction,amalgamation, restructuring, merger or any analogous event) to an unrelated third party or (ii) for which aproposed offer for sale or transfer of such Relevant Asset has been made to a Sponsor Entity (see“Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the Right of First RefusalAgreement”). The Sponsor and/or its related corporations have not given any undertaking to refrain fromdisposing any of its shareholding interest in the Manager. In the event that the Sponsor and/or its relatedcorporations cease to be the controlling shareholder of the Manager, LMIR <strong>Trust</strong> will no longer have theROFR to purchase such properties, including the ROFR Properties. This may adversely affect LMIR<strong>Trust</strong>’s pipeline of future acquisitions.RISKS RELATING TO THE PROPERTIESLMIR <strong>Trust</strong> may exercise its rights under the Put Option Agreement and sell four of the <strong>Retail</strong>Spaces to the Master Lessee.As at the Latest Practicable Date, four of the seven <strong>Retail</strong> Spaces, namely Metropolis Town Square Units,Depok Town Square Units, Malang Town Square Units and Grand Palladium Medan Units, are each boundby Kiosks Sale and Purchase Binding Agreements because their strata titles are in the process of beingissued by the <strong>Indonesia</strong>n government. Accordingly, LMIR <strong>Trust</strong> does not currently have proper legal andgood marketable titles of these four <strong>Retail</strong> Spaces.The legal process to obtain these strata titles may be lengthy and may only be issued post listing. The<strong>Trust</strong>ee and the Master Lessee have entered into a put option agreement pursuant to which, in the eventthat the strata titles to these four <strong>Retail</strong> Spaces are not issued within 24 months from the Listing Date, ameeting of all the Unitholders will be convened by the <strong>Trust</strong>ee pursuant to which the Unitholders will vote,by way of an ordinary resolution, on whether to retain these four <strong>Retail</strong> Spaces in the portfolio of LMIR<strong>Trust</strong> for a further six months from the date of the ordinary resolution. In the event that an ordinaryresolution is passed in favour of retaining these four <strong>Retail</strong> Spaces in the portfolio of LMIR <strong>Trust</strong> and thestrata titles are still not issued upon expiry of six months from the date of the ordinary resolution, the<strong>Trust</strong>ee shall be entitled to exercise the put option. In the event that an ordinary resolution is not passed in77
Risk factorsfavour of retaining these four <strong>Retail</strong> Spaces, the <strong>Trust</strong>ee shall be entitled to exercise the put option withinthree months of the date of the meeting of the Unitholders.Upon exercising the put option, the Master Lessee will be required to purchase the entire issued andpaid-up capital of the relevant Singapore SPCs, which through the <strong>Indonesia</strong>n SPCs, own these four <strong>Retail</strong>Spaces at the consideration of the higher of (i) the net asset value of the relevant <strong>Indonesia</strong> SPCs as at thedate of service of the put option notice as determined from the audited consolidated accounts of the SPCsand (ii) the net asset value based on the value attributed to these four <strong>Retail</strong> Spaces for the purpose of theListing, in each case, also taking into account all transaction costs incurred directly and indirectly by LMIR<strong>Trust</strong> for the acquisition of these four <strong>Retail</strong> Spaces. (See “Certain Agreements relating to LMIR <strong>Trust</strong> andthe Properties—Description of the Put Option Agreements”.) The <strong>Trust</strong>ee (acting on the advice andrecommendation of, and after discussions with, the Manager) is satisfied with the computation of the saidtransaction costs as set out in the put option agreement.Although the Manager will endeavour to acquire comparable retail spaces in order to maintain or enhanceLMIR’s distribution per Unit, there is no assurance that this can be achieved. In the event that comparableretail spaces cannot be acquired, the Gross Revenue, the income available for distribution by LMIR <strong>Trust</strong>to Unitholders, the distribution per Unit and the distribution yield for the Projection Year 2009 may beadversely affected.The market values of the Properties may differ from their values as determined by theIndependent Valuers.The valuations were generally conducted using a combination of valuation methods such as thediscounted cash flow method and the investment income capitalisation method. Property valuationsgenerally include a subjective determination of certain factors relating to the relevant properties, such astheir relative market positions, their financial and competitive strengths and their physical conditions. Themarket values of the Properties may therefore differ from the values of the Properties as determined by theIndependent Valuers.The values of the Properties (as determined by the Independent Valuers) are not an indication of, and donot guarantee, a sale price at that value at present or in the future. The price at which LMIR <strong>Trust</strong> sells aproperty may be lower than its value as determined by the Independent Valuers.The Properties may face increased competition from future retail developments in <strong>Indonesia</strong>.The retail property industry is competitive and may become increasingly so. Each of the Properties islocated in an area that has competing retail malls. They may also compete with retail malls in <strong>Indonesia</strong>developed in the future. The income from, and market value of, the Properties will be largely dependent onthe ability of the Properties to compete against other retail properties in <strong>Indonesia</strong> in attracting andretaining tenants. An increase in the number of competitive retail malls in <strong>Indonesia</strong>, particularly in theareas where the Properties are located, could have a material adverse effect on the revenue of theProperties, as such increased competition may have an adverse impact on the ability of the lessees of the<strong>Retail</strong> <strong>Malls</strong> or the Master Lessee of the <strong>Retail</strong> Spaces to make rental payments.Amenities and transportation infrastructure near the Properties may be closed, relocated orterminated.The proximity of amenities and transportation infrastructures, such as train stations and bus interchanges,to the Properties provides convenient access to the Properties and a constant flow of shopper traffic.There is no assurance that the amenities and transportation infrastructure and shuttle services will not beclosed, relocated or terminated in the future. Such closure, relocation or termination may adversely affectthe accessibility of the Properties which will reduce the flow of shopper traffic to the Properties. This maythen have an adverse effect on the demand for and the rental rates of the Properties and adversely affectthe financial position of LMIR <strong>Trust</strong>.78
Risk factorsRenovation work or physical damage to the Properties may disrupt the operations of LMIR<strong>Trust</strong> and collection of rental income or otherwise result in adverse impact on the financialcondition of LMIR <strong>Trust</strong>.The quality and design of the Properties directly influence the rental rates of and the demand for space inthe Properties, as well as the ability to attract heavy shopper traffic. The Properties may need to undergorenovation work from time to time to retain their attractiveness to tenants and may also require ad hocmaintenance or repairs caused by structural defects or because of new planning laws or regulations. Thecosts of maintaining a retail property and the risk of unforeseen maintenance or repair requirements tendto increase over time as the Properties age. While the Manager and the Property Manager will endeavourto keep any disruptions caused by such renovation work to a minimum, the business and operations of theProperties may still suffer some disruption and it may not be possible to collect the full rate of, or, as thecase may be, any rental income on space affected by such renovation work. Shopper traffic may also beadversely affected by potential inconveniences resulting from such renovation work.Physical damage to the Properties resulting from fire or other causes may lead to a significant disruption tothe business and operation of the Properties and together with the foregoing may result in an adverseimpact on the financial condition and results of operations of LMIR <strong>Trust</strong> and its ability to makedistributions.Some of the anchor tenants of the <strong>Retail</strong> <strong>Malls</strong> may terminate their leases pursuant to a sixmonthtermination clauseUnder the respective lease agreements, some of the anchor tenants of the <strong>Retail</strong> <strong>Malls</strong> may terminatetheir leases with a six-month notice period.The loss of these anchor tenants in the <strong>Retail</strong> <strong>Malls</strong> could result in periods of vacancy, which couldtherefore adversely affect the revenue of the relevant <strong>Retail</strong> Mall, consequently impacting the <strong>Indonesia</strong>nSPCs’ ability to make distributions to LMIR <strong>Trust</strong>.A substantial number of the leases of the <strong>Retail</strong> <strong>Malls</strong> are for terms of three to five years,which exposes the <strong>Retail</strong> <strong>Malls</strong> to significant rates of lease expiries each year.A substantial number of the leases for the <strong>Retail</strong> <strong>Malls</strong> are for terms of three to five years. As a result, theProperties experience lease cycles in which a substantial number of such leases expire each year. Thisexposes LMIR <strong>Trust</strong> to certain risks, including the risk that vacancies following the non-renewal of leasesmay lead to reduced occupancy rates, which will in turn reduce LMIR <strong>Trust</strong>’s Gross Revenue.The inspections carried out during the valuation exercise on buildings and equipment may nothave identified all material defects, breaches of laws and regulations and other deficiencies.The Independent Valuers conducted inspections on the physical condition of the Properties as part of thevaluation exercise. There can be no assurance that such reviews, surveys or inspections have revealed alldefects or deficiencies affecting the Properties. In particular, there can be no assurance as to the absenceof: (i) latent or undiscovered defects or deficiencies; or (ii) inaccuracies or deficiencies in such review,survey or inspection reports, any of which could have a material adverse effect on the operations of theProperties and, consequently, LMIR <strong>Trust</strong>’s financial condition and results of operations. The risk ofundisclosed defects, breaches and deficiencies is necessarily increased as a result of the time intervalbetween completion of the review, survey and inspection process and the date of this Prospectus.The Master Lessee may not be liable to pay rent if any of the <strong>Retail</strong> Spaces is damaged ordestroyed.Under the Master Lease Agreements, if any of the <strong>Retail</strong> Spaces is damaged or destroyed such that the<strong>Retail</strong> Space cannot be used or becomes inaccessible, the relevant landlord has the option to reinstate orreplace such <strong>Retail</strong> Space (or the affected part, as the case may be) using insurance proceeds receivedunder the insurance policies. If the relevant landlord opts to reinstate or replace the <strong>Retail</strong> Space, theMaster Lessee will not be liable to pay rent in respect of the period when the <strong>Retail</strong> Space cannot be used79
Risk factorsor is inaccessible. The non-payment of rent by the Master Lessee will have a material adverse effect onLMIR <strong>Trust</strong>’s Gross Revenue.RISKS RELATING TO INDONESIALMIR <strong>Trust</strong> is exposed to economic and real estate market conditions and changes in fiscalpolicies in <strong>Indonesia</strong>.LMIR <strong>Trust</strong> is a Singapore-based REIT constituted by the <strong>Trust</strong> Deed. It is established with the principalinvestment objective of owning and investing on a long-term basis in a diversified portfolio of incomeproducingreal estate in <strong>Indonesia</strong> that are primarily used for retail and/or retail-related purposes, and realestate related assets in connection with the foregoing.All of the Properties are situated in <strong>Indonesia</strong>. As a result, LMIR <strong>Trust</strong>’s revenue and results of operationsdepend to a large extent on the performance of the <strong>Indonesia</strong>n economy. An economic decline in<strong>Indonesia</strong> could adversely affect LMIR <strong>Trust</strong>’s results of operations and financial growth. Politicalupheavals, natural disasters, insurgency movements, riots and governmental policies all play a pivotalrole in the performance of the Properties.Other local real estate market conditions which may adversely affect the performance of LMIR <strong>Trust</strong>include the attractiveness of competing retail properties, an oversupply of or a reduced demand for retailproperties.LMIR <strong>Trust</strong> may also be exposed to risks associated with exchange rate fluctuations between the<strong>Indonesia</strong>n Rupiah or the local currency of foreign countries in which LMIR <strong>Trust</strong> invests in and theSingapore dollar.LMIR <strong>Trust</strong> will be subject to <strong>Indonesia</strong>n real estate laws, regulations and policies as a result of its propertyinvestments in <strong>Indonesia</strong>. There may be a negative impact on a property owned by LMIR <strong>Trust</strong> in <strong>Indonesia</strong>as a result of measures and policies adopted by the <strong>Indonesia</strong>n government and regulatory authorities atnational, provincial or local levels, such as governmental control over property investments or regulationsin relation to foreign exchange. Legal protection and recourse available to LMIR <strong>Trust</strong> in <strong>Indonesia</strong> may belimited.In addition, the income and gains derived from investment in properties in <strong>Indonesia</strong> will be subject tovarious types of taxes in <strong>Indonesia</strong>, including income tax, withholding tax, capital gains tax and any othertaxes that may be imposed specifically for ownership of real estate. All of these taxes, which are subject tochanges in laws and regulations that may lead to an increase in tax rates or the introduction of new taxes,could adversely affect and erode the returns from these properties and hence the distribution toUnitholders.There is also no assurance that LMIR <strong>Trust</strong> will be able to repatriate to Singapore the income and gainsderived from investment in properties outside Singapore on a timely and regular basis. Any inability torepatriate the income and gains to Singapore will affect LMIR <strong>Trust</strong>’s ability to make distributions toUnitholders out of such income and gains.The Properties and/or future acquisitions, or a part of them, may be acquired compulsorily bythe <strong>Indonesia</strong>n government.In <strong>Indonesia</strong>, pursuant to Law No. 20 of 1961 concerning Revocation of Rights of Land and the PropertiesThereon and Law No. 28 of 2002 concerning Building Construction in conjunction with PresidentialRegulation No. 36 of 2005 (as amended by the Presidential Regulation No. 65 of 2006) concerning LandProcurement for the Development of Public Interest, after fulfilling certain procedures and compensatingthe land owners based on reasonable price and prevailing laws and regulations, the <strong>Indonesia</strong>ngovernment has the right to revoke any right over the land and any property thereon owned by anyparty, in order for the <strong>Indonesia</strong>n government (including local governments) to fulfil public needs, includingpublic roads, airports, train stations, water embankments or natural reservations. Therefore, there is noassurance that the <strong>Indonesia</strong>n government will not compulsorily acquire the lands on which the Propertiesare situated.80
Risk factorsSuch compulsory acquisitions would have an adverse effect on the financial condition, operating resultsand the value of LMIR <strong>Trust</strong>’s asset portfolio.Terrorist attacks in <strong>Indonesia</strong> could destabilise the country.Terrorist acts in <strong>Indonesia</strong> could destabilise <strong>Indonesia</strong> and increase internal divisions within the<strong>Indonesia</strong>n government as it evaluates responses to that instability and unrest. Violent acts arisingfrom, and leading to, instability and unrest have in the past had, and may continue to have, a materialadverse effect on investment and confidence in, and the performance of, the <strong>Indonesia</strong>n economy, andmay have a material adverse effect on the Master Lessee’s business, financial condition, results ofoperations and future prospects. This could adversely impact the ability of the tenants of the <strong>Retail</strong> <strong>Malls</strong>and the Master Lessee to make rental payments to the <strong>Indonesia</strong>n SPCs.Economic changes in <strong>Indonesia</strong> may adversely affect the Master Lessee’s business.The economic crisis which affected Southeast Asia, including <strong>Indonesia</strong>, around mid-1997 wascharacterised in <strong>Indonesia</strong> by, among other effects, currency depreciation, negative economic growth,high interest rates, social unrest and extraordinary political developments. These conditions had materialadverse effects on <strong>Indonesia</strong>n businesses.The economic difficulties faced by <strong>Indonesia</strong> during the Asian economic crisis in 1997 resulted in, amongother things, significant volatility in interest rates, which had a material adverse impact on the ability ofmany <strong>Indonesia</strong>n companies to service their existing indebtedness.In addition, <strong>Indonesia</strong> relies heavily on aid from the International Monetary Fund (“IMF”), loans from theWorld Bank and the members of the Paris Club, as well as from the Consultative Group on <strong>Indonesia</strong>(“CGI”). The inability of the <strong>Indonesia</strong>n government to obtain adequate funding, in the event of atermination of the IMF program, or a reduction or elimination of funding from the World Bank and themembers of the Paris Club or the CGI, could have adverse economic, political and social consequences in<strong>Indonesia</strong>, which in turn, could have a material adverse effect on the Master Lessee’s business, financialcondition, results of operations and future prospects.A loss of investor confidence in the financial system of emerging and other markets may cause increasedvolatility in the <strong>Indonesia</strong>n financial markets, and a slowdown or negative growth could have materialadverse effects on the Master Lessee’s business, financial condition, results of operations and prospects.Demand for retail services are largely dependent on the purchasing power of shoppers and theirwillingness to pay for retail services. A slowdown in the <strong>Indonesia</strong>n economy or a high unemploymentrate may require more people to adopt a prudent approach towards spending, resulting in a lower demandfor retail services.The Singapore-<strong>Indonesia</strong> tax treaty may be applied in a manner adverse to the interests of theUnitholders.The <strong>Indonesia</strong>n tax rules generally require a 20.0% tax to be withheld on the payment of a dividend orinterest from an <strong>Indonesia</strong>n taxpayer to an offshore tax resident. Under the double tax treaty betweenSingapore and <strong>Indonesia</strong>, the rate of withholding tax is reduced to 10.0% on the payment of a dividend orinterest to a Singapore tax resident which is the beneficial owner of this payment. The reduced rate isavailable to a Singapore company only if the company submits an original copy of the certificate of domicileto the <strong>Indonesia</strong>n payor prior to the payment of the income.On 7 July 2005, the Directorate General of Taxation in <strong>Indonesia</strong> issued a circular letter indicating that thebenefits of <strong>Indonesia</strong>’s double tax treaties would not be available to a recipient of <strong>Indonesia</strong>n-sourcedincome that was not the beneficial owner of such income. The circular letter further elaborated that a SPVwhich is a “conduit company”, “paper box company”, “pass through company”, or any similar form of entitywould not qualify as the beneficial owner of payments received by it.The independent tax advice from PB&Co, the Independent <strong>Indonesia</strong>n Tax Adviser, sets out that thereduced withholding tax rate of 10.0% should apply to the payment of interest and dividends to aSingapore tax-resident beneficial owner. Under Singapore income tax law, the Singapore SPCs wouldbe considered tax resident in Singapore if the control and management of their business is exercised in81
Risk factorsSingapore. As a general rule, the place where a company’s control and management is exercised andhence the tax residence of the company is the place where the directors of the company hold theirmeetings. The board of directors of the Singapore SPCs will endeavour to ensure that the control andmanagement of each of the Singapore SPCs is exercised in Singapore so that each would be considered atax resident of Singapore. The Singapore SPCs are the beneficial owner of the shares in the <strong>Indonesia</strong>nSPCs and of the loans to the <strong>Indonesia</strong>n SPCs. Therefore, they should be considered as the beneficialowner of the interest and dividend income received from the <strong>Indonesia</strong>n SPCs. Nevertheless, it remainsuncertain as to whether the <strong>Indonesia</strong>n tax authorities will view the Singapore SPCs as the beneficialowners of the interest and dividends. If the Singapore SPCs are not viewed as the beneficial owners, itshould still be possible to obtain the reduced withholding tax rate to the extent that Singapore tax residents(or any other jurisdiction with the same tax rate under their respective double tax treaty) are theUnitholders of LMIR <strong>Trust</strong>. If the higher withholding tax rate of 20.0% would apply to the dividend andinterest payments from the <strong>Indonesia</strong>n SPCs, this will accordingly lower the income paid to the SingaporeSPCs and in turn may adversely affect the financial results of LMIR <strong>Trust</strong> and its distributions toUnitholders.The <strong>Indonesia</strong>n legal system is subject to considerable discretion and uncertainty.<strong>Indonesia</strong>’s legal system is a civil law system based on written statutes in which judicial and administrativedecisions do not constitute binding precedents and are not systematically published. <strong>Indonesia</strong>’scommercial and civil laws are historically based on Dutch law as in effect prior to <strong>Indonesia</strong>’sindependence in 1945. Some of these laws have not been revised to reflect the complexities ofmodern financial transactions and instruments. There may be uncertainty in the interpretation andapplication of legal principles in <strong>Indonesia</strong>. The application of legal principles in <strong>Indonesia</strong> dependsupon subjective criteria such as the good faith of the parties to the transaction and principles of publicpolicy, the practical effect of which is difficult or impossible to predict. <strong>Indonesia</strong>n judges have very broadfact-finding powers and a high level of discretion in relation to the manner in which those powers areexercised. As a result, the administration and enforcement of laws and regulations by <strong>Indonesia</strong>n courtsand <strong>Indonesia</strong>n governmental agencies may be subject to considerable discretion and uncertainty.<strong>Indonesia</strong>n legal principles relating to the rights of debtors and creditors, or their practical implementationby <strong>Indonesia</strong>n courts, differ materially from those that would apply in, for example, Singapore, the UnitedStates or the European Union. As a result, it may be more difficult for the <strong>Trust</strong>ee, on behalf of LMIR <strong>Trust</strong>,to pursue a claim against the tenants of the <strong>Retail</strong> <strong>Malls</strong> or the Master Lessee in <strong>Indonesia</strong> than it would bein other jurisdictions, such as in Singapore. This may adversely affect or eliminate entirely LMIR <strong>Trust</strong>’sability (and indirectly, the ability of its Unitholders) to obtain and/or enforce a judgment against the MasterLessee in <strong>Indonesia</strong>.The operations of the Properties may be adversely affected by earthquakes, tsunamis, floodsor other natural disasters.The <strong>Indonesia</strong>n archipelago is one of the most active volcanic regions in the world. As it is located in theconvergence zone of three major lithospheric plates, it is subject to significant seismic activity that can leadto destructive earthquakes and tidal waves. On 26 December 2004, an underwater earthquake off thecoast of Sumatra resulted in a tsunami that devastated coastal communities in <strong>Indonesia</strong>, Thailand and SriLanka. In <strong>Indonesia</strong>, more than 220,000 people died or were recorded as missing in the disaster.Aftershocks from the December 2004 tsunami have also claimed casualties. In March 2007, apowerful earthquake hit the <strong>Indonesia</strong>n island of Sumatra, flattening hundreds of buildings and killingat least 70 people. On 12 September 2007, a strong earthquake occurred in Sumatra which causedsignificant aftershocks in the surrounding regions.The operations of the Properties may be affected by floods. In February 2007, incessant rain caused riversto overflow across Jakarta. As a result, homes, government buildings, retail malls and businesses wereflooded. The authorities were forced to cut off electricity and water supplies in certain areas.There can be no assurance that future geological occurrences will not significantly impact the operationsof the Properties. An earthquake or other geological disturbance in any of <strong>Indonesia</strong>’s more populatedcities and financial centres could disrupt the <strong>Indonesia</strong>n economy and the operations of the Properties,82
Risk factorsthereby materially and adversely affecting the ability of the tenants of the <strong>Retail</strong> <strong>Malls</strong> and the MasterLessee to make rental payments to the <strong>Indonesia</strong>n SPCs.Labour activism and unrest may materially and adversely affect the Properties.Laws permitting the formation of labour unions, combined with weak economic conditions, have resulted,and may continue to result, in labour unrest and activism in <strong>Indonesia</strong>. In March 2003, the <strong>Indonesia</strong>ngovernment enacted Law No. 13/2003 (the “Labour Law”) that requires further implementation ofregulations that may substantively affect labour relations in <strong>Indonesia</strong>.The Labour Law requires bipartite forums with participation from employers and employees, and theparticipation of more than 50.0% of the employees of a company, in order for a collective labour agreementto be negotiated and, in addition, the Labour Law creates procedures that are more permissive to thestaging of strikes.Labour unrest and activism in <strong>Indonesia</strong> could disrupt operations of the Properties, and thus couldmaterially and adversely affect the ability of the tenants of the <strong>Retail</strong> <strong>Malls</strong> and the Master Lessee to makerental payments to the <strong>Indonesia</strong>n SPCs.RISKS RELATING TO AN INVESTMENT IN THE UNITSThe sale or possible sale of a substantial number of Units by the Cornerstone <strong>Investor</strong>s in thepublic market following the lapse of any applicable lock-up arrangements could have adverseeffects on LMIR <strong>Trust</strong>.The Cornerstone <strong>Investor</strong>s, being <strong>Lippo</strong> Strategic and Mapletree LM, will receive Cornerstone Units,amounting to an aggregate of approximately 39.1% of the total issued Units as at the Listing Date,(assuming no exercise of the Over-allotment Option).<strong>Lippo</strong> Holdings Inc, <strong>Lippo</strong> Capital Limited, <strong>Lippo</strong> Cayman Limited and Lanius Ltd are deemed to haveinterests in the Cornerstone Units due to their direct or indirect (as the case may be) interests in <strong>Lippo</strong>Strategic.<strong>Lippo</strong> Strategic (also the Unit Lender), <strong>Lippo</strong> Holdings Inc, <strong>Lippo</strong> Capital Limited, <strong>Lippo</strong> Cayman Limited,Lanius Ltd, MIPL, Mapletree Dextra Pte Ltd and Mapletree LM have on 9 November 2007 each agreed to(a)(b)a lock-up arrangement in respect of their direct or indirect interests (as the case may be) in theCornerstone Units (or any securities convertible or exchangeable for units or which carry any rights tosubscribe for or purchase units) (adjusted for any bonus issue, consolidation or subdivision), as at theListing Date during the First Lock-Up Period; anda lock-up arrangement in respect of their direct or indirect interests (as the case may be) in 50.0% ofthe Cornerstone Units (or any securities convertible or exchangeable for units or which carry anyrights to subscribe for or purchase units) (adjusted for any bonus issue, consolidation orsubdivision)as at the Listing Date during the Second Lock-Up Period, subject to certain exceptions.(See “Plan of Distribution—Lock-Up Arrangements”).However, there is no assurance that any of <strong>Lippo</strong> Strategic (also the Unit Lender), <strong>Lippo</strong> Holdings Inc,<strong>Lippo</strong> Capital Limited, <strong>Lippo</strong> Cayman Limited, Lanius Ltd, MIPL, Mapletree Dextra Pte Ltd and MapletreeLM will not dispose of its direct or indirect interest in the Cornerstone Units following the expiry of the FirstLock-Up Period and the Second Lock-Up Period. There is also no assurance that the Cornerstone<strong>Investor</strong>s will not dispose of their direct or indirect interests in the Cornerstone Units. In the event that anyof the Cornerstone <strong>Investor</strong>s decides to transfer or dispose of its direct or indirect interest in theCornerstone Units, there may be a material and adverse impact on the market price of the Units.LMIR <strong>Trust</strong> may not be able to make distributions to Unitholders or the level of distributionsmay fall.The net operating profit earned from real estate investments depends on, among other factors, the amountof rental income received, and the level of property, operating and other expenses incurred. If theproperties which are directly or indirectly held by LMIR <strong>Trust</strong> do not generate sufficient net operating83
Risk factorsprofit, LMIR <strong>Trust</strong>’s income, cash flow and ability to make distributions will be adversely affected. Inaddition, if the Singapore SPCs have insufficient cash flows or distributable profits or surplus, or theSingapore SPCs do not make the expected level of distributions in any financial year, LMIR <strong>Trust</strong>’s income,cash flow and ability to pay or maintain distributions to Unitholders, may be adversely affected.No assurance can be given as to LMIR <strong>Trust</strong>’s ability to pay or maintain distributions. Nor is there anyassurance that the level of distributions will increase over time, that there will be contractual increases inrent under the leases of the Properties or that the receipt of rental income in connection with expansion ofthe properties or future acquisitions of properties will increase LMIR <strong>Trust</strong>’s cash flow available fordistribution to Unitholders.Market and economic conditions may affect the market price and demand for the Units.Movements in domestic and international securities markets, economic conditions, foreign exchangerates and interest rates may affect the market price of, and demand for, the Units. In particular, an increasein market interest rates may have an adverse impact on the market price of the Units if the annual yield onthe price paid for the Units gives investors a lower return compared to other investments.The NAV per Unit may be diluted if further issues are priced below the then NAV per Unit.The <strong>Trust</strong> Deed contemplates issues of new units, the Offering Price for which may be above, at or belowthe then NAV per Unit. Where new units, including units which may be issued to the Manager in payment ofthe Manager’s management fees, are issued at less than the current NAV per Unit, the NAV of eachexisting Unit may be diluted.The laws, regulations and accounting standards in <strong>Indonesia</strong>, Singapore or countries in whichfuture acquisitions may be situated, may change.LMIR <strong>Trust</strong> may be affected by the introduction of new or revised legislation, regulations or accountingstandards. Accounting standards in <strong>Indonesia</strong> and Singapore are subject to changes as accountingstandards in both countries become more aligned with international accounting standards. The financialstatements of LMIR <strong>Trust</strong> and the Singapore SPCs may be affected by the introduction of such revisedaccounting standards. The extent and timing of these changes in accounting standards are unknown andare subject to confirmation by the relevant authorities. The Manager has not quantified the effects of theseproposed changes and there can be no assurance that these changes will not have a significant impact onthe presentation of LMIR <strong>Trust</strong>’s financial statements or on LMIR <strong>Trust</strong>’s results of operations. Suchchanges may adversely affect the ability of LMIR <strong>Trust</strong> to make distributions to Unitholders. There can beno assurance that any such changes in laws, regulations and accounting standards will not have anadverse effect on the ability of the Manager to carry out LMIR <strong>Trust</strong>’s investment strategy or on theoperations and financial condition of LMIR <strong>Trust</strong>.LMIR <strong>Trust</strong> may be unable to comply with the conditions for the tax exemption and tax ruling,or the tax exemption or tax ruling may no longer apply.LMIR <strong>Trust</strong> has obtained an approval from the Inland Revenue Authority of Singapore (“IRAS”) to exemptfrom Singapore income tax any interest received by the Singapore SPCs from the <strong>Indonesia</strong>n SPCs that ispaid out of the underlying rental income derived from the Properties. This tax exemption is given underSection 13(12) of the Income Tax Act.LMIR <strong>Trust</strong> has also received an advance ruling from IRAS issued under Section 108 of the Income Tax Actwhich confirms that a return of capital by LMIR <strong>Trust</strong> is not a taxable distribution to Unitholders.The approval for the tax exemption under Section 13(12) of the Income Tax Act and the advance rulingfrom the IRAS issued under Section 108 of the Income Tax Act are subject to LMIR <strong>Trust</strong> satisfying thestipulated conditions. Where these conditions are not satisfied, or are no longer satisfied by LMIR <strong>Trust</strong>,the tax exemption and ruling may no longer apply.The approval and tax ruling are also granted based on the facts presented to IRAS, as well as the IRAS’scurrent interpretation of the existing tax laws. Where the facts turn out to be different from thoserepresented to IRAS, or where there is a subsequent change in the tax laws, or a change in the84
Risk factorsinterpretation by the IRAS of the tax laws that affect the approval and the ruling, the tax exemption andruling may no longer apply, possibly on a retroactive basis.Foreign Unitholders may not be permitted to participate in future rights issues by LMIR <strong>Trust</strong>.The <strong>Trust</strong> Deed provides that in relation to any rights issue, the Manager may, in its absolute discretion,elect not to extend an offer of Units under a rights issue to those Unitholders whose addresses, asregistered with CDP, are outside Singapore. The rights or entitlements to the Units to which suchUnitholders would have been entitled will be offered for sale and sold in such manner, at such priceand on such other terms and conditions as the Manager may determine, subject to such other terms andconditions as the <strong>Trust</strong>ee may impose. The proceeds of any such sale will be paid to the Unitholders whoserights or entitlements have been so sold, provided that where such proceeds payable to the relevantUnitholders are less than S$10.00, the Manager is entitled to retain such proceeds as part of theDeposited Property. The holding of the relevant holder of the Units may be diluted as a result of such sale.The actual performance of LMIR <strong>Trust</strong> and the Properties could differ materially from theforward-looking statements in this Prospectus.This Prospectus contains forward-looking statements regarding, among other things, forecast andprojected distribution levels. These forward-looking statements are based on a number ofassumptions which are subject to significant uncertainties and contingencies, many of which areoutside of the Manager’s control (see “Profit Forecast and Profit Projection—Assumptions”). Inaddition, LMIR <strong>Trust</strong>’s revenue is dependent on a number of factors including the receipt of dividendsand redemption proceeds from the Target Singapore SPCs and rent from the Properties held through theSingapore SPCs, which may decrease for a number of reasons including the lowering of occupancy andrental rates, insolvency or delay in rent payment by tenants. This may adversely affect LMIR <strong>Trust</strong>’s abilityto achieve the forecast and projected distributions as some or all events and circumstances assumed maynot occur as expected, or events and circumstances may arise which are not currently anticipated. Actualresults may be materially different from the forecast and projections. No assurance can be given that theassumptions will be realised and that actual distributions will be as forecast and projected.The Manager is not obliged to redeem Units.Unitholders have no right to request the Manager to redeem their Units while the Units are listed on the SGX-ST. It is intended that Unitholders may only deal in their listed Units through trading on the SGX-ST.The Units have never been publicly traded and the listing of the Units on the Main Board ofthe SGX-ST may not result in an active or liquid market for the Units.Prior to the Offering, there was no public market for the Units and an active public market for the Units may notdevelop or be sustained after the Offering. While the Manager has received a letter of eligibility from the SGX-ST to have the Units listed and quoted on the Main Board of the SGX-ST, listing and quotation does notguarantee the development of a trading market for the Units or, if a market does develop, the liquidity of thatmarket for the Units. Prospective Unitholders should view the Units as illiquid and should be prepared to holdtheir Units for an indefinite length of time. Further, it may be difficult to assess LMIR <strong>Trust</strong>’s performanceagainst either domestic or international benchmarks.There is no assurance that the Units will remain listed on the SGX-ST.Although it is currently intended that the Units will remain listed on the SGX-ST, there is no guarantee of thecontinued listing of the Units. LMIR <strong>Trust</strong> may not continue to satisfy any future listing requirements of theSGX-ST.The Manager may change LMIR <strong>Trust</strong>’s investment strategy as there is no restriction onchanges in such investment and financing strategies.LMIR <strong>Trust</strong>’s policy with respect to certain activities, including investments and acquisitions, will bedetermined by the Manager. The Manager has stated its intention to own and invest on a long-term basis ina diversified portfolio of income-producing real estate in <strong>Indonesia</strong> that are primarily used for retail and/or85
Risk factorsretail-related purposes, and real estate related assets in connection with the foregoing purposes. Suchstrategy may not be changed for a period of three years commencing from the Listing Date (as the ListingManual prohibits a departure from the Manager’s stated investment strategy for LMIR <strong>Trust</strong> for the saidperiod unless otherwise approved by an Extraordinary Resolution passed by Unitholders). The <strong>Trust</strong> Deedgrants the Manager wide power to invest in other types of assets, including real estate, real estate-relatedassets, as well as listed and unlisted securities in Singapore and other jurisdictions and the Manager maychange its investment strategy after the expiry of the three-year period. There are risks and uncertaintieswith respect to the selection of investments and with respect to the investments themselves.Certain provisions of the Singapore Code on Take-overs and Mergers could have the effect ofdiscouraging, delaying or preventing a merger or acquisition, which could adversely affect themarket price of the Units.The MAS has announced on 8 June 2007 the decision of the Securities Industry Council to extend theambit of the Take-over Code to REITs. While the MAS will be making amendments to the SFA and theTake-over Code, where necessary, to give effect to the extension of the Take-over Code to REITs in duecourse, the Securities Industry Council has recommended that parties engaged in take-over or mergertransactions involving REITs comply with the Take-over Code prior to such amendments.The Take-over Code contains provisions that may delay, deter or prevent a future take-over or change incontrol of LMIR <strong>Trust</strong>. Under the Take-over Code, any person acquiring an interest, either individually orwith parties acting in concert, in 30.0% or more of the Units (being voting units in LMIR <strong>Trust</strong>) may berequired to extend a take-over offer for the remaining Units in accordance with the Take-over Code. A takeoveroffer is also required to be made if a person holding between 30.0% and 50.0% inclusive of the Units,either individually or in concert, acquires an additional 1.0% of the Units in any six-month period under theTake-over Code. While the application of the Take-over Code is intended to ensure equality of treatmentamong Unitholders, its provisions may discourage or prevent certain types of transactions involving anactual or threatened change of control of LMIR <strong>Trust</strong> and, as a result, may adversely affect the market priceof the Units and the ability to realise any potential change of control premium.The price of the Units may decline after the Offering.The Offering Price of the Units is determined by agreement between the Manager and the Underwritersand may not be indicative of the market price for the Units after the completion of the Offering. The Unitsmay trade at prices significantly below the Offering Price after the Offering. The trading price of the Unitswill depend on many factors, including:• the perceived prospects of LMIR <strong>Trust</strong>’s business and investments and the <strong>Indonesia</strong>n retail real estatemarket;• differences between LMIR <strong>Trust</strong>’s actual financial and operating results and those expected byinvestors and analysts;• changes in analysts’ recommendations or projections;• changes in general economic, political or market conditions;• the market value of LMIR <strong>Trust</strong>’s assets;• the perceived attractiveness of the Units against those of other equity or debt securities, including thosenot in the real estate sector;• the balance of buyers and sellers of the Units;• the future size and liquidity of the Singapore REIT market;• any future changes to the regulatory system, including the tax system, both generally and specifically inrelation to Singapore REITs;• the ability of the Manager to successfully implement its investment and growth strategies;• foreign exchange rates; and86
Risk factors• broad market fluctuations, including weakness of the equity market and increases in interest rates.For these and other reasons, the Units may trade at prices that are higher or lower than the NAV per Unit.To the extent that LMIR <strong>Trust</strong> retains operating cash flow for investment purposes, working capitalreserves or other purposes, these retained funds, while increasing the value of its underlying assets, maynot correspondingly increase the market price of the Units. Any failure on LMIR <strong>Trust</strong>’s part to meet marketexpectations with regard to future earnings and cash distributions may adversely affect the market price forthe Units.In addition, the Units are not capital-safe products and there is no guarantee that Unitholders can regainthe amount invested. If LMIR <strong>Trust</strong> is terminated or liquidated, it is possible that investors may lose a part orall of their investment in the Units.LMIR <strong>Trust</strong> may be affected by the introduction of new or revised legislation, regulations,guidelines or directives affecting REITs.LMIR <strong>Trust</strong> may be affected by the introduction of new or revised legislation, regulations, guidelines ordirectives affecting REITs. There is no assurance that the MAS or any other relevant authority will notintroduce new legislation, regulations, guidelines or directions which would adversely affect REITsgenerally, or LMIR <strong>Trust</strong> specifically.87
Use of proceedsThe Manager intends to raise an aggregate of approximately S$848.3 million (based on the Offering Price)from the Offering as well as from the issuance of Cornerstone Units.The Manager intends to apply the total proceeds from the Offering and from the issuance of CornerstoneUnits towards the following:(i) payment of the purchase consideration to the Vendors for the acquisition of all of the ordinary sharesand redeemable preference shares in the Target Singapore SPCs at completion under the SingaporeSPC Share Purchase Agreements; and(ii) costs and expenses related to the Offering, and the issuance of the Cornerstone Units.The following tables, included for the purpose of illustration, set out the intended source and application ofthe total proceeds from the Offering and from the issuance of the Cornerstone Units.Based on the Offering Price and estimated issue costs and expenses of the Offering, and assuming thatthe Over-allotment Option has not been exercised:Source (S$) Application (S$)Units under the Offering. . . . . . . . 516,375,200 Acquisition of all the ordinaryshares and redeemablepreference shares in the TargetSingapore SPCs . . . . . . . . . . . . . 815,529,280Cornerstone Units . . . . . . . . . . . . 331,956,000 Issue costs and expenses relatedto the Offering . . . . . . . . . . . . . . . 32,801,920Total ...................... 848,331,200 Total 848,331,20088
Ownership of UnitsPRINCIPAL UNITHOLDERS OF LMIR TRUST AND THEIR UNITHOLDINGSThe following table sets out the principal Unitholders of LMIR <strong>Trust</strong> and their Unitholdings immediatelyafter the Offering and the issuance of Cornerstone Units:Units owned afterOffering (assuming thatthe Over-allotment Optionis not exercised)Units owned afterOffering (assuming thatthe Over-allotment Optionis exercised in full)(’000) (%) (’000) (%)<strong>Lippo</strong> Strategic (1) . . . . . . . . . . . . . . . . . . . . . . . . 287,695 27.1 190,875 18.0Mapletree LM (2) . . . . . . . . . . . . . . . . . . . . . . . . . 127,250 12.0 127,250 12.0Total for Cornerstone <strong>Investor</strong>s . . . . . . . . . . . . 414,945 39.1 318,125 30.0Public and institutional investors . . . . . . . . . . . . . 645,469 60.9 742,289 70.0Total ................................. 1,060,414 100.0 1,060,414 100.0Notes:(1) <strong>Lippo</strong> Holdings Inc, <strong>Lippo</strong> Capital Limited, <strong>Lippo</strong> Cayman Limited and Lanius Ltd are deemed to haveinterests in the Cornerstone Units held by <strong>Lippo</strong> Strategic due to their direct or indirect (as the casemay be) interests in <strong>Lippo</strong> Strategic.(2) MIPL and Mapletree Dextra are deemed to have interests in the Cornerstone Units held by MapletreeLM due to their direct or indirect (as the case may be) interests in Mapletree LM.Concurrently with but separate from the Offering, the Cornerstone <strong>Investor</strong>s will receive an aggregate of414,945,000 Cornerstone Units constituting approximately 39.1% of the total issued Units as at the ListingDate, of which up to 96,820,000 Units, which constitute approximately 9.1% of the Units expected to beissued on the Listing Date, will be lent to the Underwriters by <strong>Lippo</strong> Strategic (as the Unit Lender) inconnection with the Over-allotment Option.<strong>Lippo</strong> Strategic (also the Unit Lender), <strong>Lippo</strong> Holdings Inc, <strong>Lippo</strong> Capital Limited, <strong>Lippo</strong> Cayman Limited,Lanius Ltd, MIPL, Mapletree Dextra Pte Ltd and Mapletree LM have on 9 November 2007 agreed to certainlock-up periods in respect of their direct or indirect interests (as the case may be) in their respectiveinterests in their Cornerstone Units, as at Listing Date, subject to certain exceptions (see “Plan ofDistribution—Lock-up Arrangements”).The Cornerstone <strong>Investor</strong>s (as set out below) have entered into Cornerstone Subscription Agreementswith the Manager to subscribe for an aggregate of 414,945,000 Cornerstone Units at the Offering Price,conditional upon the Underwriting Agreement having been entered into and not having been terminatedpursuant to its terms on or prior to the Listing Date.INFORMATION ON THE CORNERSTONE INVESTORS<strong>Lippo</strong> Strategic<strong>Lippo</strong> Strategic, a wholly-owned subsidiary of <strong>Lippo</strong> Holdings Inc, is a limited liability companyincorporated in the British Virgin Islands on 2 March 2007. <strong>Lippo</strong> Holdings Inc is wholly-owned by<strong>Lippo</strong> Capital Limited, which is in turn wholly-owned by <strong>Lippo</strong> Cayman Limited. Lanius Ltd is the registeredand legal owner of the entire issued share capital of <strong>Lippo</strong> Cayman Limited.Lanius Ltd is the trustee of a discretionary trust of which Dr Mochtar Riady is the founder. The share capitalof <strong>Lippo</strong> Cayman Limited are assets comprised in such trust. The beneficiaries of the trust includeDr Mochtar Riady and his family members.<strong>Lippo</strong> Strategic will be subscribing for 287,695,000 Units, representing 27.1% of the total issued Units ofLMIR <strong>Trust</strong> as at the Listing Date.89
Ownership of UnitsMapletree LMMapletree LM is a wholly-owned subsidiary of Mapletree Dextra, which is in turn, a wholly-ownedsubsidiary of MIPL. Mapletree LM is a private limited company incorporated in Singapore under theCompanies Act on 29 May 2007. As at 29 May 2007, it has a paid-up capital of S$2.00 and its registeredoffice is located at 1 Maritime Square, #13-01 HarbourFront Centre, Singapore 099253. MIPL is a leadingAsia-focused real estate company based in Singapore. MIPL and its subsidiaries, comprising theMapletree Group, have an asset base of approximately S$4.5 billion (as at 30 June 2007) comprisingoffice, logistics, industrial, residential and retail/lifestyle properties.Mapletree LM will be subscribing for 127,250,000 Units, representing 12.0% of the total issued Units ofLMIR <strong>Trust</strong> as at the Listing Date.90
DistributionsThe distributable income of LMIR <strong>Trust</strong> (“Distributable Income”) is substantially based on the cash flow ofLMIR <strong>Trust</strong>.The cash flow generated by the <strong>Indonesia</strong>n SPCs, from owning and letting out spaces in the <strong>Retail</strong> <strong>Malls</strong>and the <strong>Retail</strong> Spaces, will be received by the Singapore SPCS in the form of (1) dividend income; (2)repayment of principal on the shareholders’ loans extended by the Singapore SPCs to the respective<strong>Indonesia</strong>n SPCs and (3) interest payment on the shareholders’ loans. The amount of principal repaymenton the shareholders’ loans will be mainly equivalent to the total amount of depreciation expense of theProperties, thereby extracting such cash trapped in the <strong>Indonesia</strong>n SPCs.Thereafter, the cash flow will be received by LMIR <strong>Trust</strong> from the Target Singapore SPCs in the form of(1) tax-exempt dividends; and (2) proceeds from redemption of the redeemable preference shares in theTarget Singapore SPCs.The Manager’s distribution policy is to distribute 100.0% of the tax-exempt income (after deduction ofapplicable expenses) and capital receipts of LMIR <strong>Trust</strong> for the Forecast Period 2007, Projection Year2008 and Projection Year 2009 and at least 90.0% of the tax-exempt income (after deduction of applicableexpenses) and capital receipts of LMIR <strong>Trust</strong> thereafter. The tax-exempt income comprises dividendsreceived from the Target Singapore SPCs, which are ultimately paid out of income derived by the<strong>Indonesia</strong>n SPCs from the leasing of the Properties. The capital receipts comprise amounts receivedby LMIR <strong>Trust</strong> from the redemption of redeemable preference shares in the Target Singapore SPCs.The Manager believes that it is appropriate to distribute 100.0% of the tax-exempt income (after deductionof applicable expenses) and capital receipts of LMIR <strong>Trust</strong> for the Forecast Period 2007, Projection Year2008 and Projection Year 2009 given that in relation to the <strong>Retail</strong> Spaces, the Master Lessee under each ofthe Master Lease Agreements is responsible for all repair and replacement works in relation to themechanical and electrical equipment which are of a capital nature for the first 30 months of the lease term.In addition, asset enhancement works are currently being carried out at The Plaza Semanggi and haverecently been completed at Bandung Indah Plaza, Mal <strong>Lippo</strong> Cikarang and Ekalokasari Plaza, and theManager expects the capital expenditure required for each of these <strong>Retail</strong> <strong>Malls</strong> subsequent to thecarrying out of asset enhancement works to be low for the period leading up to the end of Projection Year2009.The Manager’s distribution policy for the period subsequent to the Projection Year 2009 is intended toprovide for some flexibility in the retention of some of the tax-exempt income (after deduction of applicableexpenses) and capital receipts of LMIR <strong>Trust</strong> for the benefit of LMIR <strong>Trust</strong>.The actual level of distribution will be determined at the Manager’s discretion. The actual proportion of taxexemptincome and capital receipts to be distributed to Unitholders beyond Projection Year 2009 may begreater than 90.0% if the Manager believes it to be appropriate, having regard to LMIR <strong>Trust</strong>’s fundingrequirements, other capital management considerations and ensuring the overall stability of distributions.Distributable Income is generally calculated as follows:<strong>Indonesia</strong>n SPCs level:Consolidated net profit from operations is calculated by:a) Adding all NPI of the <strong>Indonesia</strong>n SPCs to arrive at consolidated NPI;b) Deducting general and administrative expenses (non property-related) and all relevant domestictaxes (if any), including but not limited to final income tax on rental income received and <strong>Indonesia</strong>nwithholding tax on offshore interest and dividend payable at the <strong>Indonesia</strong>n SPCs level; andc) Adding or deducting (as the case may be) the difference (if any) between the amount of rent due forthe relevant period and the amount recorded as rental revenue arising from amortisation of rent freeperiods.91
DistributionsSingapore SPCs level and LMIR <strong>Trust</strong> level:Distributable Income is derived from consolidated net profit from operations by making the followingadjustments:a) Deducting fees payable to the Manager, general and administrative expenses, other trust expenses,hedging costs and expenses and taxes (if any), at the Singapore SPCs and LMIR <strong>Trust</strong> level;b) Adding any income from external parties received by the Singapore SPCs and LMIR <strong>Trust</strong> (forexample, interest income on placement of cash balances with banks);c) Deducting unrealised income, gains from the disposal of shares and properties and adding backunrealised expenses (unrealised income and expenses include unrealised exchange differencesand accretion and fair value adjustments relating to financial instruments and real properties);d) Adding back trust expenses (for example, the portion of the Manager’s management fees) paid inunits (as these are non-cash items); ande) Adding back non-recurring expenses (as deemed appropriate by the Manager).After LMIR <strong>Trust</strong> has been admitted to the Main Board of the SGX-ST, LMIR <strong>Trust</strong> will make distributions toUnitholders on a quarterly basis, with the amount calculated as at 31 March, 30 June, 30 September and31 December each year for the three-month period ending on each of the said dates. However, LMIR<strong>Trust</strong>’s first distribution after the Listing Date will be for the period from the Listing Date to 31 March 2008and will be paid by the Manager on or before 30 May 2008. Subsequent distributions will take place on aquarterly basis.In the event that there are gains arising from sales of real properties either directly or indirectly through thesales of the shares in the <strong>Indonesia</strong>n SPCs or the Singapore SPCs, and only if such gains are surplus tothe business requirements and needs of LMIR <strong>Trust</strong> and its taxability or otherwise confirmed by the IRASin the event that the gains arise from the sale of shares in the Singapore SPCs or from the sale of shares inthe <strong>Indonesia</strong>n SPCs by the Singapore SPCs, the Manager may, at its discretion, direct the <strong>Trust</strong>ee todistribute such gains. Such gains, if not distributed, will form part of the Deposited Property.LMIR <strong>Trust</strong>’s primary source of liquidity to fund distributions, payment of non-property expenses and otherrecurring capital expenditure will be from the receipts of Gross Revenue and any future borrowings.Under the Property Funds Guidelines, if the Manager declares a distribution that is in excess of profits, theManager should certify, in consultation with the <strong>Trust</strong>ee, that it is satisfied on reasonable grounds that,immediately after making the distribution, LMIR <strong>Trust</strong> will be able to fulfil, from the Deposited Property, theliabilities of LMIR <strong>Trust</strong> as they fall due. The certification by the Manager should include a description of thedistribution policy and the measures and assumptions for deriving the amount available to be distributedfrom the deposited property of the property fund. The certification should be made at the time thedistribution is declared.92
Exchange rates and exchange controlsBank <strong>Indonesia</strong> is the sole issuer of <strong>Indonesia</strong>n Rupiah and is responsible for maintaining the stability ofthe <strong>Indonesia</strong>n Rupiah. Since 1970, <strong>Indonesia</strong> has implemented three exchange rate systems:(i) a fixed rate between 1970 and 1978;(ii)a managed floating exchange rate system between 1978 and 1997; and(iii) a free floating exchange rate system since 14 August 1997.Under the second system, Bank <strong>Indonesia</strong> maintained stability of the <strong>Indonesia</strong>n Rupiah through a tradingband policy, pursuant to which Bank <strong>Indonesia</strong> would enter the foreign currency market and buy or sell<strong>Indonesia</strong>n Rupiah, as required, when trading in the <strong>Indonesia</strong>n Rupiah exceeded bid and offer pricesannounced by Bank <strong>Indonesia</strong> on a daily basis. On 14 August 1997, Bank <strong>Indonesia</strong> terminated the tradingband policy and permitted the exchange rate for the <strong>Indonesia</strong>n Rupiah to float without an announced levelat which it would intervene, which resulted in a substantial decrease in the value of the <strong>Indonesia</strong>n Rupiahrelative to certain foreign currencies, including the US dollar and the Singapore dollar. Under the currentsystem, the exchange rate of the Rupiah is determined solely by the market, reflecting the interaction ofsupply and demand in the market. Bank <strong>Indonesia</strong> may take measures, however, to maintain a stableexchange rate.The following table sets out the average, high and low exchange rates between <strong>Indonesia</strong>n Rupiah andSingapore dollars (in <strong>Indonesia</strong>n Rupiah per Singapore dollar) for the periods indicated. No representationis made that the <strong>Indonesia</strong>n Rupiah amounts actually represent such Singapore dollar amounts or couldhave been or could be converted into Singapore dollars at the rate indicated, at any other rate, or at all.<strong>Indonesia</strong>n Rupiah per S$1.00Period Average (1) High (2) Low (2)Rp. Rp. Rp.2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,709.0 6,617.0 4,797.82002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,502.6 5,694.8 4,824.52003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,919.9 5,157.6 4,651.42004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,219.3 5,706.7 4,902.62005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,832.9 6,406.6 5,529.82006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,769.5 5,953.6 5,541.9January 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,902.4 5,930.1 5,847.9February 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,913.5 5,976.3 5,869.4March 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,013.7 6,046.6 5,989.2April 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,001.8 6,021.7 5,977.6May 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,800.3 5,967.5 5,655.6June 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,839.6 5,877.8 5,803.7July 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,983.9 6,007.0 5,956.4August 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,148.9 6,175.8 6,117.0September 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,155.4 6,230.1 6,081.5Notes:The rates are the foreign exchange rates as quoted on Bloomberg. Bloomberg has not provided itsconsent, for the purposes of section 249 (read with section 302) of the SFA, to the inclusion of theinformation on the exchange rates from Bloomberg and is therefore not liable for such informationunder sections 253 and 254 (read with section 302) of the SFA. While the Manager has takenreasonable action to ensure that the information has been reproduced in its proper form and context,and that it has been extracted accurately and fairly, neither the Manager nor any other party hasconducted an independent review of, nor verified the accuracy of, such information.(footnotes continued on following page)93
Exchange rates and exchange controls(1) For full years, the average shown is calculated based on the middle exchange rate by Bloomberg onthe last day of each month during the year indicated. For monthly averages from January 2007 toSeptember 2007, the average shown is calculated based on the daily middle exchange rates duringthe month indicated.(2) For full years, the high and low amounts are determined based on the month-end middle exchangerate by Bloomberg during the year indicated. The high and low figures for 1 January 2007 to30 September 2007 are determined based on the daily middle exchange rates during the monthindicated.Source: BloombergCurrently, no exchange control restrictions exist in <strong>Indonesia</strong>. The <strong>Indonesia</strong>n Rupiah has been, and ingeneral is, freely convertible. Bank <strong>Indonesia</strong> has introduced regulations to restrict the movement of<strong>Indonesia</strong>n Rupiah from banks within <strong>Indonesia</strong> to banks domiciled outside <strong>Indonesia</strong> or to an offshorebranch or office of an <strong>Indonesia</strong>n bank, or any investment in Rupiah denomination with foreign parties and/or <strong>Indonesia</strong>n citizens domiciled or permanently residing outside <strong>Indonesia</strong> without underlying trade orinvestment reasons, thereby limiting offshore trading to existing sources of liquidity. In addition, Bank<strong>Indonesia</strong> has the authority to request information and data concerning the foreign exchange activities ofall people and legal entities that are domiciled, or who plan to reside, in <strong>Indonesia</strong> for at least one year.Bank <strong>Indonesia</strong> regulations also require resident banks and companies that have total assets or totalannual gross revenues of at least Rp. 100 billion to report to Bank <strong>Indonesia</strong> all data concerning theirforeign currency activities, if the transaction is not conducted via a domestic bank or domestic non-bankfinancial institution (for example, insurance companies, securities companies, finance companies, orventure capital companies). However, if the transaction is conducted via a domestic bank and/or domesticnon-bank financial institution, the requirement to report to Bank <strong>Indonesia</strong> is imposed on the relevant<strong>Indonesia</strong>n banks or non-bank financial institutions that carried out the transaction. The transactions thatmust be reported include receipt and payment of foreign currency through bank accounts outside of<strong>Indonesia</strong>.94
CapitalisationThe following table sets forth the pro forma capitalisation of LMIR <strong>Trust</strong> as at the Listing Date and afterapplication of the total proceeds from the Offering and the issuance of Cornerstone Units, based on theOffering Price. The information in the table below should be read in conjunction with “Use of Proceeds” and“Strategy—Capital and Risk Management Strategy”.Based on theOffering Price(S$’000)pro formaNet assets attributable to Unitholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 963,316Total capitalisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 963,31695
Unaudited pro forma consolidated balance sheet as at theListing DateThe Manager is unable to prepare historical pro forma financial statements of LMIR <strong>Trust</strong> for the followingreasons:• Gajah Mada Plaza and Mal <strong>Lippo</strong> Cikarang were recently acquired by the respective <strong>Retail</strong> Mall<strong>Indonesia</strong>n SPCs, namely, PT Graha Baru Raya and PT Graha Nusa Raya, in early March 2006.Historical financial information for these two <strong>Retail</strong> <strong>Malls</strong> prior to their acquisition dates is not availablefrom the previous vendors and, there is no comparable historical financial information for the full yearsended 31 December 2004 and 31 December 2005;• Bandung Indah Plaza, Ekalokasari Plaza and Mal <strong>Lippo</strong> Cikarang have recently undergone majorrefurbishments and other repositioning initiatives. Given the repositioning initiatives, the Manager is ofthe view that any attempt to present the historical pro forma financial performance based on the actualresults of these three <strong>Retail</strong> <strong>Malls</strong> prior to their repositioning initiatives may not be comparable to theexpected results of these <strong>Retail</strong> <strong>Malls</strong> after the repositioning initiatives;• Cibubur Junction commenced its retail space leasing operations in September 2005. Given that therewere no activities for Cibubur Junction prior to September 2005, the historical financial information onCibubur Junction’s performance would not be available for the full financial years ended 31 December2004 and 31 December 2005. Accordingly, any historical pro forma financial information presented inrespect of Cibubur Junction’s short period of operations is unlikely to be meaningful or accurately reflectits financial performance;• Each of the <strong>Retail</strong> Spaces was wholly-owned by Matahari up to the Listing Date and was held for the useof Matahari’s retail businesses. As the activities relating to the <strong>Retail</strong> Spaces form an intrinsic part ofMatahari’s core business operations, Matahari does not keep separate financial records on these <strong>Retail</strong>Spaces. Accordingly, historical financial data is unavailable for each <strong>Retail</strong> Space; and• If historical pro forma financial information is prepared based on the terms of the Master LeaseAgreements to be entered into between the Master Lessee and the relevant <strong>Retail</strong> Space <strong>Indonesia</strong>nSPC, such information will be in the nature of a forecast and will not reflect the historical financial resultsand position of LMIR <strong>Trust</strong> with respect to the <strong>Retail</strong> Spaces. Assumptions and bases which areprospective in nature would need to be made if LMIR <strong>Trust</strong> is to assume that such arrangements were inplace throughout the period covered by the historical pro forma financial information. As such, theManager believes that such historical pro forma financial information will be of little value to investors indeciding whether to acquire the Units and a profit forecast and profit projection based on, among otherthings, the terms of the Master Lease Agreements would be more meaningful to investors.For the reasons stated above, the SGX-ST has granted LMIR <strong>Trust</strong> a waiver from the requirement toprepare historical pro forma statements of total return, cash flow statements and balance sheets, subjectto the inclusion of the following financial information in this Prospectus:• profit forecast for Forecast Period 2007 and profit projections for Projection Year 2008 and ProjectionYear 2009;• pro forma consolidated balance sheet of LMIR <strong>Trust</strong> as at the Listing Date; and• disclosure of the reasons why the historical pro forma financial statements cannot be provided and thewaiver granted by the SGX-ST.The Unaudited Pro Forma Consolidated Balance Sheet as at the Listing Date has been prepared onthe bases set out in Section C of “Appendix B—Independent Accountants’ Report on theUnaudited Pro Forma Consolidated Balance Sheet as at the Listing Date”. The Unaudited ProForma Consolidated Balance Sheet should be read together with these bases.The objective of the Unaudited Pro Forma Consolidated Balance Sheet as at the Listing Date is to show,for illustrative purposes, what the financial position of LMIR <strong>Trust</strong> might be at the Listing Date, prepared onthe bases set out in Section C of “Appendix B—Independent Accountants’ Report on the Unaudited ProForma Consolidated Balance Sheet as at the Listing Date”. The Unaudited Pro Forma Consolidated96
Unaudited pro forma consolidated balance sheet as at the listing dateBalance Sheet as at the Listing Date, because of its nature, is not necessarily indicative of LMIR <strong>Trust</strong>’sactual financial position on the Listing Date.For the purpose of the consolidation, the balance sheets of the <strong>Retail</strong> Mall and <strong>Retail</strong> Space <strong>Indonesia</strong>nand Singapore SPCs have been translated into Singapore dollars based on the exchange rate ofRp. 5,900 = S$1.00.Unauditedpro formaconsolidatedbalance sheetas at theListing Date(S$’000)ASSETSCurrent assetsCash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,921Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,583Total current assets ................................................... 100,504Non-current assetsInvestment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,004,679Total non-current assets ............................................... 1,004,679Total assets. ......................................................... 1,105,183LIABILITIESCurrent liabilitiesTrade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,787Current tax payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,463Current portion of finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148Total current liabilities ................................................. 6,398Non-current liabilitiesDeferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,366Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,849Otherpayables........................................................ 5,213Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,041Total non-current liabilities ............................................. 135,469Total liabilities. ....................................................... 141,867Unitholders’ fundsNet assets attributable to Unitholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 963,316Total Unitholders’ funds. ............................................... 963,316Total liabilities and Unitholders’ funds .................................... 1,105,183Number of Units in issue (’000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,060,414NAV per unit (S$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9197
Profit forecast and profit projectionStatements contained in the Profit Forecast and Profit Projection section that are not historical facts maybe forward-looking statements. Such statements are based on the assumptions set out on pages 100 to108 of this Prospectus and are subject to certain risks and uncertainties which could cause actual resultsto differ materially from those forecast and projected. Under no circumstances should the inclusion of suchinformation herein be regarded as a representation, warranty or prediction with respect to the accuracy ofthe underlying assumptions by LMIR <strong>Trust</strong>, the Manager, the Underwriters, the Sponsor, the PropertyManager, the <strong>Trust</strong>ee or any other person, nor that these results will be achieved or are likely to beachieved. See “Forward-Looking Statements” and “Risk Factors”. <strong>Investor</strong>s in the Units are cautioned notto place undue reliance on these forward-looking statements which are valid only as at the date of thisProspectus.None of LMIR <strong>Trust</strong>, the Manager, the Financial Adviser, the Underwriters, the Sponsor, theProperty Manager, the <strong>Trust</strong>ee and the Unit Lender guarantees the performance of LMIR <strong>Trust</strong>,the repayment of capital or the payment of any distributions, or any particular return on the Units.The forecast and projected yields stated in the following table are calculated based on (i) theOffering Price and (ii) the assumption that the Listing Date is 1 July 2007. Such yields will varyaccordingly since the Listing Date will be after 1 July 2007 and in relation to investors whopurchase Units in the secondary market at a market price that differs from the Offering Price.The following table below sets forth LMIR <strong>Trust</strong>’s forecast and projected consolidated statements of totalreturn for Forecast Period 2007, Projection Year 2008 and Projection Year 2009, respectively. The financialyear-end of LMIR <strong>Trust</strong> is 31 December. For the purpose of the profit forecast and profit projections, LMIR<strong>Trust</strong>’s first accounting period is assumed to be for the period from 1 July 2007, being the date of itsestablishment, to 31 December 2007. The profit forecast and profit projections will be different if the date ofestablishment differs from 1 July 2007 or if the end of the first financial period differs from 31 December2007. The profit forecast and profit projections should be read together with the report set out in“Appendix A—Independent Accountants’ Report on the Profit Forecast and Profit Projection” as wellas the assumptions and the sensitivity analysis set out in this section of the Prospectus.The following table sets forth LMIR <strong>Trust</strong>’s Forecast and Projected Consolidated Statement of Total Returnfor Forecast Period 2007, Projection Year 2008 and the Projection Year 2009 prepared based on theOffering Price.Forecast and Projected Consolidated Statement of Total ReturnForecast Period Projection Year Projection Year200720082009(S$’000) (S$’000) (S$’000)Gross RevenueGrossRent................................. 35,018 74,660 81,632Carpark income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,782 7,356 7,053Other income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,346 2,804 2,895Total Gross Revenue. ........................ 40,146 84,820 91,580Property Operating ExpensesLand rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (661) (1,618) (1,836)Property management fees . . . . . . . . . . . . . . . . . . . . . (1,475) (3,134) (3,423)Other property operating expenses . . . . . . . . . . . . . . . (461) (583) (447)Total Property Operating Expenses ............. (2,597) (5,335) (5,706)Net Property Income ......................... 37,549 79,485 85,874Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 789 1,157 796Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . (201) (365) (339)98
Profit forecast and profit projectionForecast Period Projection Year Projection Year200720082009(S$’000) (S$’000) (S$’000)Administrative expensesManager’s management fees. . . . . . . . . . . . . . . . . . . . (2,883) (5,942) (6,198)<strong>Trust</strong>ee’s fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (191) (332) (332)Other trust operating expenses . . . . . . . . . . . . . . . . . . (607) (830) (848)Total administrative expenses ................. (3,681) (7,104) (7,378)Total return for the period before tax anddistribution and revaluation ................. 34,456 73,173 78,953Surplus on the revaluation on investment properties . . 207,887 — —Total return for the period before tax anddistribution ............................... 242,343 73,173 78,953Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,173) (8,714) (9,317)Withholding tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,893) (5,940) (6,520)Deferredtax ................................ (62,366) — —Total return for the period after tax beforedistribution ............................... 172,911 58,519 63,116Distribution to UnitholdersForecast Period Projection Year Projection Year200720082009(S$’000) (S$’000) (S$’000)Total return for the period after tax beforedistribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172,911 58,519 63,116Add back/(less) non-cash items:—Management fees (1) ......................... 1,503 3,180 3,435—Surplus on revaluation of investment properties netof deferred tax (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . (145,521) — ——Reversal of FRS adjustment on rental deposit (3) . . . . 201 365 339Total Unitholders’ distribution ................. 29,094 62,064 66,890Unitholders’ distribution:—as distributions from operations . . . . . . . . . . . . . . . . 23,035 48,044 55,487—as return of capital (4) ........................ 6,059 14,020 11,403Total Unitholders’ distribution ................. 29,094 62,064 66,890Notes:(1) This relates to the portion of the management fees which are payable in the form of Units.(2) It is assumed that all of the Properties are purchased at a total consideration of approximatelyS$796.8 million based on the Offering Price. The purchase consideration of the Properties isdetermined by the difference between the purchase consideration of the Singapore SPCs (see“Certain Agreements relating to LMIR <strong>Trust</strong> and the Properties—Description of the Singapore SPCShare Purchase Agreements” for the formula of determining this purchase consideration) and the fairvalue of all the net identifiable assets and liabilities of the Singapore SPCs acquired save for theProperties. The surplus on revaluation of the investment properties relates to the revaluation of theProperties to their fair value of S$1,004.7 million immediately upon their acquisition and the capitalexpenditures expected to be incurred in the Forecast Period 2007. The fair value of S$1,004.7 millionis based on the value appraised by Knight Frank as at 30 June 2007. It is assumed that the fair valueof the Properties will only increase by the amount of capital expenditure expected to be incurred in theForecast Period 2007, the Projection Year 2008 and the Projection Year 2009 and that there is nochange in the exchange rate between the Singapore dollar and the <strong>Indonesia</strong>n Rupiah as at the end(footnotes continued on following page)99
Profit forecast and profit projectionof Forecast Period 2007 and the Projection Year 2008 and the Projection Year 2009. Notwithstandingwhether the valuation of Knight Frank or Colliers is adopted, such adoption has no impact on thedistribution to Unitholders.(3) This relates to notional interest expense which has no impact on the distribution to Unitholders.(4) The return of capital comprises the amounts received by LMIR <strong>Trust</strong> from the redemption of itsinvestment in the redeemable preference shares in the Target Singapore SPCs (see“—Assumptions—(IX) Distributable Income” and “Distributions”).Forecast and projected distributions to UnitholdersForecast Period 2007 Projection Year 2008 Projection Year 2009Based on theOfferingPriceBased on theOfferingPriceBased on theOfferingPriceNumber of Units eligible for distribution (’000) (1) . . . . . 1,060,414 (2) 1,062,291 (3) 1,066,266 (4)Distribution per Unit (cents) . . . . . . . . . . . . . . . . . . . 2.74 5.84 6.27Offering Price per Unit (S$) . . . . . . . . . . . . . . . . . . . 0.80 0.80 0.80Distribution yield (%). ...................... 6.9 (5) 7.3 7.8Notes:(1) The increase in the number of Units in Projection Year 2008 and Projection Year 2009 are due to theissue of Units to the Manager for the payment of 100.0% of the Manager’s Performance Fees forForecast Period 2007 and Projection Year 2008 in the form of Units. These Units are assumed to beissued at the Offering Price.(2) Based on the number of Units that are assumed to be in issue as at the Listing Date. It is assumed thatthe number of Units eligible for distribution is the same throughout Forecast Period 2007.(3) Based on the number of Units that are assumed to be in issue on 1 January 2008. It is assumed thatthe number of Units eligible for distribution is the same throughout Projection Year 2008.(4) Based on the number of Units that are assumed to be in issue on 1 January 2009. It is assumed thatthe number of Units eligible for distribution is the same throughout Projection Year 2009.(5) Annualised for Forecast Period 2007.ASSUMPTIONSThe Manager has prepared the profit forecast for Forecast Period 2007 and the profit projections forProjection Year 2008 and Projection Year 2009 based on the assumptions listed below. The Managerconsiders these assumptions to be appropriate and reasonable as at the date of this Prospectus. However,recipients of this Prospectus and all prospective investors in the Units should consider these assumptionsas well as the profit forecast and profit projection and make their own assessment of the futureperformance of LMIR <strong>Trust</strong>.The major assumptions made in preparing the forecast and projected Consolidated Statement of TotalReturn are set out below.(I)Gross RevenueGross revenue is the aggregate of Gross Rent, carpark income and other income earned primarily fromthe Properties. A summary of the key assumptions used in calculating the Gross Revenue is set out below:(a)Gross RentGross Rent of <strong>Retail</strong> <strong>Malls</strong> comprises base rental income and service charges. Gross Rent of <strong>Retail</strong>Spaces comprises base rental income. The percentage of forecast and projected Gross Rent attributableto Committed Leases (including letters of offer which are to be followed up with tenancy agreements to be100
Profit forecast and profit projectionsigned by the parties) for the Properties as at 30 June 2007 (for <strong>Retail</strong> <strong>Malls</strong> 1 ) and as at the Listing Date(for <strong>Retail</strong> Spaces) are estimated as follows:Forecast Period Projection Year Projection Year200720082009(%) (%) (%)Gross Rent attributable to Committed Leases for<strong>Retail</strong> <strong>Malls</strong> (as percentage of total Gross Rent). . . . 72.4 62.7 50.0Gross Rent attributable to Committed Leases for<strong>Retail</strong> Spaces (as percentage of total Gross Rent) . . 18.9 18.2 16.8Gross Rent attributable to Committed Leases for theProperties (as percentage of total Gross Rent). . . . . 91.3 80.9 66.8Base rental incomeBase rental income comprises rental income derived from the <strong>Retail</strong> <strong>Malls</strong> and <strong>Retail</strong> Spaces (net ofrebates) pursuant to tenant leases.<strong>Retail</strong> <strong>Malls</strong>In order to forecast and project base rental income, the Manager has used rents payable under CommittedLeases (including letters of offer which are to be followed up with tenancy agreements to be signed by theparties). For Forecast Period 2007, the Projection Year 2008 and the Projection Year 2009, the Managerhas forecast and projected that the base rental income from the <strong>Retail</strong> <strong>Malls</strong> will be S$33.5 million,S$71.3 million and S$77.8 million respectively. Approximately, S$25.3 million (75.6%), S$46.8 million(65.7%) and S$40.8 million (52.4%) respectively of such forecast and projected base rental income isattributable to Committed Leases (including letters of offer which are to be followed up with tenancyagreements to be signed by the parties).Following the expiry of a Committed Lease during Forecast Period 2007, Projection Year 2008 andProjection Year 2009, the Manager has used the following process to forecast and project the base rentalincome for the periods following such expiry:• the Manager has assessed the market rent for the NLA of each of the <strong>Retail</strong> <strong>Malls</strong> as at 30 June 2007.The market rent is the rent which the Manager believes could be achieved if each lease wasrenegotiated as at 30 June 2007 and is estimated with reference to the rent payable pursuant tocomparable leases for tenancies that have recently been negotiated, the effect of competing retailmalls, assumed tenant retention rates on lease expiry, likely market conditions, inflation levels andtenant demand levels.• if a Committed Lease expires in Forecast Period 2007 or Projection Year 2008 and Projection Year 2009,the Manager has assumed that the rental rate for a new lease (or a lease renewal) which commences inForecast Period 2007 or Projection Year 2008 and Projection Year 2009 is the actual rent contractedimmediately prior to the Committed Lease’s expiry adjusted by the forecast or projected growth rate inaccordance with the methodology set out in renewal rental rates discussed below or the actual rent (ifthe lease agreement or letter of offer has been entered into).Renewal leases and vacancy allowancesIn respect of the leases that have been contracted as at 30 June 2007 and are expiring in Forecast Period2007, Projection Year 2008 or Projection Year 2009 (other than the renegotiated Matahari leases), theManager has assumed that 80% of these leases will be renewed immediately for the same contractualperiod and will not experience any vacancy period unless the actual vacancy periods are known. Theremaining 20% of these leases are assumed to experience a two month vacancy period before rentbecomes payable under a new lease. The assumed renewal rental rates are discussed below.1 Certain tenancy lease agreements with Matahari and certain of its related entities were renegotiatedafter 30 June 2007 and the revised terms, including the revised rents, will take effect from the ListingDate. Such revised rents have formed the basis for the base rental income from these tenancies andhave been used to estimate the base rental income from these tenancies for Forecast Period 2007,Projection Year 2008 and Projection Year 2009.101
Profit forecast and profit projectionNew leasesIn order to forecast and project base rental income for new leases, the Manager has applied the marketrent taking into account market conditions, tenant demand levels, the expected occupancy rate,comparable leases for tenancies that have been recently negotiated as well as referred to the marketresearch report of the <strong>Retail</strong> <strong>Malls</strong>.In addition, <strong>Lippo</strong> Strategic has entered into a Rental Guarantee Deed with the relevant <strong>Retail</strong> MallSingapore SPCs pursuant to which <strong>Lippo</strong> Strategic will (i) provide a rental guarantee to the relevant <strong>Retail</strong>Mall Singapore SPC in respect of existing and new units in the respective <strong>Retail</strong> <strong>Malls</strong> which areuntenanted and (ii) undertake to pay to the relevant <strong>Retail</strong> Mall Singapore SPC any shortfall in themaintenance and operation costs which the relevant Operating Company has undertaken to bear underthe respective Operating Costs Agreement. The Rental Guarantee Deed covers the period commencingfrom the Listing Date up to 31 December 2009. Pursuant to the Rental Guarantee Deeds, <strong>Lippo</strong> Strategicis obliged to pay to the <strong>Retail</strong> Mall Singapore SPCs a specified sum in respect of each <strong>Retail</strong> Mall for everyyear during the said period. The first of such payments will be paid on or before 31 January 2008, andsubsequent payments will be made on a quarterly basis thereafter. In the event any of the specified units inthe relevant <strong>Retail</strong> Mall becomes tenanted during such period, the amount of the specified sum payable by<strong>Lippo</strong> Strategic in respect of such <strong>Retail</strong> Mall will be reduced by the amount of the rental payable under therelevant tenancy, regardless of whether such rental is received by the owner of the relevant <strong>Retail</strong> Mall andnotwithstanding that such tenancy may be or is terminated prior to the expiry of such period.(See “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the RentalGuarantee Deeds”.)Occupancy ratesBased on the assumptions and basis as discussed above, the assumptions on rental rates below andmanagement strategy (see “Strategy”), the forecast and projected occupancy rates as at 31 December2007, 2008 and 2009 as compared against the actual occupancy rates as at 30 June 2007 for the <strong>Retail</strong><strong>Malls</strong> are set out below:Occupancy rate Occupancy rate as Occupancy rate as Occupancy rate asas at 30 June 2007 at 31 December 2007 at 31 December 2008 at 31 December 2009(%) (%) (%) (%)Gajah Mada Plaza . . . . 89.1 94.7 95.9 99.3Cibubur Junction. . . . . . 86.4 93.5 98.6 99.6The Plaza Semanggi . . 96.4 97.0 97.8 98.5Mal <strong>Lippo</strong> Cikarang. . . . 96.3 96.8 98.5 98.4Ekalokasari Plaza . . . . . 87.3 78.5 91.4 99.6Bandung Indah Plaza . . 83.2 87.2 91.9 99.5Istana Plaza . . . . . . . . . 98.9 99.1 99.4 99.2Weighted Average ... 91.6 93.2 96.5 99.1Renewal rental ratesWhen leases in the <strong>Retail</strong> <strong>Malls</strong> are renewed in Forecast Period 2007, Projection Year 2008 and ProjectionYear 2009, the Manager has assumed these leases will be renewed based on the actual rent contractedimmediately prior to the previous leases’ expiry increased by the rental growth rates below:Rental growth rate Rental growth rate Rental growth rateForecast Period 2007 Projection Year 2008 Projection Year 2009(%) (%) (%)Gajah Mada Plaza . . . . . . . . . . . . . . . . . 12 12 12Cibubur Junction. . . . . . . . . . . . . . . . . . . 12 12 12The Plaza Semanggi . . . . . . . . . . . . . . . 10 10 10Mal <strong>Lippo</strong> Cikarang. . . . . . . . . . . . . . . . . 12 12 12Ekalokasari Plaza . . . . . . . . . . . . . . . . . . 15 15 15Bandung Indah Plaza . . . . . . . . . . . . . . . 12 12 12IstanaPlaza...................... 15 15 15102
Profit forecast and profit projectionHaving assessed the likely market conditions and having taken into account the leases that have recentlybeen renewed, the demand for retail spaces, competing malls and market rent used in the market researchreports (see “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”), the Managerbelieves the estimated rental growth rates are reflective of the likely market rent that can be obtained forthe respective <strong>Retail</strong> <strong>Malls</strong> if the leases are renewed. The revised rent is then calculated as follows:“A” x [1+ (N x “Rental growth rate factor in the table above”)] = Revised rental rate“A” being the rent immediately prior to the expiry of the tenancy lease agreement; and“N” being the lease period (years) prior to the expiry of the existing lease.Based on the formula above, the average specialty rent per sq m for Forecast Period 2007, Projection Year2008 and Projection Year 2009 are as follows:Forecast Period Projection Year Projection Year200720082009(Rp. ’000 per sq m) (Rp. ’000 per sq m) (Rp. ’000 per sq m)Gajah Mada Plaza . . . . . . . . . . . . . . . . . . . . 156 187 247Cibubur Junction . . . . . . . . . . . . . . . . . . . . . . 216 224 236The Plaza Semanggi. . . . . . . . . . . . . . . . . . . 124 129 152Mal <strong>Lippo</strong> Cikarang . . . . . . . . . . . . . . . . . . . . 172 198 226Ekalokasari Plaza . . . . . . . . . . . . . . . . . . . . . 163 217 296Bandung Indah Plaza . . . . . . . . . . . . . . . . . . 281 291 311IstanaPlaza......................... 211 222 233Service chargesService charges paid by tenants are applied towards the operating expenses of the Properties whichcomprises (i) maintenance expenses (ii) utility expenses (iii) property tax (iv) insurance and (v) otherexpenses relating to the operation of LMIR <strong>Trust</strong>’s malls.For the Forecast Period 2007, Projection Year 2008 and 2009, service charges and the above mentionedoperating costs are accrued to the Operating Company pursuant to each Operating Costs Agreement tobe entered between the relevant <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC and <strong>Lippo</strong> Strategic. The Operating CostsAgreement will lapse on 31 December 2009 and thereafter, all service charges and operating costs relatedto the maintenance and operation of the <strong>Retail</strong> <strong>Malls</strong> will accrue to LMIR <strong>Trust</strong> (see “Certain AgreementsRelating to LMIR <strong>Trust</strong> and the Properties—Description of the Operating Costs Agreements”).<strong>Retail</strong> SpacesEach of the <strong>Retail</strong> Spaces will be fully leased to Matahari under Master Lease Agreements for an initialterm of 10 years, with an option to renew for another 10 years (see “Certain Agreements relating to LMIR<strong>Trust</strong> and the Properties—Description of the Master Lease Agreements”). The Master Lessee will pay afixed rent for Forecast Period 2007. The fixed rent for the respective <strong>Retail</strong> Spaces for Forecast Period2007 is as follows:<strong>Retail</strong> SpacesFixed rent(S$’000)Mall WTC Matahari Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 860Metropolis Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,173Depok Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 878Java Supermall Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 852Malang Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 851Plaza Madiun. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,098Grand Palladium Medan Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 903Total base rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,615The Master Lease Agreements contain provisions for increase in rental revenues through step-ups in thebase rent of 8.0% per annum for the first four years and thereafter, in accordance with a formula that takes103
Profit forecast and profit projectioninto account the increase in the Master Lessee’s net revenue. (See “Certain Agreements Relating to LMIR<strong>Trust</strong> and the Properties—Description of the Operating Costs Agreements”).Discounts from market rates are generally given to tenants which occupy a large amount of lettable space.The extent of such discounts depends on, but is not limited to, factors such as the amount of lettable spaceoccupied by the tenant, the relevant landlord’s analysis of the importance of the tenant in increasingshopper traffic, especially if the tenant is an anchor tenant, and the landlord’s overall marketing strategyand positioning.The valuation for the seven <strong>Retail</strong> Spaces by Knight Frank has been carried out using a discountedcashflow analysis over a ten-year horizon from 30 June 2007 to 30 June 2017 based on the terms andconditions as stipulated in the Master Lease Agreements (see “Appendix E—Independent PropertyValuation Summary Reports”).The Directors of the Manager are of the view that the rental terms for the period from FY 2008 to FY 2011are on normal commercial terms and are not prejudicial to the interests of LMIR <strong>Trust</strong> and its minorityUnitholders.(b)Carpark incomeCarpark income includes revenue earned from the operations of the carparks located at the <strong>Retail</strong> <strong>Malls</strong>.The carpark will be operated by third party carpark operators who in turn pay a fixed rent to LMIR <strong>Trust</strong>.Total carpark income as a percentage of the total Gross Revenue is estimated to be 9.4% for ForecastPeriod 2007, and 8.7% and 7.7% for Projection Year 2008 and Projection Year 2009, respectively.(c)Other incomeOther income includes revenue earned from renting out signage, billboards, etc located at the <strong>Retail</strong> <strong>Malls</strong>.The assessment of other income is based on existing agreements, historical income collections and theManager’s assessment of the <strong>Retail</strong> <strong>Malls</strong>.Total other income as a percentage of the total Gross Revenue is estimated to be 3.4%, 3.3% and 3.2% forForecast Period 2007, Projection Year 2008 and Projection Year 2009, respectively.(II)Property Operating ExpensesProperty operating expenses consist of (a) land rental, (b) property management fees and (c) otherproperty operating expenses.(a)Land rentalLand rental is required to be paid for three of the seven <strong>Retail</strong> <strong>Malls</strong>, namely Bandung Indah Plaza, CibuburJunction and The Plaza Semanggi. The forecast and projected land rentals are based on the BOTAgreement.For the <strong>Retail</strong> Spaces, no land rentals are payable.(b)Property management feeThe property management fee for the <strong>Retail</strong> <strong>Malls</strong> is based on 2.0% per annum of the gross revenue forthe relevant <strong>Retail</strong> Mall, plus a fee of 2.0% per annum of the net property income (calculated afteraccounting for the fee of 2.0% per annum of gross revenue for the relevant <strong>Retail</strong> Mall), and a fee of 0.5%per annum of the net property income in lieu of leasing commissions otherwise payable to the PropertyManager and/or third party agents for each <strong>Retail</strong> Mall.For <strong>Retail</strong> Spaces, no property management fee is payable.(c)Other property operating expensesThe other property operating expenses comprise mainly fees for corporate secretariat services, annualtax returns filing services, and accounting and auditing services. The Manager has assumed no growth inthe annual operating expenses for Forecast Period 2007, Projection Year 2008 and Projection Year 2009.104
Profit forecast and profit projection(III)DepreciationDepreciation expenses at the <strong>Indonesia</strong>n SPCs consist of depreciation of property, plant, equipment,including capitalised acquisition related expenses. Properties are depreciated on a straight-line basis overuseful life.(IV)Interest incomeFinancial income comprises mainly interest income earned from interest bearing bank balances. TheManager has calculated the interest earned based on the estimated monthly net cash inflow and hasassumed such cash to earn interest at an interest rate of 2.0% per annum calculated on a monthly basis.The Manager has assumed that the interest income earned will be subjected to <strong>Indonesia</strong>n withholding taxof 20.0% and that the cash will be kept in Rupiah and Singapore dollars.(V)Financial ExpensesLMIR <strong>Trust</strong> will not incur any borrowings at Listing Date. Financial expenses comprise the notional interestexpense in relation to the FRS adjustment on rental deposit.(VI)Administrative Expenses(a)Manager’s management feesUnder the <strong>Trust</strong> Deed, the Manager’s Base Fee is 0.25% per annum of the value of the Deposited Propertyand a Performance Fee of 4.0% per annum of the NPI of LMIR <strong>Trust</strong> for each financial year. Bothcomponents are payable quarterly in arrears pursuant to the <strong>Trust</strong> Deed. (See “The Manager andCorporate Governance—Management Fees”.)The Manager may elect to receive the management fees in cash or units or a combination of cash andunits (as it may in its sole discretion decide). For Forecast Period 2007, Projection Year 2008 andProjection Year 2009, the Manager has assumed that 100.0% of the Performance Fee will be paid in theform of Units and will be issued at the Offering Price.(b)<strong>Trust</strong>ee’s feeUnder the <strong>Trust</strong> Deed, the <strong>Trust</strong>ee’s fee is up to 0.03% per annum of the value of the Deposited Property,subject to a minimum amount of S$15,000 per month, and is accrued daily and paid monthly. It iscalculated based on the forecast and projected Deposited Property at the end of each month inaccordance with the <strong>Trust</strong> Deed. In addition, a one-time inception fee of S$25,000 is payable.(c)Other expensesOther expenses include recurring operating expenses such as annual listing fees, valuation fees, legalfees, registry and depository charges, accounting, audit and tax adviser’s fees, postage, printing andstationery costs, costs associated with the preparation of annual reports, investor communications costsand other miscellaneous expenses. The Manager has assumed no growth in the annual operatingexpenses for Forecast Period 2007, Projection Year 2008 and Projection Year 2009.(VII)Repayment of Shareholder’s LoanBased on <strong>Indonesia</strong>n accounting standards, depreciation of real estate is a mandatory expense of the<strong>Indonesia</strong>n SPCs when determining the net profits from operations of an <strong>Indonesia</strong>n SPC that would beavailable for payment as dividends. This effectively traps cash in the <strong>Indonesia</strong>n SPCs as depreciation isnot a cash expense.However, the Properties are treated as real properties carried at valuation under FRS and hence are notdepreciated. Accordingly, such depreciation of real properties is not treated as an expense item whencomputing Distributable Income of LMIR <strong>Trust</strong>. To distribute this portion, there is a need to extract the cashthat is trapped in the <strong>Indonesia</strong>n SPCs mainly in the form of depreciation expense. Hence a principal105
Profit forecast and profit projectionrepayment of the shareholder’s loans by the <strong>Indonesia</strong>n SPCs is made every quarter and this repaymentsum is equal to the lower of:• Depreciation expense for the period; and• Profit after taxes and before depreciation.(VIII)Interest on Shareholder’s LoanThe Manager has assumed that the interest rates on the shareholder’s loans extended by SingaporeSPCs to the <strong>Indonesia</strong>n SPCs will be 14.0% per year. It is assumed the <strong>Indonesia</strong>n SPCs will withhold10.0% tax on the interest expense and the interest earned by the Singapore SPCs will not be subject to tax.(IX)Distributable IncomeDistributable Income comprises:(a)Distribution from operationsDistribution from operations includes dividend income, after deduction of applicable expenses, receivedfrom the Target Singapore SPCs. The income of the Target Singapore SPCs is derived mainly frominterest income earned and dividends from the <strong>Indonesia</strong>n SPCs. The Manager has assumed that LMIR<strong>Trust</strong> will receive the dividend income from the Target Singapore SPCs in the same distribution period towhich the underlying <strong>Indonesia</strong>n profits out of which the dividends are paid relate.(b)Return on capitalReturn on capital comprises the amounts received by LMIR <strong>Trust</strong> from the redemption of its investment inthe redeemable preference shares in the Target Singapore SPCs.100.0% of the tax-exempt income (after deduction of applicable expenses) and capital receipts will bedistributed to Unitholders for Forecast Period 2007, Projection Year 2008 and Projection Year 2009, eitherin the form of distribution from operations or return on capital. Thereafter, the Manager will distribute atleast 90.0% of Distributable Income.(X)Capital ExpenditureAn allowance for expected capital expenditure on the <strong>Retail</strong> <strong>Malls</strong> has been included in Forecast Period2007, Projection Year 2008 and Projection Year 2009 and it is assumed that the capital expenditure will befunded from internal cash flows. Capital expenditure incurred are capitalised as part of the DepositedProperty and has no impact on distribution other than the Manager’s Base Fee and <strong>Trust</strong>ee’s fee. TheManager has assumed that the following capital expenditure will be incurred:Forecast Period Projection Year Projection Year200720082009(S$’000) (S$’000) (S$’000)Capital Expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . 456 987 814The Manager has assumed that no capital expenditure will be incurred for the <strong>Retail</strong> Spaces for ForecastPeriod 2007, Projection Year 2008 and Projection Year 2009 (see “Certain Agreements Relating to LMIR<strong>Trust</strong> and the Properties—Description of the Master Lease Agreements”).(XI)Investment PropertiesThe Manager has assumed that the value of the Properties will only increase by the amount of forecastand projected capital expenditure described in “—Capital Expenditure” above for the Forecast Period2007, the Projection Year 2008 and the Projection Year 2009.106
Profit forecast and profit projection(XII)TaxesThe Manager has assumed no significant changes in the taxation regulations in Singapore and <strong>Indonesia</strong>and others that will have material impact to the Distributable Income in Forecast Period 2007, ProjectionYear 2008 and Projection Year 2009 (see “Taxation”).(XIII)Accounting Standards and PoliciesThe Manager has assumed that there will be no change in applicable accounting standards or otherfinancial reporting requirements that may have a material effect on the total return for Forecast Period2007, Projection Year 2008 and Projection Year 2009.Significant accounting policies adopted by the Manager in the preparation of Forecast Period 2007,Projection Year 2008 and the Projection Year 2009 are set out in “Appendix B—Independent Accountants’Report on the Unaudited Pro Forma Consolidated Balance Sheet as at the Listing Date”.(XIV)Forward Exchange RatesThe <strong>Trust</strong>ee, as trustee of LMIR <strong>Trust</strong>, has entered into a currency hedging arrangement, effective as ofthe Listing Date, to hedge the movements in exchange rates (whether favourable or unfavorable) for aperiod of five years from the Listing Date for the notional amount of the expected <strong>Indonesia</strong>n Rupiah cashflow arising from:(i)(ii)dividends received or receivable from the Singapore SPCs. The income of the Singapore SPCs isderived mainly from interest income earned and dividends from the <strong>Indonesia</strong>n SPCs; andcapital receipts from the redemption of redeemable preference shares in the Target Singapore SPCs.The redemption of the shares is in turn funded from the repayments of the <strong>Indonesia</strong>n Rupiahshareholders’ loans.An affiliate of the Sponsor has guaranteed, on a non-recourse basis to LMIR <strong>Trust</strong>, all of LMIR <strong>Trust</strong>’sliabilities and obligations under such hedging arrangement until the Listing Date. The notional amount ofthe expected <strong>Indonesia</strong>n Rupiah cash flow will be hedged at the following forward exchange rates betweenSingapore Dollars and <strong>Indonesia</strong>n Rupiah until the end of Projection Year 2009:Period for which <strong>Indonesia</strong>n Rupiahcash flow is hedgedPayment DateForwardexchange rate(<strong>Indonesia</strong>n Rupiahper S$1.00)Listing Date to1 January 2008 to 31 March 2008 15 May 2008 6,4171 April 2008 to 30 June 2008 15 August 2008 6,5341 July 2008 to 30 September 2008 15 November 2008 6,6471 October 2008 to 31 December 2008 15 February 2009 6,7501 January 2009 to 31 March 2009 15 May 2009 6,8461 April 2009 to 30 June 2009 15 August 2009 6,9481 July 2009 to 30 September 2009 15 November 2009 7,0551 October 2009 to 31 December 2009 15 February 2010 7,169The Manager has assumed that the currency hedging arrangements do not meet the hedge accountingrequirements as stipulated in FRS 39—Financial Instruments: Recognition and Measurement.Consequently, any gain or loss from fair value measurement of the hedging instrument shall berecognised in the Consolidated Statement of Total Return.(XV)Other AssumptionsThe following additional assumptions have been made in preparing the Profit Forecast and ProfitProjection:• There will be no material changes in applicable legislation.• The tax exemption and tax ruling remain valid.107
Profit forecast and profit projection• All leases and licences are enforceable and will be performed in accordance with their terms.• The property portfolio remains unchanged throughout Forecast Period 2007, Projection Year 2008 andProjection Year 2009.• 100.0% of the Distributable Income will be distributed over Forecast Period 2007, Projection Year 2008and Projection Year 2009; and at least 90% of the Distributable Income will be distributed thereafter.• There will be no changes in the fair value of all financial instruments throughout Forecast Period 2007,Projection Year 2008 and Projection Year 2009.• There will be no further capital raised during Forecast Period 2007, Projection Year 2008 and ProjectionYear 2009.• Operating Companies will perform their duties and fulfil their obligations as required.(See “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the OperatingCosts Agreements” and “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Descriptionof the Rental Guarantee Deeds”.)SENSITIVITY ANALYSISThe forecast and projected distributions included in this Prospectus are based on a number ofassumptions that have been outlined above. The forecast and projected distributions are also subjectto a number of risks as outlined in “Risk Factors”.All prospective investors in the Units should be aware that future events cannot be predicted with anycertainty and deviation from the figures forecast or projected in this Prospectus are to be expected. Toassist investors in assessing the impact of these assumptions on the Profit Forecast and Profit Projection,a series of tables demonstrating the sensitivity of the distribution per Unit to changes in the keyassumptions are set out below.The sensitivity analysis is intended to provide a guide only and variations and actual performance couldexceed the ranges as shown. Movements in other variables may offset or compound the effect of a changein any variable beyond the extent shown.Rental growth rateChanges in rental growth rate impact the Gross Rent of each <strong>Indonesia</strong>n SPC. The base case rentalgrowth rate of each Property is set out earlier in this section. The impact of variations in the yield is set outbelow.Rental growth rateBased onOfferingPriceYieldForecast Period 2007 Projection Year 2008 Projection Year 2009Based onOfferingPriceBased onOfferingPrice(%) (%) (%)5%lower......................... 6.85 7.29 7.81Base Case ...................... 6.85 7.30 7.845% higher . . . . . . . . . . . . . . . . . . . . . . . . 6.85 7.30 7.85108
Profit forecast and profit projectionVacancy allowanceChanges in vacancy allowance impact the Gross Rent of each <strong>Indonesia</strong>n SPC. The base case vacancyallowance of each Property is set out earlier in this section. The impact of variations in the yield is set outbelow.Vacancy allowanceBased onOfferingPriceYieldForecast Period 2007 Projection Year 2008 Projection Year 2009Based onOfferingPriceBased onOfferingPrice(%) (%) (%)1 month . . . . . . . . . . . . . . . . . . . . . . . . . 6.85 7.30 7.85Base Case ...................... 6.85 7.30 7.843 months . . . . . . . . . . . . . . . . . . . . . . . . 6.85 7.30 7.83Operating Cost SubsidyPursuant to each of the Operating Costs Agreements to be entered into between the relevant <strong>Retail</strong> Mall<strong>Indonesia</strong>n SPC and Operating Company, the relevant Operating Company will agree to unconditionallybear, for a period of three years commencing from 1 January 2007, all costs directly related to themaintenance and operation of the relevant <strong>Retail</strong> Mall.Assuming that there is no subsidy from the Operating Company to each <strong>Indonesia</strong>n SPC, the impact ofvariations in the yield is set out below.SubsidyBased onOfferingPriceYieldForecast Period 2007 Projection Year 2008 Projection Year 2009Based onOfferingPriceBased onOfferingPrice(%) (%) (%)No subsidy . . . . . . . . . . . . . . . . . . . . . . . 6.70 7.20 7.91Base Case ...................... 6.85 7.30 7.84Rental guaranteeUnder the Rental Guarantee Deeds, <strong>Lippo</strong> Strategic will provide rental guarantees to the relevant <strong>Retail</strong>Mall Singapore SPCs in respect of existing and new units in the respective <strong>Retail</strong> <strong>Malls</strong> which areuntenanted. (See “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of RentalGuarantee Deeds”.)The Rental Guarantee Deeds cover the period commencing from the Listing Date up to 31 December2009. Pursuant to the Rental Guarantee Deeds, <strong>Lippo</strong> Strategic is obliged to pay to the <strong>Retail</strong> MallSingapore SPCs a specified sum in respect of each <strong>Retail</strong> Mall for every year during the said period. Thefirst of such payments will be paid on or before 31 January 2008, and subsequent payments will be madeon a quarterly basis thereafter. In the event any of the specified units in the relevant <strong>Retail</strong> Mall becomestenanted during such period, the amount of the specified sum payable by <strong>Lippo</strong> Strategic in respect of such<strong>Retail</strong> Mall will be reduced by the amount of the rental payable under the relevant tenancy, regardless ofwhether such rental is received by the owner of the relevant <strong>Retail</strong> Mall and notwithstanding that suchtenancy may be or is terminated prior to the expiry of such period.Assuming that there is no rental guarantee from <strong>Lippo</strong> Strategic to the relevant <strong>Retail</strong> Mall SingaporeSPCs, the impact of variations in the yield is set out below.109
Profit forecast and profit projectionRental guaranteeBased onOfferingPriceYieldForecast Period 2007 Projection Year 2008 Projection Year 2009Based onOfferingPriceBased onOfferingPrice(%) (%) (%)No rental guarantee . . . . . . . . . . . . . . . . 6.48 6.55 6.89Base Case ...................... 6.85 7.30 7.84Capital expenditure on the <strong>Retail</strong> SpacesUnder each of the Master Lease Agreements, the Master Lessee shall be responsible for the maintenanceof the <strong>Retail</strong> Space in question and all fixtures, fittings and installations therein, including keeping the sameclean and in good and tenantable condition, undertaking works to make good any damage, maintaining themechanical and electrical equipment in accordance with the relevant manufacturers’ guidelines andmaintenance of its own plant and machinery which are required for the operation of its business. TheMaster Lessee shall also be responsible for the land and building tax (including any increases) in respectof the <strong>Retail</strong> Spaces.The Master Lessee must comply, at its cost and expense, with all laws and regulations and allrequirements of the relevant authorities in force at the moment relating to the <strong>Retail</strong> Spaces.During the first 30 months of the lease term, the Master Lessee shall at its own cost and expense carry outall repair and replacement works in respect of the mechanical and electrical equipment, whether or notsuch works are of a capital nature. After the first 30 months of the lease term, the relevant landlords will beresponsible for repair and replacement works in relation to the mechanical and electrical equipment whichare of a capital nature. Where any replacement works (after the first 30 months of the lease term) isreasonably required by the Master Lessee in connection with any changes to the layout of the <strong>Retail</strong>Spaces, the cost of such replacement works shall be deducted from the rent payable by the Master Lesseeto the relevant landlord for the rest of the lease term.The Manager has assumed that no capital expenditure will be incurred for the <strong>Retail</strong> Spaces for ForecastPeriod 2007 and Projection Year 2008 and Projection Year 2009 (see “Certain Agreements Relating toLMIR <strong>Trust</strong> and the Properties—Description of the Master Lease Agreements”).Assuming that there is capital expenditure on the <strong>Retail</strong> Spaces, the impact of variations in the yield is setout below.Capital expenditureBased onOfferingPriceYieldForecast Period 2007 Projection Year 2008 Projection Year 2009Based onOfferingPriceBased onOfferingPrice(%) (%) (%)Borne by LMIR <strong>Trust</strong>. . . . . . . . . . . . . . . . 6.85 7.30 7.84Base Case ....................... 6.85 7.30 7.84<strong>Retail</strong> <strong>Malls</strong> held via BOT SchemesThe relevant <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs will own five of the seven <strong>Retail</strong> <strong>Malls</strong>, namely, Cibubur Junction,The Plaza Semanggi, Ekalokasari Plaza, Bandung Indah Plaza and Istana Plaza, via BOT Schemes. Inthe case of Bandung Indah Plaza, the relevant BOT Grantor has granted the BOT Grantee, the owner ofBandung Indah Plaza, the right to apply for HGB titles on top of its HPL titles. Ownership of the HGB titleallows the BOT Grantee to encumber the land with prior consent of the BOT Grantor and subject to theBOT Agreement. (See “Overview of Relevant Laws and Regulations in <strong>Indonesia</strong>—Rights to Own and/orto Use”.) In the case of the remaining four <strong>Retail</strong> <strong>Malls</strong> (i.e. Cibubur Junction, The Plaza Semanggi,Ekalokasari Plaza and Istana Plaza), the BOT Grantee cannot transfer or encumber the land on which therelevant <strong>Retail</strong> Mall is situated.110
Profit forecast and profit projectionThe impact of variations in the yield is set out below:Forecast Period 2007 Projection Year 2008 Projection Year 2009Based onOfferingPriceYieldBased onOfferingPriceBased onOfferingPrice(%) (%) (%)Base case ....................... 6.85 7.30 7.84Excluding the four <strong>Retail</strong> <strong>Malls</strong> held viaBOT Schemes. . . . . . . . . . . . . . . . . . . 3.05 3.30 3.63The base case is for LMIR <strong>Trust</strong>’s initial property portfolio to include the four <strong>Retail</strong> <strong>Malls</strong> held via BOTSchemes.Payment of Management FeeAssuming that the payment of the Manager’s management fee is entirely in the form of Units (base fee andperformance fee) or entirely in cash (base fee and performance fee), the impact of variations in the yield isset out below:Forecast Period 2007 Projection Year 2008 Projection Year 2009Based onOfferingPriceYieldBased onOfferingPriceBased onOfferingPrice(%) (%) (%)InUnits.......................... 7.18 7.61 8.13Base case ....................... 6.85 7.30 7.84In cash . . . . . . . . . . . . . . . . . . . . . . . . . . 6.50 6.94 7.48The base case for the payment of management fees are 100% in cash for the base fee and 100% in formof Units for the performance fee.Distribution PolicyAssuming that the distribution policy of LMIR <strong>Trust</strong> is to distribute 90.0% of its tax exempt-income andcapital receipts, the impact of variations in the yield is set out below.Forecast Period 2007 Projection Year 2008 Projection Year 2009Based onOfferingPriceYieldBased onOfferingPriceBased onOfferingPrice(%) (%) (%)Base case ....................... 6.85 7.30 7.84Distribute 90.0% of LMIR <strong>Trust</strong>’s taxexempt-income and capital receipts. . . 6.15 6.56 7.05The base case for LMIR <strong>Trust</strong>’s distribution policy is to distribute 100.0% of its tax exempt-income andcapital receipts.111
StrategyThe principal investment strategy of the Manager is owning and investing on a long-term basis in adiversified portfolio of income-producing real estate in <strong>Indonesia</strong> that are primarily used for retail and/orretail-related purposes, and real estate related assets in connection with the foregoing purposes.In accordance with the requirements of the Listing Manual, the Manager’s investment strategy for LMIR<strong>Trust</strong> will be adhered to for at least three years following the Listing Date, unless otherwise agreed by anExtraordinary Resolution passed at a meeting of Unitholders duly convened and held in accordance withthe provisions of the <strong>Trust</strong> Deed.The Manager’s key objectives are to deliver regular and stable distributions to Unitholders and to achievelong-term growth in the NAV per Unit in order to provide Unitholders with capital appreciation on theirinvestments. The Manager plans to achieve these objectives through the following strategies:ACQUISITION GROWTH STRATEGYLMIR <strong>Trust</strong>’s acquisition growth strategy envisages investments in retail and/or retail-related assets thatare in the interests of Unitholders. The assets in LMIR <strong>Trust</strong>’s initial portfolio are all located in <strong>Indonesia</strong>.ACTIVE ASSET ENHANCEMENT AND MANAGEMENT STRATEGYImplementing pro-active measures to enhance the returns from the existing and future properties in LMIR<strong>Trust</strong>’s portfolio. Such measures may include addition and alteration works, including re-zoning, tenancyremixing and work carried out for the purpose of expanding size and capacity and (in relation to propertiesto be acquired by LMIR <strong>Trust</strong>), leveraging and enhancing the properties’ competitive strengths to optimiserentals and enhancement projects to maintain the competitive positioning of such properties. TheManager intends to work with the relevant <strong>Indonesia</strong>n authorities to gain the necessary approvals toundertake such active asset enhancement works.• As at the Latest Practicable Date, three of the <strong>Retail</strong> <strong>Malls</strong>, Bandung Indah Plaza, Mal <strong>Lippo</strong> Cikarangand Ekalokasari Plaza have recently completed extensive asset enhancement works and a fourth <strong>Retail</strong>Mall, The Plaza Semanggi is currently undergoing asset enhancement works.- Bandung Indah Plaza has recently completed enhancement and renewal works which created anadditional NLA of approximately 3,843 sq m.- Mal <strong>Lippo</strong> Cikarang has recently completed the building of an extension which has increased the NLAof the mall’s hypermarket and specialty space by 10,694 sq m. As at 30 June 2007, 8,539 sq m orapproximately 79.8% of the additional NLA created from such asset enhancement has been precommittedto Hypermart, one of <strong>Indonesia</strong>’s leading hypermarket chains.- Ekalokasari Plaza has recently completed asset enhancement works which created an additionalNLA of 5,013 sq m by adding a third floor and a mezzanine floor. This development incorporates a foodcourt, a proposed fitness centre and potentially a cinema as anchor tenants for the top levels of thecentre. These asset enhancement works are expected to improve shopper traffic throughout all levelsof the mall. As at 30 June 2007, 670 sq m or approximately 13.4% of the additional NLA created fromsuch asset enhancement has been pre-committed.- The Plaza Semanggi is undergoing asset enhancement works to include a new alfresco café areacalled the “Plangi on the Sky” café, which will increase NLA by approximately 3,000 sq m by the end of2007.Each of Bandung Indah Plaza, Mal <strong>Lippo</strong> Cikarang and Ekalokasari Plaza has either obtained, or is in theprocess of obtaining, final local government approval for the recently completed asset enhancementworks which have created additional NLA.CAPITAL AND RISK MANAGEMENT STRATEGYBy the Listing Date, LMIR <strong>Trust</strong> expects to put in place the Debt Facilities, being a floating rate securedterm loan facility of up to S$350.0 million. While LMIR <strong>Trust</strong> will not incur any borrowings as at the Listing112
StrategyDate, to the extent that LMIR <strong>Trust</strong> incurs borrowings in the future, the Manager will employ an appropriatemix of debt and equity in the financing of future acquisitions. The <strong>Trust</strong>ee, as trustee of LMIR <strong>Trust</strong>, willenter into currency hedging arrangements to optimise risk-adjusted returns to the Unitholders as at ListingDate.Acquisition growth strategyThe Manager will pursue opportunities for asset acquisitions that will provide attractive cash flows andyields relative to LMIR <strong>Trust</strong>’s weighted average cost of capital, and opportunities for future income andcapital growth. In evaluating future acquisition opportunities, the Manager will seek acquisitions that mayenhance the diversification of the portfolio by geography and tenant profile, and optimise risk-adjustedreturns to the Unitholders. The Manager believes it is well qualified to pursue its acquisition strategy. Themanagement of the Manager has extensive experience and a strong track record in sourcing, acquiringand financing retail and/or retail-related real estate assets locally in <strong>Indonesia</strong>. The management’sindustry knowledge, relationships and access to market information provide a competitive advantagewith respect to identifying, evaluating and acquiring retail and/or retail-related real estate assets.The Manager’s acquisition growth strategy will be underpinned by:LMIR <strong>Trust</strong>’s relationship with the SponsorLMIR <strong>Trust</strong> intends to leverage on the Sponsor’s experience, market reach and network of contacts for itsacquisition strategy to evaluate and execute appropriate acquisitions that are in the interests ofUnitholders and provide potential for income and capital growth. The Sponsor intends to support thegrowth of LMIR <strong>Trust</strong>’s portfolio in the following ways:• allow the Manager to leverage the Sponsor’s established network of relationships to pursue the growthstrategy of LMIR <strong>Trust</strong>;• lend its extensive experience and expertise in the retail and property industry to the Manager to assesspotential acquisition opportunities; and• subject to certain conditions, as stipulated in the Right of First Refusal Agreement, facilitate a pipeline ofacquisitions via the ROFR granted by the Sponsor to LMIR <strong>Trust</strong> over the ROFR Properties (see“Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the Right of FirstRefusal Agreement”).LMIR <strong>Trust</strong>’s relationship with the Mapletree GroupThe Manager is 40.0% owned by Mapletree Capital and 60.0% owned by Peninsula Investment Ltd.Peninsula Investment Ltd is in turn 100.0% owned by Jesselton Investment Ltd, a wholly-owned subsidiaryof the Sponsor. Mapletree Capital is a wholly-owned subsidiary of MIPL and is part of the Mapletree Group.MIPL is a leading Asia-focused real estate company based in Singapore. It has an asset base of aboutS$4.5 billion (as at 30 June 2007) comprising office, logistics, industrial and retail/lifestyle properties. Itsbusiness philosophy is to shape new ways of delivering value from real estate and real estate-relatedinvestments to its stakeholders. It aims to be a strategic real estate partner providing real estate solutions,including capital management and quality property-related services and products to its investors, tenants,co-development partners and other business partners. To support its regional business, the group hasestablished an extensive network and presence with ongoing activities in Singapore, China, Hong Kong,Japan, Malaysia and Vietnam.One of the ways that MIPL unlocks value is by developing and rejuvenating large scale mixed-useddevelopments such as the approximately 24-ha HarbourFront Precinct, the centrepiece of which isVivoCity, the largest retail and lifestyle destination in Singapore.MIPL is the sponsor of MapletreeLog, the first Asia-focused logistics real estate investment trust inSingapore. MapletreeLog was listed on the SGX-STon 28 July 2005. It has a principal strategy of investingin a diversified portfolio of income-producing logistics real estate and real estate-related assets across theAsian region. Since its listing, MapletreeLog has grown its portfolio size from the initial 15 logistics assetsin Singapore valued at S$422.0 million to 58 logistics assets in Singapore, Hong Kong, China, Malaysiaand Japan, valued at about S$2.1 billion as at 30 June 2007. MIPL’s success with MapletreeLog has113
Strategydemonstrated its clear ability to identify and structure a pan-Asian REIT, building a regional portfolio ofgood quality logistics assets and supporting the growth of the REIT through a yield plus growth strategy.As sponsor of MapletreeLog, MIPL is also committed to support the growth of the trust by forging strategicalliances and undertaking development projects to build a strong pipeline of logistics properties forMapletreeLog to purchase on a right of first refusal basis. These development projects include logisticsparks, built-to-suit and ready-built logistics facilities in Singapore, Malaysia as well as in new markets suchas China and Vietnam, to cater to the needs of MapletreeLog’s customers.In addition to the publicly listed MapletreeLog, MIPL also manages a number of private real estate funds,such as:• Mapletree Industrial Fund (“MIF”);• CIMB-Mapletree Real Estate Fund 1; and• Mapletree Real Estate Mezzanine Fund 1.It has the experience, and the necessary real estate and financing skills to structure, originate and managereal estate-related financial products that cater to different pools of investors with different risk appetites.The following provides a brief summary of the private real estate funds managed by MIPL:• Mapletree Industrial FundMapletree sponsored the establishment of MIF with the objective of investing in industrial properties inAsia. It secured Bahrain-based Ahli United Bank’s (“AUB”) Pan Asian Industrial Fund as a cornerstoneinvestor for its first closing of US$310 million in November 2006. AUB’s Pan Asian Industrial Fund hadcommitted an investment amount of US$185 million to the MIF, while Mapletree’s commitment wasUS$125 million.MIF is a seven-year private fund which aims to provide stable recurrent income and strong total returnsto investors. It is managed by Mapletree Industrial Fund Management Pte. Ltd. (“MIFM”), a whollyownedsubsidiary of Mapletree Capital.MIF’s target investments are primarily manufacturing facilities, business parks, industrial parks,research and development facilities, information technology and software parks and industrialoffices. The intent is to tap the shift in production and research and development processes to Asiaby creating a diversified portfolio of good quality industrial real estate assets with stable returns.• CIMB-Mapletree Real Estate Fund 1Mapletree jointly manages CIMB-Mapletree Real Estate Fund 1 (“CMREF 1”), a Malaysia focused realestate fund, through a joint venture with Malaysia’s CIMB. CIMB-Mapletree Real Estate Fund’scommitted capital has almost been fully earmarked for committed projects.With a mandate to make direct investments in properties in Malaysia, including investments indistressed assets, real estate investment products and listed real estate securities, CMREF 1 hascommitted capital of MYR 402 million. With a target gearing ratio of 3:1, the total asset size couldpotentially be about MYR 1.6 billion.As at 31 March 2007, total committed investments was about MYR 700 million. It has acquired officebuildings and a shopping mall in Kuala Lumpur, and formed a joint venture with a listed Malaysiadeveloper, E&O Property Development, and Al Salam Bank Bahrain to develop bungalow lots inPenang. CMREF 1 has also underwritten certain units in a landed residential development in KualaLumpur and invested in real estate investment trusts in Malaysia and the region.• Mapletree Real Estate Mezzanine Fund 1As at 31 March 2007, Mapletree Real Estate Mezzanine Fund 1 (“MREM 1”), an Asia-wide real estatefund that focuses on originating and executing real estate mezzanine loans, had completed anddivested three mezzanine investments aggregating S$51 million.The aggregated realised internal rate of returns for all the investments well surpassed the targetedinternal rate of returns of MREM 1.114
StrategyGiven that there is limited potential to scale up MREM 1, the Group is in the process of closing the fundin order to focus on our other real estate funds.MIPL is a wholly-owned subsidiary of Temasek Holdings (Private) Limited.LMIR <strong>Trust</strong> will benefit from the track record of the Mapletree Group, with its experience in acquiring yieldaccretiveassets in various markets, including via the management of MapletreeLog and other private realestate funds in Asia. The Mapletree Group’s total assets under management as at 31 March 2007 wasS$1.7 billion.Key opportunities arising from trends in the retail industryThe Manager believes that retail service providers are increasingly looking to free up capital for businessexpansion which may increase the availability of assets for acquisition. In addition, LMIR <strong>Trust</strong> can seekpartnership and co-operation opportunities with the Sponsor. In evaluating asset acquisition opportunities,the Manager will focus on the following criteria:• Impact on income distributions. The Manager will seek to acquire retail and retail-related realestate assets that provide returns above LMIR <strong>Trust</strong>’s cost of capital, and are thereby expected tomaintain or enhance LMIR <strong>Trust</strong>’s distributions per Unit as well as provide future long-term growthprospects which are consistent with LMIR <strong>Trust</strong>’s pre-acquisition portfolio;• Opportunities for creating value. The Manager will seek retail and retail-related real estate assetsthat provide opportunities for creating value such as retail malls or retail spaces which have been undermanagedor under-capitalised, or which offer expansion or enhancement opportunities;• Location. The Manager will seek to acquire retail and retail-related real estate assets in markets withhigh growth potential. Within these markets, the Manager will seek to acquire assets in strategic orprime locations;• Geographical diversification. The Manager will seek to acquire properties that improve thegeographical diversification of LMIR <strong>Trust</strong>’s portfolio;• Management quality. The Manager will consider the quality and experience of management and thecreditworthiness of the operator of the retail and/or retail-related property;• Financial soundness. The Manager will consider the retail and/or and retail-related real estateasset’s historical and forecasted cash flows, its ability to meet operational needs, its capital expenditurerequirements, its lease or debt service obligations as well as its ability to provide a competitive return oninvestment to LMIR <strong>Trust</strong>;• Regulatory and tax implication. The Manager will consider the tax growth and regulatoryenvironment of the jurisdiction in which the retail and/or and retail-related real estate asset is located;• Operational profile. The Manager will consider the occupancy of and demand for similar retail and/orretail-related real estate assets in the same or nearby communities;• Building and facility specifications. The Manager will examine building and facility specificationssuch as construction quality, condition and design, as well as the size and age of the buildings. Thepotential to add value through selective renovation or other enhancements will be assessed; and• Engineering, environmental and land survey reports. The Manager will rely on reports submittedby a range of experts that cover matters such as (i) building deterioration; (ii) maintenance, repairs andcapital expenditure requirements; (iii) environmental matters; and (iv) compliance with buildingregulations. These reports will be used to assess building conditions and expected levels of capitalexpenditure in the short- to medium-term.The Manager intends to hold the properties it acquires on a long-term basis. However, in the future, wherethe Manager considers that any property has reached a stage that offers limited scope for further growth,the Manager may consider selling the property and using the proceeds for alternative investments inproperties that meet its investment criteria.115
StrategyActive asset enhancement and management strategyThe Manager intends to implement pro-active measures, subject to approval by the relevant <strong>Indonesia</strong>nauthorities, to enhance the returns from the existing and future properties in LMIR <strong>Trust</strong>’s portfolio. Suchmeasures include:• addition and alteration works, including work carried out for the purpose of expanding size and capacityand mall layout efficiency;• leveraging and enhancing the properties’ competitive strengths to optimise rentals and enhancementprojects to maintain the competitive positioning of such properties;• promoting a niche position for the properties in LMIR <strong>Trust</strong>’s portfolio / raising the profile of theproperties in LMIR <strong>Trust</strong>’s portfolio through retail marketing strategies, mall positioning and branding;and• in relation to properties to be acquired by LMIR <strong>Trust</strong>, obtaining contractual rent escalations under longtermleases, backed by security deposits consisting of irrevocable letters of credit or cash, most of whichwill cover at least six months of initial monthly minimum rents. Additional security will be providedtypically by covenants regarding minimum working capital and net worth, liens on accounts receivableand other operating assets, and various provisions for cross-default, cross-collateralisation, whenappropriate.Capital and risk management strategyWhile LMIR <strong>Trust</strong> will not be drawing down on the Debt Facilities as at the Listing Date, in the event thatLMIR <strong>Trust</strong> incurs any future borrowings, the proposed objectives of the Manager in relation to capital andrisk management will be to:• maintain a strong balance sheet by adopting and maintaining a target gearing ratio;• secure diversified funding sources from financial institutions and capital markets as LMIR <strong>Trust</strong>continually assesses expansion and acquisition opportunities;• adopt a proactive strategy to manage risks related to interest rate fluctuations; and• manage foreign exchange exposure through hedging, where appropriate.By doing so, the Manager believes that LMIR <strong>Trust</strong> will optimise Unitholders’ returns while maintainingoperating flexibility when considering capital expenditure requirements.The Manager will, in the event that LMIR <strong>Trust</strong> incurs any future borrowings, periodically review LMIR<strong>Trust</strong>’s capital management policy with respect to its Aggregate Leverage and modify the policy as itsmanagement deems prudent in light of prevailing market conditions. If LMIR <strong>Trust</strong> takes on debt, theManager’s strategy will generally be to match the maturity of LMIR <strong>Trust</strong>’s indebtedness with the maturityof LMIR <strong>Trust</strong>’s investment assets, and to employ long-term, fixed-rate debt to the extent practicable inview of market conditions in existence from time to time.The key aspects of the proposed capital and risk management strategy are as follows:• To maintain an Aggregate Leverage within permitted limitsThe Manager will aim to maintain the Aggregate Leverage of LMIR <strong>Trust</strong> comfortably within borrowinglimits allowable under the Property Funds Guidelines. Furthermore, by achieving the right ratio of debtand equity, the Manager will be able to minimise LMIR <strong>Trust</strong>’s cost of capital and maximise returns toUnitholders.• To secure diversified funding sources from financial institutions and capital markets as LMIR<strong>Trust</strong> continually assesses expansion and acquisition opportunitiesIn order to finance acquisitions and refurbishment of properties, in addition to any bank borrowings, theManager will consider accessing the debt capital markets through the issuance of bonds and/or notes todiversify its sources of funding. The debt market provides LMIR <strong>Trust</strong> with the ability to secure longer116
Strategyterm funding in a more cost-efficient manner. In addition to its debt strategy, the Manager will capitaliseon opportunities to raise additional equity capital for LMIR <strong>Trust</strong> through the issue of additional Units.• To adopt a proactive interest rate management strategyThe Manager will adopt a proactive strategy to manage the risk associated with changes in interestrates on any future loan facilities while also seeking to ensure that LMIR <strong>Trust</strong>’s ongoing cost of debtcapital remains competitive.• To manage the foreign exchange exposure through hedging, where appropriateFor future acquisitions, in order to manage the currency risks associated with the capital values ofoverseas assets, the Manager will, to the extent possible, adopt a hedging strategy by borrowing in thesame currency as the underlying asset.117
Business and propertiesOVERVIEWLMIR <strong>Trust</strong> is a Singapore-based REIT constituted by the <strong>Trust</strong> Deed. It is established with the principalinvestment objective of owning and investing on a long-term basis in a diversified portfolio of incomeproducingreal estate in <strong>Indonesia</strong> that are primarily used for retail and/or retail-related purposes, and realestate related assets in connection with the foregoing purposes.LMIR <strong>Trust</strong> seeks to produce regular and stable distributions to Unitholders and to achieve long-termgrowth in NAV per Unit through growth in rental yields and acquisitions which are in the interests ofUnitholders. LMIR <strong>Trust</strong>’s initial asset portfolio, as at the Listing Date, comprises the seven <strong>Retail</strong> <strong>Malls</strong>and seven <strong>Retail</strong> Spaces, all of which are located in <strong>Indonesia</strong>.The Properties will be the initial assets which LMIR <strong>Trust</strong> will invest in and own. Subsequently, the Manageraims to produce attractive total returns for Unitholders by, among other things:• selective acquisition of properties that meet the Manager’s investment criteria;• active asset enhancement and management of LMIR <strong>Trust</strong>’s property portfolio to maximise returns; and• employment of optimum capital structure and risk management.Competitive strengthsThe Manager believes that the competitive strengths of the Properties include:• The Properties are located in major cities of <strong>Indonesia</strong> amidst a growing and affluent urbanmiddle class.The Properties are mainly located within Greater Jakarta and Bandung, <strong>Indonesia</strong>’s fourth mostpopulous city.Jakarta, <strong>Indonesia</strong>’s capital and largest city, has seen its total household expenditure increase by anaverage of 12.8% per annum from 2001 to 2006, rising from Rp. 19,277 billion in 2001 toRp. 35,273 billion in 2006. Bandung has seen a similar growth in its total household expenditure,rising from Rp. 4,825 billion in 2001 to Rp. 8,317 billion in 2006, an average growth of 11.5% per annumfrom 2001 to 2006.Economic development in <strong>Indonesia</strong> has seen a significant growth of the middle class over the past fiveyears. This middle income group is considered one of the vital contributors to the economy and isperceived as the most prospective target in mass consumer markets. Based on the Social EconomicSurvey (SES) by ACNielsen 1 conducted in nine major cities in <strong>Indonesia</strong>, the share of population of themiddle income group (classified as SES A, B & C) has steadily grown from 50.0% in 2001 to 64.0% in2006. It is estimated that the urban middle income population in <strong>Indonesia</strong> totals approximately66 million people. This particular group is likely to be considered a major target market for modernretail shopping centres.<strong>Retail</strong> spending in these cities has been further boosted by a shift in lifestyle towards a higher level ofconsumerism, partially brought about by the introduction of foreign brands and designer labels. Theseforeign brands and designer labels typically have higher margins and are willing to pay higher rentals forprime and sizeable retail space. The proliferation of hypermarkets and supermarkets over traditionalmarkets has also increased shopper traffic to modern retail malls.1 Source: ACNielsen Social Economic Survey. ACNielsen has not provided its consent, for the purposesof section 249 (read with section 302) of the SFA, to the inclusion of the information extracted from therelevant report issued by it, and is thereby not liable for such information under sections 253 and 254(read with section 302) of the SFA. While the Manager has taken reasonable action to ensure that theinformation has been reproduced in its proper form and context, and that it has been extractedaccurately and fairly, neither the Manager nor any other party has conducted an independentreview of, nor verified the accuracy of, such information.118
Business and propertiesIn addition, the geographic diversification of the Properties reduces LMIR <strong>Trust</strong>’s dependence on anysingle regional market and, accordingly, contributes to the stability of LMIR <strong>Trust</strong>’s future income.(See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)60GRDP Per Capita by <strong>Indonesia</strong>n City (Current Prices), 2003-2005*Rp Millions50403020200320042005100<strong>Indonesia</strong> Jakarta Bandung Surabaya Semarang MedanCity* Figures for <strong>Indonesia</strong>, Jakarta & Bandung are for 2003-20052005 figures for Surabaya, Semarang and Medan are not availableSource: “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”Socio-Economic Survey in <strong>Indonesia</strong> (1) , 2001-2006Percentage100%90%80%70%60%50%40%30%Monthlyhousehold expenditureA (Above Rp. 2 mil/month)B (Rp. 1.5-2 mil/month)C1 (Rp. 1.0-1.5 mil/month)C2 (Rp. 0.7-1.5 mil/month)D (Rp. 0.5-0.7 mil/month)E (Below Rp. 0.5mil/month)20%10%0%2001 2002 2003 2004 2005 2006Note:(1) AC Nielsen Socio-Economic Survey is based on monthly household expenditure, not actual income.No standard can be used (or widely accepted) to calculate direct relation between expenditure andincome.Source: “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”119
Business and propertiesTotal householdexpenditure ofthe middle class(Rp. billions)Cities 2001 2006Averageannualgrowth2001-2006Jakarta ................................................ 10,561 17,276 10Bodetabek. ............................................. 7,493 25,817 28Bandung ............................................... 2,793 4,304 9Surabaya. .............................................. 4,295 6,293 8Semarang .............................................. 1,758 3,691 16Medan ................................................. 3,542 5,103 8Source: “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”• High growth potential from favourable demographics of the <strong>Indonesia</strong> populationAccording to the Independent <strong>Indonesia</strong>n <strong>Retail</strong> Property Consultant, the <strong>Indonesia</strong> retail market hashigh growth potential, with 50.0% of <strong>Indonesia</strong>’s estimated population of 222 million in 2006 under theage of 25. Based on the Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market, the share ofpopulation of the middle income group has steadily grown from 50.0% in 2001 to 64.0% in 2006. It isestimated that the urban middle income population in <strong>Indonesia</strong> totals approximately 66 million people.(See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)• <strong>Retail</strong> <strong>Malls</strong> strategically located within well-established population catchment areas.The <strong>Retail</strong> <strong>Malls</strong> are strategically located throughout Greater Jakarta with a population range ofbetween approximately 0.4 million and 2.2 million within their respective primary catchment areas.Located in middle to upper income demographic regions, each of the <strong>Retail</strong> <strong>Malls</strong> has a variety of strongcharacteristics such as:- Gajah Mada Plaza—The only shopping centre located in the Chinatown district of Jakarta with ahypermarket, executive club and a swimming pool;- Cibubur Junction—Located in the heart of Cibubur, one of the most affluent and upmarket residentialareas in Jakarta;- The Plaza Semanggi—Located in the golden triangle of the Jakarta CBD and accessible from all fourdirections of the capital city;- Mal <strong>Lippo</strong> Cikarang—Growing residential and industrial <strong>Lippo</strong> township;- Ekalokasari Plaza—A five-minute drive from the Bogor exit gate of the Jagorawi toll road, the highwaywhich connects Jakarta to Bogor;- Bandung Indah Plaza—Strategic location at the heart of Bandung and easily accessible to the greaterBandung population; and- Istana Plaza—Easily accessible from several transportation hubs in the vicinity, such as the HuseinSastranegara Airport, Bandung train station and Pasteur tollgate.The <strong>Retail</strong> <strong>Malls</strong> located within Greater Jakarta, such as Gajah Mada Plaza and The Plaza Semanggi,also enjoy high levels of connectivity via public transportation such as the Transjakarta busway which isa premium form of public transportation in Jakarta, thereby enhancing the ability of these <strong>Retail</strong> <strong>Malls</strong> todraw high volumes of shoppers.• Quality <strong>Retail</strong> <strong>Malls</strong> which cater to the daily needs of shoppers.The <strong>Retail</strong> <strong>Malls</strong> are strategically positioned as “one-stop” shopping destinations for shoppers and theirfamilies, catering to their daily as well as lifestyle and entertainment needs. The <strong>Retail</strong> <strong>Malls</strong> areanchored by supermarkets, hypermarkets or department stores, which draw significant shopper trafficto the malls and provide a comfortable, hassle-free and low-cost environment for shoppers to purchase(%)120
Business and propertiestheir daily necessities. The specialty, food & beverage and lifestyle and entertainment tenants, whichinclude foreign labels and brands, restaurants, cinemas and entertainment centres provide shopperswith a wide product offering and a complete shopping experience,Further, the <strong>Retail</strong> <strong>Malls</strong> are managed by competent professionals with retail expertise and experience,as reflected in the high occupancy rates and the ability of each <strong>Retail</strong> Mall to differentiate itself from itscompetitors within its catchment area. As at 30 June 2007, the <strong>Retail</strong> <strong>Malls</strong> had a weighted averageoccupancy of approximately 91.6%, reflecting the robust demand for space in the <strong>Retail</strong> <strong>Malls</strong>.• <strong>Retail</strong> Spaces strategically located within well-established population catchment areas.The <strong>Retail</strong> Spaces are strategically located throughout Greater Jakarta and in the major cities ofSemarang, Medan, Madiun and Malang. For example, the Mall WTC Matahari Units are located inSerpong which is part of Tangerang, one of the settlement areas on the outskirts of Jakarta. Mall WTCMatahari is strategically located along a main road which connects to BSD City, the largest residentialestate in Greater Jakarta. It has a proposed development area of 6,000 ha with currently 1,500 hadeveloped and is occupied by over 15,000 households. In recent years, BSD City has experienced rapidgrowth in terms of the number of housing units and retail shop houses which have been built. Anotherexample is the Malang Town Square Units which are located in the city of Malang in the East Javaprovince. Malang is the second largest city in East Java province with a population of approximately0.8 million and a regency population of approximately 2.4 million people. The region is a popular touristdestination due to its natural attractions (for example, Mount Bromo, one of Java’s largest volcanoes),cool climate and colonial history. Malang also has a large student population, being home to fiveuniversities (Brawijaya, State, Muhammadiyah, Widya Gama and Merdeka Universities).• Economies of scale through portfolio management of the <strong>Retail</strong> <strong>Malls</strong>.The Property Manager, a wholly-owned subsidiary of the Sponsor, will manage the <strong>Retail</strong> <strong>Malls</strong> after theListing Date. As the <strong>Retail</strong> Spaces are master-leased to Matahari, there is no property managerappointed for the <strong>Retail</strong> Spaces. The Property Manager believes that there are opportunities to realiseefficiencies and economies of scale so as to maximise the performance of each <strong>Retail</strong> Mall.The Property Manager comprises a specialised team of professionals managing the key areas ofoperations, leasing, marketing and finance. Best practices are standardised and strictly adhered toacross all assets under its portfolio.The <strong>Retail</strong> <strong>Malls</strong> will be able to leverage upon the Property Manager’s and the Sponsor’s experience inareas including contractor management, retailer relationships and key negotiations, cost controlmechanisms and strategic leasing, marketing and management initiatives.• Quality tenant base.The <strong>Retail</strong> <strong>Malls</strong> benefit from the quality of their tenants. The <strong>Retail</strong> <strong>Malls</strong>’ top tenants include wellknowninternational and domestic retailers and brand names such as Giant Hypermarket, Gramediabookstore, Starbucks, Giordano, Fitness First, Sports Station, Matahari Department Store, Hypermartand Studio 21 Cinema.The Manager is of the view that the <strong>Retail</strong> <strong>Malls</strong>’ rental values are predominantly at or below marketlevels. This will allow the Manager to capture growth on lease expiries while maximising the retail mix ofthese malls.The <strong>Retail</strong> <strong>Malls</strong> have a large combined tenant base of over 1,400 tenants (as at 30 June 2007). Thesetenants represent a wide variety of mass retailers and specialty stores and provide trade and productdiversification for the <strong>Retail</strong> <strong>Malls</strong>.• Advance rental payment structure helps to minimise cash flow volatility due to potential rentalarrears<strong>Retail</strong> tenants in <strong>Indonesia</strong> typically pay an advance rental of approximately 10% to 20% of the total rentpayable for the duration of the lease upon signing of the lease agreement. This advance rental paymenthelps to minimise LMIR <strong>Trust</strong>’s cash flow volatility due to potential rental arrears, thus enhancing LMIR<strong>Trust</strong>’s cash flow stability.121
Business and propertiesCERTAIN INFORMATION ON THE PROPERTIESName of propertyYear ofbuildingcompletionPercentage ofcontributionto LMIR<strong>Trust</strong>’s grossrent forForecastPeriod 2007NLA as at30 June 2007GFA as at30 June 2007Occupancy asat 30 June2007(%) (sq m) (sq m) (%)<strong>Retail</strong> <strong>Malls</strong>Gajah Mada Plaza . . . . . . . . . . 1982 10.5 34,278 66,160 89.1Cibubur Junction . . . . . . . . . . . 2005 11.2 34,139 49,341 86.4The Plaza Semanggi . . . . . . . . 2003 20.4 58,685 (1) 91,232 96.4Mal <strong>Lippo</strong> Cikarang . . . . . . . . . 1995 6.8 17,974 (2) 25,767 96.3Ekalokasari Plaza. . . . . . . . . . . 2003 5.8 20,587 (3) 39,895 87.3Bandung Indah Plaza . . . . . . . . 1990 14.4 26,472 (4) 55,196 83.2Istana Plaza . . . . . . . . . . . . . . . 2001 12.0 27,247 37,434 98.9Total for <strong>Retail</strong> <strong>Malls</strong> ....... — 81.1 219,382 365,025 91.6 (5)Notes:(1) Current ongoing asset enhancement works to include a new alfresco café area called the “Plangi onthe Sky” café will increase NLA by an estimated 3,000 sq m, bringing total NLA to approximately61,685 sq m by the end of 2007.(2) Recently completed asset enhancement works to expand the retail space at Mal <strong>Lippo</strong> Cikarang haveincreased the NLA by 10,694 sq m, bringing the total NLA to 28,668 sq m.(3) Recently completed asset enhancement works for the third floor and mezzanine have increased the NLAby 5,013 sq m, bringing the total NLA to 25,600 sq m.(4) Recently completed asset enhancement works have increased the NLA by 3,843 sq m, bringing thetotal NLA to 30,315 sq m.(5) Weighted average occupancy as at 30 June 2007.Name of PropertyYear ofbuildingcompletionPercentage ofcontributionto LMIR<strong>Trust</strong>’s grossrent forForecastPeriod 2007NLA as at30 June 2007(%) (sq m)<strong>Retail</strong> SpacesMall WTC Matahari Units . . . . . . . . . . . . . . . . . . . . . . . . . . . 2003 2.5 11,184 (1)Metropolis Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . 2004 3.3 15,248 (2)Depok Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005 2.5 13,045 (2)Java Supermall Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2000 2.4 11,082 (1)Malang Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . 2005 2.4 11,065 (2)Plaza Madiun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2000 3.1 19,029Grand Palladium Medan Units . . . . . . . . . . . . . . . . . . . . . . . . 2005 2.6 13,417 (2)Total for <strong>Retail</strong> Spaces ............................ — 18.9 (3) 94,070Total for Properties ............................... — 100.0 313,452Notes:(1) Based on Strata Titles Ownership Certificates. (See “—Information Regarding the Title of theProperties”.)(2) Based on Kiosks Sale and Purchase Binding Agreements. (See “—Information Regarding the Title ofthe Properties—The <strong>Retail</strong> Spaces—Kiosks Sale and Purchase Binding Agreement”.)(3) Due to rounding differences.122
Business and propertiesValuationEach of the Properties was valued as at 30 June 2007 by Knight Frank and Colliers. The Appraised Valuesof each of the Properties are set out in the following table:Property30 June 2007 30 June 2007 Frank)Percentage ofAppraised value byKnight Frank as atAppraised value byColliers as ataggregate value of theProperties (asdetermined by Knight(S$ million) (S$ million) (%)<strong>Retail</strong> <strong>Malls</strong>Gajah Mada Plaza . . . . . . . . . . . . . . . . . 103.8 117.0 10.3Cibubur Junction . . . . . . . . . . . . . . . . . . 94.2 101.8 9.4The Plaza Semanggi . . . . . . . . . . . . . . . 214.8 211.1 21.4Mal <strong>Lippo</strong> Cikarang . . . . . . . . . . . . . . . . 80.2 79.7 8.0Ekalokasari Plaza. . . . . . . . . . . . . . . . . . 66.0 68.1 6.6Bandung Indah Plaza . . . . . . . . . . . . . . . 124.5 135.1 12.4Istana Plaza . . . . . . . . . . . . . . . . . . . . . . 125.7 114.7 12.5Sub-total . . . . . . . . . . . . . . . . . . . . . . . . 809.2 827.4 (2) 80.5 (2)<strong>Retail</strong> SpacesMall WTC Matahari Units . . . . . . . . . . . . 25.2 24.3 2.5Metropolis Town Square Units . . . . . . . . 33.5 32.2 3.3Depok Town Square Units . . . . . . . . . . . 25.7 24.8 2.6Java Supermall Units . . . . . . . . . . . . . . . 26.0 25.0 2.6Malang Town Square Units. . . . . . . . . . . 25.5 25.8 2.5Plaza Madiun . . . . . . . . . . . . . . . . . . . . . 33.4 31.8 3.3Grand Palladium Medan Units . . . . . . . . 26.2 25.2 2.6Sub-total . . . . . . . . . . . . . . . . . . . . . . . . 195.5 188.9 (2) 19.5 (2)Grand Total ..................... 1,004.7 1,016.3 100.0Notes:(1) See “Appendix E—Independent Property Valuation Summary Reports”.(2) Due to rounding differences.123
Business and propertiesTenant profileThe table below sets out information on the 10 largest tenants of the Properties (in terms of Gross Rentbased on Committed Leases as at 30 June 2007). (1)Tenant Trade sub-sector Lease expiry datePercentage oftotal NLA as at30 June 2007Percentage oftotal GrossRent based onCommittedLeases as at30 June 2007(%) (%)Matahari . . . . . . . . . . . . . Department Store/ 23 March 2015 -38.1 30.6Supermarket 9 Dec 2026Hypermart. . . . . . . . . . . . Hypermarket 2 May 2015 -6.2 2.931 May 2015Rimo . . . . . . . . . . . . . . . . Department Store 30 June 2007 (2) and2.4 2.128 February 2012Centro. . . . . . . . . . . . . . . Department Store 4 November 2013 2.5 1.8Giant. . . . . . . . . . . . . . . . Hypermarket 14 February 2019 2.0 1.1Gramedia . . . . . . . . . . . . Books &30 November 2010 -1.3 1.1Stationery22 May 2014Electronic Solution<strong>Indonesia</strong> PT., . . . . . . . Electronics 31 October 2011 1.3 1.0Fitness First . . . . . . . . . . Sports & Fitness 14 April 2021 and17 May 20201.2 0.8Ace Hardware . . . . . . . . . Houseware 28 February 2012 0.5 0.8Millennium ExecutiveClub. . . . . . . . . . . . . . .29 October 2014 2.2 0.8Leisure andEntertainmentTop 10 tenants ....... 57.7 43.0Other tenants ........ 42.3 57.0Total . . . . . . . . . . . . . . . . 100.0 100.0Notes:(1) Includes the gross rental income from the <strong>Retail</strong> Spaces and assuming that the Master LeaseAgreement was in effect as at 30 June 2007(2) Rimo’s lease has been renewed till 30 June 2008.The following table sets out the expiry profile of the tenancies of the <strong>Retail</strong> <strong>Malls</strong> as at 30 June 2007:PeriodTotalnumber ofexpiringleasesNLA ofexpiringleasesMonthlygross rentof expiringleases as apercentageof forecastrentalExpiringleases as apercentageof NLA as at30 June 2007(sq m) (%) (%)2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 8,360 5.1 3.82008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 24,592 11.4 11.22009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 15,797 12.0 7.2Beyond 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 795 152,102 55.1 69.3Vacant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 18,531 16.3 8.4Total .................................... 1,472 219,382 100.0 (1) 100.0 (1)Note:(1) Due to rounding differences124
Business and propertiesThe following table sets out the expiry profile of the tenancies of the Properties (1) as at 30 June 2007:PeriodTotalnumber ofexpiringleasesNLA ofexpiringleasesMonthlygross rentof expiringleases as apercentageof forecastrentalExpiringleases as apercentageof NLA as at30 June 2007(sq m) (%)2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 8,360 3.8 2.72008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262 24,592 8.5 7.82009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 15,797 9.0 5.0Beyond 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 802 246,172 66.5 78.5Vacant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 18,531 12.2 5.9Total .................................... 1,479 313,452 100.0 100.0 (2)Note:(1) Assuming that the Master Lease Agreements for the <strong>Retail</strong> Spaces were executed on 30 June 2007.(2) Due to rounding differences.Purchase price of the Properties (1)The table below shows the purchase price of each of the Properties, taking into account estimated issuecosts of the Offering and issue costs of the Cornerstone Units (assuming that the Over-allotment Option isnot exercised). (See “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties”).PropertyPurchase pricebased onOffering Price(S$ million)<strong>Retail</strong> <strong>Malls</strong>Gajah Mada Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77.8Cibubur Junction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74.5The Plaza Semanggi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175.8Mal<strong>Lippo</strong>Cikarang .................................................... 61.0Ekalokasari Plaza. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54.5Bandung Indah Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.5IstanaPlaza.......................................................... 94.4Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635.5<strong>Retail</strong> SpacesMall WTC Matahari Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.8Metropolis Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.7Depok Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.2Java Supermall Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.4Malang Town Square Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.1Plaza Madiun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.6Grand Palladium Medan Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.6Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161.2 (2)Total ............................................................... 796.8 (2)Notes:(1) The purchase consideration of the Properties is determined by the difference between the purchaseconsideration of the Singapore SPCs (See “Certain Agreements relating to LMIR <strong>Trust</strong> and theProperties—Description of the Singapore SPC Share Purchase Agreements” for the formula ofdetermining this purchase consideration) and the fair value of all the net identifiable assets andliabilities of the Singapore SPCs acquired save for the Properties.(2) Due to rounding differences.125
Business and propertiesASSET ENHANCEMENTThe Manager will continually review and investigate asset enhancement works for each Property. The aimof this is to create further income streams and maximise retail offering at each mall. To do this, theManager intends to work with relevant <strong>Indonesia</strong>n authorities to gain the necessary approvals. The tablebelow gives a summary of potential and completed asset enhancement works.PropertyGajah Mada Plaza . . . . . . . .Cibubur Junction . . . . . . . . . .The Plaza Semanggi. . . . . . .Mal <strong>Lippo</strong> Cikarang . . . . . . . .Ekalokasari Plaza . . . . . . . . .Bandung Indah Plaza . . . . . .Istana Plaza . . . . . . . . . . . . .Key asset enhancement plans• Potential improvements to the façade, main lobby, atrium and furtherenhancement of the tenancy mix will be investigated.• Expansion of Matahari Department Store at the third level has beenrecently completed.• Relocation of the food court from the upper level to the basement.• Development of “Plangi on the Sky”, a rooftop open air cafe, addingapproximately 3,000 sq m to the NLA.• Expansion of NLA by 10,694 sq m from construction of an extensionannex has been recently completed.• As at 30 June 2007, 8,539 sq m or approximately 79.8% of theadditional NLA created from asset enhancement has been precommittedto Hypermart.• Reconfiguration of the Matahari Department Store.• Addition of a third floor with NLA of approximately 3,263 sq m and amezzanine with NLA of approximately 1,750 sq m has been recentlycompleted. The additional NLA will be occupied by a food court,proposed fitness centre and potentially, a cinema which, together,anchor the top levels of the centre, which is expected to enhanceshopper traffic on the higher floors of the mall and average grossrentals for the entire mall.• As at 30 June 2007, 670 sq m or approximately 13.4% of the additionalNLA created from the asset enhancement works has been precommitted.• An additional NLA of approximately 3,843 sq m has been recentlycompleted.• Investigate converting ice skating rink to retail.Each of Bandung Indah Plaza, Mal <strong>Lippo</strong> Cikarang and Ekalokasari Plaza has either obtained, or is in theprocess of obtaining, final local government approval for the recently completed asset enhancementworks which have created additional NLA.INSURANCEThe Properties are insured consistent with industry practice in <strong>Indonesia</strong>. This includes property damage,public liability insurance (including personal injury) policies, earthquakes, terrorism and sabotage. Thereare no significant or unusual excess or deductible amounts required under such policies. There are,however, certain types of risks that are not covered by such insurance policies, including acts of war andoutbreaks of contagious diseases.LEGAL PROCEEDINGSNone of LMIR <strong>Trust</strong>, the Manager and the Master Lessee is currently involved in any material litigation nor,to the best of the Manager’s knowledge, is any material litigation currently contemplated or threatenedagainst LMIR <strong>Trust</strong>, the Manager and the Master Lessee.ENCUMBRANCESAs at the Listing Date, there are no encumbrances which are outstanding with regard to any of theProperties.126
Business and propertiesINFORMATION REGARDING THE TITLE OF THE PROPERTIESThe <strong>Retail</strong> <strong>Malls</strong>Each of the seven <strong>Retail</strong> <strong>Malls</strong> is wholly-owned by a <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC which is, in turn, owned bytwo <strong>Retail</strong> Mall Singapore SPCs (See “—Summary of Ownership Structure of the <strong>Retail</strong> <strong>Malls</strong>”). LMIR<strong>Trust</strong> will, via its direct or indirect ownership of 100% of the shares of each of the <strong>Retail</strong> Mall SingaporeSPCs, indirectly hold the <strong>Retail</strong> <strong>Malls</strong>. (See “Certain Agreements Relating to LMIR <strong>Trust</strong> and theProperties—Summary of Ownership Structure of the <strong>Retail</strong> <strong>Malls</strong>”.) With the exception of Gajah MadaPlaza and Mal <strong>Lippo</strong> Cikarang, LMIR <strong>Trust</strong> owns the remaining five <strong>Retail</strong> <strong>Malls</strong> via BOT Schemes (asdefined below) and does not directly own the land on which the relevant <strong>Retail</strong> Mall is situated.The table below sets out the types of titles held by LMIR <strong>Trust</strong>:<strong>Retail</strong> mall Title held by the land owner (1) Title/right held by LMIR <strong>Trust</strong> (2)Gajah Mada Plaza . . . . . . . . . . Strata titles Strata titlesCibubur Junction . . . . . . . . . . . . HGB title BOT SchemeThe Plaza Semanggi. . . . . . . . . HP title BOT SchemeMal <strong>Lippo</strong> Cikarang . . . . . . . . . . HGB title HGB titleEkalokasari Plaza . . . . . . . . . . . HP title BOT SchemeBandung Indah Plaza . . . . . . . . HPL titles BOT Scheme and HGB titles ontop of HPL titles (3)Istana Plaza . . . . . . . . . . . . . . . HGB titles BOT SchemeNotes:(1) The title held by the owner of the land on which the <strong>Retail</strong> Mall is situated.(2) The title/right held by LMIR <strong>Trust</strong> via its ownership of shares in the respective <strong>Retail</strong> Mall SingaporeSPCs.(3) The BOT Grantor has granted the BOT Grantee, the owner of Bandung Indah Plaza, the right to applyfor HGB titles on top of its HPL titles. (See “—Hak Pengelolaan (“HPL”) titles”.)Build, operate and transfer schemes (“BOT schemes”)The relevant <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs will own five of the seven <strong>Retail</strong> <strong>Malls</strong>, namely, Cibubur Junction,The Plaza Semanggi, Ekalokasari Plaza, Bandung Indah Plaza and Istana Plaza, via BOT Schemes. Therelevant <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs are in turn owned by two <strong>Retail</strong> Mall Singapore SPCs. As at theListing Date, LMIR <strong>Trust</strong> will, via its direct or indirect ownership of 100% of the shares of each of the <strong>Retail</strong>Mall Singapore SPCs, indirectly hold these <strong>Retail</strong> <strong>Malls</strong>. A BOT Scheme is not registrable with any<strong>Indonesia</strong>n authority. Rights under a BOT Scheme do not amount to a legal title and represent onlycontractual interests.Pursuant to BOT Schemes, the owner of the land on which the relevant <strong>Retail</strong> Mall is situated or the partythat is appointed by the land owner (the “BOT Grantor”) has granted the relevant <strong>Retail</strong> Mall <strong>Indonesia</strong>nSPC (the “BOT Grantee”), a right to build and operate the <strong>Retail</strong> Mall for a particular period of time asstipulated in the BOT Agreement.The respective BOT Grantor for the relevant <strong>Retail</strong> <strong>Malls</strong> are not related or affiliated with the respectiveVendors or the Sponsor. The relevant BOT Grantors are regional <strong>Indonesia</strong>n Government enterprises,<strong>Indonesia</strong>n Government agencies and a church foundation.In exchange for the right to build and operate the <strong>Retail</strong> Mall on the land owned by the BOT Grantor, theBOT Grantee is obliged to pay a certain compensation (as stipulated in the BOT Agreement) to the BOTGrantor. The relevant <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC, as the BOT Grantee, financed the construction of therelevant <strong>Retail</strong> Mall and on an ongoing basis, pays for the asset enhancement works of the <strong>Retail</strong> Mall (ifany). Depending on the terms of the relevant BOT agreement, the payment by the BOT Grantee may bemade in the form of a lump sum (Istana Plaza and Ekalokasari Plaza, both of which have been fully paid) orstaggered (Bandung Indah Plaza, Cibubur Junction and The Plaza Semanggi).127
Business and propertiesLMIR <strong>Trust</strong> has, via its wholly-owned <strong>Retail</strong> Mall Singapore SPCs, entered into share purchaseagreements to acquire the entire share capital of the relevant <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC. LMIR <strong>Trust</strong>will, through the <strong>Retail</strong> Mall Singapore SPCs, indirectly own the <strong>Retail</strong> Mall for the period stipulated in therespective BOT Agreement. The term of BOT Agreements ranges from 20 years to 30 years and may beextended upon agreement of both parties. During the term of the BOT Agreement, the respective BOTGrantor is not allowed to sell or transfer the land on which the relevant <strong>Retail</strong> Mall is situated. Upon theexpiry of the term of the BOT Agreement, the BOT Grantee must return the land, together with anybuildings and fixtures on top of the land, without either party providing any form of compensation to theother.The BOT Grantee may assign its rights under the BOT Agreement with prior consent of the BOT Grantor.The BOT Agreements are silent on the circumstances under which the respective BOT Grantor maywithhold its consent to such an assignment. Under <strong>Indonesia</strong>n law, a transfer of rights under an agreementmust be approved or acknowledged by the opposite party. Therefore, if a BOT Grantee assigns its rightsunder the BOTAgreement without the consent of the BOT Grantor, the assignment will not be effective andthe BOT Grantee shall be deemed to have caused a breach of contract. Instead of a transfer of a BOTGrantee’s right through an assignment of the BOT Agreement, which requires consent from the BOTGrantor, the transfer of the BOT interest may also be made through a transfer of shares in the BOT Granteeby the shareholders of the BOT Grantee. Except for the BOT Agreement relating to Cibubur Junction, thetransfer of shares in the BOT Grantee does not require consent from the BOT Grantor. In respect ofCibubur Junction, the BOT Grantor has approved the transfer of shares in Cibubur Junction to its relevant<strong>Retail</strong> Mall Singapore SPCs, as evidenced by Letter No. 306/076.11, dated 4 April 2007, issued by therespective BOT Grantor.(See “Overview of Relevant Laws and Regulations in <strong>Indonesia</strong>—Rights to Own and/or Use—Build,Operate and Transfer or BOT”).LMIR <strong>Trust</strong> owns the <strong>Retail</strong> <strong>Malls</strong>, via its 100% ownership interests of shares in the <strong>Retail</strong> Mall SingaporeSPCs, under BOT Schemes because:• Freehold land in <strong>Indonesia</strong> may not be owned by companies (whether <strong>Indonesia</strong>n or foreign-owned) orby foreign individuals. Under <strong>Indonesia</strong>n land law, the closest form of land title to an internationallyrecognised concept of “freehold” title is Hak Milik (“HM”) or “Right of Ownership”. A Hak Milik title isavailable only to <strong>Indonesia</strong>n individuals and certain <strong>Indonesia</strong>n religious and social organisations andgovernment bodies. In the <strong>Indonesia</strong>n property market, it is common for properties to be held underagreements or schemes without the legal title being transferred. (See “Overview of Relevant Laws andRegulations in <strong>Indonesia</strong>—Rights to Own and/or to Use—Hak Milik (HM/Right to Own)”);• Instead of transferring the ownership of the land, the land owner may prefer to use the BOT Scheme forcommercial reasons. The land owner may not intend to transfer the ownership of the land because theland is located at commercially strategic locations or has historical value. Alternatively, the land ownermay have limited financial capability to develop the land. Under such circumstances, the land ownermay prefer to enter into a BOT Agreement with a BOT Grantee who are property developers with strongfinancial support and proven track records; or• A BOT Grantee may prefer to use the BOT Scheme because the compensation for obtaining the BOTrights could be considered as more price feasible and cash flow effective as compared to an outrightpurchase of the land.Strata titlesOne of the seven <strong>Retail</strong> <strong>Malls</strong>, namely, Gajah Mada Plaza, is held via strata titles. Under <strong>Indonesia</strong>n landlaw, a building developer must divide a multi-storey building into (i) rights of ownership (strata title) for eachunit, (ii) rights on common properties and (iii) rights to the common land in the form of a sketch plan, whichmust be approved by the relevant authority. Such sketch plan must also provide an explanation on (i) unitseparation that can be used by individuals, (ii) the limitation and separation of the strata title right overcommon properties, and (iii) the strata title right over the common land.In general, if a party holds a property via strata titles, the party that owns the strata title unit, will also ownthe common areas, common property and common land (i.e. the underlying land) proportionately with the128
Business and propertiesother strata title unit owners. LMIR <strong>Trust</strong> indirectly owns, via the relevant <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC,approximately 99.0% of the units of strata titles that are constructed on the relevant plot of land on whichGajah Mada Plaza is situated on.(See “Overview of Relevant Laws and Regulations in <strong>Indonesia</strong>—Rights to Own and/or to Use—StrataTitles”.)Hak Guna Bangunan (“HGB”) titlesOne of the <strong>Retail</strong> <strong>Malls</strong>, namely, Mal <strong>Lippo</strong> Cikarang, is held via a HGB title. Under <strong>Indonesia</strong>n land law, thehighest title which can be obtained by a company incorporated or located in <strong>Indonesia</strong> is a ‘Right to Build’or HGB title. HGB titles can only be obtained by an <strong>Indonesia</strong>n citizen, or by a legal entity which isincorporated under <strong>Indonesia</strong>n law and located in <strong>Indonesia</strong> including foreign investment companies(Penanaman Modal Asing, or “PMA”). A holder of HGB title has the right to erect, occupy and usebuildings on that particular parcel of land, and also has the right to encumber and sell all or part of theparcel.The validity period for a HGB title is different from that of a “freehold” title. A “freehold” title has no limitationon the validity period. A HGB title is granted for a maximum initial term of 30 years. By application to therelevant local land office upon the expiration of this initial term, a HGB title may be extended for anadditional term not exceeding 20 years. Following expiration of this additional term, a renewal applicationmay be made. The application should be made no later than two years prior to the expiration of theadditional term. The land office has discretion to grant the various extensions.(See “Overview of Relevant Laws and Regulations in <strong>Indonesia</strong>—Rights to Own and/or to Use”.)Hak Pakai (“HP”) titlesTwo of the <strong>Retail</strong> <strong>Malls</strong>, namely The Plaza Semanggi and Ekalokasari Plaza, are situated on plots of landwhich are owned by the land owner under HP (Right to Use) titles. LMIR <strong>Trust</strong> does not own these plots ofland directly and instead, holds the two <strong>Retail</strong> <strong>Malls</strong> via BOT schemes. The land owner (as the BOTGrantor) has granted the relevant <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC (as BOT Grantee), a right to build andoperate the relevant <strong>Retail</strong> Mall for a particular period of time as stipulated in the BOT Agreement. The HPtitles where Plaza Semanggi and Ekalokasari Plaza are constructed will be valid as long as the lands arebeing used by the respective land owner.A HP title allows its holder (i.e. the land owner) the right to use and/or collect the products of land directlyadministered by the State or of land owned by other persons. Hak Pakai over land can be granted by the<strong>Indonesia</strong>n government in the form of a decree or by an <strong>Indonesia</strong>n citizen in the form of an agreement.The decree or the agreement gives the user the rights and obligations laid down in that decree oragreement.A HP title in <strong>Indonesia</strong> may be obtained and owned by the following entities: (a) an <strong>Indonesia</strong>n citizen, (b) alegal entity established under <strong>Indonesia</strong>n law and domiciled in <strong>Indonesia</strong>, (c) any <strong>Indonesia</strong>n governmentdepartment or government agency, (d) any social or religious entity, (e) a foreign citizen residing in<strong>Indonesia</strong> and who has provided benefit to <strong>Indonesia</strong>, (f) a foreign legal entity that has a registeredrepresentative office in <strong>Indonesia</strong>, and (g) a state representative or a representative of certaininternational bodies.(See “Overview of Relevant Laws and Regulations in <strong>Indonesia</strong>—Rights to Own and/or to Use”.)Hak Pengelolaan (“HPL”) titlesIn the case of Bandung Indah Plaza, the BOT Grantor owns the land on which the <strong>Retail</strong> Mall is situatedunder a HPL (Right to Manage) title. A HPL title provides its holder (i.e. the land owner) with the right tomanage on a parcel of land created by the state, in which the executing authorities of such right to manageis partially granted and in common practice (only) to <strong>Indonesia</strong>n government entities. Such holder of aRight to Manage title may use the granted executing authority for the purpose of land utilisation andallocation planning, utilisation of the land related to the role of such <strong>Indonesia</strong>n government entities, partialassignment of the land to third parties and/or land management in cooperation with third parties. Bandung129
Business and propertiesIndah Plaza is constructed on land under HPL titles which will be valid as long as the land is being used bythe land owner.In respect of Bandung Indah Plaza, the land owner (as BOT Grantor) has granted the relevant <strong>Retail</strong> Mall<strong>Indonesia</strong>n SPC (as BOT Grantee) the right to apply for a HGB title on top of its HPL (Right to Manage) title.Pursuant to this BOT Scheme, the BOT Grantee is granted the right to build and operate the <strong>Retail</strong> Mall andto own a HGB title for the term of the BOT Agreement. Ownership of the HGB title allows the BOT Granteeto encumber the land with prior consent of the BOT Grantor and subject to the BOT Agreement.(See “Overview of Relevant Laws and Regulations in <strong>Indonesia</strong>—Rights to Own and/or to Use”.)The <strong>Retail</strong> SpacesEach of the seven <strong>Retail</strong> Spaces is wholly-owned by a <strong>Retail</strong> Space <strong>Indonesia</strong>n SPC which is, in turn,owned by two <strong>Retail</strong> Space Singapore SPCs. LMIR <strong>Trust</strong> will, via its ownership of 100% of the shares of therespective <strong>Retail</strong> Space Singapore SPCs, indirectly own the <strong>Retail</strong> Spaces. (See “Certain AgreementsRelating to LMIR <strong>Trust</strong> and the Properties—Summary of Ownership Structure of the <strong>Retail</strong> Spaces”.)The <strong>Retail</strong> Spaces are held by the respective <strong>Indonesia</strong>n SPCs under the following types of title:<strong>Retail</strong> SpaceMall WTC Matahari Units . . . . . . . . . . . . . . . . . . .Metropolis Town Square Units . . . . . . . . . . . . . . .Depok Town Square Units . . . . . . . . . . . . . . . . . .Java Supermall Units . . . . . . . . . . . . . . . . . . . . . .Malang Town Square Units. . . . . . . . . . . . . . . . . .Plaza Madiun . . . . . . . . . . . . . . . . . . . . . . . . . . . .Grand Palladium Medan Units . . . . . . . . . . . . . . .Held by LMIR <strong>Trust</strong> via:Strata titles ownership certificatesKiosks Sale and Purchase Binding AgreementKiosks Sale and Purchase Binding AgreementStrata titles ownership certificatesKiosks Sale and Purchase Binding AgreementHGB titlesKiosks Sale and Purchase Binding AgreementStrata titlesTwo of the <strong>Retail</strong> Spaces, namely Mall WTC Matahari Units and Java Supermall Units are held via StrataTitles.(See “—The <strong>Retail</strong> <strong>Malls</strong>—Strata Titles”.)Kiosks Sale and Purchase Binding AgreementAs at the Latest Practicable Date, four of the seven <strong>Retail</strong> Spaces, namely Metropolis Town Square Units,Depok Town Square Units, Malang Town Square Units and Grand Palladium Medan Units, are each boundby Kiosks Sale and Purchase Binding Agreements because their strata titles are in the process of beingissued by the <strong>Indonesia</strong>n government.A Kiosks Sale and Purchase Binding Agreement is regulated by Article 1338 of the <strong>Indonesia</strong>n Civil Code.In addition, for a strata title, it is a common practice to enter into a Kiosks Sale and Purchase BindingAgreement prior to entering into a deed of sale and purchase of land. Under a Kiosks Sale and PurchaseBinding Agreement, each of the parties agree on the terms and conditions for the transaction (i.e. the saleand purchase of land) but the Kiosks Sale and Purchase Binding Agreement does not have the effect oftransferring the ownership of the land to the other party. Instead, subject to certain conditions in the KiosksSale and Purchase Binding Agreement, the vendor is bound to sell the land and the purchaser is bound topurchase the land. These agreements shall be executed in good faith and cannot be revoked except bymutual agreement or pursuant to certain reasons which have been legally declared as sufficient.Upon the completion of the conditions stipulated in the said agreement (including the issuance of the stratatitle certificate), the parties enter into a deed of sale and purchase which shall be made before the localland deed official. Once the parties enter into a deed of sale and purchase agreement, the vendor isdeemed to have sold and transferred its rights of ownership of the land to the purchaser, who is in turn,deemed to have accepted the transfer of the said rights from the vendor. Pursuant to the Basic Principal ofAgrarian Law No. 5/1960, the transfer of ownership rights over the land is perfected upon registration atthe local land office.130
Business and propertiesBecause of this unique nature of <strong>Indonesia</strong>n land law, the SGX-ST has granted LMIR <strong>Trust</strong> a waiver fromcompliance with Rule 222(1) of the SGX-ST Listing Manual (the “Listing Manual”) which requiresproperties that have remaining leases of less than 30 years not to, in aggregate, account for morethan 50.0% of a company’s operating profits for the past three years.The Sponsor intends to procure the strata titles of these <strong>Retail</strong> Spaces prior to the Listing Date. However,the legal process to obtain these strata titles may be lengthy and may only be issued post listing. The<strong>Trust</strong>ee and the Master Lessee have entered into a put option agreement pursuant to which, in the eventthat the strata titles to these four <strong>Retail</strong> Spaces are not issued within 24 months from the Listing Date, ameeting of all the Unitholders will be convened by the <strong>Trust</strong>ee pursuant to which the Unitholders will vote,by way of an ordinary resolution, on whether to retain these four <strong>Retail</strong> Spaces in the portfolio of LMIR<strong>Trust</strong> for a further six months from the date of the ordinary resolution. In the event that an ordinaryresolution is passed in favour of retaining these four <strong>Retail</strong> Spaces in the portfolio of LMIR <strong>Trust</strong> and thestrata titles are still not issued upon expiry of six months from the date of the ordinary resolution, the<strong>Trust</strong>ee shall be entitled to exercise the put option. In the event that an ordinary resolution is not passed infavour of retaining these four <strong>Retail</strong> Spaces, the <strong>Trust</strong>ee shall be entitled to exercise the put option withinthree months of the date of the meeting of the Unitholders.Upon exercising the put option, the Master Lessee will be required to purchase the entire issued andpaid-up capital of the relevant <strong>Indonesia</strong>n SPCs of these four <strong>Retail</strong> Spaces at the consideration of thehigher of (i) the net asset value of the relevant <strong>Indonesia</strong> SPCs as at the date of service of the put optionnotice as determined from the audited consolidated accounts of the SPCs and (ii) the net asset valuebased on the value attributed to these four <strong>Retail</strong> Spaces for the purpose of the Listing, in each case, alsotaking into account all transaction costs incurred directly and indirectly by LMIR <strong>Trust</strong> for the acquisition ofthese four <strong>Retail</strong> Spaces. (See “Certain Agreements relating to LMIR <strong>Trust</strong> and the Properties—Description of the Put Option Agreements”.) The <strong>Trust</strong>ee (acting on the advice and recommendationof, and after discussions with, the Manager) is satisfied with the computation of the said transaction costsas set out in the put option agreement. A 24-month period is sought as the length of time required for theland title office to issue the strata title is estimated to be more than 12 months. The parties will operate as ifLMIR <strong>Trust</strong> exclusively controls the strata titles to these four <strong>Retail</strong> Spaces during this 24-month period.The transfer of strata titles without prior written approval from Matahari will result in a breach of the KiosksSale and Purchase Binding Agreement.On 9 August 2007, the <strong>Trust</strong>ee, the Manager and the Sponsor entered into a letter of undertaking,pursuant to which the Sponsor will to use its best endeavors to procure that the relevant <strong>Retail</strong> SpaceSPCs obtain the strata titles to the Metropolis Town Square Units, Depok Town Square Units, MalangTown Square Units and Grand Palladium Medan Units. (See “Certain Agreements relating to LMIR <strong>Trust</strong>and the Properties—Description of the Letter of Undertaking”.)The <strong>Trust</strong>ee (acting on the advice and recommendation of, and after discussions with the Manager) is ofthe view that the proposed arrangements, namely the put option agreement and the letter of undertaking,adequately safeguard the interest of Unitholders if the legal titles to the four <strong>Retail</strong> Spaces are not issuedon the expiry of 24 months from the Listing Date.HGB titlesOne of the <strong>Retail</strong> Spaces, namely Plaza Madiun is held via a HGB title.(See “—The <strong>Retail</strong> <strong>Malls</strong>—Hak Guna Bangunan (“HGB”) titles”.)131
Business and propertiesGAJAH MADA PLAZAJaIan Gajah Mada 19-26, Central JakartaJakarta profileThe province of Jakarta is the capital of <strong>Indonesia</strong>. It consists of five municipalities—North Jakarta, EastJakarta, South Jakarta, West Jakarta and Central Jakarta.As the administrative centre of <strong>Indonesia</strong>, Jakarta’s economy is based on finance and commerce andattracts a particularly high level of foreign investment compared to other parts of <strong>Indonesia</strong>. Income percapita is also high driven partly by a high number of expatriates living in the city, as well as the types ofemployment available in the area.According to a 2005 Census, the population of Greater Jakarta was 7.5 million. Despite rapid urbanisationover the past 40 years (with population at only 1.2 million in 1960), and solid growth for <strong>Indonesia</strong> as awhole, population in Greater Jakarta has been declining over the past five years. This is a result of adecline in the population of Central Jakarta, driven by the changing composition of the city from relativelyhigh levels of residential accommodation to an increasing mix of office development, convention centresand hotels. Over the next five years, the population of Central Jakarta is expected to begin increasing, andparticularly strong growth is also expected in South Jakarta.As the largest city in <strong>Indonesia</strong>, Jakarta has the highest GRDP (current prices) per capita with averagegrowth rate of about 14% per annum over the past four years. Total household expenditure in Jakarta grewat an average rate of 12.8% for the period from 2001 to 2006, from Rp. 19,277 billion in 2001 toRp. 35,273 billion in 2006.Apart from increases in income driving retail spending growth, spending has also been boosted by alifestyle shift towards a higher level of consumerism.DescriptionGajah Mada Plaza is a seven storey with one basement level shopping centre and a carpark comprising885 parking lots. The mall is located prominently in the heart of Jakarta’s Chinatown, an established and132
Business and propertieswell-known commercial area in the city. Situated along Jalan Gajah Mada, one of the main roads inJakarta, Gajah Mada Plaza is positioned as a one-stop shopping, dining and entertainment destination formiddle to upper income families as well as professional executives and students from the offices andschools within its vicinity. The 222 tenancies in the mall provide a diverse and complementary tenant mixanchored by Hypermart and Rimo Department Store. The mall’s strong leisure and entertainmentcomponent, which includes a cinema, restaurants, family karaoke outlets, a discotheque, video gamecentres, a fitness centre and a swimming pool, adds to the overall attractiveness of Gajah Mada Plaza.Tenant profileGajah Mada Plaza has 222 retail tenants, based on Committed Leases as at 30 June 2007. The tenantprofile of the mall comprises a diverse set of tenants from a wide variety of industries. The mall is anchoredby Hypermart and Rimo Department Store, which occupy approximately 14.5% and 8.0% of the mall’sNLA, respectively. The other prominent tenants include Millennium International Executive Club, whichoperates as a restaurant during the day and as a discotheque late at night, McDonald’s, Kentucky FriedChicken and Inul Vista Karaoke.The mall has a good tenancy mix which caters to the daily needs of its customers. It is also well known forits specialty stores providing products and services such as pets, jewellery, information technologyproducts, dining and entertainment.Asset enhancement plansIn late 2007, a new cellphone centre on the semi-ground level will be set up, the pet centre will be improvedand enlarged, and the second floor will be converted to provide for a more family-oriented merchandisemix.Other plans under consideration include enhancement of the external and internal presentation of themall. This includes improvements to the facade, main entrance and atrium, as well as enhancement to thetenancy mix.The following chart provides a breakdown (by area) of the various trade sub-sectors represented in GajahMada Plaza as at 30 June 2007:Gajah Mada Plaza—Trade sector analysis (By area)Trade sub sector Contribution (%)Leisure & EntertainmentSupermarket/HypermarketFood & Beverage/Food CourtDepartment StoreOtherGifts & SpecialtyElectronic/ITFashionHome FurnishingsSports & FitnessServicesBooks & StationeryHobbies35.516.610.89.28.07.05.22.82.01.21.10.30.3133
Business and propertiesThe table below sets out information on the 10 largest tenants of Gajah Mada Plaza based on CommittedLeases as at 30 June 2007:Percentage oftotal NLAPercentage of thetotal base rentalincome of GajahMada Plaza basedon CommittedLeases as at30 June 2007Tenant Business sector Lease expiry date(%) (%)Millennium InternationalExecutive Club . . . . . . . . Leisure & Entertainment 29 October 2014 20.2 8.6Rimo Department Store . . . Department Store 30 June 2008 8.0 7.7Hypermart. . . . . . . . . . . . . Supermarket/Hypermarket 2 February 2015 14.5 7.3McDonald’s . . . . . . . . . . . . F&B 28 July 2013 1.8 3.6Inul Vista . . . . . . . . . . . . . Leisure & Entertainment 31 August 2011 2.6 2.5Resto Mart . . . . . . . . . . . . F&B 30 April 2009 1.2 2.1Gajah Mada 21 . . . . . . . . . Leisure & Entertainment 31 March 2013 4.9 1.9Hanamasa . . . . . . . . . . . . F&B 31 October 2007 0.5 1.8Platinum Resto . . . . . . . . . F&B 30 April 2009 0.7 1.8Optical Seis. . . . . . . . . . . . Gifts & Specialty 30 April 2009 0.2 1.610 largest tenants . . . . . . . — — 54.5 (1) 38.7 (1)Other tenants . . . . . . . . . . — — 45.5 61.3Total ................ — — 100.0 100.0Note:(1) Due to rounding differences.Expiry profileThe following table sets out the expiry profiles of the tenancies at Gajah Mada Plaza as at 30 June 2007:PeriodTotal number ofleases expiringNLA of expiringleasesMonthly GrossRent of expiringleases as apercentage offorecast rentalincomeExpiring leases asa percentage ofNLA as at 30 June2007(sq m) (%) (%)FY2007 . . . . . . . . . . . . . . . . . . . . 64 3,241 13.6 9.5FY2008 . . . . . . . . . . . . . . . . . . . . 107 12,069 33.0 35.2FY2009 . . . . . . . . . . . . . . . . . . . . 27 1,225 10.5 3.6Beyond FY2009. . . . . . . . . . . . . . 24 14,002 24.2 40.8Vacant. . . . . . . . . . . . . . . . . . . . . — 3,741 18.8 10.9Total ...................... 222 34,278 100.0 (1) 100.0Note:(1) Due to rounding differences.CompetitionExisting: Located in Jakarta’s affluent Chinatown’s precinct, Gajah Mada Plaza currently faces strongcompetition from 13 retail malls with an aggregate NLA in excess of 20,000 sq m and located within asix km radius. Many of these retail malls compete for the same target segment as Gajah Mada Plaza andmay potentially impact the sales growth that can be achieved at Gajah Mada Plaza.134
Business and propertiesThe largest competing retail malls are:• Mal Taman Anggrek, situated three km to the southwest of Gajah Mada Plaza, which comprisesapproximately 97,000 sq m of retail space including Metro and Galleria department stores and also aHero Supermarket;• Cosmopolitan Mall Pluit, situated six km northwest of Gajah Mada Plaza and anchored by both MatahariDepartment Store and Carrefour hypermarket, is currently undergoing extensive asset enhancementswhich will potentially increase its retail space and improve the positioning of the mall with shoppers in itscatchment areas. The estimated NLA is 88,040 sq m after asset enhancements. As at Listing Date,LMIR <strong>Trust</strong> has entered into a non-binding memorandum of understanding with PT. Multi PratamaGemilang Perkasa (Pikko Group) to acquire Cosmopolitan Mall Pluit (see “—Potential Acquisition ofProperties from Third Party Vendors”);• Mal Ciputra, situated three km west of Gajah Mada Plaza and anchored by Batik Keris, MatahariDepartment Store and Hero Supermarket, comprises around 51,000 sq m of retail space;• Mega Glodok Kemayoran is situated three km east of Gajah Mada Plaza and anchored by <strong>Indonesia</strong>Marine Centre and Home Ciento. The strata mall has a tenancy mix dominated by automotive partsretailers;• Plaza <strong>Indonesia</strong> is a high-end retail mall targeting the upper income shopper segment and is situatedthree km south of Gajah Mada Plaza. The mall contains 42,000 sq m of mainly high-end retailing,including a Debenham’s department store;• Jakarta City is located three km south of Gajah Mada Plaza and is a strata mall anchored by aHypermart but without a department store; and• Mangga Dua contains a number of retail facilities, predominantly strata malls, and located three kmnorth of Gajah Mada Plaza. The main malls include Mangga Dua Square (60,000 sq m of NLA), WTCMangga Dua (45,000 sq m of NLA), ITC Mangga Dua (44,000 sq m) and Mal Mangga Dua (35,000 sq m).These retail malls target the lower to middle income segment households.Future: The competitive environment of Gajah Mada Plaza’s trade area is expected to intensify over thenext five years, with the planned development of a number of new competing retail malls.There are a number of retail projects currently under construction which will target middle incomehouseholds within Gajah Mada Plaza’s population catchment. These developments include:• Gajah Mada Square, a lease mall with an estimated NLA of 35,000 sq m, which is scheduled to beginoperations in the third quarter of 2007 and is located one km from Gajah Mada Plaza;• Mall of <strong>Indonesia</strong>, which is scheduled to begin operations in the first quarter of 2008;• Season’s City, a strata mall with an estimated NLA of 40,000 sq m, which is scheduled to beginoperations in 2008, located three km from Gajah Mada Plaza and anchored by Carrefour hypermarket;and• Emporium, a lease mall with an estimated NLA of 63,000 sq m, which is scheduled to begin operationsin the second quarter of 2009 and will be located five km from Gajah Mada Plaza.These new retail malls may potentially reduce the sales growth at Gajah Mada Plaza.(See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)Other informationThe following table sets out other relevant information relating to Gajah Mada Plaza.Year of building completion . . . . . . . . 1982Strata Title Area . . . . . . . . . . . . . . . .GFA as at 30 June 2007 . . . . . . . . . .NLA as at 30 June 2007 . . . . . . . . . .37,501 sq m66,160 sq m34,278 sq m135
Business and propertiesOccupancy rate as at 30 June 2007. . 89.1%Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$103.8 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$117.0 millionCar parking lots . . . . . . . . . . . . . . . . . 885Motorcycle parking lots . . . . . . . . . . . 665Population catchment . . . . . . . . . . . . 429,298 households (1)Title . . . . . . . . . . . . . . . . . . . . . . . . . . Strata Titles as evidenced by certificates :(i)(ii)(iii)(iv)(v)(vi)(vii)(viii)(ix)(x)(xi)(xii)(xiii)(xiv)No. 438/I/S Kel Petojo Utara, registered under the nameof PT Graha Baru Raya, covering an area of 5,186.1 sq m;No. 440/II/S Kel Petojo Utara, registered under the nameof PT Graha Baru Raya, covering an area of 4,755.6 sq m;No. 442/III/S Kel Petojo Utara, registered under the nameof PT Graha Baru Raya, covering an area of 4,918.6 sq m;No. 325/-I/S Kel Petojo Utara, registered under the nameof PT Graha Baru Raya, covering an area of 5,228.0 sq m;No. 326/-I/S Kel Petojo Utara, registered under the nameof PT Graha Baru Raya, covering an area of 135.0 sq m;No. 328/I/S Kel Petojo Utara, registered under the nameof PT Graha Baru Raya, covering an area of 18 sq m;No. 330/II/S Kel Petojo Utara, registered under the nameof PT Graha Baru Raya, covering an area of 17 sq m;No. 332/III/S Kel Petojo Utara, registered under the nameof PT Graha Baru Raya, covering an area of 43 sq m;No. 333/IV/S Kel Petojo Utara, registered under the nameof PT Graha Baru Raya, covering an area of 4,618 sq m;No. 334/V/S Kel Petojo Utara, registered under the nameof PT Graha Baru Raya, covering an area of 2,645 sq m;No. 335/V-VI-VII/S Kel Petojo Utara, registered under thename of PT Graha Baru Raya, covering an area of3,205 sq m;No. 336/VI-VII/S Kel Petojo Utara, registered under thename of PT Graha Baru Raya, covering an area of4,534 sq m;No. 337/VII/S Kel Petojo Utara, registered under thename of PT Graha Baru Raya, covering an area of1,607 sq m; andNo. 338/VIII/S Kel Petojo Utara, registered under thename of PT Graha Baru Raya, covering an area of591 sq m.The above strata titles are constructed on underlying HGBcommon land, valid until 24 January 2020 and are extendablefor another term of up to 20 years. Following expiration of thisadditional term, a renewal application may be made. (See136
Business and properties“Overview of the Relevant Laws and Regulations in <strong>Indonesia</strong>—Rights to Own and/or to Use—Strata Titles”)Average Specialty Base Rent as at30 June 2007 (Rp.’000 per sq m permonth) . . . . . . . . . . . . . . . . . . . . . . . 106NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—3,726Projection Year 2008—8,319Projection Year 2009—10,253Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 10.5%Note:(1) The figure comprises the number of households within the primary trade area of the relevant <strong>Retail</strong>Mall. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)137
Business and propertiesCIBUBUR JUNCTIONJalan Jambore Raya 1, Cibubur, East JakartaJakarta profile(See “—Gajah Mada Plaza—Jakarta Profile”.)DescriptionCibubur Junction is a five storey with one basement level and partial roof top level shopping centre with acarpark comprising 611 parking lots. The mall is located strategically in the middle of Cibubur which is oneof the most affluent and upmarket residential areas in Jakarta. The mall is situated five km south ofJakarta’s Jagorawi toll road and is easily accessible and visible from the main road.Being the only retail mall with a NLA of above 20,000 sq m within an approximately 10-km radius, CibuburJunction is the only mall within its locality that offers shoppers a one-stop shopping experience. Its anchortenants, Hypermart and Matahari Department Store are well complemented by international and localspecialty tenants which include restaurants, fashion labels, a cinema, bookstores, a video game centreand a fitness centre.Tenant profileAs at 30 June 2007, Cibubur Junction has 163 retail tenants based on Committed Leases. The tenantprofile of the mall comprises international brand names which target the middle to upper middle incomeresidents within the trade area. These retailers include The Body Shop, Giordano, Polo Ralph Lauren,Charles & Keith, Guardian, Planet Surf, Starbucks Coffee and Pizza Hut.The lower ground floor is anchored by Hypermart, which accounts for approximately 25.8% of the NLA.The ground floor predominantly comprises retailers selling branded fashion and accessories, and qualityF&B retailers. The lower ground floor and the ground floor are also used for exhibition and temporaryleasing. The standard lease period for exhibition is two weeks per period. The standard lease period fortemporary leases is six months per period. The area for exhibition on the lower level is approximately138
Business and properties200 sq m and is usually leased out for specialty products. The ground floor area is approximately 400 sq mand is usually leased out for automotive exhibitions.The upper ground and first floor are anchored by the Matahari Department Store, which is expanding to thesecond floor. The expanded Matahari Department Store accounts for 16.7% of the NLA as at 30 June2007. The upper ground and first floor comprise a mix of specialty retailers in trade sectors such asfashion, children’s wear, accessories and beauty. A large Sports Warehouse store is on the first floor whileKarisma Bookstore is on the upper ground.The tenant mix on the second floor focuses on entertainment and lifestyle. This floor includes theexpanded Matahari Department Store, Timezone, Fitness First and Studio 21 Cinema. There are alsoa large number of small tenancies such as electronics and handphone retailers. The top level comprisesFitness First and Studio 21 Cinema (which has four screens).As at 30 June 2007, the average monthly rental rate of specialty stores in Cibubur Junction isapproximately Rp. 200,000 per sq m.Asset enhancement plansCurrent asset enhancement plans include the expansion of the Matahari Department Store to the thirdlevel and relocation of the food court to the basement to achieve better synergies.The following chart provides a breakdown (by area) of the various trade sub-sectors represented inCibubur Junction as at 30 June 2007:Cibubur Junction—Trade sector analysis (By area)Trade sub sector Contribution (%)Supermarket/HypermarketDepartment StoreFood & Beverage/Food CourtFashionLeisure & EntertainmentSports & FitnessHome FurnishingsServicesBooks & StationeryOtherElectronic/ITToysGifts & SpecialtyHobbies26.417.115.29.77.87.25.52.62.52.21.81.00.70.3139
Business and propertiesThe table below sets out information on the 10 largest tenants of Cibubur Junction based on CommittedLeases as at 30 June 2007:Percentage oftotal NLAPercentage of thetotal base rentalincome of CibuburJunction based onCommitted Leasesas at 30 June 2007Tenant Business sector Lease expiry date(%) (%)Hypermart. . . . . . . . . . . Supermarket/Hypermarket 27 July 2015 25.8 14.2Matahari DepartmentStore . . . . . . . . . . . . . Department Store 30 August 2015 16.7 11.2Fitness First . . . . . . . . . Sports & Fitness 14 April 2021 4.9 3.0Solaria . . . . . . . . . . . . . F&B 14 April 2012 1.4 2.8Sport Warehouse. . . . . . Fashion 9 December 2010 2.1 2.1Studio 21 . . . . . . . . . . . Leisure & Entertainment 23 March 2016 4.7 1.6A&W . . . . . . . . . . . . . . . F&B 30 November 2012 0.7 1.6Karisma . . . . . . . . . . . . Books and Stationery 30 November 2010 2.1 1.5TimeZone . . . . . . . . . . . Leisure & Entertainment 30 October 2015 2.3 1.5Ring Master . . . . . . . . . . F&B 29 March 2011 0.6 1.310 largest tenants . . . . . — — 61.3 (1) 40.8Other tenants . . . . . . . . — — 38.7 59.2Total .............. — — 100.0 100.0Note:(1) Due to rounding differences.Expiry profileThe following table sets out the expiry profiles of the tenancies at Cibubur Junction as at 30 June 2007:PeriodTotal number ofleases expiringNLA of expiringleasesMonthly gross rentof expiring leasesas a percentage offorecast rentalincomeExpiring leases asa percentage of NLAas at 30 June 2007(sq m) (%) (%)FY2007 . . . . . . . . . . . . . . . . 4 83 0.7 0.2FY2008 . . . . . . . . . . . . . . . . 6 237 1.7 0.7FY2009 . . . . . . . . . . . . . . . . 7 287 1.8 0.8Beyond FY2009 . . . . . . . . . . 146 28,892 71.5 84.6Vacant . . . . . . . . . . . . . . . . . — 4,641 24.3 13.6Total .................. 163 34,139 (1) 100.0 100.0 (1)Note:(1) Due to rounding differences.CompetitionExisting: Cibubur Junction currently faces competition from the following smaller retail malls within a10-km radius.• Plaza Cibubur, located three km from Cibubur Junction, which commenced operations in 2001 and hasa NLA of 17,000 sq m, anchored by Superindo Supermarket and Karisma bookstore.• Mal Citra Gran, which commenced operations in 2001 and located five km from Cibubur Junction, has aNLA of 10,900 sq m and is anchored by Hero Supermarket.140
Business and properties• Mal Cimanggis, which commenced operations in 2003, is located six km away with a NLA of12,000 sq m, and is anchored by Naga supermarket.The above three competing retail malls position themselves as a convenient shopping location, asopposed to a destination mall, therefore targeting only their immediate population catchment.Within a 10-km radius, other competing retail malls include:• Cileungsi Trade Centre, a strata mall with a NLA of 10,000 sq m, located eight km away with no anchortenants.• Tamini Square, a strata mall with a NLA of 35,000 sq m, located nine km away and anchored byCarrefour hypermarket and Cahaya Department Store.Despite the distance from Cibubur Junction, Cileungsi Trade Centre and Tamini Square compete forshoppers within their primary and secondary trade areas.Future: “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market” indicates that, atpresent, there are no known proposals for new centres to compete directly with Cibubur Junction.However, given the relative strength of retail supply in recent years, it is possible that competingcentres will be developed in the future.(See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)Other informationThe following table sets out other relevant information relating to Cibubur Junction.Year of building completion . . . . . . . . 2005Land Area . . . . . . . . . . . . . . . . . . . . .GFA as at 30 June 2007 . . . . . . . . . .NLA as at 30 June 2007 . . . . . . . . . .31,987 sq m49,341 sq m34,139 sq mOccupancy rate as at 30 June 2007. . 86.4%Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$94.2 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$101.8 millionCar parking lots . . . . . . . . . . . . . . . . . 611Motorcycle parking lots . . . . . . . . . . . 500Population catchment . . . . . . . . . . . . 422,862 households (1)Title . . . . . . . . . . . . . . . . . . . . . . . . . .Cibubur Junction is owned by PT Cibubur Utama and was builtpursuant to a BOT Scheme based on the deed of cooperationagreement on Land Utilisation for Construction andDevelopment of a Shopping Centre Located at Cibubur—EastJakarta (Perjanjian Kerjasama tentang Pendayagunaan LahanUntuk Pembangunan dan Pengembangan Gedung PusatPerbelanjaan terletak di Cibubur—Jakarta Timur) No. 68,dated 28 July 2003, between PD Pembangunan Sarana JayaDKI Jakarta as BOT Grantor and PT Cibubur Utama as BOTGrantee, made before Imas Fatimah S.H., Notary in Jakarta, asamended by Addendum I dated 25 November 2004 andAddendum II dated 26 November 2004.PD Pembangunan Sarana Jaya DKI Jakarta, as BOT Grantor,owns a plot of land located in Cibubur covering an area of 31,987sq m based on Certificate of HGB No. 01210/Cibubur dated141
Business and properties24 December 2001 and valid until 23 December 2021. Under theBOT agreement, PD Pembangunan Sarana Jaya DKI Jakartaand PT Cibubur Utama agree to enter into a cooperationagreement, at which PD Pembangunan Sarana Jaya DKIJakarta agrees to provide the land and PT Cibubur Utamaagrees to construct a shopping centre over the land. CibuburJunction BOT arrangement between PT Cibubur Utama andPD Pembangunan Sarana Jaya DKI Jakarta shall be validuntil 28 July 2025.PT Cibubur Utama (as BOT Grantee) cannot assign its rightsunder the BOT agreement and transfer the share ownership ofthe shareholders of PT Cibubur Utama to another party unlessprior written approval is obtained from PD PembangunanSarana Jaya DKI Jakarta (as BOT Grantor). Consent of thetransfer of shares in Cibubur Junction to its relevant <strong>Retail</strong> MallSingapore SPC has been obtained as evidenced by LetterNo. 306/076.11, dated 4 April 2007, issued by the BOT Grantor.The land on which Cibubur Junction is situated is owned byPD Pembangunan Sarana Jaya DKI Jakarta. Therefore,PT Cibubur Utama has no right to encumber or transfer the land.Average Specialty Base Rent as at30 June 2007 (Rp.’000 per sq m permonth) . . . . . . . . . . . . . . . . . . . . . . . 200NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—4,233Projection Year 2008—8,895Projection Year 2009—8,943Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 11.2%Note:(1) The figure comprises the number of households within the primary trade area of the relevant <strong>Retail</strong>Mall. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)142
Business and propertiesTHE PLAZA SEMANGGIJalan Jend. Sudirman Kav.50, South JakartaJakarta profile(See “—Gajah Mada Plaza—Jakarta Profile”.)DescriptionThe Plaza Semanggi is a modern shopping centre comprising seven storey and two basement levelsshopping centre and 13 levels of office floors, with a carpark comprising approximately 1,100 parking lots.The Plaza Semanggi is strategically located in the heart of Jakarta’s CBD within the city’s Golden Triangleat the Semanggi interchange, which is a junction channelling north-south and east-west traffic acrosscentral Jakarta. The centre is situated among many commercial buildings and adjacent to AtmajayaUniversity, one of Jakarta’s most prominent universities. Anchored by Centro Department Store and GiantHypermarket, the 479 tenants (as at 30 June 2007) provide all categories of shoppers with a diverse andcomprehensive tenant mix. The Plaza Semanggi offers both destination and convenience shopping, andis supported by its central location, which is easily accessible by cars and public transport.Tenant profileAs at 30 June 2007, The Plaza Semanggi had 479 retail tenants based on Committed Leases. The mall isanchored by the only Centro Department Store located in Jakarta. This Centro Department Storeoccupies three levels, namely the upper ground level, level one and level two, with Fitness First alsooccupying space across these three levels.The lower ground floor is occupied by Giant Hypermarket. The ground floor includes a significant numberof retailers selling F&B, retail services, gifts, and health and beauty products.The upper ground floor contains a number of international fashion retailers to complement the departmentstore and to cater for middle to upper middle income visitors. High profile tenants on the upper ground level143
Business and propertiesinclude Planet Surf, Giordano, Adidas, Da Vinci jewellery, Starbucks, Bread Talk and a number of opticalretailers.The first floor mainly comprises fashion retailers selling accessories and shoes. The second level focuseson mobile phones, electronics and computers.The third level is dominated by household wares and furniture retailers. Duck King, a popular localrestaurant, is also on the third level. Level 3A houses a traditional food court with small hawker styleretailers and a restaurant precinct. The cinema complex is located on the fifth level.As at 30 June 2007, the average monthly rental rate of specialty stores in The Plaza Semanggi isapproximately Rp. 119,000 per sq m.Asset enhancement plansCurrent asset enhancement plans include a new alfresco café area called “Plangi on the Sky” which willincrease the existing NLA by an estimated 3,000 sq m. Other asset enhancement plans include thecontinued upgrade of the tenancy mix to introduce the most current and innovative retailers to cater to themulti-dimensional customer profile.The following chart provides a breakdown (by area) of the various trade sub-sectors represented in ThePlaza Semanggi as at 30 June 2007:The Plaza Semanggi—Trade sector analysis (By area)Trade sub sector Contribution (%)Department StoreFood & Beverage/Food CourtLeisure & EntertainmentSupermarket/HypermarketElectronic/ITHome FurnishingsFashionSports & FitnessOtherBooks & StationeryServicesJewelryHobbiesGifts & SpecialtyOptic16.416.013.213.012.47.15.54.44.33.81.20.90.70.70.4144
Business and propertiesThe table below sets out information on the 10 largest tenants of The Plaza Semanggi based onCommitted Leases as at 30 June 2007:Percentage oftotal NLAPercentage of thetotal base rentalincome of The PlazaSemanggi based onCommitted Leasesas at 30 June 2007Tenant Business sector Lease expiry date(%) (%)Centro Department Department Store 4 November 2013 13.3 8.6Store. . . . . . . . . . . . .Giant Hypermarket . . . . Supermarket/Hypermarket 14 February 2019 10.6 5.6Electronic Solution<strong>Indonesia</strong> . . . . . . . . . . . Electronics 31 October 2011 7.2 5.0Fitness First . . . . . . . . . Sports & Fitness 17 May 2020 3.6 2.5X Lounge . . . . . . . . . . . Entertainment & Leisure 30 November 2009 3.2 2.4Gramedia . . . . . . . . . . . Bookstore & Stationery 30 November 2010 3.0 1.83 Store . . . . . . . . . . . . . Electronic/IT 29 February 2012 0.3 1.7Duck King. . . . . . . . . . . F&B 31 July 2009 0.6 1.5Gillian’s Billiard . . . . . . . Entertainment & Leisure 19 July 2009 1.7 1.5Game Master . . . . . . . . Entertainment & Leisure 28 February 2015 1.4 1.010 largest tenants . . . . . — — 44.8 (1) 31.6Other tenants . . . . . . . . — — 55.2 68.4Total .............. — — 100.0 100.0Note:(1) Due to rounding differences.Expiry ProfileThe following table sets out the expiry profiles of the tenancies (1) at The Plaza Semanggi as at 30 June2007:PeriodTotal number ofleases expiringNLA of expiringleasesMonthly gross rentof expiring leasesas a percentage offorecast rentalincomeExpiring leases asa percentage of NLAas at 30 June 2007(sq m) (%) (%)FY2007 . . . . . . . . . . . . . . . . 15 1,346 4.3 2.3FY2008 . . . . . . . . . . . . . . . . 57 5,813 13.6 9.9FY2009 . . . . . . . . . . . . . . . . 113 9,334 30.1 15.9Beyond FY2009 . . . . . . . . . . 294 40,084 49.0 68.3Vacant . . . . . . . . . . . . . . . . . — 2,106 3.0 3.6Total .................. 479 58,685 (2) 100.0 100.0Notes:(1) Includes office leases.(2) Due to rounding differences.CompetitionExisting: The Plaza Semanggi, located in the heart of Jakarta’s CBD, currently faces competition from anumber of retail malls in the immediate trade area. There are 12 competing malls, each with a NLA inexcess of 20,000 sq m, and located within a 10 km radius from The Plaza Semanggi. Some of thesecompeting retail malls are anchored by international retailers such as Sogo Department Store, Giant145
Business and propertiesHypermarket, Galleria, Zara, Watson’s Personal Care Store, Metro department store, Nichols Edwards,and local retailers such as Hero Supermarket and Matahari Department Store. Many of these retail mallscompete for the same target segment as The Plaza Semanggi and may potentially impact the salesgrowth that can be achieved at The Plaza Semanggi.The largest competing retail malls within a six-km radius are:• Pondok Indah Mall, situated six km to the southwest of The Plaza Semanggi, with a NLA ofapproximately 100,000 sq m, and is anchored by Giant Hypermarket, Sogo and Metro departmentstores, Zara and Studio 21 Cinema.• Mal Taman Anggrek, situated five km to the northwest of The Plaza Semanggi, with a NLA ofapproximately 97,000 sq m, with a tenant profile including Metro and Galleria department stores aswell as Hero Supermarket.• Plaza Senayan and the recently opened Senayan City, situated just two km to the southwest of ThePlaza Semanggi, with an aggregate NLA of approximately 80,000 sq m. Both retail malls targetshoppers in the middle to upper income segment, with Plaza Senayan focusing on a slightly moreaffluent target segment.• Mal Ciputra, situated six km north of The Plaza Semanggi, with a NLA of 51,000 sq m, and anchored byBatik Keris, Matahari and Hero Supermarket.• Plaza <strong>Indonesia</strong>, situated three km north of The Plaza Semanggi, with a NLA of approximately42,000 sq m, is a high-end retail mall targeting the upper income shopper segment whichcomprises mainly high-end retailers, including a Debenham’s department store.• Jakarta City, situated three km north of The Plaza Semanggi, is a strata mall anchored by a Hypermartbut does not house a department store.Future: The competitive environment of The Plaza Semanggi’s trade area is expected to intensify overthe next five years, with the planned development of a number of new competing retail malls.There are a number of new retail projects currently under construction which will target the middle incomehouseholds within The Plaza Semanggi’s population catchment. These developments will add anaggregate NLA of 318,900 sq m to Jakarta’s CBD and are scheduled to be completed by the end of 2009.These developments include:• Pacific Place, located one km from The Plaza Semanggi, with a NLA of approximately 75,000 sq m, andwill be anchored by Metro department store and Kidzania.• Grand <strong>Indonesia</strong>, located three km away from The Plaza Semanggi, with a NLA of approximately108,000 sq m, and will be anchored by Seibu, Harvey Nichols and Blitz Megaplex (a cinema operator).• Citywalk Sudirman @ Cityloft, located two km away from The Plaza Semanggi, with a NLA ofapproximately 17,300 sq m.• Main Street Gandaria, located five km away from The Plaza Semanggi, with a NLA of approximately94,000 sq m, and will be anchored by Metro department store, Fitness First, Studio and ElectronicSolutions.• Plaza <strong>Indonesia</strong> extension, which will increase its current NLA of 42,000 sq m by an additional25,386 sq m.• Kota Kasablanca, located three km away from The Plaza Semanggi, with a NLA of approximately62,000 sq m and anchored by Sogo department store and Fitness First.• Kemang City Mall, located five km away from The Plaza Semanggi, with a NLA of approximately56,052 sq m.• Sudirman Place, located one km away from The Plaza Semanggi, with a NLA of approximately31,000 sq m.146
Business and properties• Epicentrum Walk, located two km away from The Plaza Semanggi, with a NLA of approximately26,200 sq m.(See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)Other informationThe following table sets out other relevant information relating to The Plaza Semanggi.Year of building completion . . . . . . . . 2003Land Area . . . . . . . . . . . . . . . . . . . . .19,000 sq mGFA as at 30 June 2007 . . . . . . . . . . 91,232 sq mNLA as at 30 June 2007 . . . . . . . . . . 58,685 sq m (1)Occupancy rate as at 30 June 2007. . 96.4%Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$214.8 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$211.1 millionCar parking lots . . . . . . . . . . . . . . . . . 1,100Motorcycle parking lots . . . . . . . . . . . 750Population catchment . . . . . . . . . . . . 270,387 households (2)Title . . . . . . . . . . . . . . . . . . . . . . . . . .The Plaza Semanggi was built pursuant to a BOT Schemebased on the Introductory agreement of revitalisation,management and transfer (Perjanjian Pengikatan Revitalisasi,Pengelolaan dan Pengalihan) dated 5 January 2000 betweenYayasan Gedung Veteran Republik <strong>Indonesia</strong> as BOT Grantorand PT Primatama Nusa Indah as BOT Grantee, as confirmedby deed of revitalisation, development, management andtransfer (Perjanjian Revitalisasi, Pembangunan, Pengolahandan Pengalihan) No. 56 dated 29 March 2000 and asamended by deeds of addendum Nos. 25 and 26, both dated26 May 2000, made before Popie Savitri M Pharmanto S.H.,Notary in Jakarta and Addendum dated 29 January 2002.Yayasan Gedung Veteran Republik <strong>Indonesia</strong> was given apermit to use a plot of land and buildings in an area of 19,000sq m located at Kecamatan Setiabudi, Karet Semanggi, DKIJakarta (known as Jalan Jend Sudirman Kav. 50 RT 002/RW01),With Right to Use (Hak Pakai—“HP”) Title No. 133 by StateSecretary of the Republic of <strong>Indonesia</strong> as the land owner.Yayasan Gedung Veteran Republik <strong>Indonesia</strong> and PTPrimatama Nusa Indah have agreed to enter into a BOTScheme to construct a shopping centre and an office building.HP Title no. 133/Karet Semanggi is registered under the name ofState Secretary of the Republic of <strong>Indonesia</strong> and will be valid aslong as the land is being used. This BOT agreement is valid for30 years from 8 July 2004.PT Primatama Nusa Indah, with consent from Yayasan GedungVeteran Republik <strong>Indonesia</strong> (as BOT Grantor) and the StateSecretariat of the Republic of <strong>Indonesia</strong>, may assign its rightsand obligations under the BOT agreement to other parties orbank or financial institutions that finance new construction,provided that the BOT agreement shall bind the transferee.147
Business and propertiesInstead of the transfer of the right of the BOT Agreement, whichrequires consent from the BOT Grantor, the transfer of the interestof the BOT agreement may also be conducted through transfer ofshares of the shareholders of PT Primatama Nusa Indah. TheBOT Agreement does not prohibit the transfer of shares by theshareholders of PT Primatama Nusa Indah.Since PT Primatama Nusa Indah does not own the land on whichThe Plaza Semanggi is situated, it cannot transfer or encumberthe land.Average Specialty Base Rent as at30 June 2007 (Rp.’000 per sq m permonth) . . . . . . . . . . . . . . . . . . . . . . . 119NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—8,572Projection Year 2008—17,356Projection Year 2009—18,274Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 20.4%Notes:(1) Current ongoing asset enhancement works to include a new alfresco café area called the “Plangi onthe Sky” café will increase NLA by an estimated 3,000 sq m, bringing total NLA to approximately61,685 sq m by the end of 2007.(2) The figure comprises the number of households within the primary trade area of the relevant <strong>Retail</strong>Mall. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)148
Business and propertiesMAL <strong>LIPPO</strong> CIKARANGJalan MH Thamrin, <strong>Lippo</strong> Cikarang, Greater JakartaJakarta profile(See “—Gajah Mada Plaza—Jakarta Profile”.)DescriptionMal <strong>Lippo</strong> Cikarang is a two-level retail mall located within the <strong>Lippo</strong> Cikarang estate. The estate isapproximately 40 km east of Jakarta and is connected to Jakarta via the Jakarta-Cilkampek toll road.Comprising industrial, commercial and residential components, the <strong>Lippo</strong> Cikarang estate is home to25,000 residents and approximately 65,000 jobs. Mal <strong>Lippo</strong> Cikarang is the main shopping centre in theestate and has limited competition within an approximately 10-km radius. The mall is anchored byMatahari Department Store, Hypermart and Hero Supermarket, complemented by a cinema, a bookshop,a video game centre, restaurants and dining outlets. The mall has recently completed a S$4.7 millionexpansion and renovation program which has increased its NLA by more than 50%.Tenant profileAs at 30 June 2007, Mal <strong>Lippo</strong> Cikarang has 116 retail tenants based on Committed Leases. The mall isanchored by Matahari Department Store, Hypermart, Hero Supermarket and Studio 21 Cinema whichcollectively occupy approximately 55.0% of the mall’s NLA, and is well complemented by a diverse set ofspecialty tenants from a wide variety of industries. The prominent specialty tenants include Nokia,Timezone, Toko Buku Utama bookstore, Kentucky Fried Chicken, Wendy’s Restaurant, Pizza Hut, TheExecutive, Dunkin Donuts and Johnny Andrean Salon.The mall has achieved an occupancy rate of 96.3% as at 30 June 2007.With the completion of the extension for Hypermart, the three anchor tenants, Matahari Marketplacesupermarket and Matahari Department Store, Hero Supermarket and Hypermart will account for over66% of the NLA of Mal <strong>Lippo</strong> Cikarang, which will provide stable and long-term rental income and attract149
Business and propertiesshoppers to the mall. The leases of 51 existing tenants expire in 2007 and this will present opportunities toreview the tenancy mix and potentially achieve higher rentals for the expiring leases.Asset enhancement plansConstruction of an extension annex, which increased the mall’s NLA by 10,694 sq m, has recently beencompleted. As at 30 June 2007, 8,539 sq m or approximately 79.8% of this additional NLA space createdhas been pre-committed to Hypermart. The remaining additional NLA will be leased out to specialtytenants.The following chart provides a breakdown (by area) of the various trade sub-sectors represented in Mal<strong>Lippo</strong> Cikarang as at 30 June 2007:Mal <strong>Lippo</strong> Cikarang—Trade sector analysis (By area)Trade sub sectorDepartment StoreSupermarket/HypermarketLeisure & EntertainmentFood & Beverage/Food CourtFashionHome FurnishingsBooks & StationeryServicesElectronic/ITOtherToysSports & FitnessGifts & SpecialtyContribution (%)23.721.314.012.112.15.43.72.91.51.20.80.70.6150
Business and propertiesThe table below sets out information on the 10 largest tenants of Mal <strong>Lippo</strong> Cikarang based on CommittedLeases as at 30 June 2007:Tenant Business sector Lease expiry datePercentage oftotal NLAPercentage of thetotal base rentalincome of Mal <strong>Lippo</strong>Cikarang based onCommitted Leases asat 30 June 2007(%) (%)Matahari DepartmentStore . . . . . . . . . . . . . Department store 9 December 2026 33.4 18.0Hero supermarket . . . . . Supermarket/Hypermarket 9 August 2008 12.5 11.8Studio 21 Cinema. . . . . . Leisure & Entertainment 16 February 2015 9.4 4.2Solaria . . . . . . . . . . . . . F&B 16 May 2012 2.8 4.1Kentucky FriedChicken . . . . . . . . . . . F&B 9 June 2010 1.1 3.1Toko Buku Utama. . . . . . Bookstore 31 August 2007 3.4 3.1Sting . . . . . . . . . . . . . . . Furniture 31 January 2012 1.1 2.8Wendy’s Restaurant . . . . F&B 14 March 2012 1.5 2.4Hoka-Hoka Bento . . . . . . F&B 22 August 2007 1.4 2.2TimeZone . . . . . . . . . . . Leisure & Entertainment 30 September 2011 3.8 1.910 largest tenants. . . . . . — — 70.3 (1) 53.5 (1)Other tenants. . . . . . . . . — — 29.7 46.5Total ............... — — 100.0 100.0Note:(1) Due to rounding differences.Expiry ProfileThe following table sets out the expiry profiles of the tenancies at Mal <strong>Lippo</strong> Cikarang as at 30 June 2007:PeriodTotal numberof leasesexpiringNLA ofexpiringleasesMonthly gross rentof expiring leasesas a percentage offorecast rentalincomeExpiring leases asa percentage of NLAas at 30 June 2007(sq m) (%) (%)FY2007 . . . . . . . . . . . . . . . . . . . . . . . 51 2,187 14.7 12.2FY2008 . . . . . . . . . . . . . . . . . . . . . . . 29 3,589 27.9 20.0FY2009 . . . . . . . . . . . . . . . . . . . . . . . 11 342 5.9 1.9Beyond FY2009. . . . . . . . . . . . . . . . . 25 11,195 46.2 62.3Vacant . . . . . . . . . . . . . . . . . . . . . . . . — 661 5.3 3.7Total ......................... 116 17,974 100.0 100.0 (1)Note:(1) Due to rounding differences.CompetitionExisting: Mal <strong>Lippo</strong> Cikarang is the only major shopping centre serving the <strong>Lippo</strong> Cikarang Township.Competing retail malls within a 10 km radius and each comprising an estimated NLA of at least 8,000 sq minclude:• Mal Carrefour Cikarang, which began operations in early 2007, is located four km away from Mal <strong>Lippo</strong>Cikarang, with a NLA of approximately 8,000 sq m, and is anchored by Carrefour hypermarket. The mall151
Business and propertiesmainly focuses on providing day-to-day necessities and groceries, with limited F&B and productofferings.• SGC Cikarang, a strata mall located nine km to the north of Mal <strong>Lippo</strong> Cikarang, with a NLA ofapproximately 29,150 sq m, and is anchored by Ramayana hypermarket.• Cikarang Trade Centre, a strata mall located two km north of Mal <strong>Lippo</strong> Cikarang, with a NLA of 10,000sq m. The mall does not have an anchor tenant and targets the low to middle income segment ofshoppers.Future: “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market” indicates that, atpresent, there are no known proposals for new centres that may compete directly with Mal <strong>Lippo</strong> Cikarang.However, given the relative strength of retail supply in recent years, it is possible that such competingcentres will be developed in the future.(See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)Other informationThe following table sets out other relevant information relating to Mal <strong>Lippo</strong> Cikarang.Year of building completion . . . . . . . . 1995Land Area . . . . . . . . . . . . . . . . . . . . .49,250 sq mGFA as at 30 June 2007 . . . . . . . . . . 25,767 sq mNLA as at 30 June 2007 . . . . . . . . . . 17,974 sq m (1)Occupancy rate as at 30 June 2007. . 96.3%Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$80.2 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$79.7 millionCar parking lots . . . . . . . . . . . . . . . . . 513Motorcycle parking lots . . . . . . . . . . . 950Population catchment . . . . . . . . . . . . 84,962 households (2)Title . . . . . . . . . . . . . . . . . . . . . . . . . .Average Specialty Base Rent as at30 June 2007 (Rp.’000 per sq m permonth) . . . . . . . . . . . . . . . . . . . . . . . 105NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—2,589Mal <strong>Lippo</strong> Cikarang was built on a plot of land of 49,250 sq mbased on Measurement Letter No. 19128/1994 dated 25 August1994 and Certificate of Right to Build (HGB title)No. 627/ Kelurahan Cibatu, registered under the name ofPT Graha Nusa Raya, issued by Bekasi Land Office on9 December 1994, and valid until 5 May 2023 and isextendable for another term of up to 20 years. Followingexpiration of this additional term, a renewal application maybe made. (See “Overview of the Relevant Laws andRegulations in <strong>Indonesia</strong>—Rights to Own and/or to Use—HakGuna Bangunan (HGB/Right to Build)”.)Projection Year 2008—5,548Projection Year 2009—5,729152
Business and propertiesPercentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 6.8%Notes:(1) Recently completed asset enhancement works to expand the retail space at Mal <strong>Lippo</strong> Cikaranghave increased the NLA by 10,694 sq m, bringing the total NLA to 28,668 sq m.(2) The figure comprises the number of households within the primary trade area of the relevant <strong>Retail</strong>Mall. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)153
Business and propertiesEKALOKASARI PLAZAJalan Siliwangi 123, Bogor, Greater JakartaBogor profileBogor, a city in West Java, has a total population of approximately of 3.0 million, made up of approximately0.9 million in the town area and 2.0 million in the suburban areas. From 2000 to 2004, the city’s populationgrew annually at 3.9%. The city is on the main road from Jakarta to Bandung, over the Puncak pass. It isalso a popular weekend getaway for families from Jakarta.DescriptionEkalokasari Plaza is a six storey with three basement levels retail mall with a carpark comprising 390parking lots. The mall is located approximately two km south east of the Bogor City Centre on a major road,Jalan Siliwangi, and approximately 3.5 km south or five minutes drive from the Bogor exit of the Jagorawitoll road which connects Jakarta to Bogor. Bogor is approximately 50 km south of Jakarta and had apopulation of approximately 855,000 as at 2002. Ekalokasari Plaza is positioned as the retail mall ofconvenience and choice for its population catchment and provides a comprehensive retail mix anchoredby Matahari Department Store, Foodmart supermarket, two large bookstores and a concentration offashion labels and outlets. Ekalokasari Plaza has recently completed a S$2.0 million expansion andrenovation programme for the third and mezzanine floors. The new expanded area will house a food courtand is also intended to include a fitness centre and a cinema.Tenant profileAs at 30 June 2007, Ekalokasari Plaza has 107 retail tenants based on Committed Leases. The tenantprofile of the mall comprises a diverse set of tenants. There are 107 specialty stores to cater to familyshoppers, with products and services ranging from fashion to music. The mall is anchored by MatahariDepartment Store and Foodmart supermarket which account for 21.6% of monthly Gross Rent. Theanchor tenants, together with the Timezone amusement centre, occupy the lower ground to the second154
Business and propertiesfloor. The other prominent tenants include Karisma bookstore, Gramedia bookstore, Number 61, BotanicalFood Court, Kentucky Fried Chicken and Popeye restaurant.As at 30 June 2007, the occupancy rate of the mall was 87.3% of the total existing NLA of 20,587 sq m.Asset enhancement plansThe mall has recently completed asset enhancement works for the third floor and mezzanine level whichhave increased the NLA by 5,013 sq m, bringing the total NLA to 25,600 sq m. This development willincorporate a new food court and potentially, a fitness centre and a cinema which will anchor the top levelsof the centre, giving the advantage of increasing traffic through all levels of the centre.The following chart provides a breakdown (by area) of the various trade sub-sectors represented inEkalokasari Plaza as at 30 June 2007:Ekalokasari Plaza—Trade sector analysis (By area)Trade sub sector Contribution (%)Department StoreSupermarket/HypermarketFashionBooks & StationeryFood & Beverage/Food CourtLeisure & EntertainmentServicesOtherHobbiesGifts & SpecialtyToysHome FurnishingsSports & FitnessElectronic/IT40.413.412.111.88.06.12.82.11.10.90.50.40.20.2155
Business and propertiesThe table below sets out information on the 10 largest tenants of Ekalokasari Plaza based on CommittedLeases as at 30 June 2007:Tenant Business sector Lease expiry datePercentage oftotal NLAPercentage of thetotal base rental incomeof Ekalokasari Plazabased on CommittedLeases as at 30 June 2007(%) (%)Matahari Department Store/Matahari Marketplacesupermarket . . . . . . . . . . Department Store/ 23 March 2015 48.2 21.6SupermarketGramedia bookstore . . . . . . Books & Stationery 22 May 2014 5.9 5.4Karisma . . . . . . . . . . . . . . . Books & Stationery 29 February 2024 4.7 4.0Number 61 . . . . . . . . . . . . . Fashion 11 December 2008 1.3 3.6Kentucky Fried Chicken . . . . F&B 12 December 2023 2.1 3.0Popeye restaurant . . . . . . . . F&B 18 December 2013 1.5 2.9Es Teler 77 . . . . . . . . . . . . . F&B 30 April 2009 0.6 2.2Bata. . . . . . . . . . . . . . . . . . Fashion 12 March 2009 0.5 1.8Steak 21 . . . . . . . . . . . . . . F&B 20 June 2010 0.7 1.7Duta Suara . . . . . . . . . . . . . Hobbies 05 March 2009 0.5 1.710 largest tenants . . . . . . . . — — 66.1 (1) 48.0 (1)Other tenants . . . . . . . . . . . — — 33.9 52.0Total ................. — — 100.0 100.0Note:(1) Due to rounding differences.Expiry profileThe following table sets out the expiry profiles of the tenancies at Ekalokasari Plaza as at 30 June 2007:PeriodTotal number ofleases expiringNLA ofexpiringleasesMonthly Gross Rentof expiring leasesas a percentage offorecast rentalincomeExpiring leases asa percentage of NLAas at 30 June 2007(sq m) (%) (%)FY2007. . . . . . . . . . . . . . . . . . . . . 13 256 2.9 1.2FY2008. . . . . . . . . . . . . . . . . . . . . 15 1,186 8.8 5.8FY2009. . . . . . . . . . . . . . . . . . . . . 33 1,683 16.7 8.2Beyond FY2009 . . . . . . . . . . . . . . 46 14,838 31.8 72.1Vacant . . . . . . . . . . . . . . . . . . . . . — 2,624 39.8 12.7Total. ...................... 107 20,587 100.0 100.0CompetitionExisting: Ekalokasari Plaza currently faces competition within a 10-km radius from seven retail mallswith an aggregate NLA of 192,300 sq m.The competing retail malls within a six-km radius include:• Botani Square, which commenced operations in late 2006, is located two km northwest of EkalokasariPlaza. It has a NLA of approximately 30,000 sq m and is anchored by Giant Hypermarket and a smallRimo Department Store.156
Business and properties• Pangrango Plaza, a strata mall located three km northwest of Ekalokasari Plaza, with a NLA of30,000 sq m, is anchored by Sarinah department store, Toka Bookstore and occupied by a large numberof strata units. The mall targets the low to middle income market.• Bogor Trade Mall, a strata mall located four km west of Ekalokasari Plaza, with a NLA of 45,000 sq m, isanchored by Ramayana department store.• Plaza Jambu Dua, located seven km north of Ekalokasari Plaza, with a NLA of 20,800 sq m, is anchoredby Ramayana department store.• Plaza Bogor, located three km west of Ekalokasari Plaza, with a NLA of 27,500 sq m, is anchored byRobinson’s department store.Future: Future competition will come from the proposed extension to Botani Square as mentionedabove. Apart from this, “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”indicates that, at present, there are no known proposals for new centres to compete directly withEkalokasari Plaza. However, given the relative strength of retail supply in recent years, it is possiblethat competing centres will be developed in the future.(See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)Other informationThe following table sets out other relevant information relating to Ekalokasari Plaza.Year of building completion . . . . . . . . 2003Land Area . . . . . . . . . . . . . . . . . . . . .GFA as at 30 June 2007 . . . . . . . . . .10,500 sq m39,895 sq mNLA as at 30 June 2007 . . . . . . . . . . 20,587 sq m (1)Occupancy rate as at 30 June 2007. . 87.3%Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$66.0 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$68.1 millionCar parking lots . . . . . . . . . . . . . . . . . 390Motorcycle parking lots . . . . . . . . . . . 382Population catchment . . . . . . . . . . . . 144,451 households (2)Title . . . . . . . . . . . . . . . . . . . . . . . . . .Ekalokasari Plaza is owned by PT Indah Pesona Bogor and wasbuilt pursuant to a BOT Scheme based on the CooperationAgreement (Perjanjian Kerjasama) between IPB representedby PT Bogor Life Science and Technology as BOT Grantor andPT IPB as BOT Grantee, as stipulated under Deed No. 133 dated27 June 2001, made before Natalia Lini Handayani S.H., Notaryin Bogor and amended by Addendum dated 9 February 2004,Notary in Bogor, as amended by Deed of AmendmentAgreement No. 7 dated 25 April 2007, drawn up before DindinSaepudin, SH, Notary in Bandung.Pursuant to this BOT Agreement, IPB grants to PT IPB a plot ofland with HP Title No. 1/Sukasari, an area of approximately10,500 sq m, located at JI Siliwangi No. 123, Bogor, registeredunder the ame of the Department of Education and Culture(Departemen Pendidikan dan Kebudayaan) c.q IPB, which willbe valid as long as the land is being used. The operating period157
Business and propertiesof the BOT Scheme of Ekalokasari Plaza is from 27 June 2001through 27 June 2032.If PT IPB (as BOT Grantee) wants to assign its rights under theBOT Agreement, PT IPB must submit written notification toPT Bogor Life Science and Technology (as BOT Grantor).Instead of the transfer of the right of the BOT Agreement, whichrequires the consent of the BOT Grantor, the transfer of theinterest of the BOT agreement may also be conducted throughtransfer of shares of the shareholders of PT IPB. The BOTAgreement does not prohibit the transfer of shares by theshareholders of PT IPB.As PT IPB is not the owner of the land on which Ekaloksari Plazais situated on, PT IPB has no right to assign or encumber theland.Average Specialty Base Rent as at30 June 2007 (Rp.’000 per sq m permonth) . . . . . . . . . . . . . . . . . . . . . . . 141NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—2,296Projection Year 2008—5,798Projection Year 2009—7,503Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 5.8%Notes:(1) Recently completed asset enhancement works for the third floor and mezzanine have increased theNLA by 5,013 sq m, bringing the total NLA to 25,600 sq m.(2) The figure comprises the number of households within the primary trade area of the relevant <strong>Retail</strong>Mall. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)158
Business and propertiesBANDUNG INDAH PLAZAJalan Merdeka No. 56, Bandung, West JavaBandung profile(See “—Istana Plaza—Bandung Profile”.)DescriptionBandung Indah Plaza is a four storey with three basement levels retail mall with a carpark comprising 602parking lots. It is located strategically in the heart of the CBD of Bandung, the fourth most populous city in<strong>Indonesia</strong>. The retail mall is easily accessible from Jalan Merdeka, a major road which connects NorthBandung to South Bandung, and is surrounded by commercial buildings and middle to upper incomeresidential areas. It is also attached to Hyatt Regency Hotel, one of the leading five-star hotels in Bandung.Bandung Indah Plaza is anchored by Matahari Department Store, Hypermart, Yogya Supermarket, abookstore, a cinema and supported by a list of international and local tenants. It has recently completed aS$12.6 million expansion and renovation programme.Tenant profileAs at 30 June 2007, Bandung Indah Plaza has 180 retail tenants based on Committed Leases. The mallprovides a one-stop shopping destination with a comprehensive tenant mix of everyday convenienceretailers. The mall is well positioned to cater to the youth market, which has strong demand in centralBandung due to the student population from nearby universities.The ground floor of the mall is anchored by Hypermart, which accounts for 16.9% of total NLA. This levelalso includes F&B outlets such as McDonald’s and Starbucks, and fashion and accessories retailers suchas Quiksilver and Giordano.The first level of the mall is anchored by Matahari Department Store, which accounts for 22.8% of totalNLA. Youth fashion retailers such as City Surf and Levis are also well represented.159
Business and propertiesThe second level of the mall is anchored by Matahari Department Store and Toko Gunung Agungbookstore. Lifestyle retailers include Extreme Store and MG Music. Yogya Supermarket anchors thesouthern end of this level.The third level of the mall comprises Studio 21 Cinema (which has six screens), Timezone and a new foodcourt.As at 30 June 2007, the average monthly rental rate of specialty stores is approximately Rp. 274,000 persq m.Asset enhancement plansThe mall has recently completed asset enhancement works which have increased NLA by 3,843 sq m.These asset enhancement initiatives have added another 50 parking lots to the basement carpark;relocate existing tenants to create new lease units in accordance with the new building lay outarrangement; improved the mall appearance through more colourful and attractive lighting; andimproved the mall directory with an elegant and trendy design.The following chart provides a breakdown (by area) of the various trade sub-sectors represented inBandung Indah Plaza as at 30 June 2007:Bandung Indah Plaza—Trade sector analysis (By area)Trade sub sector Contribution (%)Department StoreSupermarket/HypermarketOtherFood & Beverage/Food CourtLeisure & EntertainmentFashionSports & FitnessBooks & StationeryServicesHobbiesGifts & SpecialtyToysHome FurnishingsEducation/SchoolElectronic/IT20.715.412.611.911.310.35.53.22.32.21.81.30.70.60.2160
Business and propertiesThe table below sets out information on the 10 largest tenants of Bandung Indah Plaza based onCommitted Leases as at 30 June 2007:Tenant Business sector Lease expiry datePercentage oftotal NLAPercentage of thetotal base rentalincome of BandungIndah Plaza basedon Committed Leasesas at 30 June 2007(%) (%)Matahari DepartmentStore . . . . . . . . . . Department Store 31 May 2015 22.8 11.6Hypermart . . . . . . . . Supermarket/Hypermarket 31 May 2015 16.9 6.5Toko Buku GunungAgung . . . . . . . . . Books & Stationery 23 May 2011 3.5 3.9McDonald’s . . . . . . . F&B 16 November 2009 2.2 2.4Rice Bowl . . . . . . . . F&B 29 June 2011 0.8 2.2Extreme Store . . . . . Fashion 15 September 2011 1.2 2.2Felice. . . . . . . . . . . . Fashion 16 March 2011 0.4 1.9Studio 21 Cinema . . . Leisure & Entertainment 31 December 2015 6.8 1.6Texas Chicken . . . . . F&B 4 Aug 2013 1.1 1.4Timezone . . . . . . . . . Leisure & Entertainment 31 May 2015 2.1 1.410 largest tenants . . . — — 57.8 35.0 (1)Other tenants . . . . . . — — 42.2 65.0Total ............ — — 100.0 100.0(1) Due to rounding differencesExpiry profileThe following table sets out the expiry profiles of the tenancies at Bandung Indah Plaza as at 30 June2007:PeriodTotal number ofleases expiringNLA of expiringleasesMonthly gross rentof expiring leasesas a percentage offorecast rentalincomeExpiring leases asa percentage of NLAas at 30 June 2007(sq m) (%) (%)FY2007 . . . . . . . . . . . . . . . . 3 157 0.2 0.6FY2008 . . . . . . . . . . . . . . . . 7 208 1.3 0.8FY2009 . . . . . . . . . . . . . . . . 5 221 1.0 0.8Beyond FY2009 . . . . . . . . . . 165 21,430 69.1 81.0Vacant . . . . . . . . . . . . . . . . . — 4,456 28.4 16.8Total .................. 180 26,472 100.0 100.0CompetitionExisting: Bandung Indah Plaza currently faces competition within its trade area from five competingretail malls, each located within a five km radius from Bandung Indah Plaza, and comprising an aggregateNLA of approximately 145,000 sq m, being Bandung Supermall, Riau Junction, Cihampelas Walk, ParisVan Java and Istana Plaza (one of the <strong>Retail</strong> <strong>Malls</strong>). Among these competing retail malls, Riau Junctionand Paris Van Java are new malls which commenced operations in the first half of 2007.• Bandung Supermall, located four km southeast of Bandung Indah Plaza, with a NLA of 48,800 sq m, isanchored by Metro department store and Giant Hypermarket. The mall targets the upper income retailsegment in Bandung and has a strong entertainment offering, including a cinema, a bowling centre anda video games centre.161
Business and properties• Paris Van Java, located four km northwest of Bandung Indah Plaza, with a NLA of 38,000 sq m, isanchored by Sogo Department Store, Carrefour hypermarket and Blitz Megaplex Cinemas. The mallcommenced its operations in 2006, and is still in process of leasing its retail space. It’s retail offering andcompetitive position may improve once all of its tenancies are occupied and completed.• Istana Plaza, which is located two km from Bandung Indah Plaza, and is one of the <strong>Retail</strong> <strong>Malls</strong> in LMIR<strong>Trust</strong>’s initial property portfolio.• Cihampelas Walk, located two km away from Bandung Indah Plaza, with a NLA of 28,400 sq m, isanchored by Yogya Supermarket and department store.• Riau Junction, located less than one km away from Bandung Indah Plaza, with a NLA of 6,400 sq m, isanchored by Yogya Supermarket and department store with a number of food retailers on its third level.With its relative small size and limited offering, the mall mainly offers daily necessity shopping toshoppers.Future: “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market” indicates that, atpresent, there are no known proposals for new centres to compete directly with Bandung Indah Plaza.However, given the relative strength of retail supply in recent years, particularly in Greater Jakarta, it ispossible that future centres will be developed in Bandung.(See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)Other informationThe following table sets out other relevant information relating to Bandung Indah Plaza.Year of building completion . . . . . . . . 1990Land Area . . . . . . . . . . . . . . . . . . . . .15,779 sq mGFA as at 30 June 2007 . . . . . . . . . . 55,196 sq mNLA as at 30 June 2007 . . . . . . . . . . 26,472 sq m (1)Occupancy rate as at 30 June 2007. . 83.2%Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$124.5 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$135.1 millionCar parking lots . . . . . . . . . . . . . . . . . 602Motorcycle parking lots . . . . . . . . . . . 700Population catchment . . . . . . . . . . . . 124,947 households (2)Title . . . . . . . . . . . . . . . . . . . . . . . . . .Bandung Indah Plaza is owned by PT Megah Semesta Abadiand was built pursuant to a BOT Scheme based on thecooperation agreement on the renovation development andmanagement of Hotel Pakunegara, Bandung (PerjanjianKerjasama Pemugaran Pembangunandan Pengelolaan HotelPakunegara) between Perusahaan Daerah Jasa DanKepariwisataan Propinsi Jawa Barat, and formerly known asPerusahaan Daerah Kerta Wisata Jawa Barat andPT Bhuwanatala Inda Permai Tbk (formerly known asPT Bandung Indah Plaza Permai) (“Bandung Indah PlazaCooperation Agreement”) and was novated by a novationagreement to PT Megah Semesta Abadi from PT BhuwanatalaIndah Permai Tbk. on 29 December 2003.The Bandung Indah Plaza Cooperation Agreement has beenamended several times, among others with (i) Restatement and162
Business and propertiesAmendment to the Cooperation Agreement on the Renovation,Development and Management of Hotel Pakunegara, Bandung(Expansion and Renovation of Shopping Centre—PernyataanKembali dan Perubahan Perjanjian Kerjasama Pemugaran,Pembangunan dan Pengelolaan Hotel Pakunegara Bandung(Kerjasama, Perluasan dan/atau Renovasi Mall)) as stipulatedunder Deed No. 50, dated 19 July 2005, made before Ina YulantiS.H., substitute for Tien Norman Lubis S.H., Notary in Bandungand (ii) Cooperation Agreement as stipulated under Deed No. 34,dated 22 December 2005, drawn up before Tien Norman LubisS.H.Notary in Bandung (“Amendment of the CooperationAgreement”). The Bandung Indah Plaza CooperationAgreement, its amendments and the novation agreement arejointly referred to as the “Bandung Indah Plaza BOTAgreement”.The term of the Bandung Indah Plaza BOT Agreement is for30 years as of the commencement of commercial operation andwill expire on 31 December 2030.Bandung Indah Plaza was built on the following:(a)(b)HGB Title No. 26/Citarum registered under the name ofPT Megah Semesta Abadi expiring on 14 August 2010,covering an area of 1,066 sq m; andThe following HGB titles over HPL Titles No. 1/Cihapit,No. 1/Citarum, No. 1/Merdeka, and No. 2/Citarum,registered under the name of Perusahaan Daerah JasaDan Kepariwisataan Propinsi Jawa Barat, which will bevalid as long as the lands are being used:(i)(ii)(iii)(iv)(v)(vi)(vii)HGB Title No. 130/Citarum, registered under thename of PT Megah Semesta Abadi expiring on20 October 2017, covering an area of 160 sq m;HGB Title No. 131/Citarum, registered under thename of PT Megah Semesta Abadi, expiring on20 October 2017, covering an area of 1,121 sq m;HGB Title No. 64/Citarum, registered under thename of by PT Megah Semesta Abadi, expiring on20 October 2017, covering an area of 5,015 sq m;HGB Title No. 65/Citarum, registered under thename of by PT Megah Semesta Abadi expiring on8 September 2019, covering an area of 1,355 sq m;HGB Title No. 69/Citarum, registered under thename of by PT Megah Semesta Abadi expiring on8 September 2019, covering an area of 527 sq m;HGB Title No. 89/Merdeka, registered under thename of by PT Megah Semesta Abadi expiring on30 January 2021, covering an area of 3,665 sq m;andHGB Title No. 90/Merdeka, registered under thename of by PT Megah Semesta Abadi expiring on30 January 2021, covering an area of 2,870 sq m.Perusahaan Daerah Jasa & Keparawisataan Jawa Barat (asBOT Grantor) allows PT Megah Semesta Abadi (as BOT163
Business and propertiesGrantee) to sell or assign part of the HGB Certificates (owned bythe BOT Grantee) to another party with prior written approvalfrom PD Pariwisata and subject to written approval from theGovernor of West Java.Instead of the transfer of the right of the BOT Agreement, whichrequires the consent of the BOT Grantor, the transfer of theinterest of the BOT agreement may also be conducted throughtransfer of shares of the shareholders of PT Megah SemestaAbadi. The BOT Agreement does not prohibit the transfer ofshares by the shareholders of PT Megah Semesta Abadi.Average Specialty Base Rent as at30 June 2007 (Rp.’000 per sq m permonth) . . . . . . . . . . . . . . . . . . . . . . . 274NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—5,668Projection Year 2008—11,756Projection Year 2009—12,811Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 14.4%Notes:(1) Recently completed asset enhancement works have increased the NLA by 3,843 sq m, bringing thetotal NLA to 30,315 sq m.(2) The figure comprises the number of households within the primary trade area of the relevant <strong>Retail</strong>Mall. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)164
Business and propertiesISTANA PLAZAJalan Pasirkaliki No. 121-123, Bandung, West JavaBandung profileBandung, the capital of West Java, is the fourth largest city in <strong>Indonesia</strong>. The population of Bandung was2.1 million in 2001 and 2.2 million in 2004. These figures represent an average growth of 1.23% perannum. The population growth in Bandung is likely to generate strong consumer demand for retailfacilities.The value of Bandung’s GRDP grew by 7.4% per annum from Rp. 7,173 billion in 2003 to Rp. 7,704 billionin 2004. Meanwhile, the current value increased by 17.1% per annum from Rp. 23,420 billion in 2003 toRp. 27,422 billion in 2004.Since the completion of the new Bandung-Jakarta highway in 2004, Bandung’s retail industry has beendeveloping rapidly and new retail concepts have been introduced. This includes specialised shoppingcentres (Bandung Electronic Centre and Be-Mall for computers and electronics, Istana BandungCommodities Centre for home appliances and construction), stand-alone department stores (Yogya,Riau Junction and Carrefour hypermarket), and lifestyle shopping centres specialising in F&B andentertainment (Cihampelas Walk and Paris Van Java).DescriptionIstana Plaza is a four storey with two basement levels retail mall with a carpark comprising 700 parkinglots. It is located strategically in the heart of the CBD of Bandung, the fourth most populous city in<strong>Indonesia</strong>. Situated at the junction between two busy roads of Jalan Pasir Kaliki and Jalan Pajajaran, it iseasily accessible by car and public transport. Anchored by Rimo Department Store and HeroSupermarket, the 205 tenancies in Istana Plaza provide one-stop shopping experience for the middleto upper income residents within its population catchment. Istana Plaza’s many popular internationalfashion labels have also helped to attract the young and trendy shopper base.165
Business and propertiesTenant profileAs at 30 June 2007, Istana Plaza has 205 retail tenants based on Committed Leases. The tenant profile ofthe mall comprises a diverse set of tenants from a wide variety of industries. The mall is anchored by RimoDepartment Store, which occupies the first and second floors, amounting to approximately 17.9% of themall’s total NLA. Other prominent tenants include Ace Hardware which occupies 5.9% of the mall’s totalNLA. In addition, it is the only mall in its catchment area with a Nokia Professional Centre and a Hewlett-Packard Centre.As at 30 June 2007, the mall enjoys an occupancy rate of approximately 98.9%.The following chart provides a breakdown (by area) of the various trade sub-sectors represented in IstanaPlaza as at 30 June 2007:Istana Plaza—Trade sector analysis (By area)Trade sub sector Contribution (%)Department Store18.9Fashion14.3Food & Beverage/Food Court13.8Leisure & Entertainment9.5Home Furnishings6.8Books & Stationery6.7Supermarket / Hypermarket5.5Gifts & Specialty5.1Electronic/IT4.8Other4.6Sports & Fitness3.5Services2.9Toys2.6Hobbies1.0166
Business and propertiesThe table below sets out information on the 10 largest tenants of Istana Plaza based on Committed Leasesas at 30 June 2007:Tenant Business sector Lease expiry datePercentage oftotal NLAPercentage of thetotal base rentalincome of IstanaPlaza based onCommitted Leases asat 30 June 2007(%) (%)Rimo Department Store . . . . Department Store 28 February 2012 17.9 11.5Ace Hardware . . . . . . . . . . . Houseware 28 February 2012 5.9 6.5Gramedia bookstore . . . . . . Books & Stationery 29 February 2012 4.5 3.6Game Master . . . . . . . . . . . Leisure &Entertainment 30 November 2011 3.8 3.1Kiddy Land . . . . . . . . . . . . . Leisure &Entertainment 28 May 2007 0.8 2.3Giovanni . . . . . . . . . . . . . . . Fashion 29 January 2012 1.2 2.1Pizza Hut . . . . . . . . . . . . . . F&B 29 January 2012 1.2 2.0Planet Sport . . . . . . . . . . . . Sports & Fitness 29 November 2011 1.0 1.9Nike . . . . . . . . . . . . . . . . . . Fashion 29 January 2012 0.5 1.9Giordano. . . . . . . . . . . . . . . Fashion 30 September 2009 0.5 1.910 largest tenants . . . . . . . . — — 37.3 36.8Other tenants . . . . . . . . . . . — — 62.7 63.2Total ................. — — 100.0 100.0Expiry profileThe following table sets out the expiry profile of the tenancies at Istana Plaza as at 30 June 2007:PeriodTotal number ofleases expiringNLA of expiringleasesMonthly gross rentof expiring leasesas a percentage offorecast rentalincomeExpiring leases asa percentage of NLAas at 30 June 2007(sq m) (%) (%)FY2007 . . . . . . . . . . . . . . . . 43 1,089 8.1 4.0FY2008 . . . . . . . . . . . . . . . . 41 1,490 9.0 5.5FY2009 . . . . . . . . . . . . . . . . 26 2,705 9.1 9.9Beyond FY2009 . . . . . . . . . . 95 21,661 72.4 79.5Vacant . . . . . . . . . . . . . . . . . — 303 1.5 1.1Total .................. 205 27,247 (1) 100.0 (1) 100.0Note:(1) Due to rounding differences.CompetitionExisting: Istana Plaza, located two km from Bandung Indah Plaza, shares the same competitivelandscape as Bandung Indah Plaza. (See “—Bandung Indah Plaza—Competition”.)Future: “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market” indicates that, atpresent, there are no known proposals for new centres to compete directly with Istana Plaza. However,given the relative strength of retail supply in recent years, particularly in Greater Jakarta, it is possible thatfuture centres will be developed in Bandung.(See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)167
Business and propertiesOther informationThe following table sets out other relevant information relating to Istana Plaza.Year of building completion . . . . . . . . 2001Land Area . . . . . . . . . . . . . . . . . . . . .GFA as at 30 June 2007 . . . . . . . . . .NLA as at 30 June 2007 . . . . . . . . . .13,082 sq m37,434 sq m27,247 sq mOccupancy rate as at 30 June 2007. . 98.9%Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$125.7 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$114.7 millionCar parking lots . . . . . . . . . . . . . . . . . 700Motorcycle parking lots . . . . . . . . . . . 500Population catchment . . . . . . . . . . . . 99,525 households (1)Title . . . . . . . . . . . . . . . . . . . . . . . . . .Istana Plaza is owned by PT Suryana Istana Pasundan and wasbuilt pursuant to a BOT Scheme based on cooperationagreement, dated 9 May 1997 between, Gereja KristenPasundon, Ginawan Chandra, Edi Sukainto Josona, ChandraTambayang, Wirawan Chandra, Heryanto Gunawan Prihatra,Stepanus Tedjasentosa, Tat Ong Budiarta and Abrijanto Effendi(as consultants) (“the Istana Plaza CooperationAgreement”). This Istana Plaza Cooperation Agreement wasamended by (i) Amendment Agreement dated 28 April 2001 and(ii) Addendum Agreement dated 10 June 2004 (the Istana PlazaCooperation Agreement and its amendments shall be jointlyreferred to as the “Istana Plaza BOT Agreement”).Based on this Istana Plaza BOT Agreement, Gereja KristenPasundan as BOT Grantor grants a right to PT SuryanaIstana Pasundan as BOT grantee to construct a shoppingcentre building on top of the following HGB titles:(i)(ii)(iii)(iv)(v)HGB Title No. 43/Pamoyanan, registered under the nameof Gereja Kristen Pasundan, expiring on 24 September2032, covering an area of 12,350 sq m;HGB Title No. 177/Pajajaran, registered under the name ofGereja Kristen Pasundan, expiring on 24 September 2032,covering an area of 40 sq m;HGB Title No. 58/Pamoyanan, registered under the nameof Gereja Kristen Pasundan, expiring on 24 September2032, covering an area of 86 sq m;HGB Title No. 59/Pamoyanan, registered under the nameof Gereja Kristen Pasundan, expiring on 24 September2036, covering an area of 361 sq m; andHGB Title No. 60/Pamoyanan, registered under the nameof Gereja Kristen Pasundan, expiring on 24 September2036, covering an area of 245 sq m.168
Business and propertiesThe Istana Plaza BOT Agreement is valid for 32 years fromJanuary 2002.Under the Istana Plaza BOT Agreement, assignment ofownership or encumbering the retail mall is prohibited exceptas security for a loan in relation to the construction of the retailmall.Instead of the transfer of the right of the BOT Agreement, whichrequires the consent of the BOT Grantor, the transfer of theinterest of the BOT agreement may also be conducted throughtransfer of shares of the shareholders of PT Suryana IstanaPasundan. The BOT Agreement does not prohibit the transfer ofshares by the shareholders of PT Suryana Istana Pasundan.As Pasundan Christian Church owns the land on which IstanaPlaza is situated PT Suryana Istana Pasundan has no right toassign or encumber the land.Average Specialty Base Rent as at30 June 2007 (Rp.’000 per sq m permonth) . . . . . . . . . . . . . . . . . . . . . . . 170NPI for Forecast Period 2007,Projection Year 2008 and ProjectionYear 2009 (S$’000) . . . . . . . . . . . . . . Forecast Period 2007—4,286Projection Year 2008—8,958Projection Year 2009—9,285Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 12.0%Note:(1) The figure comprises the number of households within the primary trade area of the relevant <strong>Retail</strong>Mall. (See “Appendix F—Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)169
Business and propertiesMALL WTC MATAHARI UNITSJalan Raya Serpong, Pondok Jagung, Serpong, Tangerang, Banten, Greater JakartaDescriptionMall WTC Matahari is located along Jalan Serpong Raya, Serpong within administrative area of Tangerangregency, Banten province. It is situated approximately 18 km west of Jakarta’s CBD.Tangerang is renowned as an industrial and manufacturing city in the Greater Jakarta area, being home toseven industrial estates with a total area of approximately over 1,700 ha.Due to its proximity to Jakarta, Tangerang benefits from the urban expansion of Jakarta and is home tocommuters who work in Jakarta. In recent years, residential estates and satellite cities with their facilitieshave been developed in Tangerang.Mall WTC Matahari is strategically located along the main road connecting the BSD residential estate, thelargest residential estate in Greater Jakarta. It has proposed development area of 6,000 ha with currently1,500 ha developed and occupied by over 15,000 households. In recent years, BSD City has experiencedrapid growth in terms of the number of housing units and retail shop houses which have been built. Thishas also successfully enhanced Mall WTC Matahari’s target market segment from middle to middle-upperand upper class.The Mall WTC Matahari Units comprise four strata units on part of the ground floor, upper ground floor,mezzanine and second floor of the building, aggregating a total NLA of 11,184 sq m, representing 23.2% ofthe total NLA of Mall WTC Matahari. The Mall WTC Matahari Units are currently utilised as a departmentstore, hypermarket and entertainment and game centre.170
Business and propertiesRelevant information relating to the Mall WTC Matahari UnitsThe following table sets out other relevant information relating to the Mall WTC Matahari Units.NLA in respect of the <strong>Retail</strong> Space asat 30 June 2007 . . . . . . . . . . . . . . . .11,184 sq mNLA as a percentage of the NLA of MallWTC Matahari as at 30 June 2007 . . 23.2%Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.5%Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$25.2 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$24.3 millionNPI contribution from the <strong>Retail</strong> Spacefor Forecast Period 2007, ProjectionYear 2008 and Projection Year 2009(S$’000) . . . . . . . . . . . . . . . . . . . . . . Forecast Period 2007—843Projection Year 2008—1,742Projection Year 2009—1,770Title . . . . . . . . . . . . . . . . . . . . . . . . . .Mall WTC Matahari was built on plots of land covering an area of(i) 3,470 sq m with Strata Titles Ownership CertificateNo. 428/Desa Pondok Jagung dated 17 December 2004,(ii) 5,892 sq m with Strata Titles Ownership CertificateNo. 00153/Desa Pondok Jagung dated 17 December 2004,(iii) 873 sq m with Strata Titles Ownership CertificateNo. 00372/Desa Pondok Jagung dated 17 December 2004,and (iv) 949 sq m with Strata Titles Ownership CertificateNo. 00197/Desa Pondok Jagung dated 17 December 2004, allof which are registered under the name of Matahari and itsunderlying HGB common land will expire on 8 April 2018 but isextendable for another term of up to 20 years. Following theexpiration of this additional term, a renewal application may bemade. (See “Overview of Relevant Laws and Regulations in<strong>Indonesia</strong>—Rights to Own and/or to use—Hak Guna Bangunan(HGB/Right to Build)”.) (See “Business and Properties—MallWTC Mahatari Units”.)Relevant information relating to Mall WTC MatahariThe following table sets out other relevant information relating to Mall WTC Matahari.Year of building completion . . . . . . . . 2003Land Area . . . . . . . . . . . . . . . . . . . . . 35,886 sq mNLA ......................... 48,204sqmCarparkLots................... 1,101Motorcycle Parking Lots . . . . . . . . . . 500171
Business and propertiesMETROPOLIS TOWN SQUARE UNITSJalan Hartono Raya, Modernland Cikokol, Tangerang, Banten, Greater JakartaDescriptionMetropolis Town Square is located in Tangerang city, Banten province, approximately 20 km west ofJakarta’s CBD. The CBD’s strategic location near the main road connecting the toll road to Tangerang cityprovides easy access to the Jakarta—Merak toll gate and surrounding residential areas in Tangerang.Tangerang is an industrial and manufacturing city in Greater Jakarta, home to seven industrial estates witha total area of approximately 1,700 ha. Due to its proximity to Jakarta, Tangerang is a popular residentiallocation for commuters who work in Jakarta. In recent years, residential estates and satellite cities (forexample, <strong>Lippo</strong> Karawaci, Bumi Serpong Damai, Kota Modern, Alam Sutra, Summarecon Serpong andBintaro Jaya) have been developed in Tangerang.Metropolis Town Square is located along Jalan Hartono Raya within the Kota Modern residential estate,about 2.6 km south of the city centre of Tangerang.Tangerang’s strategic location between Jakarta and the Soekarno-Hatta International Airport makes it apopular choice for offices and factories. The <strong>Indonesia</strong>n government has continuously been improving thequality of infrastructure between the city and the nation’s capital to accommodate the ever increasing roadtraffic.Metropolis Town Square is a one-stop shopping mall located along one of the main roads in Tangerang.Hence, the mall has good accessibility to passing traffic. In addition, the mall is the only major retaildevelopment in the Tangerang Municipality. The mall is designed in an art deco style and is located withinthe Modernland development, a large middle to upper income housing complex.The Metropolis Town Square Units comprise three strata units on part of the ground floor, first floor andsecond floor of the building, aggregating a total NLA of 15,248 sq m and representing 25.1% of the totalNLA of Metropolis Town Square. The Metropolis Town Square Units are currently utilised as a departmentstore, hypermarket and entertainment and games centre.172
Business and propertiesRelevant information relating to the Metropolis Town Square UnitsThe following table sets out other relevant information relating to the Metropolis Town Square Units.NLA in respect of the <strong>Retail</strong> Space asat 30 June 2007 . . . . . . . . . . . . . . . .15,248 sq mNLA as a percentage of the NLA ofMetropolis Town Square as at 30 June2007 . . . . . . . . . . . . . . . . . . . . . . . . . 25.1%Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 3.3%Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$33.5 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$32.2 millionNPI contribution from the <strong>Retail</strong> Spacefor Forecast Period 2007, ProjectionYear 2008 and Projection Year 2009(S$’000) . . . . . . . . . . . . . . . . . . . . . . Forecast Period 2007—1,156Projection Year 2008—2,382Projection Year 2009—2,420Title . . . . . . . . . . . . . . . . . . . . . . . . . .Metropolis Town Square Units are currently held by Mataharipursuant to Kiosks Sale and Purchase Binding Agreement(i) No. 093/AGR/DM/MPP/IX/03, dated 10 September 2003,(ii) No. 054/AGR/DM/MPP/VI/03, dated 23 June 2003 and(iii) No. 084/AGR/DM/MPP/VIII/03, dated 25 August 2003, allbetween Matahari and Coldwell Banker Dwimustika Mas.These Kiosks Sale and Purchase Binding Agreements areevidence of the parties’ intention to effect the sale andpurchase of Strata Units, but do not have the effect oftransferring ownership. This is a common practice in<strong>Indonesia</strong>. (See “Risk Factors—Risks Relating to Investing inReal Estate—LMIR <strong>Trust</strong> is dependent on the quality of the titlesto the Properties”.)Relevant information relating to Metropolis Town SquareThe following table sets out other relevant information relating to Metropolis Town Square.Year of building completion . . . . . . . . 2004Land Area . . . . . . . . . . . . . . . . . . . . . 38,905 sq mNLA ......................... 60,734sqmCarparkLots................... 800Motorcycle Parking Lots . . . . . . . . . . 1,200173
Business and propertiesDEPOK TOWN SQUARE UNITSJalan Margonda Raya No. 1, Pondok Cina Beji, Depok, Greater JakartaDescriptionDepok is located in the West Java province, situated between southern Jakarta and the northern side ofBogor regency. The city is located approximately 16 km south of Jakarta’s CBD. Depok is renowned as thecity of students, being home to four large universities (University of <strong>Indonesia</strong>, Gunadarma University,Tugu Polytechnic and Jakarta Polytechnic).Depok’s population is estimated at 1.5 million in 2007 and has shown strong population growth, averaging3.3% per annum between 2000 and 2005. In line with city population growth, the commercial area ofDepok has been growing rapidly for the last few years, as evidenced by a number of modern shoppingcentre developments and commercial buildings built along the main road of Depok, Jalan Margonda Raya.Depok Town Square is located on Jalan Margonda Raya, adjacent to the south eastern side of Universityof <strong>Indonesia</strong>, a prominent university in <strong>Indonesia</strong>. The centre has direct access to Pondok Cina RailwayStation at its rear entrance, and therefore connects the station to Jalan Margonda Raya.The Depok Town Square Units comprise four strata units on part of the lower ground floor, first floor andsecond floor of the building, aggregating a total NLA of 13,045 sq m and representing 31.7% of the totalNLA of Depok Town Square. The Depok Town Square Units are currently utilised as a department store,hypermarket and entertainment and games centre.174
Business and propertiesRelevant information relating to the Depok Town Square UnitsThe following table sets out other relevant information relating to the Depok Town Square Units.NLA in respect of the <strong>Retail</strong> Space asat 30 June 2007 . . . . . . . . . . . . . . . .13,045 sq mNLA as a percentage of the NLA ofDepok Town Square as at 30 June2007 . . . . . . . . . . . . . . . . . . . . . . . . . 31.7%Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.5%Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$25.7 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$24.8 millionNPI contribution from the <strong>Retail</strong> Spacefor Forecast Period 2007, ProjectionYear 2008 and Projection Year 2009(S$’000) . . . . . . . . . . . . . . . . . . . . . . Forecast Period 2007—861Projection Year 2008—1,778Projection Year 2009—1,807Title . . . . . . . . . . . . . . . . . . . . . . . . . .Depok Town Square Units are currently held by Mataharipursuant to Kiosks Sale and Purchase Binding Agreement(i) No. 031/AGR/DM/MPP/XII/02, dated 19 December 2002entered into between Matahari and Coldwell BankerDwimustika Mas, and (ii) No. 012/JPN-PPJB/II/04, dated11 February 2004, entered into between Matahari andPT Jagat Pertala Nusantara.These Kiosks Sale and Purchase Binding Agreements areevidence of the parties’ intention to effect the sale andpurchase of strata units, but do not have the effect oftransferring ownership. The strata titles are in the process ofbeing issued by the local land office. Upon issuance, the stratatitles will be purchased by the relevant <strong>Retail</strong> Space <strong>Indonesia</strong>nSPC. (See “Business and Properties—Depok Town SquareUnits.”)Relevant information relating to Depok Town SquareThe following table sets out other relevant information relating to Depok Town Square.Year of building completion . . . . . . . . 2005Land Area . . . . . . . . . . . . . . . . . . . . . 24,634 sq mNLA ......................... 41,129sqmCarparkLots................... 870Motorcycle Parking Lots . . . . . . . . . . 1,200175
Business and propertiesJAVA SUPERMALL UNITSJalan MT Haryono No. 992-994, Jomblang, Semarang, Central JavaDescriptionSemarang is the capital city of the Central Java province and the fifth largest city in terms of population in<strong>Indonesia</strong>. With its location along the northern coast of Java, Semarang is an important trading port for theregion. Semarang had a population of 1.3 million in 2000 and is estimated to have grown annually at 2.6%per annum, registering a total increase of approximately 1.5 million over the last seven years.Java Supermall is located within the vicinity of a middle to upper class residential area which is easilyaccessible from most areas in Semarang. The Java Supermall Units comprise four strata units on thesemi-basement, first floor and second floor of the building, aggregating a total NLA of 11,082 sq m,representing 56.0% of the total NLA of Java Supermall. The Java Supermall Units are currently utilised asa department store and supermarket.Relevant information relating to the Java Supermall UnitsThe following table sets out other relevant information relating to the Java Supermall Units.NLA in respect of the <strong>Retail</strong> Space asat 30 June 2007 . . . . . . . . . . . . . . . .11,082 sq mNLA as a percentage of the NLA ofJava Supermall as at 30 June 2007. . 56.0%Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.4%Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$26.0 million176
Business and propertiesAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$25.0 millionNPI from the <strong>Retail</strong> Space contributionfor Forecast Period 2007, ProjectionYear 2008 and Projection Year 2009(S$’000) . . . . . . . . . . . . . . . . . . . . . . Forecast Period 2007—836Projection Year 2008—1,726Projection Year 2009—1,754Title . . . . . . . . . . . . . . . . . . . . . . . . . . Java Supermall was built on a plot of land covering an area of:(i) 3,839 sq m with Strata Titles Ownership CertificateNo. 1/Desa Lamper Kidul dated 23 November 1998;(ii) 3,201 sq m with Strata Titles Ownership CertificateNo. 2/Desa Lamper Kidul dated 23 November 1998;(iii) 3,772 sq m with Strata Titles Ownership CertificateNo. 22/Desa Lamper Kidul dated 23 November 1998; and(iv) 270 sq m with Strata Titles Ownership CertificateNo. 45/Desa Lamper Kidul dated 18 April 2000,all of which are registered under the name of Matahari and itsunderlying HGB common land will expire on 24 September 2017and is extendable for another term of up to 20 years. Followingthe expiry of this additional term, a renewal application may bemade.(See “Risk Factors—Risks Relating to Investing in RealEstate—LMIR <strong>Trust</strong> is dependent on the quality of the titles tothe Properties”.)Relevant information relating to Java SupermallThe following table sets out other relevant information relating to Java Supermall.Year of building completion . . . . . . . . 2000Land Area . . . . . . . . . . . . . . . . . . . . . 10,800 sq mNLA ......................... 19,800sqmCarparkLots................... 700Motorcycle Parking Lots . . . . . . . . . . 2,000177
Business and propertiesMALANG TOWN SQUARE UNITSJaIan Veteran No. 2, Malang, East JavaDescriptionMalang is the second largest city in the East Java province with a population of approximately 0.8 millionand a regency population of approximately 2.4 million.The region is a popular tourist destination due to its natural attractions (for example, Mount Bromo, one ofJava’s largest volcanoes), cool climate and colonial history. Malang also has a large student population,being home to five universities (Brawijaya, State, Muhammadiyah, Widya Gama and MerdekaUniversities).Malang Town Square, in which Malang Town Square Units are located, is a mall conceptualised as aninternational lifestyle mall as well as the biggest and most comprehensive mall in Malang. The centre haseasy access to public transportation and is surrounded by exclusive residential communities and severaluniversities which have more than 50,000 students.The Malang Town Square Units comprise three strata units on part of the ground floor, upper ground floor,first floor and second floor of the building, aggregating a total NLA of 11,065 sq m, representing 44.7% ofthe total NLA of Malang Town Square. The Malang Town Square Units are currently utilised as adepartment store, hypermarket and entertainment and games centre.178
Business and propertiesRelevant information relating to the Malang Town Square UnitsThe following table sets out other relevant information relating to the Malang Town Square Units.NLA in respect of the <strong>Retail</strong> Space asat 30 June 2007 . . . . . . . . . . . . . . . .11,065 sq mNLA as a percentage of the NLA ofMalang Town Square as at 30 June2007 . . . . . . . . . . . . . . . . . . . . . . . . . 44.7%Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.4%Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$25.5 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$25.8 millionNPI contribution from the <strong>Retail</strong> Spacefor Forecast Period 2007, ProjectionYear 2008 and Projection Year 2009(S$’000) . . . . . . . . . . . . . . . . . . . . . . Forecast Period 2007—834Projection Year 2008—1,723Projection Year 2009—1,751Title . . . . . . . . . . . . . . . . . . . . . . . . . .Malang Town Square Units are constructed on HBG land titlesand are exclusively controlled currently by Matahari pursuant toKiosks Sale and Purchase Binding Agreement No. 031/PN-PPJB/X/03, dated 7 October 2003 between Matahari and PTPendopo Niaga.The Kiosks Sale and Purchase Binding Agreement is evidenceof the parties’ intention to effect the sale and purchase of strataunits, but do not have the effect of transferring ownership. This isa common practice in <strong>Indonesia</strong>. (See “Risk Factors—RisksRelating to Investing in Real Estate—LMIR <strong>Trust</strong> is dependenton the quality of the titles to the Properties”.)Relevant information relating to Malang Town SquareThe following table sets out other relevant information relating to Malang Town Square.Year of building completion . . . . . . . . 2005Land Area . . . . . . . . . . . . . . . . . . . . .NLA .........................18,500 sq m24,740sqmCarparkLots................... 544Motorcycle Parking Lots . . . . . . . . . . 720179
Business and propertiesPLAZA MADIUNJalan Pahlawan, Madiun, East JavaDescriptionThe city of Madiun, with a total population of 0.2 million (based on a 2005 census), is the capital city ofMadiun regency in the East Java province. The Madiun regency has a total land area of 1,011 sq km and itspopulation exceeds 0.6 million (based on a 2001 census). (See “Appendix F—Independent Report on the<strong>Indonesia</strong>n <strong>Retail</strong> Property Market”.)Madiun has benefited from its position which connects major cities in Central and East Java. It is the homeof <strong>Indonesia</strong>’s first and largest train manufacturer and is a major sugar producer in Java. The industrialsector and trade, hotel and restaurant businesses are key revenue generators for the city, havingcontributed around 27.0% and 20.0%, respectively, to Madiun’s GRDP (based on economic statisticsin 2004).Plaza Madiun is located along Jalan Pahlawan, a major road of the city which is also the primarythoroughfare in the city of Madiun. The street is positioned in the centre of the commercial andadministrative zone, at the crossroad of three existing subdistricts of Madiun. Most of the prominentbuildings in Madiun are included in this precinct, including the City Hall, Merdeka Hotel, Tentara Hospitaland Pasaraya Shopping Centre. Jalan Pahlawan is accessible from Jalan Sudirman, another majorthoroughfare in the city.Plaza Madiun enjoys high pedestrian traffic from Jalan Pahlawan and is in close proximity to various formsof public transportation options.Plaza Madiun, aggregating a total NLA of 19,029 sq m situated on two HGB titles, comprises thebasement, first floor, second floor and third floor and are currently occupied by a supermarket and adepartment store.180
Business and propertiesRelevant information relating to Plaza MadiunThe following table sets out other relevant information relating to Plaza Madiun.NLA as at 30 June 2007 . . . . . . . . . . 19,029 sq mNLA as a percentage of the NLA ofPlaza Madiun as at 30 June 2007 . . . 100.0%Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 3.1%Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$33.4 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$31.8 millionNPI contribution for Forecast Period2007, Projection Year 2008 andProjection Year 2009 (S$’000) . . . . . . Forecast Period 2007—1,081Projection Year 2008—2,228Projection Year 2009—2,264Title . . . . . . . . . . . . . . . . . . . . . . . . . . Plaza Madiun was built on a plot of land covering an area of(i) 5,501 sq m with HGB Certificate No. 186/KelurahanPangongangan dated 3 June 1997, registered under thename of Matahari and will expire on 10 February 2012; and(ii) 82 sq m with HGB Certificate No. 188/ KelurahanPangongangan dated 12 February 1998, registeredunder the name of Matahari and will expire on10 February 2012.Both HGB titles are extendable for another 20 years. Followingthe expiry of this additional term, a renewal application may bemade.(See “Overview of Relevant Laws and Regulations in<strong>Indonesia</strong>—Rights to Own and/or to Use—Hak GunaBangunuan (HGB/Right to Build)”.)(See “Business and Properties—Plaza Madiun”.)Year of building completion . . . . . . . . 2000Land Area . . . . . . . . . . . . . . . . . . . . . 5,583 sq mCarparkLots................... 80Motorcycle Parking Lots . . . . . . . . . . 400181
Business and propertiesGRAND PALLADIUM MEDAN UNITSJalan Kapt. Maulana Lubis, Medan, North SumatraDescriptionMedan, the provincial capital of the North Sumatra, is the largest city in Sumatra and the third mostpopulous city in <strong>Indonesia</strong> after Jakarta and Surabaya. It is a cosmopolitan city with a population of over2.0 million.Medan is a growing commercial centre in the region, mainly with agriculture and industry businesses. Thecity was transformed from a tobacco plantation village in the 19th century to a major government andcommercial centre at present.In terms of economic activity, Medan relies on its natural resources as well as processing industries. Overthe years, Medan has been a supplier of vegetable oil, seafood, crafts and various agricultural products toa number of Asian and European countries.Grand Palladium Medan is conveniently located within the Medan CBD and is only 2.5 km from the PoloniaInternational Airport. The mall is located in the centre of Medan, hence drawing shoppers from all aroundthe city. It is surrounded by government and business offices and the town hall, and therefore benefits fromregular crowds of government and business visitors. The mall will potentially witness greater visitor trafficfrom the proposed office and hotel developments in the vicinity.The Grand Palladium Medan Units comprise four strata units in part of the basement, lower ground floor,upper ground floor, first floor and third floor of the building, aggregating a total NLA of 13,417 sq m,representing 45.8% of the total NLA of Grand Palladium Medan. The Grand Palladium Medan Units arecurrently utilised as a department store, hypermarket and entertainment and games centre.182
Business and propertiesRelevant information relating to the Grand Palladium Medan UnitsThe following table sets out other relevant information relating to the Grand Palladium Medan Units.NLA in respect of the <strong>Retail</strong> Space asat 30 June 2007 . . . . . . . . . . . . . . . .13,417 sq mNLA as a percentage of the NLA ofGrand Palladium Medan as at 30 June2007 . . . . . . . . . . . . . . . . . . . . . . . . . 45.8%Percentage of contribution to LMIR<strong>Trust</strong>’s Gross Rent for Forecast Period2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.6%Appraised value by Knight Frank as at30 June 2007 . . . . . . . . . . . . . . . . . . S$26.2 millionAppraised value by Colliers as at30 June 2007 . . . . . . . . . . . . . . . . . . S$25.2 millionNPI contribution from the <strong>Retail</strong> Spacefor Forecast Period 2007, ProjectionYear 2008 and Projection Year 2009(S$’000) . . . . . . . . . . . . . . . . . . . . . . Forecast Period 2007—886Projection Year 2008—1,829Title . . . . . . . . . . . . . . . . . . . . . . . . . .Projection Year 2009—1,859Relevant information relating to Grand Palladium MedanThe Grand Palladium Medan Units are constructed on HGB titlesand are currently exclusively controlled by Matahari pursuant toKiosks Sale and Purchase Binding Agreement No. 011/UPI-PPJB/IX/04, dated 14 September 2004 between Matahari andPT Unitech Prima Indah.This Kiosks Sale and Purchase Binding Agreement is evidenceof the parties’ intention to effect the sale and purchase of strataunits, but does not have the effect of transferring ownership. Thestrata titles are in the process of being issued by the local landoffice. Upon issuance, the strata titles will be purchased by therelevant <strong>Retail</strong> Space <strong>Indonesia</strong>n SPC. (See “Business andProperties—Grand Palladium Medan Units”.) This is acommon practice in <strong>Indonesia</strong>. (See “Risk Factors—RisksRelating to Investment in Real Estate—LMIR <strong>Trust</strong> isdependent on the quality of the titles to the Properties”.)The following table sets out other relevant information relating to Grand Palladium Medan.Year of building completion . . . . . . . . 2005Land Area . . . . . . . . . . . . . . . . . . . . .NLA .........................CarparkLots................... 1,200Motorcycle Parking Lots . . . . . . . . . . 700ACQUISITION PIPELINE10,640 sq m29,272sqmThe Sponsor has granted LMIR <strong>Trust</strong>, for so long as (a) <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong><strong>Trust</strong> Management Ltd. remains the manager of LMIR <strong>Trust</strong> and (b) the Sponsor and/or any of its183
Business and propertiesrelated corporations, alone or in aggregate, remains a controlling shareholder of the Manager, a ROFRover any Relevant Asset (i) which any Sponsor Entity proposes to sell or transfer (whether such RelevantAsset is wholly-owned or partly-owned by the Sponsor Entity and excluding any sale of such RelevantAsset by a Sponsor Entity to any related corporation of such Sponsor Entity pursuant to a reconstruction,amalgamation, restructuring, merger or any analogous event) to an unrelated third party or (ii) for which aproposed offer for sale or transfer of such Relevant Asset has been made to a Sponsor Entity (see“Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the Right of First RefusalAgreement”).As at the Latest Practicable Date, the ROFR Properties are expected to have an aggregate GFA ofapproximately 397,080 sq m, and an aggregate NLA of approximately 273,074 sq m. If LMIR <strong>Trust</strong>acquires all the ROFR Properties, the aggregate NLA of LMIR <strong>Trust</strong>’s initial property portfolio will increaseby over 270,000 sq m, and will represent approximately 87.1% of the aggregate NLA of LMIR <strong>Trust</strong>’s initialproperty portfolio as at 30 June 2007.The Manager believes that the ROFR granted to LMIR <strong>Trust</strong> provides a visible pipeline of futureacquisitions and will greatly enhance LMIR <strong>Trust</strong>’s growth profile given the size and quality of theROFR Properties, as well as significantly increase LMIR <strong>Trust</strong>’s presence in the <strong>Indonesia</strong>n retail markets.The following tables set out the relevant information relating to the ROFR Properties.Binjai SupermallJalan Soekarno Hatta, Binjai, North SumatraExpected completion date . . . . . . . . . . . . . . . . . .EstimatedGFA ..........................EstimatedNLA ..........................Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .Fourth quarter of 200723,615 sq m18,300 sq mMiddle to middle-upper income groups in Medan,North Sumatra and the surrounding suburbanareas.Medan, North SumatraDescriptionBinjai Supermall, when completed, will be a two-level retail mall prominently located along the main roadfrom North Sumatra to Medan. The mall has a wide population catchment area which covers Binjai andMedan. There are approximately 2.2 million people within its immediate catchment area.Positioned as a lifestyle mall for the middle to upper middle income segments of the retail market, BinjaiSupermall targets a wide range of customers, including families, business people and teenagers. Thepotential strong tenancy mix, which includes an amusement centre and plentiful food and cafe outlets, willdraw shoppers to the mall.Pejaten MallJalan Warung Jati Barat, South JakartaExpected completion date . . . . . . . . . . . . . . . . . .EstimatedGFA ..........................EstimatedNLA ..........................Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .Second quarter of 200857,948 sq m40,327 sq mMiddle to upper income residents from SouthJakarta and the surrounding suburban areas.South Jakarta184
Business and propertiesDescriptionPejaten Mall is located along Jalan Warung Jati Barat, a major road linking central Jakarta to the southernpart of Jakarta. This proposed six-level retail mall will cater to the upper income housing estates,surrounding this site in South Jakarta. It is intended that the tenant mix will comprise a hypermarket,a department store and specialty shops.Kuta Beach MallKartika Plaza Road, Kuta, BaliExpected completion date . . . . . . . . . . . . . . . . . .EstimatedGFA ..........................EstimatedNLA ..........................Target Segment. . . . . . . . . . . . . . . . . . . . . . . . . .District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .Second half of 200841,562 sq m30,735 sq mTourists and residents of Kuta, BaliKuta, BaliDescriptionKuta Beach Mall is located along Kartika Plaza road which is the main road connecting Ngurah Rai Airportto the Kuta Beach area. This proposed retail mall targets the tourist and local population. The theme ofKuta Beach Mall reflects the relaxed lifestyle of Bali and includes a tenant mix comprising F&B, fashion,entertainment and a variety of stores catering to daily convenience needs.Kemang City MallJalan Pangeran Antasari, South JakartaExpected completion date . . . . . . . . . . . . . . . . . .EstimatedGFA ..........................EstimatedNLA ..........................Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .First half of 200977,555 sq m56,052 sq mMiddle to upper income residents from SouthJakarta and the surrounding suburban areasSouth JakartaDescriptionKemang City Mall is located in Kemang, South Jakarta. It will be positioned to blend a tenant mix includingtenants specialising in leisure, hospitality, entertainment, education, retail, and residential. It offersenjoyable views of both the river and the scenic Pangeran Antasari Street. The scale of this projectwill enable customers to be drawn from a vast catchment area across Jakarta.Puri “Paragon City”Jalan Puri Indah Raya, West JakartaExpected completion date . . . . . . . . . . . . . . . . . .EstimatedGFA ..........................EstimatedNLA ..........................Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .Second half of 2009196,400 sq m127,660 sq mMiddle to upper income residents from WestJakarta and the surrounding suburban areas.West Jakarta185
Business and propertiesDescriptionPuri “Paragon City” will be the first of its kind in West Jakarta, offering a mixed-used developmentcomprising a retail mall, residential apartments, a school, and a hotel. It is located along Puri Indah RayaStreet with access from Tomang, Tangerang, and Daan Mogot. A major benefit will be its direct access tothe major toll road linking Jakarta to West Jakarta and Tangerang.POTENTIAL ACQUISITION OF PROPERTIES FROM THIRD PARTY VENDORSAs at the Latest Practicable Date, the Manager has entered into a non-binding memorandum ofunderstanding with:(i)(ii)(iii)PT. Multi Pratama Gemilang Perkasa (Pikko Group) in respect of the potential acquisition by LMIR<strong>Trust</strong> of Cosmopolitan Mall Pluit, a retail mall located in North Jakarta;Zellwager Enterprise Limited in respect of the potential acquisition by LMIR <strong>Trust</strong> of Sun Plaza, aretail mall located in Medan, North Sumatra; andPT. Pakuwon Permai in respect of the potential acquisition by LMIR <strong>Trust</strong> of Supermal PakuwonIndah and Pakuwon Trade Center, a retail mall located in West Surabaya, East Java.(See “Certain Agreements relating to LMIRT and the Properties—Description of Non-BindingMemorandum of Understanding”.) The Manager understands that Cosmopolitan Mall Pluit is currentlyundergoing asset enhancement works, with such works scheduled for completion in the second half of2008.Cosmopolitan Mall PluitPluit, North JakartaExpected completion date of renovation . . . . . . .EstimatedGFA ..........................EstimatedNLA ..........................Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .Estimated acquisition price . . . . . . . . . . . . . . . . .Second half of 2008131,013 sq m88,040 sq mMiddle to upper income residents of NorthJakartaNorth JakartaTo be negotiated and agreed in good faithbetween the parties, provided that suchacquisition price shall not be more than theappraised value of Cosmopolitan Mall Pluit asdetermined by an independent property valuer tobe appointed by the <strong>Trust</strong>ee before the signing ofthe conditional sale and purchase agreement.DescriptionLocated in the heart of the affluent Pluit residential district of North Jakarta, Cosmopolitan Mall Pluit offersan exciting cultural and retail experience, with urban sculptures along the waterfront, blendingharmoniously with a variety of lifestyle and cuisines outlets.186
Business and propertiesSun PlazaMedan, North SumatraEstimatedGFA ..........................EstimatedNLA ..........................Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .Estimated acquisition price . . . . . . . . . . . . . . . . .73,871 sq m61,348 sq mMiddle to upper income residents of MedanMedanTo be negotiated and agreed in good faithbetween the parties, provided that suchacquisition price shall not be more than theappraised value of Sun Plaza as determined byan independent property valuer to be appointedby the <strong>Trust</strong>ee before the signing of theconditional sale and purchase agreement.DescriptionSun Plaza is a six-level retail mall located in the <strong>Indonesia</strong>n city of Medan, the third most populous city in<strong>Indonesia</strong> after Jakarta and Surabaya. Sun Plaza is surrounded by government and business offices andis accessible from all parts of Medan City.The titanium façade of Sun Plaza resembles a sculpture and offers visitors an experience of luxury andelegance.Supermal Pakuwon Indah and Pakuwon Trade CenterWest Surabaya, East JavaEstimatedGFA ..........................EstimatedNLA ..........................Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .Estimated acquisition price . . . . . . . . . . . . . . . . .289,563 sq m114,834 sq mMiddle to upper income residents of WestSurabayaWest SurabayaTo be negotiated and agreed in good faithbetween the parties, provided that suchacquisition price shall not be more than theappraised value of Supermal Pakuwon Indah andPakuwon Trade Center as determined by anindependent property valuer to be appointed bythe <strong>Trust</strong>ee and the appraised value is agreed bythe Vendor before the signing of the conditionalsale and purchase agreement.DescriptionSupermal Pakuwon Indah and Pakuwon Trade Center is strategically located in the heart of WestSurabaya’s affluent residential district. The tenants of Supermal Pakuwon Indah and Pakuwon TradeCenter provide a variety of shopping, dining and entertainment options to shoppers. Together with theconvention centre facilities, the retail mall aims to deliver a memorable and exciting retail experience.In the future, the Manager will identify other potential acquisitions and will enter into negotiations and nonbindingmemoranda of understanding with regard to these potential acquisitions.187
The Manager and corporate governanceTHE MANAGER OF LMIR TRUSTThe Manager, <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd., was incorporated in Singaporeunder the Companies Act on 3 May 2007. As at the Listing Date, it has a paid-up capital of S$1.0 million, itsregistered office is located at 78 Shenton Way, #05-01 <strong>Lippo</strong> Centre, Singapore 079120 and its telephoneand facsimile numbers are (65) 6410 9138 and (65) 6220 6557, respectively.The Manager is 40.0% owned by Mapletree Capital and 60.0% owned by Peninsula Investment Ltd.Peninsula Investment Ltd is in turn 100.0% owned by Jesselton Investment Ltd, a wholly-owned subsidiaryof the Sponsor.Mapletree Capital, a wholly-owned subsidiary of MIPL, is a private limited company incorporated inSingapore under the Companies Act on 6 October 2004. As at 30 June 2007, it has a paid-up capital ofS$2.00 and its registered office is located at 1 Maritime Square, #13-01 HarbourFront Centre, Singapore099253. MIPL is a leading Asia-focused real estate company based in Singapore. The Mapletree Group,which MIPL is a part of, has an asset base of approximately S$4.5 billion (as at 30 June 2007) comprisingoffice, logistics, industrial, residential and retail/lifestyle properties. (See “Strategy—Acquisition GrowthStrategy—LMIR <strong>Trust</strong>’s relationship with the Mapletree Group”.)Directors of the ManagerThe Board is entrusted with the responsibility for the overall management of the Manager. The followingtable sets forth information regarding the Directors:Name Age Address PositionTan Bar Tien . . . . . . 57 129 Aroozoo Avenue Chairman,Singapore 539880 Non-Executive and Independent DirectorLim Ho Seng. . . . . . 64 100 Neo Tiew Road Non-Executive and Independent DirectorSingapore 719026Lok Vi Ming . . . . . . 46 21 Fernwood Terrace Non-Executive and Independent DirectorSingapore 458559Viven G. Sitiabudi . . 52 130 Tanjong Rhu Road Executive Director and Chief Executive OfficerPebble BayBlock M #17-12Singapore 436918Yeo Cheow Tong. . . 60 25 Maryland Drive Non-Executive DirectorSingapore 277519Tan Boon Leong . . . 54 89 Chuan Drive Non-Executive DirectorSingapore 554734Wong Mun Hoong . . 41 12A Lorong J Non-Executive DirectorTelok KurauSingapore 423489Ms Viven G. Sitiabudi and Mr Yeo Cheow Tong are nominees of the Sponsor. Mr Tan Boon Leong andMr Wong Mun Hoong are nominees of the Mapletree Group. Mr Tan Bar Tien, Mr Lim Ho Seng and Mr LokVi Ming are independent directors.Save as disclosed in this Prospectus, none of the Directors is related to one another, any substantialshareholder of the Manager or any Substantial Unitholder.Experience and expertise of the Board of DirectorsInformation on the business and working experience of each Director is set out below:Mr Tan Bar TienMr Tan Bar Tien is the Chairman as well as a Non-Executive and Independent Director of the Manager. Alawyer, Mr Tan has been running his own law firm, M/s B.T. Tan & Co, since 1982. With 30 years of188
The Manager and corporate governanceexperience in practice, Mr Tan has extensive experience in various aspects of law including corporate law,property law and litigation matters.Mr Tan has represented clients in transactions in relation to completed properties and properties underconstruction. Having been involved in conveyancing work for the last 28 years, Mr Tan is familiar with realestate matters such as property mortgages, sale and purchase of properties, construction loans anddeveloper’s projects, including the construction of properties on a progressive basis.Mr Tan graduated from the University of Singapore in 1976 with a degree in Bachelor of Laws (Honours),and was admitted as an Advocate and Solicitor of the High Court of Singapore in January 1977.Mr Lim Ho SengMr Lim Ho Seng is a Non-Executive and Independent Director of the Board. Mr Lim has over 20 years ofexperience in the retail industry. Mr Lim was formerly the Chief Executive Officer of NTUC Fairprice CooperativeLtd, which has investments in real estate and leases retail spaces to other retail tenants.From October 1992 to August 1997, Mr Lim was a director of Tampines Mall Pte Ltd which wasincorporated to develop and manage Tampines Mall shopping centre, which was subsequentlyacquired by CapitaMall <strong>Trust</strong>.Currently, Mr Lim is the Chairman of Baker Technology Limited and Sim Siang Choon Ltd, in addition toholding directorships on the boards of several other publicly listed companies in Singapore.Mr Lim is a Fellow of the Institute of Certified Public Accountants of Singapore, the Institute of CertifiedPublic Accountants, Australia, the Association of Chartered Certified Accountants, United Kingdom, theInstitute of Chartered Secretaries and Administrators, United Kingdom and the Singapore Institute ofDirectors.Mr Lok Vi MingMr Lok Vi Ming is a Non-Executive and Independent Director of the Board. He is currently a partner andhead of the Aviation Practice Group at M/s Rodyk & Davidson. Appointed as a Senior Counsel in 2005,Mr Lok is an internationally renowned aviation lawyer. He is featured in Euromoney Legal Media’s Guideand Guide to the World’s Leading Insurance and Reinsurance lawyers and also in the International Who’sWho of Aviation lawyers 2005.Mr Lok is a Fellow of the Singapore Institute of Arbitrators and has been appointed to the Regional Panel ofArbitrators with the Singapore International Arbitration Centre. He is a Fellow of the Singapore Academy ofLaw and is on the committee for the International Promotion of Singapore Law. He has been appointed bythe Honourable Chief Justice of Singapore to chair Disciplinary Committees convened to hear complaintsinto the conduct of lawyers. Mr Lok has lectured on Aviation Law at the Law Faculty of the NationalUniversity of Singapore and at the Singapore Aviation Academy. He is also the immediate past Chairmanof the Aerospace Committee of the Inter-Pacific Bar Association and is on the International Advisory Panelof the Registry of Aircraft Parts established under the Cape Town Convention.Mr Lok currently holds directorships in various companies including Singapore Cruise Center Pte Ltd,Singex Exhibitions Pte Ltd, and Singapore Food Industries Ltd. Since 2003, Mr Lok has been appointed asa director of Singex Venues Pte Ltd, which operates and manages Singapore Expo, the largest exhibitionand convention centre in Singapore.Mr Lok graduated with a Bachelor of Law (Honours) from the National University of Singapore in 1986.Ms Viven G. SitiabudiMs Viven G. Sitiabudi (also known as Mrs Viven Gouw) is an Executive Director of the Board and the ChiefExecutive Officer of the Manager. Ms Sitiabudi has more than 20 years of experience in management,marketing and sales.Since 2004, Ms Sitiabudi has been appointed the President Director of the Sponsor, especially followingthe Sponsor’s internal restructuring which involved the merger of eight different entities. Under herstewardship in the past three years, the Sponsor has become the largest listed property company in<strong>Indonesia</strong> to date. She has been integral in identifying the opportunity for the Sponsor to invest in retail189
The Manager and corporate governanceproperties (the strata malls and the planned leased malls), enhancing existing assets and ensuring thedelivery of the Sponsor’s development projects, which span across a variety of real estate sectors,including urban/township, residential clusters, condominium, hospitals as well as hotel projects,throughout <strong>Indonesia</strong>.Prior to her appointment as the President Director of the Sponsor, Ms Sitiabudi was a senior adviser to theboard of directors of <strong>Lippo</strong> Land Development (“LLD”) from 1990 to 1995. LLD is a property arm/flagship ofthe <strong>Lippo</strong> Group during the said period and has since been merged with seven other property-relatedcompanies to form the Sponsor. In her 5-year period at LLD, she led LLD to complete Citra Graha (formerlyknown as <strong>Lippo</strong>Center) and Wisma BCA. She also identified opportunities and oversaw the construction ofvarious property projects throughout <strong>Indonesia</strong> for LLD. These projects include <strong>Lippo</strong>Center Bandung,Sudirman Tower, <strong>Lippo</strong>Cikarang (formerly known as Bekasi Industrial Estate), Puncak Resort (formerlyknown as CipanasHill Resort), <strong>Lippo</strong> Karawaci township (formerly known as JakartaBaru township),Seaworld <strong>Indonesia</strong>, Supermal Karawaci (formerly known as <strong>Lippo</strong>VillageMall), Imperial AryadutaKarawaci (formerly known as Century Hotel), Asia Tower, Dynaplast Tower, UPH building, SudirmanTower Condominium, Carita Bay Resort, Golf Karawaci Condo, Crown Court Condo, Siloam Hospital,Pacific Tower, Amartapura Condo, Hotel Sahid <strong>Lippo</strong> Cikarang, Mal <strong>Lippo</strong> Cikarang, a golf course in <strong>Lippo</strong>Karawaci and Tanjung Bunga township in Makassar.From 1984 to 1995, Ms Sitiabudi was the President Director of PT <strong>Lippo</strong> Life Insurance. Under herleadership, PT <strong>Lippo</strong> Life Insurance became one of the largest life insurance companies in <strong>Indonesia</strong>, withMs Sitiabudi leading its initial public offering in 1989. In 1996, Ms Sitiabudi was appointed Chief ExecutiveOfficer of Legal and General Australia’s operations in <strong>Indonesia</strong>. Three years later, Ms Sitiabudi joinedAllianz Life <strong>Indonesia</strong> as its Vice President Director.Ms Sitiabudi graduated from the University of New South Wales, Australia in 1977 with a degree inComputer Science and Statistics.Mr Yeo Cheow TongMr Yeo Cheow Tong is a Non-Executive Director of the Board. He has been a prominent figure in theSingapore political landscape for over 20 years and had previously held different ministerial positions inthe Singapore government such as Minister of Transport, Minister of Health, Minister for CommunityDevelopment, Minister for Trade and Industry and Minister for the Environment. He is currently a Memberof Parliament for Hong Kah Group Representation Constituency. Mr Yeo sits on the panel of advisers forTemasek Holdings (Private) Limited, <strong>Lippo</strong> Group, Raffles Education Corporation as well as that for theUniversity of Chicago Graduate School of Business. In addition, he holds the position of chairman of theBoard of Governors of Raffles University, and is also a director of KillyInvest Pte Ltd.Mr Yeo graduated from the University of Western Australia in 1971 with a Bachelor’s degree inEngineering.Mr Tan Boon LeongMr Tan Boon Leong is a Non-Executive Director of the Manager. He has 32 years of experience in the realestate industry and is currently the Chief Operating Officer of MIPL. He is also a director of MapletreeLogistics <strong>Trust</strong> Management Ltd, the manager of MapletreeLog (which is listed on the SGX-ST), from July2005. He chairs the Asset Control Group for VivoCity, the largest retail mall in Singapore.Prior to joining MIPL in June 2003, he was a managing director of Temasek Holdings (Private) Limited,overseeing private equity investments in the property and infrastructure sectors, both locally andoverseas. He was with Temasek Holdings (Private) Limited from December 1995.Mr Tan is a Colombo Plan scholar and studied urban valuation (real estate) at the University of Auckland,New Zealand and worked with IRAS upon his graduation, from 1975 to 1995. While at IRAS, he wasinvolved in the valuation of real estate in Singapore and rose to become a Superscale Officer and held theappointments of Tax Director (Technical Services—Property) and Head of Property and ValuationServices.Mr Tan is a member of the Valuation Review Board of Singapore.190
The Manager and corporate governanceMr Wong Mun HoongMr Wong Mun Hoong is a Non-Executive Director of the Manager. He joined MIPL as Chief FinancialOfficer in January 2006. As the Chief Financial Officer, he is responsible for Finance, Treasury, CorporatePlanning & <strong>Investor</strong> Relations, Risk Management and Information Technology of the Mapletree Group. Heis also a director of Mapletree Logistics <strong>Trust</strong> Management Ltd, the manager of MapletreeLog (which islisted on the SGX-ST), since July 2006.Prior to joining MIPL, Mr Wong has over 14 years’ investment banking experience in Asia, the last 10 yearsof which were with Merrill Lynch & Co, which included stints in Singapore, Hong Kong and Tokyo. He was aDirector and Head of its Singapore Investment Banking Division prior to leaving Merrill Lynch (Singapore)Pte Ltd in late 2005.Mr Wong graduated with a Bachelor of Accountancy (Honours) from the National University of Singaporein 1990. He is a non-practising member of the Institute of Certified Public Accountants of Singapore. Heholds the professional designation of Chartered Financial Analyst from the CFA Institute of the UnitedStates.A list of the present and past directorships of each Director of the Manager over the last five yearspreceding the Latest Practicable Date is set out in “Appendix H—List of Present and Past PrincipalDirectorships of Directors and Executive Officers”.Experience and expertise of the BoardEach of Mr Lim Ho Seng, Mr Lok Vi Ming, Mr Tan Boon Leong and Mr Wong Mun Hoong have experience inbeing a director of a public listed company in Singapore. Ms Viven G. Sitiabudi has experience in being aPresident Commissioner of public listed companies in <strong>Indonesia</strong>. <strong>Indonesia</strong>n companies are managed bya two-tiered management structure. The executive functions of an <strong>Indonesia</strong>n company are run by a boardof directors, which is supervised by a board of commissioners.They therefore have the appropriate experience to act as directors of the Manager and are familiar with therules and responsibilities of a director of a public listed company.The Manager will arrange for the relevant training to prepare Mr Tan Bar Tien and Mr Yeo Cheow Tong forthe roles and responsibilities of a director of the manager of a public listed REITsubsequent to the listing ofLMIR <strong>Trust</strong>.The key roles of the BoardThe key roles of the Board are to:• guide the corporate strategy and directions of the Manager;• ensure that senior management discharges business leadership and demonstrates the highest qualityof management skills with integrity and enterprise; and• oversee the proper conduct of the Manager.The Board comprises seven Directors. The Audit Committee of the Board comprises Mr Tan Bar Tien,Mr Lim Ho Seng and Mr Lok Vi Ming. Mr Lim Ho Seng has been appointed as the Chairman of the AuditCommittee.The Board shall meet to review the key activities and business strategies of the Manager. The Boardintends to meet regularly, at least once every quarter, to deliberate the strategic policies of LMIR <strong>Trust</strong>,including acquisitions and divestments, approval of the annual budget and review of the performance ofLMIR <strong>Trust</strong>.Each Director has been appointed on the basis of his professional experience and his potential tocontribute to the proper guidance of LMIR <strong>Trust</strong>. The Directors will contribute in different ways, includingusing their personal networks to further the interest of LMIR <strong>Trust</strong>.The Board has the intention of approving a set of internal controls which sets out approval limits for capitalexpenditure, investments and divestments and bank borrowings as well as arrangements in relation to191
The Manager and corporate governancecheque signatories. In addition, sub-limits are also delegated to various management levels to facilitateoperational efficiency.The members of the Board’s Audit Committee will monitor changes to regulations and accountingstandards closely. To keep pace with regulatory changes, where these changes have an importantbearing on the Manager’s or Directors’ disclosure obligations, the Directors will be briefed either duringBoard meetings or at specially convened sessions involving the relevant professionals. The managementwill also provide the Board with complete and adequate information in a timely manner through regularupdates on financial results, market trends and business developments.The majority of the Directors are non-executive. Further, three of the seven Directors are independent ofthe management. This enables the management to benefit from their external, diverse and objectiveperspective on issues that are brought before the Board. It would also enable the Board to interact andwork with the management through a robust exchange of ideas and views to help shape the strategicprocess. This, together with a clear separation of the roles of the Chairman and the Chief Executive Officer,provides a healthy professional relationship between the Board and the management, with clarity of rolesand robust oversight as they deliberate on the business activities of the Manager.The positions of Chairman of the Board and Chief Executive Officer are separately held by two persons inorder to maintain an effective check and balance. The Chairman of the Board, Mr Tan Bar Tien, is anIndependent Director, while the Chief Executive Officer, Ms Viven G. Sitiabudi, is an Executive Director ofthe Board.There is a clear separation of the roles and responsibilities between the Chairman and the Chief ExecutiveOfficer of the Manager. The Chairman is responsible for the overall management of the Board as well asensuring that the members of the Board and the management work together with integrity andcompetency, and that the Board engages the management in constructive debate on strategy,business operations, enterprise risk and other plans while the Chief Executive Officer has fullexecutive responsibilities over the business directions and operational decisions in the day-to-daymanagement of the Manager.The Board has separate and independent access to senior management and the Company Secretary atall times. The Company Secretary attends to corporate secretarial administration matters and attends allBoard meetings. The Board also has access to independent professional advice where appropriate andwhenever requested.192
The Manager and corporate governanceManagement reporting structure of the BoardBoard of DirectorsTan Bar TienLim Ho SengLok Vi MingViven G. SitiabudiYeo Cheow TongTan Boon LeongWong Mun Hoong(Chairman, Non-Executive andIndependent Director)(Non-Executive and IndependentDirector)(Non-Executive and IndependentDirector)(Executive Director and ChiefExecutive Officer)(Non-Executive Director)(Non-Executive Director)(Non-Executive Director)Chief Executive OfficerViven G. SitiabudiChief FinancialOfficer / <strong>Investor</strong>Relations Manager /Compliance OfficerRudi Chuan HweeHiowAsset ManagerAndreas KartawinataInvestmentManagerJeremy S. WalkerEXECUTIVE OFFICERS OF THE MANAGERThe Executive Officers of the Manager are entrusted with the responsibility for the daily operations of theManager.Roles of the Executive Officers of the ManagerThe Chief Executive Officer of the Manager will work with the Board to determine the strategy for LMIR<strong>Trust</strong>. He will also work with the other members of the Manager’s management team, such as theinvestment, asset management and financial personnel, in meeting the stated strategic, investment, andoperational objectives of LMIR <strong>Trust</strong>. Additionally, the Chief Executive Officer will be responsible forplanning the future strategic development and the day-to-day operations of LMIR <strong>Trust</strong>.The Chief Financial Officer / <strong>Investor</strong> Relations Manager / Compliance Officer of the Manager willwork with the Chief Executive Officer and other members of the Manager’s management team toformulate strategic plans for LMIR <strong>Trust</strong> in accordance with the Manager’s stated investment strategy.The Chief Financial Officer / <strong>Investor</strong> Relations Manager / Compliance Officer will be responsible forapplying the appropriate capital management strategy, overseeing implementation of LMIR <strong>Trust</strong>’s shortandmedium-term business plans and financial condition, as well as coordinating fund managementactivities. He is responsible for compliance issues concerning LMIR <strong>Trust</strong> in relation to the Listing Manualand the relevant Singapore laws and regulations. In the area of investor relations, he is responsible for193
The Manager and corporate governancefacilitating communications and liaison with Unitholders. This includes statutory reporting, such asproducing annual reports to Unitholders, and reporting to the SGX-ST in compliance with the ListingManual. The principal objective of this role is to maintain continuous disclosure and transparentcommunications with Unitholders and the market. He is also tasked with the responsibility ofpromoting and marketing LMIR <strong>Trust</strong> to Unitholders, prospective investors and the media throughregular communications, roadshows, events and a corporate website.The Asset Manager is responsible for formulating the business plans in relation to LMIR <strong>Trust</strong>’s propertieswith short, medium and long-term objectives, and with a view to maximising the rental income of LMIR<strong>Trust</strong> via active asset management. The Asset Manager will work closely with the Property Manager toimplement LMIR <strong>Trust</strong>’s strategies so as to ensure that the properties in LMIR <strong>Trust</strong>’s portfolio maximisetheir income generation potential and minimise their expense base without compromising theirmarketability. The Asset Manager will focus on the operations of LMIR <strong>Trust</strong>’s properties, theimplementation of the short to medium term objectives of LMIR <strong>Trust</strong>’s portfolio and will supervise theProperty Manager in the implementation of LMIR <strong>Trust</strong>’s property-related strategies.The Investment Manager is responsible for identifying, researching and evaluating potential acquisitionsand related investments with a view to enhancing LMIR <strong>Trust</strong>’s portfolio or divestments where a property isno longer strategic, fails to enhance the value of LMIR <strong>Trust</strong>’s portfolio or fails to be yield accretive. TheInvestment Manager also recommends and analyses potential asset enhancement initiatives. In order tosupport these various initiatives, the Investment Manager will develop financial models to test the financialimpact of different courses of action. These findings will be research-driven to help develop and implementthe proposed initiatives.Experience and Expertise of Executive OfficersInformation on the working experience of the executive officers of the Manager is set out below:Ms Viven G. Sitiabudi(See “—Directors of the Manager—Experience and Expertise of the Board of Directors—Ms VivenG.Sitiabudi”.)Mr Rudi Chuan Hwee HiowMr Rudi Chuan Hwee Hiow is the Chief Financial Officer, the <strong>Investor</strong> Relations Manager and theCompliance Officer of the Manager. He has experience in corporate finance. Prior to joining theManager in April 2007, he was the Senior Vice President (Finance & Accounting) with MacquariePacific Star Prime REIT Management Limited from March 2005. As the Senior Vice President,Mr Chuan was in charge of finance and finance-related duties, human resource, informationtechnology as well as serving as the co-company secretary.From July 2000 to February 2005, Mr Chuan was a financial controller with a private property developmentcompany, Suntec City Development Pte. Ltd. From December 1995 to July 2000, Mr Chuan was a SeniorManager, Finance with NatSteel Chemicals Limited.From February 1990 to October 1995, Mr Chuan worked with Unilever Singapore Pte. Ltd., MarsConfectionary, Australia and Effem Foods Inc (a wholly-owned subsidiary of Mars Incorporated, USA).From January 1989 to January 1990, Mr Chuan was a Senior Accountant with a logistics company, FreightLinks Express Ltd.From July 1986 to December 1988, Mr Chuan was a project analyst at a real estate company, UnitedIndustrial Corporation Ltd. As a project analyst, Mr Chuan was responsible for evaluating and makingrecommendations on potential take-over targets.Mr Chuan is a certified public accountant and has been a member of the Institute of Certified PublicAccountants of Singapore since 1988. He graduated in 1981 from the University of Otago, New Zealand,with a Bachelor of Commerce degree in Accounting and holds a Master’s degree in BusinessAdministration from the State University of New York, Buffalo.194
The Manager and corporate governanceMr Andreas KartawinataMr Andreas Kartawinata is the Asset Manager of the Manager. Prior to joining PT <strong>Lippo</strong> Karawaci Tbk inFebruary 2007, Mr Andreas Kartawinata was the Director of Leasing/Marketing and Operations withPT Metropolitan Kentjana Tbk where he was responsible for managing properties such as Pondok IndahMall, Puri Indah Mall, Wisma Pondok Indah Office Tower, Apartment Golf Pondok Indah (serviceapartment), Pondok Indah Real Estate, Puri Indah Real Estate, and Bumi Shangrila Batam RealEstate. Under Mr Kartawinata’s management, Pondok Indah Mall was awarded the Prix d’Excellence(<strong>Retail</strong> Category) in 2006 by FIABCI, an international real estate federation. Mr Kartawinata was withPT Metropolitan Kentjana Tbk from June 1995.From June 1987 to May 1995, Mr Kartawinata held various positions with the Ometraco Group, includingthe position of a Leasing/Marketing manager with PT Schneider Ometraco, a joint venture between theSchneider Group (France) and the Ometraco Group. From August 1985 to June 1987, Mr Kartawinata wasa Leasing/Marketing manager with PT Inti Datamas Sukses.Mr Kartawinata has over twenty years of experience in all phases of leasing, management, marketing andsales, including building a team of property professionals, market research, market planning, productmanagement, advertising, promotion, sales and property management.Mr Kartawinata has been appointed as the President of the Association of Shopping Centres of Jakarta—<strong>Indonesia</strong> for two consecutive periods, namely 2003-2007 and 2007-2010. Mr Kartawinata hasparticipated in international events such as sitting as a panelist on the Council of Asian ShoppingCentre Seminar in Malaysia (2005) and <strong>Indonesia</strong> (2006). Mr Kartawinata is also a part-time lecturerfor ‘retail business’ at Tarumanegara University Jakarta, Petra University Surabaya and Bina <strong>Retail</strong><strong>Indonesia</strong>.Mr Kartawinata graduated from Institute Technology of Bandung with a major in Electro-techniqueEngineering.Mr Jeremy S. WalkerMr Jeremy S. Walker is the Investment Manager of the Manager. In December 2006, Mr Walker joinedPT <strong>Lippo</strong> Karawaci Tbk as Director—Asset Management. Having worked in the Australian property sectorsince 1990, Mr Walker has extensive experience in the Australian listed property trust market and hasbeen involved in sharing his knowledge of international best practices with the <strong>Lippo</strong> Group.Prior to joining PT <strong>Lippo</strong> Karawaci Tbk, Mr Walker was the National Director—<strong>Retail</strong> at Jones LangLaSalle. During his 12 years at Jones Lang LaSalle, Mr Walker’s experience covered many aspects of theretail property industry, spanning areas such as retail leasing, management and sales across all states ofAustralia. From 1995 to 1996, Mr Walker was the <strong>Retail</strong> Leasing Executive responsible for a portfolio ofshopping centres and new projects. This included the successful repositioning of Wendouree VillageShopping Centre after major renovations. From 1998 to 1999, Mr Walker was the National PortfolioManager with Jones Lang LaSalle for Schroders Australia. This included overall responsibility of assetmanagement, marketing and leasing of six retail shopping centres in three states of Australia with a totalvalue of around A$300 million.From 1999 to 2000, Mr Walker was the Manager of Investment Sales. Based in Melbourne and workingwith a national team of experts, Mr Walker was responsible for working with key clients to acquire anddispose assets in relation to retail shopping centres across Victoria and other parts of Australia. From 2000to 2006, Mr Walker was responsible for the asset management and client relationship of many propertiesin Australia with an approximate value in excess of A$500 million, and represented various clients in themanagement, marketing and leasing of 16 shopping centres in Australia. Mr Walker provided advice ondevelopment, acquisition and divestment to institutional clients such as AMP Limited, Deutshe Bank alongwith other syndicated vehicles such as MCS and Australian Unity and private investors.Mr Walker is a licensed real estate agent in Australia and graduated with a degree in Bachelor of BusinessProperty from RMIT University in 1998. He also graduated with a graduate Diploma in BusinessAdministration from Mt. Eliza Business School, Australia in 2002.195
The Manager and corporate governanceA list of the present and past directorships of each Executive Officer of the Manager over the last five yearspreceding the Latest Practicable Date is set out in “Appendix H—List of Present and Past PrincipalDirectorships of Directors and Executive Officers”.Roles and responsibilities of the ManagerThe Manager has general powers of management over the assets of LMIR <strong>Trust</strong>. The Manager’s mainresponsibility is to manage LMIR <strong>Trust</strong>’s assets and liabilities for the benefit of Unitholders.The Manager will set the strategic direction of LMIR <strong>Trust</strong> and give recommendations to the <strong>Trust</strong>ee on theacquisition, divestment or enhancement of assets of LMIR <strong>Trust</strong> in accordance with its stated investmentstrategy.The Manager has covenanted in the <strong>Trust</strong> Deed to use its best endeavours to• carry on and conduct its business in a proper and efficient manner;• ensure that LMIR <strong>Trust</strong>’s operations are carried on and conducted in a proper and efficient manner; and• conduct all transactions with or for LMIR <strong>Trust</strong> at arm’s length and on normal commercial terms.Furthermore, the Manager will prepare property plans on a regular basis, which may contain proposalsand forecasts on net income, capital expenditure, sales and valuations, explanations of major variances toprevious forecasts, written commentary on key issues and any relevant assumptions. The purpose ofthese plans is to explain the performance of LMIR <strong>Trust</strong>’s properties.The Manager will also be responsible for ensuring compliance with the applicable provisions of the SFAand all other relevant legislation, the Listing Manual, the CIS Code (including the Property FundsGuidelines), the <strong>Trust</strong> Deed, any tax ruling and all relevant contracts. The Manager will be responsiblefor all regular communications with Unitholders.The Manager may require the <strong>Trust</strong>ee to borrow on behalf of LMIR <strong>Trust</strong> (upon such terms and conditionsas the Manager deems fit, including the charging or mortgaging of all or any part of the DepositedProperty) whenever the Manager considers, among other things, that such borrowings are necessary ordesirable in order to enable LMIR <strong>Trust</strong> to meet any liabilities or to finance the acquisition of any property.However, the Manager must not direct the <strong>Trust</strong>ee to incur a borrowing if to do so would mean that LMIR<strong>Trust</strong>’s total borrowings and deferred payments exceed 35.0% of the value of its Deposited Property at thetime the borrowing is incurred, taking into account deferred payments (including deferred payments forassets whether to be settled in cash or in Units). The Property Funds Guidelines allow a REIT to borrowmore than 35.0% of the value of its Deposited Property (up to a maximum of 60.0%) only if a credit ratingfrom Fitch Inc., Moody’s or Standard & Poor’s is obtained and disclosed to the public.In the absence of fraud, negligence, wilful default or breach of the <strong>Trust</strong> Deed by the Manager, it shall notincur any liability by reason of any error of law or any matter or thing done or suffered to be done or omittedto be done by it in good faith under the <strong>Trust</strong> Deed. In addition, the Manager shall be entitled, for thepurpose of indemnity against any actions, costs, claims, damages, expenses or demands to which it maybe put as Manager, to have recourse to the Deposited Property or any part thereof save where such action,cost, claim, damage, expense or demand is occasioned by the fraud, negligence, wilful default or breach ofthe <strong>Trust</strong> Deed by the Manager. The Manager may, in managing LMIR <strong>Trust</strong> and in carrying out andperforming its duties and obligations under the <strong>Trust</strong> Deed, with the written consent of the <strong>Trust</strong>ee, appointsuch person to exercise any or all of its powers and discretions and to perform all or any of its obligationsunder the <strong>Trust</strong> Deed, provided always that the Manager shall be liable for all acts and omissions of suchpersons as if such acts and omissions were its own.196
The Manager and corporate governanceTHE PROPERTY MANAGER OF LMIR <strong>Trust</strong>Management reporting structure of the Property ManagerChairmanTjokro LibiantoChief Executive OfficerYuke Elia SusiloputroChief FinancialOfficerSusantoAsset ManagerWilfredo Z. PinedaCentre ManagersHeads of DepartmentExecutive Officers of the Property ManagerInformation on the working experience of the Executive Officers of the Property Manager is set out below:Mr Tjokro LibiantoMr Tjokro Libianto is the Chairman of the Property Manager. He has many years of experience in propertydevelopment as well as related regulatory requirements. He has been instrumental in negotiating most ofthe land acquisitions by the <strong>Lippo</strong>-related companies. He was formerly the Administrative and FinanceManager of PT Dwi Satya Utama in Surabaya as well as that of PT Tifa Finance and PT Tifa Securities.Mr Libianto holds a degree in Accountancy from Brawijaya University, Malang, <strong>Indonesia</strong>.Mr Yuke Elia SusiloputroMr Yuke is the Chief Executive Officer of the Property Manager. He started his career as a design architectin Future Systems, Los Angeles, California from 1986 to 1988. From 1988 to 1992, he was the AssociateDirector of Glenwood L. Garvey & Associates, Santa Monica, California.Mr Yuke has extensive experience in property development. In 1992, he joined the <strong>Lippo</strong> Group to developthe first regional shopping centre in Cikarang, Bekasi, West Java and since then, he was actively involvedin most of the <strong>Lippo</strong> Group’s development of shopping centres in <strong>Indonesia</strong>. He also serves in the<strong>Indonesia</strong>n Real Estate Association as Head of the New Township Development. In addition, he is theChairman of the <strong>Indonesia</strong>n Industrial Estate Association for Infrastructure Facilities Development.Presently, he is the President Director in the International Zone Area (Special Economic Zone),Bekasi, West Java, <strong>Indonesia</strong>.197
The Manager and corporate governanceMr Yuke graduated from the Southern California Institute of Architecture, Santa Monica, California in 1986with a degree in Architecture.Mr SusantoMr Susanto is the Chief Financial Officer of the Property Manager. He is an experienced finance andaccounting professional who started his career as a Consultant at Prasetio Utomo & Co—Arthur AndersenPublic Accountant Firm where his last position was as the Andersen World Wide Manager. He joined the<strong>Lippo</strong>-related companies in 2000 as a Finance & Accounting Division Head in PT <strong>Lippo</strong> Karawaci Tbk. In2001, he was appointed Director of PT <strong>Lippo</strong> Cikarang Tbk and in August 2004, he was appointed ChiefController of PT <strong>Lippo</strong> Karawaci Tbk.Mr Susanto holds an Accounting degree from STIE “YAI”, Jakarta, <strong>Indonesia</strong>.Mr Wilfredo Z. PinedaMr Wilfredo Z. Pineda is the Asset Manager of the Property Manager. He joined PT <strong>Lippo</strong> Karawaci Tbk inDecember 2006 and is responsible for finance and accounting.Mr Pineda has 28 years of professional experience covering the areas of Corporate and Project Finance;Financial and Operation Audit; Financial Budgeting and Controlling; System Development and GeneralAdministration. His industry experiences include direct-to-home satellite pay television broadcasting;property development and management of hotel, shopping malls, office buildings, condominiums,membership clubs and real estate housing.Mr Pineda has 20 years experience in property development and management which includes his stint asAssistant Vice President Comptroller with Rockwell Land Corporation, a real estate developmentcompany in the Philippines, as Financial Controller and Management Advisor to PT Plaza <strong>Indonesia</strong>Realty Tbk, a property development and management company in <strong>Indonesia</strong>, and as Finance andAccounting Manager with PT. Bimantara Siti Wisesa, an <strong>Indonesia</strong>n investment company.Mr Pineda holds a Bachelor of Science degree in Commerce with a major in Accounting from Holy AngelUniversity, Philippines, and he is a Certified Public Accountant in the Philippines.MANAGEMENT FEESThe Manager is entitled under the <strong>Trust</strong> Deed to the following management fees:• (in respect of Authorised Investments which are in the form of real estate whether held directly by LMIR<strong>Trust</strong> or indirectly through one or more SPVs) a Base Fee of 0.25% per annum of the value of theDeposited Property and a Performance Fee of 4.00% per annum of LMIR <strong>Trust</strong>’s NPI in the relevantfinancial year (calculated before accounting for the Performance Fee in that financial year); and• (in respect of Authorised Investments which are not in the form of real estate whether held directly byLMIR <strong>Trust</strong> or indirectly through one or more SPVs) an Authorised Investment Management Fee of0.5% per annum of the value of such Authorised Investments which, unless such Authorised Investmentis an interest in a property fund (either a REIT or private property fund), wholly managed by a whollyownedsubsidiary of the Sponsor in which case no Authorised Investment Management Fee shall bepayable in relation to such Authorised Investment.For Forecast Period 2007, Projection Year 2008 and Projection Year 2009, the Manager has opted toreceive 100% of the Performance Fee in the form of Units.The Manager may elect to receive the management fees in cash or Units or a combination of cash andUnits (as it may in its sole discretion determine) after the Projection Year 2009, having regard to thedistribution yields to Unitholders and the cash flow of LMIR <strong>Trust</strong>.Any increase in the rate above the maximum permitted level or any change in the structure of theManager’s management fees must be approved by an Extraordinary Resolution of the Unitholders passedat a Unitholders’ meeting duly convened and held in accordance with the provisions of the <strong>Trust</strong> Deed.198
The Manager and corporate governanceThe Manager is also entitled to:• (for any Authorised Investment acquired directly or indirectly from time to time by the <strong>Trust</strong>ee on behalfof LMIR <strong>Trust</strong>) an acquisition fee of 1.0% of the purchase price in the case of any Authorised Investmentacquired by LMIR <strong>Trust</strong>; and• a divestment fee of 0.5% of the sale price (after deducting the interest of any co-owners or coparticipants)of any Authorised Investment sold directly or indirectly or divested from time to time by the<strong>Trust</strong>ee on behalf of LMIR <strong>Trust</strong>.No acquisition fee is payable for the acquisition of the initial property portfolio of LMIR <strong>Trust</strong>.Any payment to third party real estate agents or brokers in connection with the acquisition or divestment ofany Authorised Investment of LMIR <strong>Trust</strong> shall be paid by the Manager to such persons out of theDeposited Property of LMIR <strong>Trust</strong> or the assets of the relevant SPV, and not out of the acquisition fee or thedivestment fee received or to be received by the Manager.The acquisition fee and the divestment fee are payable to the Manager in the form of cash and/or Units (asthe Manager may elect in its sole discretion) at the then prevailing market price provided that in respect ofany acquisition and sale or divestment of real estate assets from/to interested parties, such a fee should, ifrequired by the applicable laws, rules and/or regulations, be in the form of Units issued by LMIR <strong>Trust</strong> atprevailing market price(s) and subject to such transfer restrictions as may be imposed. At present, theProperty Funds Guidelines prescribe that such Units should not be sold within one year from date of theirissuance. Any increase in the rate above the maximum permitted level or any change in the structure of theManager’s acquisition fee or divestment fee must be approved by an Extraordinary Resolution of theUnitholders passed at a Unitholders’ meeting duly convened and held in accordance with the provisions ofthe <strong>Trust</strong> Deed.In relation to Authorised Investments in the form of real estate owned or held, or to be owned or held, eitherdirectly or indirectly, by a SPV, the fees payable to the Manager shall be calculated on the same basis as ifsuch real estate, or the pro-rated share of such real estate in the case where the interest of LMIR <strong>Trust</strong> inthe SPV is partial, had been held directly by the <strong>Trust</strong>ee.ANNUAL REPORTSAn annual report will be issued by the Manager to Unitholders within three months from the end of eachfinancial year of LMIR <strong>Trust</strong>, containing, among other things, the following key items:(i)(ii)(iii)(iv)(v)(vi)(vii)details of all real estate transactions entered into during the financial accounting period;details of LMIR <strong>Trust</strong>’s real estate assets;if applicable, with respect to investments other than real property:(a)(b)(c)(d)(e)(f)(g)(h)a brief description of the business;proportion of share capital owned;cost;(if relevant) Directors’ valuation and in the case of listed investments, market value;dividends received during the year (indicating any interim dividends);dividend cover or underlying earnings;any extraordinary items; andnet assets attributable to investments;cost of each property held by LMIR <strong>Trust</strong>;annual valuation of each property of LMIR <strong>Trust</strong>;analysis of provision for diminution in value of each property of LMIR <strong>Trust</strong> (to the extent possible);annual rental income for each property of LMIR <strong>Trust</strong>;199
The Manager and corporate governance(viii)(ix)(x)(xi)(xii)(xiii)(xiv)(xv)(xvi)(xvii)(xviii)(xix)(xx)(xxi)(xxii)(xxiii)(xxiv)(xxv)occupancy rates for each property of LMIR <strong>Trust</strong>;remaining term for each of LMIR <strong>Trust</strong>’s leasehold properties;amount of Distributable Income held pending distribution;details of assets other than real estate;details of LMIR <strong>Trust</strong>’s exposure to derivatives;details of LMIR <strong>Trust</strong>’s investments in other property funds;details of borrowings by the <strong>Trust</strong>ee and other financial accommodation to the <strong>Trust</strong>ee in relationto LMIR <strong>Trust</strong>;value of the Deposited Property and the NAV of LMIR <strong>Trust</strong> at the beginning and end of thefinancial year under review;the prices at which the Units were quoted at the beginning and end of the accounting period, andthe highest and lowest prices at which the Units were traded on the SGX-ST during the financialaccounting period;volume of trade in the Units during the accounting period;the aggregate value of all transactions entered into by the <strong>Trust</strong>ee (for and on behalf of LMIR <strong>Trust</strong>)with an “interested party” (as defined in the Property Funds Guidelines) or with an “interestedperson” (as defined in the Listing Manual) during the financial year under review;total operating expenses of LMIR <strong>Trust</strong> in respect of the accounting period, including expensespaid to the Manager and interested parties (if any) and the <strong>Trust</strong>ee, and taxation incurred inrelation to LMIR <strong>Trust</strong>’s properties;historical performance of LMIR <strong>Trust</strong>, including rental income obtained and occupancy rates foreach property in respect of the accounting period and other various periods of time (e.g. one-year,three-year, five-year or 10-year) and any distributions made;total amount of fees paid to the <strong>Trust</strong>ee;name of the manager of LMIR <strong>Trust</strong>, together with an indication of the terms and duration of itsappointment and the basis of its remuneration;total amount of fees paid to the Manager and the price(s) of the Units at which they were issued inpart payment thereof;an analysis of realised and unrealised surpluses or losses, stating separately profits and losses asbetween listed and unlisted investments, if applicable; andany extraordinary items.The first annual report will cover the period from the date of constitution of LMIR <strong>Trust</strong> to 31 December2008.Additionally, the Manager has given an undertaking to the SGX-ST that it will announce LMIR <strong>Trust</strong>’s NAVper Unit on a quarterly basis. Such announcements will be based on the latest available valuation of LMIR<strong>Trust</strong>’s real estate and real estate-related assets, which the Manager has undertaken to conduct at leastonce a year. The first such valuation will be conducted by 31 December 2008.RETIREMENT OR REMOVAL OF THE MANAGERThe Manager shall have the power to retire in favour of a corporation approved by the <strong>Trust</strong>ee to act as themanager of LMIR <strong>Trust</strong>.Also, the Manager may be removed by notice given in writing by the <strong>Trust</strong>ee if:• the Manager goes into liquidation (except a voluntary liquidation for the purpose of reconstruction oramalgamation upon terms previously approved in writing by the <strong>Trust</strong>ee) or a receiver is appointed overits assets or a judicial manager is appointed in respect of the Manager;200
The Manager and corporate governance• the Manager ceases to carry on business;• the Manager fails or neglects after reasonable notice from the <strong>Trust</strong>ee to carry out or satisfy anymaterial obligation imposed on the Manager by the <strong>Trust</strong> Deed;• if the Unitholders by an Ordinary Resolution duly proposed and passed by Unitholders present andvoting at a meeting of Unitholders convened in accordance with the <strong>Trust</strong> Deed, with no Unitholder(including the Manager and its Related Parties) being disenfranchised, vote to remove the Manager;• for good and sufficient reason, the <strong>Trust</strong>ee is of the opinion, and so states in writing, that a change of theManager is desirable in the interests of the Unitholders; or• the MAS directs the <strong>Trust</strong>ee to remove the Manager.Where the Manager is removed on the basis that a change of the Manager is desirable in the interests ofthe Unitholders, the Manager has a right under the <strong>Trust</strong> Deed to refer the matter to arbitration. Anydecision made pursuant to such arbitration proceedings is binding upon the Manager, the <strong>Trust</strong>ee and allUnitholders.CORPORATE GOVERNANCE OF THE MANAGERThe following outlines the main corporate governance practices of the Manager.Board of Directors of the ManagerThe Board is responsible for the overall corporate governance of the Manager including establishing goalsfor management and monitoring the achievement of these goals. The Manager is also responsible for thestrategic business direction and risk management of LMIR <strong>Trust</strong>. All Board members will participate inmatters relating to corporate governance, business operations and risks, financial performance, and thenomination and review of Directors. The Board will establish a framework for the management of theManager and LMIR <strong>Trust</strong>, including a system of internal audit and control and a business risk managementprocess. The Board consists of seven members, three of whom are Independent Directors. None of theDirectors has entered into any service contract directly with LMIR <strong>Trust</strong>.The composition of the Board is determined using the following principles:• the Chairman of the Board should be a non-executive Director;• the Board should comprise Directors with a broad range of commercial experience including expertisein funds management, law, finance and the property industry; and• at least one-third of the Board should comprise independent Directors.The composition will be reviewed regularly to ensure that the Board has the appropriate mix of expertiseand experience.Audit CommitteeThe Audit Committee is appointed by the Board from among the Directors and is composed of threemembers, a majority of whom (including the Chairman of the Audit Committee) are required to beindependent Directors. As at the date of this Prospectus, the members of the Audit Committee are Mr TanBar Tien, Mr Lim Ho Seng and Mr Lok Vi Ming. Mr Lim Ho Seng has been appointed as the Chairman of theAudit Committee. All of them are independent Directors and resident in Singapore.The role of the Audit Committee is to monitor and evaluate the effectiveness of the Manager’s internalcontrols. The Audit Committee will review the quality and reliability of information prepared for inclusion infinancial reports, and will be responsible for the nomination of external auditors and reviewing theadequacy of external audits in respect of cost, scope and performance.The Audit Committee’s responsibilities also include:• monitoring the procedures established to regulate Related Party Transactions, including ensuringcompliance with the provisions of the Listing Manual relating to “interested person transactions” (asdefined therein) and the provisions of the Property Funds Guidelines relating to “interested party201
The Manager and corporate governancetransactions” (as defined therein) (both such types of transactions constituting “Related PartyTransactions”);• monitoring the procedures in place to ensure compliance with applicable legislation, the Listing Manualand the Property Funds Guidelines;• reviewing arrangements by which employees of LMIR <strong>Trust</strong> may, in confidence, raise concerns aboutpossible improprieties in matters of financial reporting or other matters and ensuring that arrangementsare in place for the independent investigation of such matters and for appropriate follow-up action;• examining the effectiveness of financial, operating and compliance controls and risk managementpolicies and systems at least annually;• reviewing external audit reports to ensure that where deficiencies in internal controls have beenidentified, appropriate and prompt remedial action is taken by the management;• reviewing the adequacy of external audits in respect of cost, scope and performance;• making recommendations to the Board on the appointment, reappointment and removal of externalauditors and approving the remuneration and terms of engagement of external auditors;• reviewing, on an annual basis, the independence and objectivity of the external auditors and where theexternal auditors also provide a substantial volume of non-audit services to LMIR <strong>Trust</strong>, keeping thenature and extent of such services under review, seeking to balance the maintenance of objectivity andvalue for money;• reviewing internal audit reports annually to ascertain that the guidelines and procedures established tomonitor Related Party Transactions have been complied with;• ensuring that the internal audit function is adequately resourced and has appropriate standing withLMIR <strong>Trust</strong>;• ensuring, at least annually, the adequacy of the internal audit function;• meeting with external and internal auditors, without the presence of the executive officers of theManager, at least on an annual basis;• reviewing the significant financial reporting issues and judgements so as to ensure the integrity of thefinancial statements of LMIR <strong>Trust</strong> and any formal announcements relating to LMIR <strong>Trust</strong>’s financialperformance;• investigating any matters within the Audit Committee’s terms of reference, whenever it deemsnecessary; and• reporting to the Board on material matters, findings and recommendations.Dealings in UnitsThe <strong>Trust</strong> Deed requires each Director to give notice to the Manager of his acquisition of Units or ofchanges in the number of Units which he holds or in which he has an interest, within two Business Daysafter such acquisition or the occurrence of the event giving rise to changes in the number of Units which heholds or in which he has an interest (see “The Formation and Structure of LMIR <strong>Trust</strong>—The<strong>Trust</strong> Deed—Directors’ Declaration of Unitholdings”).All dealings in Units by Directors will be announced via SGXNET, with the announcement to be posted onthe Internet at the SGX-ST website http://www.sgx.comThe Directors and employees of the Manager are encouraged, as a matter of internal policy, to hold Unitsbut are prohibited from dealing in the Units:• in the period commencing one month before the public announcement of LMIR <strong>Trust</strong>’s annual resultsand (where applicable) property valuations and two weeks before the public announcement of LMIR<strong>Trust</strong>’s quarterly results, and ending on the date of announcement of the relevant results or, as the casemay be, property valuations; and• at any time while in possession of price sensitive information.202
The Manager and corporate governanceThe Directors and employees of the Manager are also prohibited from communicating price sensitiveinformation to any person.In addition, the Manager has given an undertaking to the MAS that it will announce to the SGX-ST theparticulars of its holdings in the Units and any changes thereto within two Business Days after the date onwhich it acquires or disposes of any Units, as the case may be. The Manager has also undertaken that itwill not deal in the Units in the period commencing one month before the public announcement of LMIR<strong>Trust</strong>’s annual results and (where applicable) property valuations and two weeks before the publicannouncement of LMIR <strong>Trust</strong>’s quarterly results, and ending on the date of announcement of therelevant results or, as the case may be, property valuations.Management of business riskThe Board will meet quarterly or more often if necessary and will review the financial performance of theManager and LMIR <strong>Trust</strong> against a previously approved budget. The Board will also review the businessrisks of LMIR <strong>Trust</strong>, examine liability management and will act upon any comments from the auditors ofLMIR <strong>Trust</strong>.The Manager has appointed experienced and well-qualified management personnel to handle theday-to-day operations of the Manager and LMIR <strong>Trust</strong>. In assessing business risk, the Board willconsider the economic environment and risks relevant to the property industry. It will reviewmanagement reports and feasibility studies on individual development projects prior to approvingmajor transactions. The management will meet regularly to review the operations of the Manager andLMIR <strong>Trust</strong> and discuss any disclosure issues.Conflicts of interestThe Manager has also instituted the following procedures to deal with conflicts of interest issues:• The Manager will not manage any other REIT which invests in the same type of properties as LMIR<strong>Trust</strong>.• All executive officers will be employed by the Manager.• All resolutions in writing of the Directors in relation to matters concerning LMIR <strong>Trust</strong> must be approvedby a majority of the Directors, including at least one Independent Director.• At least one-third of the Board shall comprise Independent Directors.• In respect of matters in which the Sponsor and/or its subsidiaries have an interest, direct or indirect, anynominees appointed by the Sponsor and/or its subsidiaries to the Board to represent its/their interestswill abstain from voting. In such matters, the quorum must comprise a majority of the IndependentDirectors and must exclude nominee Directors of the Sponsor and/or its subsidiaries.• In respect of matters in which MIPL and/or its subsidiaries have an interest, direct or indirect, anynominees appointed by MIPL and/or its subsidiaries to the Board to represent its/their interests willabstain from voting. In such matters, the quorum must comprise a majority of the Independent Directorsand must exclude nominee Directors of MIPL and/or its subsidiaries.• It is also provided in the <strong>Trust</strong> Deed that if the Manager is required to decide whether or not to take anyaction against any person in relation to any breach of any agreement entered into by the <strong>Trust</strong>ee for andon behalf of LMIR <strong>Trust</strong> with a related party of the Manager, the Manager shall be obliged to consult witha reputable law firm (acceptable to the <strong>Trust</strong>ee) which shall provide legal advice on the matter. If the saidlaw firm is of the opinion that the <strong>Trust</strong>ee, on behalf of LMIR <strong>Trust</strong>, has a prima facie case against theparty allegedly in breach under such agreement, the Manager shall be obliged to take appropriateaction in relation to such agreement. The Directors will have a duty to ensure that the Manager socomplies. Notwithstanding the foregoing, the Manager shall inform the <strong>Trust</strong>ee as soon as it becomesaware of any breach of any agreement entered into by the <strong>Trust</strong>ee for and on behalf of LMIR <strong>Trust</strong> with arelated party of the Manager and the <strong>Trust</strong>ee may take such action as it deems necessary to protect therights of Unitholders and/or which is in the interests of Unitholders. Any decision by the Manager not to203
The Manager and corporate governancetake action against a related party of the Manager shall not constitute a waiver of the <strong>Trust</strong>ee’s right totake such action as it deems fit against such related party.RELATED PARTY TRANSACTIONSThe Manager’s internal control systemThe Manager will establish an internal control system to ensure that all future Related Party Transactions• will be undertaken on normal commercial terms; and• will not be prejudicial to the interests of LMIR <strong>Trust</strong> and the Unitholders.As a general rule, the Manager must demonstrate to its Audit Committee that such transactions satisfy theforegoing criteria, which may entail obtaining (where practicable) quotations from parties unrelated to theManager, or obtaining one or more valuations from independent professional valuers (in accordance withthe Property Funds Guidelines).The Manager will maintain a register to record all Related Party Transactions which are entered into byLMIR <strong>Trust</strong> and the bases, including any quotations from unrelated parties and independent valuationsobtained to support such bases, on which they are entered into.The Manager will also incorporate into its internal audit plan a review of all Related Party Transactionsentered into by LMIR <strong>Trust</strong>. The Audit Committee shall review the internal audit reports at least twice a yearto ascertain that the guidelines and procedures established to monitor Related Party Transactions havebeen complied with. In addition, the <strong>Trust</strong>ee will also have the right to review such audit reports to ascertainthat the Property Funds Guidelines have been complied with. Furthermore, the following procedures willbe undertaken:• transactions (either individually or as part of a series or if aggregated with other transactions involvingthe same related party during the same financial year) equal to or exceeding S$100,000 in value butbelow 3.0% of the value of LMIR <strong>Trust</strong>’s net tangible assets will be subject to review by the AuditCommittee at regular intervals;• transactions (either individually or as part of a series or if aggregated with other transactions involvingthe same related party during the same financial year) equal to or exceeding 3.0% but below 5.0% of thevalue of LMIR <strong>Trust</strong>’s net tangible assets will be subject to the review and prior approval of the AuditCommittee. Such approval shall only be given if the transactions are on normal commercial terms andare consistent with similar types of transactions made by the <strong>Trust</strong>ee with third parties which areunrelated to the Manager; and• transactions (either individually or as part of a series or if aggregated with other transactions involvingthe same related party during the same financial year) equal to or exceeding 5.0% of the value of LMIR<strong>Trust</strong>’s net tangible assets will be reviewed and approved prior to such transactions being entered into,on the basis described in the preceding paragraph, by the Audit Committee which may, as it deems fit,request advice on the transaction from independent sources or advisers, including the obtaining ofvaluations from independent professional valuers. Furthermore, under the Listing Manual and theProperty Funds Guidelines, such transactions would have to be approved by the Unitholders at ameeting of Unitholders duly convened and held in accordance with the provisions of the <strong>Trust</strong> Deed.Where matters concerning LMIR <strong>Trust</strong> relate to transactions entered into or to be entered into by the<strong>Trust</strong>ee for and on behalf of LMIR <strong>Trust</strong> with a related party of the Manager (which would include relevantassociates thereof) or LMIR <strong>Trust</strong>, the <strong>Trust</strong>ee is required to consider the terms of such transactions tosatisfy itself that such transactions are• conducted on normal commercial terms;• not prejudicial to the interests of LMIR <strong>Trust</strong> and the Unitholders; and• in accordance with all applicable requirements of the Property Funds Guidelines and/or the ListingManual relating to the transaction in question.204
The Manager and corporate governanceFurther, the <strong>Trust</strong>ee has the discretion under the <strong>Trust</strong> Deed to decide whether or not to enter into atransaction involving a related party of the Manager or LMIR <strong>Trust</strong>. If the <strong>Trust</strong>ee is to sign any contract witha related party of the Manager or LMIR <strong>Trust</strong>, the <strong>Trust</strong>ee will review the contract to ensure that it complieswith the requirements relating to interested party transactions in the Property Funds Guidelines (as maybe amended from time to time) and the provisions of the Listing Manual relating to interested persontransactions (as may be amended from time to time) as well as such other guidelines as may from time totime be prescribed by the MAS and the SGX-ST to apply to REITs.Save for the transactions described under “—Related Party Transactions in connection with the setting upof LMIR <strong>Trust</strong> and the Offering” and “—Exempted Agreements”, LMIR <strong>Trust</strong> will comply with Rule 905 ofthe Listing Manual by announcing any interested person transaction in accordance with the Listing Manualif such transaction, by itself or when aggregated with other interested person transactions entered into withthe same interested person during the same financial year, is 3.0% or more of LMIR <strong>Trust</strong>’s latest auditednet tangible assets.The aggregate value of all Related Party Transactions which are subject to Rules 905 and 906 of theListing Manual in a particular financial year will be disclosed in LMIR <strong>Trust</strong>’s annual report for that financialyear.Role of the Audit Committee for Related Party TransactionsThe Audit Committee will periodically review all Related Party Transactions to ensure compliance with theManager’s internal control system and with the relevant provisions of the Listing Manual as well as theProperty Funds Guidelines. The review will include the examination of the nature of the transaction and itssupporting documents or such other data deemed necessary by the Audit Committee.If a member of the Audit Committee has an interest in a transaction, he is to abstain from participating inthe review and approval process in relation to that transaction.Related Party Transactions in connection with the setting up of LMIR <strong>Trust</strong> and the OfferingThe <strong>Trust</strong>ee, on behalf of LMIR <strong>Trust</strong>, has entered into a number of transactions with the Manager andcertain related parties of the Manager in connection with the setting up of LMIR <strong>Trust</strong> and the Offering.These Related Party Transactions are as follows:• The <strong>Trust</strong>ee has entered into the <strong>Trust</strong> Deed with the Manager. The terms of the <strong>Trust</strong> Deed aregenerally described in “The Formation and Structure of LMIR <strong>Trust</strong>”.• The <strong>Retail</strong> Space <strong>Indonesia</strong>n SPCs, which will be indirectly owned by the <strong>Trust</strong>ee as at the Listing Date,have entered into the Master Lease Agreements with the Master Lessee for the operation,maintenance, management and marketing of the <strong>Retail</strong> Spaces. These agreements are moreparticularly described in “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the Master Lease Agreements”.The Manager considers that the Master Lessee has the necessary expertise and resources to performthe property management, lease management and marketing services for the <strong>Retail</strong> Spaces.Based on its experience, expertise and knowledge of contracts, the Manager believes that the MasterLease Agreements were made on normal commercial terms and are not prejudicial to the interests ofLMIR <strong>Trust</strong> and the Unitholders.• The <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs, which will be indirectly owned by the <strong>Trust</strong>ee as at the Listing Date,have entered into the Operating Costs Agreements with the Operating Companies. This agreement ismore particularly described in “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the Operating Costs Agreements”.• The <strong>Trust</strong>ee has entered into the Singapore SPC Share Purchase Agreements with the Vendors for theacquisition of all the ordinary shares and redeemable preference shares in each of the Target SingaporeSPCs. These agreements are more particularly described in “Certain Agreements Relating to LMIR<strong>Trust</strong> and the Properties—Description of the Singapore SPC Share Purchase Agreements”. The<strong>Trust</strong>ee has also entered into the Deeds of Indemnity with <strong>Lippo</strong> Capital Limited pursuant to which205
The Manager and corporate governance<strong>Lippo</strong> Capital Limited will, subject to certain conditions, indemnify the <strong>Trust</strong>ee against liabilities ordamage suffered by the <strong>Trust</strong>ee arising from any of the Singapore SPC Share Purchase Agreements.These agreements are more particularly described in “Certain Agreements Relating to LMIR <strong>Trust</strong> andthe Properties—Description of the Deeds of Indemnity”.• The <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs, which will be indirectly owned by the <strong>Trust</strong>ee as at the Listing Date,have entered into the Existing Property Management Agreements with the Property Manager for theoperation, management, maintenance and marketing of the <strong>Retail</strong> <strong>Malls</strong>. These agreements are moreparticularly described in “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Descriptionof the Existing Property Management Agreements”.The Manager considers that the Property Manager has the necessary expertise and resources toperform the retail management, lease management and marketing services for the <strong>Retail</strong> <strong>Malls</strong>.Based on its experience, expertise and knowledge of contracts, the Manager believes that the ExistingProperty Management Agreements were made on normal commercial terms and are not prejudicial tothe interests of LMIR <strong>Trust</strong> and the Unitholders.• The <strong>Trust</strong>ee, the Manager and the Property Manager have entered into the Master PropertyManagement Agreement pursuant to which the Property Manager was appointed to operate,maintain, manage and market all the properties of LMIR <strong>Trust</strong> located in <strong>Indonesia</strong> acquired afterthe Listing Date, subject to the overall management of the Manager. This agreement is more particularlydescribed in “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the MasterProperty Management Agreement”.The Manager considers that the Property Manager has the necessary expertise and resources toperform the operation, maintenance, management and marketing services for the properties of LMIR<strong>Trust</strong> located in <strong>Indonesia</strong> acquired after the Listing Date.Based on its experience, expertise and knowledge of contracts, the Manager believes that the MasterProperty Management Agreement was made on normal commercial terms and is not prejudicial to theinterests of LMIR <strong>Trust</strong> and the Unitholders.Save as disclosed in this Prospectus, the <strong>Trust</strong>ee has not entered into any other transactions with theManager or any related party of the Manager or the Property Manager in connection with the setting up ofLMIR <strong>Trust</strong>.Exempted agreementsThe Master Lease Agreements, the Operating Costs Agreements, the Existing Property ManagementAgreements and the Master Property Management Agreement, each of which constitutes a Related PartyTransaction, is deemed to have been specifically approved by the Unitholders upon subscription for theUnits and are therefore not subject to Rules 905 and 906 of the Listing Manual to the extent that there is nosubsequent change to the rates and/or bases of the fees charged thereunder which will adversely affectLMIR <strong>Trust</strong>. However, the renewal of such agreements will be subject to Rules 905 and 906 of the ListingManual.Future Related Party TransactionsAs a REIT, LMIR <strong>Trust</strong> is regulated by the Property Funds Guidelines and the Listing Manual. The PropertyFunds Guidelines regulate, among other things, transactions entered into by the <strong>Trust</strong>ee (for and on behalfof LMIR <strong>Trust</strong>) with an interested party relating to LMIR <strong>Trust</strong>’s acquisition of assets from or sale of assetsto an interested party, LMIR <strong>Trust</strong>’s investment in securities of or issued by an interested party and theengagement of an interested party as property management agent or marketing agent for LMIR <strong>Trust</strong>’sproperties. Depending on the materiality of transactions entered into by LMIR <strong>Trust</strong> for the acquisition ofassets from, the sale of assets to or the investment in securities of or issued by, an interested party, theProperty Funds Guidelines may require that an immediate announcement to the SGX-ST be made, andmay also require that the approval of the Unitholders be obtained.The Listing Manual regulates all interested person transactions, including transactions already governedby the Property Funds Guidelines. Depending on the materiality of the transaction, LMIR <strong>Trust</strong> may be206
The Manager and corporate governancerequired to make a public announcement of the transaction (Rule 905 of the Listing Manual), or to make apublic announcement of and to obtain Unitholders’ prior approval for the transaction (Rule 906 of theListing Manual). The <strong>Trust</strong> Deed requires the <strong>Trust</strong>ee and the Manager to comply with the provisions of theListing Manual relating to interested person transactions as well as such other guidelines relating tointerested person transactions as may be prescribed by the SGX-ST to apply to REITs.The Manager may seek a general annual mandate from the Unitholders pursuant to Rule 920(1) of theListing Manual for recurrent transactions of a revenue or trading nature or those necessary for itsday-to-day operations, including a general mandate in relation to leases and/or licence agreements to beentered into with interested persons. All transactions conducted under such general mandate for therelevant financial year will not be subject to the requirements under Rules 905 and 906 of the ListingManual. In seeking such a general annual mandate, the <strong>Trust</strong>ee will appoint an independent financialadviser (without being required to consult the Manager) pursuant to Rule 920(1)(b)(v) of the Listing Manualto render an opinion as to whether the methods or procedures for determining the transaction prices of thetransactions contemplated under the annual general mandate are sufficient to ensure that suchtransactions will be carried out on normal commercial terms and will not be prejudicial to the interestsof LMIR <strong>Trust</strong> and the Unitholders.The Property Funds Guidelines and the Listing Manual requirements would have to be complied with inrespect of a proposed transaction which is prima facie governed by both sets of rules. Where mattersconcerning LMIR <strong>Trust</strong> relate to transactions entered or to be entered into by the <strong>Trust</strong>ee for and on behalfof LMIR <strong>Trust</strong> with a related party (either an “interested party” under the Property Funds Guidelines or an“interested person” under the Listing Manual) of the Manager or LMIR <strong>Trust</strong>, the <strong>Trust</strong>ee is required toensure that such transactions are conducted in accordance with applicable requirements of the PropertyFunds Guidelines and/or the Listing Manual relating to the transaction in question.The Manager is not prohibited by either the Property Funds Guidelines or the Listing Manual fromcontracting or entering into any financial, banking or any other type of transaction with the <strong>Trust</strong>ee (whenacting other than in its capacity as trustee of LMIR <strong>Trust</strong>) or from being interested in any such contract ortransaction, provided that any such transaction shall be on normal commercial terms and is not prejudicialto the interests of LMIR <strong>Trust</strong> and the Unitholders. The Manager shall not be liable to account to the <strong>Trust</strong>eeor to the Unitholders for any profits or benefits or other commissions made or derived from or in connectionwith any such transaction. The <strong>Trust</strong>ee shall not be liable to account to the Manager or to the Unitholdersfor any profits or benefits or other commission made or derived from or in connection with any suchtransaction.207
The SponsorIn July 2004, the Sponsor was formed from a merger of eight property-related companies. The Sponsor isan internationally recognised corporation and is also the largest listed property company in <strong>Indonesia</strong>,based on its market capitalisation on the JSX of Rp. 10,609.2 billion (approximately S$1.8 billion) based onthe closing price of Rp. 1,790.0 on the JSX as at 18 October 2007. The Sponsor develops residential,commercial and retail properties, and light industrial areas throughout <strong>Indonesia</strong>, with the majority of itscurrent developments based in and around Greater Jakarta.The Sponsor’s property portfolio comprises townships and residential developments, commercial andretail development projects, healthcare, hospitality and infrastructure. It has three townships and oneresidential cluster as well as eight developed commercial and retail centres. It manages four hospitals, oneof which it owns. In addition, it owns three hotels, two of which it also manages.The merger strengthened recurring cash flows, achieved economies of scale and reduced exposure tobusiness cycles. As a result of the merger, all assets and liabilities of the merged companies became theSponsor’s assets and liabilities. The effect of the merger was to expand the Housing and LandDevelopment business segment as well as to increase the Sponsor’s market capitalisation. Since themerger, the Sponsor has established itself as the largest property developer in <strong>Indonesia</strong> with a strongrecurring income base.The Sponsor is listed on the JSX and the SSX in <strong>Indonesia</strong>. It is also included in the LQ 45 Index, which is acapitalisation-weighted index of the 45 most heavily traded stocks on the JSX.In November 2005, Euromoney conferred two awards on the Sponsor, naming it the “Best PropertyDeveloper in <strong>Indonesia</strong>” as well as placing it among the top 10 property developers in the Asia-Pacificregion. Subsequently in July 2006, the Sponsor received, from Businessweek Magazine, the “<strong>Indonesia</strong>’sMost Admired Company (IMAC) 2006” award in the category of property developers. The methodologiesapplied by Euromoney on the rating survey were (i) creativity of the developer in composing product andability to create investment opportunities, (ii) quality of the products, and (iii) financial ability. Inputs fromcommercial banks, investment banks and real estate advisers were taken into consideration whendetermining the award recipient.The Sponsor is staffed by experienced professionals, all of whom have in-depth property managementand operating experience.208
The SponsorThe business structure of the Sponsor comprises the following three main aspects:HEALTHCAREThe Sponsor owns Siloam Hospitals <strong>Lippo</strong> Cikarang and manages four hospitals being, Siloam Hospitals<strong>Lippo</strong> Cikarang, Siloam Hospitals <strong>Lippo</strong> Karawaci, Siloam Hospitals West Jakarta and Siloam HospitalsSurabaya, with a total 591 operational beds, and a maximum bed capacity of 835, located in Jakarta,Greater Jakarta and Surabaya. Specialist medical services offered include complex surgical procedures,laboratory, radiology and imaging, general healthcare and emergency services. In its hospitals, theSponsor has developed “centres of excellence” 1 in various areas of healthcare which are recognised asproviding premium healthcare services in <strong>Indonesia</strong>.HOSPITALITY AND INFRASTRUCTUREThe Sponsor manages hotel operations and operates a number of restaurants and other facilities locatedaround <strong>Indonesia</strong>. The Sponsor has developed over 280 km of roads, water treatment plants, trafficcontrol services, in addition to four hotels with a total of over 800 rooms and a 2,125 sq m food court. TheSponsor also provides quality urban management services such as security, water and sewage treatment,daily garbage collection, health and hygiene services, landscape, roads and drains maintenance andpublic transportation services to the residents of <strong>Lippo</strong> Karawaci, <strong>Lippo</strong> Cikarang and Tanjung Bungaurban developments. This provision of high quality, privately operated and commercially-run urbanmanagement is unique in <strong>Indonesia</strong>.HOUSING AND LAND DEVELOPMENTThis business aspect deals with the urban development of residential, commercial, retail and industrial realestate. Starting in 1993 with the development of the <strong>Lippo</strong> Karawaci urban development and subsequent<strong>Lippo</strong> Cikarang and Tanjung Bunga urban developments, the Sponsor has pioneered the development of“Edge Cities” in <strong>Indonesia</strong>. “Edge Cities” are designed and constructed with all necessary infrastructure toestablish self-contained cities beyond the boundaries of larger cities, in the case of <strong>Lippo</strong> Karawaci and<strong>Lippo</strong> Cikarang, to the west and east of Jakarta, respectively. The Sponsor is internationally recognisedand has won awards for such “Edge Cities” developments. These three urban developments have acombined population of more than 70,000 residents, 20,000 homes and employ more than 120,000workers. In addition, the Sponsor owns eight commercial and retail centres, amounting to over250,000 sq m of saleable area and 40,000 sq m of retail space available for leasing.The Sponsor’s total revenue was Rp. 1,905.0 billion (approximately S$330.2 million) in the financial yearended 31 December 2006. Its market capitalisation on the JSX was Rp. 10,609.2 billion (approximatelyS$1.8 billion) based on the closing price per ordinary share on the JSX of Rp. 1,790.0 as at 18 October2007. 50.0% of its revenue in 2006 was derived from recurring income (including rental income from itsresidential, commercial and retail, and revenues from the operation of five medical facilities and operationof its hotels. 50.0% of its revenue in 2006 was derived from development income (including thedevelopment and sale of residential, commercial and retail and light industrial properties).The table below, which was prepared based on <strong>Indonesia</strong>n generally accepted accounting principles, setsforth the unaudited consolidated revenues, generated by each of the Sponsor’s Housing and LandDevelopment, Healthcare and Hospitals as well as Hospitality and Infrastructure business segments in theperiod indicated.The consolidated revenues shown in the table below have been translated for convenience and as amatter of arithmetical computation only. The consolidated revenue is translated at an average rate ofRp. 5,770 per S$1.00. Such translations should not be construed as a representation that the Singaporedollar amounts could be converted into <strong>Indonesia</strong>n Rupiah at the above rate or other rate.1 “Centres of excellence” is a term used by the Sponsor to describe a particular area of medicalspecialisation, proficiency and excellence, with the relevant specialist doctors, nursing staff andstate-of-the-art medical equipment and facilities, at a hospital.209
The SponsorFinancial year ended 31 December 2006(Rp. millions) (S$’000) (%)Housing and Land Development . . . . . . . . . . . . . . . . . . . . . . . . . . 952,246 165,034 50.0Healthcare. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 573,496 99,393 30.1Hospitality and Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379,588 65,786 19.9Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,905,330 330,213 100.0A formal credit rating on the Sponsor has been carried out by various credit rating agencies. The Sponsorwas rated “B1” by Moody’s and “B+” by Standard & Poor’s.As at 31 March 2007, the Sponsor has completed eight commercial and retail development projects with atotal GFA of 581,740 sq m and has six commercial and retail development projects under developmentwith an estimated total GFA of approximately 483,060 sq m. Significant projects that have already beendeveloped or are currently being developed by the Sponsor include:• <strong>Lippo</strong> Karawaci township, located in <strong>Lippo</strong> Karawaci, Greater Jakarta (see profile below);• <strong>Lippo</strong> Cikarang township located in <strong>Lippo</strong> Cikarang, Greater Jakarta (see profile below);• Tanjung Bunga located in Makassar (see profile below);• Puncak Resort International, a 60-ha development located in Cipanas, West Java, consisting of480 villas and unique sports, recreation and meeting facilities;• Metropolis Town Square, a three-level strata mall located in Tangerang, an industrial and manufacturingcity in Greater Jakarta;• Mall WTC Matahari, a five-level strata mall located within the proximity of the Bumi Serpong Damairesidential estate, the largest residential estate in Greater Jakarta;• GTC Makassar, a four-level strata mall located in Makassar, South Sulawesi;• Malang Town Square, a three-level strata mall located in Malang, the second largest city in the EastJava province;• Depok Town Square, a five-level strata mall located in Depok and next to the University of <strong>Indonesia</strong>, thebiggest university in Greater Jakarta;• Grand Palladium Medan, a six-level strata mall located in Medan, a city renowned as a growingcommercial centre in the North Sumatra province;• City of Tomorrow, a four-level retail mall, five-storey office tower, 17-storey residential tower and eightstoreyhotel, located in Surabaya, East Java;• Puri “Paragon City”, a mixed-used development located in West Jakarta comprising a retail mall,residential apartments, a school, and a hotel;• Kemang Village located in South Jakarta, offering enjoyable views of both the river and the scenicPangeran Antasari Street;• Bellanova Country Mall, a one-level strata mall opened in July 2005 and located in Sentul, GreaterJakarta;• Binjai Supermall, a two-level retail mall located in Binjai, North Sumatra (see “Business andProperties—Acquisition Pipeline”); and• Pejaten Mall, a retail mall located in South Jakarta (see “Business and Properties—AcquisitionPipeline”).The <strong>Lippo</strong> Karawaci urban development was the Sponsor’s first significant project which commencedconstruction in 1993 and is located approximately 30 km west of central Jakarta. The developmentcurrently has a population of approximately 40,000 residents and has been developed on an area ofapproximately 1,032 ha of land. It includes 11,257 homes, shophouses and four apartment/condominiumtowers with a total of 1,146 units. The development has become a regional centre for office properties,210
The Sponsorshopping, entertainment and recreation (with a five-star hotel, a resort and a 67-ha golf course). Notableestablishments within the <strong>Lippo</strong> Karawaci urban development include Siloam Hospitals <strong>Lippo</strong> Karawaci,the Pelita Harapan University and an internationally accredited English language educational institutionoffering preschool through secondary school facilities. More than 108 km of roads were built by theSponsor within the development.The Sponsor has developed and operated urban developments at <strong>Lippo</strong> Cikarang located in the east ofJakarta and Tanjung Bunga in Makassar, respectively. <strong>Lippo</strong> Cikarang was launched in 1993 and TanjungBunga in 1996. The Sponsor also developed the Royal Serpong Village, a gated micro-suburb at Serponglocated to the west of Jakarta, which includes a secure and exclusive 150-home residential development.In 2002, the Sponsor launched its first retail strata-titled project, Mall WTC Matahari, a retail shopping malllocated in Greater Jakarta. Since that time, it has developed the retail and commercial properties ofMetropolis Town Square in Modernland, Greater Jakarta; Depok Town Square in Depok, Greater Jakarta;Malang Town Square in Malang, East Java; GTC Makassar in Makassar, South Sulawesi and MedanGrand Palladium Medan in Medan, North Sumatra.As at 31 December 2006, the Sponsor has approximately 2,046 ha of land available for future townshipdevelopment, in addition to land banks for future commercial retail development, which is among thelargest landbanks among all <strong>Indonesia</strong>n property companies. This is anticipated to be sufficient for theSponsor’s planned development projects for the next 15 to 20 years. The significant size of its landbankprovides the Sponsor with the flexibility to develop or divest areas of land to take advantage of cyclicalproperty market conditions and reduces its exposure to the complexities of land acquisitions in <strong>Indonesia</strong>.The Sponsor has formulated the following strategies for its property business, especially its retail propertybusiness:• Expansion of portfolios in strategic locations. For the past three years, the Sponsor has acquired keysites in strategic locations to build retail malls and other mixed use developments such as residentialtowers, hospitals and hotels. These developments include Puri Paragon in West Jakarta, KemangVillage in South Jakarta and Kuta Beach Mall in Bali. The Sponsor will continue to seek opportunities toacquire new sites for future developments.• Continuing strong relations with business partners. The Sponsor has established and continues tomaintain strong relations with its network of business partners and other business groups and hasgained their trust and confidence.• Experienced key personnel. The Sponsor has strong industry experience and established trackrecord. Its management team, through a combination of local knowledge and global experience, willcontinue to strive towards international best practice by attracting and developing its key people.• Asset enhancement. The Sponsor has planned ongoing asset enhancements on the malls which itowns and/or manages. This includes the constant upkeep and improvement of all <strong>Retail</strong> <strong>Malls</strong>. TheSponsor is aware of the need to continuously monitor and improve retail properties in a dynamic globalenvironment.• Leverage its broad based property development experience and platform. The Sponsor will leverageits wide ranging property development capabilities and platform to consistently source for new retaildevelopments and third party acquisition opportunities.• Tenant relationship. The Sponsor values its tenants as key stakeholders in the growth and success ofitself, its subsidiaries, their business associates and controlled affiliates. It has established and willcontinue to build greater relationships to drive both the Sponsor’s as well as LMIR <strong>Trust</strong>’s success.(See “Business and Properties—Acquisition Pipeline”.)211
The SponsorLOCATION OF DEVELOPMENTSThe following map shows, as at 31 December 2006, the geographic distribution of the Sponsor’sdevelopments in <strong>Indonesia</strong>. Its operations are located in diverse and the more economicallydeveloped regions of <strong>Indonesia</strong>.The following map shows, as at 31 December 2006, the geographic distribution of the Sponsor’sdevelopments in Greater Jakarta. The Sponsor’s significant presence in the property market inJakarta and the surrounding areas demonstrates its belief that these areas offer high consumerdemand which are currently under-served.212
The SponsorKEY SHAREHOLDERS OF THE SPONSOR• <strong>Lippo</strong>-related companiesIn 1990, the Riady family founded PT. Tunggal Reksa Kencana which was subsequently merged withLLD, PT. Siloam Healthcare Tbk, PT. Aryaduta Hotels Tbk, PT. Kartika Abadi Sejahtera, PT. SumberWaluyo, PT. Ananggadipa Berkat Mulia and PT. Metropolitan Tatanugraha to form the Sponsor. TheRiady family currently has an indirect shareholding in the Sponsor through various companies,including Pacific Asia Holdings Ltd and other <strong>Lippo</strong>-related companies which collectively hold25.63% of the Sponsor. Pacific Asia Holdings Ltd holds 13.95% of the Sponsor, and none of theother <strong>Lippo</strong>-related companies individually hold more than 5.0% of the Sponsor. The <strong>Lippo</strong>-relatedcompanies are involved in retail, telecommunications, entertainment, multimedia and financialservices. Benefits that the <strong>Lippo</strong>-related companies bring to the Sponsor are synergies with othergroup entities including, but not limited to, Matahari retail stores, hypermarkets and Timezoneamusement centres. These companies take an interest, as shareholders, in the performance of theSponsor.• China Resources group of companiesThe China Resources group of companies beneficially own 15.42% of the Sponsor through asubsidiary, Greatmind Investments Limited. The China Resources group of companies is a Chinesegovernment-owned conglomerate with diverse and substantial investments and operations in the PRC,Hong Kong and Asia. It is also one of the leading property developers in the PRC, having developednearly 50 real estate projects, including the Xidan commercial area, Dongguanying residential area,Jiangongnanli residential area and Sunny Up town. It also has substantial businesses in food products,retailing, infrastructure and trading. Listed entities under its stable include China Resources Enterprise,China Resources Land, China Resources Logic, China Resources Cement Holdings, China ResourcesPower Holdings Co. and China Resources Peoples Telephone Co. The China Resources group ofcompanies benefit the Sponsor by providing its vast experience in property development,institutionalising better business practices and providing support for future capital raising.• CP Inlandsimmobilien Holding Gmbh (“CPIHG”)CPIHG owns 7.75% of the Sponsor beneficially through its wholly-owned subsidiary, Capital BloomInvestment Limited. CPIHG, which is mandated to invest in properties in developing countries, is theinvestment banking real estate arm of Austria’s Raiffeisen Bank, which was established in 1990 and, asat the date of this Prospectus, has 15 subsidiaries in Austria.The public owns the remaining 51.2% of the Sponsor, as at the Listing Date.SOLE FINANCIAL ADVISER TO THE SPONSOR: PT. CIPTADANA CAPITALPT. Ciptadana Capital is an <strong>Indonesia</strong>n-incorporated company which undertakes predominantlyinvestment banking activities, and owns various subsidiary companies dealing in, among others,securities, asset management and multifinance. It is the sole financial adviser to the Sponsor andassists the Sponsor in, among other things, the structuring of the Offering, the provision ofinformation and data relating to the Properties and the Sponsor, and liaising with <strong>Indonesia</strong>nregulators and professional advisers.213
The formation and structure of LMIR <strong>Trust</strong>The <strong>Trust</strong> Deed is a complex document and the following is a summary only and is qualified in its entiretyby, and is subject to, the contents of the <strong>Trust</strong> Deed. <strong>Investor</strong>s should refer to the <strong>Trust</strong> Deed itself toconfirm specific information or for a detailed understanding of LMIR <strong>Trust</strong>. The <strong>Trust</strong> Deed is available forinspection at the registered office of the Manager at 78 Shenton Way, #05-01 <strong>Lippo</strong> Centre, Singapore079120.THE TRUST DEEDLMIR <strong>Trust</strong> is a REITconstituted by the <strong>Trust</strong> Deed which was entered into on 8 August 2007 (as amendedby a first supplemental deed dated 18 October 2007) between the <strong>Trust</strong>ee and the Manager, and isprincipally regulated by the SFA and the CIS Code (including the Property Funds Guidelines).The terms and conditions of the <strong>Trust</strong> Deed shall be binding on each Unitholder (and persons claimingthrough such Unitholder) as if such Unitholder had been a party to the <strong>Trust</strong> Deed and as if the <strong>Trust</strong> Deedcontains covenants by such Unitholder to observe and be bound by the provisions of the <strong>Trust</strong> Deed andan authorisation by each Unitholder to do all such acts and things as the <strong>Trust</strong> Deed may require theManager and/or the <strong>Trust</strong>ee to do.Operational structureLMIR <strong>Trust</strong> is a Singapore-based REIT constituted by the <strong>Trust</strong> Deed. It is established with the principalinvestment objective of owning and investing on a long-term basis in a diversified portfolio of incomeproducingreal estate in <strong>Indonesia</strong> that are primarily used for retail and/or retail-related purposes, and realestate related assets in connection with the foregoing purposes.LMIR <strong>Trust</strong> aims to generate returns for its Unitholders by owning, buying and actively managing suchproperties in line with its investment strategy, including the divestment of any property that is identified bythe Manager at any time, to have limited scope for growth.Subject to the restrictions and requirements in the Property Funds Guidelines and the Listing Manual, theManager is also authorised under the <strong>Trust</strong> Deed to invest in investments which need not be real estate.Although the Manager may use certain financial derivative instruments for hedging purposes or efficientportfolio management provided that such financial derivative instruments are not used to gear LMIR<strong>Trust</strong>’s overall investment portfolio or are intended to be borrowings of LMIR <strong>Trust</strong>, the Manager presentlydoes not have any intention to invest in options, warrants, commodities, futures contracts, unlistedsecurities and precious metals.For further details of the investment objectives and policies of the Manager, see Clause 10.2 of the<strong>Trust</strong> Deed.The Units and UnitholdersThe rights and interests of Unitholders are contained in the <strong>Trust</strong> Deed. Under the <strong>Trust</strong> Deed, these rightsand interests are safeguarded by the <strong>Trust</strong>ee.Each Unit represents an undivided interest in LMIR <strong>Trust</strong>. A Unitholder has no equitable or proprietaryinterest in the underlying assets of LMIR <strong>Trust</strong> and is not entitled to the transfer to it of any asset (or anypart thereof) or of any real estate, any interest in any asset and real estate-related assets (or any partthereof) of LMIR <strong>Trust</strong>. A Unitholder’s right is limited to the right to require due administration of LMIR <strong>Trust</strong>in accordance with the provisions of the <strong>Trust</strong> Deed, including, without limitation, by suit against the<strong>Trust</strong>ee or the Manager.Under the <strong>Trust</strong> Deed, each Unitholder acknowledges and agrees that it will not commence or pursue anyaction against the <strong>Trust</strong>ee or the Manager seeking an order for specific performance or for injunctive reliefin respect of the assets of LMIR <strong>Trust</strong> (or any part thereof), including all its Authorised Investments (asdefined in the <strong>Trust</strong> Deed), and waives any rights it may otherwise have to such relief. If the <strong>Trust</strong>ee or theManager breaches or threatens to breach its duties or obligations to the Unitholder under the <strong>Trust</strong> Deed,the Unitholder’s recourse against the <strong>Trust</strong>ee or the Manager is limited to a right to recover damages or214
The formation and structure of LMIR <strong>Trust</strong>compensation from the <strong>Trust</strong>ee or the Manager in a court of competent jurisdiction, and the Unitholderacknowledges and agrees that damages or compensation is an adequate remedy for such breach orthreatened breach.Further, unless otherwise expressly provided in the <strong>Trust</strong> Deed, a Unitholder may not interfere or seek tointerfere with the rights, powers, authority or discretion of the Manager or the <strong>Trust</strong>ee, exercise any right inrespect of the assets of LMIR <strong>Trust</strong> or any part thereof or lodge any caveat or other notice affecting the realestate assets and real estate-related assets of LMIR <strong>Trust</strong> (or any part thereof), or require that anyAuthorised Investments forming part of the assets of LMIR <strong>Trust</strong> be transferred to such Unitholder.No certificate shall be issued to Unitholders by either the Manager or the <strong>Trust</strong>ee in respect of Units issuedto Unitholders. For so long as LMIR <strong>Trust</strong> is listed, quoted and traded on the SGX-ST and/or any otherRecognised Stock Exchange and the Units have not been suspended from such listing, quotation andtrading for more than 60 consecutive calendar days or de-listed permanently, the Manager shall pursuantto the Depository Services Agreement dated 10 August 2007 entered into between CDP, the Manager andthe <strong>Trust</strong>ee, appoint CDP as the Unit depository for LMIR <strong>Trust</strong>, and all Units issued will be represented byentries in the register of Unitholders kept by the <strong>Trust</strong>ee or the agent appointed by the <strong>Trust</strong>ee in the nameof, and deposited with, CDP as the registered holder of such Units. The Manager or the agent appointed bythe Manager shall issue to CDP not more than 10 Business Days after the issue of Units a confirmationnote confirming the date of issue and the number of Units so issued and, if applicable, also stating that theUnits are issued under the First Lock-Up Period and the Second Lock-Up Period and the expiry date ofsuch lock-up and for the purposes of the <strong>Trust</strong> Deed, such confirmation note shall be deemed to be acertificate evidencing title to the Units issued.The MAS has announced on 8 June 2007 the decision of the Securities Industry Council to extend theambit of the Take-over Code to REITs. While the MAS will be making amendments to the SFA and theTake-over Code, where necessary, to give effect to the extension of the Take-over Code to REITs in duecourse, the Securities Industry Council has recommended that parties engaged in take-over or mergertransactions involving REITs comply with the Take-over Code prior to such amendments.Under the Take-over Code, any person acquiring an interest, either individually or with parties acting inconcert, in 30.0% or more of the Units (being voting units in LMIR <strong>Trust</strong>) may be required to extend a takeoveroffer for the remaining Units in accordance with the Take-over Code. A take-over offer is also requiredto be made if a person holding between 30.0% and 50.0% inclusive of the Units, either individually or inconcert, acquires an additional 1.0% of the Units in any six-month period under the Take-over Code.Issue of UnitsThe following is a summary of the provisions of the <strong>Trust</strong> Deed relating to the issue of Units in LMIR <strong>Trust</strong>.Subject to the following sub-paragraphs (1), (2) and (3) below and to such laws, rules and regulations asmay be applicable, for so long as LMIR <strong>Trust</strong> is listed on the SGX-ST or any other Recognised StockExchange, the Manager may issue Units on any Business Day at an Issue Price equal to the “marketprice”, without the prior approval of Unitholders in a Unitholders’ meeting duly convened and held inaccordance with the provisions of the <strong>Trust</strong> Deed. For this purpose, “market price” shall mean (i) thevolume weighted average price for a Unit for all trades on the SGX-ST, or such other Recognised StockExchange on which the LMIR <strong>Trust</strong> is listed, in the ordinary course of trading on the SGX-STor, as the casemay be, such other Recognised Stock Exchange, for the period of 10 Business Days (or such other periodas may be prescribed by the SGX-STor relevant Recognised Stock Exchange) immediately preceding therelevant Business Day; or (ii) if the Manager believes that the calculation in paragraph (i) above does notprovide a fair reflection of the market price of a Unit, an amount as determined by the Manager and the<strong>Trust</strong>ee (after consultation with a stockbroker approved by the <strong>Trust</strong>ee), as being the fair market price of aUnit.(1) The Manager shall comply with the rules in the Listing Manual in determining the Issue Price perUnit, including the Issue Price per Unit for a rights issue on a pro rata basis to all existing Unitholders,the Issue Price per Unit issued other than by way of a rights issue offered on a pro rata basis to allexisting Unitholders and the Issue Price per Unit for any reinvestment or distribution arrangement.215
The formation and structure of LMIR <strong>Trust</strong>(2) Where Units are issued as full or partial consideration for the acquisition of an Authorised Investmentby LMIR <strong>Trust</strong> in conjunction with an issue of Units to raise cash for the balance of the considerationfor the said Authorised Investment (or part thereof) or to acquire other Authorised Investments inconjunction with the said Authorised Investment, the Manager shall have the discretion to determinethat the Issue Price of a Unit so issued as partial consideration shall be the same as the Issue Pricefor the Units issued in conjunction with an issue of Units to raise cash for the aforesaid purposes.(3) Following the new Rule 887 of the Listing Manual which came into effect on 1 September 2006, theManager may issue new Units without the prior approval of Unitholders in a general meeting if theissue (together with any other issue of Units in the same financial year) would not exceed 10.0% ofthe Units in issue. The scope of the general mandate to be given in a general meeting of theUnitholders is limited to the issue of an aggregate number of additional Units which must not exceed50.0% of the total number of Units in issue, of which the aggregate number of additional Units to beissued other than on a pro rata basis to the existing Unitholders must not exceed 20.0% of the totalnumber of Units in issue. The first financial period of LMIR <strong>Trust</strong> will commence on 8 August 2007,being the date of its constitution, and end on 31 December 2007.By purchasing the Units under the Offering, investors are deemed to have given the Manager theabove general mandate to issue new Units, to be automatically renewed on an annual basis, with theeffective date of renewal being the start of LMIR <strong>Trust</strong>’s financial year, subject to revocation orvariation by ordinary resolution of Unitholders in general meeting pursuant to Rule 887(3)(b) of theListing Manual.If in connection with an issue of a Unit, any requisite payment of the Issue Price for such Unit has not beenreceived by the <strong>Trust</strong>ee before the seventh Business Day after the Unit was agreed to be issued (or suchother date as the Manager and the <strong>Trust</strong>ee may agree), the Manager may cancel its agreement to issuesuch Unit and upon notice being given to the <strong>Trust</strong>ee, such Unit will be deemed never to have been issuedor agreed to be issued. In such an event, the Manager may, at its discretion, charge the investor (and retainthe same for its own account) (i) a cancellation fee of such amount as the Manager may from time to timedetermine to represent the administrative costs involved in processing the application for such Unit, and(ii) an amount (if any) by which the Issue Price of such Unit exceeds the repurchase price applying if suchUnit was requested to have been repurchased or redeemed on the same day.Suspension of issue of UnitsThe Manager or the <strong>Trust</strong>ee may, with the prior written approval of the other and subject to the ListingManual, suspend the issue of Units during:• any period when the SGX-ST or any other relevant Recognised Stock Exchange is closed (otherwisethan for public holidays) or during which dealings are restricted or suspended;• the existence of any state of affairs which, in the opinion of the Manager or the <strong>Trust</strong>ee (as the case maybe), might seriously prejudice the interests of the Unitholders as a whole or the Deposited Property;• any breakdown in the means of communication normally employed in determining the price of anyassets of LMIR <strong>Trust</strong> or the current price thereof on the SGX-STor any other relevant Recognised StockExchange, or when for any reason the prices of any assets of LMIR <strong>Trust</strong> cannot be promptly andaccurately ascertained;• any period when remittance of money which will or may be involved in the realisation of any asset ofLMIR <strong>Trust</strong> or in the payment for such asset of LMIR <strong>Trust</strong> cannot, in the opinion of the Manager, becarried out at normal rates of exchange;• any period where the issuance of Units is suspended pursuant to any order or direction issued by theMAS;• in relation to any general meeting of Unitholders, the period of 48 hours before such general meeting orany adjournment thereof; or216
The formation and structure of LMIR <strong>Trust</strong>• any period when the business operations of the Manager or the <strong>Trust</strong>ee in relation to LMIR <strong>Trust</strong> aresubstantially interrupted or closed as a result of, or arising from, pestilence, acts of war, terrorism,insurrection, revolution, civil unrest, riots, strikes or acts of God.Such suspension shall take effect forthwith upon the declaration in writing thereof by the Manager or the<strong>Trust</strong>ee (as the case may be) and shall terminate on the day following the first Business Day on which thecondition giving rise to the suspension ceases to exist and no other conditions under which suspension isauthorised (as set out above) exists, upon the declaration in writing thereof by the Manager or the <strong>Trust</strong>ee(as the case may be).In the event of any suspension while LMIR <strong>Trust</strong> is listed on the SGX-ST, the Manager shall ensure thatimmediate announcement of such suspension is made through the SGX-ST.Redemption of UnitsThe <strong>Trust</strong> Deed provides that any redemption of Units will be carried out in accordance with the PropertyFunds Guidelines, the rules of the Listing Manual (if applicable) and all other applicable laws andregulations. With respect to any terms which are necessary to carry out such redemption but are notprescribed by the Property Funds Guidelines, the rules in the Listing Manual and any laws and regulations,these terms shall be determined by mutual agreement between the Manager and the <strong>Trust</strong>ee.However, for so long as the Units are listed on the SGX-ST, the Unitholders have no right to request theManager to repurchase or redeem their Units while the Units are listed on the SGX-ST and/or any otherRecognised Stock Exchange. It is intended that the Unitholders may only deal in their listed Units throughtrading on the SGX-ST.Rights and liabilities of UnitholdersThe key rights of Unitholders include rights to:• receive income and other distributions attributable to the Units held;• receive audited accounts and the annual reports of LMIR <strong>Trust</strong>; and• participate in the termination of LMIR <strong>Trust</strong> by receiving a share of all net cash proceeds derived fromthe realisation of the assets of LMIR <strong>Trust</strong> less any liabilities, in accordance with their proportionateinterests in LMIR <strong>Trust</strong>.No Unitholder has a right to require that any asset of LMIR <strong>Trust</strong> be transferred to him.Further, Unitholders cannot give any directions to the <strong>Trust</strong>ee or the Manager (whether at a meeting ofUnitholders duly convened and held in accordance with the provisions of the <strong>Trust</strong> Deed or otherwise) if itwould require the <strong>Trust</strong>ee or the Manager to do or omit doing anything which may result in:• LMIR <strong>Trust</strong> ceasing to comply with applicable laws and regulations; or• the exercise of any discretion expressly conferred on the <strong>Trust</strong>ee or the Manager by the <strong>Trust</strong> Deed orthe determination of any matter which, under the <strong>Trust</strong> Deed, requires the agreement of either or both ofthe <strong>Trust</strong>ee and the Manager.The <strong>Trust</strong> Deed contains provisions that are designed to limit the liability of a Unitholder to the amount paidor payable for any Unit. The provisions seek to ensure that if the Issue Price of the Units held by aUnitholder has been fully paid, no such Unitholder, by reason alone of being a Unitholder, will be personallyliable to indemnify the <strong>Trust</strong>ee or any creditor of LMIR <strong>Trust</strong> in the event that the liabilities of LMIR <strong>Trust</strong>exceed its assets.Under the <strong>Trust</strong> Deed, every Unit carries the same voting rights.Amendments of the <strong>Trust</strong> DeedSubject to the third paragraph below, save where an amendment to the <strong>Trust</strong> Deed has been approved byan Extraordinary Resolution passed at a meeting of Unitholders duly convened and held in accordance217
The formation and structure of LMIR <strong>Trust</strong>with the provisions of the <strong>Trust</strong> Deed, no amendment may be made to the provisions of the <strong>Trust</strong> Deedunless the <strong>Trust</strong>ee certifies, in its opinion, that such amendment:• does not materially prejudice the interests of Unitholders and does not operate to release, to anymaterial extent, the <strong>Trust</strong>ee or the Manager from any responsibility to the Unitholders;• is necessary in order to comply with applicable fiscal, statutory or official requirements (whether or nothaving the force of law); or• is made to remove obsolete provisions or to correct a manifest error.No such amendment shall impose upon any Unitholder any obligation to make any further payments inrespect of his Units or to accept any liability in respect thereof.Notwithstanding any of the above, the Manager and the <strong>Trust</strong>ee may, with the written approval of thecompetent authorities, alter certain provisions in Clause 9 of the <strong>Trust</strong> Deed relating to the use ofderivatives.Meeting of UnitholdersUnder applicable law and the provisions of the <strong>Trust</strong> Deed, LMIR <strong>Trust</strong> will not hold any meetings forUnitholders unless the <strong>Trust</strong>ee or the Manager convenes a meeting or unless not less than 50 Unitholdersor Unitholders representing not less than 10.0% of the total Units issued requests a meeting to beconvened.A meeting of Unitholders when convened may, by Extraordinary Resolution and in accordance with theprovisions of the <strong>Trust</strong> Deed:• sanction any modification, alteration or addition to the <strong>Trust</strong> Deed which shall be agreed by the <strong>Trust</strong>eeand the Manager as provided in the <strong>Trust</strong> Deed;• sanction a supplemental deed increasing the maximum permitted limit or any change in the structure ofthe Manager’s management fees, acquisition fee and divestment fee and the <strong>Trust</strong>ee’s fee;• remove the auditors;• remove the <strong>Trust</strong>ee;• direct the <strong>Trust</strong>ee to take any action pursuant to Section 295 of the SFA; and• delist LMIR <strong>Trust</strong> after it has been listed.A meeting of Unitholders may, also by an Ordinary Resolution of Unitholders present and voting at ameeting of Unitholders convened in accordance with the <strong>Trust</strong> Deed, vote to remove the Manager (with theManager and its related parties being permitted to vote) or the <strong>Trust</strong>ee.Any decision to be made by resolution of Unitholders other than the above shall be made by OrdinaryResolution, unless an Extraordinary Resolution is required by the SFA, the CIS Code or the ListingManual.Except as otherwise provided for in the <strong>Trust</strong> Deed, at least 14 days’ notice (not inclusive of the day onwhich the notice is served or deemed to be served and of the day for which the notice is given) of everymeeting shall be given to the Unitholders in the manner provided in the <strong>Trust</strong> Deed.Each notice shall specify the place, day and hour of the meeting, and the terms of the resolutions to beproposed, and each such notice may, in general, be given by advertisement in the daily press and in writingto each stock exchange on which LMIR <strong>Trust</strong> is listed. Any notice of a meeting called to consider specialbusiness shall be accompanied by a statement regarding the effect of any proposed resolutions in respectof such special business.The quorum at a meeting shall not be less than two Unitholders present in person or by proxy, holding orrepresenting one-tenth in value of all the Units for the time being in issue.Voting at a meeting shall be by a show of hands unless a poll is demanded by the chairman of the meeting,or by five or more Unitholders present in person or by proxy, or holding or representing one tenth in value of218
The formation and structure of LMIR <strong>Trust</strong>all the Units represented at the meeting. Unitholders do not have different voting rights on account of thenumber of votes held by a particular Unitholder. On a show of hands, every Unitholder has one vote. On apoll, every Unitholder has one vote for each Unit of which it is the Unitholder. The <strong>Trust</strong> Deed does notcontain any limitation on non-Singapore resident or foreign Unitholders holding Units or exercising thevoting rights with respect to their unitholdings.Neither the Manager nor any of its Associates shall be entitled to vote or be counted as part of a quorum ata meeting convened to consider a matter in respect of which the Manager or any of its Associates has amaterial interest save for an Ordinary Resolution duly proposed to remove the Manager, in which case, noUnitholder shall be disenfranchised.For so long as the Manager is the manager of LMIR <strong>Trust</strong>, the controlling shareholders (as defined in theListing Manual) of the Manager and of any of its Associates are prohibited from voting or being counted aspart of a quorum for any meeting of Unitholders convened to consider a matter in respect of which therelevant controlling shareholders of the Manager and/or of any of its Associates have a material interest.Substantial holdingsUnder Section 137B of the Securities and Futures Act, Substantial Unitholders will be required to notify the<strong>Trust</strong>ee of their deemed and direct holdings and any subsequent change in the percentage level of suchholdings (rounded down to the next whole number) or their ceasing to hold 5.0% or more of the totalnumber of Units within two Business Days of acquiring such holdings or of such changes or suchcessation.Under Section 137A of the Securities and Futures Act, Substantial Unitholders must also, within the sametime limit, submit such notifications to the SGX-ST.Failure to comply with either Section 137A or Section 137B of the Securities and Futures Act constitutes anoffence and will render a Substantial Unitholder liable to a fine on conviction.Directors’ declaration of UnitholdingsUnder the <strong>Trust</strong> Deed, the Directors are required to give notice to the Manager of their acquisition of Unitsor of changes to the number of Units which they hold or in which they have an interest, within two BusinessDays after such acquisition or the occurrence of the event giving rise to changes in the number of Unitswhich they hold or in which they have an interest, as applicable. Upon such notification, the Manager willpromptly announce such interests or changes to the SGX-ST.A Director is deemed to have an interest in Units in the following circumstances:• Where the Director is the beneficial owner of a Unit (whether directly through a direct Securities Accountor indirectly through a depository agent or otherwise), he is deemed to have an interest in that Unit.• Where a body corporate is the beneficial owner of a Unit and the Director is entitled to exercise or controlthe exercise of not less than 20.0% of the votes attached to the voting shares in the body corporate, he isdeemed to have interest in that Unit.• Where the Director’s spouse or infant child (including step-child and adopted child) has any interest in aUnit, he is deemed to have an interest in that Unit.• Where the Director, his spouse or infant child (including step-child and adopted child):- has entered into a contract to purchase a Unit;- has a right to have a Unit transferred to any of them or to their order, whether the right is exercisablepresently or in the future and whether on the fulfilment of a condition or not;- has the right to acquire a Unit under an option, whether the right is exercisable presently or in thefuture and whether on the fulfilment of a condition or not; or- is entitled (otherwise than by reason of any of them having been appointed a proxy or representativeto vote at a meeting of Unitholders) to exercise or control the exercise of a right attached to a Unit, notbeing a Unit which any of them holds,the Director is deemed to have an interest in that Unit.219
The formation and structure of LMIR <strong>Trust</strong>• Where the property subject to a trust consists of or includes a Unit and the Director knows or hasreasonable grounds for believing that he has an interest under the trust and the property subject to thetrust consists of or includes such Unit, he is deemed to have an interest in that Unit.The <strong>Trust</strong>eeThe trustee of LMIR <strong>Trust</strong> is HSBC Institutional <strong>Trust</strong> Services (Singapore) Limited. The <strong>Trust</strong>ee is acompany incorporated in Singapore and registered as a trust company under the <strong>Trust</strong> Companies Act2005, Chapter 336 of Singapore. It is approved to act as a trustee for authorised collective investmentschemes under the SFA. The <strong>Trust</strong>ee has a paid-up capital of S$5,150,000 and has a place of business inSingapore at 21 Collyer Quay, #14-01 HSBC Building, Singapore 049320. The <strong>Trust</strong>ee is independent ofthe Manager.Powers, duties and obligations of the <strong>Trust</strong>eeThe <strong>Trust</strong>ee’s powers, duties and obligations are set out in the <strong>Trust</strong> Deed. The powers and duties of the<strong>Trust</strong>ee include:• acting as trustee of LMIR <strong>Trust</strong> and, in such capacity, safeguarding the rights and interests of theUnitholders, for example, by satisfying itself that transactions it enters into for and on behalf of LMIR<strong>Trust</strong> with a related party of the Manager or LMIR <strong>Trust</strong> are conducted on normal commercial terms, arenot prejudicial to the interests of LMIR <strong>Trust</strong> and the Unitholders, and in accordance with the rules of allapplicable requirements under the Property Funds Guidelines and/or the Listing Manual or otherrelevant Recognised Stock Exchange(s) relating to the transaction in question;• holding the assets of LMIR <strong>Trust</strong> on trust for the benefit of the Unitholders in accordance with the<strong>Trust</strong> Deed; and• exercising all the powers of a trustee and the powers that are incidental to the ownership of the assets ofLMIR <strong>Trust</strong>.The <strong>Trust</strong>ee has covenanted in the <strong>Trust</strong> Deed that it will exercise all due diligence and vigilance in carryingout its functions and duties, and in safeguarding the rights and interests of Unitholders.In the exercise of its powers, the <strong>Trust</strong>ee may (on the recommendation of the Manager) and subject to theprovisions of the <strong>Trust</strong> Deed, acquire or dispose of any real or personal property, borrow and encumberany asset.The <strong>Trust</strong>ee may, subject to the provisions of the <strong>Trust</strong> Deed, appoint and engage:• a person or entity to exercise any of its powers or perform its obligations; and• any real estate agents or managers, including a related party of the Manager, in relation to themanagement, development, leasing, purchase or sale of any of real estate assets and real estaterelatedassets.Although the <strong>Trust</strong>ee may borrow money and obtain other financial accommodation for the purposes ofLMIR <strong>Trust</strong>, both on a secured and unsecured basis, the Manager must not direct the <strong>Trust</strong>ee to incur aliability if to do so would mean that total liabilities of LMIR <strong>Trust</strong> exceed 35.0% (or such other limit as may bestipulated by the MAS) of the value of its Deposited Property in accordance with the provisions of theProperty Funds Guidelines.The <strong>Trust</strong>ee must carry out its functions and duties and comply with all the obligations imposed on it andset out in the <strong>Trust</strong> Deed, the Listing Manual, the SFA, the CIS Code (including the Property FundsGuidelines), any tax ruling and all other relevant laws. It must retain LMIR <strong>Trust</strong>’s assets, or cause LMIR<strong>Trust</strong>’s assets to be retained, in safe custody and cause LMIR <strong>Trust</strong>’s accounts to be audited. It can appointvaluers to value the real estate assets and real estate-related assets of LMIR <strong>Trust</strong>.The <strong>Trust</strong>ee is not personally liable to a Unitholder in connection with the office of the <strong>Trust</strong>ee except inrespect of its own fraud, gross negligence, wilful default, breach of duty or breach of trust. Any liabilityincurred and any indemnity to be given by the <strong>Trust</strong>ee shall be limited to the assets of LMIR <strong>Trust</strong> overwhich the <strong>Trust</strong>ee has recourse, provided that the <strong>Trust</strong>ee has acted without fraud, negligence, wilful220
The formation and structure of LMIR <strong>Trust</strong>default, breach of trust or breach of the <strong>Trust</strong> Deed. The <strong>Trust</strong> Deed contains certain indemnities in favourof the <strong>Trust</strong>ee under which it will be indemnified out of the assets of LMIR <strong>Trust</strong> for liability arising inconnection with certain acts or omissions. These indemnities are subject to any applicable laws.Retirement and replacementThe <strong>Trust</strong>ee may retire or be replaced under the following circumstances:• The <strong>Trust</strong>ee shall not be entitled to retire voluntarily except upon the appointment of a new trustee (suchappointment to be made in accordance with the provisions of the <strong>Trust</strong> Deed).• The <strong>Trust</strong>ee may be removed by notice in writing to the <strong>Trust</strong>ee by the Manager:- if the <strong>Trust</strong>ee goes into liquidation (except a voluntary liquidation for the purpose of reconstruction oramalgamation upon terms previously approved in writing by the Manager) or if a receiver is appointedover any of its assets or if a judicial manager is appointed in respect of the <strong>Trust</strong>ee;- if the <strong>Trust</strong>ee ceases to carry on business;- if the <strong>Trust</strong>ee fails or neglects after reasonable notice from the Manager to carry out or satisfy anymaterial obligation imposed on the <strong>Trust</strong>ee by the <strong>Trust</strong> Deed;- if an Ordinary Resolution is passed at a Unitholders’ meeting duly convened and held in accordancewith the provisions of the <strong>Trust</strong> Deed, and of which not less than 21 days’ notice has been given to the<strong>Trust</strong>ee and the Manager, shall so decide; or- if the MAS directs that the <strong>Trust</strong>ee be removed.<strong>Trust</strong>ee’s feeUnder the <strong>Trust</strong> Deed, the maximum fee payable to the <strong>Trust</strong>ee is 0.03% per annum of the value of theDeposited Property, subject to a minimum of S$15,000 per month, excluding out-of-pocket expenses andGST.LMIR <strong>Trust</strong> will also pay the <strong>Trust</strong>ee a one-time inception fee of S$25,000.The <strong>Trust</strong>ee’s fee will be subject to review three years from the Listing Date.Any increase in the maximum permitted amount or any change in the structure of the <strong>Trust</strong>ee’s fee must bepassed by an Extraordinary Resolution at a Unitholders’ meeting duly convened and held in accordancewith the provisions of the <strong>Trust</strong> Deed.Termination of LMIR <strong>Trust</strong>Under the provisions of the <strong>Trust</strong> Deed, the duration of LMIR <strong>Trust</strong> shall end on:• such date as may be provided under written law;• the date on which LMIR <strong>Trust</strong> is terminated by the Manager in such circumstances as set out under theprovisions of the <strong>Trust</strong> Deed as described below; and• the date on which LMIR <strong>Trust</strong> is terminated by the <strong>Trust</strong>ee in such circumstances as set out under theprovisions of the <strong>Trust</strong> Deed as described below.The Manager may in its absolute discretion terminate LMIR <strong>Trust</strong> by giving notice in writing to allUnitholders and the <strong>Trust</strong>ee no later than three months in advance and to the MAS not less thanseven days before the termination in any of the following circumstances:• if any law shall be passed which renders it illegal or in the opinion of the Manager impracticable orinadvisable to continue LMIR <strong>Trust</strong>;• if the NAV of the Deposited Property shall be less than S$50,000,000 after the end of the firstanniversary of the date of the <strong>Trust</strong> Deed or any time thereafter; and• if at any time LMIR <strong>Trust</strong> becomes unlisted after it has been listed.221
The formation and structure of LMIR <strong>Trust</strong>Subject to the SFA and any other applicable law or regulation, LMIR <strong>Trust</strong> may be terminated by the<strong>Trust</strong>ee by notice in writing in any of the following circumstances, namely:• if the Manager shall go into liquidation (except a voluntary liquidation for the purpose of reconstructionor amalgamation upon terms previously approved in writing by the <strong>Trust</strong>ee) or if a receiver is appointedover any of its assets or if a judicial manager is appointed in respect of the Manager or if anyencumbrance shall take possession of any of its assets or if it shall cease business and the <strong>Trust</strong>eefails to appoint a successor manager in accordance with the provisions of the <strong>Trust</strong> Deed;• if any law shall be passed which renders it illegal or in the opinion of the <strong>Trust</strong>ee impracticable orinadvisable to continue LMIR <strong>Trust</strong>; or• if within the period of three months from the date of the <strong>Trust</strong>ee expressing in writing to the Manager thedesire to retire, the Manager shall have failed to appoint a new trustee in accordance with the provisionsof the <strong>Trust</strong> Deed.The decision of the <strong>Trust</strong>ee in any of the events specified above shall be final and binding upon all theparties concerned but the <strong>Trust</strong>ee shall be under no liability on account of any failure to terminate LMIR<strong>Trust</strong> pursuant to the paragraph above or otherwise. The Manager shall accept the decision of the <strong>Trust</strong>eeand relieve the <strong>Trust</strong>ee of any liability to it therefor and hold it harmless from any claims whatsoever on itspart for damages or for any other relief.Generally, upon the termination of LMIR <strong>Trust</strong>, the <strong>Trust</strong>ee shall, subject to any authorisations or directionsgiven to it by the Manager or the Unitholders pursuant to the <strong>Trust</strong> Deed, sell the Deposited Property andrepay any borrowings incurred on behalf of LMIR <strong>Trust</strong> in accordance with the <strong>Trust</strong> Deed (together withany interest accrued but remaining unpaid) as well as all other debts and liabilities in respect of LMIR <strong>Trust</strong>before distributing the balance of the Deposited Property to the Unitholders in accordance with theirproportionate interests in LMIR <strong>Trust</strong>.222
Certain agreements relating to LMIR <strong>Trust</strong> and thePropertiesThe agreements discussed in this section are complex documents and the following is a summary only.<strong>Investor</strong>s should refer to the agreements themselves to confirm specific information or for a detailedunderstanding of LMIR <strong>Trust</strong>. The agreements are available for inspection at the registered office of theManager at 78 Shenton Way, #05-01 <strong>Lippo</strong> Centre, Singapore 079120 for a period of six months from thedate of this Prospectus.DESCRIPTION OF THE SINGAPORE SPC SHARE PURCHASE AGREEMENTSOn 18 October 2007, the <strong>Trust</strong>ee and the Vendors entered into 14 Singapore SPC Share PurchaseAgreements, pursuant to which the <strong>Trust</strong>ee will, on the Listing Date and subject to the listing of LMIR <strong>Trust</strong>on the SGX-ST, acquire all the ordinary shares and redeemable preference shares in each of the TargetSingapore SPCs.The minimum purchase consideration (the “Base Amount”) payable to the respective Vendors in respectof each Property is set out below.PropertyBase Amount(S$)<strong>Retail</strong> MallGajah Mada Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,607,345Cibubur Junction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,693,943The Plaza Semanggi. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177,226,637Mal <strong>Lippo</strong> Cikarang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,145,410Ekalokasari Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,457,065Bandung Indah Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,664,500Istana Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,713,095<strong>Retail</strong> SpacesMall WTC Matahari Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,762,193Metropolis Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,668,942Depok Town Square Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,167,650Java Supermall Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,433,294Malang Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,069,781Plaza Madiun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,571,074Grand Palladium Medan Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,573,107Aggregate Base Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 828,754,036The aggregate purchase consideration payable to the Vendors on completion for the acquisition of all ofthe ordinary shares and redeemable preference shares in the Target Singapore SPCs will be determinedaccording to the following formula:[(A + B) C]WhereABCis the total proceeds raised from the Offering;is the total proceeds raised from the issuance of the Cornerstone Units; andis the issue expenses.<strong>Retail</strong> Mall Singapore SPCIn the event that the aggregate purchase consideration is greater than the aggregate Base Amountpayable to the Vendors, the purchase consideration payable to the respective Vendor on completion for223
Certain agreements relating to LMIR <strong>Trust</strong> and the Propertiesthe acquisition of all of the ordinary shares and redeemable preference shares in the respective <strong>Retail</strong> MallSingapore SPC will be determined in accordance with the following formula:[(A + B) C] (D / E)whereABCDEis the total proceeds raised from the Offering;is the total proceeds raised from the issuance of the Cornerstone Units;is the issue expenses;is the valuation of the relevant Property by Knight Frank; andis the aggregate valuation of all the Properties by Knight Frank.<strong>Retail</strong> Space Singapore SPCIn respect of the <strong>Retail</strong> Space Singapore SPCs, the relevant Base Amount of each <strong>Retail</strong> Space SingaporeSPC (“<strong>Retail</strong> Space Singapore SPC Base Amount”) shall be determined in accordance with thefollowing formula:(0.95 F) + (0.05 G)whereFGis the Base Amount of the <strong>Retail</strong> Space which is indirectly 95.0% owned by the relevant <strong>Retail</strong>Space Singapore SPC; andis the Base Amount of the <strong>Retail</strong> Space which is indirectly 5.0% owned by the relevant <strong>Retail</strong>Space Singapore SPC.In the event that the aggregate purchase consideration is greater than the aggregate Base Amountpayable to the Vendors, the purchase consideration payable to the respective Vendor on completion forthe acquisition of all the ordinary shares and redeemable preference shares in the respective <strong>Retail</strong> SpaceSingapore SPC will be the higher of:(a)(b)the Base Amount for the relevant <strong>Retail</strong> Space Singapore SPC as described above; orthe amount determined in accordance with the following formula:[(A + B) C] (D / E)whereABCDEis the total proceeds raised from the Offering;is the total proceeds raised from the issuance of the Cornerstone Units;is the issue expenses;is the <strong>Retail</strong> Space Singapore SPC Base Amount; andis the Aggregate Base Amount.In the event that the aggregate purchase consideration falls below the aggregate Base Amount, LMIR<strong>Trust</strong> will cover for the shortfall (i.e. the difference between the aggregate Base Amount and the aggregatepurchase consideration) with the cash balance in the respective <strong>Indonesia</strong>n SPC as at the Listing Date andpay the relevant Base Amount (in respect of the <strong>Retail</strong> Mall Singapore SPC) or <strong>Retail</strong> Space SingaporeSPC Base Amount (in respect of the <strong>Retail</strong> Space Singapore SPC) to the respective Vendor.Each Singapore SPC Share Purchase Agreement provides that completion will be subject to thesatisfaction of a number of conditions including but not limited to the following:(a)the occurrence of the listing, and the commencement of trading, of the Units on the SGX-ST;224
Certain agreements relating to LMIR <strong>Trust</strong> and the Properties(b) (with regard to the <strong>Retail</strong> Space Singapore SPCs) the completion of the sale and purchase of each ofthe Properties in accordance with the terms and conditions of the relevant Property PurchaseAgreement;(c) the concurrent completion of the sale and purchase of all the ordinary shares and redeemablepreference shares of each of the other Target Singapore SPCs in accordance with the terms andconditions of the relevant Singapore SPC Share Purchase Agreement;(d) there being no damage to the relevant Property and no breach of warranties which in the reasonableopinion of the <strong>Trust</strong>ee, acting on the recommendation of the Manager, will have a material adverseeffect on the financial condition, prospects, earnings, business, undertaking or assets of theProperty, the relevant Target Singapore SPC or the relevant <strong>Indonesia</strong>n SPC, in each case,taken as a whole; and(e) (with regard to the <strong>Retail</strong> Space Singapore SPCs) the entry into the Master Lease Agreements bythe Master Lessee and the relevant <strong>Retail</strong> Space <strong>Indonesia</strong>n SPCs.The Vendors have undertaken to the <strong>Trust</strong>ee to fulfil or to procure the fulfilment of the conditions of theSingapore SPC Share Purchase Agreements.In the event the listing and trading of the Units on the SGX-ST does not occur on the Listing Date or suchother date as agreed by the <strong>Trust</strong>ee and the Vendors, each of the <strong>Trust</strong>ee and the Vendors is entitled torescind the Singapore SPC Share Purchase Agreements for the sale and purchase of all the ordinaryshares and redeemable preference shares in the Target Singapore SPCs with, among other things, fullrepayment by the Vendors to the <strong>Trust</strong>ee of the completion amount under each of the respective SingaporeSPC Share Purchase Agreements.Each Singapore SPC Share Purchase Agreement contains customary representations and warrantiesmade by the Vendors, subject to certain limitations on its liability, in respect of the relevant TargetSingapore SPC ordinary and redeemable preference shares, the relevant <strong>Indonesia</strong>n SPC and therelevant Property.225
Certain agreements relating to LMIR <strong>Trust</strong> and the PropertiesSUMMARY OF OWNERSHIP STRUCTURE OF THE RETAIL MALLSLMIR <strong>Trust</strong>100.0%100.0% 100.0% 100.0% 100.0% 100.0% 100.0%.Belilios InternationalPte. Ltd.Dominion Capital Pte.Ltd.Greenlot InvestmentsPte. Ltd.Tangent InvestmentsPte. Ltd.Magnus InvestmentsPte. Ltd.Thornton InvestmentsPte. Ltd.PierbridgeInvestments Pte. Ltd.5.0% 100.0%5.0% 100.0% 95.0% 100.0% 95.0% 100.0% 95.0% 100.0% 95.0% 100.0% 95.0% 100.0%PrismInvestmentsPte. Ltd.Silver DoryHoldings Pte.Ltd.VernonInvestmentsPte. Ltd.MaxiaInvestmentsPte. Ltd.FentonInvestmentsPte. Ltd.LangstonInvestmentsPte. Ltd.BowlandInvestmentsPte. Ltd.95.0% 95.0% 5.0%5.0% 5.0% 5.0%5.0%PT Graha Baru RayaPT Graha Nusa Raya PT Cibubur Utama PT Megah SemestaAbadiPT Suryana IstanaPasundanPT Indah PesonaBogorPT Primatama NusaIndah100.0% 100.0%100.0%100.0%100.0% 100.0% 100.0%Gajah Mada PlazaMal <strong>Lippo</strong> Cikarang Cibubur Junction Bandung Indah Plaza Istana Plaza Ekalokasari Plaza The Plaza SemanggiTier 1<strong>Retail</strong> MallSingapore SPCsTier 2<strong>Retail</strong> MallSingapore SPCs<strong>Retail</strong> Mall<strong>Indonesia</strong>nSPCs<strong>Retail</strong><strong>Malls</strong>226
Certain agreements relating to LMIR <strong>Trust</strong> and the PropertiesSUMMARY OF OWNERSHIP STRUCTURE OF THE RETAIL SPACESLMIR <strong>Trust</strong>100.0% 100.0%100.0% 100.0% 100.0% 100.0%100.0%100.0%Java PropertiesPte. Ltd.SerpongProperties Pte.Ltd.MetropolisProperties Pte.Ltd.Matos PropertiesPte. Ltd.Detos PropertiesPte. Ltd.PalladiumProperties Pte.Ltd.MadiunProperties Pte.Ltd.Java PropertiesPte. Ltd.5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0%PT DinamikaSerpongPT GemaMetropolis ModernPT Matos SuryaPerkasaPT Megah DetosUtamaPT PalladiumMegah LestariPT MadiunRitelindoPT Java MegaJaya100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%Mall WTC MatahariUnitsMetropolis TownSquare UnitsMalang TownSquare UnitsDepok TownSquare UnitsGrand PalladiumMedan UnitsPlaza Madiun Java SupermallUnits<strong>Retail</strong> SpaceSingaporeSPCs<strong>Retail</strong> Space<strong>Indonesia</strong>nSPCs<strong>Retail</strong>Spaces227
Certain agreements relating to LMIR <strong>Trust</strong> and the PropertiesDESCRIPTION OF THE DEEDS OF INDEMNITYOn 18 October 2007, <strong>Lippo</strong> Capital Limited, which indirectly owns 100.0% of the issued shares of <strong>Lippo</strong>Strategic, entered into 14 Deeds of Indemnity with the <strong>Trust</strong>ee pursuant to which <strong>Lippo</strong> Capital Limited willindemnify the <strong>Trust</strong>ee against certain liabilities or damage suffered by the <strong>Trust</strong>ee arising out of or inconnection with the 14 Singapore SPC Share Purchase Agreements respectively, subject to certain termsand conditions including the following:(a)(b)(c)(d)(e)if any Singapore SPC Share Purchase Agreement is rescinded or terminated in accordance with theterms and conditions of the relevant Singapore SPC Share Purchase Agreement, <strong>Lippo</strong> CapitalLimited shall, except for certain obligations, be released and discharged from its obligations underthe relevant Deed of Indemnity;the maximum aggregate liability of <strong>Lippo</strong> Capital Limited to the <strong>Trust</strong>ee under each of the Deeds ofIndemnity shall not exceed the completion amount under the relevant Singapore SPC SharePurchase Agreement;no liability shall attach to <strong>Lippo</strong> Capital Limited under a Deed of Indemnity unless the aggregateamount of all claims for which the Vendor would be liable under that Deed of Indemnity equals to orexceeds an amount equivalent to S$1,500,000 (for a Singapore SPC Share Purchase Agreementrelating to a <strong>Retail</strong> Mall) or S$500,000 (for a Singapore SPC Share Purchase Agreement relating to a<strong>Retail</strong> Space), but if the aggregate liability in respect of all such claims equals to or exceeds suchamount, then all claims, including claims previously notified, shall accrue against and be recoverableagainst <strong>Lippo</strong> Capital Limited;no claim shall be brought against <strong>Lippo</strong> Capital Limited unless it is notified in writing before the expiryof a period of 48 months for taxation claims and 24 months for any other claims from the date ofcompletion of the relevant Singapore SPC Share Purchase Agreement; andthe <strong>Trust</strong>ee shall not be entitled to recover from <strong>Lippo</strong> Capital Limited for breach of a warranty morethan once in respect of the same damage suffered.Each Deed of Indemnity contains customary representations and warranties made to the <strong>Trust</strong>ee by <strong>Lippo</strong>Capital Limited.DESCRIPTION OF THE MASTER LEASE AGREEMENTSOn 18 October 2007, each of the <strong>Retail</strong> Space <strong>Indonesia</strong>n SPCs (as landlord) and the Master Lessee (astenant) entered into a Master Lease Agreement, pursuant to which the <strong>Retail</strong> Spaces were leased to theMaster Lessee in accordance with the terms and conditions of the Master Lease Agreements.Lease term and renewal of lease termThe term of each Master Lease Agreement is for 10 years with an option for the Master Lessee to renewthe lease for a further term of 10 years based on substantially the same terms and conditions, except forthe renewal rent. The renewal rent for the further term shall be at the then prevailing market rent, as maybe agreed by the relevant landlord and the Master Lessee in good faith. If there is no agreement by therelevant landlord and the Master Lessee on such prevailing market rent, the relevant landlord and theMaster Lessee may refer the determination of the prevailing market rent to an independent property valueror valuers.The renewal of lease must be made by written request to the relevant landlord 12 months before the expiryof the lease term.228
Certain agreements relating to LMIR <strong>Trust</strong> and the PropertiesLease rentalThe Master Lessee is required to make lease rental payments to the relevant landlords on a monthly basisin advance, such lease rental payments to be determined as follows:• Period commencing from Listing Date to end of FY 2007The lease rental for the period commencing from Listing Date to end of FY 2007, shall be a sumequivalent to the applicable rental rate 1 multiplied by the GFA of the relevant <strong>Retail</strong> Space and multipliedby the number of months in the period commencing from Listing Date to end of FY 2007.• FY 2008 to FY 2011The lease rental for FY 2008 shall be based on the rental rate which is 108.0% of the rental rateapplicable to the period commencing from the Listing Date to end of FY 2007.The lease rental for each of FY 2009, FY 2010 and FY 2011 shall be based on the rental rate which is108.0% of the rental rate applicable to the immediately preceding financial year.• FY 2012 to FY 2016The lease rentals for each financial year from FY 2012 to FY 2016, shall comprise:(A)(B)an amount equivalent to the lease rental payable in respect of FY 2011; andan amount equivalent to 4.25% of the amount by which the net revenue of the Master Lesseederived from the <strong>Retail</strong> Spaces for the immediately preceding financial year exceeds the netrevenue of the Master Lessee derived from <strong>Retail</strong> Spaces for the Base Year 2 .The table below depicts the total lease rentals for FY 2012 to FY 2016, which is equivalent to the sum ofcolumn (A) and column (B) in the table.Lease rental (A) (B)FY2012 . . . . . . . . . .FY2013 . . . . . . . . . .FY2014 . . . . . . . . . .FY2015 . . . . . . . . . .FY2016 . . . . . . . . . .Amount equal tolease rental forFY 2011Amount equal tolease rental forFY 2011Amount equal tolease rental forFY 2011Amount equal tolease rental forFY 2011Amount equal tolease rental forFY 20114.25% x(net revenue of Master Lessee derived from <strong>Retail</strong>Spaces for FY 2011 - net revenue of Master Lesseederived from <strong>Retail</strong> Spaces for FY 2010)4.25% x(net revenue of Master Lessee derived from <strong>Retail</strong>Spaces for FY 2012 - net revenue of Master Lesseederived from <strong>Retail</strong> Spaces for FY 2010)4.25% x(net revenue of Master Lessee derived from <strong>Retail</strong>Spaces for FY 2013 - net revenue of Master Lesseederived from <strong>Retail</strong> Spaces for FY 2010)4.25% x(net revenue of Master Lessee derived from <strong>Retail</strong>Spaces for FY 2014 - net revenue of Master Lesseederived from <strong>Retail</strong> Spaces for FY 2010)4.25% x(net revenue of Master Lessee derived from <strong>Retail</strong>Spaces for FY 2015 - net revenue of Master Lesseederived from <strong>Retail</strong> Spaces for FY 2010)1 This rental rate is Rp. 80,000 per sq m per month for the Metropolis Town Square Units, the Mall WTCMatahari Units, the Java Supermall Units and the Malang Town Square Units, Rp. 70,000 per squaremetre per month for the Depok Town Square Units and the Grand Palladium Medan Units andRp. 60,000 per sq m per month for Plaza Madiun.2 The Base Year is fixed as calendar year 2010.229
Certain agreements relating to LMIR <strong>Trust</strong> and the PropertiesOther material termsSecurity depositThe Master Lessee will provide a security deposit equivalent to (i) six months’ rent for the first five years ofthe lease term and (ii) three month’s rent for the next five years of the lease term, in the form of cash or abank guarantee, under the Master Lease Agreements as security for the compliance by the Master Lesseeof the terms of the Master Lease Agreements as well as against any loss or damage resulting from theMaster Lessee’s default and against any claim by the relevant landlord against the Master Lessee.Liabilities of Master LesseeThe Master Lessee shall be responsible for the maintenance of the <strong>Retail</strong> Spaces and all fixtures, fittingsand installations therein, including keeping the same clean and in good and tenantable condition,undertaking works to make good any damage, maintaining the mechanical and electrical equipment inaccordance with the relevant manufacturers’ guidelines and maintenance of its own plant and machinerywhich are required for the operation of its business. The Master Lessee shall also be responsible for theland and building tax (including any increases) in respect of the <strong>Retail</strong> Spaces.The Master Lessee must comply, at its cost and expense, with all laws and regulations and all requirementsof the relevant authorities in force at the moment relating to the <strong>Retail</strong> Spaces.Works of a capital nature during the first 30 monthsDuring the first 30 months of the lease term, the Master Lessee shall at its own cost and expense carry outall repair and replacement works in respect of the mechanical and electrical equipment, whether or notsuch works are of a capital nature. After the first 30 months of the lease term, the relevant landlords will beresponsible for repair and replacement works in relation to the mechanical and electrical equipment whichare of a capital nature. Where any replacement works (after the first 30 months of the lease term) isreasonably required by the Master Lessee in connection with any changes to the layout of the <strong>Retail</strong>Spaces, the cost of such replacement works shall be deducted from the rent payable by the Master Lesseeto the relevant landlord for the rest of the lease term.Addition and alteration worksThe Master Lessee must obtain the prior written consent of the relevant landlord (such consent not to beunreasonably delayed or withheld) for addition and alteration works to or affecting the <strong>Retail</strong> Spaces if suchworks require the approval of the relevant authorities or involves the hacking of floors or structural columnsand beams.AssignmentThe Master Lessee may sub-let to sub-lessees of good repute and sound financial standing any part ofeach of the <strong>Retail</strong> Spaces, not exceeding 30.0% of the total leased area of the relevant <strong>Retail</strong> Space and fora term not exceeding one year.The Master Lessee is not permitted to assign any of the Master Lease Agreements except where suchassignment is in respect of (a) its subsidiary and the performance of the assignee’s obligations under therelevant Master Lease Agreement is guaranteed by the Master Lessee or (b) its associated companywhich is of equivalent or better financial standing than the Master Lessee.InsuranceThe Master Lessee must at its own cost take out and maintain, inter alia, all risks and public liabilityinsurance policies in the joint names of the Master Lessee and the relevant landlord covering the relevant<strong>Retail</strong> Space.Damage or destructionIf any of the <strong>Retail</strong> Spaces is damaged or destroyed such that the <strong>Retail</strong> Space cannot be used or becomesinaccessible, the relevant landlord has the option to reinstate or replace such <strong>Retail</strong> Space (or the affectedpart, as the case may be) using insurance proceeds received under the insurance policies. If the relevantlandlord opts to reinstate or replace the <strong>Retail</strong> Space, the Master Lessee will not be liable to pay rent inrespect of the period when the <strong>Retail</strong> Space cannot be used or is inaccessible. If the relevant landlord optsnot to reinstate or replace the <strong>Retail</strong> Space, the Master Lessee may either terminate the relevant Master230
Certain agreements relating to LMIR <strong>Trust</strong> and the PropertiesLease Agreement or opt to reinstate or replace the <strong>Retail</strong> Space using insurance proceeds received underthe insurance policies. If the <strong>Retail</strong> Space is partly unusable, the Master Lessee’s liability for the rent will bereduced in proportion to the reduction in the usability caused by the damage from the date of the damageor destruction.Increase in taxIf any change in or amendment to the relevant laws or treaties increases the taxes payable by the relevantlandlord, except for any increases in building tax, the increased tax shall be borne in the following manner:(i)(ii)if such increase is less than or equal to 10.0% of the original taxes payable by the landlord, then theamount of such increase shall be solely borne by the Master Lessee;if such increase is more than 10.0% but less than or equal to 15.0% of the original taxes payable bythe landlord, then:(a)(b)the Master Lessee shall bear such part of the amount of increase as is equivalent to 10.0% ofthe original taxes payable by the landlord; andthe landlord and Master Lessee shall bear the balance of the amount of increase in equalshares; and(iii)if such increase is more than 15.0% of the original taxes payable by the landlord, then:(a)(b)(c)the Master Lessee shall bear such part of the amount of increase as is equivalent to 10.0% ofthe original taxes payable by the landlord;additionally, the landlord and Master Lessee shall bear in equal shares such part of the amountof increase as is equivalent to 5.0% of the original taxes payable by the landlord; andthe balance of the amount of increase shall be solely borne by the landlord.Vacation of premisesThe Master Lessee is required to vacate the <strong>Retail</strong> Spaces after the expiry of the lease term. If the MasterLessee fails to vacate at the end of the expiry of the lease term, the landlord is entitled to charge the MasterLessee double the amount of the Rent for the period of holding over.On vacating the <strong>Retail</strong> Spaces, the Master Lessee must reinstate the premises to a good and tenantablecondition to the reasonable satisfaction of the relevant landlord.Change in laws affecting Master Lessee’s operationsIf as a result of any change in or amendment to the applicable laws or regulations, the Master Lessee isprohibited from carrying out its current operations at any of the <strong>Retail</strong> Spaces, the Master Lessee shall beentitled to terminate the lease with a three-month termination notice and upon such termination, thesecurity deposit will be forfeited to the landlord. The Master Lessee shall use its best endeavours toprocure a replacement tenant.DESCRIPTION OF THE OPERATING COSTS AGREEMENTSPursuant to each of the Operating Costs Agreements to be entered into between the relevant <strong>Retail</strong> Mall<strong>Indonesia</strong>n SPC and Operating Company, the relevant Operating Company will agree to unconditionallybear, for a period of three years commencing from 1 January 2007, all costs directly related to themaintenance and operation of the relevant <strong>Retail</strong> Mall.In consideration of its agreements under the relevant Operating Costs Agreement, the relevant OperatingCompany has the right to collect, through the Property Manager, a service charge and statutory incomefrom the tenants of the relevant <strong>Retail</strong> Mall. The service charge is intended to cover the costs directlyrelated to the maintenance and operation of the <strong>Retail</strong> Mall. The amount of the service charge will berecommended by the Property Manager as a result of its review of the prevailing market rates. Thestatutory income is intended to cover the costs directly related to the provision of utilities to the <strong>Retail</strong> Mall.231
Certain agreements relating to LMIR <strong>Trust</strong> and the PropertiesThe right to collect the service charge and statutory income shall be in accordance with the leaseagreements entered into by and between the <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC and the respective tenants of the<strong>Retail</strong> Mall and such collection shall be coordinated by the Property Manager.The Operating Costs Agreements will lapse on 31 December 2009 and LMIR <strong>Trust</strong> will bear all costsdirectly related to the maintenance and operation of the <strong>Retail</strong> <strong>Malls</strong> thereafter.The rationale for the Operating Costs Agreement is to provide certain protection to LMIR <strong>Trust</strong> in relation tothe costs directly related to the maintenance and operation of the <strong>Retail</strong> <strong>Malls</strong>, in particular for BandungIndah Plaza, Mal <strong>Lippo</strong> Cikarang, Ekalokasari Plaza and The Plaza Semanggi which are in the process ofundergoing asset enhancement works and may incur higher operating costs, with a reduction in servicecharges received from tenants due to tenant relocation or loss at the areas which are affected by the assetenhancement works, in the initial period subsequent to the completion of the asset enhancement works.DESCRIPTION OF THE RENTAL GUARANTEE DEEDSOn 10 August 2007, <strong>Lippo</strong> Strategic entered into a Rental Guarantee Deed with the following <strong>Retail</strong> MallSingapore SPCs pursuant to which <strong>Lippo</strong> Strategic will (i) provide a rental guarantee to the relevant <strong>Retail</strong>Mall Singapore SPC in respect of existing and new units in the respective <strong>Retail</strong> <strong>Malls</strong> which areuntenanted and (ii) undertake to pay to the relevant <strong>Retail</strong> Mall Singapore SPC any shortfall in themaintenance and operation costs which the relevant Operating Company has undertaken to bear underthe respective Operating Costs Agreement.<strong>Retail</strong> MallGajah Mada Plaza . . . . . . . . . . . . . . . . . . . . . . . .Mal <strong>Lippo</strong> Cikarang . . . . . . . . . . . . . . . . . . . . . . .Cibubur Junction . . . . . . . . . . . . . . . . . . . . . . . . .Bandung Indah Plaza . . . . . . . . . . . . . . . . . . . . . .Istana Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Ekalokasari Plaza. . . . . . . . . . . . . . . . . . . . . . . . .The Plaza Semanggi . . . . . . . . . . . . . . . . . . . . . .Relevant <strong>Retail</strong> Mall Singapore SPCBelilios International Pte. Ltd.Dominion Capital Pte. Ltd.Greenlot Investments Pte. Ltd.Tangent Investments Pte. Ltd.Magnus Investments Pte. Ltd.Thornton Investments Pte. Ltd.Pierbridge Investments Pte. Ltd.The Rental Guarantee Deeds cover the period commencing from the Listing Date up to 31 December2009. Pursuant to the Rental Guarantee Deeds, <strong>Lippo</strong> Strategic is obliged to pay to the <strong>Retail</strong> MallSingapore SPCs a specified sum in respect of each <strong>Retail</strong> Mall for every year during the said period. Thefirst of such payments will be paid on or before 31 January 2008, and subsequent payments will be madeon a quarterly basis thereafter. In the event any of the specified units in the relevant <strong>Retail</strong> Mall becomestenanted during such period, the amount of the specified sum payable by <strong>Lippo</strong> Strategic in respect of such<strong>Retail</strong> Mall will be reduced by the amount of the rental payable under the relevant tenancy, regardless ofwhether such rental is received by the owner of the relevant <strong>Retail</strong> Mall and notwithstanding that suchtenancy may be or is terminated prior to the expiry of such period.To secure <strong>Lippo</strong> Strategic’s performance under each of the Rental Guarantee Deeds, <strong>Lippo</strong> Strategic isrequired to furnish to the <strong>Retail</strong> Mall Singapore SPCs bank guarantees. The aggregate amount of all thebank guarantees to be furnished under the Rental Guarantee Deeds is S$10.0 million.DESCRIPTION OF THE RIGHT OF FIRST REFUSAL AGREEMENTOn 14 August 2007, an agreement was entered into between the <strong>Trust</strong>ee and the Sponsor pursuant towhich the Sponsor granted to LMIR <strong>Trust</strong>, for so long as (a) <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong><strong>Trust</strong> Management Ltd. remains the manager of LMIR <strong>Trust</strong> and (b) the Sponsor and/or any of itsrelated corporations, alone or in aggregate, remains a controlling shareholder of the Manager, a ROFRover any Relevant Asset (i) which any Sponsor Entity proposes to sell or transfer (whether such RelevantAsset is wholly-owned or partly-owned by the Sponsor Entity and excluding any sale of such RelevantAsset by a Sponsor Entity to any related corporation of such Sponsor Entity pursuant to a reconstruction,amalgamation, restructuring, merger or any analogous event) to an unrelated third party or (ii) for which aproposed offer for sale or transfer of such Relevant Asset has been made to a Sponsor Entity.232
Certain agreements relating to LMIR <strong>Trust</strong> and the PropertiesFor the purposes of the ROFR,(a)(b)a “controlling shareholder” of a company means a person who (i) holds directly or indirectly 15.0% ormore of the nominal amount of all voting shares of that company, or (ii) in fact exercises control overthat company, and (ii) “control” of a company means the capacity to dominate decision-making,directly or indirectly, in relation to the financial and operating policies of that company; anda “related corporation” means a corporation which is (i) the holding company of another corporation,(ii) a subsidiary of another corporation; or (iii) a subsidiary of the holding company of anothercorporation.Where (a) a Sponsor Entity proposes to sell or transfer a Relevant Asset (whether wholly-owned or partlyownedand excluding a sale of a Relevant Asset by a Sponsor Entity to any related corporation of suchSponsor Entity pursuant to a reconstruction, amalgamation, restructuring, merger or any analogous event)to an unrelated third party; or (b) a proposed offer for sale or transfer of a Relevant Asset is made to aSponsor Entity, the Sponsor shall give written notice thereof to the <strong>Trust</strong>ee, and will grant to the <strong>Trust</strong>ee thefirst right to purchase the Relevant Asset for the benefit of LMIR <strong>Trust</strong>.If (i) the <strong>Trust</strong>ee does not enter into a binding commitment for the purchase of the Relevant Asset within30 days (or such longer period as may be mutually agreed) from the date of the <strong>Trust</strong>ee’s receipt of therelevant documents or (ii) the <strong>Trust</strong>ee indicates in writing that it will not be purchasing the Relevant Asset or(iii) the proposed purchase of the Relevant Asset is aborted by the <strong>Trust</strong>ee, the relevant Sponsor Entity isentitled to (as the case may be) (a) sell its Relevant Asset to a third party on terms and conditions no morefavourable to the third party than those offered by the Sponsor Entity to the <strong>Trust</strong>ee or (b) purchase theRelevant Asset offered to it without any accountability, liability or obligation to the <strong>Trust</strong>ee.The Right of First Refusal Agreement will come into effect as at Listing Date. As at Listing Date, the scopeof the ROFR will encompass the ROFR Properties, being:ROFR Propertiesunder developmentLocationExpected date ofcompletion Estimated GFA Estimated NLA(sq m) (sq m)Binjai Supermall North Sumatra Fourth quarter of 2007 23,615 18,300Pejaten Mall South Jakarta Second quarter of 2008 57,948 40,327Kuta Beach Mall Kuta, Bali Second half of 2008 41,562 30,735Kemang City Mall South Jakarta First half of 2009 77,555 56,052Puri “Paragon City” West Jakarta Second half of 2009 196,400 127,660397,080 273,074The ROFR shall be subject to all prevailing laws, regulations and governmental policies as well asoverriding contractual obligations of the relevant Sponsor Entity (if any), including obligations underexisting and future joint ventures.Where a property which is subject to the ROFR is jointly owned with one or more third parties (i.e. partieswhich are not subject to the ROFR), the ROFR shall be subject to the consent of these third parties to thesale of that property to the <strong>Trust</strong>ee, and in this respect, the Sponsor shall use reasonable endeavours toobtain such consent.DESCRIPTION OF NON-BINDING MEMORANDUM OF UNDERSTANDINGOn 21 May 2007, the Manager entered into a non-binding memorandum of understanding with PT. MultiPratama Gemilang Perkasa (Pikko Group) with regard to the potential acquisition by LMIR <strong>Trust</strong> ofCosmopolitan Mall Pluit, a retail mall located in North Jakarta, <strong>Indonesia</strong>. The Manager understands thatCosmopolitan Mall Pluit is currently undergoing asset enhancement works, with such works scheduled forcompletion in the second half of 2008.233
Certain agreements relating to LMIR <strong>Trust</strong> and the PropertiesThe details of Cosmopolitan Mall Pluit are set out below:Cosmopolitan Mall PluitPluit, North JakartaExpected completion date of renovation . . . . . . .EstimatedGFA ..........................EstimatedNLA ..........................Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .District/Area. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Estimated acquisition price . . . . . . . . . . . . . . . . .Second half of 2008131,013 sq m88,040 sq mMiddle to upper income residents of North JakartaNorth JakartaTo be negotiated and agreed in good faith betweenthe parties, provided that such acquisition priceshall not be more than the appraised value ofCosmopolitan Mall Pluit as determined by anindependent property valuer to be appointed bythe <strong>Trust</strong>ee before the signing of the conditionalsale and purchase agreement.DescriptionLocated in the heart of the affluent Pluit residential district of North Jakarta, Cosmopolitan Mall Pluit offersan exciting cultural and retail experience, with urban sculptures along the waterfront, blendingharmoniously with a variety of lifestyle and cuisines outlets.In the future, the Manager will identify other potential acquisitions and will enter into negotiations and nonbindingmemoranda of understanding with regard to these potential acquisitions.On 22 June 2007, the Manager entered into a non-binding memorandum of understanding with ZellwagerEnterprise Limited with regard to the potential acquisition by LMIR <strong>Trust</strong> of Sun Plaza, a retail mall locatedin Medan, North Sumatra.The details of Sun Plaza are set out below:Sun PlazaMedan, North SumatraEstimatedGFA ..........................EstimatedNLA ..........................Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .District/Area. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Estimated acquisition price . . . . . . . . . . . . . . . . .73,871 sq m61,348 sq mMiddle to upper income residents of MedanMedanTo be negotiated and agreed in good faith betweenthe parties, provided that such acquisition priceshall not be more than the appraised value ofSun Plaza as determined by an independentproperty valuer to be appointed by the <strong>Trust</strong>eebefore the signing of the conditional sale andpurchase agreement.DescriptionSun Plaza is a six-level retail mall located in the <strong>Indonesia</strong>n city of Medan, the third most populous city in<strong>Indonesia</strong> after Jakarta and Surabaya. Sun Plaza is surrounded by government and business offices andis accessible from all parts of Medan City.234
Certain agreements relating to LMIR <strong>Trust</strong> and the PropertiesThe titanium façade of Sun Plaza resembles a sculpture and offers visitors an experience of luxury andelegance.On 26 June 2007, the Manager entered into a non-binding memorandum of understanding withPT. Pakuwon Permai in respect of the potential acquisition by LMIR <strong>Trust</strong> of Supermal Pakuwon Indahand Pakuwon Trade Center, a retail mall located in West Surabaya, East Java.The details of Supermal Pakuwon Indah and Pakuwon Trade Center are set out below:Supermal Pakuwon Indah and Pakuwon Trade CenterWest Surabaya, East JavaEstimatedGFA ..........................EstimatedNLA ..........................Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .District/Area. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Estimated acquisition price . . . . . . . . . . . . . . . . .289,563 sq m114,834 sq mMiddle to upper income residents of WestSurabayaWest SurabayaTo be negotiated and agreed in good faith betweenthe parties, provided that such acquisition priceshall not be more than the appraised value ofSupermal Pakuwon Indah and Pakuwon TradeCenter as determined by an independentproperty valuer to be appointed by the <strong>Trust</strong>eeand the appraised value is agreed by the Vendorbefore the signing of the conditional sale andpurchase agreement.DescriptionSupermal Pakuwon Indah and Pakuwon Trade Center is strategically located in the heart of WestSurabaya’s affluent residential district. The tenants of Supermal Pakuwon Indah and Pakuwon TradeCenter provide a variety of shopping, dining and entertainment options to shoppers. Together with theconvention centre facilities, the retail mall aims to deliver a memorable and exciting retail experience.DESCRIPTION OF THE EXISTING PROPERTY MANAGEMENT AGREEMENTSOn 9 April 2006, each of the <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs have entered into an Existing PropertyManagement Agreement with the Property Manager pursuant to which the Property Manager willoperate, manage, maintain and market the <strong>Retail</strong> <strong>Malls</strong>.The initial term for each of these Existing Property Management Agreements is four years from the date ofthe agreement.Property Manager’s servicesThe services provided by the Property Manager for the relevant <strong>Retail</strong> Mall under its management shallinclude, among other things, the following:• <strong>Retail</strong> management services for the relevant <strong>Retail</strong> Mall, including (i) advising and developing astrategic management policy for tenants and service providers; (ii) reviewing the existingorganisational structure for the operation of the <strong>Retail</strong> Mall and making changes if necessary;(iii) reviewing and implementing policies relating to human resource administration, accounting andfinance, the collection of rental payments and service charges, financial reporting, maintenance, safety,security, insurance, tenancy mix, cleaning and car parking for the <strong>Retail</strong> Mall; (iv) reviewing andproviding input on vehicular and pedestrian flows and customer conveniences of the <strong>Retail</strong> Mall; and(v) providing public relations and customer services;235
Certain agreements relating to LMIR <strong>Trust</strong> and the Properties• Coordinating with the relevant service providers or contractors for the advertising and promotion of the<strong>Retail</strong> Mall;• Preparing and implementing a lease documentation and monitoring system, and managementreporting system; and• Liaising with the relevant parties with regard to the building documentation system for the <strong>Retail</strong> Mall.FeesUnder each Existing Property Management Agreement, the Property Manager is entitled to the followingfees in respect of each <strong>Retail</strong> Mall under its management:• 2.0% per annum of the Gross Revenue for the relevant <strong>Retail</strong> Mall;• 2.0% per annum of the NPI for the relevant <strong>Retail</strong> Mall (after accounting for the fee of 2.0% per annum ofthe gross revenue for the relevant <strong>Retail</strong> Mall); and• 0.5% per annum of the NPI for the relevant <strong>Retail</strong> Mall in lieu of leasing commissions otherwise payableto the Property Manager and/or third party agents.Reimbursable amountsUnder each Existing Property Management Agreement, each of the <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs agreesto reimburse the Property Manager, upon request made from time to time, for its expenses incurred inconnection with the provision of property management services and with the performance of its dutieswhich are in compliance with the approved annual business plan and budget as stated in the ExistingProperty Management Agreement.Such expenses include, but are not limited to:• rent, service charge and VAT payable by the Property Manager for its lease of its office premises;• advertising and promotion costs; and• salaries of the Property Manager’s employees who are approved by the relevant <strong>Retail</strong> Mall <strong>Indonesia</strong>nSPC.IndemnityUnder each Existing Property Management Agreement, each of the <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs agreesto indemnify the Property Manager against all actions, suits, proceedings, claims, demands, costs,expense and liability whatsoever (present, future, contingent or otherwise) arising as a result of thedischarge, performance or exercise by the Property Manager of its duties, powers and exertions under andin accordance with the terms of the Existing Property Management Agreement.TerminationIf the relevant <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC does not wish to extend the period of the Existing PropertyManagement Agreement beyond the initial four year term, the <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC shall providewritten notice of such intention to the Property Manager at least 90 days prior to the maturity date of theinitial term. The Property Manager may also terminate (without penalty) the Existing PropertyManagement Agreement with 30 days prior written notice. The <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs do nothave any right to terminate the Existing Property Management Agreements without penalty. The ExistingProperty Management Agreements do not provide for any termination fee. Should any of the ExistingProperty Management Agreements be prematurely terminated unilaterally by the relevant <strong>Retail</strong> Mall<strong>Indonesia</strong>n SPC, this may be considered to be a breach of contract and the Property Manager may beentitled to damages for breach of contract, with the amount to be assessed by the relevant court of law.DESCRIPTION OF THE MASTER PROPERTY MANAGEMENT AGREEMENTAny properties located in <strong>Indonesia</strong> acquired by LMIR <strong>Trust</strong> after the Listing Date, whether such propertiesare directly or indirectly held by LMIR <strong>Trust</strong>, or are wholly or partly-owned by LMIR <strong>Trust</strong> will be managed bythe Property Manager in accordance with the terms of a master property management agreement (the“Master Property Management Agreement”).236
Certain agreements relating to LMIR <strong>Trust</strong> and the PropertiesThe Master Property Management Agreement was entered into on 18 October 2007 by the <strong>Trust</strong>ee, theManager and the Property Manager pursuant to which the Property Manager was appointed to operate,maintain, manage and market all the properties of LMIR <strong>Trust</strong> located in <strong>Indonesia</strong> acquired after theListing Date, subject to the overall management of the Manager.The Master Property Management Agreement provides that each of the <strong>Retail</strong> <strong>Malls</strong> currently the subjectof an Existing Property Management Agreement will continue to be managed in accordance with the termsof that Existing Property Management Agreement, and the terms of the Master Property ManagementAgreement shall not apply to the relevant <strong>Retail</strong> Mall during the subsistence of the Existing PropertyManagement Agreement.The Master Property Management Agreement also provides that in respect of each property acquired afterthe Listing Date, the <strong>Trust</strong>ee, the Manager and the Property Manager will enter into a separate propertymanagement agreement in the form and on the terms set out in a schedule to the Master PropertyManagement Agreement, in order to incorporate the specific terms set out in the Master PropertyManagement Agreement in their application to each of such properties.The initial term of the Master Property Management Agreement is four years from the Listing Date.Six months prior to expiry of the initial term of the Master Property Management Agreement, the PropertyManager may request to extend its appointment for a further four years on the same terms and conditions,except for revision of all fees payable to the Property Manager to market rates prevailing at the time of suchextension.Two months before expiry of the initial term, the <strong>Trust</strong>ee will decide the prevailing rates for the extensionterm, based on the recommendation of the Manager. If the Property Manager disagrees with the <strong>Trust</strong>ee’sdecision on the prevailing market rates for the extension term, the matter will be referred to an independentexpert whose determination of the prevailing market rates shall be final and binding on the parties.The <strong>Trust</strong>ee shall, based on the recommendation of the Manager, agree to extend the appointment of theProperty Manager for the extension term, on the revised fees based on the prevailing market ratesdetermined as aforesaid, subject to the approval of the Unitholders of LMIR <strong>Trust</strong>, if such approval isrequired pursuant to any applicable legislation or regulations (including any Singaporean legislation,regulation and/or requirement, and regulatory requirements on Related Party Transactions relating to realestate investment trusts).The <strong>Trust</strong>ee shall not be obliged to extend the appointment of the Property Manager if the above conditionsare not fulfilled.Property Manager’s servicesThe services provided by the Property Manager for each property subject to the Master PropertyManagement Agreement will be substantially the same as those services provided by the PropertyManager under the Existing Property Management Agreements.FeesThe fees payable to the Property Manager under the Master Property Management Agreement will besubstantially the same as those fees the Property Manager is entitled to under the Existing PropertyManagement Agreements.Reimbursable amountsIn addition to its fees, the Property Manager will be fully reimbursed for each property under itsmanagement under the Master Property Management Agreement as follows:• the employment and remuneration costs of the team of personnel employed by the Property Managerfor the provision of services to that property; and• the employment and remuneration costs relating to the centralised team of employees of the PropertyManager who provide group services for all properties the subject of the Master Property ManagementAgreement under its management, which costs are apportioned by the Property Manager to thatproperty,237
Certain agreements relating to LMIR <strong>Trust</strong> and the Propertiesas approved in each annual budget by the <strong>Trust</strong>ee following the recommendation of the Manager.ExpensesThe Property Manager is authorised to utilise funds deposited in operating accounts maintained in thename of the <strong>Trust</strong>ee and to make payment of all costs and expenses incurred in the operation,maintenance, management and marketing of each property within each annual budget approved bythe <strong>Trust</strong>ee on the recommendation of the Manager.Provision of office spaceWhere applicable, the <strong>Trust</strong>ee shall permit employees of the Property Manager engaged to manage aproperty to occupy suitable office space at such property (as approved by the <strong>Trust</strong>ee on therecommendation of the Manager) without the Property Manager being required to pay any rent,service charge, utility charges or other sums.TerminationThe <strong>Trust</strong>ee or the Manager may terminate the appointment of the Property Manager in relation to all theproperties of LMIR <strong>Trust</strong> under the management of the Property Manager pursuant to the Master PropertyManagement Agreement on the occurrence of certain specified events, which include the liquidation orcessation of business of the Property Manager.The <strong>Trust</strong>ee or the Manager may also terminate the appointment of the Property Manager specifically inrelation to a property under its management in the event of the sale of such property, but the MasterProperty Management Agreement will continue to apply with respect to the remaining properties managedby the Property Manager under the terms of the Master Property Management Agreement.In addition, if the Property Manager, within 90 days of receipt of written notice, fails to remedy any breach(which is capable of remedy) of its obligations in relation to a property, the <strong>Trust</strong>ee or the Manager mayterminate the appointment of the Property Manager in relation only to such property in respect of which thebreach relates, upon giving 30 days’ written notice to the Property Manager.On the termination of the appointment of the Property Manager, the Manager shall, as soon as practicable,procure the appointment of a replacement property manager for the affected property.NovationThe <strong>Trust</strong>ee and the Manager are entitled to novate their respective rights, benefits and obligations underthe Master Property Management Agreement to a new trustee of LMIR <strong>Trust</strong> or a new manager of LMIR<strong>Trust</strong> appointed in accordance with the terms of the <strong>Trust</strong> Deed. With the approval of the <strong>Trust</strong>ee, whichapproval shall not be unreasonably withheld, the Property Manager is also entitled to novate its respectiverights, benefits and obligations under the Master Property Management Agreement to any wholly-owneddirect or indirect subsidiary of the Sponsor.Exclusion of liabilityIn the absence of fraud, negligence, wilful default or breach of the Master Property ManagementAgreement by the Property Manager, it shall not incur any liability by reason of any error of law or anymatter or thing done or suffered or omitted to be done by it in good faith under the Master PropertyManagement Agreement.In addition, the <strong>Trust</strong>ee shall indemnify the Property Manager against any actions, costs, claims, damages,expenses or demands to which it may suffer or incur as Property Manager, save where such action, cost,damage, expense or demand is occasioned by the fraud, negligence, wilful default or breach of the MasterProperty Management Agreement by the Property Manager, its employees or agents.No restriction on Property ManagerThe Property Manager may provide services similar to those contemplated under the Master PropertyManagement Agreement to other parties operating in the same or similar business as LMIR <strong>Trust</strong> or inother businesses.238
Certain agreements relating to LMIR <strong>Trust</strong> and the PropertiesDESCRIPTION OF THE PUT OPTION AGREEMENTSAs at the Latest Practicable Date, four of the seven <strong>Retail</strong> Spaces, namely Metropolis Town Square Units,Depok Town Square Units, Malang Town Square Units and Grand Palladium Medan Units, are each boundby Kiosks Sale and Purchase Binding Agreements because their strata titles are in the process of beingissued by the <strong>Indonesia</strong>n government.In relation to each of the Metropolis Town Square Units, Depok Town Square Units, Malang Town SquareUnits and Grand Palladium Medan Units, a put option agreement has been entered into between, inter alia,the <strong>Trust</strong>ee and the Master Lessee, pursuant to which, in the event that the strata titles to these four <strong>Retail</strong>Spaces are not issued within 24 months from the Listing Date, a meeting of all the Unitholders will beconvened by the <strong>Trust</strong>ee pursuant to which the Unitholders will vote, by way of an ordinary resolution, onwhether to retain these four <strong>Retail</strong> Spaces in the portfolio of LMIR <strong>Trust</strong> for a further six months from thedate of the ordinary resolution. In the event that an ordinary resolution is passed in favour of retaining thesefour <strong>Retail</strong> Spaces in the portfolio of LMIR <strong>Trust</strong> and the strata titles are still not issued upon expiry of sixmonths from the date of the ordinary resolution, the <strong>Trust</strong>ee shall exercise the put option. In the event thatan ordinary resolution is not passed in favour of retaining these four <strong>Retail</strong> Spaces, the <strong>Trust</strong>ee shall beentitled to exercise the put option within three months of the date of the meeting of the Unitholders.Upon the <strong>Trust</strong>ee’s exercise of the put option in relation to one of these four <strong>Retail</strong> Spaces, the MasterLessee will be required to purchase the relevant <strong>Retail</strong> Space at the consideration of (a) all transactioncosts incurred directly or indirectly by the <strong>Trust</strong>ee in relation to the acquisition of the relevant <strong>Retail</strong> Spaceand (b) the higher of the• sell-back NAVThe sell-back NAV is based on the average of two valuations conducted by two independent valuers. Itis the NAVof the relevant <strong>Indonesia</strong> SPCs as at the date of service of the put option notice (the “ServiceDate”) as determined from the audited consolidated accounts of the relevant <strong>Indonesia</strong>n SPCs, dulyaudited by an independent public accounting firm appointed by agreement between the Master Lesseeand the <strong>Trust</strong>ee within ten days after the Service Date. Failing agreement, the independent publicaccounting firm shall be appointed by the chairman for the time being of the Singapore InternationalArbitration Centre.The Master Lessee and the <strong>Trust</strong>ee shall procure that two independent valuers be each appointed bythe Manager and the <strong>Trust</strong>ee within five days after the Service Date. Each independent valuer shalldetermine within 30 days from the Service Date, the value of the relevant <strong>Retail</strong> Space as at the ServiceDate by adopting the same method and basis of valuation as that adopted for purposes of the listing ofLMIR <strong>Trust</strong>.• IPO NAVThe IPO NAV is based on the value attributed to the four relevant <strong>Retail</strong> Spaces for the purpose of thelisting of the LMIR <strong>Trust</strong>, in each case, also taking into account all transaction costs incurred directly andindirectly by the LMIR <strong>Trust</strong> for the acquisition of these four <strong>Retail</strong> Spaces. The IPO NAV will not take intoaccount depreciation costs of the <strong>Retail</strong> Spaces incurred from the date LMIR <strong>Trust</strong> is listed on theSGX-ST.The Master Lessee and the <strong>Trust</strong>ee shall procure that the independent accountants shall determine theIPO NAV within 60 days from the Service Date. The IPO NAV of the relevant <strong>Retail</strong> Space is calculatedbased on the following formula:ZXY239
Certain agreements relating to LMIR <strong>Trust</strong> and the PropertiesWhere:“X” is the valuation of the relevant <strong>Retail</strong> Space adopted for purposes of the Offering;“Y” is the valuation of the total portfolio of LMIR <strong>Trust</strong> adopted for purposes of the Offering; and“Z” is the implied value of the total portfolio of LMIR <strong>Trust</strong> at the Offering based on the following formula:Y + [(A B) C]Where:“A” is the purchase price per Unit under the Offering;“B” is the NAV per Unit under the Offering based on the valuation of the total portfolio of LMIR <strong>Trust</strong>adopted for purposes of the Offering; and“C” is the total number of Units in issue immediately after completion of the Offering.The <strong>Trust</strong>ee (acting on the advice and recommendation of, and after discussions with, the Manager) issatisfied with the computation of the said transaction costs as set out in each of the put option agreements.Using the Metropolis Town Square Units as an example, in the event that the put option in respect of theMetropolis Town Square Units is exercised, each of the following events will happen concurrently on thedate of completion:(i) the <strong>Trust</strong>ee will transfer Metropolis Properties Pte. Ltd. (“Metropolis Properties”) to Matahari at thepurchase consideration described above;(ii) Serpong Properties Pte. Ltd. (“Serpong Properties”) will transfer its 5.0% interest in PT GemaMetropolis Modern to an entity to be nominated by Matahari for consideration of S$1.00; and(iii) Metropolis Properties will transfer its 5.0% interest in PT Matos Surya Perkasa to SerpongProperties for consideration of S$1.00.DESCRIPTION OF THE LETTER OF UNDERTAKINGOn 9 August 2007, the <strong>Trust</strong>ee, the Manager and the Sponsor entered into a letter of undertaking, pursuantto which the Sponsor will use its best endeavours to procure that the relevant <strong>Retail</strong> Space SPCs obtain thestrata titles to the Metropolis Town Square Units, Depok Town Square Units, Malang Town Square Unitsand Grand Palladium Medan Units.The <strong>Trust</strong>ee (acting on the advice and recommendation of, and after discussions with the Manager) is ofthe view that the proposed arrangements, namely the put option agreements and the letter of undertaking,adequately safeguard the interest of Unitholders if the legal titles to the four <strong>Retail</strong> Spaces are not issuedon or prior to the expiry of 24 months from the Listing Date.240
Overview of relevant laws and regulations in <strong>Indonesia</strong><strong>Indonesia</strong>n real property rights are governed under Law No. 5 Year 1960 regarding Agrarian Law (the“Agrarian Law”) and various implementing regulations issued by the <strong>Indonesia</strong>n central government andthe <strong>Indonesia</strong>n provincial governments.The Agrarian Law recognises the rights of legal persons to own and to use lands subject to various type ofrights granted by the Agrarian Law which are, among others, (a) Right of Ownership (“Hak Milik”), (b) Rightto Use (“Hak Pakai”), (c) Right to Cultivate (“Hak Guna Usaha”), (d) Right to Build (“Hak Guna Bangunan”),(e) Right to Lease (“Hak Sewa), and (f) other rights issued pursuant to the implementing laws andregulations such as Strata Title Rights (“Hak Atas Satuan Rumah Susun”).Pursuant to the <strong>Indonesia</strong>n Government Regulation No. 10 of 1961 as further amended by the <strong>Indonesia</strong>nGovernment Regulation No. 24 of 1997 ownership of lands are evidenced by the registration of the holderof the land in the Land Register of the relevant local land office (Badan Pertanahan) where such land islocated.RIGHTS TO OWN AND/OR TO USEReferring to the above there are various forms of rights for the use of land pursuant to the Agrarian Law,some of such forms are set out below.Hak Milik (HM/Right to Own). The closest form of land title to an internationally recognised concept of“freehold” title is Hak Milik or “Right of Ownership”. A Hak Milik title is available only to <strong>Indonesia</strong>nindividuals and certain <strong>Indonesia</strong>n religious and social organisations and government bodies, as regulatedin Government Regulation No. 38 of 1963. Hak Milik title cannot be obtained by companies (whether<strong>Indonesia</strong>n or foreign owned) or by foreign individuals.Hak Guna Bangunan (HGB/Right to Build). HGB is a land right to build on land that belongs to anotherparty. <strong>Indonesia</strong>n individuals and <strong>Indonesia</strong>n companies (or foreign investment companies incorporated in<strong>Indonesia</strong>) may acquire HGB titles. HGB titles can be granted on (i) State-owned land by the decision of theappointed relevant authority, (ii) Hak Pengelolaan (“HPL/Right to Manage”) land by the decision of theappointed relevant authority decision based on the recommendation of the HPL holder and (iii) Hak Milikland by a mutual agreement between the Hak Milik holder and the prospective HGB holder stated in thedeed made before the Land Official. In a piece of a land, a number of HGB certificates can be issueddepending on the ownership of the land. A HGB title is granted for a maximum initial term of 30 years. Byapplication to the relevant local land office upon the expiration of this initial term, a HGB title may beextended for an additional term not exceeding 20 years. Following expiration of this additional term, arenewal application may be made. Certain requirements and procedures for a HGB renewal applicationmust be complied with and followed including submitting relevant supporting documents and payingcertain amount of administrative fee chargeable by the local land office and subject to an inspection to thelocation by the local land office.The New Investment Law provides incentives which includes offering land title for longer periods such thateligible investors may hold HGB title in the form of grant and an advance acceleration of land title for aperiod of 50 years, and may be renewed for an additional term of 30 years.Hak Pakai (HP/Right to Use). Hak Pakai is the right to use and/or collect the products of land directlyadministered by the State (State-owned land), or of land owned by other persons (based on Hak Milik).Hak Pakai over land can be granted by the government in the form of a decree or by an <strong>Indonesia</strong>n citizenin the form of an agreement. The decree or the agreement gives the user the rights and obligations laiddown in that decree or agreement. Only (i) <strong>Indonesia</strong>n citizens, (ii) <strong>Indonesia</strong>n foreigners domiciled in<strong>Indonesia</strong>, (iii) legal entities established under <strong>Indonesia</strong>n law and having domicile in <strong>Indonesia</strong> and(iv) foreign entities that have representative in <strong>Indonesia</strong>, may have such rights and the holder of such landright may mortgage the land as security. Hak Pakai titles can be granted on (i) State-owned land by thedecision of the appointed relevant authority, (ii) HPL pursuant to the decision of the relevant Minister or therelevant appointed authority based on the recommendation of the owner of the HPL title or (iii) Hak Milikland by a mutual agreement between the Hak Milik holder and the prospective HGB holder stated in thedeed made before the Land Official.241
Overview of relevant laws and regulations in <strong>Indonesia</strong>Hak Pakai can be granted for a definite period of time or indefinite period of time. For definite of time, HakPakai is granted for a maximum of 25 years and may be extended for an additional term of 20 years.Following expiration of this additional term, an extension cannot be granted but a renewal application maybe made. Like a HGB renewal application, certain requirements and procedures for a Hak Pakai renewalapplication must be complied with and followed including submitting relevant supporting documents andpaying certain amount of administrative fee chargeable by the local land office and subject to an inspectionto the location by the local land office. Hak Pakai with an indefinite period of time can be granted as long asit is in use to governmental departments or institutions, local governments, embassies/representatives ofother countries, representatives of international institutions, religious bodies and social institutions.Under the New Investment Law, Hak Pakai with definite period may also be granted for a longer periods foran advance acceleration of land title for a period of 45 years and it may be renewed for an additional term of25 years.The extension and/or renewal of HGB or Hak Pakai title is granted if the following conditions are met:(a)(b)(c)(d)the land is being properly used in accordance with the situation, nature and objective of the grantingof the right;the requirements of the granting of the right are fulfilled by the title holder;the titleholder still meets the requirements as a titleholder of the land; andthe land is still used in accordance with the Spatial Plan (Rencana Tata Ruang Wilayah) of the area.The granting of acceleration and renewal of HGB and Hak Pakai based on the New Investment Law mayonly be granted if the following conditions are met:(a)(b)(c)(d)(e)the investment will be conducted for a long period and related to structural changes of the <strong>Indonesia</strong>neconomy;the investment with a level of investment risk that requires a long term investment return inaccordance with the type of investment being conducted;the investment which does not require an extensive area;the investment which uses state-owned land rights; andthe investment which does not disturb the sense of impartiality in the community as well as publicinterest.The renewal of the HGB and Hak Pakai based on the New Investment Law may be granted after it isevaluated as to whether the land can be further appropriately used according to the condition, nature andobjective of granting of the rights.It is unclear how the land office will respond to the issuance of the New Investment Law, which grants alonger period of the term of the land title.A HGB or Hak Pakai title holder has the right to erect, occupy and use buildings on such parcel of land andsell all or part of such parcel to a third party. Further, the HGB or Hak Pakai title can be revoked if thefollowing occur:(a)(b)(c)(d)the period of the title as stated in the decision/agreement of granting or extending the title is expired;the authority or the HPL or Hak Milik holder terminates the period before the expiry of the land titledue to (i) non fulfilment of the obligations of the land title, (ii) non compliance of the requirements orobligations stated in the decision/agreement between the HGB or Hak Pakai holder and the HPL orHak Milik holders, or (iii) the final and binding court decision;the revocation of the land title; orif the land title holder who is not an eligible party to hold the title does not transfer the land title to otherparty within one year.If the HGB or Hak Pakai title on State-owned land is revoked, is not renewed or extended, the HGB or HakPakai holder must demolish the buildings erected on such land and return the land to the state within one242
Overview of relevant laws and regulations in <strong>Indonesia</strong>year after the land title is revoked. If the HGB or Hak Pakai title on Hak Milik or HPL land is not renewed orextended, the HGB or Hak Pakai holder must return the land to the Hak Milik or HPL land in accordancewith agreement among the parties.The application should be made no later than two years prior to the expiration of the additional term. Theland office has discretion to grant the various extensions.Hak Pengelolaan (HPL/Right to Manage). HPL is the right to (i) plan the purpose and the use of theland, (ii) use the land for the needs of the business of the holder, and (iii) surrender plots of land to thirdparties in accordance with the terms and conditions laid down by the holder of the HPL title. HPL titles canbe granted to (i) <strong>Indonesia</strong>n governmental institutions including local government, (ii) State-ownedenterprises (ii) <strong>Indonesia</strong>n regional government enterprises, (iv) Persero Limited Liability Company,(v) Authority bodies and (vi) other legal entities owned by the <strong>Indonesia</strong>n government. HPL is grantedfor an indefinite period of time. The application of granting HPL is made to the relevant Minster throughlocal Land officers where the land is located. HGB and Hak Pakai can be granted over the HPL land basedon local land officers’ recommendations.Strata Titles. <strong>Indonesia</strong>n law regulates strata titles, as stipulated in Law No. 16 of 1985 and GovernmentRegulation No. 4 of 1988 and its implementing regulations. Strata title buildings may only be constructedon plots of land with a right of ownership (Hak Milik), HGB or Hak Pakai on State-owned land. For a plot ofland with HPL, such right must first be converted to a HGB for the construction of multi-storey offices,residential or retail buildings on it. Under <strong>Indonesia</strong>n law, strata title is a legal title to the building propertyand common property, common area and common land of which all constitute an inseparable part to thestrata title ownershipThe right of strata title ownership may be owned by an individual, a corporation established under<strong>Indonesia</strong>n Law and domiciled in <strong>Indonesia</strong> or foreigners depending on the title of the land where a stratatitle building is built. For strata title ownership, a certificate for the right of strata title ownership is issued.Strata title buildings including the underlying common land and the right of strata title ownership may be putas encumbrance with (a) Hak Tanggungan, if the title of the land is Hak Milik or, HGB and Hak Pakai ofstate-owned land, or (b) fiduciary security, if the title of the land is Hak Pakai on state-owned land. A stratatitle building may only be sold after the a regional government grants the occupation permit (Iljin layakhuni).The term of the strata title, together with its extension, depends on the title of the underlying common land(i.e. Hak Milik, HGB and Hak Pakai) that has been issued.The process of obtaining strata title certificates commences with the construction of the strata title building.Prior to construction, the developer must obtain a building licence from a local government. Theapplication form must indicate the purpose of the use of the strata title i.e for residential or nonresidential or both. Aside from the building licence, the developer must prepare the specificationclearly showing the boundaries of each strata title unit, common area, common land and commonproperty and their proportional ratio value which must be authorised by the second level of localgovernment. If the specification provides the necessary details and is authorised by the localgovernment, the local government will issue the building licence and the developer may beginconstruction of the strata title buildings. The specification will be used as the basis for preparing theseparation deed for the strata title.Upon completion of the construction of the strata title the developer must obtain the occupation permit.The local government will issue the occupation permit after conducting an inspection of the architecture,construction, installation and other supporting facilities of the strata titles building. The next step is toprepare a separation deed which shows a drawing and description of the separation between the units andcommon area, the common land and the common property, as well as the vertical and horizontalboundaries. The separation deed is subject to approval by the second level of local government andwill be used as the basis for issuing the strata titles certificates. After the separation deed is certified andregistered and the local land office issues the land book of the strata title, the strata title certificate for eachunit is issued under the registration name of the developer. The strata titles certificate consists of (a) anexcerpt of the land book of the strata title, (b) an excerpt of the measurement letter/the drawing layout of thecommon land and (c) the drawing layout of the strata titles showing their level and location.243
Overview of relevant laws and regulations in <strong>Indonesia</strong>After the issuance of the strata titles certificates, the underlying common land title certificate is retainedand deposited in the local land office with a record that the strata title certificates have been issued. Thestrata title can only be transferred to other third party once the strata title certificate is issued.The transfer of strata title certificate for the first time is carried out between the developer and purchaser byentering into a sale and purchase deed before the land deed official. The land official deed must beregistered at the local land office, together with, among others, the strata title certificate registered underthe name of the developer and the rules and regulations of the residents’ association. Having examined allthe required supporting documents, the local land office will record the transfer of title and annotate thename of the developer into the name of the purchaser in the strata title certificate as the new owner of thestrata title.Build, Operate and Transfer or BOT. BOT is a form of right to utilise a piece of land, wherein a privateentity receives certain rights from the land owner to finance, design, construct and operate a facility on theland for a specified period, after which the ownership of the building is transferred with the land back to theland owner.A BOT Scheme is a common structure in <strong>Indonesia</strong> for construction of commercial buildings where theland owner owns the relevant BOT Land. Under the BOT Scheme, the BOT Grantor agrees to grant certainrights over the BOT Land based on the BOT Agreement to the BOT Grantee. The BOT Grantee candevelop the site subject to the relevant approvals and then operate the buildings constructed on the landfor the certain use, such as retail shopping centre developments, for a particular period of time asstipulated in the BOT Agreement. For the right to utilise the BOT Land, the BOT Grantee is obliged to pay acertain compensation to the BOT Grantor as stipulated in the BOT Agreement. The period of BOTAgreements is subject to the parties’ agreement but commonly ranges from 20 to 30 years and may beextended upon agreement of both parties. Upon the expiry of the term of the BOT Agreement, the BOTGrantee must return the BOT Land together with the improvements without either party paying any form ofcompensation to the other.The BOT Scheme and cooperation arrangement is essentially a contractual arrangement and governed by<strong>Indonesia</strong>n Civil Code Contract Law. Pursuant to Article 1338 of the <strong>Indonesia</strong>n Civil Code the contractingparties are free to arrange their relationship in the BOT Agreement or Cooperation Agreement (freedom ofcontract) subject to, among others, the prevailing laws and regulations, the good faith of the contractingparties and public policy principles.During the term of the BOT Agreement, the BOT Grantee has full rights to use the BOT Land and buildingsas agreed between the parties, including to operate the buildings as shopping mall, to receive rent fromtenants occupying the building and to appoint parties to conduct activities on or to the BOT land andpremises such as building managers in the case of retail shopping centre developments.Lease Agreement. The right to use land and buildings, as is similar in many other jurisdictions can alsobe granted through lease-hold arrangements. In general, no limitation on citizenship should apply underthis arrangement pursuant to the principle of freedom of contract as set out above.Share Ownership. A foreign indirect ownership of land and building through a PMA Company schememay also provide the rights of a foreign shareholder, such as LMIR <strong>Trust</strong>, in the Property Companies toenjoy the beneficial benefits from the Property Companies owning the Property. <strong>Indonesia</strong>n law deems aPMA Company as an <strong>Indonesia</strong>n legal person and as such, a PMA Company has all the rights granted to<strong>Indonesia</strong>n legal persons including to own, manage and operate property developments. The rights ofsuch foreign shareholders are protected by Law No. 25 Year 2007, regarding Investment and Law No. 1Year 1995 regarding Company Law. Such relevant protections include the repatriation guarantee on profitsobtained by the Property Companies and acknowledgement as a shareholder of the Property Companieswith the rights and obligation to be represented on the Board of Directors and Board of Commissioners.The licence of a PMA Company is issued by the Capital Investment Board (BKPM).REGULATION ON THE DEVELOPMENT AND USE OF LANDBefore a parcel of land can be used for certain purposes, such as housing and its related facilities orshopping complex, an environmental impact analysis must be carried out for the proposed project.Thereafter, such person, or the contractor who is responsible for the construction as instructed and244
Overview of relevant laws and regulations in <strong>Indonesia</strong>authorised by the land owner, shall obtain a building licence / Izin Mendirikan Bangunan (“IMB”) from thelocal regional government.After that, the person may commence the construction or development of the land including the clearanceand preparation for the construction of infrastructure including drainage system, roads, landscaping,street lighting, electricity and telephone cables. As the constructions may be conducted in various phases,an IMB must be obtained for each phase to construct building(s) on top of the land, which is alreadyoutfitted with the infrastructure as referred above.The development of a housing complex must also comply with the requirement of procurement for publicand social facilities which shall be provided for the public benefit such as schools, sport facilities, places ofworship (e.g. mosques, churches), markets, parks, playgrounds and others.TRANSFER OF THE PROPERTYThe transfer of property is done through a deed of transfer made before the local land deed officer. Therewill be certain taxes payable by both the vendor and the purchaser before a deed of transfer can beexecuted. The current rate of tax is 5.0% of the transfer amount or the valuation used for Land and Buildingtax purposes, whichever is the higher, and such tax is payable by both the vendor and the purchaser.Following the signing of such deed of transfer, the Land Deed Official (Pejabat Pembuat Akta Tanah, or“PPAT”) who is normally a local notary will then submit an application to the national land office where theproperty is located, to register the name of the new owner in the Land Book at such National Land Board(Badan Pertanahan Negara; or “BPN”) as well as on the Land Certificate.The abovementioned procedures are also applicable for the transfer of Strata Title interests in property.Under the present regulations, a developer can only transfer or sell units or offices in such a building afterthe Strata Title (Hak Milik Atas Satuan Rumah Susun) over the Hak Milik / HGB / Hak Pakai Atas TanahNegara and Hak Pengelolaan titles of the land where the building is constructed has been issued. Oncethis has been issued, the developer may apply for separation of the common areas. The application mustalso include detailed boundaries of each unit or office in the form of sketch plans. A certificate of ownershiprights in a unit or office is issued to each of the transferees upon application. The ownership rights in a unitor office also include rights over the common areas, which together constitute an inseparable part of theunit or office concerned.The property under the BOT Scheme is not allowed to be transferred to a third party since the BOTGrantee must deliver the property to the BOT Grantor at the expiry of the BOT Agreement without anycompensation. However, the interest of the properties under the BOT Scheme can be transferred byassignment of rights under the BOT Agreement or by way of transfer of shares of the shareholders of theBOT Grantee.In accordance with the <strong>Indonesia</strong>n law, the assignment of rights under the BOT Agreement will requireacknowledgment or consent from the BOT Grantor. The BOT Agreements do not provide provisionsregarding the party who may receive the assignment, except for The Plaza Semanggi BOT Agreementwhich specifically states that the assignment may be designated to (i) other third parties or banks orfinancial institutions who finance the construction or (ii) other third party appointed by them, provided thatthe BOT Agreement will bind the transferee.With respect to the transfer of shares of the shareholders of the BOT Grantee, except for the CibuburJunction BOT Agreement which requires prior consent from the BOT Grantor, the BOT Agreements aresilent on the consent for transfer of shares of the shareholders of the BOT Grantee. In the absence of anexpress provision of the transfer of shares in the BOT Agreements, the transfer of shares of theshareholders of the BOT Grantees is not prohibited.MORTGAGE OF THE PROPERTYSubject to the type of land rights and provisions of the relevant agreements, such as the BOT Agreement,the Properties may be used as a security and therefore encumbered with a Mortgage (Hak Tanggungan).The Mortgage shall be set out in a deed made before a local land deed officer and registered at the relevantnational land office. As evidence of the mortgage, BPN will make a notation of the Land Book noting themortgage and issue a mortgage certificate.245
Overview of relevant laws and regulations in <strong>Indonesia</strong>REGULATION OF THE INDONESIAN ENVIRONMENTAL LAWS AND REGULATIONSEnvironmental protection in <strong>Indonesia</strong> is governed by various laws, regulations and decrees of which theProperties are subject, Under the Decree of State Minister for Environmental Affairs No. 17/2001 datedMay 22, 2001 concerning Business and/or Action Plans which must be completed with Analysis ofEnvironmental Impact, an Analysis of Environmental Impacts must be conducted on some of theProperties to study the major and significant impacts on businesses and/or activities planned in aparticular environment which will be needed for the process of making decisions on the execution ofthe businesses and/or activities. Pursuant to Government Regulation No. 27 of 1999 dated May 7, 1999concerning Analysis of Environmental Impacts, the Analysis of Environmental Impacts constitutes arequirement which must be fulfilled to obtain a license to conduct a business’ and/or activity from thecompetent authority. An Assessment Committee formed by the <strong>Indonesia</strong>n government will evaluate theAnalysis of Environmental Impacts based on the framework of reference, the environmental impactassessment report, or AMDAL report, an environmental management plan (“RKL”) and an environmentalmonitoring plan (“RPL”). A framework of reference is the scope of the analysis of environmental impactswhich will be the result of scope-delineation. AMDAL is a careful and in-depth study of the major andsignificant impacts of a business and/or activity plan. RKL is a plan to handle the major and significantimpacts on the environment as the consequence of a business and/or activity plan. RPL is a plan to monitorthe components of the environment exposed to the major and significant impacts as the consequence of abusiness and/or activity plan.For other business plans which do not have to be completed with the AMDAL document, an EnvironmentManagement Efforts (“UKL”) and Environment Monitoring Efforts or UPL would have to be prepared.Under Law No. 23 of 1997 dated September 19, 1997 concerning Environmental Management, theProperties are also subject to regulations relating to the management of certain materials and waste andare required to obtain a licence in order to operate, and to reduce, process and accumulate such waste .Such licences may be revoked and operations may be required to cease if the regulations relating to suchwaste are violated.REGULATION ON MODERN AND PRIVATE MARKET BUSINESSUnder the Decision of the Minister of Trade and Industry of the Republic of <strong>Indonesia</strong> No. 107/MPP/Kep/2/1998, dated 27 February 1998 on the Provisions and Procedures for the Granting of Modern MarketBusiness Licences (“IUPM”), every company that engages in modern market business activities must beobligated to obtain a Modern Market Business Licence.Modern market is defined as markets established by government, private companies, and cooperatives inthe forms of malls, supermarkets, department stores and shopping centres, the management of whichmust be carried out in a modern manner that prioritises comfort in shopping with a single management,having relatively strong capital with use of fixed price labels. The IUPM is granted by the Minister of Tradeand Industry and is valid so long as the company engages in modern market activities. The IUPM is issuedbased on the domicile or location of the modern market and the company must obtain a new IUPM if thedomicile or location of the modern market is changed.The modern market is obliged to cooperate with small and medium scale enterprises and cooperatives andtraditional markets under a partnership pattern. If it fails to do this, a written warning letter will be given bythe Directorate General of Domestic Trade and the IUPM can be frozen for 6 months period as of theissuance of the warning letter.A Modern Market company that has obtained an IUPM is obliged to submit a report once every 6 months atthe latest on 15 July and 15 January to the Director General of Domestic Trade though the Minister of Tradeand Industry may from time to time request the company to submit a report on its business activities. Awritten warning will be given to a modern market company that has obtained an IUPM if, among otherthings, it does not submit the periodical report or carries out business that is not in accordance with itsIUPM. The IUPM can be revoked if it is obtained on the basis of incorrect or forged information, or if on thelapse of the period of the warning letter the company has not performed its obligations required above themodern market company or has been found guilty by a final and binding court decision of violation ofIntellectual Property or of committing a criminal offence.246
Overview of relevant laws and regulations in <strong>Indonesia</strong>Further, pursuant to Regional Regulation of DKI Jakarta Province No. 2 of 2002, dated 28 June 2002regarding Private Markets in DKI Jakarta Province, every operation of a private market must obtain writtenapproval from the Governor of DKI Jakarta. Private markets includes stores, malls, supermalls, plazas andshopping centres. The private market operational licence is valid as long as the company still engages inthe private market activities, provided that the registration must be conducted once every five years. Theprivate market activities must include the partnership formation of a cooperation of small scale enterprisesor cooperatives, paying tax and retribution obligations, and informing the DKI Jakarta Governor in writing ifthe private market activities are no longer conducted or are transferred to other parties.Any individual or company that engages in private market activities without obtaining the licence will besentenced to imprisonment for a maximum of three months, or will be fined a maximum of Rp. 5,000,000and or will receive administrative sanctions such as the temporary closing of the private market location.REGULATION ON TRANSFER OF SHARESOn 16 August 2007, the <strong>Indonesia</strong>n government enacted Law No. 40 of 2007 on Limited Liability Company(the “New Company Law”). Based on the New Company Law, there are two approaches on the transfer ofshares, i.e., a transfer of shares and acquisition.Transfer of SharesA transfer of shares is conducted by way of executing a deed of transfer of shares. A copy of the deed oftransfer of shares must be provided to the company. After the execution of the deed of transfer of shares,the Board of Directors of the company must register every transfer of shares (including the date of transfer)in the shareholders’ register and special register, and must notify any changes regarding the shareholdersto the Minister of Law and Human Rights (“MOLHR”) to be recorded in the Company Registry within30 days after the date of the registration of the transfer of shares.The New Company Law stipulates that if the Board of Directors does not notify the MOLHR of such transferof shares, the MOLHR may reject the subsequent approval or notification which will be submitted to theMOLHR based on the shareholding composition and the name of the new shareholders. In practice, thenotification on the transfer of shares will be conducted by a notary through an online system. The MOLHRwill issue a receipt of notification once the MOLHR receives such notice.In addition, transfers of shares in public companies are subject to laws and regulations applicable to publiccompanies.Acquisition:An acquisition is defined as a share acquisition which results in a change of control in the company. TheNew Company Law differentiates the acquisition through the Board of Directors of the target company ordirectly through the shareholders.If the acquisition will be conducted through the Board of Directors, the Board of Directors of the targetcompany and the acquiring company must prepare an acquisition plan, which should contain at least thefollowing information:(a) name and domicile of the target company and the acquiring company;(b) reasons and explanations from the Board of Directors of the target company and the acquiringcompany;(c) financial statements (comprising at least the balance sheet in the preceding financial yearconsolidated with the balance sheet in the previous financial year, profit and loss statement fromthe relevant financial year, cash flow statement, and equity movement report including notes on thefinancial statements) of each the acquiring company and the target company;(d) procedures for valuation and conversion of shares of the target company to the shares to be sold inexchange for the sale of shares, if the payment is made by way of exchange of shares;(e) number of shares to be acquired;(f) source of funding;247
Overview of relevant laws and regulations in <strong>Indonesia</strong>(g) pro forma balance sheet of the acquiring company prepared in accordance with the prevailing<strong>Indonesia</strong>n GAAP;(h) method for settling the rights of shareholders who disagree with the acquisition plan;(i) method for settling the status, rights, and obligations of the members of the Board of Directors, theBoard of Commissioners, and employees of the target company;(j) estimated timeline for completing the acquisition, including timeline to give an authorization for thetransfer of shares from the shareholders to the Board of Directors;(k) draft amendments to the Articles of Association of the target company as a result of the acquisition (ifthese are required).The requirement to prepare this acquisition plan does not apply to acquisitions that are conducted directlythrough the shareholders.If the acquisition is conducted through the Board of Directors, the Board of Directors of the acquiringcompany should do the following not later than 30 days prior to the date of notice of Extraordinary GeneralMeeting of Shareholders (EGMS):(a) announce the summary of the acquisition plan in at least one <strong>Indonesia</strong>n national newspaper; and(b) announce the acquisition plan in writing to the employees.The provision on such announcement also applies to acquisitions conducted directly through theshareholders.Following the announcement, creditors may file an objection with the company within 14 days after theannouncement. If there is any objection that cannot be settled until the date of the EGMS, that objectionmust be presented to the EGMS for resolution. Further, pursuant to the New Company Law, the acquisitioncannot be completed if the objections of the creditors have not been resolved.The New Company Law explictly states that the obligation of the announcement above is applied for theacquiring company. However, some legal practicioners intepret that the announcement requirement alsoapplies to the target company.248
TaxationSINGAPORE TAX IMPLICATIONSThe following summary of certain Singapore income tax consequences of the purchase, ownership anddisposition of the Units is based upon laws, regulations, rulings and decisions now in effect, all of which aresubject to change (possibly with retroactive effect). The summary does not purport to be a comprehensivedescription of all of the tax considerations that may be relevant to a decision to purchase, own or dispose ofthe Units and does not purport to apply to all categories of investors, some of which may be subject tospecial rules. <strong>Investor</strong>s should consult their own tax advisers concerning the application of Singaporeincome tax laws to their particular situations as well as any consequences of the purchase, ownership anddisposition of the Units arising under the laws of any other taxing jurisdiction.Taxation of LMIR <strong>Trust</strong>LMIR <strong>Trust</strong> is liable to Singapore income tax on:• income accruing in or derived from Singapore; and• unless otherwise exempt, income derived from outside Singapore which is received in Singapore ordeemed to have been received in Singapore by the operation of law.Dividends from the Target Singapore SPCsLMIR <strong>Trust</strong>’s income will comprise substantially dividends received from its holding of ordinary shares inthe Target Singapore SPCs. Provided that the Target Singapore SPCs are tax residents of Singapore forincome tax purposes, these dividends will be one-tier (tax-exempt) dividends and hence exempt from tax inthe hands of the <strong>Trust</strong>ee.Gains on disposal of sharesSingapore does not impose tax on capital gains. In the event that LMIR <strong>Trust</strong> disposes of its ordinaryshares or redeemable preference shares or both in the Target Singapore SPCs, gains arising from such adisposal will not be liable to Singapore income tax unless the gains are considered income of a trade orbusiness. The gains may also be liable to Singapore income tax if the shares were acquired with theintention or purpose of making a profit by sale and not for long-term investment purposes.Gains arising from the sale of the ordinary shares or redeemable preference shares or both in the TargetSingapore SPCs, if considered to be trading gains, will be taxable on the <strong>Trust</strong>ee.Redemption of redeemable preference shares in the Target Singapore SPCsAny proceeds received by LMIR <strong>Trust</strong> from the redemption of its redeemable preference shares in theTarget Singapore SPCs at the original cost of the redeemable preference shares are capital receipts andhence not taxable on the <strong>Trust</strong>ee.Taxation of the Singapore SPCsThe Singapore SPCs are liable to Singapore income tax on:• income accruing in or derived from Singapore; and• unless otherwise exempt, income derived from outside Singapore which is received in Singapore ordeemed to have been received in Singapore by the operation of law.Dividends from the <strong>Indonesia</strong>n SPCsProvided that the Singapore SPCs are tax residents of Singapore for income tax purposes, any dividendsreceived in Singapore by the Singapore SPCs from the <strong>Indonesia</strong>n SPCs will be exempt from Singaporeincome tax under Section 13(8) of the Income Tax Act, if the following conditions are met:• in the year the dividends are received in Singapore, the headline corporate tax rate in <strong>Indonesia</strong> is atleast 15.0%;249
Taxation• the dividends have been subject to tax in <strong>Indonesia</strong>; and• the Singapore Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to theSingapore SPCs.Based on the current tax laws in <strong>Indonesia</strong>, dividends paid by the <strong>Indonesia</strong>n SPCs out of their incomefrom the letting of the Properties will meet the aforesaid conditions (see —“<strong>Indonesia</strong>n Tax Implications”).Interest from the <strong>Indonesia</strong>n SPCsLMIR <strong>Trust</strong> has obtained approval of the IRAS to exempt the interest received by the relevant SingaporeSPCs on the loans extended to the <strong>Indonesia</strong>n SPCs from Singapore income tax under Section 13(12) ofthe Income Tax Act. This approval is subject to the relevant Singapore SPCs satisfying certain stipulatedconditions, including the condition that the full amount of the remitted interest, less attributable expenses,must be distributed to LMIR <strong>Trust</strong>.Gains on disposals of sharesSingapore does not impose tax on capital gains. In the event that the Singapore SPCs dispose of theirordinary shares in the <strong>Indonesia</strong>n SPCs, gains arising from such a disposal will not be liable to Singaporeincome tax unless the gains are considered income of a trade or business. The gains may also be liable toSingapore income tax if the shares were acquired with the intention or purpose of making a profit by saleand not for long-term investment purposes.Gains arising from the sale of ordinary shares in the <strong>Indonesia</strong>n SPCs, if considered to be trading gains,will be assessed to tax on the Singapore SPCs.Repayment of loans by the <strong>Indonesia</strong>n SPCsAny proceeds received by the Singapore SPCs from repayment of principal on the loans by the <strong>Indonesia</strong>nSPCs are capital receipts and hence not taxable on the Singapore SPCs.Taxation of UnitholdersDistributions by LMIR <strong>Trust</strong>Subject to LMIR <strong>Trust</strong>’s distribution policy (see “Distributions”), LMIR <strong>Trust</strong>’s distributions will mainly bemade out of the following receipts:• one-tier (tax-exempt) dividends received from the Target Singapore SPCs ( the “tax-exemptincome”); and• capital receipts from the redemption of redeemable preference shares in the Target Singapore SPCs.Distributions out of tax-exempt incomeUnitholders will be exempt from Singapore income tax on distributions made out of LMIR <strong>Trust</strong>’s taxexemptincome.For this purpose, the amount of tax-exempt income distributions that LMIR <strong>Trust</strong> can distribute for adistribution period will be to the extent of the amount of tax-exempt income that it has received and isentitled to receive in that distribution period.Distributions made out of any amount of Distributable Income for a distribution period which LMIR <strong>Trust</strong>received or is entitled to receive as its own tax-exempt income after the end of that distribution period willbe treated as capital distributions and the tax treatment set out under “Distributions out of capital receipts”will apply. The amount of such tax-exempt income may be used to frank tax-exempt income distributionsout of Distributable Income for subsequent distribution periods.Distributions out of capital receiptsUnitholders will not be subject to Singapore income tax on distributions made by LMIR <strong>Trust</strong> out of itscapital receipts, i.e. amounts received from the redemption of redeemable preference shares in the TargetSingapore SPCs. Such distributions will be treated as returns of capital for Singapore income taxpurposes. For Unitholders who hold the Units as trading or business assets and are liable toSingapore income tax on gains arising from disposal of the Units, the amount of such distributions will250
Taxationbe applied to reduce the cost of the Units for the purpose of calculating the amount of taxable trading gainwhen the Units are disposed of. If the amount exceeds the cost or the reduced cost of the Units, as the casemay be, the excess will be subject to tax as trading income of such Unitholders.Distributions out of gains from the disposal of shares in the Target Singapore SPCsDistributions made out of gains from the disposal of shares in the Target Singapore SPCs, that is if theManager exercises its discretion to distribute such gains, will:• not be assessable to tax on the Unitholders if the gains are determined to be capital gains for Singaporeincome tax purposes, unless the distributions are considered gains or profits of a trade or businesscarried on by the Unitholder, for example, if the Units are held as trading assets; and• not be subject to further Singapore income tax in the hands of Unitholders if the gains are determined tobe trading gains for Singapore income tax purposes. Tax on such trading gains will be assessed on the<strong>Trust</strong>ee.Disposal of UnitsSingapore does not impose tax on capital gains. Any gains on disposal of the Units are not liable toSingapore income tax provided the Units are held as investment assets. Where the Units are held astrading assets, any gains on disposal of the Units are liable to Singapore income tax under Section 10(1)(a)of the Income Tax Act. Where the Units are acquired with the intention or purpose of making a profit by saleand not with the intention to be held as long-term investments, any gains on disposal of the Units could beconstrued as “gains or profits of an income nature” liable to tax under Section 10(1)(g) of the Income TaxAct.Stamp dutyStamp duty will not be imposed on instruments of transfers relating to the Units. In the event of a change oftrustee of LMIR <strong>Trust</strong>, stamp duty on any document effecting the appointment of a new trustee and thetransfer of the trust assets from the incumbent trustee to the new trustee will be charged at a nominal ratenot exceeding S$10.00 as specified under Article 3(g)(ii) of the First Schedule to the Stamp Duties Act,Chapter 312 of Singapore.INDONESIA TAX IMPLICATIONSTax implications on the <strong>Retail</strong> <strong>Malls</strong> portion of the LMIR <strong>Trust</strong> Structure:On the transfer of shares in <strong>Indonesia</strong>n SPCs to Singapore SPCsAny capital gain from the transfer of shares in <strong>Indonesia</strong>n SPCs to Singapore SPCs is subject to taxpursuant to Article 17 of Income Tax Law No. 17/2000 with a maximum rate of 30.0% and the liability forsuch capital gains tax is the sole obligation of the Vendors.Tax implication for the TenantsOn the Rental Payments to the <strong>Indonesia</strong>n SPCs• Article 4(2) Withholding Income TaxThe payment of rental on land and/or buildings leased by the Tenants to the <strong>Indonesia</strong>n SPCs will besubject to a 10.0% final withholding income tax on the gross value of the land and/or buildings rental.However, if the tenants of the <strong>Retail</strong> <strong>Malls</strong> are not appointed tax withholder (i.e. individuals), then the finalincome tax must be paid directly by the <strong>Indonesia</strong>n SPCs (not using the withholding system).251
TaxationTax implication for the <strong>Indonesia</strong>n SPCsOn the rental payments received from the Tenants• Corporate Income TaxThe rental income received from the Tenants will be subject to final income tax (Withholding article 4(2)Income Tax) at the rate of 10.0%. Because the rental income has already been subjected to the finalincome tax, the said income should not be combined with other non-final income in calculating thecorporate income tax due for the corresponding tax year.The imposition of final income tax to the rental income treated as income for the <strong>Indonesia</strong>n SPCs andthe income tax of 10.0% withheld by the Tenants will be treated as payment for the corporate income taxdue for the respective <strong>Indonesia</strong>n SPCs. The imposition of final income tax does not mean that theincome from the lease of land and/or buildings does not need to be reported in the Annual CorporateIncome Tax Return (SPT Tahunan PPh Badan) of the <strong>Indonesia</strong>n SPCs. The rental income must bereported in the <strong>Indonesia</strong>n SPC’s returns, however it should not be combined with other non-finalincome in calculating the income tax due for the corresponding tax year.• VAT on the Rental of Land and/or BuildingThe <strong>Indonesia</strong>n SPCs must charge 10.0% VATon the rental of land and/or building (taxable service) tothe Tenants.On the payment of Management Fee to the Property Manager• Article 23 withholding income taxThe <strong>Indonesia</strong>n SPCs must withhold article 23 income tax at the rate of 4.5% from the payment ofmanagement fees to the Property Manager. This 4.5% withholding tax will be treated as prepaid tax forthe Property Manager.Please be advised that according to Article 13 of Law No. 16/2000 regarding General Tax Provisions andProcedures, the Directorate General of Taxation shall have the authority to conduct audit or verificationwithin a 10 years period after the end of fiscal year or fiscal period.Tax implications on the <strong>Retail</strong> Spaces portion of the LMIR <strong>Trust</strong> StructureTax implication for the Master LesseeOn the transfer of title of land and/or buildings• Capital Gains TaxAny capital gain received by the Master Lessee from the transfer of title of land and/or buildings (i.e.,<strong>Retail</strong> Spaces) to the <strong>Indonesia</strong>n SPCs is subject to tax pursuant to Article 17 of Income Tax Law No. 17/2000 with a maximum rate of 30.0% and the liability for such capital gains tax is the sole obligation of theMaster Lessee.• Income Tax on the Transfer of Title of Land and/or BuildingsThe transfer of title of Land and/or Buildings by the Master Lessee will be subject to 5.0% income tax asstipulated by Government Regulation No. 79/1999, which can be treated as tax credit in calculating theamount of tax due for corporate income tax for the Master Lessee.• VATConsidering that the Master Lessee is a Taxable Entrepreneur, the Master Lessee needs to charge10.0% VAT on the transfer. This VAT will be treated as input tax for the <strong>Indonesia</strong>n SPCs and will beoffset against <strong>Indonesia</strong>n SPCs’ output tax (i.e. VAT charged by the <strong>Indonesia</strong>n SPCs to the MasterLessee on the rental fee) to arrive at the amount of VAT due to the state treasury.252
TaxationOn the rental payments to the <strong>Indonesia</strong>n SPCs• Article 4(2) Withholding Income TaxThe payment of rental on land and/or buildings leased by the Master Lessee to the <strong>Indonesia</strong>n SPCs willbe subject to 10.0% final withholding income tax on the gross value of the land and/or buildings rental.• VATGiven the fact that the Master Lessee is a Taxable Entrepreneur, then the 10.0% VAT charged by the<strong>Indonesia</strong>n SPCs on the rental payments should be treated as input tax for the Master Lessee (to beoffset against its output tax to arrive at the amount of VAT due to the state treasury).Tax implication for the <strong>Indonesia</strong>n SPCsOn the transfer of title of land and/or buildings• Property Title Acquisition DutyAs stipulated by Law No. 20/2000, the <strong>Indonesia</strong>n SPCs must pay the Property Title Acquisition Duty atthe rate of 5.0% from the amount of the actual selling price or from the sales value of tax object(predetermined value for tax calculation purposes), whichever is higher.• VATConsidering that the <strong>Indonesia</strong>n SPCs are Taxable Entrepreneurs, then the 10.0% VAT charged by theMaster Lessee on the transfer should be treated as input tax for the <strong>Indonesia</strong>n SPCs (to be off setagainst the output tax from the rental fee to arrive at the amount of VAT due to the state treasury).On the rental income received from the Master Lessee• Corporate Income TaxThe rental income received from the Master Lessee will be subject to final withholding income tax(Withholding article 4(2) Income Tax) at the rate of 10.0% because the rental income has alreadysubjected to the final income tax, then the said income should not be combined with other non-finalincome in calculating the corporate income tax due for the corresponding tax year.The rental income received from the Master Lessee will be treated as income for the <strong>Indonesia</strong>n SPCsand the income tax of 10.0% withheld by the Master Lessee will be treated as payment for the corporateincome tax due for the respective <strong>Indonesia</strong>n SPCs. The imposition of final income tax does not meanthat the income from the lease of land and/or buildings does not need to be reported in the AnnualCorporate Income Tax Return (SPT Tahunan PPh Badan) of the <strong>Indonesia</strong>n SPCs. The rental incomemust be reported in the annual tax return, however, the income should not be combined with other nonfinalincome in calculating the income tax due for the corresponding tax year.• VATThe <strong>Indonesia</strong>n SPCs must charge 10.0% VATon the rent of land and/or building (taxable service) to theMaster Lessee. This VATshould be treated as input tax for the Master Lessee and to be offset against itsoutput tax to arrive at the amount of VAT due to the state treasury.Payment of Shareholders’ Loans and related interest from <strong>Indonesia</strong>n SPCs to Singapore SPCsTax implications for the <strong>Indonesia</strong>n SPCs• The Repayment of Principal from Shareholders’ LoansThe repayment of principal from the shareholder’s loans will not be subject to any form of <strong>Indonesia</strong>n taxas there are no thin capitalisation rules in <strong>Indonesia</strong>.• The Payment of Interest on Shareholders’ LoanThe <strong>Indonesia</strong>n tax rules generally require a twenty percent (20%) tax to be withheld on the payment ofinterest from an <strong>Indonesia</strong>n taxpayer to an offshore tax resident. Under the tax treaty betweenSingapore and <strong>Indonesia</strong>, the rate of withholding tax is reduced to ten percent (10%) on thepayment of interest to Singapore tax resident beneficial owner of the interest. The reduced rate is253
Taxationavailable to a Singapore company only if the company submits an original copy of its certificate ofdomicile to the <strong>Indonesia</strong>n payor prior to the payment of the interest.On 7 July 2005, the Directorate General of Taxation in <strong>Indonesia</strong> issued a circular letter indicating thatthe benefits of <strong>Indonesia</strong>’s tax treaties would not be available to a recipient of <strong>Indonesia</strong>n-sourcedincome who was not the beneficial owner of such income. The circular letter further elaborated that a“special purpose vehicle” which is a “conduit company”, “paper box company”, “pass-through company”or any similar form of entity would not qualify as the beneficial owner of payments received by it. Itremains uncertain as to how the <strong>Indonesia</strong>n tax authorities will decide whether or not the SingaporeSPCs are the beneficial owners of interest received from the <strong>Indonesia</strong>n SPCs.In the event that the Singapore SPCs were viewed by the <strong>Indonesia</strong>n tax authorities as conduitcompanies or pass-through companies, and therefore not the beneficial owners of interest receivedfrom the <strong>Indonesia</strong>n SPCs, the Unitholders of LMIR <strong>Trust</strong> should in that case be viewed as the beneficialowners of the interest. In that case it should still be possible to take the position that the reduced rate ofwithholding tax is applicable, to the extent that the Unitholders are tax resident in Singapore or any otherjurisdiction with the same tax rate under their respective tax treaty.Payment of dividends from <strong>Indonesia</strong>n SPCs to Singapore SPCsTax implications for the <strong>Indonesia</strong>n SPCs• VAT on the Payment of DividendsThere will be no VAT on the payment of dividends.• Article 26 Withholding Income Tax on the Payment of DividendsThe <strong>Indonesia</strong>n tax rules generally require a 20.0% tax to be withheld on the payment of a dividend froman <strong>Indonesia</strong>n taxpayer to an offshore tax resident. Under the tax treaty between Singapore and<strong>Indonesia</strong>, the rate of withholding tax is reduced to 10.0% on the payment of a dividend to Singapore taxresident beneficial owner of the dividend. The reduced rate is available to a Singapore company only ifthe company submits an original copy of its certificate of domicile to the <strong>Indonesia</strong>n payor prior to thepayment of the dividend.As stated above, the Directorate General of Taxation in <strong>Indonesia</strong> issued a circular letter indicating thatthe benefits of <strong>Indonesia</strong>’s tax treaties would not be available to a recipient of <strong>Indonesia</strong>n-sourcedincome who was not the beneficial owner of such income. The circular letter further elaborated that a“special purpose vehicle” which is a “conduit company”, “paper box company”, “pass-through company”or any similar form of entity would not qualify as the beneficial owner of payments received by it. Itremains uncertain as to how the <strong>Indonesia</strong>n tax authorities will decide whether or not the SingaporeSPCs are the beneficial owners of dividends received from the <strong>Indonesia</strong>n SPCs.In the event that the Singapore SPCs were viewed by the <strong>Indonesia</strong>n tax authorities as conduitcompanies or pass-through companies, and therefore not the beneficial owners of dividends receivedfrom the <strong>Indonesia</strong>n SPCs, the Unitholders of LMIR <strong>Trust</strong> should in that case be viewed as the beneficialowners of the dividends. In that case it should still be possible to take the position that the reduced rateof withholding tax is applicable, to the extent that the Unitholders are tax resident in Singapore or anyother jurisdiction with the same tax rate under their respective tax treaty.254
Plan of distributionThe Manager is making an offering of 645,469,000 Units (representing approximately 60.9 % of the totalnumber of Units in issue after the Offering) for subscription at the Offering Price under the Placement andthe Public Offer. 625,469,000 Units are being offered under the Placement and 20,000,000 Units are beingoffered under the Public Offer. Units may be re-allocated between the Placement and the Public Offer atthe discretion of the Underwriters (subject to the minimum unitholding and distribution requirement of theSGX-ST), such as in the event of excess applications in one and a deficit of applications in the other.The Public Offer is open to members of the public in Singapore. Under the Placement, the Managerintends to offer the Units by way of an international placement through the Underwriters to investors,including institutional and other investors in Singapore. Subject to the terms and conditions set forth in theUnderwriting Agreement entered into among the Sponsor, the Manager, the Unit Lender and theUnderwriters on 9 November 2007, the Manager has agreed to effect for the account of LMIR <strong>Trust</strong>the issue of, and the Underwriters have agreed to severally (and not jointly) subscribe, or procuresubscribers for, the number of Units, set forth opposite their respective names below.UnderwritersNumber of Unitsunder the OfferingUBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322,734,500BNP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 161,367,250OCBC Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161,367,250Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 645,469,000The Units are being offered at the Offering Price. The Offering Price per Unit under the Placement and thePublic Offer is identical. The Underwriters have agreed to subscribe and pay for, or procure thesubscription and payment for 625,469,000 Units at the Offering Price, less the Underwriting, Sellingand Management Commission to be borne by LMIR <strong>Trust</strong>. <strong>Lippo</strong> Strategic, as Unit Lender, will bear theUnderwriting, Selling and Management Commission in respect of any Units that are subsequently soldpursuant to the exercise of the Over-allotment Option.The Manager and the Sponsor have agreed in the Underwriting Agreement to indemnify the Underwritersagainst certain liabilities.The Underwriting Agreement also provides that the obligations of the Underwriters to subscribe and payfor or procure the subscription or payment for the Units in the Offering are subject to the satisfaction ofcertain conditions contained in the Underwriting Agreement.The Underwriting Agreement may be terminated by the Underwriters at any time prior to payment beingmade for the Units, upon the occurrence of certain events in accordance with the terms of the UnderwritingAgreement. If the Underwriters are released and discharged from their obligations under the UnderwritingAgreement, this Offering will be cancelled and any moneys received in connection with this Offering will bereturned to prospective investors without interest or any share of the revenue arising therefrom.Subscribers of the Units may be required to pay brokerage (and if so required, such brokerage will be up to1.0% of the Offering Price) and applicable stamp duties, taxes and other similar charges (if any) inaccordance with the laws and practices of the country of subscription, in addition to the Offering Price.The Underwriters and their respective affiliates may engage in transactions with, and perform services for,the <strong>Trust</strong>ee, the Manager, the Sponsor and LMIR <strong>Trust</strong> in the ordinary course of business and haveengaged, and may in the future engage, in commercial banking and/or investment banking transactionswith the <strong>Trust</strong>ee, the Manager, the Sponsor and LMIR <strong>Trust</strong>, for which they have received, or may in thefuture receive, customary compensation.OVER-ALLOTMENT AND STABILISATIONThe Unit Lender has granted the Over-allotment Option to the Underwriters for the purchase of up to anaggregate of 96,820,000 Units at the Offering Price. The number of Units subject to the Over-allotmentOption will not be more than 15.0% of the number of Units under the Placement and the Public Offer. TheStabilising Manager may exercise the Over-allotment Option in full or in part, on one or more occasions, no255
Plan of distributionlater than the earliest of (i) the date falling 30 days from the commencement of trading of the Units on theSGX-ST, (ii) the date when the Stabilising Manager has bought on the SGX-ST, an aggregate of96,820,000 Units, representing not more than 15.0% of the total Units offered, to undertake stabilisingactions or (iii) the date falling 30 days after the date of adequate public disclosure of the final price of theUnits, solely to cover over-allotments of Units (if any) in connection with the Offering, subject to applicablelaws and regulations.In connection with the Over-allotment Option, the Stabilising Manager and the Unit Lender, have enteredinto a unit lending agreement (the “Unit Lending Agreement”) dated 9 November 2007 pursuant towhich the Stabilising Manager may borrow up to an aggregate of 96,820,000 Units from the Unit Lender forthe purpose of facilitating settlement of the over-allotment of Units (if any) in connection with the Offering.The Stabilising Manager will re-deliver to the Unit Lender such number of Units which have not beenpurchased pursuant to the exercise of the Over-allotment Option.In connection with the Offering, the Stabilising Manager (or persons acting on behalf of the StabilisingManager) may, in consultation with the other Underwriters, over-allot or effect transactions which stabiliseor maintain the market price of the Units at levels which might not otherwise prevail in the open market.Such transactions may be effected on the SGX-ST and in other jurisdictions where it is permissible to doso, in each case in compliance with all applicable laws and regulations, including the SFA and anyregulations thereunder. However, there is no assurance that the Stabilising Manager (or persons acting onbehalf of the Stabilising Manager) will undertake stabilising action. Such transactions may commence onor after the date of commencement of trading of the Units on the SGX-ST and, if commenced, may bediscontinued at any time and shall not be effected upon the earliest of (i) the date falling 30 days from thedate of commencement of trading of the Units on the SGX-ST, (ii) the date when the over-allotment of theUnits which are the subject of the Over-allotment Option has been fully covered (through the purchase ofthe Units on the SGX-ST and/or the exercise of the Over-allotment Option by the Stabilising Manager, onbehalf of itself and the other Underwriters) or (iii) the date falling 30 days after the date of adequate publicdisclosure of the final price of the Units. Any profit after expenses derived, or any loss sustained, as aconsequence of the exercise of the Over-allotment Option or the undertaking of any stabilising activitiesshall be for the account of the Underwriters.None of the Manager, the Sponsor, the Unit Lender or the Stabilising Manager makes any representationor prediction as to the magnitude of any effect that the transactions described above may have on the priceof the Units. In addition, none of the Manager, the Sponsor, the Unit Lender and the Stabilising Managermakes any representation that the Stabilising Manager will engage in these transactions or that thesetransactions, once commenced, will not be discontinued without notice (unless such notice is required bylaw). The Stabilising Manager will be required to make a public announcement via SGXNET in relation tothe total number of Units purchased by the Stabilising Manager, not later than 12 noon on the next tradingday of the SGX-ST after the transactions are effected. The Stabilising Manager will also be required tomake a public announcement through the SGX-ST in relation to the cessation of stabilising action and thenumber of Units in respect of which the Over-allotment Option has been exercised not later than 8.30 a.m.on the next trading day of the SGX-ST after the cessation of stabilising action.LOCK-UP ARRANGEMENTS<strong>Lippo</strong> Strategic (also the Unit Lender)<strong>Lippo</strong> Strategic has on 9 November 2007 agreed with the Underwriters that it will not, without the priorwritten consent of the Underwriters (such consent not to be unreasonably withheld or delayed), directly orindirectly, offer, sell or contract to sell, grant any option to purchase, grant any security over, encumber orotherwise dispose of, or enter into any transaction which is designed to, or might reasonably be expectedto, result in the sale or disposition (whether by actual sale or disposition or effective economic sale ordisposition due to cash settlement or otherwise) of (i) any or all of its direct interest in the Cornerstone Units(or any securities convertible into or exchangeable for the Cornerstone Units or which carry any rights tosubscribe for or purchase Cornerstone Units) (adjusted for any bonus issue, consolidation or subdivision)as at Listing Date during the First Lock-Up Period; and (ii) more than 50.0% of its direct interest in theCornerstone Units (or any securities convertible into or exchangeable for the Cornerstone Units or whichcarry any rights to subscribe for or purchase Cornerstone Units) (adjusted for any bonus issue,consolidation or subdivision) as at Listing Date during the Second Lock-Up Period.256
Plan of distributionThe restriction described in the preceding paragraph does not apply to:• the transfer by <strong>Lippo</strong> Strategic of its direct interest in the Cornerstone Units to and between its whollyownedsubsidiaries, provided that each such transferee gives a similar undertaking to the reasonablesatisfaction of the Underwriters for the remainder of the First Lock-Up Period and/or the SecondLock-Up Period (as the case may be); and• any securities lending arrangement with the Underwriters or any sale or transfer by <strong>Lippo</strong> Strategic of itsdirect interest in the Cornerstone Units pursuant to exercise of the Over-allotment Option.The restrictions on <strong>Lippo</strong> Strategic do not restrict any security granted over or encumbrance created overthe Cornerstone Units pursuant to any lending agreement to which <strong>Lippo</strong> Strategic is a party, provided thatthe terms of any such security or encumbrance state that it may not be enforced and that <strong>Lippo</strong> Strategicretains beneficial interest in these Cornerstone Units for the Lock-Up Periods.<strong>Lippo</strong> Holdings Inc, <strong>Lippo</strong> Capital Limited, <strong>Lippo</strong> Cayman Limited and Lanius Ltd<strong>Lippo</strong> Holdings Inc, <strong>Lippo</strong> Capital Limited, <strong>Lippo</strong> Cayman Limited and Lanius Ltd, have on 9 November2007 each agreed with the Underwriters that it will not, without the prior written consent of the Underwriters(such consent not to be unreasonably withheld or delayed), directly or indirectly, offer, sell or contract tosell, grant any option to purchase, grant any security over, encumber or otherwise dispose of, or enter intoany transaction which is designed to, or might reasonably be expected to, result in the sale or disposition(whether by actual sale or disposition or effective economic sale or disposition due to cash settlement orotherwise) of (i) any or all of its direct or indirect interest in the Cornerstone Units (or any securitiesconvertible into or exchangeable for the Cornerstone Units or which carry any rights to subscribe for orpurchase Cornerstone Units) (adjusted for any bonus issue, consolidation or subdivision) as at ListingDate during the First Lock-Up Period; and (ii) more than 50.0% of its direct or indirect interest in theCornerstone Units (or any securities convertible into or exchangeable for the Cornerstone Units or whichcarry any rights to subscribe for or purchase Cornerstone Units) (adjusted for any bonus issue,consolidation or subdivision) as at Listing Date during the Second Lock-Up Period.The restriction described in the preceding paragraph does not apply to:• the transfer by any one of <strong>Lippo</strong> Holdings Inc, <strong>Lippo</strong> Capital, <strong>Lippo</strong> Cayman Limited and Lanius Ltd of itsdirect or indirect interest in the Cornerstone Units to and between its wholly-owned subsidiaries,provided that each such transferee gives a similar undertaking to the reasonable satisfaction of theUnderwriters for the remainder of the First Lock-Up Period and/or the Second Lock-Up Period (as thecase may be); and• any securities lending arrangement with the Underwriters or any sale or transfer of the direct interest inthe Cornerstone Units by <strong>Lippo</strong> Strategic pursuant to exercise of the Over-allotment Option.MIPL, Mapletree Dextra Pte Ltd and Mapletree LMMIPL, Mapletree Dextra Pte Ltd and Mapletree LM have on 9 November 2007 each agreed with theUnderwriters that it will not, without the prior written consent of the Underwriters (such consent not to beunreasonably withheld or delayed), directly or indirectly, offer, sell or contract to sell, grant any option topurchase, grant any security over, encumber or otherwise dispose of, or enter into any transaction which isdesigned to, or might reasonably be expected to, result in the sale or disposition (whether by actual sale ordisposition or effective economic sale or disposition due to cash settlement or otherwise) of (i) any or all ofits direct or indirect interest in the Cornerstone Units (or any securities convertible into or exchangeable forthe Cornerstone Units or which carry any rights to subscribe for or purchase Cornerstone Units) (adjustedfor any bonus issue, consolidation or subdivision) as at Listing Date during the First Lock-Up Period; and(ii) more than 50.0% of its direct or indirect interest in the Cornerstone Units (or any securities convertibleinto or exchangeable for the Cornerstone Units or which carry any rights to subscribe for or purchaseCornerstone Units) (adjusted for any bonus issue, consolidation or subdivision) as at Listing Date duringthe Second Lock-Up Period.The restriction described in the preceding paragraph does not apply to the transfer by MIPL, MapletreeDextra Pte Ltd and Mapletree LM of its direct or indirect interest in the Cornerstone Units to and between itswholly-owned subsidiaries, provided that each such transferee gives a similar undertaking to the257
Plan of distributionreasonable satisfaction of the Underwriters for the remainder of the First Lock-Up Period and/or theSecond Lock-Up Period (as the case may be).The ManagerThe Manager has agreed on 9 November 2007 with the Underwriters that it will not (and will not cause orpermit LMIR <strong>Trust</strong> to), directly or indirectly, without the prior written consent of the Underwriters (suchconsent not to be unreasonably withheld or delayed):• offer, issue, sell, contract to issue or sell, grant any option to purchase, grant security over, encumber orotherwise dispose of, or enter into any transaction (excluding commitments for the sale and purchase ofadditional properties, whether in the form of a sale and purchase agreement or a put and call option)which is designed to, or might reasonably be expected to, result in the issuance, sale or disposition(whether by actual issuance, sale or disposition or effective economic issuance, sale or disposition dueto cash settlement or otherwise) of any Units (or any securities convertible into or exchangeable forUnits or which carry rights to subscribe for or purchase Units) (adjusted for any bonus issue,consolidation or subdivision); or make any announcement with respect to any of the foregoingtransactions other than as required by applicable laws or regulations during the First Lock-UpPeriod; and/or• during the First Lock-up Period deposit any Units (or any securities convertible into or exchangeable forUnits or which carry rights to subscribe for or purchase Units or part thereof) in any depositary receiptfacility.The restriction described in the preceding paragraph does not apply to any Units to be issued to theManager in full or part payment of its fees under the <strong>Trust</strong> Deed.SGX-ST LISTINGLMIR <strong>Trust</strong> has received a letter of eligibility from the SGX-ST for the listing and quotation of the Units onthe Main Board of the SGX-ST. The SGX-ST assumes no responsibility for the correctness of anystatements or opinions made or reports contained in this Prospectus. Admission to the Official List of theSGX-ST is not to be taken as an indication of the merits of the Offering, LMIR <strong>Trust</strong>, the Manager or theUnits. It is expected that the Units will commence trading on the SGX-ST on a “ready” basis on or about19 November 2007.Prior to this Offering, there has been no trading market for the Units. There can be no assurance that anactive trading market will develop for the Units, or that the Units will trade in the public market subsequentto this Offering at or above the Offering Price. (See “Risk Factors—Risks Relating to an Investment in theUnits—The Units have never been publicly traded and the listing of the Units on the Main Board of theSGX-ST may not result in an active or liquid market for the Units”.)Issue costsThe estimated amount of the costs in relation to the Offering and issuance of the Cornerstone Units ofapproximately S$32.8 million based on the Offering Price (subject to the Over-allotment Option) includesthe Underwriting, Selling and Management Commission, professional and other fees and all otherincidental costs in relation to the Offering, which will be borne by LMIR <strong>Trust</strong>. A breakdown of theseestimated costs is as follows:Estimated expenses(S$’000)Professional and other fees (1) ......................................... 10,660Underwriting, Selling and Management Commission . . . . . . . . . . . . . . . . . . . . . . . . 17,773Miscellaneous offering expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,369Total estimated expenses of the Offering and issuanceof the Cornerstone Units ........................................... 32,802258
Plan of distributionNote:(1) Includes financial advisory, solicitors’ fees and fees for the Independent Reporting Accountants, theIndependent Singapore Tax Adviser, the Independent <strong>Indonesia</strong>n Tax Adviser, both of theIndependent Valuers and other professionals’ fees.DISTRIBUTION AND SELLING RESTRICTIONSNo action has been or will be taken in any jurisdiction that would permit a public offering of the Units or thepossession, circulation or distribution of this Prospectus or any other offering or publicity material relatingto LMIR <strong>Trust</strong> or the Units in any country or jurisdiction (other than Singapore, where action for the purposeis required). Accordingly, the Units may not be offered or sold, directly or indirectly, and neither thisProspectus nor any other offering material, circular, form of application or advertisement in connection withthe Units may be distributed or published, in or from any country or jurisdiction except under circumstancesthat will result in compliance with all applicable laws and regulations of any such country or jurisdiction.AustraliaThis Prospectus does not constitute an offer of, or an invitation to purchase, the Units in or to any residentof Australia, other than set out below.Offers of Units under this Prospectus to investors in Australia are only made to those investors who are“wholesale clients” under section 761G of the Corporations Act 2001 (Cth). If the Units are to be on-sold toinvestors in Australia without a product disclosure statement within 12 months of issue of the Units, theymay only be on-sold to investors in Australia who are “wholesale clients” under section 761G of theCorporations Act 2001 (Cth). This Prospectus does not and is not intended to constitute a prospectus orproduct disclosure statement within the meaning of the Corporations Act 2001 (Cth) and neither thisProspectus nor any other prospectus or product disclosure statement has been lodged or registered withthe Australian Securities and Investments Commission. No action has been taken by LMIR <strong>Trust</strong> thatwould permit a public offering of the Units in Australia.European Economic AreaIn relation to each Member State of the European Economic Area which has implemented the ProspectusDirective (each, a “Relevant Member State”), with effect from and including the date on which theProspectus Directive is implemented in that Relevant Member State (the “Relevant ImplementationDate”), an offer of any Units to the public may not be made in that Relevant Member State prior to thepublication of a prospectus in relation to the Units which has been approved by the competent authority inthat Relevant Member State or, where appropriate, approved in another Relevant Member State andnotified to the competent authority in that Relevant Member State, all in accordance with the ProspectusDirective, except that, with effect from and including the Relevant Implementation Date, an offer to thepublic in that Relevant Member State of any Units may be made at any time:• to legal entities which are authorised or regulated to operate in the financial markets or, if not soauthorised or regulated, whose corporate purpose is solely to invest in securities;• to any legal entity which has two or more of (i) an average of at least 250 employees during the lastfinancial year, (ii) a total balance sheet of more than e43,000,000 and (iii) an annual net turnover of morethan e50,000,000, as shown in its last annual or consolidated accounts; or• in any other circumstances which do not require the publication by LMIR <strong>Trust</strong> of a prospectus pursuantto Article 3 of the Prospectus Directive.For the purposes of this provision, the expression an “offer of Units to the public” in relation to any Units inany Relevant Member States means the communication in any form and by any means of sufficientinformation on the terms of the offer and any Units to be offered so as to enable an investor to decide topurchase or subscribe for the Units, as the same may be varied in that Member State by any measureimplementing the Prospectus Directive in that Member State and the expression “Prospectus Directive”means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant MemberState.259
Plan of distributionFranceThis Prospectus does not constitute an offer or invitation for the subscription or purchase of Units inFrance. Neither this Prospectus nor anything contained herein shall form the basis of any contract or anyobligation of any kind whatsoever in France. Any person who is in possession of this Prospectus is herebynotified that no action has or will be taken that would allow the offer and marketing of Units in France.Accordingly, the Units may not be marketed, offered, sold or delivered in France, and neither the Units norany offering material relating to the Units may be distributed or made available in France, except aspermitted by French law and regulation.GermanyThe distribution of the Units has not been and will not be notified to the Bundesanstalt furFinanzdienstleistungsaufsicht and no documents or other information relating to the Units have beenand will be filed with, approved by or notified to the Bundesanstalt fur Finanzdienstleistungsaufsicht inaccordance with the German Investment Act (Investmentgesetz), the Securities Prospectus Act(Wertpapierprospektgesetz) or any other present or future applicable laws in Germany and the Unitsshall not be sold, distributed or promoted in Germany other than in compliance with the Investment Act, theSecurities Prospectus Act and any other applicable German laws and regulations.Hong KongThis Prospectus has not been registered and will not be registered as a prospectus under the CompaniesOrdinance (Cap. 32 of the Laws of Hong Kong). The Units may not be offered or sold in Hong Kong bymeans of any documents, other than to “professional investors” within the meaning of section 1 of Part 1 ofSchedule 1 to the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (“SFO”) and inaccordance with the requirements under the SFO and any rules made under the SFO. No person mayhave in its possession for the purposes of issue, or issue (in each case whether in Hong Kong orelsewhere), any prospectus, notice, circular, brochure, advertisement, invitation or other document relatingto the Units which is directed at, or the contents of which are likely to be accessed or read by, the public inHong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to Unitswhich are or are intended to be disposed of (i) only to persons outside Hong Kong or (ii) only to“professional investors” within the meaning of the SFO and in accordance with the requirements underthe SFO and any rules made under the SFO.<strong>Indonesia</strong>This Prospectus may not be distributed directly or indirectly in <strong>Indonesia</strong> or to any <strong>Indonesia</strong>n entity or<strong>Indonesia</strong>n citizen (person), and the Underwriters, may not offer or sell, directly or indirectly, any Units in<strong>Indonesia</strong> or to any <strong>Indonesia</strong>n entity or <strong>Indonesia</strong>n citizen (person), in a manner constituting a publicoffering of the Units under the <strong>Indonesia</strong>n Capital Markets Law and the applicable regulations of theCapital Market Supervisory Agency.IrelandThe Units described in this Prospectus are interests in a collective investment scheme which is notsupervised or authorised by the Irish Financial Regulator or approved by the Irish Financial Regulator tomarket the Units in Ireland. Therefore, no advertising or marketing of Units may take place in Irelandwithout the prior approval in writing of the Irish Financial Regulator. In addition, any sales or marketing ofUnits in Ireland must take place in accordance with all applicable provisions of the Irish InvestmentIntermediaries Act, 1995 (as amended), the Irish Market Abuse (Directive 2003/6/EEC) Regulations2006 (as amended) and all other relevant laws, regulations and rules.ItalyThe offering of the Units has not been cleared by CONSOB (the Italian Securities Exchange Commission)pursuant to Italian securities legislation or the Bank of Italy. Accordingly, no Units may be offered, sold ordelivered, directly or indirectly, nor may copies of this Prospectus nor any other documentation relating tothe Units be distributed or made available in Italy except (i) to professional investors, as defined under260
Plan of distributionArticle 31, second paragraph, of CONSOB Regulation No. 11522 of 1 July 1998, as amended(“Regulation No. 11522”), in accordance with Article 100 and Article 30, second paragraph, ofLegislative Decree No. 58 of 24 February 1998, as amended (the “Financial Services Act”),provided that such professional investors act in their capacity and not as depositories or nominees forother person; or (ii) in circumstances which are exempted from the rules of solicitation of investmentspursuant to Article 100 of the Financial Services Act and Article 33, first paragraph, of CONSOBRegulation No. 11971 of 14 May 1999, as amended (“Regulation No. 11971”).In any event, the offering of the Units must be effected in compliance with all relevant Italian securities, taxand exchange controls and any other applicable laws and regulations.Accordingly, the Units may not be offered, sold or delivered and copies of this Prospectus or any otherdocumentation relating to the Units may not be distributed or made available in Italy unless such offer ofthe Units or distribution or availability of copies of this Prospectus or any other documentation relating tothe Units in Italy is made: (i) by an investment firm, a bank or a financial intermediary permitted to conductsuch activities in Italy in accordance with Legislative Decree No. 385 of 1 September 1993, as amended(the “Banking Act”) and the implementing instructions of the Bank of Italy, the Financial Services Act,Regulation No. 11522, Regulation No. 11971 and any other applicable laws and regulations; (ii) incompliance with Article 129 of the Banking Act and the implementing instructions of the Bank of Italy,pursuant to which the issue or offer of securities in Italy is subject to prior notification to the Bank of Italyunless an exemption, depending, inter alia, on the aggregate value of the securities issued or offered andthe features of the securities, applies; and (iii) in compliance with any other applicable notification,requirement or limitation which may be imposed by CONSOB or the Bank of Italy. In any case, the Unitsshould not be placed, offered, sold, re-sold or delivered on a retail basis, either in the primary or thesecondary market, to any persons which are not professional investors and in any case to any individualresiding in Italy. Each person in Italy receiving this Prospectus acknowledges that it (i) is a professionalinvestor, as defined under Article 31, second paragraph, of CONSOB Regulation No. 11522 of 1 July 1998,as amended, (ii) is acting in its capacity as a professional investor and not as a depository or nominee foranother person, and (iii) has agreed that it will not resell or deliver the Units purchased in this offering inItaly to persons which are not professional investors and in any case it will not resell or deliver the Unitspurchased in this offering to any individual residing in Italy.JapanThe Units have not been and will not be registered under the Securities and Exchange Law of Japan (the“Securities and Exchange Law”) and each of the Underwriters has agreed that it will not offer or sell anysecurities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term asused herein means any person resident of Japan, including any corporation or other entity organised underthe laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident ofJapan except pursuant to an exemption which will result on compliance with the Securities and ExchangeLaw and any other applicable laws, regulations and guidelines promulgated by the relevant Japanesegovernmental and regulatory authorities and which are then in effect.The NetherlandsThe offer of the Units is subject to the provisions of the Prospectus Directive referred to above in“—European Economic Area”. The Units can only be offered in the Netherlands without the publication,approval or notification of a prospectus in relation to the Units if an exemption applies. In the case of theoffering of the Units, an exemption applies in view of the fact that the Units are solely offered to professionalmarket parties within the meaning of the Exemption Regulation to the Act on the Supervision of theSecurities Transactions 1995 (Vrijstellingsregeling Wet toezicht effectenverkeer 1995).The Manager is exempted from the obligation to obtain a licence within the meaning of the Act on theSupervision of the Investment Institutions (Wet toezicht beleggingsinstellingen) as the Units may only beoffered, sold, delivered or transferred, directly or indirectly, solely to individuals or legal entitles that trade orinvest in investment products (beleggingsproducten) in the conduct of a profession or trade, includingbanks, brokers and institutional investors, within the meaning of the Exemption Regulation to the Act on theSupervision of the Investment Institutions (Vrijstellingsregeling Wet toezicht beleggingsinstellingen), asamended from time to time.261
Plan of distributionUnited Arab EmiratesThe Units have not been and will not, directly or indirectly, be issued, offered, sold, delivered or publiclypromoted or advertised in the United Arab Emirates (the “UAE”) other than in compliance with any lawsapplicable in the UAE governing the issue, offering, and/or sale, delivery or public promotion oradvertisement of securities including without limitation those laws applicable in the Dubai InternationalFinancial Centre. This Prospectus is strictly private and confidential and has not been and will not bereviewed by, deposited or registered with any licensing authority, the Dubai International FinancialExchange or governmental agencies in the UAE, including without limitation the Emirates Securitiesand Commodities Authority or the UAE Central Bank, the Dubai Financial Market, the Abu DhabiSecurities Market, or any other UAE Exchange. This Prospectus may be issued to a limited number ofinstitutional and/or sophisticated investors in the UAE upon their request and confirmation that theyunderstand that LMIR <strong>Trust</strong> has not been licensed by or registered with the UAE authorities concerned andthat this Prospectus is intended only for the original recipient to whom it is addressed, must not thereforebe provided to any person other than such original recipient and may not be reproduced or used for anyother purpose. Further, the information contained in this Prospectus does not, and is not intended to,constitute a public offer of securities in any part of the United Arab Emirates in accordance with theCommercial Companies Law (UAE Federal Law No. 8 of 1984 (as amended)) or otherwise, and is notintended to be an offer or an invitation to subscribe for or purchase any Units. Furthermore, the informationcontained in this Prospectus is not intended to lead to the conclusion of any contract of whatsoever naturewithin the territory of the United Arab Emirates.United KingdomThe Units are interests in a collective investment scheme (as defined in the Financial Services and MarketsAct 2000 (the “FSMA”)) which has not been authorised or reviewed by the Financial Services Authority orany other regulatory authority of the United Kingdom. Accordingly, this Prospectus is not being distributedto, and must not be passed on to, or relied or acted upon by, the general public in the United Kingdom.This Prospectus is for distribution in the United Kingdom only to persons (i) who have professionalexperience of participating in unregulated collective investment schemes and of markets relating toinvestments falling within both Article 14(5) of the Financial Services and Markets Act 2000 (Promotion ofCollective Investment Schemes) (Exemptions) Order 2002 (the “CIS Order”) and Article 19(5) of theFinancial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “FP Order”), or (ii) whofall within both Article 22(2)(a) to (d) of the CIS Order and Article 49(2)(a) to (d) of the FP Order, or (iii) towhom communications relating to unregulated collective investment schemes may otherwise lawfully bemade (such persons together “Relevant Eligible Persons”).By way of explanation, the following persons fall within Article 49(2)(a) to (d) of the FP Order andArticle 22(2)(a) to (d) of the CIS Order:• a body corporate which has more than 20 members or which is a subsidiary undertaking of a parentundertaking which has more than 20 members and which has a called up share capital or net assets ofnot less than £500,000;• any other body corporate, unincorporated association or partnership which has a called up capital or netassets of not less than £5 million;• the trustee of a high value trust (being a trust where the aggregate value of the cash and investmentswhich form part of the trust’s assets (before deducting the amount of its liabilities) is (a) £10 million ormore, or (b) has been £10 million or more at any time during the year immediately preceding the date onwhich this communication was first directed); or• any person acting in the capacity of a director, officer or employer of one of the previous three categoriesof persons and whose responsibilities include him or her engaging in investment activity.Any investment or investment activity to which this Prospectus relates is only available to Relevant EligiblePersons or will be engaged in only with Relevant Eligible Persons and this financial promotion must not berelied or acted upon by persons who are not Relevant Eligible Persons. Expressions of interest resultingfrom this Prospectus will only be responded to if received from persons falling within those Articles.262
Plan of distributionUnited States of AmericaThe Units have not been and will not be registered under the Securities Act, or any state securities laws,and may not be offered, sold, pledged or transferred within the United States, except in certaintransactions exempt from the registration requirements of the Securities Act. The Units are beingoffered and sold only outside the United States in accordance with Regulation S under the SecuritiesAct. Terms used but not defined in this section shall bear the meanings given to them under Regulation S.In addition, each subscriber of or purchaser of Units or any interest therein, including in the secondarymarket, who is a U.S. person for US federal income tax purposes will be deemed to have made thefollowing representations:• We understand and acknowledge that LMIR <strong>Trust</strong> may be classified as a “passive foreign investmentcompany” (“PFIC”) for the current taxable year and for future taxable years due to the nature of itsincome and activities and operations. A non-U.S. corporation will be considered a PFIC for any taxableyear if either (i) at least 75% of its gross income is passive income, or (ii) at least 50% of the value of itsassets is attributable to assets that produce or are held for the production of passive income. In thisregard, rental income, which constitutes LMIR <strong>Trust</strong>’s main income, is generally considered passiveunless it meets certain criteria to be considered active rents. We understand that a portion of LMIR<strong>Trust</strong>’s rental income would likely not be considered active rents, and thus, LMIR <strong>Trust</strong> may beconsidered a PFIC. A separate determination must be made as to the PFIC status each year;• We understand that, if LMIR <strong>Trust</strong> is a PFIC either currently or in any future taxable year during which wehold Units, we will be subject to special tax rules with respect to any “excess distribution” that we receiveand any gain we realize from a sale or other disposition of the Units, unless we make a “mark-to-market”election or a “qualified electing fund” election described below. Distributions we receive in a taxable yearthat are greater than 125% of the average annual distributions we received during the shorter of thethree preceding taxable years or our holding period for the Units will be treated as an excess distribution.We are aware that under these special tax rules:1. The excess distribution or gain will be allocated rateably over our holding period for the Units;2. The amount allocated to the current taxable year and any taxable year prior to the first taxable yearin which LMIR <strong>Trust</strong> became a PFIC will be treated as ordinary income;3. The amount allocated to each other year will be subject to the highest tax rate in effect for that yearand the interest charge generally applicable to underpayments of tax will be imposed on theresulting tax attributable to each such year; and4. The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution”cannot be offset by any net operating losses for such years, and gains (but not losses) realised onthe sale of the Units cannot be treated as capital, even if we hold the Units as capital assets;• We understand that if we are a U.S. holder of “marketable stock” (as defined below) in a PFIC, we maymake a mark-to-market election for such stock to elect out of the tax treatment discussed above. If wemake a mark-to-market election for the Units, we will include in income each year an amount equal to theexcess, if any, of the fair market value of the Units as of the close of our taxable year over our adjustedbasis in such Units. We further understand that we are allowed a deduction for the excess, if any, of theadjusted basis of the Units over their fair market value as of the close of the taxable year. However,deductions are allowed only to the extent of any net mark-to-market gains on the Units included in ourincome for prior taxable years. We are aware that amounts included in our income under amark-to-market election, as well as gain on the actual sale or other disposition of the Units, aretreated as ordinary income. Ordinary loss treatment also applies to the deductible portion of anymark-to-market loss on the Units, as well as to any loss realised on the actual sale or disposition of theUnits, to the extent that the amount of such loss does not exceed the net mark-to-market gainspreviously included for such Units. Accordingly, we understand that our basis in the Units will be adjustedto reflect any such income or loss amounts. We further understand that if we make a validmark-to-market election with respect to the Units, the tax rules that apply to distributions bycorporations which are not PFICs would apply to distributions by LMIR <strong>Trust</strong>;263
Plan of distribution• We understand that the mark-to-market election is available only for “marketable stock,” which is stockthat is traded in other than de minimis quantities on at least 15 days during each calendar quarter on aqualified exchange or other market, as defined in applicable U.S. Treasury regulations. Although not freefrom doubt, we understand that the SGX-ST should be considered as a qualified exchange or othermarket for this purpose;• We understand that, in general, if a non-U.S. corporation is a PFIC, a holder of shares in that corporationmay avoid taxation under the rules described above by making a “qualified electing fund” election toinclude its share of the corporation’s income on a current basis, or a “deemed sale” election once thecorporation no longer qualifies as a PFIC. We understand and acknowledge however that we may makea qualified electing fund election with respect to our Units only if LMIR <strong>Trust</strong> agrees to furnish us annuallywith certain tax information, and LMIR <strong>Trust</strong> does not intend to prepare and provide such information;and• We understand that if we hold Units in any year in which LMIR <strong>Trust</strong> is a PFIC, we will be required to fileInternal Revenue Service Form 8621 regarding distributions received on the Units and any gain realisedon the disposition of the Units. We acknowledge that we have been advised to consult our tax adviserregarding the application of the PFIC rules to our investment in the Units.In addition, each subscriber or purchaser of Units or any interest therein, including in the secondarymarket, will be deemed to have represented that no portion of the funds used by it to acquire the Unitsconstitute (a) the assets of any “plan” (as such term is defined in Section 4975 of the U.S. Internal RevenueCode of 1986, as amended (the “IRC”)) that is subject to Section 4975 of the IRC or (b) the “plan assets” ofany “employee benefit plan” that is subject to Title I of the U.S. Employee Retirement Income Security Actof 1974, as amended (“ERISA”), pursuant to U.S. Department of Labor RegulationSection 2510.3-101(b)(i) as modified by Section 3(42) of ERISA or Section 401(c) of the ERISA.264
Clearance and settlementINTRODUCTIONA letter of eligibility has been obtained from the SGX-ST for the listing and quotation of the Units. For thepurpose of trading on the SGX-ST, a board lot for the Units will comprise 1,000 Units.Upon listing and quotation on the SGX-ST, the Units will be traded under the electronic book-entryclearance and settlement system of CDP. All dealings in and transactions of the Units through the SGX-STwill be effected in accordance with the terms and conditions for the operation of Securities Accounts, asamended from time to time.CDP, a wholly-owned subsidiary of Singapore Exchange Limited, is incorporated under the laws ofSingapore and acts as a depository and clearing organisation. CDP holds securities for its account-holdersand facilitates the clearance and settlement of securities transactions between account-holders throughelectronic book-entry changes in the Securities Accounts maintained by such account-holders with CDP.It is expected that the Units will be credited into the Securities Accounts of applicants for the Units withinfour Market Days after the closing date for applications for the Units.CLEARANCE AND SETTLEMENT UNDER THE DEPOSITORY SYSTEMThe Units will be registered in the name of CDP or its nominee and held by CDP for and on behalf ofpersons who maintain, either directly or through depository agents, Securities Accounts with CDP. Personsnamed as direct Securities Account holders and depository agents in the depository register maintained byCDP will be treated as Unitholders in respect of the number of Units credited to their respective SecuritiesAccounts.Transactions in the Units under the book-entry settlement system will be reflected by the seller’s SecuritiesAccount being debited with the number of Units sold and the buyer’s Securities Account being credited withthe number of Units acquired and no transfer stamp duty is currently payable for the transfer of Units thatare settled on a book-entry basis.Units credited to a Securities Account may be traded on the SGX-ST on the basis of a price between awilling buyer and a willing seller. Units credited into a Securities Account may be transferred to any otherSecurities Account with CDP, subject to the terms and conditions for the operation of Securities Accountsand a S$10.00 transfer fee payable to CDP. All persons trading in the Units through the SGX-ST shouldensure that the relevant Units have been credited into their Securities Account, prior to trading in suchUnits, since no assurance can be given that the Units can be credited into the Securities Account in time forsettlement following a dealing. If the Units have not been credited into the Securities Account by the duedate for the settlement of the trade, the buy-in procedures of the SGX-ST will be implemented.Clearing feesA clearing fee for the trading of Units on the SGX-ST is payable at the rate of 0.04% of the transactionvalue, subject to a maximum of S$600.00 per transaction. The clearing fee, deposit fee and unit withdrawalfee may be subject to GST (currently 7.0%).Dealings in the Units will be carried out in Singapore dollars and will be effected for settlement in CDP on ascripless basis. Settlement of trades on a normal “ready” basis on the SGX-ST generally takes place on thethird Market Day following the transaction date. CDP holds securities on behalf of investors in SecuritiesAccounts. An investor may open a direct account with CDP or a sub-account with any CDP depositoryagent. A CDP depository agent may be a member company of the SGX-ST, bank, merchant bank or trustcompany.265
ExpertsRSM Chio Lim, the Independent Reporting Accountants, were responsible for preparing the “IndependentAccountants’ Report on the Profit Forecast and Profit Projection” and the “Independent Accountants’Report on the Unaudited Pro Forma Consolidated Balance Sheet as at Listing Date” found in Appendix Aand Appendix B of this Prospectus, respectively.Ernst & Young, the Independent Singapore Tax Adviser, was responsible for preparing the “IndependentSingapore Taxation Report” found in Appendix C of this Prospectus.PB & Co, the Independent <strong>Indonesia</strong>n Tax Adviser, was responsible for preparing the “Independent<strong>Indonesia</strong>n Taxation Report” found in Appendix D of this Prospectus.Knight Frank / PT. Willson Properti Advisindo and Colliers International / PT Penilai, the IndependentValuers, were responsible for preparing the “Independent Property Valuation Summary Reports” found inAppendix E of this Prospectus,PT Jones Lang LaSalle, the Independent <strong>Indonesia</strong>n <strong>Retail</strong> Property Consultant, was responsible forpreparing the section of this Prospectus entitled “Independent Report on the <strong>Indonesia</strong>n <strong>Retail</strong> PropertyMarket” found in Appendix F of this Prospectus.The Independent Reporting Accountants, the Independent Singapore Tax Adviser, the Independent<strong>Indonesia</strong>n Tax Adviser, the Independent Valuers and the Independent <strong>Retail</strong> Consultant have eachgiven and have not withdrawn their written consents to the issue of this Prospectus with the inclusion hereinof their names and their respective write-ups and reports and all references thereto in the form and contextin which they respectively appear in this Prospectus, and to act in such capacity in relation to thisProspectus.None of Allen & Gledhill LLP, Stamford Law Corporation, Latham & Watkins LLP, Makes & Partners,Hadiputranto Hadinoto & Partners, Ery Yunasri & Partners and Shook Lin & Bok LLP makes, or purports tomake, any statement in this Prospectus and none of them is aware of any statement in this Prospectuswhich purports to be based on a statement made by it and it makes no representation, express or implied,regarding, and takes no responsibility for, any statement in or omission from this Prospectus.266
General information(1) The profit forecast and profit projection contained in “Profit Forecast and Profit Projection” have beenstated by the Directors after due and careful enquiry.(2) There are no legal or arbitration proceedings pending or, so far as the Directors are aware,threatened against the Manager the outcome of which, in the opinion of the Directors, may haveor have had during the 12 months prior to the date of this Prospectus, a material adverse effect on thefinancial position of the Manager.(3) There are no legal or arbitration proceedings pending or, so far as the Directors are aware,threatened against LMIR <strong>Trust</strong> the outcome of which, in the opinion of the Directors, may haveor have had during the 12 months prior to the date of this Prospectus, a material adverse effect on thefinancial position (on a pro forma consolidated basis) of LMIR <strong>Trust</strong>.(4) The name, age and address of each of the Directors are set out in “The Manager and CorporateGovernance—The Manager of LMIR <strong>Trust</strong>—Directors of the Manager”. A list of the present and pastdirectorships of each Director and Executive Officer of the Manager over the last five years precedingthe Latest Practicable Date is set out in “Appendix H—List of Present and Past PrincipalDirectorships of Directors and Executive Officers”.(5) There is no family relationship among the Directors and executive officers of the Manager.(6) None of the Directors or executive officers of the Manager is or was involved in any of the followingevents:• at any time during the last 10 years, an application or a petition under any bankruptcy laws of anyjurisdiction filed against him or against a partnership of which he was a partner at the time when hewas a partner or at any time within two years from the date he ceased to be a partner;• at any time during the last 10 years, an application or a petition under any law of any jurisdictionfiled against an entity (not being a partnership) of which he was a director or an equivalent personor a key executive, at the time when he was a director or an equivalent person or a key executive ofthat entity or at any time within two years from the date he ceased to be a director or an equivalentperson or a key executive of that entity, for the winding up or dissolution of that entity or, where thatentity is the trustee of a business trust, that business trust, on the ground of insolvency;• any unsatisfied judgment against him;• a conviction of any offence, in Singapore or elsewhere, involving fraud or dishonesty which ispunishable with imprisonment, or has been the subject of any criminal proceedings (including anypending criminal proceedings of which he is aware) for such purpose;• a conviction of any offence, in Singapore or elsewhere, involving a breach of any law or regulatoryrequirement that relates to the securities or futures industry in Singapore or elsewhere, or hasbeen the subject of any criminal proceedings (including any pending criminal proceedings of whichhe is aware) for such breach;• at any time during the last 10 years, judgment been entered against him in any civil proceedings inSingapore or elsewhere involving a breach of any law or regulatory requirement that relates to thesecurities or futures industry in Singapore or elsewhere, or a finding of fraud, misrepresentation ordishonesty on his part, or any civil proceedings (including any pending civil proceedings of whichhe is aware) involving an allegation of fraud, misrepresentation or dishonesty on his part;• a conviction in Singapore or elsewhere of any offence in connection with the formation ormanagement of any entity or business trust;• disqualification from acting as a director or an equivalent person of any entity (including the trusteeof a business trust), or from taking part directly or indirectly in the management of any entity orbusiness trust;• any order, judgment or ruling of any court, tribunal or governmental body permanently ortemporarily enjoining him from engaging in any type of business practice or activity;267
General information• to his knowledge, been concerned with the management or conduct, in Singapore or elsewhere, ofthe affairs of:(i)(ii)(iii)(iv)any corporation which has been investigated for a breach of any law or regulatoryrequirement governing corporations in Singapore or elsewhere;any entity (not being a corporation) which has been investigated for a breach of any law orregulatory requirement governing such entities in Singapore or elsewhere;any business trust which has been investigated for a breach of any law or regulatoryrequirement governing business trusts in Singapore or elsewhere;any entity or business trust which has been investigated for a breach of any law or regulatoryrequirement that relates to the securities or futures industry in Singapore or elsewhere inconnection with any matter occurring or arising during the period when he was so concernedwith the entity or business trust; or• has been reprimanded or issued any warning, by the MAS or any other regulatory authority,exchange, professional body or government agency, whether in Singapore or elsewhere.(7) The financial year-end of LMIR <strong>Trust</strong> is 31 December. The annual audited financial statements ofLMIR <strong>Trust</strong> will be prepared and sent to Unitholders within three months of the financial year-end.(8) A full valuation of each of the real estate assets held by LMIR <strong>Trust</strong> will be carried out at least once ayear in accordance with the Property Funds Guidelines. The Manager or the <strong>Trust</strong>ee may at anyother time arrange for the valuation of any of the real properties held by LMIR <strong>Trust</strong> if it is of theopinion that it is in the best interest of Unitholders to do so.(9) While LMIR <strong>Trust</strong> is listed on the SGX-ST, investors may check the SGX-ST websitehttp://www.sgx.com for the prices at which Units are being traded on the SGX-ST. <strong>Investor</strong>s mayalso check one or more major Singapore newspapers such as The Straits Times, The BusinessTimes and Lianhe Zaobao, for the price range within which Units were traded on the SGX-STon thepreceding day.(10) The Manager does not intend to receive soft dollars (as defined in the CIS Code) in respect of LMIR<strong>Trust</strong>. Save as disclosed in this Prospectus, unless otherwise permitted under the Listing Manual,neither the Manager nor any of its Associates will be entitled to receive any part of any brokeragecharged to LMIR <strong>Trust</strong>, or any part of any fees, allowances or benefits received on purchasescharged to LMIR <strong>Trust</strong>.(11) The SGX-ST has granted waivers to LMIR <strong>Trust</strong> from compliance with the following:(a)(b)(c)(d)(e)Rule 404(3) of the Listing Manual, which would otherwise require an investment fund which isdenominated in Singapore Dollars (other than a venture capital fund or a hedge fund) to: (i) limitits investment in companies which are related to the investment fund’s substantialshareholders, investment managers or management companies to a maximum of 10.0% ofgross assets; (ii) abide by the same investment and borrowing restrictions that govern“investments companies” prescribed by the Companies Act; and (iii) restrict investments inunlisted securities to 30.0% of gross assets;Rules 404(5) and 407(4) of the Listing Manual, which would otherwise require the Manager tobe reputable and have a track record in managing investments, as the Manager has only beenrecently incorporated;Rule 409(3) of the Listing Manual, which would otherwise require the submission with theapplication for the listing of LMIR <strong>Trust</strong> on the SGX-ST the annual accounts of LMIR <strong>Trust</strong> foreach of the last five financial years;Rule 705(2), which would otherwise require the Manager to announce LMIR <strong>Trust</strong>’s financialresults for the period from the Listing Date to 31 December 2007;Rule 707(2), which would otherwise require LMIR <strong>Trust</strong> to issue an annual report for thefinancial period from 8 August 2007 to 31 December 2007;268
General information(f)(g)(h)Rule 748(1) of the Listing Manual, which would otherwise require LMIR <strong>Trust</strong> to announce viaSGXNET its net tangible assets per Unit at the end of each week; andRule 748(3), which would otherwise require LMIR <strong>Trust</strong> to disclose certain information in itsannual report subject to compliance with the Property Funds Guidelines; andthe requirement of holding annual general meetings of LMIR <strong>Trust</strong>.(12) The dates of, parties to, and general nature of every material contract which the trustee of LMIR <strong>Trust</strong>has entered into within the two years preceding the date of this Prospectus (not being contractsentered into in the ordinary course of the business of LMIR <strong>Trust</strong>) are as follows:(a)(b)the <strong>Trust</strong> Deed;the Singapore SPC Share Purchase Agreements; and(c)the Right of First Refusal Agreement.(See “Certain Agreements relating to LMIR <strong>Trust</strong> and the Properties—Description of the Right ofFirst Refusal Agreement”.)(13) Copies of the following documents are available for inspection at the registered office of the Managerat 78 Shenton Way, #05-01 <strong>Lippo</strong> Centre, Singapore 079120, for a period of six months from the dateof this Prospectus:(a)(b)the material contracts referred to in paragraph 12 above, save for the <strong>Trust</strong> Deed (which will beavailable for inspection for so long as LMIR <strong>Trust</strong> is in existence);the Underwriting Agreement;(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)(m)(n)(o)(p)(q)(r)(s)the Unit Lending Agreement;the Cornerstone Subscription Agreements;the Property Purchase Agreements;the <strong>Retail</strong> Space <strong>Indonesia</strong>n SPC Share Purchase Agreements;the <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC Share Purchase Agreements;the Master Lease Agreements;the Operating Costs Agreements;the Rental Guarantee Deeds;the Right of First Refusal Agreement;the Existing Property Management Agreements;the Master Property Management Agreement;the Independent Accountants’ Report on the Profit Forecast and Profit Projection as set out inAppendix A of this Prospectus;the Independent Accountants’ Report on the Unaudited Pro Forma Consolidated BalanceSheet as at the Listing Date as set out in Appendix B of this Prospectus;the Independent Singapore Taxation Report as set out in Appendix C of this Prospectus;the Independent <strong>Indonesia</strong>n Taxation Report as set out in Appendix D of this Prospectus;the Independent Property Valuation Summary Reports as set out in Appendix E of thisProspectus as well as the full valuation reports referred to therein for each of the Properties;the Independent Report on the <strong>Retail</strong> Property Industry in <strong>Indonesia</strong> as set out in Appendix F ofthis Prospectus;269
General information(t) the written consents of the Independent Reporting Accountants, the Independent SingaporeTax Adviser, the Independent <strong>Indonesia</strong>n Tax Adviser, the Independent Valuers and theIndependent <strong>Indonesia</strong>n <strong>Retail</strong> Property Consultant (see “Experts”);(u) the undertaking of the Manager to the MAS covenanting, among other things, not to deal in theUnits during certain stipulated periods (see “The Manager and Corporate Governance—Corporate Governance of the Manager—Dealings in Units”);(v) the undertaking of the Manager to the SGX-ST that it will conduct a valuation of LMIR <strong>Trust</strong>’sreal estate and real estate-related assets annually and announce the NAV per Unit on aquarterly basis (see “The Manager and Corporate Governance—Annual Reports”); and(w) the Depository Services Agreement.(14) UBS, named as Financial Adviser to the Offering and Joint Lead Manager, Issue Managers andUnderwriter, has given and has not withdrawn its written consent to the issue of this Prospectus withthe inclusion herein of, and all references to, its name and all references thereto in the form andcontext in which they appear in this Prospectus, and to act in such capacity in relation to thisProspectus.(15) BNP and OCBC Bank, named as Joint Lead Managers, Issue Managers and Underwriters, haveeach given and have not withdrawn their written consent to the issue of this Prospectus with theinclusion herein of, and all references to, their names and all references thereto in the form andcontext in which they appear in this Prospectus, and to act in such capacity in relation to thisProspectus.270
Glossary% Per centum or percentageAggregate LeverageAgrarian LawAMDAL ReportApplication FormsApplication ListAppraised ValueAssociateATMsAUBAuthorised InvestmentAuthorised InvestmentManagement FeeBandung Indah PlazaCooperation AgreementTotal borrowings and deferred payments (including deferredpayments for assets whether to be settled in cash or in unitsof the relevant property fund)Law No. 5 Year 1960, which governs <strong>Indonesia</strong>n real propertyrightsThe Analysis of Environmental Impacts based on the frameworkof reference, the environmental impact assessment reportThe printed application forms to be used for the purpose of theOffering and which form part of this ProspectusThe list of applicants subscribing for Units which are the subjectof the Public OfferIn relation to a Property, the value for that Property (i) as at30 June 2007 as appraised by Knight Frank, and (ii) as at 30 June2007 as appraised by ColliersHas the meaning ascribed to it in the Listing ManualAutomated teller machines, and each, an “ATM”Ahli United BankRefers to, in general, (i) real estate, whether freehold orleasehold, in or outside Singapore or <strong>Indonesia</strong>, held singly orjointly, and/or by way of direct ownership or by a shareholding in aSPV; (ii) any improvement or extension of or addition to orreconstruction or renovation or other development of any realestate or any building thereon; (iii) real estate related assets,wherever the issuers, assets or securities are incorporated,located, issued or traded; (iv) listed or unlisted debt securitiesand listed shares or stock and (if permitted by the MAS) unlistedshares or stock of or issued by local or foreign non-propertycompanies or corporations; (v) government securities (issued onbehalf of the Singapore Government or governments of othercountries) and securities issued by a supra-national agency or aSingapore statutory board; (vi) cash and cash equivalent items;(vii) financial derivatives only for the purposes of (a) hedgingexisting positions in the portfolio of LMIR <strong>Trust</strong> where there is astrong correlation to the underlying investments or (b) efficientportfolio management, provide that such derivatives are notused to gear the overall portfolio of LMIR <strong>Trust</strong> or intended tobe borrowings of LMIR <strong>Trust</strong>; and (viii) other investment notcovered by sub-paragraph (i) to (vii) of this definition butspecified as a permissible investment in the Property FundsGuidelines and selected by the Manager for investment by LMIR<strong>Trust</strong> and approved by the <strong>Trust</strong>ee in writing (see the <strong>Trust</strong> Deedfor details)0.50% of the value of Authorised Investments which are not realestate (whether held directly by LMIR <strong>Trust</strong> or indirectly via oneor more SPVs) subject to certain conditionsThe cooperation agreement on the renovation, development andmanagement of Hotel Pakunegara, Bandung (Perjanjian271
GlossaryBase AmountBase FeeBase RentBasic Agrarian LawBNPBoardBOTBOT Agreement or CooperationAgreementBOT GranteeBOT GrantorBOT LandBOT SchemesBPNBSD CityBusiness DayCBDCDPCGICIS CodeKerjasama Pemugaran Pembangunan dan Pengelolaan HotelPakunegara) between Perusahaan Daerah Jasa DanKepariwisataan Propinsi Jawa Barat, and formerly known asPerusahaan Daerah Kerta Wisata Jawa Barat) and PTBhuwanatala Indah Permai Tbk (formerly known as PTBandung Indah Plaza Permai)The minimum purchase consideration payable to the respectiveVendor in respect of each Property0.25% per annum of the value of the Deposited Property payableto the Manager under the <strong>Trust</strong> DeedRental income derived from the <strong>Retail</strong> Spaces and <strong>Retail</strong> <strong>Malls</strong>pursuant to tenant leasesThe Basic Agrarian Law (Law No. 5 of 1960) of <strong>Indonesia</strong>BNP Paribas Capital (Singapore) Ltd.Board of directors of the ManagerBuild, Operate and TransferAn agreement entered into by the BOT Grantor and the BOTGrantee in relation to the construction of a structure of some ofthe <strong>Retail</strong> <strong>Malls</strong>, i.e. a building and fixturesThe party which owns the land property and grants a right by theBOT Grantor to build and operate a building on the BOTGrantor’s land for a particular period of time, at the BOTGrantee’s cost, pursuant to a BOT SchemeThe land owner or the party that is appointed by the land owner,who grants a BOT Grantee a right to build and operate a buildingon the BOT Land for a particular period of time, at the BOTGrantee’s cost, pursuant to a BOT Scheme; and at the end of theBOT period for the BOT Grantee to transfer the building to theBOT GrantorThe land owned by the land owner, that is granted to the BOTGrantee based on a BOT AgreementBuild, Operate and Transfer schemes where the BOT Grantoragrees to grant the BOT Grantee a right to build and operate abuilding on the BOT Grantor’s land for a particular period of time,at the BOT Grantee’s costBadan Pertanahan Negara, or National Land Board of <strong>Indonesia</strong>Bumi Serpong Damai CityAny day (other than a Saturday, Sunday or gazetted publicholiday) on which commercial banks are open for business inSingapore and the SGX-ST is open for tradingCentral business districtThe Central Depository (Pte) LimitedConsultative Group on <strong>Indonesia</strong>The Code on Collective Investment Schemes (including theProperty Funds Guidelines) of Singapore issued by the MASCMREF 1 CIMB-Mapletree Real Estate Fund 1272
GlossaryColliersColliers International / PT Penilai, as Independent Valuer to the<strong>Trust</strong>eeCommitted Leases All current leases in respect of the Properties as at 30 June 2007and each, a “Committed Lease”Companies ActCornerstone <strong>Investor</strong>sCornerstone SubscriptionAgreementsCornerstone UnitsCPFCPIHGDeeds of IndemnityDepok Town Square UnitsDeposited PropertyCompanies Act, Chapter 50 of Singapore<strong>Lippo</strong> Strategic and Mapletree LMEach of the subscription agreements (a) dated 18 October 2007entered into between <strong>Lippo</strong> Strategic and the Manager, pursuantto which <strong>Lippo</strong> Strategic subscribed for 287,695,000Cornerstone Units, and (b) dated 18 October 2007 enteredinto between Mapletree LM and the Manager, pursuant towhich Mapletree LM subscribed for 127,250,000 CornerstoneUnitsThe aggregate of 414,945,000 Units subscribed by all theCornerstone <strong>Investor</strong>s pursuant to the CornerstoneSubscription AgreementsCentral Provident Fund of SingaporeCP Inlandsimmobilien Holding GmbhThe 14 Deeds of Indemnity dated 18 October 2007 entered intoby the <strong>Trust</strong>ee and <strong>Lippo</strong> Capital Limited, pursuant to which<strong>Lippo</strong> Capital Limited will indemnify the <strong>Trust</strong>ee against liabilitiesor damage suffered by the <strong>Trust</strong>ee arising from any of the 14Singapore SPC Share Purchase Agreements, subject to certainconditionsFour strata units in Depok Town Square located at JalanMargonda Raya No. 1, Pondok Cina Beji, Depok, GreaterJakarta (See “Business and Properties—Depok Town SquareUnits—Relevant information relating to the Depok Town SquareUnits”)All the assets of LMIR <strong>Trust</strong>, including the Properties and all theAuthorised Investments of LMIR <strong>Trust</strong> for the time being held ordeemed to be held upon the trusts under the <strong>Trust</strong> DeedDepository Services Agreement The depository services agreement dated 10 August 2007entered into between CDP, the Manager and the <strong>Trust</strong>eerelating to the deposit of the Units in CDPDirectorDistributable IncomeElectronic ApplicationsERISAExisting Property ManagementAgreementsDirector of the ManagerIncome of LMIR <strong>Trust</strong> distributable to Unitholders, as defined in“Profit Forecast and Profit Projection—Assumptions—(IX)Distributable Income”The application for the Units offered in the Offering by way ofATMs of the Participating BanksThe U.S. Employee Retirement Income Security Act of 1974, asamendedThe property management agreements entered into betweeneach of the <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs and the PropertyManager in respect of the <strong>Retail</strong> <strong>Malls</strong> and “ExistingProperty Management Agreement” means any one of them273
GlossaryExtraordinary ResolutionF&BFinancial AdviserFirst Lock-Up PeriodA resolution proposed and passed as such by a majorityconsisting of 75.0% or more of the total number of votes castfor and against such resolution at a meeting of Unitholders dulyconvened and held in accordance with the provisions of the<strong>Trust</strong> DeedFood and beverageUBS AG, acting through its business group, UBS InvestmentBank, as sole financial adviser to the OfferingThe period commencing from the Listing Date until the datefalling six months after the Listing DateForecast Period 2007 The period from 1 July 2007 to 31 December 2007FRSSingapore Financial Reporting StandardsFY Financial year ended or, as the case may be, ending31 DecemberGDPGFAGrand Palladium Medan UnitsGRDPGreater JakartaGross RentGross RevenueGSThaHGBHPHPLIMBIMFIncome Tax ActIndependent <strong>Indonesia</strong>n <strong>Retail</strong>Property ConsultantIndependent <strong>Indonesia</strong>n TaxAdviserIndependent ValuersGross domestic productGross floor areaFour strata units in Grand Palladium Medan located at JalanKapt. Maulana Lubis, Medan, North Sumatra (See “Businessand Properties—Grand Palladium Medan Units—Relevantinformation relating to the Grand Palladium Medan Units”)Gross regional domestic productComprises Jakarta, Bogor, Depok, Tangerang and BekasiBase rent and services chargesThe aggregate of Gross Rent, carpark income and other incomeearned primarily from the PropertiesGoods and services tax of SingaporeHectaresHak Guna Bangunan (Right to Build)Hak Pakai, the right to use and/or collect the products of landdirectly administered by the State, or of land owned by otherpersons (based on Hak Milik).Hak Pengelolaan, the right to (i) plan the purpose and the use ofthe land, (ii) use the land for the need of the business of theholder and (iii) surrender plots of land to third parties inaccordance with the terms and conditions set up by the holderof the HPL title.Izin Mendirikan BangunanInternational Monetary FundThe Income Tax Act, Chapter 134 of SingaporePT Jones Lang LaSallePB & CoKnight Frank and Colliers274
Glossary<strong>Indonesia</strong>n SPCsInterested PersonInterested Person TransactionInvestible SavingsIPBIRASIRCIssue PriceIstana Plaza BOT AgreementIstana Plaza CooperationAgreementIUPMJava Supermall UnitsJSXKiosks Sale and Purchase BindingAgreementkmKnight FrankLabour LawLatest Practicable DateThe <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs and the <strong>Retail</strong> Space<strong>Indonesia</strong>n SPCsHas the meaning ascribed to it in the Listing Manual and theProperty Funds GuidelinesHas the meaning ascribed to it in the Listing Manual and theProperty Funds GuidelinesThe balance in a CPF Ordinary Account plus the net amounts (ifany) withdrawn for education and investmentInstitut Pertanian BogorInland Revenue Authority of SingaporeU.S. Internal Revenue Code of 1986, as amendedIssue price of each UnitThe Istana Plaza Cooperation Agreement and its amendmentsThe cooperation agreement, dated 9 May 1997 between, GerejaKristen Pasundan, Ginawan Chondro, Edi Sukamto Josana,Chandra Tambayong, Wirawan Chondro, Heryanto Gunawan,and Subagya Putra Prawira (as investors), and TK GunawanPrihatna, Stepanus Tedjasentosa, Tatang Budiarto, andAbrijanto Effendi (as consultants)The Decision of the Minister of Trade and Industry of theRepublic of <strong>Indonesia</strong> No. 107/MPP/Kep/2/1998, dated27 February 1998 on the Provisions and Procedures for theGranting of Modern Market Business LicencesFour strata units in Java Supermall located at Jalan MT HaryonoNo. 992-994, Jomblang, Semarang, Central Java (See“Business and Properties—Java Supermall Units—Relevantinformation relating to the Java Supermall Units”)Jakarta Stock ExchangeKiosks Sale and Purchase Binding Agreements are evidence ofthe parties’ intention to effect the sale and purchase of StrataUnits, but do not have the effect of transferring ownershipKilometreKnight Frank / PT. Willson Properti Advisindo, as independentvaluer to the ManagerLaw No. 13/2003, enacted by the <strong>Indonesia</strong>n government15 October 2007, being the latest practicable date prior to thelodgement of this Prospectus with the MAS<strong>Lippo</strong> Strategic <strong>Lippo</strong> Strategic Holdings Inc, a limited liability companyincorporated in the British Virgin Islands on 2 March 2007,and one of the Cornerstone <strong>Investor</strong>sListing DateListing ManualLLDLMIR <strong>Trust</strong>The date of admission of LMIR <strong>Trust</strong> to the Official List of theSGX-STListing Manual of the SGX-STPT. <strong>Lippo</strong> Land Development Tbk<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>, a REIT established inSingapore and constituted by the <strong>Trust</strong> Deed275
GlossaryLQ 45 IndexMalang Town Square UnitsMall WTC Matahari UnitsManagerMapletree CapitalMapletree GroupMapletree LMMapletreeLogMarket DayMASMaster Lease AgreementsMaster Property ManagementAgreementA capitalisation-weighted index of the 45 most heavily tradedstocks on the JSXThree strata units in Malang Town Square located at JalanVeteran No. 2, Malang, East Java (See “Business andProperties—Malang Town Square Units—Relevantinformation relating to the Malang Town Square Units”)Four strata units in Mall WTC Matahari located at Jalan RayaSerpong, Pondok Jagung, Serpong, Tangerang, Banten,Greater Jakarta (See “Business and Properties—Mall WTCMatahari Units—Relevant information relating to the MallWTC Matahari Units”)<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd., asmanager of LMIR <strong>Trust</strong>Mapletree Capital Management Pte. Ltd.MIPL and its subsidiaries, including Mapletree CapitalMapletree LM Pte. Ltd.Mapletree Logistics <strong>Trust</strong>A day on which the SGX-ST is open for trading in securitiesThe Monetary Authority of SingaporeThe seven lease agreements dated 18 October 2007 enteredbetween the Master Lessee and the <strong>Retail</strong> Space <strong>Indonesia</strong>nSPCs in relation to the <strong>Retail</strong> Spaces, and “Master LeaseAgreement” means any one of themThe property management agreement entered into between the<strong>Trust</strong>ee, the Manager and the Property Manager on 18 October2007Matahari or Master LesseePT. Matahari Putra Prima Tbk, an <strong>Indonesia</strong>n company listed onthe JSX and SSX, in which the <strong>Lippo</strong> Group has a controllinginterest through PT Multipolar Corporation Tbk.Metropolis Town Square Units Three strata units in Metropolis Town Square located at JalanHartono Raya, Modernland Cikokol, Tangerang, Banten,Greater Jakarta (See “Business and Properties—MetropolisTown Square Units—Relevant information relating to theMetropolis Town Square Units”)MIFMapletree Industrial FundMIFMMapletree Industrial Fund Management Pte. Ltd.MIPLMapletree Investments Pte LtdMoody’sMoody’s <strong>Investor</strong>s Services, Inc.MREM 1 Mapletree Real Estate Mezzanine Fund 1MYRMalaysian Ringgit, the lawful currency of MalaysiaNAVNet asset valueNew Investment Law The <strong>Indonesia</strong>n investment law which amends Law No. 1 of 1967(as amended) regarding Foreign Capital Investment Law andLaw No. 6 of 1968 (as amended) regarding Domestic CapitalInvestment LawNLANet lettable area276
GlossaryNPIOCBC BankNet property income consisting of property revenue lessproperty operating expensesOversea-Chinese Banking Corporation LimitedOffering The offering of 645,469,000 Units by the Manager forsubscription at the Offering Price under the Placement andthe Public Offer, subject to the Over-allotment OptionOffering PriceOperating CompaniesThe subscription price of S$0.80 for each Unit under the OfferingPT Multi Nusantara Karya, PT Selaras Maju, PT Sarana KaryaMegah, PT Antara Nusa Permai, PT Primatama Kreasi Bersamaand PT Kharisma Abadi Selaras, and each an “OperatingCompany”Operating Costs AgreementOrdinary ResolutionOver-allotment OptionParticipating BanksPerformance FeePlacementThe operating costs agreement entered into between therelevant <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC and Operating CompanyA resolution proposed and passed as such by a majority being50.0% of the total number of votes cast for and against suchresolution at a meeting of Unitholders duly convened and held inaccordance with the provisions of the <strong>Trust</strong> DeedAn option granted by the Unit Lender to the Underwriters topurchase from the Unit Lender up to an aggregate of 96,820,000Units at the Offering Price, solely to cover the over-allotment ofUnits (if any)OCBC Bank, DBS Bank Ltd (including POSB) (“DBS Bank”) andUnited Overseas Bank (“UOB Bank”) including its subsidiary, FarEastern Bank Limited (the “UOB Group”)4.0% per annum of the NPI of LMIR <strong>Trust</strong> in the relevant financialyear (calculated before accounting for this additional fee in thatfinancial year)625,469,000 Units offered by way of an international placementto investors, including institutional and other investors inSingapore, pursuant to the OfferingPlaza MadiunTwo HGB titles in Plaza Madiun located at Jalan Pahlawan (See“Business and Properties—Plaza Madiun—Relevantinformation relating to Plaza Madiun”)PMA Penanaman Modal Asing, or foreign capital investmentcompanies established and organised under and by virtue ofthe laws of the Republic of <strong>Indonesia</strong> and located in <strong>Indonesia</strong>PPATPRCPejabat Pembuat Akta Tanah, or Land Deed Official who isnormally a local notary in <strong>Indonesia</strong>The People’s Republic of ChinaProjection Year 2008 The period from 1 January 2008 to 31 December 2008Projection Year 2009 The period from 1 January 2009 to 31 December 2009PropertiesProperty Funds GuidelinesThe properties comprising LMIR <strong>Trust</strong>’s initial asset portfolio asat the Listing Date, namely, the <strong>Retail</strong> <strong>Malls</strong> and <strong>Retail</strong> Spacesand “Property” means any one of themThe guidelines to Real Estate Investment <strong>Trust</strong>s issued by theMAS as Appendix 2 of the CIS Code277
GlossaryProperty ManagerProperty Purchase AgreementsPT IPBPublic OfferRecognised Stock ExchangeREITRegulation SRelated PartyRelated Party TransactionsRelevant AssetRentRental Guarantee Deeds<strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC SharePurchase Agreements<strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCs<strong>Retail</strong> Mall Singapore SPCs<strong>Retail</strong> <strong>Malls</strong><strong>Retail</strong> Space <strong>Indonesia</strong>n SPC SharePurchase Agreements<strong>Retail</strong> Space <strong>Indonesia</strong>n SPCsPT. Consulting & Management Services Division, as propertymanager of the <strong>Retail</strong> <strong>Malls</strong> and any property located in<strong>Indonesia</strong> acquired by LMIR <strong>Trust</strong> after the Listing Date.The sale and purchase agreements, each entered into by therelevant <strong>Indonesia</strong>n SPC, to acquire the relevant PropertyPT Indah Pesona BogorThe offering of 20,000,000 Units to the public in SingaporeAny stock exchange of repute in any part of the worldReal estate investment trustRegulation S under the Securities ActRefers to an interested person and/or, as the case may be, aninterested partyRefers to an Interested Person Transaction and/or, as the casemay be, an Interested Party TransactionA retail property located in <strong>Indonesia</strong> which is subject to theROFR, as described in “Certain Agreements Relating to LMIR<strong>Trust</strong> and the Properties—Description of the Right of FirstRefusal Agreement”Consists of rent paid by tenants under their lease agreements forspace in the <strong>Retail</strong> SpacesThe seven rental guarantee deeds entered into by <strong>Lippo</strong>Strategic with the relevant <strong>Retail</strong> Mall Singapore SPCpursuant to which <strong>Lippo</strong> Strategic will (i) provide a rentalguarantee over the relevant <strong>Retail</strong> Mall and (ii) undertake topay to the relevant <strong>Retail</strong> Mall Singapore SPC any shortfall in themaintenance and operation costs which the relevant OperatingCompany has undertaken to bear under the respectiveOperating Costs AgreementThe seven share purchase agreements, each entered intobetween two relevant Singapore SPCs and the vendor of therelevant <strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC, pursuant which the tworelevant Singapore SPCs acquire all the ordinary shares in that<strong>Retail</strong> Mall <strong>Indonesia</strong>n SPCThe <strong>Indonesia</strong>n SPCs which collectively own the <strong>Retail</strong> <strong>Malls</strong> asat the Listing Date and each a “<strong>Retail</strong> Mall <strong>Indonesia</strong>n SPC”The Tier 1 <strong>Retail</strong> Mall Singapore SPCs and the Tier 2 <strong>Retail</strong> MallSingapore SPCsGajah Mada Plaza, Cibubur Junction, The Plaza Semanggi, Mal<strong>Lippo</strong> Cikarang, Ekalokasari Plaza, Bandung Indah Plaza andIstana PlazaThe seven share purchase agreements, each entered intobetween two relevant Singapore SPCs and the vendor of therelevant <strong>Retail</strong> Space <strong>Indonesia</strong>n SPC, pursuant which the tworelevant Singapore SPCs acquire all the ordinary shares in that<strong>Retail</strong> Space <strong>Indonesia</strong>n SPCThe <strong>Indonesia</strong>n SPCs which collectively own the <strong>Retail</strong> Spacesas at the Listing Date, and each a “<strong>Retail</strong> Space <strong>Indonesia</strong>nSPC”278
Glossary<strong>Retail</strong> Space Singapore SPCs Java Properties Pte. Ltd., Serpong Properties Pte. Ltd.,Metropolis Properties Pte. Ltd., Matos Properties Pte. Ltd.,Detos Properties Pte. Ltd., Palladium Properties Pte. Ltd. andMadiun Properties Pte. Ltd., and each a “<strong>Retail</strong> SpaceSingapore SPC”<strong>Retail</strong> SpacesRKLROFR or Right of First RefusalThe Mall WTC Matahari Units; the Metropolis Town SquareUnits; the Depok Town Square Units; the Java SupermallUnits; the Malang Town Square Units; Plaza Madiun; and theGrand Palladium Medan UnitsAn environmental management planA right that an offer be made to LMIR <strong>Trust</strong> over a sale or transferof a Relevant Asset, as described in “Certain AgreementsRelating to LMIR <strong>Trust</strong> and the Properties—Description of theRight of First Refusal Agreement”ROFR PropertiesBinjai Supermall, Pejaten Mall, Kuta Beach Mall, Kemang CityMall and Puri “Paragon City”Rp. or <strong>Indonesia</strong>n RupiahThe lawful currency of the Republic of <strong>Indonesia</strong>RPLAn environmental monitoring planS$ or Singapore dollars and cents Singapore dollars and cents, the lawful currency of the Republicof SingaporeSARSSevere Acute Respiratory SyndromeSecond Lock-Up PeriodThe period commencing from the day immediately following theFirst Lock-up Period until the date falling 12 months after theListing DateSecurities AccountSecurities account or sub-account maintained by a Depositor (asdefined in Section 130A of the Companies Act) with CDPSecurities ActU.S. Securities Act of 1933, as amendedService DateThe date of service of the put option noticeSettlement DateThe date and time on which the Units are issued as settlementunder the OfferingSFA or Securities and Futures Act Securities and Futures Act, Chapter 289 of SingaporeSFOSecurities and Futures Ordinance (Cap. 571 of the Laws of HongKong)SGX-STSingapore Exchange Securities Trading LimitedSingapore SPC Share PurchaseAgreementsSingapore SPCsSPCsSpecialty Base RentSponsorSponsor EntityThe agreements dated 18 October 2007 entered into betweeneach of the Vendors and the <strong>Trust</strong>ee, pursuant to which the<strong>Trust</strong>ee will acquire all of the ordinary shares and redeemablepreference shares in each of the Target Singapore SPCs atcompletionThe <strong>Retail</strong> Mall Singapore SPCs and the <strong>Retail</strong> Space SingaporeSPCsSpecial Purpose Companies, and each, a “SPC”Monthly rental rate per sq m chargeable to specialty storetenantsPT. <strong>Lippo</strong> Karawaci TbkThe Sponsor or any of its subsidiaries279
GlossarySPVsq ftsq mSSXStabilising ManagerStandard & Poor’sSubstantial UnitholderTake-over CodeTarget Singapore SPCsTax-Exempt IncomeTier 1 <strong>Retail</strong> Mall Singapore SPCsTier 2 <strong>Retail</strong> Mall Singapore SPCsTristar<strong>Trust</strong> Deed<strong>Trust</strong>eeU.S.UBSUnaudited Pro Forma ConsolidatedBalance SheetUnderwritersUnderwriting AgreementUnderwriting, Selling andManagement CommissionUnitUnit LenderSpecial Purpose VehicleSquare feetSquare metresSurabaya Stock ExchangeUBSStandard & Poor’s Ratings Group, a division of the McGraw-HillCompanies, Inc.Any Unitholder with an interest in one or more Units constitutingnot less than 5.0% of all Units in issueThe Singapore Code on Take-overs and Mergers issued by theMASThe Tier 1 <strong>Retail</strong> Mall Singapore SPCs and the <strong>Retail</strong> SpaceSingapore SPCsThe one-tier (tax-exempt) dividends received from the TargetSingapore SPCsBelilios International Pte. Ltd., Dominion Capital Pte. Ltd.,Greenlot Investments Pte. Ltd., Tangent Investments Pte. Ltd.,Magnus Investments Pte. Ltd., Thornton Investments Pte. Ltd.and Pierbridge Investments Pte. Ltd.Prism Investments Pte. Ltd., Silver Dory Holdings Pte. Ltd.,Vernon Investments Pte. Ltd., Maxia Investments Pte. Ltd.,Fenton Investments Pte. Ltd., Langston Investments Pte. Ltd.and Bowland Investments Pte. Ltd.Tristar Capital Ltd.The trust deed dated 8 August 2007 (as amended by a firstsupplemental deed dated 18 October 2007) entered intobetween the <strong>Trust</strong>ee and the Manager constituting LMIR <strong>Trust</strong>.HSBC Institutional <strong>Trust</strong> Services (Singapore) Limited, astrustee of LMIR <strong>Trust</strong>United States of AmericaUBS AG, acting through its business group, UBS InvestmentBankUnaudited Pro Forma Consolidated Balance Sheet of LMIR <strong>Trust</strong>as at the Listing DateBNP, OCBC Bank and UBSThe underwriting agreement dated 9 November 2007 enteredinto between the Sponsor, the Manager, the Unit Lender and theUnderwritersThe underwriting, selling and management commission payableto the Underwriters for their services in connection with theOfferingAn undivided interest in LMIR <strong>Trust</strong> as provided for in the<strong>Trust</strong> Deed<strong>Lippo</strong> Strategic280
GlossaryUnit Lending AgreementUnit Registrar or Share RegistrarUnitholderVATVendorsVolume Weighted Average TradedPriceweighted average occupancyThe unit lending agreement dated 9 November 2007 entered intobetween the Stabilising Manager and the Unit Lender inconnection with the Over-allotment OptionBoardroom Corporate & Advisory Services Pte. Ltd.The registered holder for the time being of a Unit includingpersons so registered as joint holders, except that where theregistered holder is CDP, the term “Unitholder” shall, in relationto Units registered in the name of CDP, mean, where the contextrequires, the depositor whose Securities Account with CDP iscredited with UnitsValue-added taxGolden Acres Investment Ltd., Market Holdings Ltd., MillenniumCapital Ltd., Superior Asset Investment Ltd., Victoria InvestmentLtd., Dellmore Investment Ltd. and Tristar, companiesincorporated in the Federal Territory of Labuan, Malaysia.Tristar is a wholly-owned subsidiary of Matahari. The Vendors,with the exception of Tristar, are not owned, whether wholly orpartially, directly or indirectly, by the SponsorThe ratio of the value traded to the total volume traded over aparticular time horizonIn respect of each <strong>Retail</strong> Mall, this is derived by dividing theoccupied area of the <strong>Retail</strong> Mall by the total NLA of the <strong>Retail</strong>Mall.Words importing the singular shall, where applicable, include the plural and vice versa. Words importingthe masculine gender shall, where applicable, include the feminine and neuter genders. References topersons shall include corporations.Any reference in this Prospectus to any enactment is a reference to that enactment for the time beingamended or re-acted.Any reference to a time of day in this Prospectus is made by reference to Singapore time unless otherwisestated.281
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Appendix AINDEPENDENT ACCOUNTANTS’ REPORT ON THE PROFIT FORECAST AND PROFIT PROJECTION9 November 2007The Board of Directors<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd(As manager of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>)78 Shenton Way#05-01 <strong>Lippo</strong> CentreSingapore 079120The Board of DirectorsHSBC Institutional <strong>Trust</strong> Services (Singapore) Limited(As trustee of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>)21 Collyer Quay, #14-01 HSBC BuildingSingapore 049320Dear SirsLETTER FROM THE REPORTING ACCOUNTANTS ON THE PROFIT FORECAST FOR THEFINANCIAL PERIOD ENDING 31 DECEMBER 2007 AND THE PROFIT PROJECTION FOR THEFINANCIAL YEARS ENDING 31 DECEMBER 2008 AND 2009This letter has been prepared for inclusion in the prospectus (the “Prospectus”) issued in connection withthe offering of certain Units in <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> (“LMIR <strong>Trust</strong>”) (the “Offering”).We have examined the Profit Forecast of LMIR <strong>Trust</strong> for the financial period ending 31 December 2007and the Profit Projection for the financial years ending 31 December 2008 and 2009 as set out on pages 98to 100 of the Prospectus in accordance with Singapore Standards on Assurance Engagements 3400 “TheExamination of Prospective Financial Information”.The Directors of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd (the “Directors”) are responsiblefor the preparation and presentation of the forecast and projected Consolidated Statements of TotalReturn for the financial period ending 31 December 2007 (the “Profit Forecast”) and the financial yearsending 31 December 2008 and 2009 (the “Profit Projections”) in each case with respect to LMIR <strong>Trust</strong> asset out on pages 98 to 100 of the Prospectus, including their assumptions as set out on pages 100 to 108 ofthe Prospectus.Profit forecastBased on our examination of the evidence supporting the assumptions, nothing has come to our attentionwhich causes us to believe that these assumptions do not provide a reasonable basis for the ProfitForecast. Further, in our opinion the Profit Forecast, so far as the accounting policies and calculations areconcerned, is properly prepared on the basis of the assumptions, is consistent with the accounting policiesset out on pages B-10 to B-15 of Appendix B of the Prospectus, and is presented in accordance with theapplicable presentation principles of Recommended Accounting Practice 7 “Reporting Framework for Unit<strong>Trust</strong>s” (but not all the required disclosures for the purpose of this letter) issued by the Institute of CertifiedPublic Accountants of Singapore which is the framework adopted by LMIR <strong>Trust</strong> in the preparation of itsfinancial statements.Profit projectionsThe Profit Projections have been prepared to show a possible outcome based on the stated assumptions.As LMIR <strong>Trust</strong> is newly established without any history of activities and because the length of the periodcovered by the Profit Projections extend beyond the period covered by the Profit Forecast, the assumptionsused in the Profit Projections (which include hypothetical assumptions about future events andA-1
Appendix Amanagement’s actions that are not necessarily expected to occur) are more subjective than would beappropriate for a profit forecast. The Profit Projections do not therefore constitute a profit forecast.Based on our examination of the evidence supporting the relevant assumptions, nothing has come to ourattention which causes us to believe that these assumptions do not provide a reasonable basis for theProfit Projections. Further, in our opinion the Profit Projections, so far as the accounting policies andcalculations are concerned, are properly prepared on the basis of the assumptions, are consistent with theaccounting policies set out on pages B-10 to B-15 of Appendix B of the Prospectus, and are presented inaccordance with the applicable presentation principles of Recommended Accounting Practice 7“Reporting Framework for Unit <strong>Trust</strong>s” (but not all the required disclosures for the purposes of thisletter) issued by the Institute of Certified Public Accountants of Singapore which is the framework adoptedby LMIR <strong>Trust</strong> in the preparation of its financial statements.Events and circumstances frequently do not occur as expected. Even if the events anticipated under thehypothetical assumptions occur, actual results are still likely to be different from the Profit Forecast andProfit Projections since other anticipated events frequently do not occur as expected and the variation maybe material. The actual results may therefore differ materially from those forecast and projected. For thereasons set out above, we do not express any opinion as to the possibility of achievement of the ProfitForecast and Profit Projections.Attention is drawn, in particular to the risk factors set out on pages 65 to 87 of the Prospectus whichdescribe the principal risks associated with the Offering, to which the Profit Forecast and Profit Projectionsrelate and sensitivity analysis of the Directors’ Profit Forecast and Profit Projections set out on page 108 to111 of the Prospectus.Yours faithfullyRSM Chio LimCertified Public AccountantsSingaporePartner in charge: Paul Lee Seng MengA member of the Institute of Certified Public Accountants of SingaporeA-2
Appendix BINDEPENDENT ACCOUNTANTS’ REPORT ON THE UNAUDITED PRO FORMA CONSOLIDATEDBALANCE SHEET AS AT THE LISTING DATE9 November 2007The Board of Directors<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd(As manager of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>)78 Shenton Way#05-01 <strong>Lippo</strong> CentreSingapore 079120The Board of DirectorsHSBC Institutional <strong>Trust</strong> Services (Singapore) Limited(As trustee of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>)21 Collyer Quay, #14-01 HSBC BuildingSingapore 049320Dear SirsINDEPENDENT ACCOUNTANTS’ REPORT ON THE UNAUDITED PRO FORMA CONSOLIDATEDBALANCE SHEET AS AT THE LISTING DATEWe report on the Unaudited Pro Forma Consolidated Balance Sheet of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong><strong>Trust</strong> (“LMIR <strong>Trust</strong>”) and its subsidiaries (the “Pro Forma Group”) as at the Listing Date (the “Pro FormaConsolidated Balance Sheet”) set out on pages B3 to B26 of Appendix B of the prospectus (the“Prospectus”) issued in connection with the offering of certain units in LMIR <strong>Trust</strong>, which has beenprepared for illustrative purposes only and based on certain assumptions after making certainadjustments.The Pro Forma Consolidated Balance Sheet as at the Listing Date has been prepared on the basis of theassumptions set out in section C on pages B-5 to B-6 to provide information on the financial position of thePro Forma Group, had the purchase of the seven retail malls comprising Gajah Mada Plaza; CibuburJunction; The Plaza Semanggi; Mal <strong>Lippo</strong> Cikarang; Ekalokasari Plaza; Bandung Indah Plaza and IstanaPlaza (collectively known as “<strong>Retail</strong> <strong>Malls</strong>”) and the purchase of the seven retail spaces comprising MallWTC Matahari Units; Metropolis Town Square Units; Depok Town Square Units; Java Supermall Units;Malang Town Square Units; Plaza Madiun and Grand Palladium Medan Units (collectively known as“<strong>Retail</strong> Spaces”) been undertaken by LMIR <strong>Trust</strong> under the same terms set out in the Prospectus on theListing Date.The Pro Forma Consolidated Balance Sheet has been prepared for illustrative purposes only and,because of its nature, may not give a true picture of the Pro Forma Group’s actual financial position.The Pro Forma Consolidated Balance Sheet is the responsibility of the directors of <strong>Lippo</strong>-Mapletree<strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd (the “Directors”). Our responsibility is to express an opinion on thePro Forma Consolidated Balance Sheet based on our work.We carried out procedures in accordance with Singapore Statement of Auditing Practice 24 “Auditors andPublic Offering Documents”. Our work, which involved no independent examination of the underlyingfinancial information, consisted primarily of:(i)comparing the Pro Forma Consolidated Balance Sheet to the combined audited balance sheets ofthe seven <strong>Retail</strong> <strong>Malls</strong> property companies as at 31 December 2006, audited balance sheets of theseven <strong>Retail</strong> Spaces property companies and its seven investment holding companies as at15 February 2007 and 10 February 2007 respectively, the unaudited balance sheets of therelevant <strong>Retail</strong> <strong>Malls</strong>’ ten investment holding companies as at incorporation date and four of therelevant <strong>Retail</strong> <strong>Malls</strong>’ investment holding companies as at 31 December 2006 and the unauditedfinancial statements of LMIR <strong>Trust</strong> at its constitution; andB-1
Appendix B(ii) considering the evidence supporting the pro forma adjustments and discussing the Pro FormaConsolidated Balance Sheet with the Directors.In our opinion:(a) the Pro Forma Consolidated Balance Sheet has been properly prepared from the combined financialstatements of LMIR <strong>Trust</strong> and its subsidiaries (which are prepared in accordance with SingaporeFinancial Reporting Standards (“FRS”) and is presented in accordance with the relevantpresentation principles of Recommended Accounting Practice 7 “Reporting Framework for Unit<strong>Trust</strong>s” issued by the Institute of Certified Public Accountants of Singapore;(b) the Pro Forma Consolidated Balance Sheet has been properly prepared in a manner consistent withboth the format of the balance sheet and the relevant accounting policies of LMIR <strong>Trust</strong>;(c) each material adjustment to the information used in the computation of a financial effect relating tothe Pro Forma Consolidated Balance Sheet is appropriate for the purpose of preparing such a ProForma Consolidated Balance Sheet and is in accordance with FRS; and(d) the Pro Forma Consolidated Balance Sheet has been properly prepared on the basis of theassumptions and after making the adjustments as described in section C on pages B-5 to B-6.Yours faithfullyRSM Chio LimCertified Public AccountantsSingaporePartner in charge: Paul Lee Seng MengA member of the Institute of Certified Public Accountants of SingaporeB-2
Appendix B<strong>LIPPO</strong>-<strong>MAPLETREE</strong> INDONESIA RETAIL TRUST UNAUDITED PROFORMA CONSOLIDATED BALANCESHEET AS AT LISTING DATE(A)IntroductionThe Unaudited Pro Forma Consolidated Balance Sheet of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> (“LMIR<strong>Trust</strong>”) and its subsidiaries (“the Pro Forma Group”) as at the Listing Date (the “Pro Forma ConsolidatedBalance Sheet”) is for the purposes of the prospectus (the “Prospectus”) issued in connection with theoffering of certain units in LMIR <strong>Trust</strong>, which has been prepared for illustrative purposes only and based oncertain assumptions after making certain adjustments.LMIR <strong>Trust</strong> is a Singapore-based real estate investment trust constituted by a trust deed entered intobetween HSBC Institutional <strong>Trust</strong> Services (Singapore) Limited (the “<strong>Trust</strong>ee”) and <strong>Lippo</strong>-Mapletree<strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd (the “Manager”). LMIR <strong>Trust</strong> is established with the principalinvestment objective of owning and investing on a long-term basis in a diversified portfolio of incomeproducingreal estate in <strong>Indonesia</strong> that are primarily used for retail and/or retail-related purposes, and realestate related assets in connection with the foregoing purposes.The sponsor for LMIR <strong>Trust</strong> is PT. <strong>Lippo</strong> Karawaci Tbk (“Sponsor”).Its initial property portfolio comprises the following seven retail malls and seven retail spaces(“Properties”):(1) <strong>Retail</strong> <strong>Malls</strong>(a)(b)(c)(d)(e)(f)(g)Gajah Mada Plaza;Cibubur Junction;The Plaza Semanggi;Mal <strong>Lippo</strong> Cikarang;Ekalokasari Plaza;Bandung Indah Plaza; andIstana Plaza(2) <strong>Retail</strong> Spaces(a)(b)(c)(d)(e)(f)(g)Mall WTC Matahari Units;Metropolis Town Square Units;Depok Town Square Units;Java Supermall Units;Malang Town Square Units;Plaza Madiun; andGrand Palladium Medan UnitsThe subsidiaries held by the LMIR <strong>Trust</strong> are listed below:(i)(ii)Special purpose investment holding companies incorporated in Singapore (“Investment HoldingCompanies”) comprising Belilios International Pte Ltd, Dominion Capital Pte Ltd, GreenlotInvestments Pte Ltd, Magnus Investments Pte Ltd, Pierbridge Investments Pte Ltd, ThorntonInvestments Pte Ltd, Tangent Investments Pte Ltd, Prism Investments Pte Ltd, Silver DoryHoldings Pte Ltd, Vernon Investments Pte Ltd, Maxia Investments Pte Ltd, Fenton InvestmentsPte Ltd, Langston Investments Pte Ltd, Bowland Investments Pte Ltd, Serpong Properties Pte Ltd,Metropolis Properties Pte Ltd, Matos Properties Pte Ltd, Detos Properties Pte Ltd, PalladiumProperties Pte Ltd, Madiun Properties Pte Ltd and Java Properties Pte Ltd.Special purpose property companies incorporated in <strong>Indonesia</strong> (“Property Companies”) comprisingPT Graha Baru Raya (Owner of Gajah Mada Plaza), PT Graha Nusa Raya (Owner of Mal <strong>Lippo</strong>B-3
Appendix BCikarang), PT Cibubur Utama (Owner of Cibubur Junction), PT Megah Semesta Abadi (Owner ofBandung Indah Plaza), PT Suryana Istana Pasundan (Owner of Istana Plaza), PT Indah PesonaBogor (Owner of Ekalokasari Plaza), PT Primatama Nusa Indah (Owner of The Plaza Semanggi),PT Dinamika Serpong (Owner of Mall WTC Matahari Units), PT Gema Metropolis Modern (Owner ofMetropolis Town Square Units), PT Matos Surya Perkasa (Owner of Malang Town Square Units), PTMegah Detos Utama (Owner of Depok Town Square Units), PT Palladium Megah Lestari (Owner ofGrand Palladium Medan Units), PT Madiun Ritelindo (Owner of Plaza Madiun) and PT Java MegaJaya (Owner of Java Supermall Units).As at the Listing Date, the auditors of the Singapore incorporated subsidiaries are RSM Chio Lim,Singapore and the auditors of the <strong>Indonesia</strong>n incorporated subsidiaries are RSM AAJ Associates,<strong>Indonesia</strong> a member firm of RSM International of which RSM Chio Lim is a member.All the Singapore subsidiaries and the <strong>Retail</strong> Spaces Property Companies were inactive before the date ofthe acquisition of the Properties mentioned above.All the above subsidiaries are effectively wholly-owned by LMIR <strong>Trust</strong>.(B)Pro Forma historical financial informationThe pro forma consolidated statements of total return, consolidated cash flow statement and consolidatedbalance sheet have not been prepared to show the pro forma historical financial performance and positionof LMIR <strong>Trust</strong> (“Pro Forma Historical Financial Statements”) for the following reasons:• Gajah Mada Plaza and Mal <strong>Lippo</strong> Cikarang were recently acquired by the respective <strong>Retail</strong> MallProperty Companies, namely PT Graha Baru Raya and PT Graha Nusa Raya, in March 2006. Historicalfinancial information for these two <strong>Retail</strong> <strong>Malls</strong> prior to their acquisition dates is not available from theprevious vendors and, there is no comparable historical financial information for the full years ended31 December 2004 and 31 December 2005;• Bandung Indah Plaza, Ekalokasari Plaza and Mal <strong>Lippo</strong> Cikarang have recently undergone majorrefurbishments and other repositioning initiatives. Given the repositioning initiatives, the Manager is ofthe view that any attempt to present the historical pro forma financial performance based on the actualresults of these three <strong>Retail</strong> <strong>Malls</strong> prior to their repositioning initiatives may not be comparable to theexpected results of these <strong>Retail</strong> <strong>Malls</strong> after the repositioning initiatives;• Cibubur Junction commenced its retail space leasing operations in September 2005. Given that therewere no activities for Cibubur Junction prior to September 2005, the historical financial information onCibubur Junction’s performance would not be available for the full financial years ended 31 December2004 and 31 December 2005. Accordingly, any historical pro forma financial information presented inrespect of Cibubur Junction’s short period of operations is unlikely to be meaningful or accurately reflectits financial performance;• Each of the <strong>Retail</strong> Spaces was wholly-owned by PT Matahari Putra Prima Tbk (“Matahari” or “MasterLessee”) up to the Listing Date and was held for the use of Matahari’s retail businesses. As the activitiesrelating to the <strong>Retail</strong> Spaces form an intrinsic part of Matahari’s core business operations, Mataharidoes not keep separate financial records on these <strong>Retail</strong> Spaces. Accordingly, historical financial data isunavailable for each <strong>Retail</strong> Space; and• If historical pro forma financial information is prepared based on the terms of the Master LeaseAgreements to be entered into between the Master Lessee and the relevant <strong>Retail</strong> Space PropertyCompanies, such information will be in nature of a forecast and will not reflect the historical financialresults and position of LMIR <strong>Trust</strong> with respect to the <strong>Retail</strong> Spaces. Assumptions and bases which areprospective in nature would need to be made if LMIR <strong>Trust</strong> is to assume that such arrangements were inplace throughout the period covered by the historical pro forma financial information. As such, theManager believes that such historical pro forma financial information will be of little value to investors indeciding whether to acquire the units but a profit forecast and profit projection based on, among otherthings, the terms of the Master Lease Agreements would be more meaningful to investors.For the reasons stated above, the SGX-ST has granted LMIR <strong>Trust</strong> a waiver from the requirement toprepare Pro Forma Historical Financial Statements. In lieu of Pro Forma Historical Financial Statements, aB-4
Appendix BPro Forma Consolidated Balance Sheet of LMIR <strong>Trust</strong>, upon completion of the offering and the acquisitionof the Properties, has been prepared by the Manager as set out in section D below and a profit forecast forthe period from 1 July 2007 to 31 December 2007 and profit projections for the financial years ending31 December 2008 and 2009 have been included in the Prospectus.(C) Bases of preparation of Pro Forma Consolidated Balance Sheet as at the listing dateThe Pro Forma Consolidated Balance Sheet as at the listing date is prepared for illustrative purposes onlyand based on certain assumptions after making certain adjustments. The Manager has assumed that thelisting date is 1 July 2007 (“Listing Date”).The Pro Forma Consolidated Balance Sheet is prepared:• based on the audited balance sheets of the seven <strong>Retail</strong> <strong>Malls</strong> Property Companies as at 31 December2006 and audited balance sheets of the seven <strong>Retail</strong> Spaces Property Companies as at 15 February2007;• based on the audited balance sheets of the seven <strong>Retail</strong> Spaces’ Investment Holding Companies as at10 February 2007;• based on the unaudited balance sheets of the relevant ten Investment Holding Companies as atincorporation date and four of the relevant Investment Holding Companies as at 31 December 2006;• based on the unaudited balance sheet of LMIR <strong>Trust</strong> as at its constitution; and• incorporating adjustments necessary to reflect the financial position of the Pro Forma Group, pursuantto the terms set out in the Prospectus and bases set out below.The Pro Forma Consolidated Balance Sheet of LMIR <strong>Trust</strong> as at the Listing Date reflects the financialposition of LMIR <strong>Trust</strong> as if it had purchased the Property Companies on the Listing Date under the sameterms set out in the Prospectus.The Pro Forma Consolidated Balance Sheet has been prepared on the basis of the accounting policies setout in section F below.The objective of the Pro Forma Consolidated Balance Sheet of the Pro Forma Group is to show what thefinancial position might have been at the Listing Date, on the basis as described above. However, the ProForma Consolidated Balance Sheet is not necessarily indicative of the financial position that would havebeen actually attained by LMIR <strong>Trust</strong> on the Listing Date. The Pro Forma Consolidated Balance Sheet,because of its nature, may not give a true picture of the Pro Forma Group’s financial position.The Pro Forma Consolidated Balance Sheet has been prepared after incorporating the following keyadjustments:• Adjustments to reflect the transfer of assets and liabilities from the <strong>Retail</strong> <strong>Malls</strong> Property Companies tothe Operating Companies (namely cash and cash equivalents, trade and other receivables, otherinvestments, certain plant and equipment, trade and other payables and borrowings). The <strong>Retail</strong> MallProperty Companies have entered into the Operating Costs Agreements with the OperatingCompanies. These agreements are more particularly described in “Certain Agreements Relating toLMIR <strong>Trust</strong> and the Properties—Description of Operating Costs Agreements” of the Prospectus.The financial statements of seven <strong>Retail</strong> <strong>Malls</strong> Property Companies have been restated from<strong>Indonesia</strong>n GAAP to Singapore Financial Reporting Standards (“FRS”) (“Restated FRS financialstatements”) to be in line with the accounting policies of LMIR <strong>Trust</strong>. RSM AAJ Associates were theauditors for this purpose. The Restated FRS financial statements have been qualified by RSM AAJAssociates to the extent that certain financial assets and financial liabilities of these <strong>Retail</strong> <strong>Malls</strong>Property Companies have not been fair valued, accounted and presented in accordance with therequirements of FRS 32 and 39. The Manager is of the view that there is no practical benefit in restatingthese financial assets and financial liabilities to FRS as these financial assets and financial liabilities willbe transferred to the Operating Companies (see Note F15) at their carrying values as stated inaccordance with <strong>Indonesia</strong>n GAAP. As such, the Manager believes that restating the financial assetsand financial liabilities to FRS will have no value to investors. The audited financial statements of theseentities prepared in accordance with <strong>Indonesia</strong>n GAAP were not qualified.B-5
Appendix B• Adjustments to record the capital expenditure incurred for the period between 1 January 2007 and theListing Date amounting of approximately Rp. 51.9 billion (S$8,805,000) and the related depreciationthereof;• Adjustment to accrue the Build, Operate and Transfer (“BOT”) liabilities, discounted at 14% which isapproximate to the discount rate used by the property valuer in the valuation of the Properties;• Adjustment to state the Properties at a total valuation of approximately Rp. 5.9 trillion (approximatelyS$1,004,679,000) and the deferred tax attributable to the revaluation of the Properties of approximatelyS$62,366,000. The valuation is based on an independent valuation dated 30 June 2007 carried out byKnight Frank / PT. Willson Properti Advisindo as at 30 June 2007;• Adjustment to reflect LMIR <strong>Trust</strong>’s issuance of 1,060,414,000 units at S$0.80 per unit, comprising645,469,000 units under the Offering and 414,945,000 units allocated to Cornerstone investors for cashof approximately S$848,331,200 before issue costs;• Adjustment to incorporate the incurrence of issue costs relating to the offering which is estimated atS$32,801,920; and• Adjustment to incorporate the relevant estimated revenue, expense and deferred income and relatedtaxes earned and incurred between 1 January 2007 and the Listing Date.In addition, the Manager has assumed the following:• The valuations of the Properties adopted at the Listing Date remain unchanged from those as at 30 June2007 based on the independent valuation report by Knight Frank / PT. Willson Properti Advisindo dated30 June 2007;• The issue price of the units under offering is S$0.80 per unit;• The total acquisition cost of the Investment Holding Companies and the Property Companies isapproximately S$815,529,280;• The derivative financial instruments that will be contracted at the Listing Date will have no significantimpact to the financial position of LMIR <strong>Trust</strong>;• All agreements are enforceable and will be performed in accordance with their respective terms andconditions;• Prior to the Listing Date, there will be no significant transactions in the seven <strong>Retail</strong> Spaces PropertyCompanies and their respective Investment Holding Companies and, the Investment HoldingCompanies of the <strong>Retail</strong> <strong>Malls</strong> Property Companies; and• Interest is earned based on the estimated monthly net cash inflow at an interest rate of 2% per yearcalculated on monthly basis. The Manager has assumed that the interest income earned will besubjected to <strong>Indonesia</strong> withholding tax of 20% and the funds will be kept in <strong>Indonesia</strong>n Rupiah andSingapore dollars.B-6
Appendix B(D)Pro Forma Consolidated Balance Sheet as at the Listing DateThe Pro Forma Consolidated Balance Sheet as at the Listing Date has been prepared for inclusion inthe Prospectus and is presented below. The assumptions used to prepare the Pro FormaConsolidated Balance Sheet are consistent with those described in Bases of Preparation of thePro Forma Consolidated Balance Sheet in section C. The following combined balance sheetcomprises the relevant audited and unaudited balance sheets of LMIR <strong>Trust</strong> and its subsidiaries.NotesCombinedbalance sheetS$’000Pro formaadjustments(see section Ebelow)S$’000Pro formaconsolidatedbalance sheetas at listing dateS$’000ASSETSCurrent assetsCash and cash equivalents . . . . . . . . . . . . . . . . F3 9,270 77,651 86,921Trade and other receivables . . . . . . . . . . . . . . . F4 19,938 (6,355) 13,583Total current assets . . . . . . . . . . . . . . . . . . . . 29,208 71,296 100,504Non-current assetsOther receivables . . . . . . . . . . . . . . . . . . . . . . . 10,997 (10,997) —Other investment . . . . . . . . . . . . . . . . . . . . . . . 27,934 (27,934) —Property, plant and equipment . . . . . . . . . . . . . 247,106 (247,106) —Investment properties . . . . . . . . . . . . . . . . . . . . F5 — 1,004,679 1,004,679Total non-current assets . . . . . . . . . . . . . . . . 286,037 718,642 1,004,679Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 315,245 789,938 1,105,183LIABILITIESCurrent liabilitiesTrade and other payables . . . . . . . . . . . . . . . . . F6 8,807 (7,020) 1,787Current tax payable . . . . . . . . . . . . . . . . . . . . . 4,709 (246) 4,463Borrowings from financial institutions . . . . . . . . 22,444 (22,444) —Current portion of finance leases . . . . . . . . . . . F7 — 148 148Total current liabilities . . . . . . . . . . . . . . . . . . 35,960 (29,562) 6,398Non-current liabilitiesDeferred tax liabilities . . . . . . . . . . . . . . . . . . . . F8 — 62,366 62,366Deferred income . . . . . . . . . . . . . . . . . . . . . . . . F6 91,681 (24,832) 66,849Other payables . . . . . . . . . . . . . . . . . . . . . . . . . F6 124,837 (119,624) 5,213Long-term borrowings from financialinstitutions . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,345 (26,345) —Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . F7 — 1,041 1,041Total non-current liabilities . . . . . . . . . . . . . . 242,863 (107,394) 135,469Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 278,823 (136,956) 141,867Unitholders fundsNet assets attributable to Unitholders . . . . . . . . F9 36,422 926,894 963,316Total liabilities and Unitholders funds. . . . . . . . . 315,245 789,938 1,105,183See accompanying notes to the Pro Forma Consolidated Balance Sheet.B-7
Appendix B(E)Pro Forma adjustmentsIn arriving at the Pro Forma Consolidated Balance Sheet of the Pro Forma Group at the Listing Date, thefollowing pro forma adjustments were made:(i)(ii)(iii)(iv)(v)(vi)(vii)(viii)(ix)S$’000Cash and cash equivalentsRental deposits received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,754Transfer of cash to the Operating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,270)Acquisition of Investment Holding and Property Companies . . . . . . . . . . . . . . . . . . (815,529)Proceeds from issuance of units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 815,529Net cash injection by Operating Companies and Vendors . . . . . . . . . . . . . . . . . . . 94,870Capital expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,805)Refund arising from rearrangement of leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,623)Cash arising from rentals collected in advance (net of tax) and other operatingactivities ........................................................ 26,725Total ........................................................... 77,651Trade and other receivablesTransfer of assets to the Operating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,702)Prepaid tax for rents collected in advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,597Amortisation of prepaid tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,572)Prepaid tax written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,956)Trade receivables for the period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,278Total (6,355)Other receivables (Non-current)Transfer of assets to the Operating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,997)Other investmentsTransfer of assets to the Operating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . (27,934)Property, Plant and EquipmentTransfer of assets to the Operating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,061)Capital expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,805Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,620)Reclassification to investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (250,230)Total (247,106)Investment propertiesInvestment properties acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 796,792Revaluation surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207,887Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,004,679Trade and other payablesTransfer of liabilities to the Operating Companies. . . . . . . . . . . . . . . . . . . . . . . . . . (5,914)Rental received in advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,167Trade and other payables for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,273)Total (7,020)Taxes payableNettaxpaidduringtheperiod........................................ (246)Borrowings from financial institutionsShort term: Transfer of liabilities to the Operating Companies . . . . . . . . . . . . . . . . (22,444)Long-term: Transfer of liabilities to the Operating Companies. . . . . . . . . . . . . . . . . (26,345)B-8
Appendix B(x)(xi)(xii)(xiii)(xiv)S$’000Finance leasesAccrual of BOT Fees (see Note F15)—Short term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148—Long-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,041Deferred taxDeferred tax arising from the revaluation of investment properties . . . . . . . . . . . . . 62,366Deferred incomeNet increase during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,791Refund arising from rearrangement of leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29,623)Total (24,832)Other payables (Non-current)Transfer of liabilities to the Operating Companies. . . . . . . . . . . . . . . . . . . . . . . . . . (121,493)Interest accrued on certain financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49Rental deposits net of fair value adjustment at the Listing Date . . . . . . . . . . . . . . . 1,820Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (119,624)Net assets attributable to UnitholdersIssuance of units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 815,529Fair value adjustment on rental deposits at the Listing Date. . . . . . . . . . . . . . . . . . 2,266Total net return for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,066Elimination of pre-acquisition reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (52,488)Revaluation surplus net of deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145,521Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 926,894B-9
Appendix B(F)Notes to the Pro Forma Consolidated Balance Sheet1. Summary of significant accounting policiesThe following is a summary of the significant accounting policies of the Pro Forma Group which has beenconsistently applied in preparing the Pro Forma Consolidated Balance Sheet set out in this report.Accounting convention—The financial statements are prepared under the historical cost convention except where SingaporeFinancial Reporting Standards (“FRS”) require an alternative treatment (such as fair values) as disclosedwhere appropriate in these financial statements.Basis of preparation—The Pro Forma Consolidated Balance Sheet is prepared in accordance with the bases set out in section Cand applied to financial information prepared in accordance with the Statement of RecommendedAccounting Practice (“RAP”) 7 “Reporting Framework for Unit <strong>Trust</strong>s” issued by the Institute ofCertified Public Accountants of Singapore, FRS and the applicable requirements of the Code onCollective Investment Schemes issued by the Monetary Authority of Singapore (“MAS”) and theprovisions of the <strong>Trust</strong> Deed.The Pro Forma Consolidated Balance Sheet is presented in Singapore dollar and rounded to the nearestthousand, unless otherwise stated.The preparation of financial statements in conformity with generally accepted accounting principlesrequires the management to make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reporting period. Actualresults could differ from those estimates. The estimates and assumptions are reviewed on an ongoingbasis. Apart from those involving estimations, management has made judgments in the process ofapplying the entity’s accounting policies. The areas requiring management’s most difficult, subjective orcomplex judgments, or areas where assumptions and estimates are significant to the financial statements,are disclosed at the end of this footnote, where applicable.Basis of presentation—The consolidation accounting method is used for the consolidated financial statements which include thefinancial statements made up to the balance sheet date of the <strong>Trust</strong> and of those companies in which itholds, directly or indirectly through subsidiaries, over 50 percent of the shares and voting rights (itssubsidiaries including special purpose entities). Consolidated financial statements are the financialstatements of the group presented as those of a single economic entity. The consolidated financialstatements are prepared using uniform accounting policies for like transactions and other events in similarcircumstances. All significant intragroup balances and transactions, including income, expenses anddividends, are eliminated in full on consolidation. The results of the investees acquired or disposed ofduring the financial year are consolidated from the respective dates of acquisition or up to the dates ofdisposal. On disposal the attributable amount of goodwill is included in the determination of the gain or losson disposal.Subsidiaries—A subsidiary is an entity including unincorporated and special purpose entity that is controlled by the group.Control is the power to govern the financial and operating policies of an entity so as to obtain benefits fromits activities accompanying a shareholding of more than one half of the voting rights or the ability to appointor remove the majority of the members of the board of directors or to cast the majority of votes at meetingsof the board of directors. The existence and effect of potential voting rights that are currently exercisable orconvertible are considered when assessing whether the group controls another entity. In the <strong>Trust</strong>’s ownseparate financial statements, the investments in subsidiaries are stated at cost less any provision forimpairment in value. Impairment loss recognised in profit or loss for a subsidiary is reversed only if therehas been a change in the estimates used to determine the asset’s recoverable amount since the lastimpairment loss was recognised. The net book values of the subsidiaries are not necessarily indicative ofthe amounts that would be realised in a current market exchange.B-10
Appendix BCash and cash equivalents—Cash and cash equivalents include bank and cash balances and any highly liquid debt instrumentspurchased with an original maturity of three months or less.Trade receivables—After initial recognition at fair value, trade receivables are measured at amortised cost using the effectiveinterest method except that short-duration receivables with no stated interest rate are normally measuredat original invoice amount unless the effect of imputing interest would be significant. Trade receivables arestated after provision for impairment. The amount of the provision for impairment is recognized in thestatement of total return. A trade receivable amount is regarded as impaired if there is objective evidenceof impairment as a result of one or more events that occurred after the initial recognition and that loss eventhas an impact on the estimated future cash flows of the financial asset that can be reliably estimated. Thecarrying amounts of trade receivables are assumed to approximate their fair value. Normally no interest ischarged on trade receivables.Loans and other receivables—Loans and other receivables are non-derivative financial assets with fixed or determinable payments thatare not quoted in an active market, other than: (a) those that the entity intends to sell immediately or in thenear term and are classified as held for trading, and those that the entity upon initial recognition designatesas at fair value through profit or loss; (b) those that the entity upon initial recognition designates asavailable for sale; or (c) those for which the holder may not recover substantially all of its initial investment,other than because of credit deterioration and are classified as available for sale. Items with a shortduration are not discounted. After initial recognition such financial assets, including derivatives that areassets, are measured at their fair values, without any deduction for transaction costs that may be incurredon sale or other disposal, except for the non-current financial assets that are loans and receivables whichare measured at amortised cost using the effective interest method less provision for impairment. Theseitems are included in the balance sheet in loans and receivables as current assets or as non-current assetswhere the maturities are greater than 12 months after the balance sheet date.Investment properties—Investment property is property owned or held under a finance lease to earn rentals or for capitalappreciation or both, rather than for use in the production or supply of goods or services or foradministrative purposes or sale in the ordinary course of business. After initial recognition at costincluding transaction costs the fair value model is used to measure the investment property at fairvalue on the existing use basis to reflect the actual market state and circumstances as of the balance sheetdate, not as of either a past or future date. A gain or loss arising from a change in the fair value ofinvestment property is included in the statement of total return for the period in which it arises. Therevaluations are made periodically on a systematic basis at least once yearly by external independentvaluers having an appropriate recognised professional qualification and recent experience in the locationand category of property being valued.Net assets attributable to Unitholders—Net assets attributable to Unitholders represents the Unitholders’ residual interest in LMIR <strong>Trust</strong>’s netassets upon termination.Expenses incurred in connection with the initial public offering of LMIR <strong>Trust</strong> are deducted directly from netassets attributable to Unitholders.Impairment of non-financial assets—At each full year balance sheet date an assessment is made whether there is any indication that adepreciable or amortisable asset may be impaired. If any such indication exists, an estimate is made of therecoverable amount of the asset. Irrespective of whether there is any indication of impairment, an annualimpairment test is performed at the same time every year on an intangible asset with an indefinite usefullife or an intangible asset not yet available for use. The impairment loss is the excess of the carryingamount over the recoverable amount and is recognised in the statement of total return unless the relevantasset is carried at a revalued amount, in which case the impairment loss is treated as a revaluationdecrease. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value lessB-11
Appendix Bcosts to sell and its value in use. In assessing value in use, the estimated future cash flows are discountedto their present value using a pre-tax discount rate that reflects current market assessments of the timevalue of money and the risks specific to the asset. For the purposes of assessing impairment, assets aregrouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).At each reporting date non-financial assets other than goodwill with impairment loss recognised in priorperiods are assessed for possible reversal of the impairment. An impairment loss is reversed only to theextent that the asset’s carrying amount does not exceed the carrying amount that would have beendetermined, net of depreciation or amortisation, if no impairment loss had been recognised.Impairment of financial assets—All financial assets except those measured at fair value through profit or loss are subject to review forimpairment. A financial asset or a group of financial assets is impaired and impairment losses are incurredif there is objective evidence of impairment as a result of one or more events that occurred after the initialrecognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimatedfuture cash flows of the financial asset or group of financial assets that can be reliably estimated. Lossesexpected as a result of future events, no matter how likely, are not recognised.Financial liabilities—Financial liabilities at fair value through profit or loss when recognised initially are measured at fair value.Financial liabilities not at fair value through profit or loss are measured at fair value plus transaction coststhat are directly attributable to the acquisition or issue of the financial liability. After initial recognitionfinancial liabilities at fair value through profit or loss, including derivatives that are financial liabilities, aremeasured at fair value. Other financial liabilities not at fair value through profit or loss are measured atamortised cost and any difference between the proceeds (net of transaction costs) and the redemptionvalue is recognised in the statement of total return over the period of the borrowings using the effectiveinterest method. Financial liabilities including bank and other borrowings are classified as current liabilitiesunless there is an unconditional right to defer settlement of the liability for at least 12 months after thebalance sheet date. Items classified within trade and other payables are not usually re-measured, as theobligation is usually known with a high degree of certainty and settlement is short-term.Liabilities and provisions—A liability or provision is recognised when there is a present obligation (legal or constructive) as a result of apast event, it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation and a reliable estimate can be made of the amount of the obligation. These includetrade and other payables and where the effect of the time value of money is material, the amountrecognised is the present value of the expenditures expected to be required to settle the obligation using apre-tax rate that reflects current market assessments of the time value of money and the risks specific tothe obligation. The increase in the provision due to passage of time is recognised as interest expense.Leases as a lessee—A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of anasset. At the commencement of the lease term, a finance lease is recognised as an asset and as liability inthe balance sheet at amounts equal to the fair value of the leased asset or, if lower, the present value of theminimum lease payments, each determined at the inception of the lease. The discount rate used incalculating the present value of the minimum lease payments is the interest rate implicit in the lease, if thisis practicable to determine; if not, the lessee’s incremental borrowing rate is used. Any initial direct costs ofthe lessee are added to the amount recognised as an asset. The excess of the lease payments over therecorded lease liability are treated as finance charges which are allocated to each period during the leaseterm so as to produce a constant periodic rate of interest on the remaining balance of the liability.Contingent rents are charged as expenses in the periods in which they are incurred. The assets aredepreciated as owned depreciable assets. Leases where the lessor effectively retains substantially all therisks and benefits of ownership of the leased assets are classified as operating leases. For operatingleases, lease payments are recognised as an expense in the statement of total return on a straight-linebasis over the term of the relevant lease unless another systematic basis is representative of the timepattern of the user’s benefit, even if the payments are not on that basis. Lease incentives received arerecognised in the statement of total return as an integral part of the total lease expense.B-12
Appendix BLeased assets—Leases in terms of which the entity assumes substantially all the risks and rewards of ownership areclassified as finance leases. The owner-occupied property acquired by way of finance lease is stated at anamount equal to the lower of its fair value and the present value of the minimum lease payments atinception of the lease, less accumulated depreciation and impairment losses. A property held under afinance lease and leased out under operating lease is classified as investment property and stated at thefair value. Lease payments are accounted for as described in these accounting policies. Property heldunder operating leases that would otherwise meet the definition of investment property is classified asinvestment property.Liabilities and equity financial instruments—A financial instrument is classified as a liability or as equity in accordance with the substance of thecontractual arrangement on initial recognition. Where the financial instrument does not give rise to acontractual obligation on the part of the issuer to make payment in cash or kind under conditions that arepotentially unfavourable, it is classified as an equity instrument. The equity and the liability elements ofcompound instruments are classified separately as equity and as a liability. Equity instruments arerecorded at the proceeds, net of direct issue costs.Fair value of financial instruments—The carrying values of current financial assets and financial liabilities including cash, accounts receivable,short-term borrowings, accounts payable approximate their fair values due to the short-term maturity ofthese instruments. The fair values of non-current financial instruments are not disclosed unless there aresignificant items at the end of the year and in the event the fair values are disclosed in the relevant notes.Disclosures of fair value are not made when the carrying amount is a reasonable approximation of fairvalue. The maximum exposure to credit risk is the fair value of the financial instruments at the balancesheet date.Cash flow hedge—Where a derivative financial instrument is designated as a hedge of the variability in cash flows of arecognised asset or liability, or a highly probable forecast transaction, the effective part of any gain or losson re-measurement of the derivative financial instrument to fair value is recognised directly in hedgingreserve. The ineffective part of any gain or loss is recognised immediately in the statement of total return.When the forecast transaction subsequently results in the recognition of a non-financial asset or nonfinancialliability, or the forecast transaction for a non-financial asset or non-financial liability becomes afirm commitment for which fair value hedge accounting is applied, the associated cumulative gain or loss isremoved from hedging reserve and included in the initial cost or other carrying amount of the non-financialasset or liability. If a hedge of a forecast transaction subsequently results in the recognition of a financialasset or financial liability, the associated gains and losses that were recognised directly in hedging reserveare reclassified into the statement of total return in the same period or periods during which the assetacquired or liability assumed affects the statement of total return (i.e. when interest income or expense isrecognised). For other cash flow hedges, the associated cumulative gain or loss is removed from hedgingreserve and recognised in the statement of total return in the same period or periods during which thehedged forecast transaction affects the statement of total return.When a hedging instrument expires or is sold, terminated or exercised, or the designation of the hedgerelationship is revoked but the hedged forecast transaction is still expected to occur, the cumulative gain orloss at that point remains in hedging reserve and is recognised in accordance with the above policy whenthe transaction occurs. If the hedged forecast transaction is no longer expected to take place, thecumulative unrealised gain or loss recognised in hedging reserve is recognised immediately in thestatement of total return.Foreign currency transactions—The functional currency is the Singapore dollar as it reflects the primary economic environment in whichthe <strong>Trust</strong> operates. Transactions in foreign currencies are recorded in the functional currency at the ratesruling at the dates of the transactions. At each balance sheet date, recorded monetary balances andbalances measured at fair value that are denominated in foreign currencies are reported at the rates rulingB-13
Appendix Bat the balance sheet and fair value dates respectively. All realised and unrealised exchange adjustmentgains and losses are dealt with in the statement of total return. The presentation is in the functionalcurrency.Foreign currency financial statements—The foreign entities determine the appropriate functional currency as it reflects the primary economicenvironment in which the entities operate. In translating the financial statements of a foreign entity forincorporation in the consolidated financial statements the assets and liabilities denominated in currenciesother than the functional currency of the entity are translated at rate of Rp. 1 to S$0.000169 (or S$1 toRp. 5,900) as at 31 December 2006. The same rate has been used in translating the pro formaadjustments set out section E of this report. The resulting translation adjustments (if any) areaccumulated in a separate component of equity until the disposal of the foreign entity.Revenue recognition—The revenue amount is the fair value of the consideration received or receivable from the gross inflow ofeconomic benefits during the year arising from the course of the ordinary activities of the entity and it isshown net of related tax and discounts, if any. Revenue from rendering of services that are of short durationis recognised when the services are completed. Rental revenue is recognised on a time-proportion basisthat takes into account the effective yield on the asset. Rental received in advance is amortised on timeproportionbasis. Interest revenue is recognised on a time-proportion basis using the effective interest ratethat takes into account the effective yield on the asset.A fair value gain or loss on a financial asset or financial liability classified as at fair value through profit orloss that is not part of a hedging relationship is recognised in profit or loss. A fair value gain or loss on anavailable-for-sale financial asset is recognised directly in equity, except for impairment losses and foreignexchange gains and losses until the financial asset is derecognised, at which time the cumulative gain orloss previously recognised in equity is recognised in profit or loss. However, interest calculated using theeffective interest method is recognised in profit or loss. Dividends on equity instrument are recognised inprofit or loss when the entity’s right to receive payment is established. For financial assets and financialliabilities carried at amortised cost, a gain or loss is recognised in profit or loss when the financial asset orfinancial liability is derecognised or impaired, and through the amortisation process. However, hedgeditems are taken to equity.Borrowing costs—All borrowing costs that are interest and other costs incurred in connection with the borrowing of funds arerecognised as an expense in the period in which they are incurred except for borrowing costs that aredirectly attributable to the acquisition, construction or production of a qualifying asset that necessarily takea substantial period of time to get ready for their intended use or sale are capitalised as part of the cost ofthat asset until substantially all the activities necessary to prepare the qualifying asset for its intended useor sale are complete. The interest expense is calculated using the effective interest rate method.Income tax—The income taxes are accounted using the asset and liability method that requires the recognition of taxespayable or refundable for the current year and deferred tax liabilities and assets for the future taxconsequence of events that have been recognised in the financial statements or tax returns. Themeasurements of current and deferred tax liabilities and assets are based on provisions of theenacted or substantially enacted tax laws; the effects of future changes in tax laws or rates are notanticipated. Income tax expense represents the sum of the tax currently payable and deferred tax.Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same incometax authority. The carrying amount of deferred tax assets is reviewed at each balance sheet date and isreduced, if necessary, by the amount of any tax benefits that, based on available evidence, are notexpected to be realised. A deferred tax amount is recognised for all temporary differences, unless thedeferred tax amount arises from (a) goodwill for which amortisation is not deductible for tax purposes; or(b) the initial recognition of an asset or liability in a transaction which (i) is not a business combination; and(ii) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). A deferred taxliability is not recognised for all taxable temporary differences associated with investments in subsidiaries,and interests in joint ventures because (a) the company is able to control the timing of the reversal of theB-14
Appendix Btemporary difference; and (b) it is probable that the temporary difference will not reverse in the foreseeablefuture. Taxes relating to items directly related to Unitholders’ funds, in which case it is recognised inUnitholders’ Funds.Segment reporting—A business segment is a distinguishable component of an enterprise that is engaged in providing anindividual product or service or a group of related products or services and that is subject to risks andreturns that are different from those of other business segments. A geographical segment is adistinguishable component that is engaged in providing products or services within a particulareconomic environment and that is subject to risks and returns that are different from those ofcomponents operating in other economic environments. Segment information has not been presentedas all of the Pro Forma Group’s investment properties are used primarily for retail purposes and are alllocated in <strong>Indonesia</strong>.Critical judgements, assumptions and estimation uncertaintiesOther than as disclosed in section C of this report, there were no critical judgments made in the process ofapplying the entity’s accounting policies that have the most significant effect on the amounts recognised inthe financial statements. There were no key assumptions concerning the future, and other key sources ofestimation uncertainty at the balance sheet date, that have a significant risk of causing a materialadjustment to the carrying amounts of assets and liabilities within the next financial year.Risk management policies for financial instrumentsGENERAL RISK MANAGEMENT PRINCIPLES—The financial instruments comprise borrowings, somecash and liquid resources, and various items, such as trade and other receivables, trade and otherpayables. The main purpose of these financial instruments is to raise finance for the entity’s operations.The main risks arising from the entity’s financial instruments are credit risk, interest risk, liquidity risk,foreign currency risk and market price risk comprising interest rate and currency risk exposures. Themanagement reviews and monitors policies for managing each of these risks and they are summarisedbelow.CREDIT RISKON FINANCIAL ASSETS—Financial assets that are potentially subject to concentrations ofcredit risk and failures by counterparties to discharge their obligations consist principally of cash, cashequivalents and trade and other accounts receivable. Credit risk on cash balances and derivative financialinstruments is limited because the counter-parties are banks with high credit ratings. An ongoing creditevaluation is performed of the debtors’ financial condition and a loss from impairment is recognised in thestatement of total return. There is no significant concentration of credit risk, as the exposure is spread overa large number of counter-parties and customers unless otherwise disclosed in the notes to the financialstatements.OTHER RISKS ON FINANCIAL INSTRUMENTS—The main risks arising from the entity’s financialinstruments are interest risk, liquidity risk and foreign currency risk. The operations will be financedthrough a mixture of retained earnings and borrowings. Borrowings are in the desired currencies at bothfixed and floating rates of interest. The policy is to retain flexibility in selecting borrowings at both fixed andfloating interest rates. There is exposure to interest rate price risk for financial instruments with a fixedinterest rate and to interest rate or cash flow risk for financial instruments with a floating interest rate that isreset as market rates change. Interest rate swaps may be used to generate the desired interest profit andto manage the exposure to interest rate fluctuations. There is also exposure to liquidity. As regards toliquidity, the policy has been to ensure continuity of funding and where necessary a certain percentage ofthe borrowings should mature in two to five years. Short-term flexibility is achieved by overdraft facilities.There is also exposure to changes in foreign exchange rates arising from foreign currency transactionsand balances and changes in fair values. The Pro Forma Group has planned to utilise currency derivativesto eliminate or reduce the exposure of its foreign currency and to hedge future transactions and cash flows.As a matter of principle, the Pro Forma Group does not enter into derivative contracts for speculativepurposes.B-15
Appendix B2. Related party transactionsA related party is an entity or person that directly or indirectly through one or more intermediaries controls,is controlled by, or is under common or joint control with, the entity in governing the financial and operatingpolicies, or that has an interest in the entity that gives it significant influence over the entity in financial andoperating decisions. It also includes members of the key management personnel or close members of thefamily of any individual referred to herein and others who have the ability to control, jointly control orsignificantly influence by or for which significant voting power in such entity resides with, directly orindirectly, any such individual. This includes the Sponsor, the Manager, parents, subsidiaries, fellowsubsidiaries, associates, joint ventures and post-employment benefit plans, if any.2.1 Related parties transactionsTransactions with related parties mainly consists of trade receivables, intercompany advances andcharges, and loans. The related party transactions are made on terms equivalent to those that prevailin market rated transactions unless otherwise disclosed. The current intercompany balances areunsecured without fixed repayment terms and interest unless stated otherwise. For non-currentbalances an interest is imputed based on the cost of borrowing less the interest rate if any provided inthe agreement for the balance.Intragroup transactions and balances that have been eliminated in the Pro Forma Consolidated BalanceSheet are not disclosed as related party transactions and balances below.The trade transactions and the trade receivables and payables balances arising from lease of spaces andservices rendered are disclosed elsewhere in the notes to the Pro Forma Consolidated Balance Sheet.In addition to the transactions and balances disclosed elsewhere in the notes to the Pro FormaConsolidated Balance Sheet, the <strong>Trust</strong>ee, on behalf of LMIR <strong>Trust</strong>, has entered into a number oftransactions with the Manager and certain related parties of the Manager in connection with thesetting up of LMIR <strong>Trust</strong> and the Offering as follows:• The <strong>Trust</strong>ee has entered into the <strong>Trust</strong> Deed with the Manager. The terms of the <strong>Trust</strong> Deed aregenerally described in “The Formation and Structure of LMIR <strong>Trust</strong>” of the Prospectus.• The <strong>Retail</strong> Space Property Companies, which will be indirectly owned by the <strong>Trust</strong>ee as at the ListingDate, have entered into the Master Lease Agreements with the Master Lessee for the operation,maintenance, management and marketing of the <strong>Retail</strong> Spaces. These agreements are moreparticularly described in “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the Master Lease Agreements” of the Prospectus.• The <strong>Retail</strong> Mall Property Companies, which will be indirectly owned by the <strong>Trust</strong>ee as at the Listing Date,have entered into the Operating Costs Agreements with the Operating Companies. These agreementsare more particularly described in “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the Operating Costs Agreements” of the Prospectus.• The <strong>Trust</strong>ee has entered into the Singapore SPC Share Purchase Agreements with the Vendors for theacquisition of all the ordinary shares and redeemable preference shares in each of the Target SingaporeInvestment Holding Companies. These agreements are more particularly described in “CertainAgreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the Singapore SPC SharePurchase Agreements” of the Prospectus. The <strong>Trust</strong>ee has also entered into the Deeds of Indemnitywith <strong>Lippo</strong> Capital Limited pursuant to which <strong>Lippo</strong> Capital Limited will, subject to certain conditions,indemnify the <strong>Trust</strong>ee against liabilities or damage suffered by the <strong>Trust</strong>ee arising from any of theSingapore SPC Share Purchase Agreements. These agreements are more particularly described in“Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the Deeds ofIndemnity” of the Prospectus.• The <strong>Retail</strong> Mall Property Companies, which will be indirectly owned by the <strong>Trust</strong>ee as at the Listing Date,have entered into the Existing Property Management Agreements with the Property Manager for theoperation, management, maintenance and marketing of the <strong>Retail</strong> <strong>Malls</strong>. These agreements are moreparticularly described in “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Descriptionof the Existing Property Management Agreements” of the Prospectus.B-16
Appendix B• The <strong>Trust</strong>ee, the Manager and the Property Manager have entered into the Master PropertyManagement Agreement pursuant to which the Property Manager was appointed to operate,maintain, manage and market all the properties of LMIR <strong>Trust</strong> located in <strong>Indonesia</strong> acquired afterthe Listing Date, subject to the overall management of the Manager. This agreement is more particularlydescribed in “Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the MasterProperty Management Agreement” of the Prospectus.3. Cash and cash equivalentsS$’000Not restricted in use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,921Analysis of above amount denominated in foreign currency:<strong>Indonesia</strong>n Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,072The effective rate of interest for interest earning balances is 2% per year.4. Trade and other receivablesS$’000Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,277VAT receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,023Prepaid taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,283Total 13,583Analysis of above amount denominated in foreign currency:<strong>Indonesia</strong>n Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,583Prepaid taxes refer to tax paid on the rents received in advance. The amount is expensed to statement oftotal return when the rent is recognised as income.5. Investment propertiesS$’000At valuation:Additions at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 796,792Revaluation surplus included in the statement of total return . . . . . . . . . . . . . . . . . . . . . . . 207,887Fair value at the Listing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,004,679All the Properties are located in <strong>Indonesia</strong>. Investment properties comprise <strong>Retail</strong> <strong>Malls</strong> and <strong>Retail</strong> Spacesthat are leased to customers. Details of the investment properties are as follows:Description of propertyLocationAt valuationas atlisting dateS$’000Percentage of totalnet assetsattributable toUnitholders%<strong>Retail</strong> <strong>Malls</strong>Gajah Mada Plaza (c) Jakarta . . . . . . . . . . . . . . . . . . . . . 103,780 10.8Cibubur Junction (b) Jakarta . . . . . . . . . . . . . . . . . . . . . 94,186 9.8The Plaza Semanggi (b) Jakarta . . . . . . . . . . . . . . . . . . . . . 214,847 22.3Mal <strong>Lippo</strong> Cikarang (a) Cikarang, Greater Jakarta . . . . . . 80,186 8.3Ekalokasari Plaza (b) Bogor, Greater Jakarta . . . . . . . . . 66,017 6.9Bandung Indah Plaza (b) Bandung, West Java . . . . . . . . . . 124,458 12.9Istana Plaza (b) Bandung, West Java . . . . . . . . . . 125,729 13.1Sub total 809,203 84.0B-17
Appendix BDescription of propertyLocationAt valuationas atlisting dateS$’000Percentage of totalnet assetsattributable toUnitholders%<strong>Retail</strong> SpacesMall WTC Matahari Units (c) Tangerang, Greater Jakarta . . . . . 25,170 2.6Metropolis Town Square Units (d) Tangerang, Greater Jakarta . . . . . 33,542 3.5Depok Town Square Units (d) Depok, Greater Jakarta . . . . . . . . 25,661 2.7Java Supermall Units (c) Semarang, Central Java . . . . . . . . 25,983 2.7Malang Town Square Units (d) Malang, East Java . . . . . . . . . . . . 25,543 2.7Plaza Madiun (a) Madiun, Central Java . . . . . . . . . . 33,424 3.5Grand Palladium Medan Units (d) Medan, North Sumatra . . . . . . . . . 26,153 2.7Sub total 195,476 20.3Total investment properties, at valuation 1,004,679(a)(b)(c)(d)The title/right held by LMIR <strong>Trust</strong> is Hak Guna Bangunan (“HGB”). A holder of HGB title has the rightto erect, occupy and use buildings on that particular parcel of land, and also has the right toencumber and sell all or part of the parcel.These properties are under build operate and transfer arrangements (“BOT”) (see Note F15 ). Thisright is granted by the land owner to the <strong>Retail</strong> <strong>Malls</strong> Property Companies, who are given the right tobuild and operate the <strong>Retail</strong> <strong>Malls</strong> for a particular period of time in exchange for payment of certaincompensation as stipulated in the BOT agreements. Specific terms and conditions apply for eachBOT agreement and its addendums.The title/right held by LMIR <strong>Trust</strong> is strata title. For strata titles, under the <strong>Indonesia</strong>n land law, abuilding developer must divide the multi-storey building into (i) rights of ownership (strata title) oneach unit, (ii) rights on common properties and (iii) rights to common land in the form of a sketch plan,which must be approved by the relevant authority. Such sketch plan must also provide an explanationon (i) unit separation that can be used by individuals, (ii) the limitation and separation of the strata titleright over common properties and (iii) the strata title right over the common land.These retail spaces are each bound by Kiosks Sale and Purchase Binding Agreements becausetheir strata titles are in the process of being issued by the <strong>Indonesia</strong>n government. See alsoNote F15.Other details on the Properties are disclosed in the Prospectus. Please also refer to the revaluationselected by the Manager as disclosed in the Prospectus.The carrying amounts of the investment properties as at the Listing Date are based on an independentvaluation dated 30 June 2007 undertaken by Knight Frank / PT. Willson Properti Advisindo as of 30 June2007. The valuations were based on the Income Method of valuation utilising a Discounted CashflowAnalysis and Income Capitalisation Method.6. Trade and other payables / deferred incomeS$’000Rental deposits from tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394Deferred income—<strong>Retail</strong> Spaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,166Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227Total trade and other payables (Current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,787Other payables (Non-current)—Rental deposits from tenants . . . . . . . . . . . . . . . . . . . . . . . . . 5,213Deferred income (Non-current)—<strong>Retail</strong> <strong>Malls</strong> . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,849Analysis of above amount denominated in foreign currency:<strong>Indonesia</strong>n Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,849B-18
Appendix BDeferred income represents rent received in advance. The amount is recognised to statement of totalreturn over the period of the relevant leases.Long-term other payables represent rental deposits from tenants. The amount includes rental deposits ofRp. 20.6 billion (S$3,500,000) from a related party of the Sponsor. In addition, the related party hasprovided bankers guarantee equivalent to three months deposit of approximately Rp. 20.6 billion(S$3,500,000).Long-term rental deposits is stated at amortised cost which is approximate to fair value.7. Finance lease liabilitiesFinance lease represents BOT fees payable (see Note F15 for further details). The amount carries anotional interest rate of 14% per year.8. Deferred tax liabilitiesThis refers to deferred tax arising from the revaluation of the investment properties.9. Net assets attributable to UnitholdersS$’000Unitholders’ contributionFrom creation of units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 848,331Unit issue costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32,802)Net contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 815,529Fair value adjustments of rental deposit as at the Listing Date . . . . . . . . . . . . . . . . . . . . . . 2,266Surplus on revaluation of investment properties, net of deferred tax . . . . . . . . . . . . . . . . . . 145,521Total increase in net assets attributable to Unitholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 963,316Units in issue (’000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,060,414Net assets attributable to Unitholders per unit (S$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.9110. Units in issueCreation of new units arising from:—the Cornerstone Units (subject to the over-allotment option) . . . . . . . . . . . . . . . . . . . . . . 414,945—the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 645,4691,060,414The Cornerstone Units will vary as is more fully described in the Prospectus.Each unit in LMIR <strong>Trust</strong> represents an undivided interest in LMIR <strong>Trust</strong>. The key rights of Unitholders arecontained in the <strong>Trust</strong> Deed and include the rights to:• receive income and other distributions attributable to the Units held;• receive audited financial statements and the annual reports of LMIR <strong>Trust</strong>; and• participate in the termination of LMIR <strong>Trust</strong> by receiving a share of all net cash proceeds derived from therealisation of the assets of LMIR <strong>Trust</strong> less any liabilities, in accordance with their proportionate interestsin LMIR <strong>Trust</strong>.No Unitholder has a right to require that any assets of LMIR <strong>Trust</strong> be transferred to him.‘000B-19
Appendix BFurther, Unitholders cannot give directions to the <strong>Trust</strong>ee or the Manager (whether at a meeting ofUnitholders duly convened and held in accordance with the provisions of the <strong>Trust</strong> Deed or otherwise) if itwould require the <strong>Trust</strong>ee or the Manager to do or omit doing anything which may result in:• LMIR <strong>Trust</strong> ceasing to comply with applicable laws and regulations; or• The exercise of any discretion expressly conferred on the <strong>Trust</strong>ee or the Manager by the <strong>Trust</strong> Deed orthe determination of any matter which, under the <strong>Trust</strong> Deed, requires the agreement of either or both ofthe <strong>Trust</strong>ee and the Manager.The <strong>Trust</strong> Deed contains provisions that are designed to limit the liability of a Unitholder to the amount paidor payable for any Unit. The provisions seek to ensure that if the Issue Price of the Units held by aUnitholder has been fully paid, no such Unitholder, by reason alone of being a Unitholder, will be personallyliable to indemnify the <strong>Trust</strong>ee or any creditor of LMIR <strong>Trust</strong> in the event that the liabilities of LMIR <strong>Trust</strong>exceeds its assets.Under the <strong>Trust</strong> Deed, every Unit carries the same voting rights.11. Unit issue costsS$‘000Unit issue costs comprise the following:Professional and other fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,660Underwriting, selling and management commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,773Miscellaneous issue expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,36932,80212. Operating lease income commitmentsS$’000Notlaterthanoneyear..................................................... 69,132Later than one year and not later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258,092Later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143,234Operating lease income commitments are for committed rentals receivable for the <strong>Retail</strong> <strong>Malls</strong> and <strong>Retail</strong>Spaces. The lease term varies from less than 1 year to 27 years. Certain lease rental terms are subject toan escalation clause but the amount of the rent increase is not to exceed a certain percentage. Other thanthose disclose below, such increases are not included in the above amounts.On 18 October 2007, each of the <strong>Retail</strong> Space Property Companies (as landlord) and the Master Lessee(as tenant) entered into a Master Lease Agreement, pursuant to which the <strong>Retail</strong> Spaces were leased tothe Master Lessee in accordance with the terms and conditions of the Master Lease Agreements. Theterm of each of the Master Lease Agreements is for 10 years with an option for the Master Lessee to renewfor a further term of 10 years based on substantially the same terms and conditions, except for renewalrent. The renewal rent for the further term shall be at the then prevailing market rent, as may be agreed bythe relevant landlord and the Master Lessee in good faith. If there is no agreement by the relevant landlordand the Master Lessee on such prevailing market rent, the relevant landlord and the Master Lessee mayrefer the determination of the prevailing market rent to an independent property valuer or valuers.The renewal lease must be made by written request to the relevant landlord 12 months before the expiry ofthe lease term.Under each of the Master Lease Agreements, the relevant <strong>Retail</strong> Space Property Companies will beentitled to receive from the Master Lessee rental payments comprising a fixed base rent from Listing Dateto 31 December 2007, an annual increment of 8.0% over the lease rental payable for the immediatelypreceding financial year for each of the financial years ending on 31 December 2008 to 31 December 2011and, for each of the financial years ending on 31 December 2012 to 2016, an amount equivalent to thelease rental payable in respect of financial year ending 31 December 2011 and 4.25% of the amount bywhich the net revenue of the Master Lessee derived from the retail spaces for the immediately precedingB-20
Appendix Bfinancial year exceeds the net revenue of the Master Lessee derived from the retail spaces for the financialyear ending 31 December 2010.Operating lease income commitments attributable to the Master Lessee’s net sales turnover are notincluded in the above amounts.13. Capital commitmentsEstimated amounts committed at the balance sheet date for future capital expenditure on theProperties but not recognised in Pro Forma Consolidated Balance Sheet are as follows:S$’000Authorisedbutnotcontractedfor ............................................... 2,25714. Manager’s Management Fee, Property Manager’s Fee and <strong>Trust</strong>ee Fee(a)Manager’s Management FeeUnder the trust deed, the Manager is entitled to the following management fees:(i)(ii)(in respect of authorised investments which are in the form of real estate whether held directly byLMIR <strong>Trust</strong> or indirectly through one or more special purpose vehicles) a base fee of 0.25% perannum of the value of the deposited property and a Performance Fee of 4.0% per annum of the NetProperty Income (“NPI”) in the relevant financial year (calculated before accounting for PerformanceFee in that financial year); and(in respect of authorised investments which are not in the form of real estate whether held directly byLMIR <strong>Trust</strong> or indirectly through one or more special purpose vehicles) an authorised investmentmanagement fee of 0.5% per annum of the value of such authorised investments which, unless suchauthorised investment is an interest in a property fund (either a real estate investment trust or privateproperty fund), wholly managed by a wholly-owned subsidiary of the Sponsor in which case noauthorised investment management fee shall be payable in relation to such authorised investment.The Manager is also entitled to:(i)(ii)(for any authorised investment acquired directly or indirectly from time to time by the <strong>Trust</strong>ee onbehalf of LMIR <strong>Trust</strong>) an acquisition fee of 1.0% of the purchase price in the case of any authorisedinvestment acquired by LMIR <strong>Trust</strong>.No acquisition fee is payable for the acquisition of the initial property portfolio of LMIR <strong>Trust</strong>.a divestment fee of 0.5% of the sale price (after deducting the interest of any co-owners or coparticipants)of any authorised investment sold directly or indirectly or divested from time to time bythe <strong>Trust</strong>ee on behalf of LMIR <strong>Trust</strong>.The Manager is 40.0% owned by Mapletree Capital Management Pte Ltd and 60.0% owned by PeninsulaInvestment Ltd. Peninsula Investment Ltd is in turn 100.0% owned by Jesselton Investment Ltd, a whollyownedsubsidiary of the Sponsor.(b)<strong>Trust</strong>ee’s FeeUnder the trust deed, the maximum fee payable to the <strong>Trust</strong>ee is 0.03% per annum of the value of thedeposited property, subject to a minimum of S$15,000 per month, excluding out of pocket expenses andGST. The <strong>Trust</strong>ee’s fee will be subject to review three years from the Listing Date. In addition, LMIR <strong>Trust</strong>will also pay the <strong>Trust</strong>ee a one-time inception fee of S$25,000.(c)Property Manager’s feeUnder each existing property management agreement, the property manager is entitled to the followingfees in respect of each <strong>Retail</strong> Mall under its management:• 2.0% per annum of the gross revenue for the relevant <strong>Retail</strong> Mall;B-21
Appendix B• 2.0% per annum of the net property income for the relevant <strong>Retail</strong> Mall (after accounting for the fee of2.0% per annum of the gross revenue for the relevant <strong>Retail</strong> Mall); and• 0.5% per annum of the net property income for the relevant <strong>Retail</strong> Mall in lieu of leasing commissionsotherwise payable to the Property Manager and / or third party agents.Under each existing property management agreement, each of the <strong>Retail</strong> Mall Property Companiesagrees to reimburse the property manager, upon request made from time to time, for its expenses incurredin connection with the provision of property management services and with the performance of its dutieswhich are in compliance with the approved annual business plan and budget as stated in the existingproperty management agreement. Such expenses include but are not limited to rent, service charge andVAT payable by the property manager for its lease of its office premises; advertising and promotion costs;and salaries of the property manager’s employees who are approved by the relevant <strong>Retail</strong> Mall PropertyCompanies.The Property Manager is a wholly-owned subsidiary of the Sponsor.15. Other matters(a)Right of First Refusal (“ROFR”)On 14 August 2007, an agreement was entered into between the <strong>Trust</strong>ee and the Sponsor pursuant towhich the Sponsor granted LMIR <strong>Trust</strong>, for so long as (a) <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>Management Ltd remains the manager of LMIR <strong>Trust</strong>; and (b) the Sponsor and/or any of its relatedcorporations, alone or in aggregate, remains a controlling shareholder of the Manager; a right of firstrefusal (the “ROFR”) over any retail properties located in <strong>Indonesia</strong> (each such property to be known as a“Relevant Asset”): (i) which the Sponsor or any of its subsidiaries (each a “Sponsor Entity”) proposes to sellor transfer (whether such Relevant Asset is wholly-owned or partly-owned by the Sponsor Entity andexcluding any sale of Relevant Asset by a Sponsor Entity to any related corporation of such Sponsor Entitypursuant to a reconstruction, amalgamation, restructuring, merger or any analogous event) to an unrelatedthird party; or (ii) for which a proposed offer for sale or transfer of such Relevant Asset has been made to aSponsor Entity.As at the Listing Date, the scope of the ROFR encompasses five properties currently under developmentby the Sponsor and / or its subsidiaries as set out below:ROFR Properties under developmentLocationBinjai Supermall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Pejaten Mall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Kuta Beach Mall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Kemang City Mall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Puri “Paragon City” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(b)Memorandum of Understanding for Potential AcquisitionsNorth SumatraSouth JakartaKuta, BaliSouth JakartaWest JakartaOn 21 May 2007, the Manager entered into a non-binding memorandum of understanding with PT MultiPratama Gemilang Perkasa (Pikko Group) with regard to the potential acquisition by LMIR <strong>Trust</strong> ofCosmopolitan Mall Pluit, a retail mall located in North Jakarta. The Manager understands thatCosmopolitan Mall Pluit is currently undergoing asset enhancement works, with such works scheduledfor completion in the second half of 2008.On 22 June 2007, the Manager entered into a non-binding memorandum of understanding with ZellwagerEnterprise Limited with regard to the potential acquisition by LMIR <strong>Trust</strong> of Sun Plaza, a retail mall locatedin Medan, North Sumatra. The estimated acquisition price is to be negotiated and agreed in good faithbetween the parties, provided that such acquisition price shall not be more than the appraised value of SunPlaza as determined by an independent property valuer to be appointed by the <strong>Trust</strong>ee before the signingof the conditional sale and purchase agreement.On 26 June 2007, the Manager entered into a non-binding memorandum of understanding withPT. Pakuwon Permai in respect of the potential acquisition by LMIR <strong>Trust</strong> of Supermal Pakuwon Indahand Pakuwon Trade Center, a retail mall located in West Surabaya, East Java. The estimated acquisitionB-22
Appendix Bprice is to be negotiated and agreed in good faith between the parties, provided that such acquisition priceshall not be more than the appraised value of Supermal Pakuwon Indah and Pakuwon Trade Center asdetermined by an independent property valuer to be appointed by the <strong>Trust</strong>ee and the appraised value isagreed by the Vendor before the signing of the conditional sale and purchase agreement.(c)Rental Guarantee DeedsOn 10 August 2007, <strong>Lippo</strong> Strategic Holdings Inc (“<strong>Lippo</strong> Strategic”) entered into a Rental Guarantee Deedwith each of the <strong>Retail</strong> Mall Investment Holding Companies pursuant to which <strong>Lippo</strong> Strategic will provide arental guarantee to the relevant <strong>Retail</strong> Mall Investment Holding Companies in respect of existing and newunits in the respective retail malls which are untenanted and undertake to pay to the relevant <strong>Retail</strong> MallInvestment Holding Companies any shortfall in the maintenance and operation costs which the relevantOperating Company has undertaken to bear under the respective Operating Costs Agreement.The Rental Guarantee Deeds cover the period commencing from the Listing Date up to 31 December2009. Pursuant to the Rental Guarantee Deeds, <strong>Lippo</strong> Strategic is obliged to pay to the <strong>Retail</strong> MallInvestment Holding Companies a specified sum in respect of each <strong>Retail</strong> Mall for every year during the saidperiod. The first of such payment will be paid on or before 31 January 2008, and subsequent payments willbe made on a quarterly basis thereafter. In the event any of the specified units in the relevant <strong>Retail</strong> Mallbecomes tenanted during such period, the amount of the specified sum payable by <strong>Lippo</strong> Strategic inrespect of such <strong>Retail</strong> Mall will be reduced by the amount of the rental payable under the relevant tenancy,regardless of whether such rental is received by the owner of the relevant <strong>Retail</strong> Mall and notwithstandingthat such tenancy may be or is terminated prior to the expiry of such period.To secure <strong>Lippo</strong> Strategic’s performance under each of the Rental Guarantee Deeds, <strong>Lippo</strong> Strategic isrequired to furnish to the <strong>Retail</strong> Mall Investment Holding Companies bank guarantees. The aggregateamount of all the bank guarantees to be furnished under the Rental Guarantee Deeds is S$10.0 million.(d)<strong>Retail</strong> <strong>Malls</strong> Operating Costs AgreementsPursuant to each of the Operating Costs Agreements to be entered into between the relevant <strong>Retail</strong> MallProperty Companies and Operating Company, the relevant Operating Company will agree tounconditionally bear, for a period of three years commencing 1 January 2007, all costs directly relatedto the maintenance and operation of the relevant <strong>Retail</strong> Mall.In consideration of its agreements under the relevant Operating Costs Agreement, the relevant OperatingCompany has the right to collect, through the property manager, a service charge and statutory incomefrom the tenants of that <strong>Retail</strong> Mall. This service charge is intended to cover the costs directly related to themaintenance and operation of the <strong>Retail</strong> Mall. The amount of the service charge will be recommended bythe property manager as a result of its review of the prevailing market rates. The statutory income isintended to cover the costs directly related to the provision of utilities to the retail mall.The right to collect the service charge and statutory income shall be in accordance with the leaseagreements entered into by and between the <strong>Retail</strong> <strong>Malls</strong> Property Companies and the respective tenantsof the <strong>Retail</strong> Mall and such collection shall be coordinated by the property manager.The operating costs agreements will lapse on 31 December 2009 and LMIR <strong>Trust</strong> will bear all costs directlyrelated to the maintenance and operation of the <strong>Retail</strong> <strong>Malls</strong> thereafter.(e)Build Operate and Transfer (“BOT”) AgreementsThe Pro Forma Group has the following BOT agreements for the following <strong>Retail</strong> <strong>Malls</strong>:1. Cibubur JunctionPT Cibubur Utama (“PT Cibubur”) entered into a BOT agreement with Perusahaan Daerah PembangunanSarana Jaya DKI Jakarta (“Sarana”). PT Cibubur has the right to build operate and transfer the property fora period of 20 years commencing July 2005 and the first priority to extend the agreement. To obtain theextension, PT Cibubur must give at least 3 months prior written notice to Sarana and that PT Cibubur hasmet all obligations under the BOT agreement.B-23
Appendix BPT Cibubur has the following payment obligations to Sarana:(a)(b)Rp. 9,500,000,000 (S$1,610,200) including VAT in 8 installments from 9 June 2003 to 15 December2003.US$2,260,000 (S$3,473,600) including VAT, that is to be paid by installments from the year 2004 until2024 as follows:(i) US$ 75,500 (S$116,000) per year for the first 5 years.(ii) US$100,500 (S$154,500) per year for the second 5 years.(iii) US$125,500 (S$192,900) per year for the third 5 years.(iv) US$150,500 (S$231,300) per year for fourth 5 years.The pegged rate of payment shall be US$1 equal to Rp. 8,500.(c) Goodwill cooperation of Rp. 100,000,000 (S$17,000) (including VAT) on 20 December 2004.(d)(e)Goodwill compensation of Rp. 1,500,000,000 (S$254,000) that is to be paid(i) Rp. 500,000,000 (S$84,700) shall be paid on 20 December 2004 and(ii) Rp. 1,000,000,000 (S$169,500) shall be paid from 2005 until 2009 in 5 installments ofRp. 200,000,000 (S$33,900) per year with the first installment commencing 1 February 2005.Monitoring fee of Rp. 5,000,000 (S$847) per month including VAT that is to be paid quarterly on15 January, 15 April, 15 July and 15 October commencing 2004.2. Plaza SemanggiPT Primatama Nusa Indah (“PT Primatama”) entered into a BOTagreement with Yayasan Gedung VeteranRepublik <strong>Indonesia</strong> (“Yayasan Veteran”). PT Primatama has the right to build operate and transfer theproperty for a period of 30 years commencing July 2004. The BOT Agreement can be extendedautomatically for another 20 years under the same terms and conditions of the current lease with atleast 6 months prior written notice, and to such notice, Yayasan Veteran automatically grants its approvalfor the extension.PT Primatama shall pay to Yayasan Veteran annually 5% of its gross income from the lease of premisesand parking spaces (excluding taxes) of each year, commencing from the date of commencement ofoperations to the 15th year.From the 16th year, PT Primatama shall pay Yayasan Veteran 10% of its gross income from the lease ofpremises and parking spaces (excluding taxes) for each year.3. Ekalokasari PlazaPT Indah Pesona Bogor (“PT Indah”) entered into a BOT amendment agreement with PT Bogor LifeScience and Technology (“BLST”) representing Institute Pertanian Bogor (“Institute Pertanian”). PT Indahhas the right to build operate and transfer the property for a period of 31 years up to 2032.PT Indah shall pay BLST Rp. 12,000,000,000 (S$2,034,000) (excluding tax) comprising:(i) Rp. 4,000,000,000 (S$678,000) (excluding tax) for the utilisation of land;(ii) Rp. 500,000,000 (S$84,700) (excluding tax) for the additional compensation for the utilisation ofland;(iii) Rp. 960,000,000 (S$162,700) (excluding tax) that will be paid for the extension of the validity of theBOT agreement;(iv) Rp. 6,290,000,000 (S$1,066,100) (excluding tax) for early payment of kiosk / tenancy rental incomeprofit sharing which was previously of 15% of PT Indah’s kiosk / tenancy rental income;(v) Rp. 250,000,000 (S$42,400) (excluding tax) for early payment of shopping centre operational netincome profit sharing, which previously as 50% of PT Indah’s shopping centre net income.PT Indah has paid Rp. 4,000,000,000 (S$678,000) for the utilisation of land and has the remaining amountof Rp. 8,000,000,000 (S$1,356,000) which is to be paid in 4 installments from June 2007 to September2007.PT Indah can extend the term of the agreement with 6 months prior written application.B-24
Appendix B4. Bandung Indah PlazaPT Megah Semesta Abadi (“PT Megah”) entered into a BOT agreement with Perusahaan Daerah (PD)Jasa dan Kepariwisataan Jawa Barat (previously known as PD Kerta Wisata Jawa Barat) (“PDJK”).PT Megah has been granted the right to build operate and transfer the property up to 31 December 2030. IfPDJK does not intend to manage the building and facilities, PDJK will give first option to PT Megah tobecome a partner of PDJK under a new agreement. PDJK must notify the PT Megah on whether or not ithas the intention to operate the building and facilities. This notification must be provided at least 6 monthsprior to expiration of the BOT Agreement. BOT agreement cannot be assigned without prior approval.PT Megah has the following obligations to PDJK:a. Revenue sharing for Shopping Centre I for the period from 19 August 1992 to 31 December 2030 willbe at 2% of the rental income of shops and retail per year and shall increase 0.25% every 4 years.The increase will commence as of May 2008;b. Revenue sharing for Shopping Centre II for the period from 1 May 1994 to 31 December 2030 will beat 2 % of rental income of shops and retails per year and shall increase 0.25% every 4 years. Theincrease will commence on May 2008;c. 5% of net operational profits, commencing August 1995;d. 5% of net income from rental of open areas, promotional spaces and corridors commencing August2005;e. Profit sharing with respect to parking spaces from August 2005 at 40% of parking net income afterdeducting contribution to Parking Management Institution (Badan Pengelola Perparkiran—“BPP”)and other expenses, VAT of 10%, interest expense, depreciation of parking facility, with maximumthreshold of the expenses is 76% of rental income, provided that if the VAT no longer prevails or thegovernment changes the figure of the VAT then the percentage of expenses will be mutually agreedby both parties;f. Both PT Megah and PDJK will share the net rental revenue of the cinema up to August 2020 basedon 50% ratio each. Profit share after 2020 will be determined later;g. The revenue sharing for commercial space will be in the amount of 2% of the rental income ofcommercial space per year and shall increase 0.25% every 4 years. The increase will commence onMay 2008.5. Istana PlazaPT Suryana Istana Plaza (“PT Suryana”) entered into a BOT agreement with Pasundan Church.PT Suryana has the right to build operate and transfer the property for a period of 32 years fromJanuary 2002. During the BOT period, PT Suryana is prohibited from assigning the ownership orencumbering the property to another party, except to use the property as security for the repaymentof loan to finance the construction of the building. No extension provision is provided in the BOTAgreement.(f)Put OptionAs at the Latest Practicable Date, four of the seven retail spaces, namely Metropolis Town Square Units,Depok Town Square Units, Malang Town Square Units and Grand Palladium Medan Units, are each boundby Kiosks Sale and Purchase Binding Agreements because their strata titles are in the process of beingissued by the <strong>Indonesia</strong>n government.In relation to each of the Metropolis Town Square Units, Depok Town Square Units, Malang Town SquareUnits and Grand Palladium Medan Units, a put option agreement has been entered into between, inter alia,the <strong>Trust</strong>ee and the Master Lessee, pursuant to which, in the event that the strata titles to these four retailspaces are not issued within 24 months from the Listing Date, a meeting of all the Unitholders will beconvened by the <strong>Trust</strong>ee pursuant to which the Unitholders will vote, by way of an ordinary resolution, onwhether to retain these four retail spaces in the portfolio of LMIR <strong>Trust</strong> for a further six months from thedate of the ordinary resolution. In the event that an ordinary resolution is passed in favour of retaining thesefour retail spaces in the portfolio of LMIR <strong>Trust</strong> and the strata titles are still not issued upon expiry of sixB-25
Appendix Bmonths from the date of the ordinary resolution, the <strong>Trust</strong>ee shall exercise the put option. In the event thatan ordinary resolution is not passed in favour of retaining these four retail spaces, the <strong>Trust</strong>ee shall beentitled to exercise the put option within three months of the date of the meeting of the Unitholders.Upon the <strong>Trust</strong>ee’s exercise of the put option in relation to one of these four <strong>Retail</strong> Spaces, the MasterLessee will be required to purchase the relevant <strong>Retail</strong> Spaces at the consideration as described in“Certain Agreements Relating to LMIR <strong>Trust</strong> and the Properties—Description of the Put OptionAgreements” of the Prospectus.(g) Letter of UndertakingOn 9 August 2007, the <strong>Trust</strong>ee, the Manager and the Sponsor entered into a letter of undertaking, pursuantto which the Sponsor will use its best endeavours to procure that the relevant <strong>Retail</strong> Space PropertyCompanies obtain the strata titles to the Metropolis Town Square Units, Depok Town Square Units, MalangTown Square Units and Grand Palladium Medan Units.16. Future changes in accounting standardsThe following new or revised FRS that have been issued will be effective in future and may be relevant tothe entity.FRS No.TitleEffective date forperiods beginningon or afterFRS 108 Operating Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1.2009INT FRS 112 Service Concessions Arrangements. . . . . . . . . . . . . . . . . . . . . . . . . 1.1.2008B-26
Appendix CINDEPENDENT SINGAPORE TAXATION REPORTThe Board of Directors<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd.as Manager of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>78 Shenton Way#05-01 <strong>Lippo</strong> CentreSingapore 079120HSBC Institutional <strong>Trust</strong> Services (Singapore) Limitedas <strong>Trust</strong>ee of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>21 Collyer Quay#14-01 HSBC BuildingSingapore 04932019 October 2007Dear SirsSINGAPORE TAXATION REPORTThis letter has been prepared at the request of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd.(the “Manager”) for inclusion in the Prospectus for <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> (“LMIR <strong>Trust</strong>”)dated 19 October 2007 in connection with the listing of LMIR <strong>Trust</strong> on the Singapore Exchange SecuritiesTrading Limited.The purpose of this letter is to provide prospective purchasers of the units in LMIR <strong>Trust</strong> (“Units”) with anoverview of the Singapore income tax consequences of the purchase, ownership and disposition of theUnits. This letter principally addresses Unitholders who hold the Units as investment assets. Unitholderswho hold or have acquired the Units for dealing purposes should consult their own tax advisers concerningthe tax consequences of their particular situations.This letter is not a tax advice and does not attempt to describe comprehensively all of the taxconsiderations that may be relevant to a decision to purchase, own or dispose of the Units.Unitholders should consult their own tax advisers concerning the tax consequences of their particularsituations. In particular, Unitholders who are not Singapore tax residents are advised to consult their owntax advisers to take into account the tax laws of their respective countries of residence and the existence ofany tax treaty which their countries of residence may have with Singapore.This letter is based on the Singapore income tax law and the relevant interpretation thereof current at thedate of this letter, all of which are subject to change, possibly with retroactive effect.Words and expressions in this letter have the same meaning as defined in the Prospectus. In addition,unless the context requires otherwise, words in the singular include the plural and the other way aroundand words of one gender include any gender.SINGAPORE TAXATION OF REAL ESTATE INVESTMENT TRUSTS IN GENERALUnder current Singapore income tax law, the taxable income of a trust comprises:(a)(b)income accruing in or derived from Singapore; andunless otherwise exempt, income derived from outside Singapore which is received in Singapore ordeemed to have been received in Singapore by the operation of law.The taxable income of a trust is ascertained in accordance with the provisions of the Singapore income taxlaw, after deduction of all allowable expenses and any other allowances permitted under the law.C-1
Appendix CThe taxable income of a trust, or part thereof, is taxed at the prevailing corporate rate of income tax and thetax is assessed on the trustee in the following circumstances:• where the income is derived from any trade or business carried on by the trustee, in its capacity as thetrustee of the trust;• where the beneficiaries of the trust are not resident in Singapore; or• where the beneficiaries are not entitled to the income of the trust.Any distribution made out of such income which has been assessed to tax on the trustee is not taxable inthe hands of the beneficiaries. The tax paid by the trustee on such income is not imputed as a credit to thebeneficiaries for Singapore income tax purposes.Where the taxable income of a trust is income other than that derived from any trade or business carried onby the trustee, such income may be assessed to tax directly on the beneficiaries of the trust where thebeneficiaries are resident in Singapore and are entitled to the income of the trust.In a real estate investment trust, which is defined in the Income Tax Act to mean a trust constituted as acollective investment scheme authorised under section 286 of the Securities and Futures Act (Cap.289) and listed on the Singapore Exchange, that invests or proposes to invest in immovable property andimmovable property-related assets, (referred hereinafter as a “REIT”), the trustee may be charged at alower rate or not charged with any tax, as the Comptroller of Income Tax (“Comptroller”) shall determineand subject to the satisfaction of the Comptroller. This treatment, if granted, will apply to only certainincome of a REIT, including rental income or income from the management or holding of immovableproperty but not including gains from the disposal of immovable property (“tax-transparent income”).Beneficiaries of the REITare instead assessed to tax on the share of such tax-transparent income to whicheach of them is beneficially entitled. The tax may be assessed directly on the beneficiaries or deducted bythe trustee from the amount of distribution made to the beneficiaries, depending on their own particularcircumstances.The income of a REIT that is taxable in the hands of its beneficiaries does not include income from anytrade or business carried on by the trustee that is not tax-transparent income. Tax on such non taxtransparentincome would have been assessed on the trustee of the REIT. Beneficiaries of the REITare nottaxed on distributions made out of such non tax-transparent income. The tax paid by the trustee on suchnon tax-transparent income is not imputed as a credit to the beneficiaries for Singapore income taxpurposes.Where the REIT derives any tax-exempt income, such income is exempt from tax in the hands of thetrustee. Beneficiaries of the REIT will also be exempt from tax on the share of such tax-exempt income towhich each of them is beneficially entitled.SINGAPORE TAXATION OF LMIR TRUSTLMIR <strong>Trust</strong> is liable to Singapore income tax on:(a)(b)income accruing in or derived from Singapore; andunless otherwise exempt, income derived from outside Singapore which is received in Singapore ordeemed to have been received in Singapore by the operation of law.The Singapore taxation of LMIR <strong>Trust</strong> in respect of the income and gains which it may derive from theProperties is described below.Dividends from the Target Singapore SPCsLMIR <strong>Trust</strong>’s income will comprise substantially dividends received from its holding of ordinary shares inthe Target Singapore SPCs. Provided that the Target Singapore SPCs are tax residents of Singapore forincome tax purposes, these dividends will be one-tier (tax-exempt) dividends and hence exempt from tax inthe hands of the <strong>Trust</strong>ee.A company is a tax resident of Singapore if the management and control of its business is exercised inSingapore.C-2
Appendix CGains on disposal of sharesSingapore does not impose tax on capital gains. In the event that LMIR <strong>Trust</strong> disposes of its ordinaryshares or redeemable preference shares or both in the Target Singapore SPCs, gains arising from such adisposal will not be liable to Singapore income tax unless the gains are considered income of a trade orbusiness. The gains may also be liable to Singapore income tax if the shares were acquired with theintention or purpose of making a profit by sale and not for long-term investment purposes.Gains arising from the sale of the ordinary shares or redeemable preference shares or both in the TargetSingapore SPCs, if considered to be trading gains, will be taxable on the <strong>Trust</strong>ee.Redemption of redeemable preference shares in the Target Singapore SPCsAny proceeds received by LMIR <strong>Trust</strong> from the redemption of its redeemable preference shares in theTarget Singapore SPCs at the original cost of the redeemable preference shares are capital receipts andhence not taxable on the <strong>Trust</strong>ee.Other incomeIn the event that LMIR <strong>Trust</strong> derives other income that is liable to Singapore income tax, for exampleinterest from the deposit of surplus cash with banks, the tax on such income will be assessed on the<strong>Trust</strong>ee at the prevailing corporate tax rate.Taxation of the Singapore SPCsThe Singapore SPCs are liable to Singapore income tax on:(a) income accruing in or derived from Singapore; and(b) unless otherwise exempt, income derived from outside Singapore which is received in Singapore ordeemed to have been received in Singapore by the operation of law.The income of the Singapore SPCs will comprise substantially dividends derived from their holdings ofordinary shares in the relevant <strong>Indonesia</strong>n SPCs or interest derived from shareholder’s loans extended tothe relevant <strong>Indonesia</strong>n SPCs or both.Dividends from the <strong>Indonesia</strong>n SPCsProvided that the Singapore SPCs are tax residents of Singapore for income tax purposes, any dividendsreceived in Singapore by the Singapore SPCs from the <strong>Indonesia</strong>n SPCs will be exempt from Singaporeincome tax under Section 13(8) of the Income Tax Act, if the following conditions are met:(a) in the year the dividends are received in Singapore, the headline corporate tax rate in <strong>Indonesia</strong> is atleast 15.0%;(b) the dividends have been subject to tax in <strong>Indonesia</strong>; and(c) the Comptroller is satisfied that the tax exemption would be beneficial to the Singapore SPCs.Based on the current tax laws in <strong>Indonesia</strong>, dividends paid by the <strong>Indonesia</strong>n SPCs out of their incomefrom the letting of the Properties will meet the aforesaid conditions (see “<strong>Indonesia</strong>n Tax Implications”).Interest from the <strong>Indonesia</strong>n SPCsLMIR <strong>Trust</strong> has obtained approval of the IRAS to exempt the interest received by the relevant SingaporeSPCs on the loans extended to the <strong>Indonesia</strong>n SPCs from Singapore income tax under Section 13(12) ofthe Income Tax Act. This approval is subject to the relevant Singapore SPCs satisfying certain stipulatedconditions, including the condition that the full amount of the remitted interest, less attributable expenses,must be distributed to LMIR <strong>Trust</strong>.Gains on disposals of sharesSingapore does not impose tax on capital gains. In the event that the Singapore SPCs dispose of theirordinary shares in the <strong>Indonesia</strong>n SPCs, gains arising from such a disposal will not be liable to Singaporeincome tax unless the gains are considered income of a trade or business. The gains may also be liable toSingapore income tax if the shares were acquired with the intention or purpose of making a profit by saleand not for long-term investment purposes.C-3
Appendix CGains arising from the sale of ordinary shares in the <strong>Indonesia</strong>n SPCs, if considered to be trading gains,will be assessed to tax on the Singapore SPCs.Repayment of loans by the <strong>Indonesia</strong>n SPCsAny proceeds received by the Singapore SPCs from repayment of principal on the loans by the <strong>Indonesia</strong>nSPCs are capital receipts and hence not taxable on the Singapore SPCs.SINGAPORE TAXATION OF UNITHOLDERSDistributions by LMIR <strong>Trust</strong>Subject to LMIR <strong>Trust</strong>’s distribution policy (see “Distributions”), LMIR <strong>Trust</strong>’s distributions will mainly bemade out of the following receipts:(a)(b)one-tier (tax-exempt) dividends received from the Target Singapore SPCs (the “tax-exemptincome”); andcapital receipts from the redemption of redeemable preference shares in the Target SingaporeSPCs.Distributions out of tax-exempt incomeUnitholders will be exempt from Singapore income tax on distributions made out of LMIR <strong>Trust</strong>’s taxexemptincome.For this purpose, the amount of tax-exempt income distributions that LMIR <strong>Trust</strong> can distribute for adistribution period will be to the extent of the amount of tax-exempt income that it has received and isentitled to receive in that distribution period.Distributions made out of any amount of Distributable Income for a distribution period which LMIR <strong>Trust</strong>received or is entitled to receive as its own tax-exempt income after the end of that distribution period willbe treated as capital distributions and the tax treatment set out under “Distributions out of capital receipts”will apply. The amount of such tax-exempt income may be used to frank tax-exempt income distributionsout of Distributable Income for subsequent distribution periods.Distributions out of capital receiptsUnitholders will not be subject to Singapore income tax on distributions made by LMIR <strong>Trust</strong> out of itscapital receipts, i.e. amounts received from the redemption of redeemable preference shares in the TargetSingapore SPCs. Such distributions will be treated as returns of capital for Singapore income taxpurposes. For Unitholders who hold the Units as trading or business assets and are liable toSingapore income tax on gains arising from disposal of the Units, the amount of such distributions willbe applied to reduce the cost of the Units for the purpose of calculating the amount of taxable trading gainwhen the Units are disposed of. If the amount exceeds the cost or the reduced cost of the Units, as the casemay be, the excess will be subject to tax as trading income of such Unitholders.Distributions out of taxable trading gains or taxable incomeUnitholders are not subject to further Singapore income tax on distributions made by LMIR <strong>Trust</strong> out of itstaxable trading gains, for example, gains arising from the disposal of shares in the Target Singapore SPCswhich are determined to be trading gains, or other taxable income. The tax on such gains or income will beassessed on the <strong>Trust</strong>ee at the prevailing corporate tax rate and any distribution made out of such gains orincome is not taxed in the hands of Unitholders. The tax paid by the <strong>Trust</strong>ee on such gains or income is notimputed as a credit to Unitholders for Singapore income tax purposes.Distributions out of capital gainsUnitholders are not subject to Singapore income tax on distributions made by LMIR <strong>Trust</strong> out of capitalgains, for example, gains arising from the disposal of shares in the Target Singapore SPCs which aredetermined to be capital in nature, unless the distributions are considered gains or profits of a trade orbusiness carried on by the Unitholder, for example, if the Units are held as trading assets.C-4
Appendix CDisposal of UnitsSingapore does not impose tax on capital gains. Therefore, gains on disposal of the Units that are capital innature will not be subject to tax. However, such gains may be considered income in nature and subject toSingapore income tax if they arise from or are otherwise connected with the activities of a trade or businesscarried on in Singapore. Such gains may also be considered income in nature, even if they do not arisefrom an activity in the ordinary course of trade or business or an ordinary incident of some other businessactivity, if the Units were purchased with the intention or purpose of making a profit by sale and not with theintention to be held for long-term investment purposes.If a Unitholder has held the Units for long-term investment purposes, any gains arising from sale of theUnits should be considered capital gains and hence not subject to Singapore income tax. However, if theUnits have been held as trading assets of a trade or business carried on in Singapore, the gains arisingfrom the sale will be taxed as income. The precise tax status of one Unitholder will vary from another.Because of this, Unitholders are advised to consult their own professional advisers on the Singapore taxconsequences that may apply to their individual circumstances.Yours faithfullyErnst & YoungSingaporeLim Gek KhimTax PartnerC-5
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Appendix DINDEPENDENT INDONESIAN TAXATION REPORTJakarta, 19 October 200778 Shenton Way #05-01 <strong>Lippo</strong> CentreSingapore 079120D-1
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Appendix EINDEPENDENT PROPERTY VALUATION SUMMARY REPORTSE-1
Appendix EReport No.017/WPA-Report/200730 June 2007To:<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management(as Manager of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>)One Phillip Street #15-00Singapore 048692andHSBC Institutional <strong>Trust</strong> Services (Singapore) Limited(as <strong>Trust</strong>ee of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>)21 Collyer Quay#14-01 HSBC BuildingSingapore 049320PT. Willson Properti AdvisindoWisma Nugra Santana #17-03Jl. Jend. Sudirman Kav. 7-8Jakarta 10220, <strong>Indonesia</strong>+62 (21) 570 7170+62 (21) 570 7177 faxwww.knightfrank.comDear Sirs,RE:VALUATION OF SHOPPING CENTERS:1. THE PLAZA SEMANGGI, JAKARTA—INDONESIA.2. GAJAH MADA PLAZA, JAKARTA—INDONESIA.3. CIBUBUR JUNCTION, JAKARTA—INDONESIA.4. BANDUNG INDAH PLAZA, BANDUNG—INDONESIA.5. ISTANA PLAZA, BANDUNG—INDONESIA.6. EKALOKASARI PLAZA, BOGOR—INDONESIA.7. MAL <strong>LIPPO</strong> CIKARANG, BEKASI—INDONESIA.VALUATION OF RETAIL SPACES TENANTED AND OPERATED BY MATAHARIGROUP AT:1. DEPOK TOWN SQUARE, DEPOK—INDONESIA.2. MALL WTC MATAHARI, TANGERANG—INDONESIA.3. METROPOLIS TOWN SQUARE, TANGERANG—INDONESIA.4. JAVA SUPERMALL, SEMARANG—INDONESIA.5. PLAZA MADIUN, MADIUN—INDONESIA.6. MALANG TOWN SQUARE, MALANG—INDONESIA.7. GRAND PALLADIUM, MEDAN—INDONESIA.InstructionsThis valuation summary report has been prepared for the purposes of inclusion in the prospectus to beissued in relation to the initial public offering of units in the <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>, whichwill be listed on the Singapore Exchange Securities Trading Limited.E-2Continue to page 2.
Appendix EReport No.017/WPA-Report/2007Page 2.In accordance with your instructions for Knight Frank/PT. Willson Properti Advisindo to conduct formalfixed asset valuation of the above-captioned properties (the “Properties”) in providing our opinion ofMarket Value of the Properties as at 30 June 2007; subject to the existing and proposed leases, occupancyand operational arrangements of the shopping centers, and subject to the proposed lease arrangementsof the retail outlet stores with PT. Matahari Putra Prima Tbk as stipulated in the proposed LeaseAgreements (the “Valuation”).We are pleased to confirm that we have completed our site inspection, due diligence, and Valuation of theProperties; and have prepared fourteen formal comprehensive valuation reports for each of the Properties(the “Reports”). No structural survey has been made, but in the course of our inspection, we did not noteany serious defect. We are not, however, able to report that the Properties are free from rot, infestation orany other structural defect. No tests were carried out to any of the services.Our Valuation expresses our opinion of Market Value, which is defined in the International ValuationStandards (IVS) 2003 and the <strong>Indonesia</strong>n Valuation Standards (Standar Penilaian <strong>Indonesia</strong>/SPI) 2002 tomean “the estimated amount for which an asset should exchange on the date of valuation between a willingbuyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties hadeach acted knowledgeably, prudently and without compulsion”.We have prepared and provided this summary of the Reports outlining key factors that have beenconsidered in arriving at our opinion of Market Value, which reflects all information known by us and basedon current market conditions.RELIANCE ON THIS LETTERThis valuation summary report does not contain all the necessary data and support information included inour Reports. For further information to that contained herein, reference should be made to the Reports,copies of which are held by the Manager and which we understand will be available for inspection for aperiod of six months from the date of the Prospectus.The Valuation and market information contained in the Reports are not guarantees or predictions and mustbe read in consideration of the followings:• Each report is several pages in length and the conclusion as to the value assessment is based upon thefactual information set forth in that Report. Whilst Knight Frank/PT. Willson Properti Advisindo hasendeavored to assure the accuracy of the factual information, it has not independently verified allinformation provided by the Manager (primarily the existing leases and the Master Lease Agreementsand other information relating to the Properties) or the Government of the Republic of <strong>Indonesia</strong>(primarily statistical information relating to market conditions). Knight Frank/PT. Willson PropertiAdvisindo believes that every investor, before making an investment in <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong><strong>Retail</strong> <strong>Trust</strong>, should review the Reports to understand the complexity of the methodology and the manyvariables involved.Continue to page 3.E-3
Appendix EReport No.017/WPA-Report/2007Page 3.• The methodologies used by Knight Frank/PT. Willson Properti Advisindo in valuing the Properties—theIncome Method utilizing Discounted Cash Flow Analysis and Income Capitalization—are based uponassessment of future results and are not predictions. These valuation methodologies are summarized inthe Valuation Rationale section of this summary report. Each methodology is based on a set ofassumptions as to income and expenses of the relevant Property and future economic conditions in thelocal market. The income and expenses figures are mathematically extended with the adjustments foranticipated changes in economic conditions. The resultant value is considered the best practiceassessment but is not to be construed as a prediction or guarantee and is fully dependent upon theaccuracy of the assumptions as to income, expenses and market conditions.• The Reports were undertaken based upon information available as at 30 June 2007. Knight Frank/PT. Willson Properti Advisindo accepts no responsibility for subsequent changes in information as toincome, expenses or market conditions.We have also relied on the information provided by the owning companies of the Properties on matterssuch as the ownership title particulars, the terms and conditions of BOT (Build, Operate, and Transfer)arrangements and leasehold tenure, details, land areas, building floor areas, building facilities andservices, tenancy list, renovation and/or expansion plans, etc. All information provided to us is treatedas correct and we accept no responsibility for subsequent changes in information and reserve the right tochange our opinion of value if any other information provided were to materially change.E-4Continue to page 4.
Appendix EReport No.017/WPA-Report/2007Page 4.SUMMARY OF THE PROPERTIESShopping Centers:1. The Plaza SemanggiBrief DescriptionThe Plaza Semanggi is a shopping-cum-office complex, which comprises ‘The Plaza Semanggi’—7-storey and 2-basement level shopping center, and ‘Gedung Veteran’—a 13-storey office building.The Plaza Semanggi is built adjacent to and on the same site with Balai Sarbini, a convention hall,which is excluded in this Valuation.The Plaza Semanggi has a total existing lettable retail floor area of about 46,724 square meters. Inaddition, a proposed 3,000-square meter dining-cum-entertainment facility, designated as “Plangi onthe Sky”, will be built above the parking floor and is scheduled for completion and operation by themiddle of 2007.The Plaza Semanggi offers a wide range of shopping, dining, and leisure activities. The buildingaccommodates a supermarket, a department store, retail units, restaurants, cafes, food outlets, foodcourt, home furnishing stores, a fitness center, a karaoke lounge, a book store, an electronic megastore, hand phone and computer stores, a Cineplex, and a billiard. The building is built with 2 basementlevels and 7 parking floors on 5th to 9th levels to accommodate a total of 1,100 car parking capacity.Major tenants include Centro Department Store, Giant Superstore, Electronic Solution, Fitness First,Gramedia Book Store, and 21 Cineplex.Gedung Veteran is a B-grade office building with a total lettable office floor area of about11,961 square meters (including a 970-square meter rent-free office space entitled to the landowner). Major tenants include MAA Insurance and X Lounge.ParticularsAddress : Jalan Jenderal Sudirman Kav. 50,Sub-District of Karet Semanggi, District of Setiabudi,Regency of South Jakarta,Jakarta—<strong>Indonesia</strong>.Land Area : 19,000 square meters.Land Owner : Yayasan Gedung Veteran Republik <strong>Indonesia</strong> CQ the SecretaryGeneral of the Republic of <strong>Indonesia</strong>.Land Title : Hak Pakai (Right to Use) No. 133/Karet Semanggi dated21 October 1997.BOT Agreement : - Perjanjian Pengikatan Revitalisasi, Pengelolaan dan Pengalihan(Introductory Agreement of Revitalization, Management andTransfer) dated 5 January 2000.- Perjanjian Revitalisasi, Pembangunan, Pengolahan danPengalihan (Deed of Revitalization, Development, Managementand Transfer) No. 56 dated 29 March 2000.Continue to page 5.E-5
Appendix EReport No.017/WPA-Report/2007Page 5.- Addendum Perjanjian Revitalisasi, Pembangunan, Pengolahandan Pengalihan (Deed of Addendum for the Deed ofRevitalization, Development, Management and Transfer) Nos. 25and 26 dated 26 May 2000.- Addendum Perjanjian Revitalisasi, Pembangunan, Pengolahandan Pengalihan (Deed of Addendum for the Deed ofRevitalization, Development, Management and Transfer) dated29 January 2002.BOT Right Holder : PT. Primatama Nusa Indah.BOT Term : - Initial term of 30 (thirty) years from 8 July 2004 to 8 July 2034.- Extension term of 20 (twenty) years from 8 July 2034 to 8 July2054.In total, a remaining BOT term of 47.05 years from the date ofvaluation.Land Zoning : Commercial use.Type of Development : Shopping center and office building.No. of Building Block : 2 blocks.Building Level : - Shopping center (7 floors and 2 basement levels).- Office Building (13 floors, including Level 11, the rent-free officefloor entitled to the land owner)- Parking (7 floors starting from level 5)Initial Opening Year : 2004.Gross Floor Area : 91,232 square meters.Lettable Floor Area : - <strong>Retail</strong> spaces of The Plaza Semanggi : 46,724 square meters.- Office spaces of Gedung Veteran(including Level 11, a 970-squaremeter rent-free office floor entitled tothe land owner).: 11,961 square metersCurrent Total- “Plangi on the Sky”, a proposeddining-cum-entertainment facilityscheduled for completion andoperation by middle of 2007).Future TotalOccupancy Level : 96.4%, based on current total lettablefloor area of 58,685 square meters.: 58,685 square meters.: 3,000 square meters.: 61,685 square meters.E-6Continue to page 6.
Appendix EReport No.017/WPA-Report/2007Page 6.Tenancy Details : As at 30 June 2007, anchor and major tenants occupied about53.6% of the total occupied retail space within the shopping center.Centro Department Store is the largest tenant which constitutedabout 17.2% of the total occupied retail space, Giant Superstore isthe second largest tenant by 13.7%, Electronic Solution is the thirdlargest tenant by 9.3%, Fitness First is the fourth largest tenant by4.6%, Gramedia is the fifth largest tenant by 3.5%, 21 Cineplex isthe sixth largest by 3.1%, and the remaining 2.2% goes to GilliansBilliard.Centro Department Store has a 10-year lease term expiring in4 November 2013, Giant has a 12-year lease term expiring in14 February 2019, Electronic Solution and 21 Cineplex have 5-yearlease term expiring in 2011 and 2014, Fitness First has a 15-yearlease term expiring in 2020, whilst Gillian’s Billiard, and Gramediahave 5-year lease terms expiring in 2009, 2010 respectively. About44.4% of the specialty shops including food outlets have a 5-yearlease term, about 22.3% have a 30-year lease term, about 10.8%have a 3-year lease term, about 15.9.2% have a 10-year leaseterm, and the remaining 6.6% have variable lease terms.The shopping center has an overall average base rental rate ofabout Rp. 92,598/square meter/month. The average base rentalrate for the anchor and major tenants, Ground Floor, UpperGround Floor, 1st Floor, 2nd Floor, 3rd Floor, 3A Floor (food courtand restaurant level) respectively are about Rp. 58,402,Rp. 174,200, Rp. 256,176, Rp. 220,151, Rp. 101,055, Rp. 79,896,Rp. 425,581/square meter/month.As at 30 June 2007, MAA Assurance was the largest tenant in theoffice building occupying about 17.18% of the total occupiedspaces, and X Lounge was the second largest tenant by about17.22%.About 46% of the existing tenants in the office building have a5-year lease term expiring in 2009 and 2010, about 24.2% have a3-year lease term expiring in 2008, about 18.2% have a 2-yearlease term expiring in 2007, and the remaining 11.6% are under a30-year lease term expiring in 2034.The office building has an average base rental rate of aboutRp. 42,388/square meter/month. The base rental rate for its typicalfloor is about Rp. 34,120/square meter/month, and for its groundfloor is about Rp. 206,459/square meter/month.Continue to page 7.E-7
Appendix EReport No.017/WPA-Report/2007Page 7.2. Gajah Mada PlazaBrief DescriptionGajah Mada Plaza is a 7-storey with 1 basement level shopping center with a total lettable floor area ofabout 34,278 square meters. It offers a wide range of shopping, dining, and leisure activities. Thebuilding accommodates a hypermarket, a department store, retail units, restaurants, food outlets,food court, pet shops, a book store, computer stores, a Cineplex, convention/wedding halls, fitnesscenter, karaoke lounge, and a night club. Major tenants include Hypermart, Rimo Department Store,Inul Fiesta, Millenium Executive Club, Eva Bun, and GM 21 Cineplex.Gajah Mada Plaza is built adjacent to and on the same site with the 28-storey Gajah Mada OfficeBuilding.ParticularsAddress : Jalan Gajah Mada No. 19-26,Sub-District of Petojo Utara, District of Gambir,Regency of Central Jakarta,Jakarta—<strong>Indonesia</strong>.Strata Title Floor Area : 37,501 square meters.Strata Title Owner : PT. Graha Baru Raya.Strata Title : - Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 325/-I/S/Petojo Utara dated 26 July 1999.• Unit No. SSG-01, Level SG, Block S.• Unit Area: 5,228 square meters.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 326/-I/S/Petojo Utara dated 26 July 1999.• Unit No. SSG-02, Level SG, Block S.• Unit Area: 135 square meters.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 328/I/S/Petojo Utara dated 26 July 1999.• Unit No. SG-02, Level G, Block S.• Unit Area: 18 square meters.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 330/II/S/Petojo Utara dated 26 July 1999.• Unit No. S01-02, Level 1, Block S.• Unit Area: 17 square meters.E-8Continue to page 8.
Appendix EReport No.017/WPA-Report/2007Page 8.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 332/III/S/Petojo Utara dated 26 July 1999.• Unit No. S02-02, Level 2, Block S.• Unit Area: 43 square meters.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 333/IV/S/Petojo Utara dated 26 July 1999.• Unit No. S03-02, Level 3, Block S.• Unit Area: 4,618 square meters.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 334/V/S/Petojo Utara dated 26 July 1999.• Unit No. S04-01, Level 4, Block S.• Unit Area: 2,645 square meters.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 335/V-VI-VII/S/Petojo Utara dated 26 July 1999.• Unit No. S04-02, Level 4-5-6, Block S.• Unit Area: 3,205 square meters.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 336/VI-VII/S/Petojo Utara dated 26 July 1999.• Unit No. S05-02, Level 5-6, Block S.• Unit Area: 4,534 square meters.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 337/VII/S/Petojo Utara dated 26 July 1999.• Unit No. S06A-01, Level 6A, Block S.• Unit Area: 1,607 square meters.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 338/VIII/S/Petojo Utara dated 26 July 1999.• Unit No. S07-01, Level 7, Block S.• Unit Area: 591 square meters.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 438/I/S/Petojo Utara dated 3 June 2002.• Unit No. SG-01A, Level 1, Block S.• Unit Area: 5,186.1 square meters.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 440/II/S/Petojo Utara dated 3 June 2002.• Unit No. SO1-O1A, Level 2, Block S.• Unit Area: 4,755.6 square meters.Continue to page 9.E-9
Appendix EReport No.017/WPA-Report/2007Page 9.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 442/III/S/Petojo Utara dated 3 June 2002.• Unit No. SO2-O1A, Level 2, Block S.• Unit Area: 4,918.6 square meters.Land Zoning : Commercial use.Type of Development : Shopping center.No. of Building Block : 1 block of shopping center and annexed multi-storey parking building.Building Level : - Shopping center (7 floors and 1 basement level).- Parking building (8 floors).Initial Opening Year : 1982.Gross Floor Area : 66,160 square meters.Lettable Floor Area : 34,278 square meters.Occupancy Level : 89.1%.Tenancy Details : As at 30 June 2007, anchor and major tenants occupied about 55.9%of the total occupied retail space. Millenium Executive Club is thelargest tenant which constituted about 18.3% of the total occupiedretail spaces, Hypermart is the second largest tenant by 16.4%, RimoDept. Store is the third largest tenant by 9.1%, Eva Bun is the fourthlargest tenant by 6.6%, and GM 21 Cineplex is the fifth largest by5.5%.Millenium Executive Club has a 15-year lease term expiring in29 October 2014, Hypermart has a 10-year lease term expiring in2 February 2015, Rimo Dept. Store has a 2-year lease term expiring in30 June 2008, Eva Bun has a 10-year lease term expiring in 2015, andGM 21 Cineplex has a 10-year lease term expiring in 2013. About27.6% of the specialty shops including food outlets have a 5-yearlease term, about 21% have a 2-year lease term, about 20.6% have3-year lease term, about 14% have a 1-year or less lease term, about11.6% have a 11.4-year lease term, and the remaining 5.2% have a4-year or 20-year lease terms.The overall average base rental rate is about Rp. 71,523/squaremeter/month. The average base rental rate for the anchor tenants,Semi Ground Floor, Ground Floor, 1st Floor, 2nd Floor, 3rd Floor,3rd Floor (computer shops), 3A Floor (food court and restaurantlevel), and 7 Floor respectively are about Rp. 35,166, Rp. 150,000,Rp. 202,317, Rp. 181,980, Rp. 150,670, Rp. 147,775, Rp. 68,449,Rp. 249,707, Rp. 24,767/square meter/month.E-10Continue to page 10.
Appendix EReport No.017/WPA-Report/2007Page 10.3. Cibubur JunctionBrief DescriptionCibubur Junction is a 5-storey with 1 basement level and partial roof top level shopping center with atotal lettable retail floor area of about 34,139 square meters. It offers a wide range of shopping, dining,and leisure activities. The building accommodates a hypermarket, a department store, retail units,restaurants, food outlets, a book store, a fitness center, and a cineplex. Major tenants includeHypermart, Matahari Department Store, Timezone Amusement Center, Karisma Book Store, SportWarehouse, Fitness First, and 21 Cineplex.ParticularsAddress : Jalan Jambore No. 1Sub-District of Cibubur, District of Ciracas,Regency of East Jakarta,Jakarta—<strong>Indonesia</strong>.Land Area : 31,987 square meters.Land Owner : Perusahaan Daerah Pembangunan Sarana Jaya DKI Jakarta.Land Title : Hak Guna Bangunan No. 01210/Cibubur dated 24 December 2001.BOT Agreement : - Perjanjian Kerjasama Tentang Pendayagunaan Lahan UntukPembangunan dan Pengembangan Gedung Pusat Perbelanjaandi Areal Lahan Terletak di Cibubur—Jakarta Timur (Deed ofCooperation Agreement on Land Utilization for Construction andDevelopment of a Shopping Centre Located at Cibubur—EastJakarta) No. 68 dated 28 July 2003.- Addendum I dated 25 November 2004.- Addendum II dated 26 November 2004.BOT Right Holder : PT. Cibubur Utama.BOT Term : 20 (twenty) years from 28 July 2005 up to 28 July 2025.Or a remaining BOT term of 13.09 years from the date of valuation.Land Zoning : Commercial use.Type of Development : Shopping center.No. of Building Block : 1 block.Building Level : 5 floors with 1 basement level.Initial Opening Year : 2005.Continue to page 11.E-11
Appendix EReport No.017/WPA-Report/2007Page 11.Gross Floor Area : 49,341 square meters.Lettable Floor Area : 34,139 square meters.Occupancy Level : 86.4%.Tenancy Details : As at 30 June 2007, anchor and major tenants occupied about 67.9%of the total occupied retail space. Hypermart is the largest tenantwhich constituted about 29.9% of the total occupied retail spaces,Matahari Group (Dept. Store and Timezone) is the second largesttenant by 22%, Fitness First is the third largest tenant by 5.7%, 21Cineplex is the fourth largest tenant by 5.5%, and the remaining 4.9%is shared between Sports Warehouse and Karisma Book Store.Hypermart has a 10-year lease term expiring in 27 July 2015,Matahari Dept. Store has a 9.5-year lease term expiring in30 August 2015, Timezone has a 9.75-year lease term expiring in30 October 2015, Fitness First has a 15-year lease term expiring in2021, and 21 Cineplex has a 10-year lease term expiring in 23 March2016, whilst both Sports Warehouse and Karisma Book Store have a5-year lease term expiring in 2010. About 65.7% of the specialtyshops including food outlets have a 5-year lease term, about 27.1%have a 7-year lease term, and the remaining 7.2% have variable leaseterm of 1, 2, 3, or 10 years.The overall average base rental rate is about Rp. 86,584/squaremeter/month. The average base rental rate for the anchor tenants,Lower Ground Floor, Ground Floor, Upper Ground Floor, 1st Floor,2nd Floor (food court and restaurant level) respectively are aboutRp. 49,232, Rp. 215,732, Rp. 160,580, Rp. 180,522, Rp. 184,822,Rp. 169,850/square meter/month.E-12Continue to page 12.
Appendix EReport No.017/WPA-Report/2007Page 12.4. Bandung Indah PlazaBrief DescriptionBandung Indah Plaza is the first major shopping center to be built in Bandung, the capital city of WestJava Province. It is a 4-storey with 3 basement levels shopping center with a total lettable retail floorarea of about 26,472 square meters. It offers a wide range of shopping, dining, and leisure activities.The building accommodates a supermarket, 2 department stores, retail units, restaurants, cafes, foodoutlets, food court, a book store, and a Cineplex. Major tenants include Hypermart, MatahariDepartment Store, Yogya Department Store, Timezone amusement center, 21 Cineplex, andGunung Agung Book Store.Recently, Bandung Indah Plaza undergone renovations to its exterior and interior elements, and iscurrently undergoing tenancy mix repositioning exercise. The building reserves a total retail andtemporary leasing areas of about 2,700 square meters, of which about 24% of the areas will start to betenanted by middle of 2007, about 7% by 2008, and the remaining 69% by 2009. The building also hasabout 1,142 square meters space for casual leasing.ParticularsAddress : Jalan Merdeka No. 56Sub-District of Citarum, District of Bandung Wetan,Regency of Bandung,West Java—<strong>Indonesia</strong>.Land Area : 15,779 square meters.Land Owner : Perusahaan Daerah Jasa dan Kepariwisataan Pemerintah PropinsiJawa Barat (The State Company for Tourism Service of theGovernment of West Java Province).Land Title : - Hak Guna Bangunan (Right to Build) No. 26/CitarumLand Area : 1,066 square meters.Registered Proprietor : PT Megah Semesta AbadiExpiry Date : 14 August 2010- 7 (seven) HGB titles registered under the name of PT. MegahSemesta Abadi, which are issued over Hak Pengelolaan (Right toOperate titles Nos. 1/Cihapit, 1/Citarum, 1/Merdeka, and 2/Citarumregistered under the name of Perusahaan Daerah Jasa danKepariwisataan Pemerintah Propinsi Jawa Barat.(i) HGB Title No. 130/CitarumLand Area : 160 square meters.Registered Proprietor : PT Megah Semesta Abadi.Expiry Date : 20 October 2017.(ii) HGB Title No. 131/CitarumLand Area : 1,121 square meters.Registered Proprietor : PT Megah Semesta Abadi.Expiry Date : 20 October 2017.Continue to page 13.E-13
Appendix EReport No.017/WPA-Report/2007Page 13.(iii) HGB Title No. 64/CitarumLand Area : 5,015 square meters.Registered Proprietor : PT Megah Semesta Abadi.Expiry Date : 8 September 2019.(iv) HGB Title No. 65/CitarumLand Area : 1,355 square meters.Registered Proprietor : PT Megah Semesta Abadi.Expiry Date : 8 September 2019.(v) HGB Title No. 69/CitarumLand Area : 527 square meters.Registered Proprietor : PT Megah Semesta Abadi.Expiry Date : 8 September 2019.(vi) HGB Title No. 89/MerdekaLand Area : 3,665 square meters.Registered Proprietor : PT Megah Semesta Abadi.Expiry Date : 30 January 2021.(vii) HGB Title No. 90/MerdekaLand Area : 2,870 square meters.Registered Proprietor : PT Megah Semesta Abadi.Expiry Date : 30 January 2021.BOT Agreement : - Perjanjian Kerjasama Pemugaran, Pembangunan dan PengelolaanHotel Pakunegara—Bandung (Cooperation Agreement on theRenovation, Development and Management of HotelPakunegara, Bandung) No. 18 dated 30 August 1986.- Novasi Perjanjian Kerjasama Pemugaran, Pembangunan danPengelolaan Hotel Pakunegara—Bandung) (Deed of Novation forthe Cooperation Agreement on the Renovation, Development andManagement of Hotel Pakunegara, Bandung) No. 125 dated29 December 2003, which novated the BOT right holder fromPT. Bhuwanatala Indah Permai to PT Megah Semesta Abadi.- Amended several times, amongst others with:• Pernyataan Kembali dan Perubahan Perjanjian KerjasamaPemugaran, Pembangunan dan Pengelolaan HotelPakunegara Bandung (Kerjasama, Perluasan dan/atauRenovasi Mall) (Restatement and Amendment Deed to theCooperation Agreement on the Renovation, Development andManagement of Hotel Pakunegara, Bandung (Cooperation,Expansion and/or Renovation of the Mall) No. 50, dated 19 July2005; and• Akta Kesepakatan Bersama (Cooperation Agreement) No. 34,dated 22 December 2005E-14Continue to page 14.
Appendix EReport No.017/WPA-Report/2007Page 14.BOT Right Holder : PT. Megah Semesta Abadi.BOT Term : From 19 August 1990 (for BIP 1) and 1 May 1994 (for BIP 2) up to31 December 2030.Or a remaining BOT term of 23.52 years from the date of valuation.Land Zoning : Commercial use.Type of Development : Shopping center.No. of Building Block : 1 block.Building Level : 4 floors with 3 basement levels.Initial Opening Year : 1990 (BIP 1) and 1994 (BIP 2).Gross Floor Area : 55,196 square meters.Lettable Floor Area : 26.472 square meters.Occupancy Level : 83.2%, based on the condition that currently about 2,701 squaremeters of retail and temporary leasing spaces are currently still vacantand will only be tenanted in stages starting from the middle of 2007 upto 2009.Tenancy Details : As at 30 June 2007, anchor and major tenants occupied about 60.6%of the total occupied retail space. Matahari Group (Dept. Store andTimezone) is the largest tenant which constituted about 28.9% of thetotal occupied retail spaces, Hypermart is the second largest tenantby 19.7%, 21 Cineplex is the third largest tenant by 7.9%, and GunungAgung Book Store is the fourth largest tenant by 4.1%.Matahari Group Dept. Store, Timezone and Hypermart have a9.5-year lease term expiring in 31 May 2015, 21 Cineplex has a10-year lease term expiring in 31 December 2015, and GunungAgung Book Store has a 5-year lease term expiring in 23 May2011. About 81.2% of the specialty shops including food outletshave a 5-year lease term, about 14.4% have a 10-year lease term,and the remaining 4.4% have variable lease term of 1 to 4 years.The overall average base rental rate is about Rp. 141,230/squaremeter/month. The average base rental rate for the anchor tenants,Ground Floor, 1st Floor, 2nd Floor, 3rd Floor, and 3rd Floor (food court)respectively are about Rp. 45,000, Rp. 290,288, Rp. 262,956,Rp. 260,261, Rp. 213,056, Rp. 500,398/square meter/month.Continue to page 15.E-15
Appendix EReport No.017/WPA-Report/2007Page 15.5. Istana PlazaBrief DescriptionIstana Plaza is a 4-storey with 2 basement levels shopping center with a total lettable retail floor areaof about 27,247 square meters. It offers a wide range of shopping, dining, and leisure activities. Thebuilding accommodates a supermarket, a department store, retail units, restaurants, cafes, foodoutlets, food court, a book store, a hardware store, and an ice skating facility. Major tenants includeHero Supermarket, Rimo Department Store, Game Master Amusement Center, Gramedia BookStore, Ace Hardware, Agis Electronic, a “stand-alone” McDonalds outlet, and an ice skating ring.ParticularsAddress : Jalan Pasir Kaliki No. 121-123Sub-District of Pamayonan, District of Cicendo,Regency of Bandung,West Java—<strong>Indonesia</strong>.Land Area : 13,082 square meters.Land Owner : Gereja Kristen Pasundan.Land Title : - Hak Guna Bangunan (Right to Build) No. 43/PamayonanLand Area : 12,350 square meters.Registered Proprietor : Gereja Kristen PasundanExpiry Date : 24 September 2032.- Hak Guna Bangunan (Right to Build) No. 177/PajajaranLand Area : 40 square meters.Registered Proprietor : Gereja Kristen PasundanExpiry Date : 24 September 2032.- Hak Guna Bangunan (Right to Build) No. 58/PamayonanLand Area : 86 square meters.Registered Proprietor : Gereja Kristen PasundanExpiry Date : 24 September 2032.- Hak Guna Bangunan (Right to Build) No. 59/PamayonanLand Area : 361 square meters.Registered Proprietor : Gereja Kristen PasundanExpiry Date : 24 September 2032.- Hak Guna Bangunan (Right to Build) No. 60/PamayonanLand Area : 245 square meters.Registered Proprietor : Gereja Kristen PasundanExpiry Date : 24 September 2032.E-16Continue to page 16.
Appendix EReport No.017/WPA-Report/2007Page 16.BOT Agreement : - Perjanjian Kerjasama (Cooperation Agreement), dated 9 May1997.- Amendment Agreement dated 28 June 2001.- Amendment Agreement dated 10 June 2004.BOT Right Holder : PT. Suryana Istana Pasundan.BOT Term : 32 (thirty two) years from 17 January 2002Or a remaining BOT term of 26.57 years from the date of valuation.Land Zoning : Commercial use.Type of Development : Shopping center.No. of Building Block : 1 block.Building Level : 4 floors with 2 basement levels.Initial Opening Year : 2003.Gross Floor Area : 37,434 square meters.Lettable Floor Area : 27,247 square meters.Occupancy Level : 98.9%.Tenancy Details : As at 30 June 2007, anchor and major tenants occupied about51.1% of the total occupied retail space. Rimo Dept. Store is thelargest tenant which constituted about 17.2% of the total occupiedretail spaces, McDonald’s is the second largest tenant by 8.7%,Ace Hardware is the third largest tenant by 5.5%, HeroSupermarket is the fourth largest tenant by 5.0%, Gramedia BookStore is the fifth largest tenant by 4.6%, and the remaining 10.1%is shared between Agis Electronic, Ice Skating Ring, and GameMaster.Rimo Dept. Store, Ace Hardware, Gramedia Book Store have a10-year lease term expiring in 28 February 2012, Agis Electronichave a 5-year lease term expiring in 2007 (but have confirmed toextend the lease until 2012), Game Master and Ice Skating Ringhave a 5-year lease term expiring in 2011 and 2012 respectively,whilst Hero Supermarket and McDonald’s have a 20-year leaseterm expiring in 2020. About 75.1% of the specialty shopsincluding food outlets have a 5-year lease term, about 18.6% havea 3-year lease term, and the remaining 6.3% have variable leaseterm of 1, 2, 4 or 10 years.The overall average base rental rate is about Rp. 88,458/squaremeter/month. The average base rental rate for the anchor tenants,Lower Ground Floor, Ground Floor, 1st Floor, 2nd Floor, 3rd Floor,and 3rd Floor (food court) respectively are about Rp. 43,678,Rp. 161,443, Rp. 232,124, Rp. 113,071, Rp. 121,089, Rp. 127,576,Rp. 235,747/square meter/month.Continue to page 17.E-17
Appendix EReport No.017/WPA-Report/2007Page 17.6. Ekalokasari PlazaBrief DescriptionEkalokasari Plaza is a 6-storey with 3 basement levels shopping center with a total lettable retail floorarea of about 20,587 square meters. It offers a wide range of shopping, dining, and leisure activities.The building accommodates a supermarket, a department store, retail units, restaurants, food outlets,and 2 book stores. Major tenants include Market Place Supermarket, Matahari Department Store,Gramedia Book Store, and Karisma Book Store.The building reserves a total retail space of about 5,013 square meters for a proposed Cineplex, aproposed amusement center, food court and restaurant areas, including temporary leasing areas onLevel 4, and a proposed fitness center on the mezzanine floor of Level 4; which will start tenanting bymiddle to end of 2007.ParticularsAddress : Jalan Siliwangi No. 123Sub-District of Sukasari, District of Kota Bogor Timur,Administrative City of Bogor,West Java—<strong>Indonesia</strong>.Land Area : 10,500 square meters.Land Owner : PT. Bogor Life Science and Technology CQ Institut Pertanian Bogor(Bogor Institute of Agriculture).Land Title : Hak Pakai (Right to Use) No. 1/Sukasari dated 22 December 1995.BOT Agreement : - Perjanjian Kerjasama (Cooperation Agreement) No. 133 dated27 June 2001.- Addendum dated 9 February 2004.BOT Right Holder : PT. Indah Pesona Bogor.BOT Term : 25 (twenty five) years from 27 June 2001 up to 27 June 2026.Or a remaining BOT term of 19.01 years from the date of valuation.Land Zoning : Commercial use.Type of Development : Shopping center.No. of Building Block : 1 block.Building Level : 6 floors with 3 basement levels.Initial Opening Year : 2003.E-18Continue to page 18.
Appendix EReport No.017/WPA-Report/2007Page 18.Gross Floor Area : 39,895 square meters.Lettable Floor Area : 20,587 square meters.Occupancy Level : 87.3%, based on the condition that currently about 5,013-squaremeter retail and temporary leasing spaces on Level 4 and themezzanine floor of Level 4 are still vacant and will only be tenantedby 3 major tenants i.e. Cinema 21, Fit By Beat, and Timezone by Mayand September 2007.Tenancy Details : As at 30 June 2007, anchor and major tenants occupied about 67.1%of the total occupied retail space. Matahari Group (Dept. Store andMarket Place) is the largest tenant which constituted about 55.1% ofthe total occupied retail spaces, Gramedia Book Store is the secondlargest tenant by 6.7%, and Karisma Book Store is the third largesttenant by 5.3%.Matahari Group (Dept. Store and Market Place) has a 10-year leaseterm expiring in 23 March 2015, Gramedia has a 10-year lease termexpiring in 22 May 2014, whilst Karisma Book Store has a 20-yearlease term expiring on 29 February 2024. About 59.3% of thespecialty shops including food outlets have a 5-year lease term,about 26.6% have a 20-year lease term, 8.1% have a 3-year leaseterm, and the remaining 6% have a 10-year lease term.The overall average base rental rate is about Rp. 73,669/squaremeter/month. The average base rental rate for the anchor tenants,Lower Ground Floor, Ground Floor, 1st Floor, 2nd Floor, and 3rd Floorrespectively are about Rp. 34,164, Rp. 205,877, Rp. 158,995,Rp. 191,151, Rp. 128,176, Rp. 103,778/square meter/month.Continue to page 19.E-19
Appendix EReport No.017/WPA-Report/2007Page 19.7. Mal <strong>Lippo</strong> CikarangBrief DescriptionMal <strong>Lippo</strong> Cikarang is a 2-storey shopping center with an existing total lettable retail floor area of about17,974 square meters.Mal <strong>Lippo</strong> Cikarang offers a wide range of shopping, dining, and leisure activities. The buildingaccommodates a supermarket, a department store, retail units, restaurants, food outlets, food court,a book store, and a Cineplex. Major tenants include Hypermart, Hero Supermarket, MatahariDepartment Store, Utama Book Store, Timezone Amusement Center and 21 Cineplex.ParticularsAddress : Jalan M.H. Thamrin, <strong>Lippo</strong> CikarangSub-District of Cibatu, District of Lemah Abang,Regency of Bekasi,West Java—<strong>Indonesia</strong>.Land Area : 49,250 square meters.Land Owner : PT. Graha Nusa Raya: Hak Guna Bangunan/HGB (Right to Build) No. 627/Cibatu datedLand Title9 December 1999.- Land Area : 49,250 square meters.- Registered Proprietor : PT. Graha Nusa Raya- Expiry Date : 5 May 2023 (extendable uponexpiry).Land Zoning : Commercial use.Type of Development : Shopping center.No. of Building Block : 1 block.Building Level : 2 floors.Initial Opening Year : 1995.Gross Floor Area : 25,767 square meters.E-20Continue to page 20.
Appendix EReport No.017/WPA-Report/2007Page 20.Lettable Floor Area : - Existing retail spaces : 17,884 square meters.- Under constructionproposed retail Extensionbuilding scheduled forcompletion and operationby July 2007): 10,694 square meters.Future Total : 28,668 square meters.Occupancy Level : 96.3%, based on current total lettable floor area of 17,884 squaremeters.Tenancy Details : As at 30 June 2007, existing anchor and major tenants occupiedabout 64.8% of the total occupied retail space. 79.8% of the additionalNLA created from asset enhancement has been pre-committed toHypermart. Matahari Group (Dept. Store and Timezone) is currentlythe largest tenant by about 38.6% of the total occupied retail spaces,Hero Supermarket is the second largest tenant by 13.0%, 21 Cineplexis the third largest tenant by 9.7%, and Utama Book Store is the fourtlargest tenant by 3.6%.Hypermart has a 20-year lease term expiring in 30 June 2027,Matahari Group Dept. Store has a 20-year lease term expiring on9 December 2026, Timezone has a 6-year lease term expiring in30 September 2011, Hero Supermarket and Utama Book Store havea 2-year lease term expiring in 2007, and 21 Cineplex has a 10-yearlease term expiring in 2015. About 27.2% of the specialty shopsincluding food outlets have a 2-year lease term, 23.8% have a1-year or less lease term, about 27.1% have a 3-year lease term,about 15.2% have a 5-year lease term, and the remaining 6.7% havevariable lease term of 4 or 10 years.The overall average base rental rate is about Rp. 58,038/squaremeter/month. The average base rental rate for the anchor tenants,Ground Floor, and 1st Floor respectively are about Rp. 45,859,Rp. 128,089, Rp. 92,202/square meter/month.Continue to page 21.E-21
Appendix EReport No.017/WPA-Report/2007Page 21.<strong>Retail</strong> Spaces tenanted and operated by Matahari Group at:1. Depok Town SquareBrief DescriptionStrata-titled retail space with a total floor area of about 13,045 square meters within Depok TownSquare—a strata-titled shopping center—which are tenanted and operated by Hypermart, MatahariDepartment Store, and Timezone Amusement Center.ParticularsAddress : Depok Town SquareJalan Margonda Raya No. 1,Sub-District of Pondok Cina Beji, District of Depok,Regency of Depok,West Java—<strong>Indonesia</strong>.Object of Valuation : Selected strata-titled retail spaces on the Lower Ground Floor, FirstFloor and Second Floor.Owner/Lessor : PT. Megah Detos Utama.Strata Title : - Perjanjian Pengikatan Jual Beli Satuan Kios/Kios(Binding Agreement for Sales and Purchase of Kiosk Unit/Kiosk)No. 031/AGR/DM/MPP/XII/02 dated 19 December 2002.- Perjanjian Pengikatan Jual Beli Satuan Kios/Kios(Binding Agreement for Sales and Purchase of Kiosk Unit/Kiosk)No. 012/JPN-PPJB/II/04 dated 11 February 2004.Lettable Floor Area : 13,045 square meters.Lessee : PT. Matahari Putra Prima Tbk.Initial Occupation Year : 2005.Occupancy Level : 100%.Lease Term : 10 (ten) years with an option to renew for another ten (10) years afterthe expiry of the initial lease Term.Rental Rate : - The lease rental rate for the year 2007 shall be a fixed amount ofRp. 70,000 per square meter per month.- The lease rental rate for each of the subsequent four calendar yearsafter year 2007 shall increase by 8% from the preceding lease rentalrate per square meter.E-22Continue to page 22.
Appendix EReport No.017/WPA-Report/2007Page 22.- The lease rental lump-sum for each of the year, starting from thebeginning of year 2012 to the end of year 2016, shall be computedas follows:(A) The lease rental rate per square meter paid in the CalendarYear 2009 multiplied by the lettable floor area of the space andby the number of months in that calendar year, added with(B) 4.25% of the Lessee’s excess revenue for the period betweenthe immediately preceding calendar year and of the Base Year,which is fixed as Calendar Year 2010.2. Mal WTC MatahariBrief DescriptionStrata-titled retail space with a total floor area of about 11,184 square meters within Mal WTCMatahari—a strata-titled shopping center—which are tenanted and operated by Hypermart, MatahariDepartment Store, and Timezone Amusement Center.ParticularsAddress : Mal WTC MatahariJalan Raya Serpong,Sub-District of Pondok Jagung, District of Serpong,Regency of Tangerang,Banten—<strong>Indonesia</strong>.Object of Valuation : Selected strata-titled retail spaces on the Ground Floor, UpperGround Floor, Mezzanine and Second Floor.Owner/Lessor : PT. Dinamika Serpong.Strata Title : - Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 00153/Pondok Jagung dated 17 December 2004.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 00197/Pondok Jagung dated 17 December 2004.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 00372/Pondok Jagung dated 17 December 2004.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 00428/Pondok Jagung dated 17 December 2004.Lettable Floor Area : 11,184 square meters.Continue to page 23.E-23
Appendix EReport No.017/WPA-Report/2007Page 23.Lessee : PT. Matahari Putra Prima Tbk.Initial Occupation Year : 2004.Occupancy Level : 100%.Lease Term : 10 (ten) years with an option to renew for another ten (10) years afterthe expiry of the initial lease Term.Rental Rate : - The lease rental rate for the year 2007 shall be a fixed amount ofRp. 80,000 per square meter per month.- The lease rental rate for each of the subsequent four calendar yearsafter year 2007 shall increase by 8% from the preceding lease rentalrate per square meter.- The lease rental lump-sum for each of the year, starting from thebeginning of year 2012 to the end of year 2016, shall be computedas follows:(A) The lease rental rate per square meter paid in the CalendarYear 2009 multiplied by the lettable floor area of the space andby the number of months in that calendar year, added with(B) 4.25% of the Lessee’s excess revenue for the period betweenthe immediately preceding calendar year and of the Base Year,which is fixed as Calendar Year 2010.3. Metropolis Town SquareBrief DescriptionStrata-titled retail space with a total floor area of about 15,248 square meters within Metropolis TownSquare—a strata-titled shopping center— which are tenanted and operated by Hypermart, MatahariDepartment Store, and Timezone Amusement Center.ParticularsAddress : Metropolis Town SquareJalan Hartono Raya,Sub-District of Kelapa Indah, District of Cikokol,Regency of Tangerang,Banten—<strong>Indonesia</strong>.Object of Valuation : Selected strata-titled retail spaces on the Ground Floor, First Floor,and Second Floor.Owner/Lessor : PT. Gema Metropolis Modern.E-24Continue to page 24.
Appendix EReport No.017/WPA-Report/2007Page 24.Strata Title : - Perjanjian Pengikatan Jual Beli Satuan Kios/Kios(Binding Agreement for Sales and Purchase of Kiosk Unit/Kiosk)No. 054/AGR/DM/MPP/VI/03 dated 23 June 2003.- Perjanjian Pengikatan Jual Beli Satuan Kios/Kios(Binding Agreement for Sales and Purchase of Kiosk Unit/Kiosk)No. 084/AGR/DM/MPP/VIII/03 dated 25 August 2003.- Perjanjian Pengikatan Jual Beli Satuan Kios/Kios(Binding Agreement for Sales and Purchase of Kiosk Unit/Kiosk)No. 093/AGR/DM/MPP/IX/03 dated 10 September 2003.Lettable Floor Area : 15,248 square meters.Lessee : PT. Matahari Putra Prima Tbk.Initial Occupation Year : 2004.Occupancy Level : 100%.Lease Term : 10 (ten) years with an option to renew for another ten (10) years afterthe expiry of the initial lease Term.Rental Rate : - The lease rental rate for the year 2007 shall be a fixed amount ofRp. 80,000 per square meter per month.- The lease rental rate for each of the subsequent four calendar yearsafter year 2007 shall increase by 8% from the preceding lease rentalrate per square meter.- The lease rental lump-sum for each of the year, starting from thebeginning of year 2012 to the end of year 2016, shall be computedas follows:(A) The lease rental rate per square meter paid in the CalendarYear 2009 multiplied by the lettable floor area of the space andby the number of months in that calendar year, added with(B) 4.25% of the Lessee’s excess revenue for the period betweenthe immediately preceding calendar year and of the Base Year,which is fixed as Calendar Year 2010.Continue to page 25.E-25
Appendix EReport No.017/WPA-Report/2007Page 25.4. Java SupermallBrief DescriptionStrata-titled retail space with a total floor area of about 11,082 square meters within Java Supermall—a strata-titled shopping center—which are tenanted and operated by Matahari Department Store, andMatahari Supermarket.ParticularsAddress : Java SupermallJalan MT Haryono No. 992-994,Sub-District of Jomblang, District of Semarang Selatan,Regency of Semarang,Central Java—<strong>Indonesia</strong>.Object of Valuation : Selected strata-titled retail spaces on the Semi Basement Floor, FirstFloor, and Second Floor.Owner/Lessor : PT. Java Mega Jaya.Strata Title : - Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 1/Lamper Kidul dated 23 November 1998.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 2/Lamper Kidul dated 23 November 1998.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 22/Lamper Kidul dated 23 November 1998.- Sertifikat Hak Milik Atas Satuan Rumah Susun(Freehold Unit Title in a Multi-Storey Building)No. 45/Lamper Kidul dated 18 April 2000.Lettable Floor Area : 11,082 square meters.Lessee : PT. Matahari Putra Prima Tbk.Initial Occupation Year : 2000.Occupancy Level : 100%.Rental Rate : - The lease rental rate for the year 2007 shall be a fixed amount ofRp. 80,000 per square meter per month.- The lease rental rate for each of the subsequent four calendar yearsafter year 2007 shall increase by 8% from the preceding lease rentalrate per square meter.E-26Continue to page 26.
Appendix EReport No.017/WPA-Report/2007Page 26.- The lease rental lump-sum for each of the year, starting from thebeginning of year 2012 to the end of year 2016, shall be computedas follows:(A) The lease rental rate per square meter paid in the Calendar Year2009 multiplied by the lettable floor area of the space and by thenumber of months in that calendar year, added with(B) 4.25% of the Lessee’s excess revenue for the period betweenthe immediately preceding calendar year and of the Base Year,which is fixed as Calendar Year 2010.5. Plaza MadiunBrief DescriptionPlaza Madiun is a 3-storey and one basement level retail building with a total lettable floor area ofabout 19,029 square meters, which is currently which are tenanted and operated by MatahariDepartment Store, Matahari Supermarket and Timezone Amusement Center.ParticularsAddress : Plaza MadiunJalan Pahlawan No. 38-40,Sub-District of Pangongangan, District of Manguharjo,Regency of Madiun,Central Java—<strong>Indonesia</strong>.Object of Valuation : The entire building (Basement level, level one, level two, and levelthree)Owner/Lessor : PT. Madiun Ritelindo.Land Area : 5,583 square meters.Land Title : - Hak Guna Bangunan/HGB (Right to Build) No. 186/Pangongangan.Land Area : 5,501 square meters.Expiry Date : 10 February 2012 (extendable upon expiry).- Hak Guna Bangunan/HGB (Right to Build) No. 188/Pangongangan.Land Area : 82 square meters.Expiry Date : 10 February 2012 (extendable upon expiry).Lettable Floor Area : 19,029 square meters.Lessee : PT. Matahari Putra Prima Tbk.Initial Occupation Year : 2001.Occupancy Level : 100%.Continue to page 27.E-27
Appendix EReport No.017/WPA-Report/2007Page 27.Lease Term : 10 (ten) years with an option to renew for another ten (10) years afterthe expiry of the initial lease Term.Rental Rate : - The lease rental rate for the year 2007 shall be a fixed amount ofRp. 60,000 per square meter per month.- The lease rental rate for each of the subsequent four calendar yearsafter year 2007 shall increase by 8% from the preceding lease rentalrate per square meter.- The lease rental lump-sum for each of the year, starting from thebeginning of year 2012 to the end of year 2016, shall be computedas follows:(A) The lease rental rate per square meter paid in the CalendarYear 2009 multiplied by the lettable floor area of the space andby the number of months in that calendar year, added with(B) 4.25% of the Lessee’s excess revenue for the period betweenthe immediately preceding calendar year and of the Base Year,which is fixed as Calendar Year 2010.6. Malang Town SquareBrief DescriptionStrata-titled retail space with a total floor area of about 11,065 square meters within Malang TownSquare—a strata-titled shopping center—which are tenanted and operated by Hypermart, MatahariDepartment Store, and Timezone Amusement Center.ParticularsAddress : Malang Town SquareJalan Veteran No. 2,Sub-District of Penanggungan, District of Klojen,Regency of Malang,East Java—<strong>Indonesia</strong>.Object of Valuation : Selected strata-titled retail spaces on the Ground Floor, UpperGround Floor, First Floor and Second Floor.Owner/Lessor : PT. Matos Surya Perkasa.Strata Title : Perjanjian Pengikatan Jual Beli Satuan Kios/Kios- (Binding Agreement for Sales and Purchase of Kiosk Unit/Kiosk)- No. 031/PN-PPJB/X/03 dated 7 October 2003.Lettable Floor Area : 11,065 square meters.Lessee : PT. Matahari Putra Prima Tbk.E-28Continue to page 28.
Appendix EReport No.017/WPA-Report/2007Page 28.Initial Occupation Year : 2005.Occupancy Level : 100%.Lease Term : 10 (ten) years with an option to renew for another ten (10) years afterthe expiry of the initial lease Term.Rental Rate : - The lease rental rate for the year 2007 shall be a fixed amount ofRp. 80,000 per square meter per month.- The lease rental rate for each of the subsequent four calendar yearsafter year 2007 shall increase by 8% from the preceding lease rentalrate per square meter.- The lease rental lump-sum for each of the year, starting from thebeginning of year 2012 to the end of year 2016, shall be computedas follows:(A) The lease rental rate per square meter paid in the CalendarYear 2009 multiplied by the lettable floor area of the space andby the number of months in that calendar year, added with(B) 4.25% of the Lessee’s excess revenue for the period betweenthe immediately preceding calendar year and of the Base Year,which is fixed as Calendar Year 2010.7. Grand PalladiumBrief DescriptionStrata-titled retail space with a total floor area of about 13,417 square meters within GrandPalladium—a strata-titled shopping center—which are tenanted and operated by Hypermart,Matahari Department Store, and Timezone Amusement Center.ParticularsAddress : Grand PalladiumJalan Kapten Maulana Lubis,Sub-District of Petisah Tengah, District of Medan Petisah,Regency of Medan,North Sumatera—<strong>Indonesia</strong>.Object of Valuation : Selected strata-titled retail spaces on the Basement Floor, LowerGround Floor, Upper Ground Floor, First Floor and Third Floor.Owner/Lessor : PT. Palladium Megah Lestari.Strata Title : - Perjanjian Pengikatan Jual Beli Satuan Kios/Kios(Binding Agreement for Sales and Purchase of Kiosk Unit/Kiosk)No. 011/UPI-PPJB/IX/04 dated 14 September 2004.Continue to page 29.E-29
Appendix EReport No.017/WPA-Report/2007Page 29.Lettable Floor Area : 13,417 square meters.Lessee : PT. Matahari Putra Prima Tbk.Initial Occupation Year : 2005.Occupancy Level : 100%.Lease Term : 10 (ten) years with an option to renew for another ten (10) years afterthe expiry of the initial lease Term.Rental Rate : - The lease rental rate for the year 2007 shall be a fixed amount ofRp. 70,000 per square meter per month.- The lease rental rate for each of the subsequent four calendar yearsafter year 2007 shall increase by 8% from the preceding lease rentalrate per square meter.- The lease rental lump-sum for each of the year, starting from thebeginning of year 2012 to the end of year 2016, shall be computedas follows:(A) The lease rental rate per square meter paid in the CalendarYear 2009 multiplied by the lettable floor area of the space andby the number of months in that calendar year, added with(B) 4.25% of the Lessee’s excess revenue for the period betweenthe immediately preceding calendar year and of the Base Year,which is fixed as Calendar Year 2010.E-30Continue to page 30.
Appendix EReport No.017/WPA-Report/2007Page 30.The following table summarizes the key details of each shopping center of the Properties:Properties Land title Title tenureInitialopeningyearExistingretailarea (4) (m 2 )Occupancylevel as at30 Apr. 20071. The Plaza Semanggi . . . . . BOT (1) 50 years,expiring in Jul. 20542. Gajah Mada Plaza. . . . . . . Freehold 30 years,strata title (2) extendable upon expiry3. Cibubur Junction . . . . . . . . BOT (1) 20 years,expiring in Jul. 20254. Bandung Indah Plaza . . . . BOT (1) 40 years,expiring in Dec. 20305. Istana Plaza . . . . . . . . . . . BOT (1) 30 years,expiring in Nov. 20336. Ekalokasari Plaza . . . . . . . BOT (1) 25 years,expiring in Jun. 20267. Mal <strong>Lippo</strong> Cikarang . . . . . . Hak Guna 30 years,Bangunan (3) Extendable upon expiry2004 58,685 (5) 96.4%1982 34,278 89.1%2005 34,139 86.4%1990 and 1994 26,472 83.2%2003 27,247 98.9%2003 20,587 87.3%1995 17,974 96.3%Note:(1) BOT stands for Build, Operate, and Transfer. This title is granted by the land owner to the shoppingcenter developer for the right to build the shopping center, to collect income from retail space letting tothird parties, and to hand over the building upon expiry of the tenure. Specific terms and conditions areas governed by a BOT agreement and its addendums.(2) Sertifikat Hak Milik Atas Satuan Rumah Susun (Freehold Unit Title in a Multi-Storey Building).(3) Hak Guna Bangunan title gives the right to construct and own buildings on a plot of land. The right istransferable and may be encumbered. Technically, HGB is a leasehold title with the State retains“ownership”. But for practical purposes, there is only little difference from a freehold title. HGB title isgranted for an initial period of up to 30 years and is extendable for a subsequent period of up to20 years. Upon the expiration of such extensions, new HGB title may be granted on the same land withthe same tenure terms. The commencement date of each title varied.(4) Total existing lettable retail floor areas excludes any proposed buildings that are currently underconstruction and or any reserves of retail spaces yet to be occupied.(5) Current ongoing asset enhancement works to include a new café called the ‘Plangi on the Sky’ willincrease NLA by an estimated 3,000 sq-m, bringing total NLA to approximately 61,685 sq-m by the endof 2007.Continue to page 31.E-31
Appendix EReport No.017/WPA-Report/2007Page 31.The following table summarizes the key details for each retail spaces leased by Matahari Group:PropertiesTitleLettablefloorarea(m 2 )InitialoccupationyearOccupancylevel1. Depok Town Square . . . . . Binding Sales and Purchase Agreement (1) 13,045 2005 100%2. Mall WTC Matahari . . . . . . Freehold strata title (2) 11,184 2004 100%3. Metropolis Town Square . . . Binding Sales and Purchase Agreement (1) 15,248 2004 100%4. Java Supermall . . . . . . . . . Freehold strata title (2) 11,082 2000 100%5. Plaza Madiun . . . . . . . . . . Hak Guna Bangunan (3) 19,029 2001 100%6. Malang Town Square . . . . . Binding Sales and Purchase Agreement (1) 11,065 2005 100%7. Grand Palladium . . . . . . . . Binding Sales and Purchase Agreement (1) 13,417 2005 100%Note:(1) Binding Sales and Purchase Agreement acts as valid ownership document prior to the issuance of afreehold strata unit title (Sertifikat Hak Milik Atas Satuan Rumah Susun).(2) Sertifikat Hak Milik Atas Satuan Rumah Susun (Freehold Unit Title in a Multi-Storey Building).(3) Hak Guna Bangunan title gives the right to construct and own buildings on a plot of land. The right istransferable and may be encumbered. Technically, HGB is a leasehold title with the State retains“ownership”. But for practical purposes, there is only little difference from a freehold title. HGB title isgranted for an initial period of up to 30 years and is extendable for a subsequent period of up to20 years. Upon the expiration of such extensions, new HGB title may be granted on the same land withthe same tenure terms.E-32Continue to page 32.
Appendix EReport No.017/WPA-Report/2007Page 32.Valuation RationaleIn arriving at our opinion of value, we have adopted the Income Valuation Method utilizing DiscountedCash Flow Analysis as the primary approach to arrive at our opinion of value and also with InvestmentMethod by making consideration of relevant general and economic factors and in particular haveinvestigated recent sales and leasing transactions of comparable properties that have occurred in theretail market.No allowance has been made in the Valuation for any charges, mortgages or amounts owing on theProperties or for any expenses or taxation which may be incurred in effecting a sale. Unless otherwisestated, it is assumed that the Properties are free from encumbrances, restrictions and outgoings of anonerous nature which could affect value.Discounted Cash Flow AnalysisThe Discounted Cash Flow (DCF) Method is used considering that the Properties are income producingproperties. This form of analysis reflects investors’ decision-making process and values the Properties insuch a manner as to attain the desired level of investment return commensurate with the risk of that assetclass. This method is also more precise as it takes into account the timing receipts and payments.In undertaking this analysis, we have used a wide range of assumptions including rental growth, areversionary market rental rate for each tenant type and its location, other income revenue growth,vacancy allowances, and inflation rate. Our valuation analysis also assumes that an operating companywill manage the shopping centers and absorb all operating expenses for the first three years of the DCFanalysis horizon; subject to the execution of the proposed operating company agreements. Whereapplicable, we have also taken into consideration royalty fees and/or other payments associated withthe BOTagreements and the addendums to the land owners, and the remaining BOT tenure for Propertiesunder BOT arrangements.We have carried out a DCF analysis over a five-year investment horizon from 30 June 2007 (the materialdate) to 30 June 2012 for the seven shopping centers, and over a ten-year horizon from 30 June 2007 (thematerial date) to 30 June 2017 for the seven retail spaces occupied by Matahari Group based on terms andconditions as stipulated in the proposed lease agreements for the Properties.Hypothetically, for the shopping centers held with HGB titles and/or with freehold strata title or itsequivalent, we have assumed that the Properties are sold at the commencement of the sixth year ofthe cash flow. Our selected terminal capitalization rates, used to assess the terminal capital value of theProperties, take into consideration perceived market conditions in the future, estimated cash flow profile,and the overall physical condition of the Properties in 5 years’ time.Continue to page 33.E-33
Appendix EReport No.017/WPA-Report/2007Page 33.As for the shopping centers under BOT arrangements, since we are considering the leasehold interest upto the expiry of the BOT tenure, the sixth year’s net income is not capitalized at a single capitalization rate toperpetuity in view that the Properties may be surrendered to the land owner at the end of the BOT tenure,hence, the Properties may not have a terminal disposal capital value per se as would have been the casefor the shopping centers held under HGB titles. In order to arrive at the fifth year’s terminal capitalizedvalue for the BOT properties for the remaining years of the BOT period, we have capitalized the sixth year’snet income using dual capitalization rates i.e. a generally accepted terminal capitalization rate for similarproperties held under HGB title, which takes into account a sinking fund provision in order to recoup theinitial capital outlay at the end of the BOT period.The conversion of projected annual income streams into an estimate of the total present value is byapplication of a 14% annual discount rate based on our assessment of the current market requirementsand the local property market conditions for an investment return over a five-year period from suchproperties located in <strong>Indonesia</strong>.We have also taken into account annual capital expenditure which is to be deducted from the projectedannual rental income streams. Provision for capital expenditure is essential in order to maintain theProperties at a reasonable condition and to keep up with its current competition level in the market.Investment MethodIn the Investment Method, the estimated gross revenue has been adjusted to reflect an ongoing vacancyand subject to an operating company will manage the shopping centers and absorb all operating expensesto arrive at a net income. Gross revenue comprises rental from existing tenancies, potential future incomefrom existing vacant units and turnover and other income of the Properties. Other income is in respect ofsundry (e.g. license fees, rentals of atrium/kiosks, etc.) and car park income.The net income of the shopping centers held with HGB titles and/or with freehold strata title or itsequivalent is capitalized at a capitalization rate which is appropriate for the type of use, tenure andreflective of the quality of the investment, based on analysis of yields reflected in the sales of comparableproperty types. Whilst, the net income of the shopping centers held under BOTarrangements is capitalizedusing dual capitalization rates i.e. a generally accepted terminal capitalization rate for similar propertiesheld under HGB title, which takes into account a sinking fund provision in order to recoup the initial capitaloutlay at the end of the BOT period.Capital adjustments such as letting up allowance, capital expenditure provisions and capitalized rentalreversions, royalty fees and/or other payments associated with the BOT agreements and the addendumsto the land owners where applicable are then made to derive the capital value of the Properties.E-34Continue to page 34.
Appendix EReport No.017/WPA-Report/2007Page 34.Conclusion and Summary of ValuesWe are of the opinion that the total aggregate Market Value of the Properties as at 30 June 2007; subject tothe existing and proposed leases, occupancy and operational arrangements of the Properties, the termsand conditions of the relevant BOT agreements and their addendums, the terms and conditions of theproposed lease arrangements of the retail outlet stores with PT. Matahari Putra Prima Tbk as stipulated inthe proposed Lease Agreements; the transfer of ownership of the Properties, the execution of theproposed Lease Agreements, the execution of the proposed Operating Company Agreement, thefactual data, our assumptions, comments, qualifications, and limiting conditions as detailed in our fullReports, is:Rp. 5,927,600,000,000.(Rupiahs Five Trillion Nine Hundred Twenty Seven Billion and Six Hundred Million Only)Reflecting Singapore Dollars 1,004,677,966 at an exchange rate of Rp. 5,900 for every Singapore Dollar.The following table summarizes the salient valuation assumptions and Market Value for each of theProperties:PropertiesMarket valueas at30 June 2007DiscountrateTerminal capitalizationInitialrateyield Dual rate Single rateThe Plaza Semanggi . . . . . . . . . . . Rp. 1,267,600,000,000.* 14% 9.1% 9.5%/6.5% —Gajah Mada Plaza. . . . . . . . . . . . . Rp. 612,300,000,000. 14% 6.7% — 11%Cibubur Junction . . . . . . . . . . . . . . Rp. 555,700,000,000.* 14% 9.7% 9.5%/6.5% —Bandung Indah Plaza . . . . . . . . . . Rp. 734,300,000,000.* 14% 7.0% 10.5%/6.5% —Istana Plaza . . . . . . . . . . . . . . . . . Rp. 741,800,000,000.* 14% 7.5% 9.5%/6.5% —Ekalokasari Plaza . . . . . . . . . . . . . Rp. 389,500,000,000.* 14% 8.3% 9.5%/6.5% —Mal <strong>Lippo</strong> Cikarang . . . . . . . . . . . . Rp. 473,100,000,000. 14% 6.6% — 10.5%13,045-sqm retail space atDepok Town Square . . . . . . . . . . Rp. 151,400,000,000. 14% 6.3% — 9.5%11,184-sqm retail space atMall WTC Matahari . . . . . . . . . . Rp. 148,500,000,000. 14% 6.3% — 9.5%15,248-sqm retail space atMetropolis Town Square . . . . . . . Rp. 197,900,000,000. 14% 6.4% — 9.5%11,082-sqm retail space atJava Supermall . . . . . . . . . . . . . Rp. 153,300,000,000. 14% 6.0% — 9.5%19,029-sqm retail space atPlaza Madiun . . . . . . . . . . . . . . Rp. 197,200,000,000. 14% 6.0% — 9.5%11,065-sqm retail space atMalang Town Square . . . . . . . . . Rp. 150,700,000,000. 14% 6.1% — 9.5%13,417-sqm retail space atGrand Palladium . . . . . . . . . . . . Rp. 154,300,000,000. 14% 6.3% — 9.5%Total Aggregate. . . . . . . . . . . . . . . Rp. 5,927,600,000,000. 7.80%Note:* Market Value for the interest of the BOTright holder over the right to operate the Properties pursuant tothe relevant BOT agreements and their addendums.Continue to page 35.E-35
Appendix EReport No.017/WPA-Report/2007Page 35.DisclaimerWe have prepared this Valuation Summary Letter for inclusion in the Prospectus and specifically disclaimliability to any person in the event of any omission from or false or misleading statement included in theProspectus, other than in respect of the information provided within the aforementioned Reports and thisValuation Summary Letter. We do not make any warranty or representation as to the accuracy of theinformation in any other part of the Prospectus other than as expressly made or given by Knight Frank/PT. Willson Properti Advisindo in this letter.Knight Frank/PT. Willson Properti Advisindo has relied upon data supplied by the Manager and/or theowning companies and/or operator of the Properties, which we assume to be true and accurate. KnightFrank/PT. Willson Properti Advisindo takes no responsibility for inaccurate client supplied data andsubsequent conclusions related to such data.The reported analyses, opinions and conclusions are limited only by the reported assumptions and limitingconditions and are our personal, unbiased professional analyses, opinions and conclusions. We have nopresent or prospective interest in the Properties and have no personal interest or bias with respect to theparty/parties involved. The valuer’s compensation is not contingent upon the reporting of a predeterminedvalue or direction in value that favours the cause of the client, the amount of the value estimate, theattainment of a stipulated result, or the occurrence of a subsequent event.We hereby certify that the valuers undertaking these valuations are authorized to practice as valuers andhave the necessary expertise and experience in valuing similar types of properties.Yours faithfully,Knight Frank/PT. Willson Properti AdvisindoWillson Kalip, B.Sc. (Est. Mgt.) (Hons), MAPPI (Cert.)President DirectorMember of <strong>Indonesia</strong>n Society of Appraiser (MAPPI) No: 94-S-00387Valuation License No.: 1.99.0041 (Ministry of Finance of the Republic of <strong>Indonesia</strong>)Valuation License No.: AD 041-2004997D (Inland Revenue Authority of Singapore)E-36
Appendix ERef. No: V/2006/PKG/3819 September 2007PT Penilai10F World Trade CentreJl Jenderal Sudirman Kav 29-31Jakarta 12920<strong>Indonesia</strong>Tel 62 21 521 1400Fax 62 21 521 1411HSBC Institutional <strong>Trust</strong> Services (Singapore) Limited(as <strong>Trust</strong>ee of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Limited, “LMIRT”)21 Collyer Quay#14-01 HSBC BuildingSingapore 049320Attention: Head of Client ServicesDear Sirs,We refer to instructions issued by <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Limited (the“Manager”) to report to you the formal valuation advice, prepared as at 30 June 2007, in respect of theMarket Value of the following properties (the “Properties”) for the inclusion into LMIRT, subject to theexisting and proposed leases and occupancy arrangements:1. Bandung Indah Plaza2. Istana Plaza3. Cibubur Junction4. Ekalokasari Plaza5. Mal <strong>Lippo</strong> Cikarang6. The Plaza Semanggi7. Gajah Mada Plaza8. Plaza Madiun9. <strong>Retail</strong> spaces at Depok Town Square10. <strong>Retail</strong> spaces at Grand Palladium11. <strong>Retail</strong> spaces at Mall WTC Matahari12. <strong>Retail</strong> spaces at Malang Town Square13. <strong>Retail</strong> spaces at Java Supermall14. <strong>Retail</strong> spaces at Metropolis Town SquareIn accordance with your instructions, Colliers International/PT Penilai has prepared fourteen formalcomprehensive valuation reports for the Properties (individually a “Report” and collectively the “Reports”).Our valuation is our opinion of the Market Value of the Properties, which is in accordance with theInternational Valuation Standards Committee definition of “the estimated amount for which an assetshould exchange on the date of Valuation between a willing buyer and a willing seller in an arm’s lengthtransaction after proper marketing wherein the parties had each acted knowledgeably, prudently andwithout compulsion.”This valuation summary report has been prepared for the purpose of inclusion in the prospectus to beissued in relation to the initial public offering of units in LMIRT, which will be listed on the SingaporeExchange Securities Trading Limited. The summary outlines the key factors that have been considered inarriving at our opinions of value. The value conclusions reflect all information known by us, marketconditions and available data.E-37
Appendix EReliance on This LetterThis valuation summary report does not contain all the necessary data and support information included inour Reports. For further information to that contained herein, reference should be made to the Reports,copies of which are held by the Manager.The Valuation and market information contained in the Reports are not guarantees or predictions and mustbe read in consideration of the following:• Each report is several pages in length and the conclusion as to the value assessment is based upon thefactual information set forth in that Report. Whilst Colliers International/PT Penilai has endeavored toassure the accuracy of the factual information it has not independently verified all information providedby the Manager (primarily copies of leases, the Master Lease Agreement and other information withrespect to the Properties) or the Government of the Republic of <strong>Indonesia</strong> (primarily statisticalinformation with respect to market conditions). Colliers International/PT Penilai believes that everyinvestor and every recipient of the Prospectus should review the Reports to understand the complexityof the methodology and the many variables involved prior to making an investment in the LMIRT.• The methodology used by Colliers International/PT Penilai in valuing the Properties—the DiscountedCash Flow Analysis—is based upon estimates of future results and are not predictions. This valuationmethodology is summarized in the Valuation Rationale section of this summary report. Themethodology begins with a set of assumptions as to income and expenses of the relevant Propertyand future economic conditions in the local market. The income and expenses figures aremathematically extended with the adjustments for anticipated changes in economic conditions. Theresultant value is considered the best practice estimate, but is not to be construed as a prediction orguarantee and is fully dependent upon the accuracy of the assumptions as to income, expenses andmarket conditions.• The Reports were undertaken based upon information available as at 30 June 2007. ColliersInternational/PT Penilai accepts no responsibility for subsequent changes in information as toincome, expenses or market conditions.We have also relied on the information provided by the owning companies of the Properties. Whilst duecare has been undertaken in the application of that information, we cannot verify its accuracy. Should it berevealed that any of this information is inaccurate or misleading so that its use would affect the valuation,we reserve the right to amend our opinion.E-38
Appendix EVALUATION CERTIFICATEProperty : Bandung Indah PlazaJalan Merdeka No. 56, Bandung, West Java.Title : - HGB Title No. 26/CitarumCovering Area: 1,066 square metres.Expiry Date: 14 August 2010.- HGB Title No. 130/CitarumCovering Area: 160 square metres.Expiry Date: 20 October 2017.- HGB Title No. 131/CitarumCovering Area: 1,121 square metres.Expiry Date: 20 October 2017- HGB Title No. 64/CitarumCovering Area: 5,015 square metres.Expiry Date: 8 September 2019.- HGB Title No. 65/CitarumCovering Area: 1,355 square metres.Expiry Date: 8 September 2019.- HGB Title No. 69/CitarumCovering Area: 527 square metres.Expiry Date: 8 September 2019.- HGB Title No. 89/MerdekaCovering Area: 3,665 square metres.Expiry Date: 30 January 2021.- HGB Title No. 90/MerdekaCovering Area: 2,870 square metres.Expiry Date: 30 January 2021.- Held under BOT Agreements from 19 August 1990 for BIP 1 and 1 May1994 for BIP 2, or a remaining BOT term of 24 years from the date ofvaluation.BOT Grantor : Perusahaan Daerah Jasa dan Kepariwisataan Pemerintah Proponsi JawaBarat (State Company for Tourism Service of the Government of WestJava Province).Location : The subject property is located at Jalan Merdeka No. 56, about 2 km southof Bandung’s CBD.Land Zoning : Commercial.E-39
Appendix EProperty Description : The Property is a four-storey with three basement levels shopping centrein the heart of the central business district of Bandung. The centrecomprises two buildings and was developed in conjunction with theadjoining Hyatt Hotel in 1990.Site Area : 15,779 square metres.Gross Floor Area : 55,196 square metres.Net Lettable Area : 26,472 square metres (as at 30 June 2007).30,315 square metres (after asset enhancement).Market Value : Rp. 797,220,000,000,-(<strong>Indonesia</strong>n Rupiahs Seven Hundred Ninety Seven Billion and TwoHundred Twenty Million Only).OrS$. 135,122,000,-(Singapore Dollars One Hundred Thirty Five Million and One HundredTwenty Two Thousand Only).Based on exchange rate adopted at SGD 1 = Rp. 5,900.00.Date of Valuation : 30 June 2007.Notice : This Valuation Certificate should be read in conjunction with the fullvaluation report which detailed the conditions and assumptions underwhich this valuation is prepared.E-40
Appendix EVALUATION CERTIFICATEProperty : Istana PlazaJalan Pasir Kaliki No. 121-123, Bandung, West Java.Title : - Hak Guna Bangunan (Right to Build) No. 43/PamayonanCovering Area: 12,350 square metres.Expiry Date: 24 September 2032.- Hak Guna Bangunan (Right to Build) No. 177/PajajaranCovering Area: 40 square metres.Expiry Date: 24 September 2032.- Hak Guna Bangunan (Right to Build) No. 58/PamayonanCovering Area: 86 square metres.Expiry Date: 24 September 2032.- Hak Guna Bangunan (Right to Build) No. 59/PamayonanCovering Area: 361 square metres.Expiry Date: 24 September 2032.- Hak Guna Bangunan (Right to Build) No. 60/PamayonanCovering Area: 245 square metres.Expiry Date: 24 September 2032.- Held under BOT Agreements for 32 years from 17 January 2002 or aremaining BOT term of 26.9 years from the date of valuation.BOT Grantor : Gereja Kristen Pasundan.Land Zoning : Commercial.Location : Jalan Pasir Kaliki No. 121-123, Pamoyanan Sub District, Cicendo District,about 4 km south of Bandung’s CBD.Property Description : The Property is a four-storey with two basement levels shopping centreand has become a major community focus for the northern and westernregions of Bandung. The centre provides a one-stop shopping destinationfor the middle to middle and upper income residents in this region. Thecentre is located at the two busy roads, Jalan Pasir Kaliki and JalanPadjajaran and is considered one of the major modern shoppingcentres serving the population of Bandung. It is approximately 2 kmwest of the centre of Bandung.Site Area : 13,082 square metres.Gross Floor Area : 37,434 square metres.Net Lettable Area : 27,247 square metres.E-41
Appendix EMarket Value : Rp. 676,431,000,000,-(<strong>Indonesia</strong>n Rupiahs Six Hundred Seventy Six Billion and Four HundredThirty One Million Only).OrS$. 114,650,000,-(Singapore Dollars One Hundred Fourteen Million and Six Hundred FiftyThousand Only).Based on exchange rate adopted at SGD 1 = Rp. 5,900.00.Date of Valuation : 30 June 2007.Notice : This Valuation Certificate should be read in conjunction with the fullvaluation report which detailed the conditions and assumptions underwhich this valuation is prepared.E-42
Appendix EVALUATION CERTIFICATEProperty : Cibubur JunctionJalan Raya Jambore, Cibubur, East Jakarta.Title : - Deed of Cooperation Agreement on Land Utilization for Constructionand Development of a Shopping Centre Located at Cibubur—EastJakarta (Perjanjian Kerjasama Tentang Pendayagunaan Lahan UntukPembangunan dan Pengembangan Gedung Pusat Perbelanjaan diAreal Lahan Terletak di Cibubur—Jakarta Timur) No. 68 dated 28 July2003.- Addendum I dated 25 November 2004.- Addendum II dated 26 November 2004.- Held under BOTAgreements for 20 years from 28 July 2005 up to 28 July2025 or a remaining BOT term of 18.6 years from the date of valuation.BOT Grantor : Perusahaan Daerah Pembangunan Sarana Jaya DKI Jakarta.Land Zoning : Commercial.Location : Approximately 26 km south east of Jakarta’s CBD within a growing middleto middle upper class district.Property Description : The Property is a five-storey with one basement level and partial rooftoplevel shopping centre opened in July 2005. Since its opening, CibuburJunction has quickly established itself as the key retail destination formiddle to middle upper income residents within the region.Site Area : 31,987 square metres.Gross Floor Area : 49,341 square metres.Net Lettable Area : 34,139 square metres.E-43
Appendix EMarket Value : Rp. 600,640,000,000,-(<strong>Indonesia</strong>n Rupiahs Six Hundred Billion and Six Hundred Forty MillionOnly).OrS$. 101,803,000,-(Singapore Dollars One Hundred One Million and Eight Hundred ThreeThousand Only).Based on exchange rate adopted at SGD 1 = Rp. 5,900.00.Date of Valuation : 30 June 2007.Notice : This Valuation Certificate should be read in conjunction with the fullvaluation report which detailed the conditions and assumptions underwhich this valuation is prepared.E-44
Appendix EVALUATION CERTIFICATEProperty : Ekalokasari PlazaJalan Siliwangi 123, Bogor, West Java.Title : - Cooperation Agreement (Perjanjian Kerjasama) No. 133 dated 27 June2001.- Addendum dated 9 February 2004.- Held under BOT Agreements for 25 years from 27 June 2001 up to27 June 2026 or a remaining BOT term of 19.5 years from the date ofvaluation.Land Zoning : Commercial.Location : The property is located approximately 2 km southeast of Bogor city c entreon Jalan Siliwangi, a major road which is approximately 1 kilometre west ofthe Jagorawi toll road.Property Description : The Property is a large modern shopping centre comprising six storey andthree basement levels which was opened in December 2003. The centre iscurrently undergoing major refurbishment and extensions. An addition oftwo new floors (third floor and mezzanine) comprising a range of lifestyleand entertainment facilities.Site Area : 10,500 square metres.Gross Floor Area : 39,895 square metres.Net Lettable Area 20,587 square metres (as at 30 June 2007).25,600 square metres (after asset enhancement).Market Value : Rp. 401,580,000,000,-(<strong>Indonesia</strong>n Rupiahs Four Hundred One Billion and Five Hundred EightyMillion Only).OrS$. 68,064,000,-(Singapore Dollars Sixty Eight Million and Sixty Four Thousand Only).Based on exchange rate adopted at SGD 1 = Rp. 5,900.00.Date of Valuation : 30 June 2007.Notice : This Valuation Certificate should be read in conjunction with the fullvaluation report which detailed the conditions and assumptions underwhich this valuation is prepared.E-45
Appendix EVALUATION CERTIFICATEProperty : Mal <strong>Lippo</strong> CikarangJalan MH Thamrin <strong>Lippo</strong> Cikarang, Bekasi, West Java.Title : - Held under HGB (Right To Build) No. 627/Cibatu, dated 9 December1999 expiring on 5 May 2023 (extendable upon expiry).Land Zoning : Commercial.Location : The Property is located in Cikarang, which comprises industrial,commercial and residential estates and has attracted around600 companies including overseas manufacturers taking advantage ofthe lower costs of manufacturing in <strong>Indonesia</strong>. It continues to grow inimportance as a location for foreign investment with other prime industrialestates nearby, including the 3,000 hectare Jababeka Industrial Estate.Similarly, this estate is developing as self contained city with the JababekaCBD complementing industrial and residential within the estate.Property Description : The Property is a two-storey shopping centre opened in 1995. It is a onestopshopping complex serving the surrounding residential areas andworkers in the nearby industrial estates. Currently the Property is inrenovation for building extensions.Site Area : 49,250 square metres.Gross Floor Area : 25,767 square metres.Net Lettable Area : 17,974 square metres (as at 30 June 2007).28,668 square metres (after asset enhancement).Market Value : Rp. 470,361,000,000,-(<strong>Indonesia</strong>n Rupiahs Four Hundred Seventy Billion and Three HundredSixty One Million Only).OrS$. 79,722,000,-(Singapore Dollars Seventy Nine Million and Seven Hundred Twenty TwoThousand Only).Based on exchange rate adopted at SGD 1 = Rp. 5,900.00.Date of Valuation : 30 June 2007.Notice : This Valuation Certificate should be read in conjunction with the fullvaluation report which detailed the conditions and assumptions underwhich this valuation is prepared.E-46
Appendix EVALUATION CERTIFICATEProperty : The Plaza SemanggiJalan Jenderal Sudirman Kav. 50, South Jakarta.Title : - Introductory Agreement of Revitalization, Management and Transfer(Perjanjian Pengikatan Revitalisasi, Pengelolaan dan Pengalihan) dated5 January 2000.- Deed of Revitalization, Development, Management and Transfer(Perjanjian Revitalisasi, Pembangunan, Pengolahan dan Pengalihan)No. 56 dated 29 March 2000.- Deed of Addendum for the Deed of Revitalization, Development,Management and Transfer (Addendum Perjanjian Revitalisasi,Pembangunan, Pengolahan dan Pengalihan) Nos. 25 and 26 dated26 May 2000.- Deed of Addendum for the Deed of Revitalization, Development,Management and Transfer (Addendum Perjanjian Revitalisasi,Pembangunan, Pengolahan dan Pengalihan) dated 29 January 2002.- Held under BOTAgreements for 30 years from 18 July 2004 up to 18 July2034 with an extension term of 20 years from 18 July 2034 up to 18 July2054 or a remaining BOT term of 47.6 years from the date of valuation.Land Zoning : Commercial.Location : The Property is located on Jalan Jenderal Sudirman, Setiabudi district.The mall is strategically located at the centre of the Jakarta CBD within theSemanggi interchange which is a major throroughfare for north-south andeast-west traffic and adjacent to a number of Jakarta’s most prominentuniversities, including Atmajaya University, and PT. Telkom office. Thesurrounding site comprises offices, schools and hotel buildings alongJalan Jenderal Sudirman and Jalan Jenderal Gatot Subroto.Property Description : The Property is a seven-storey with two basement levels modern shoppingcentre and a 13-level office building. The mall in the Property iscomplemented by a range of non-retail uses within the mixed usedevelopment, such as a convention hall and an office tower, including anight club.Site Area : 19,000 square metres.Gross Floor Area : 91,232 square metres.E-47
Appendix ENet Lettable Area : 58,685 square metres (as at 30 June 2007).61,685 square metres (after asset enhancement).Market Value : Rp. 1,245,200,000,000,-(<strong>Indonesia</strong>n Rupiahs One Trillion Two Hundred Forty Five Billion and TwoHundred Million Only).OrS$. 211,051,000,-(Singapore Dollars Two Hundred Eleven Million and Fifty One ThousandOnly).Based on exchange rate adopted at SGD 1 = Rp. 5,900.00.Date of Valuation : 30 June 2007.Notice : This Valuation Certificate should be read in conjunction with the fullvaluation report which detailed the conditions and assumptions underwhich this valuation is prepared.E-48
Appendix EVALUATION CERTIFICATEProperty : Gajah Mada PlazaJalan Gajah Mada No. 19-26, Central Jakarta.Title : Strata Titles as evidenced by certificates:- No. 325/-I/S/Petojo Utara dated 26 July 1999.• Covering Area: 5,228 square metres.• Expiry Date: 24 January 2020.- No. 326/-I/S/Petojo Utara dated 26 July 1999.• Covering Area: 135 square metres.• Expiry Date: 24 January 2020.- No. 328/I/S/Petojo Utara dated 26 July 1999.• Covering Area: 18 square metres.• Expiry Date: 24 January 2020.- No. 330/II/S/Petojo Utara dated 26 July 1999.• Covering Area: 17 square metres.• Expiry Date: 24 January 2020.- No. 332/III/S/Petojo Utara dated 26 July 1999.• Covering Area: 43 square metres.• Expiry Date: 24 January 2020.- No. 333/IV/S/Petojo Utara dated 26 July 1999.• Covering Area: 4,618 square metres.• Expiry Date: 24 January 2020.- No. 334/V/S/Petojo Utara dated 26 July 1999.• Covering Area: 2,645 square metres.• Expiry Date: 24 January 2020.- No. 335/V-VI-VII/S/Petojo Utara dated 26 July 1999.• Covering Area: 3,205 square metres.• Expiry Date: 24 January 2020.- No. 336/VI-VII/S/Petojo Utara dated 26 July 1999.• Covering Area: 4,534 square metres.• Expiry Date: 24 January 2020.- No. 337/VII/S/Petojo Utara dated 26 July 1999.• Covering Area: 1,607 square metres.• Expiry Date: 24 January 2020.E-49
Appendix E- No. 338/VIII/S/Petojo Utara dated 26 July 1999.• Covering Area: 591 square metres.• Expiry Date: 24 January 2020.- No. 438/I/S/Petojo Utara dated 3 June 2002.• Covering Area: 5,186.1 square metres.• Expiry Date: 24 January 2020.- No. 440/II/S/Petojo Utara dated 3 June 2002.• Covering Area: 4,755.6 square metres.• Expiry Date: 24 January 2020.- No. 442/III/S/Petojo Utara dated 3 June 2002.• Covering Area: 4,918.6 square metres.• Expiry Date: 24 January 2020.Location : The Property is located in the city’s traditional Chinatown precinctincluding mixed of residential and commercial uses, the centre is alsowithin the vicinity of the capital city’s main civic buildings such asPresidential and Vice Presidential Palace are located only 5 kilometresnorth of Jakarta’s CBD area.Land Zoning : Commercial.Property Description : The Property is an established seven-storey with one basement levelshopping centre which has been operated for more than 25 years and hasa firm position as a one-stop shopping destination to meet the everydayconvenience retail requirements of local residents considered to be in themiddle and middle upper segments.Strata Title Area : 37,501 square metres.Gross Floor Area : 66,160 square metres.Net Lettable Area : 34,278 square metresMarket Value : Rp. 690,108,000,000,-(<strong>Indonesia</strong>n Rupiahs Six Hundred Ninety Billion and One Hundred EightMillion Only).OrS$. 116,967,000,-(Singapore Dollars One Hundred Sixteen Million and Nine Hundred SixtySeven Thousand Only).Based on exchange rate adopted at SGD 1 = Rp. 5,900.00.Date of Valuation : 30 June 2007.Notice : This Valuation Certificate should be read in conjunction with the fullvaluation report which detailed the conditions and assumptions underwhich this valuation is prepared.E-50
Appendix EVALUATION CERTIFICATEProperty : Plaza MadiunJalan Pahlawan No. 38-40, Madiun, East Java.Title : Held under HGBs (Right To Build) No. 186/Pangongangan and No.188/Pangongangan both expiring on 10 February 2012 (extendableupon expiry).Location : The Property is located in the city of Madiun, which is located around 169kilometres west of Surabaya. It benefits from its position which connectsmajor cities in Central and East Java. The city’s industrial sectorcontributes significant portion to the city’s economy.Land Zoning : Commercial.Property Description : The Property is a three-storey shopping centre with one basement leveland the biggest in the area. The shopping centre enjoys high exposurefrom Jalan Pahlawan and has an easy access to transportation.Site Area : 5,583 square metres.Net Lettable Area : 19,029 square metres.Market Value : Rp. 187,403,000,000,-(<strong>Indonesia</strong>n Rupiahs One Hundred Eighty Seven Billion Four Hundred andThree Million Only).OrS$. 31,763,000,-(Singapore Dollars Thirty One Million and Seven Hundred Sixty ThreeThousand Only).Based on exchange rate adopted at SGD 1 = Rp. 5,900.00.Date of Valuation : 30 June 2007.Notice : This Valuation Certificate should be read in conjunction with the fullvaluation report which detailed the conditions and assumptions underwhich this valuation is prepared.E-51
Appendix EVALUATION CERTIFICATEProperty : <strong>Retail</strong> spaces at Depok Town SquareJalan Margonda Raya No. 1, Cina Beji, Depok, West Java.Title : Held under Kiosks Sale and Purchase Binding Agreements No.031/AGR/DM/MPP/XII/02 dated 19 December 2002 and No. 012/JPN-PPJB/II/04 dated 11 February 2004.Location : The Property is located within Depok Town Square, one of the newest andmost comprehensive malls in Depok, a growing city approximately16 kilometres south of Jakarta’s CBD. The city of Depok hasexperienced high demand for residential accommodation. The shoppingcentre is adjacent to the southeastern side of University of <strong>Indonesia</strong>, oneof the biggest and most prominent universities in <strong>Indonesia</strong>.Land Zoning : Commercial.Property Description : The Property comprises of retails spaces on lower ground floor, first floorand second floors currently utilized as a hypermarket (Hypermart),department store (Matahari Department Store) and entertainment andgaming center (Timezone).Net Lettable Area : 13,045 square metres.Market Value : Rp. 146,024,000,000,-(<strong>Indonesia</strong>n Rupiahs One Hundred Forty Six Billion and Twenty FourMillion Only).OrS$. 24,750,000,-(Singapore Dollars Twenty Four Million and Seven Hundred FiftyThousand Only).Based on exchange rate adopted at SGD 1 = Rp. 5,900.00.Date of Valuation : 30 June 2007.Notice : This Valuation Certificate should be read in conjunction with the fullvaluation report which detailed the conditions and assumptions underwhich this valuation is prepared.E-52
Appendix EVALUATION CERTIFICATEProperty : <strong>Retail</strong> spaces at Grand PalladiumJalan Kapten Maulana Lubis, Medan, North Sumatra.Title : Held under Kiosks Sale and Purchase Binding Agreement No. 011/UPI-PPJB/IX/04 dated 14 September 2004.Location : The Property is located within Grand Palladium, a shopping centre locatedon Jalan Kapten Maulana Lubis in the city of Medan, the largest city inSumatra and surrounded by office and government buildings.Land Zoning : Commercial.Property Description : The Property comprises of retail spaces on the basement floor, lowerground floor, upper ground floor, first floor and third floor currently utilizedas a hypermarket (Hypermart), department store (Matahari DepartmentStore) and entertainment and gaming centre (Timezone).Net Lettable Area : 13,417 square metres.Market Value : Rp. 148,425,000,000,-(<strong>Indonesia</strong>n Rupiahs One Hundred Forty Eight Billion and Four HundredTwenty Five Million Only).OrS$. 25,157,000,-(Singapore Dollars Twenty Five Million and One Hundred Fifty SevenThousand Only).Based on exchange rate adopted at SGD 1 = Rp. 5,900.00.Date of Valuation : 30 June 2007.Notice : This Valuation Certificate should be read in conjunction with the fullvaluation report which detailed the conditions and assumptions underwhich this valuation is prepared.E-53
Appendix EVALUATION CERTIFICATEProperty : <strong>Retail</strong> spaces at Mall WTC Matahari Jalan Raya Serpong, Pondok Jagung,Serpong, Tangerang, Banten.Title : Held under Strata Titles Ownership Certificates No. 00153/PondokJagung dated 17 December 2004, No. 00197/Pondok Jagung dated17 December 2004, No. 00372/Pondok Jagung dated 17 December2004 and No. 00428/Pondok Jagung dated 17 December 2004.Location : The Property is within Mall WTC Matahari. The centre is strategicallylocated within the vicinity of Bumi Serpong Damai City, one of the largestresidential estates in Tangerang, a renowned industrial and manufacturingcity in Greater Jakarta. Tangerang has benefited from urban expansion ofJakarta and is being home to seven industrial estates with over 1,700 haarea.Land Zoning : Commercial.Property Description : The Property comprises of retail spaces on the ground floor, upper grondfloor, mezzanine and second floor currently utilized as a hypermarket(Hypermart), department store (Matahari Department Store) andentertainment and gaming center (Timezone).Net Lettable Area : 11,184 square metres.Market Value : Rp. 143,469,000,000,-(<strong>Indonesia</strong>n Rupiahs One Hundred Forty Three Billion and Four HundredSixty Nine Million Only).OrS$. 24,317,000,-(Singapore Dollars Twenty Four Million and Three Hundred SeventeenThousand Only).Based on exchange rate adopted at SGD 1 = Rp. 5,900.00.Date of Valuation : 30 June 2007.Notice : This Valuation Certificate should be read in conjunction with the fullvaluation report which detailed the conditions and assumptions underwhich this valuation is prepared.E-54
Appendix EVALUATION CERTIFICATEProperty : <strong>Retail</strong> spaces at Malang Town SquareJalan Veteran No. 2, Malang, East Java.Title : Held under Kiosks Sale and Purchase Binding Agreement No. 031/PN-PPJB/X/03 dated 7 October 2003.Location : The Property is located within Malang Town Square, the biggest and mostcomprehensive mall in the city of Malang, the second largest city in EastJava province. The city has a large student population, being home to fiveuniversities and three of them are within the proximity of the Property.Land Zoning : Commercial.Property Description : The Property comprises of retail spaces on the ground floor, upper groundfloor, first floor and second floor currently utilized as a hypermarket(Hypermart), department store (Matahari Department Store) andentertainment and gaming center (Timezone).Net Lettable Area : 11,065 square metres.Market Value : Rp. 151,945,000,000,-(<strong>Indonesia</strong>n Rupiahs One Hundred Fifty One Billion and Nine HundredForty Five Million Only).OrS$. 25,753,000,-(Singapore Dollars Twenty Five Million and Seven Hundred Fifty ThreeThousand Only).Based on exchange rate adopted at SGD 1 = Rp. 5,900.00.Date of Valuation : 30 June 2007.Notice : This Valuation Certificate should be read in conjunction with the fullvaluation report which detailed the conditions and assumptions underwhich this valuation is prepared.E-55
Appendix EVALUATION CERTIFICATEProperty : <strong>Retail</strong> spaces at Java SupermallJalan MT Haryono No. 992-994, Jomblang, Semarang, Central Java.Title : Held under Strata Titles Ownership Certificates No. 1/Lamper Kidul dated23 November 1998, No. 2/Lamper Kidul dated 23 November 1998, No.22/Lamper Kidul dated 23 November 1998 and No. 45/Lamper Kidul dated18 April 2000.Location : The Property is located within Java Supermall, a mall within the vicinity ofan upper middle class residential area in Semarang, the capital city ofCentral Java. The city is the fifth largest city in terms of population in<strong>Indonesia</strong>.Land Zoning : Commercial.Property Description : The Property comprises of retail spaces on the semi-basement, first floorand second floor currently utilized as a supermarket (MatahariSupermarket) and department store (Matahari Department Store).Net Lettable Area : 11,082 square metres.Market Value : Rp 147,230,000,000,-(<strong>Indonesia</strong>n Rupiahs One Hundred Forty Seven Billion and Two HundredThirty Million Only).OrS$. 24,954,000,-(Singapore Dollars Twenty Four Million and Nine Hundred Fifty FourThousand Only).Based on exchange rate adopted at SGD 1 = Rp. 5,900.00.Date of Valuation : 30 June 2007.Notice : This Valuation Certificate should be read in conjunction with the fullvaluation report which detailed the conditions and assumptions underwhich this valuation is prepared.E-56
Appendix EVALUATION CERTIFICATEProperty : <strong>Retail</strong> Spaces at Metropolis Town Square.Jalan Hartono Raya, Modernland Cikokol, Tangerang, Banten.Title : Held under Kiosks Sale and Purchase Binding Agreements No. 054/AGR/DM/MPP/VI/03 dated 23 June 2003, No. 084/AGR/DM/MPP/VIII/03 dated25 August 2003, 093/AGR/DM/MPP/IX/03 dated 10 September 2003.Location : The Property is located within Metropolis Town Square, a one-stopshopping centre on one of the main roads in Tangerang near theModernland residential estates, about 3 kilometres south of the citycentre of Tangerang. The city of Tangerang is a popular residentialestates due to its proximity to Jakarta, which is approximately 20 kmwest of Jakarta’s CBD.Land Zoning : Commercial.Property Description : The Property comprises of retail spaces on the ground floor, first floor andsecond floor currently utilized as a hypermarket (Hypermart), departmentstore (Matahari Department Store) and entertainment and gaming center(TimeZone).Net Lettable Area : 15,248 square metres.Market Value : Rp. 189,874,000,000(<strong>Indonesia</strong>n Rupiahs One Hundred Eighty Nine Billion and Eight HundredSeventy Four Million Only).OrS$. 32,182,000,-(Singapore Dollars Thirty Two Million and One Hundred Eighty TwoThousand Only).Based on exchange rate adopted at SGD 1 = Rp. 5,900.00.Date of Valuation : 30 June 2007.Notice : This Valuation Certificate should be read in conjunction with the fullvaluation report which detailed the conditions and assumptions underwhich this valuation is prepared.E-57
Appendix EValuation RationaleIn arriving at our opinion value, we have considered relevant general and economic factors. We haveutilized Discounted Cash Flow Analysis and Direct Comparison in undertaking our assessment of theProperties. We have investigated recent sales and leasing transactions of comparable properties thathave occurred in the shopping center market.Discounted Cash Flow AnalysisThis approach gives consideration to the existing income earning and the future expectation income at thecertain time, which can be generated by the property. The stream of future earnings are either capitalizedor discounted at an appropriate rate to arrive at an indication of value at which ownership would be justifiedby a prudent investor. We have carried out a discounted cash flow analysis over a 5-year investmenthorizon in which we have assumed that the Properties is sold at the commencement of the sixth year of thecash flow. This form of analysis allows an investor or owner to make an assessment of the long term returnthat is likely to be derived from the properties with a combination of both rental and capital growth over anassumed investment horizon.In undertaking this analysis, a wide range of assumptions are made including a target internal rate ofreturn, rental growth, sales turnover growth and sale price of the property at the end of investment horizon.While the Properties generate mostly <strong>Indonesia</strong>n Rupiah denominated cash flow, we understand thatthere will be hedging arrangement in place that allows us to appropriately assume that the cash flow will beconverted from <strong>Indonesia</strong>n Rupiah into Singapore Dollar and to value the Properties by taking intoconsideration such an arrangement.The following table summarizes the key details for each of the Properties:PropertiesLandarea (m 2 )Grossbuildingfloor area(m 2 )Netlettablearea (m 2 )LandtitleLandzoningBandung Indah Plaza. . . . . . . . . . . . . . . . . 15,779 55,196 26,472 BOT CommercialIstana Plaza. . . . . . . . . . . . . . . . . . . . . . . . 13,082 37,434 27,247 BOT CommercialCibubur Junction . . . . . . . . . . . . . . . . . . . . 31,987 49,341 34,139 BOT CommercialEkalokasari Plaza . . . . . . . . . . . . . . . . . . . 10,500 39,895 20,587 BOT CommercialMal <strong>Lippo</strong> Cikarang . . . . . . . . . . . . . . . . . . 49,250 25,767 17,974 HGB CommercialThe Plaza Semanggi . . . . . . . . . . . . . . . . . 19,000 91,232 58,685 BOT CommercialGajah Mada Plaza . . . . . . . . . . . . . . . . . . . 37,501 (1) 66,160 34,278 HGB CommercialPlaza Madiun. . . . . . . . . . . . . . . . . . . . . . . 5,583 — 19,029 HGB Commercial<strong>Retail</strong> spaces at Depok Town Square. . . . . — — 13,045 Strata Commercial<strong>Retail</strong> spaces at Grand Palladium . . . . . . . — — 13,417 Strata Commercial<strong>Retail</strong> spaces at Mall WTC Matahari . . . . . — — 11,184 Strata CommercialE-58
Appendix EPropertiesLandarea (m 2 )Grossbuildingfloor area(m 2 )Netlettablearea (m 2 )LandtitleLandzoning<strong>Retail</strong> spaces at Malang Town Square . . . . — — 11,065 Strata Commercial<strong>Retail</strong> spaces at Java Supermall . . . . . . . . — — 11,082 Strata Commercial<strong>Retail</strong> spaces at Metropolis Town Square. . — — 15,248 Strata Commercial(1) Strata Title AreaConclusion and Summary of ValuesWe are of the opinion that the total aggregate Market Value of the Properties as at 30 June 2007 subject tothe transfer of ownership of the Properties, to all existing tenancies and occupancy arrangements, theexecution of the proposed Master Lease Agreement, the factual data, our assumptions, comments,qualifications, and limiting conditions as detailed in our full Reports, is:S$1,016,255,000(Singapore Dollars One Billion Sixteen Million and Two Hundred Fifty Five Thousand Only)The following table summarizes the salient valuation assumptions and Market Value for each of theProperties:PropertiesMarket value as at30 June 2007(S$)DiscountrateTerminalcapitalizationrateBandung Indah Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,122,000 14% 9%Istana Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,650,000 14% 9%Cibubur Junction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,803,000 14% 9%Ekalokasari Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,064,000 14% 9%Mal <strong>Lippo</strong> Cikarang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,722,000 14% 9%The Plaza Semanggi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211,051,000 14% 9%Gajah Mada Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116,967,000 14% 9%Plaza Madiun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,763,000 14% 9%<strong>Retail</strong> spaces at Depok Town Square. . . . . . . . . . . . . . . . . 24,750,000 14% 9%<strong>Retail</strong> spaces at Grand Palladium . . . . . . . . . . . . . . . . . . . 25,157,000 14% 9%<strong>Retail</strong> spaces at Mall WTC Matahari . . . . . . . . . . . . . . . . . 24,317,000 14% 9%<strong>Retail</strong> spaces at Malang Town Square . . . . . . . . . . . . . . . . 25,753,000 14% 9%<strong>Retail</strong> spaces at Java Supermall . . . . . . . . . . . . . . . . . . . . 24,954,000 14% 9%<strong>Retail</strong> spaces at Metropolis Town Square. . . . . . . . . . . . . . 32,182,000 14% 9%E-59
Appendix EDisclaimerWe have prepared this Valuation Summary Letter for inclusion in the Prospectus and specifically disclaimliability to any person in the event of any omission from or false or misleading statement included in theProspectus, other than in respect of the information provided within the aforementioned Reports and thisValuation Summary Letter. We do not make any warranty or representation as to the accuracy of theinformation in any other part of the Prospectus other than as expressly made or given by ColliersInternational/ PT Penilai in this Letter.Colliers International / PT Penilai has relied upon data supplied by the Manager and/or the owningcompanies of the Properties, which we assume to be true and accurate. Colliers International / PT Penilaitakes no responsibility for inaccurate client supplied data and subsequent conclusions related to suchdata.The reported analyses, opinions and conclusion are limited only by the reported assumptions and limitingconditions and are our personal, unbiased professional analyses, opinions and conclusions. We have nopresent or prospective interest in the Properties and have no personal interest or bias with respect to theparty/parties involved. The valuer’s compensation is not contingent upon the reporting of a predeterminedvalue or direction in value that favours the cause of the client, the amount of the value estimate, theattainment of a stipulated result, or the occurrence of a subsequent event.We hereby certify that the valuers undertaking these valuations are authorized to practice as valuers andhave the necessary expertise and experience in valuing similar types of properties.Your Faithfully,PT PENILAIMember of <strong>Indonesia</strong>n Appraisal Companies Association (GAPPI) No. 016in Association with Colliers InternationalIr. Hendra Gunawan M.Sc. (MAPPI Cert.)Director of PT PENILAICapital Market Valuer License: 28/PM/STTD-P/A/2006Member of <strong>Indonesia</strong>n Society of Appraisers (MAPPI) No. 81-S-00005Public Valuer License No. 1.99.0019E-60
Appendix EADDENDUM—STATEMENT OF ASSUMPTIONS AND LIMITING CONDITIONS1. An opinion of value will always involve a degree of subjectivity and uncertainty that will affect theprobability that the opinion of market value would be the same as the price achieved by an actual saleat the valuation date. The assessment of value is dependent upon the accuracy of the informationavailable to us pertaining to the Properties and the market, together the underlying conditions andassumptions made. If these conditions and assumptions are not fulfilled, all future projections and thevalue reflected herein should be reappraised in light of actual events.2. All information (facilities overview, estimates, and opinions) obtained from parties not employed by PTPenilai/Colliers International is assumed to be true and correct. PT Penilai/Colliers International canassume no liability resulting from misinformation.3. No responsibility is assumed for matters of a legal nature, nor do we renders any opinion as to land titleor leases, which is assumed to be marketable and free of any deed restrictions and easements.4. Unless noted, it is assumed that there are no encroachments or planning and building violationsencumbering the existing structure and / or proposed property.5. It is assumed that the Properties will be in full compliance with all applicable city, local and privatecodes, laws, consents, licenses and regulations (including an alcohol license where appropriate), andthat all licenses, permits, certificates, franchises and so forth can be freely renewed and/ortransferred to a purchaser.6. All mortgages, liens, encumbrances, lease, servitudes, arrears and penalties have been disregardedunless specified otherwise.7. No portion of this report may be reproduced in any form without the permission of PT Penilai/ColliersInternational.8. PT Penilai/ Colliers International is not required to give testimony or attendance in court by reason ofthis economic and valuation study without previous arrangements and only when our standard perdiem fees and travel costs are paid prior to the appearance.9. If the reader is making a fiduciary or individual investment decision and has any questions concerningthe material contained in this report, it is recommended that the reader contact PT Penilai/ ColliersInternational.10. The quality of the Properties on-site management has a direct effect on their economic viability andmarket value. The financial forecasts presented in this report assume both responsible ownership andcompetent management. Any variance from this assumption may have a significant impact on theforecast operating results.E-61
Appendix E11. Many of the figures presented in this document were generated using sophisticated computer modelsthat make calculations based upon numbers carried out to three or more decimal places. In theinterest of simplicity, most numbers presented in this report have been rounded to the nearest tenth.Thus, these figures may be subject to small rounding errors in some cases.12. Valuing real estate is both a science and an art. Although this valuation employs various mathematicalcalculations, the final estimate is subjective and may be influenced by the author’s experience andother factors not specifically set forth in this report.13. The relationship between the currency adopted in this report and other major world currenciesremains constant as at the date of our fieldwork.14. Whilst the information contained herein is believed to be correct, it is subject to change. Nothingcontained herein is to be construed as a representation or warranty of any kind.15. Valuation reports for each individual Property are accompanied with their corresponding list ofassumptions and limiting conditions, which states assumptions peculiar and pertinent to individualProperties. Interested parties are advised to read the individual reports prior to making any legal,financial or other commitments.E-62
Appendix FINDEPENDENT REPORT ON THE INDONESIAN RETAIL PROPERTY MARKETJUNE 2007Prepared for Board of Directors of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd(as manager of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>) and HSBC Institutional <strong>Trust</strong> Services (astrustee of <strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>)In respect of<strong>LIPPO</strong>-<strong>MAPLETREE</strong> INDONESIA RETAIL TRUSTFOR AND ON BEHALF OFPT JONES LANG LASALLELucia RumantirChairman, <strong>Indonesia</strong>F-1
Appendix FF-2
TABLE OF CONTENTSREPORT INSTRUCTIONS. ..................................................... F-4SCOPE OF WORKS .......................................................... F-4EXECUTIVE SUMMARY ...................................................... F-61. OVERVIEW OF INDONESIA AND ITS ECONOMY ................................ F-91.1 REGIONAL CONTEXT AND BACKGROUND ...................................... F-91.2 HISTORICAL BACKGROUND ............................................... F-91.3 POLITICAL BACKGROUND ................................................ F-91.4 SYSTEM OF GOVERNMENT ............................................... F-101.5 ADMINISTRATIVE DIVISIONS .............................................. F-101.6 CURRENT ECONOMIC POLICY ............................................. F-101.7 ECONOMIC PERFORMANCE. .............................................. F-111.8 POPULATION GROWTH AND DEMOGRAPHICS ................................... F-181.9 TOURISM .......................................................... F-201.10 ECONOMIC OUTLOOK AND IMPLICATIONS FOR THE RETAIL MARKET ..................... F-212. RETAIL MARKET OVERVIEW ............................................... F-222.1 RETAIL SALES GROWTH—HISTORICAL AND FORECAST. ............................ F-222.2 CHANGES IN INCOME AND RETAIL SPENDING ................................... F-232.3 CHANGING CONSUMER BEHAVIOUR AND PREFERENCES ............................ F-252.4 BRAND ACCEPTANCE .................................................. F-252.5 NEW RETAIL FORMATS AND RETAILERS ...................................... F-262.6 RETAIL PROVISION AND PIPELINE OF SHOPPING CENTRES .......................... F-282.7 RETAIL SALES PERFORMANCE ............................................ F-292.8 SUPPLY CONSTRAINTS AND THE REGULATORY ENVIRONMENT ......................... F-312.9 RETAIL RENTALS ..................................................... F-322.10 FUTURE OUTLOOK FOR THE RETAIL SECTOR ................................... F-333. OVERVIEW OF PORTFOLIO ................................................ F-343.1 REGIONAL CONTEXT ................................................... F-343.2 GEOGRAPHIC SPREAD. ................................................. F-383.3 SUMMARY OF RETAIL PROPERTIES. ......................................... F-444. LEASED CENTRES ....................................................... F-484.1 CIBUBUR JUNCTION ................................................... F-484.2 PLAZA SEMANGGI .................................................... F-574.3 BANDUNG INDAH PLAZA ................................................ F-674.4 ISTANA PLAZA ....................................................... F-754.5 MAL <strong>LIPPO</strong> CIKARANG ................................................. F-834.6 GAJAH MADA PLAZA .................................................. F-894.7 EKALOKASARI PLAZA .................................................. F-995. RETAIL SPACES MALLS ................................................... F-1075.1 JAVA SUPERMALL. .................................................... F-1075.2 MALANG TOWN SQUARE ................................................ F-1095.3 GRAND PALLADIUM MEDAN .............................................. F-1125.4 METROPOLIS TOWN SQUARE ............................................. F-1155.5 DEPOK TOWN SQUARE ................................................. F-1185.6 PLAZA MADIUN ...................................................... F-1205.7 MALL WTC MATAHARI ................................................. F-124F-3
Report instructions<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd requested that Jones Lang LaSalle provide anoverview of the <strong>Indonesia</strong>n retail market with particular reference to subject sites for inclusion in theprospectus to be issued in connection with the initial public offering of units in the <strong>Lippo</strong>-Mapletree<strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> (“LMIR <strong>Trust</strong>”) and the listing of LMIR <strong>Trust</strong> in the SGX-ST.SCOPE OF WORKSThis report covers the following key issues:• Overview of <strong>Indonesia</strong> and its economy;• Overview of the <strong>Indonesia</strong>n retail market, including retail sales growth, emerging trends, retail rentalsand future outlook;• Summary of the portfolio contained in the LMIR <strong>Trust</strong>;• Market analysis of all leased properties contained in the LMIR <strong>Trust</strong>; and• Market analysis of all retail spaces malls contained in the LMIR <strong>Trust</strong>.LimitationsThis retail market commentary has been prepared with reference to specific properties within theLMIR <strong>Trust</strong>. The analysis is the view of Jones Lang LaSalle Research and Consulting. We confirmthat Jones Lang LaSalle received a fee for the preparation and publication of this commentary.DisclaimerJones Lang LaSalle is not operating under an Australian Financial Services Licence in giving this report.No reference to the report or any part of it may be published in any document, statement or circular or inany communication with third parties without our prior written approval of the form and context in which itwill appear.This report has been produced solely as a general guide and does not constitute advice. We have used andrelied upon information from sources generally regarded as authoritative and reputable, but theinformation obtained from these sources may not have been independently verified by Jones LangLaSalle Research and Consulting.Neither Jones Lang LaSalle nor any of its associates have any other interests (whether pecuniary or notand whether direct or indirect) or any association or relationships with LMIR <strong>Trust</strong> Management Ltd or anyof its associates that might reasonably be expected to be or have been capable of influencing Jones LangLaSalle in providing this report.We stress that forecasting is a problematical exercise which at best should be regarded as an indicativeassessment of possibilities rather than absolute certainties. The process of making forward projectionsinvolves assumptions in respect of a considerable number of variables which are acutely sensitive tochanging conditions, variations in any one of which may significantly affect the outcome and we draw yourattention to this factor.About Jones Lang LaSalleJones Lang LaSalle is the world’s leading real estate services and money management firm, operatingacross more than 100 markets around the globe. The company provides comprehensive integratedexpertise, including management services, implementation services and investment managementservices on a local, regional and global level to owners, occupiers and investors.Jones Lang LaSalle has over 45 years experience in Asia Pacific. With over 12,000 employees operating inover 30 markets across the Asia Pacific region, the company’s team of experts is uniquely qualified to givethe quality advice needed for making quality real estate decisions.F-4
Report instructionsAbout Jones Lang LaSalle Research and ConsultingJones Lang LaSalle Global Research and Consulting is a multi-disciplinary professional group with corecompetencies in economics, real estate market analysis and forecasting, locational analysis andinvestment strategy. The Research and Consulting Group is able to draw on an extensive range anddepth of experience from the Company’s network of offices, operating across more than 100 key marketsworldwide. Our aim is to provide high-level analytical research and consulting services to assist practicaldecision-making for all investors, owners and occupiers of real estate.The Global Research team comprises of more than 200 professionals and supports the Global CapitalMarkets and LaSalle Investment Management businesses through the analysis of real estate markets,forecasting of future market conditions and application of these trends for locational decision andinvestment strategies.F-5
Executive summaryThis report provides an independent review of the <strong>Indonesia</strong>n economy and retail market together with areview and market outlook of each of the subject properties in the LMIR <strong>Trust</strong>.The key findings of this report are summarised below:INDONESIAN ECONOMY<strong>Indonesia</strong> is the world’s fourth most populous country, with an estimated population in 2006 of 222 millionpeople. 130 million people live on the island of Java, the world’s most populous island. In 2005, <strong>Indonesia</strong>’sgross domestic product (GDP) was US$281 billion, ranking <strong>Indonesia</strong> as the 26th largest economy in theworld.Politically, <strong>Indonesia</strong> has changed significantly over the past decade from a political system whichemphasised consensus, unity and control towards a democracy, with a publicly elected president.Economically, the country has made significant steps towards modernisation, with the liberalisation of thepreviously restrictive investment rules and a number of economic packages aimed at increasing foreigninvestment, encouraging development in infrastructure and strengthening the financial sector.Today, <strong>Indonesia</strong> is the world’s number one exporter of liquefied natural gas (LNG) and the 17th largest oilproducer. Its manufacturing sector is now the largest contributor to GDP and international companies areshowing interest in locating manufacturing plants in the country, taking advantage of the relaxation offoreign investment rules, <strong>Indonesia</strong>’s strategic location and its low-cost employment base.Whilst <strong>Indonesia</strong> took longer than some other countries to recover from the Asian financial crisis of1997/98, GDP growth has improved considerably in recent years, from 3.8% in 2001 to 5.5% in 2006.Importantly, this trend is expected to continue, with GDP growth forecast to average 5.8% over the next fiveyears, significantly higher than global economic growth.In terms of purchasing power parity (PPP), <strong>Indonesia</strong> has recorded strong growth in per capita income(6.9% in 2005). On this basis, income levels in <strong>Indonesia</strong> are significantly higher than India but remain wellbelow China.<strong>Indonesia</strong>’s competitiveness is now much improved with the World Economic Forum ranking it 50th on theirGlobal Competitiveness Scale in 2006, its highest ever ranking.Whilst <strong>Indonesia</strong> has recorded relatively high inflation over the past two years, the EIU expects inflation tofall to approximately 6% in 2007 and 2008, due in part to the stabilisation of the local currency.Population growth has slowed in the past two decade and is expected to average 1.4% per annum between2006 and 2010. This lower growth rate should prove positive in the longer term, placing less strain onpublic services and infrastructure, reducing new entrants to the labour market and leading to higher levelsof GDP per capita.<strong>Indonesia</strong> has a relatively young population with over 80% of the population under 45 years of age. This willsee the country’s employment base increase markedly in the short to medium term.<strong>Indonesia</strong>’s population is largely concentrated on the island of Java, which accounts for nearly 60% of totalpopulation. Urbanisation has been strong, with the population living in cities growing from 22% in 1980 to46% in 2005. The Greater Jakarta, with an estimated population of 22.3 million, is one of the 10 mostpopulous cities in the world.Economic development in <strong>Indonesia</strong> has seen a significant increase of the middle income group over thepast five years. Such an increase has been a major driver of the retail sector. The middle and upper incomegroups have increased as a percentage of total households from 50% in 2001 to 64% in 2006, with a higherproportion being within urban areas and on the island of Java. It is estimated that the urban middle incomegroup in <strong>Indonesia</strong> totals approximately 66 million people.F-6
Executive summaryIMPLICATIONS FOR RETAILWith moderate to strong economic growth forecast over the next five years, the outlook for the <strong>Indonesia</strong>nretail market is positive. Growth in the middle and upper income classes and continuing urbanisation will beprime drivers, providing a critical mass of customers to support modern retailing formats. Furthermore, theshift away from traditional wet markets towards modern shopping malls will continue to support thedevelopment of new shopping centres in major urban areas.<strong>Retail</strong> sales growth has generally been stronger than GDP growth, due to continued increases in domesticconsumption as a proportion of GDP.Since the recovery from the Asian financial crisis, nominal retail sales growth has averaged 11% perannum, with a similar rate forecast to continue over the next five years to 2011. In real terms, retail salesare expected to grow by an average of 5.9% per annum between 2007 and 2011.While per capita wealth and retail spending are highest in Jakarta, the strongest growth has been in theurban areas surrounding Jakarta, i.e. Bogor, Depok, Tangerang and Bekasi, the location for a number ofthe assets within the LMIR <strong>Trust</strong> portfolio.With the easing of foreign investment regulations, increased urbanisation and the growth of the middle andupper income groups, foreign retailers have successfully entered the <strong>Indonesia</strong>n market. Thisglobalisation of retailing and increased brand acceptance have also been influenced by other factorssuch as television, international business (expatriates) and tourism (both inwards and outwards).International brands such as Carrefour and Sogo have not only gained strong market acceptance but haveinfluenced the development of domestic operators such as Matahari and Hypermart.Furthermore, the <strong>Indonesia</strong>n consumer has shown increased preference for shopping at modern centresrather than at traditional wet markets due to more comfortable shopping environment, a more completerange of goods, guaranteed quality of products (food safety and cleanliness), competitive prices, goodservice, and easier accessibility. This trend is expected to continue.SHOPPING CENTRE PROVISIONThe opening of the domestic retail industry to global players in 1998 has provided a boost to thedevelopment of retail shopping malls in <strong>Indonesia</strong>, initially in Jakarta but more recently in other citiessuch as Surabaya, Medan, Bandung and Semarang.The shopping centre boom is set to continue, with 19 proposals potentially entering the market in Jakartaalone over the next three years. In the longer term, smaller urban markets and growing areas withinGreater Jakarta (but outside Jakarta Province) may experience greater retail development. In addition,competing development pressures from alternative land uses for scarce but strategically located siteswithin Jakarta may restrict opportunities in the longer term.FUTURE OUTLOOK FOR RETAIL PROPERTYWe consider the outlook for the retail property market in <strong>Indonesia</strong> to be sound. Economic growth isforecast to pick up over the next five years and the growth in the urban middle and upper income groups willsupport the retail market. While the supply pipeline is strong, particularly within Jakarta, well maintained,and suitably located centres with an established customer base and strong anchor tenants shouldcontinue to perform well.Increased brand acceptance and the growing number of national and international retailers should providea steady supply of sought-after anchor and specialty tenants for existing and new retail centres. Expansioninto urban areas outside of the Greater Jakarta is expected, in line with the increase in middle and upperincome households in these markets.<strong>LIPPO</strong>-<strong>MAPLETREE</strong> INDONESIA RETAIL TRUSTThe majority of LMIR <strong>Trust</strong>’s properties are within Greater Jakarta, with other properties being located inmajor cities in Java and North Sumatra.F-7
Executive summaryThe seven leased malls and seven retail spaces are located across six provinces, five of which are in Java(Jakarta, West Java, East Java, Central Java, Banten) and one in North Sumatra.The leased malls are fully contained within LMIR <strong>Trust</strong> while the retail spaces (most of which are strataproperties) constitute only part of the total mall (generally as the anchor tenants).Three of the leased malls are within Jakarta, which has the highest level of gross regional domestic product(GRDP) per capita of all provinces in <strong>Indonesia</strong>, reflecting its role as the administrative and financial capitalof <strong>Indonesia</strong>.Two leased malls and three retail spaces are in Greater Jakarta. This region has experienced the strongestper capita growth in household expenditure of all major urban areas between 2001 and 2005. Theremaining two leased malls and four retail spaces are located outside Greater Jakarta.Total net lettable area of the properties within the portfolio as at 30 June 2007 is as follows:Seven leased malls: 219,382 square metres (sq.m)(241,932 sq.m following extension)Seven retail spaces: 94,070 sq.mOver the next five years, shopping centres are expected to experience increased competition, as newcentres commence operations and existing centres are re-positioned. On balance, however, the subjectmalls are well located, with sound tenancy mixes and strategies in place to maintain and potentiallyincrease market share.F-8
Overview of <strong>Indonesia</strong> and its Economy1. OVERVIEW OF INDONESIA AND ITS ECONOMY1.1 Regional context and background<strong>Indonesia</strong> is the world’s largest archipelagic country with approximately 17,508 islands scattered aroundthe equator. Its strategic location between Asia and Australia has historically influenced its culture, society,politics and economy.<strong>Indonesia</strong> is the world’s fourth most populous country after China, India and the USA and has the largestMuslim population in the world. Over 300 ethnic groups are represented with the largest being theJavanese and Sundanese.Figure 1.1.1 <strong>Indonesia</strong>Source: maps by Rei-artur (http://commons.wikimedia.org/wiki/User:Rei-artur)The five main islands of <strong>Indonesia</strong> are Java, Sumatra, Kalimantan (the <strong>Indonesia</strong>n part of Borneo), NewGuinea (shared with Papua New Guinea) and Sulawesi. The capital, Jakarta, is on the island of Java and isthe nation’s largest city, followed by Surabaya, Bandung, Medan and Semarang.At the time of the 2000 National Census, the population of <strong>Indonesia</strong> was 206 million people. This had risento approximately 222 million people by 2006. 130 million people live on the island of Java, the world’s mostpopulous island.1.2 Historical backgroundFrom the early centuries, the <strong>Indonesia</strong>n archipelago has been a major destination for trading, beginningwith trade in spices when Chinese merchants first landed in Sumatra. <strong>Indonesia</strong>’s history has since beenshaped by foreigners attracted to the archipelago by its rich and abundant natural resources. Theseincluded Indians, Muslim traders from the Arabic and Persian lands, and Europeans, particularly theDutch.After three centuries of Dutch rule and over three years of Japanese occupation, <strong>Indonesia</strong> declared itsindependence on August 17th, 1945. Independence was formally recognised by the Hague Conventionsome four years later on December 27th, 1949.1.3 Political backgroundUnder the regime of President Suharto, <strong>Indonesia</strong> was under a political system which emphasisedconsensus, unity and controlled authority. For 30 years, the Golkar Party, led by Suharto, had the majorityin both the legislative and executive bodies. This came to an end in 1998 when Suharto stepped down asPresident.Since 1998 <strong>Indonesia</strong> has hosted two general elections. In 1999, the country appointed AbdurrahmanWahid from Partai Kebangkitan Bangsa (PKB) as its fourth President. He was removed as President by theparliament and was replaced by Megawati Sukarnoputri, the Vice President, who was also the leader ofPartai Demokrat <strong>Indonesia</strong> Perjuangan (PDIP).Three years later, in April 2004, <strong>Indonesia</strong> hosted its first direct presidential election. Although Golkar wonmore seats than any other party, and PDIP came in second, the candidate from Partai Demokrat (PD),F-9
Overview of <strong>Indonesia</strong> and its Economyretired army general, Susilo Bambang Yudhoyono (SBY), was elected President. Jusuf Kalla (JK) fromGolkar was elected Vice President.1.4 System of government<strong>Indonesia</strong> is a republic with a presidential system. Being a unitary state, executive power resides with thecentral government. Since 2001 new laws on regional autonomy have been introduced to promotedecentralisation, as requested by provincial administrations.As head of state, the President of <strong>Indonesia</strong> also serves as the commander-in-chief of the <strong>Indonesia</strong>narmed forces and is responsible for domestic governance, policy-making and foreign affairs. He issupported by the Vice President and a council of Ministers. The President is elected for a maximumof two consecutive five-year periods.On the legislative front, the People’s Consultative Assembly (MPR or Majelis Permusyawaratan Rakyat)stands as the highest representative body at the national level. Its main roles include supporting andamending the constitution, inauguration of the President and the setting of broad outlines of state policy(GBHN or Garis-garis Besar Haluan Negara). MPR contains two lower Houses of Representatives—thePeople’s Representative Council (DPR or Dewan Perwakilan Rakyat) and the Regional RepresentativesCouncil (DPD or Dewan Perwakilan Daerah).The DPR is the legislative institution which passes state laws and monitors the executive body (i.e. thegovernment). Members of the DPR are elected for five year terms and selection is based on proportionaterepresentation of more than two thousand electoral districts.The <strong>Indonesia</strong>n judicial system comprises a hierarchical system of courts, the highest being the SupremeCourt. Most civil disputes appear first before a State Court. Final appeals are heard and case reviews areconducted by the Supreme Court. A Commercial Court handles cases such as bankruptcy and liquidation.Other court systems recognised by the country are:• State Administrative Court—hears administrative law cases against the government;• Constitutional Court—hears disputes concerning legality of law products, general elections, dissolutionof political parties and the capacity of a state institution; and• Religious Court—deals with specific religious cases, particularly marriages.1.5 Administrative divisions<strong>Indonesia</strong> currently has 33 provinces. These comprise 27 typical provinces, two special regions (DaerahIstimewa i.e. Aceh and Yogyakarta) and one special capital city region (Daerah Khusus Ibukotai.e. Jakarta). Each province is headed by a Governor.Provinces (the first administrative level or Dati I) in <strong>Indonesia</strong> are divided into Regencies (kabupaten) inrural areas or Municipalities (kotamadya) in urban areas. Regencies and Municipalities (the secondadministrative level or Dati II) are further divided into Subdistricts (kecamatan). The lowest level in theadministrative hierarchy is the Village (desa) in rural areas or the Neighbourhood (kelurahan) in urbanareas. Legislation at the provincial level is handled by parliaments from Dati I and Dati II. Governors,mayors and regents must be directly elected by the people and this has been effectively implemented since2004.1.6 Current economic policy<strong>Indonesia</strong> has seen considerable economic growth over the past 40 years. Initially a country largelydependent on agriculture, it is now one of the major emerging markets in the region. Today, <strong>Indonesia</strong> is theworld’s largest exporter of liquefied natural gas (LNG) and the 17th largest oil producer in the world,responsible for about 1.8% of global production (as at 2004).A number of economic packages have been launched, aimed at increasing foreign investment,encouraging infrastructure development and strengthening the financial sector.Recent economic trends have been positive. Domestic consumption has been steadily increasing, thecurrency has been strengthening with reduced volatility and there has been stable economic growth.F-10
Overview of <strong>Indonesia</strong> and its Economy1.7 Economic performance1.7.1 Size of the economyIn 2005, <strong>Indonesia</strong>’s GDP was US$281 billion, ranking <strong>Indonesia</strong> as the 26th largest economy in the world.Per capita GDP at PPP was US$4,458, placing <strong>Indonesia</strong> 110th in the world.The industrial sector accounted for 45.8% of GDP, followed by services (40.8%) and agriculture (13.4%)The agricultural sector is the country’s largest employer, providing jobs for 44.3% of the 95 million-strongworkforce, followed by the services sector (36.9%) and the industrial sector (18.8%).Table 1.7.1 Key economic indicators, 2005Indicators <strong>Indonesia</strong> Malaysia India Thailand ChinaNominal GDP (US$ bn) . . . . . . . . . . . . . . . . . . . . 281.3 130.6 797.8 176.6 2,224.9Current-account balance (US$ bn) . . . . . . . . . . . . 2.6 14.1 (12.9) (3.7) 160.8Current-account balance (% GDP) . . . . . . . . . . . . 0.9 10.8 (1.6) (2.1) 7.2Exports of goods fob (US$ billion) . . . . . . . . . . . . 83.2 141.8 98.1 109.3 762.5Imports of goods fob (US$ billion) . . . . . . . . . . . . (61.8) (115.5) (149.8) (106) (628.3)External debt (US$ billion) . . . . . . . . . . . . . . . . . . 135.0 52.0 125.5 52.5 252.8Debt-service ratio, paid (%) . . . . . . . . . . . . . . . . . 14.2 4.8 9.2 8.6 5.2Source: Economist Intelligence Unit, Country Data plantation1.7.2 Economic baseHistorically, agriculture (including crop plantations, animal husbandry, fishing and forestry) has been thedominant sector in terms of both employment and economic output. <strong>Indonesia</strong>’s main agricultural productsinclude palm oil, rice, tea, coffee, spices and rubber.In addition, the country has abundant mineral resources. The mining sector has therefore been asimportant souce of income for the country. <strong>Indonesia</strong> is considered a major oil producer and is South EastAsia’s only member of the Organisation of the Petroleum Exporting Countries (OPEC).The industrial or manufacturing sector emerged in the late 1970s and surpassed the agricultural sector inGDP contribution in the mid 1980s. Between 1995 and 1997, the industrial sector replaced the servicessector as the major contributor to GDP. Key sub-sectors include consumer goods products, textiles,apparel and car manufacturing.The services sector has continued to grow over the past five years, supported by growth in tourism, as wellas growth in the retail and financial sectors.Table 1.7.2 GDP by industrial origin, 2000-2005 current prices (in billions Rupiah)2000 2001 2002 2003 2004 2005GDP by industrial origin. ..... 1,389,770 1,684,280 1,863,275 2,045,853 2,273,142 2,729,708Agriculture . . . . . . . . . . . . . . . . . 216,831 263,328 298,877 325,654 331,553 365,560Mining . . . . . . . . . . . . . . . . . . . . 167,692 182,008 161,024 169,536 196,112 285,087Manufacturing . . . . . . . . . . . . . . 385,598 506,320 553,747 590,051 639,655 765,967Electricity, gas & water . . . . . . . . 8,394 10,855 15,392 19,541 22,067 24,993Construction. . . . . . . . . . . . . . . . 76,573 89,299 101,574 112,571 143,052 173,441Trade . . . . . . . . . . . . . . . . . . . . . 224,452 267,656 314,647 337,840 369,361 429,944Transport & communications . . . . 65,012 77,188 97,970 118,267 142,292 180,969Finance . . . . . . . . . . . . . . . . . . . 115,463 135,370 154,442 174,324 194,429 228,108Public administration. . . . . . . . . . 69,461 81,851 84,729 102,507 121,129 135,133Other . . . . . . . . . . . . . . . . . . . . . 60,294 70,407 80,874 95,562 113,491 140,508Net factor income from abroad . . (92,162) (61,051) (54,513) (79,629) (78,414) (85,355)Gross National Product (GNP) . . 1,297,608 1,623,229 1,808,762 1,966,225 2,194,728 2,644,354Source: Asian Development Bank, Key Indicators, 2006F-11
Overview of <strong>Indonesia</strong> and its Economy1.7.3 Economic growth—historical and forecast<strong>Indonesia</strong> has been known for its vest oil reserves and the Government has placed great importance onmanaging this resource. During the 1970s, <strong>Indonesia</strong> benefited from rising oil prices and this resulted inlarge export revenues for the country.From 1968 to 1981, <strong>Indonesia</strong>’s GDP grew steadily. However, growth slowed subsequently in 1987 as aresult of declining oil prices. <strong>Indonesia</strong> at this time was heavily dependant on oil revenues and this wascompounded by inefficiencies due to over-regulation. The Government began eliminating regulatoryobstacles in order to stimulate growth in the non-oil export sector, which resulted in a steady increase inGDP growth from 1987 to 1997.Economic growth was particularly strong from the early to mid 1990s. However, when the Asian financialcrisis hit the region in 1997, <strong>Indonesia</strong>’s economy suffered dramatically. In 1998, <strong>Indonesia</strong>’s GDPcontracted by 13.7% and unemployment rose to 15-20%. The economy began to recover in the late1990s, albeit slower than some other economies in the region. The country has since stabilised its bankingsector and taken steps to stimulate growth and investment, particularly in infrastructure. <strong>Indonesia</strong>’s GDPhas since grown from 3.8% in 2001 to 5.5% in 2006.Table 1.7.3 GDP growth, 2000-2006GDP growth (%)Country 2000 2001 2002 2003 2004 2005 2006Brunei . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 3.0 2.8 3.8 1.7 3.6 n/aChina................................... 8.0 7.5 8.3 9.5 9.5 9.9 10.7India*................................... 4.4 5.8 3.8 8.5 7.5 8.4 9.2<strong>Indonesia</strong> ............................... 4.9 3.8 4.4 4.7 5.1 5.6 5.5Malaysia................................. 8.9 0.3 4.4 5.4 7.1 5.3 5.9Philippines............................... 4.4 1.8 4.5 4.5 6.0 5.1 5.4Singapore. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.0 (2.3) 4.0 2.9 8.7 6.6 7.9Thailand................................. 4.8 2.2 5.3 7.0 6.2 4.5 5.0Vietnam................................. 6.8 6.9 7.1 7.3 7.8 8.4 8.2Source: Asian Development Bank (ADO 2006) & Jones Lang LaSalle Research*) Data for real GDP is based on constant factor costNote: Thailand GDP for 2006 is preliminary dataAccording to the Economist Intelligence Unit (EIU), real GDP growth in <strong>Indonesia</strong> is expected to accelerateto 6% in 2007 with interest rates and inflation expected to fall, and measures to improve the businessenvironment and encourage investment beginning to take effect. New policy packages on infrastructureand the financial sector are also expected to facilitate greater private sector investments in the years tocome. The EIU also expects exports to continue to grow, albeit at slower rates than the 12% growth in2006. Weaker forecast economic growth in <strong>Indonesia</strong>’s main export markets should be partially offset bystrong growth in China and the acceleration in manufacturing exports, particularly textiles and footwear.Stronger investment demand, together with rising private consumption and exports, will lead to higherdemand for imports. As a result, the current account surplus growth will likely fall in 2007 and remain flat in2008.F-12
Overview of <strong>Indonesia</strong> and its EconomyTable 1.7.4 <strong>Indonesia</strong> GDP, 2002-2011YearReal GDP(constant price)—Trillion Rp.Annualgrowth2002 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,506.102003 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,577.20 4.7%2004 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,656.80 5.0%2005 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,749.50 5.6%2006 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,843.80 5.4%2007 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,953.70 6.0%2008 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,073.60 6.1%2009 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,185.40 5.4%2010 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,305.90 5.5%2011 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,443.00 5.9%a = Actualf = ForecastSource: Economist Intelligence Unit, Country Forecast, February 2007Table 1.7.5 <strong>Indonesia</strong> forecast overview, 2007-2011Key indicator 2007 2008 2009 2010 2011Real GDP growth (%) . . . . . . . . . . . . . . . . . . . . . . . . . 6.0 6.1 5.4 5.5 5.9Consumer price inflation (av;%) . . . . . . . . . . . . . . . . . . 6.9 6.1 6.2 5.1 5.1Budget balance (% of GDP). . . . . . . . . . . . . . . . . . . . . (0.9) (0.6) (1.0) (0.9) (1.2)Current-account balance (% of GDP) . . . . . . . . . . . . . . 1.4 1.0 0.7 0.5 0.4Deposit rate (av;%) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3 9.1 9.6 9.1 9.0Exchange rate Rp.:US$ (av). . . . . . . . . . . . . . . . . . . . . 9,212 9,422 9,601 9,640 9,703Exchange rate Rp.:¥100 (av) . . . . . . . . . . . . . . . . . . . . 8,063 9,446 10,027 10,310 10,570Source: Economist Intelligence Unit, Country Forecast, February 20071.7.4 Private consumption expenditure growthSimilar to other South East Asian countries, strong domestic demand has become the dominant growthfactor in <strong>Indonesia</strong> over the last few years. Since the financial crisis in 1997, private consumption hasremained the principal driver of <strong>Indonesia</strong>’s economic growth.Prior to the crisis, private consumption contributed approximately 60% of total GDP. Between 2002 and2005, the proportion of private consumption expenditure increased to approximately 65% of total GDP.Over the last five years private consumption (at constant prices) rose at a rate of 4% per annum.F-13
Overview of <strong>Indonesia</strong> and its EconomyFigure 1.7.1: Private consumption (current prices), 2000-2005Trillion RpSource: Central Statistics Bureau2,000Private Consumption1,800Growth1,6001,4001,2001,00080060040020002000 2001 2002 2003 2004 2005Year25%20%15%10%5%0%Percentage GrowthIn nominal terms, private consumption expenditure in 2005 totalled approximately Rp. 1,786 trillion(current prices) compared to Rp. 1,533 trillion the previous year.The following table details <strong>Indonesia</strong>’s GDP from 2001 to 2005 based on expenditure and its proportion oftotal GDP.Table 1.7.6 GDP by expenditure—<strong>Indonesia</strong>, 2000-2005<strong>Indonesia</strong> current prices (in billions rupiah)2000 2001 2002 2003 2004 2005Expenditure . . . . . . . . . . . . . . . . . 1,389,770 1,684,280 1,863,275 2,045,853 2,273,142 2,729,708Private consumption . . . . . . . . . . . 856,798 1,039,655 1,231,965 1,372,078 1,532,888 1,785,596Government consumption . . . . . . . 90,780 113,416 132,219 163,701 191,056 224,981Gross fixed capital formation . . . . . 275,881 323,875 353,967 392,789 492,850 599,795Increase in stocks . . . . . . . . . . . . . 33,283 47,194 35,980 122,682 34,515 7,172Exports of goods & services. . . . . . 569,490 642,595 595,514 613,721 729,321 915,610Less: Imports goods & services . . . 423,318 506,426 480,815 462,941 623,525 797,276Statistical discrepancy . . . . . . . . . . (13,145) 23,972 (5,554) (156,176) (83,963) (6,170)Percentage of GDPPrivate consumption . . . . . . . . . . . 61.7 61.7 66.1 67.4 67.4 65.4Government consumption . . . . . . . 6.5 6.7 7.1 8.0 8.4 8.2Gross domestic capital formation . . 22.2 22.0 20.9 25.3 23.2 22.2Exports of goods & services. . . . . . 41.0 38.2 32.0 30.1 32.1 33.5Imports goods & services. . . . . . . . 30.5 30.1 25.8 22.7 27.4 29.2Source: Asian Development Bank, Key Indicators, 20061.7.5 Per capita income growthDuring the oil boom in the 1970s, <strong>Indonesia</strong>’s GDP per capita increased from US$80 in 1970 to US$520 in1980, representing an increase of more than 500%. However, growth fell sharply throughout the 1980s to21%, improving to 25% in the following decade. The 1997 financial crisis had significantly reduced<strong>Indonesia</strong>’s purchasing power. However, the economic recovery in 2002, <strong>Indonesia</strong>’s purchasing powerreturned to pre-crisis levels. According to data from Central Statistics Bureau, per capita gross nationalincome (GNI) grew by an average of 16% per annum in Rupiah terms across 2001-2006.F-14
Overview of <strong>Indonesia</strong> and its EconomyFigure 1.7.2: GNI per capita (current prices), 2000-2005Million Rp16.014.012.010.08.06.04.02.0Per Capita GNIGrowth35%30%25%20%15%10%5%Percentage GrowthSource: Central Statistics Bureau0.02000 2001 2002 2003 2004 2005 2006Year0%Compared with other countries in the region, <strong>Indonesia</strong> recorded the strongest growth between 2000 and2005 in GNI per capita. Below is the comparison of <strong>Indonesia</strong>’s GNI per capita against various Asianeconomies, using the Atlas Method. The Atlas method smoothens exchange rate fluctuations by usingthree-year moving averages and price-adjusted conversion factors.Table 1.7.7 <strong>Indonesia</strong> and selected Asian countries’ GNI per capita,2000-2005 current prices (in US dollars)Country 2000 2001 2002 2003 2004 20055-yeargrowthChina . . . . . . . . . . . . . . . . . . . . 930 1,000 1,100 1,270 1,500 1,740 87.1%India . . . . . . . . . . . . . . . . . . . . . 450 460 470 530 620 720 60.0%<strong>Indonesia</strong> ................. 590 740 830 940 1,140 1,280 116.9%Malaysia . . . . . . . . . . . . . . . . . . 3,430 3,460 3,600 3,940 4,520 4,960 44.6%Philippines. . . . . . . . . . . . . . . . . 1,040 1,080 1,050 1,100 1,170 1,300 25.0%Singapore . . . . . . . . . . . . . . . . . 23,030 21,260 20,820 21,890 24,760 27,490 19.4%Thailand . . . . . . . . . . . . . . . . . . 1,990 1,950 1,970 2,150 2,490 2,750 38.2%Vietnam. . . . . . . . . . . . . . . . . . . 380 410 430 470 540 620 63.2%Based on World Bank Atlas, data are converted from national currency to US$ using the average nominalexchange rate for the year.Source: World Bank, World Development Indicators, 2006However, in order to obtain a like-for-like comparison of various economies, a purchasing power parity(PPP) approach is commonly used. PPP conversion takes into account differences in the prices of goodsand services, particularly non-tradables, and thereby provides a more accurate measure of the real valueof output produced by an economy, compared to other economies. Using the PPP method, <strong>Indonesia</strong>’sgrowth is below China’s and India’s.F-15
Overview of <strong>Indonesia</strong> and its EconomyTable 1.7.8 <strong>Indonesia</strong> and selected Asian countries GNI per capitaGNI per capita—Atlas methodCurrent US dollarsGNI per capita—PPP International dollarsCountry 2000 2001 YoY growth 2004 2005 YoY growthChina . . . . . . . . . . . . . . . . . . . . . . . 1,500 1,740 16.0% 5,890 6,600 12.1%India . . . . . . . . . . . . . . . . . . . . . . . 620 720 16.1% 3,120 3,460 10.9%<strong>Indonesia</strong> ................... 1,140 1,280 12.3% 3,480 3,720 6.9%Malaysia . . . . . . . . . . . . . . . . . . . . 4,520 4,960 9.7% 9,720 10,320 6.2%Philippines . . . . . . . . . . . . . . . . . . . 1,170 1,300 11.1% 4,950 5,300 7.1%Singapore . . . . . . . . . . . . . . . . . . . 24,760 27,490 11.0% 27,370 29,780 8.8%Thailand. . . . . . . . . . . . . . . . . . . . . 2,490 2,750 10.4% 7,930 8,440 6.4%Vietnam . . . . . . . . . . . . . . . . . . . . . 540 620 14.8% 2,700 3,010 11.5%In current US dollars (Atlas) versus international dollars (PPP). The international dollar is a hypotheticalunit of currency that has the same purchasing power that the U.S. dollar has in the United States at a givenpoint in time.Source: World Bank, World Development Indicators, 20061.7.6 CompetitivenessIn 2006, <strong>Indonesia</strong> was ranked 50th on the World Economic Forum’s competitiveness scale, the highestrank it has ever achieved and a marked improvement from 2005, when it ranked 69th. The successfulachievements during 2006 were primarily driven by greater confidence in the new administration led bySBY and JK, easier access to bank loans, decreased in lobying power of business groups and a moreeffective anti-trust policy.The following table is the World Economic Forum’s Global Competitive Indexes (GCI) for selected Asianeconomies. While <strong>Indonesia</strong> may still have considerable ground to make up on some of the moredeveloped countries in the region, the improvement over the past year has been very positive.Table 1.7.9 Global competitiveness index (GCI), 2006GCICountry2006Rank2006Score2005RankChanges2005-2006Taiwan............................................... 13 5.41 8 D (5)South Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 5.13 19 D (5)Malaysia.............................................. 26 5.11 25 D (1)Thailand.............................................. 35 4.58 33 D (2)India................................................. 43 4.44 45 B 2<strong>Indonesia</strong> ............................................ 50 4.26 69 B 19China................................................ 54 4.24 48 D (6)Philippines............................................ 71 4.00 73 B 2Vietnam.............................................. 77 3.89 74 D (3)Source: World Economic Forum, 20061.7.7 Interest ratesInterest rates in <strong>Indonesia</strong> are among the highest in the region, which ultimately impact foreigninvestments and consumer spending. However, anecdotal evidence suggests that the impact of a highinterest rate environment is felt more strongly in the middle-lower and lower income group (or the massmarket) rather than in the higher income group. The middle to upper class group in <strong>Indonesia</strong> is relativelyresilient to the increase in interest rates due to their lower dependency on bank loans. This can be seen inthe residential property market where a large portion of the buyers in the middle to upper income groupprefers to buy houses or condominiums in cash, rather than through a credit loan from the bank.F-16
Overview of <strong>Indonesia</strong> and its EconomyIn an effort to generate business activity, the <strong>Indonesia</strong>n government reduced the benchmark interest rateof the one-month Central Bank Promissory Notes (or SBI) progressively in 2002. As a result, the SBI ratestood at an historical low in 2004 of around 7%. Despite the positive impact this had on consumptiongrowth and related sectors, the decline in the benchmark interest rate did not lead to similar drops in banklending rates.In 2005, the government decided to adjust the SBI rate to above 13% in order to support the Rupiah. Whilethis was reasonably effective, it placed greater burdens on the business environment. Declining inflationthrough 2006 and a more stable local currency saw the SBI rate decline to around 10% by the end of 2006.Prime lending rates, however, remained at around 15%.Based on EIU’s forecasts, interest rates are expected to decline over the course of 2007, albeit at a slowerrate than in 2006. <strong>Indonesia</strong>’s benchmark interest rate was lowered by 25 basis point to 9.5% in January2007. The scope for a confirmed lowering of interest rates in 2007 will be constrained by a narrowingdifferential with rates in OECD countries.Figure 1.7.3: Benchmark interest rate growth, 2001-200620.018.016.014.0Percentage12.010.08.06.04.0Prime Lending Rate1-Month Time Deposit Rate2.01-Month SBI Rate0.0Jan-01 Sep-01 May-02 Jan-03 Sep-03 May-04 Jan-05 Sep-05 May-06DateSource: Bank <strong>Indonesia</strong>1.7.8 Exchange ratesRising domestic interest rates and a declining inflation gap in the early 1990s encouraged strong inflows offoreign capital to the country. This was followed by an appreciation of the Rupiah in 1996. Unfortunately,this was short-lived as political events in the subsequent years caused investors to reassess <strong>Indonesia</strong>’spolitical risks. The Asian financial crisis orginated in Thailand and spread across South East Asia. Thisexacerbated concerns over political instability in <strong>Indonesia</strong> and destabilised the Rupiah.Since the crisis, the Rupiah has stabilised and it continued to strengthen in 2006, ending 2006 at anexchange rate of Rp. 9,020 per US$1.Table 1.7.10 <strong>Indonesia</strong>n Rupiah exchange rate against the US dollar (middle rate, end-of-period)Year Rp./US$ Year Rp./US$1991 1,992 1999 7,1001992 2,062 2000 9,5951993 2,110 2001 10,4001994 2,200 2002 8,9401995 2,308 2003 8,4651996 2,383 2004 9,2901997 4,650 2005 9,8301998 8,025 2006 9,020Source: Bank <strong>Indonesia</strong>, 2006F-17
Overview of <strong>Indonesia</strong> and its EconomyLooking ahead, the EIU expects the nominal Rupiah exchange rate will weaken marginally to an average ofRp. 9,212 in 2007, with a further decline to Rp. 9,422 in 2008. In real terms, the Rupiah is expected to befairly stable against the US dollar in 2007-08. The Rupiah will remain exposed to the risk of volatility duringthe EIU’s forecast period, as large inflows of foreign portfolio funds in 2006 have left the Rupiah vulnerableto short-term perceptions of political risk.1.7.9 InflationInflation in <strong>Indonesia</strong> remains relatively high compared to other South East Asian economies. A majorcontributing factor in the past two years has been the sharp rise in energy prices.The crisis in 1997 led to severe inflation in 1998 and 1999, driven by the collapse of the Rupiah and therapid movement of money supply to the banking sector. However, in 1999, the return of macroeconomicstability, together with subdued economic growth, reduced inflation to around 2%, which at around 9% inthe following five years. The government’s decision to increase fuel prices by an average of 125% inOctober 2005 caused inflation to increase significantly to 17%. Inflation improved to 7% in 2006. Below isthe comparison table of average annual inflation between <strong>Indonesia</strong> and selected Asian countries.Table 1.7.11 Consumer price inflation, 1996-2006 average annual% growthCountry 96 97 98 99 00 01 02 03 04 05 06Brunei . . . . . . . . . . . . . 2.0 1.7 (0.4) 0.0 1.2 0.6 (2.3) 0.3 0.9 1.1 0.5China . . . . . . . . . . . . . 8.3 2.8 (0.8) (1.4) 0.4 0.7 (0.8) 1.2 3.9 1.8 1.5India . . . . . . . . . . . . . . 8.8 7.4 13.2 4.7 3.9 3.7 4.5 3.7 3.9 4.0 5.6<strong>Indonesia</strong> .......... 7.0 6.2 58.0 20.7 3.8 11.5 11.8 6.8 6.1 10.5 13.0Malaysia . . . . . . . . . . . 3.5 2.6 5.1 2.8 1.6 1.4 1.8 1.1 1.4 3.0 3.8Pakistan . . . . . . . . . . . 10.8 11.8 7.8 5.7 3.6 4.4 2.5 3.1 4.6 9.3 7.9Philippines. . . . . . . . . . 9.1 5.9 9.7 6.4 4.0 6.8 2.9 3.5 6.0 7.6 6.7Thailand . . . . . . . . . . . 5.9 5.6 8.1 0.3 1.6 1.7 0.6 1.8 2.8 4.5 4.9Vietnam . . . . . . . . . . . 5.7 3.2 7.7 4.2 (1.6) (0.4) 4.0 3.2 7.7 8.2 7.6Source: World Bank, World Development Indicators, 2006Note: data for <strong>Indonesia</strong> refers to urban areas/selected cities onlyStable international oil prices and a relatively strong Rupiah are expected to help contain inflationarypressures in 2007, despite stronger economic growth. As a result, the EIU has forecast CPI will average6.9% in 2007 and 6.1% in 2008. Drought and an import ban may place upward pressure on rice prices in2007. Wage pressures in 2007-08 should be subdued, given relatively high unemployment and easinginflationary pressures.1.8 Population growth and demographics1.8.1 Population growth<strong>Indonesia</strong> is the fourth most populous country in the world after China, India and the USA. The 2000Census recorded the population at 201 million, with the Central Bureau of Statistics (BPS) estimating thatthe population had risen to 222 million in 2006. Population growth has slowed considerably, averaging1.5% per annum throughout the 1990s, a result of successful family planning programs that havesubstantially reduced the fertility rate.About 95% of the population is of Malay origin, with over 300 minority groupings, including theMelanesians, Polynesians and Micronesians as well as the estimated 4 million of ethnic Chinese. Themost common religion practiced is Islam (87%), followed by Christianity (10%), Hinduism (2% mainly inBali) and Buddhism (1%).The gender profile of <strong>Indonesia</strong> is well balanced, with approximately 101 million males and 100 millionfemales based on the 2000 National Census. Most of the population was classified as of working-age(between 15-64 years old). However, among the working-age population, the majority were aged between15 and 45 years, accounting for over 51% of <strong>Indonesia</strong>’s total population. Combined with 30% of theF-18
Overview of <strong>Indonesia</strong> and its Economypopulation aged under 15 years of age, the country has a huge pool of human resources to draw upon inthe short to medium term.Table 1.8.1 <strong>Indonesia</strong>—population by gender and age, 2000Age group Male Female Total % of total0-15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,191 31,060 63,251 30.7%15-25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,886 21,921 42,807 20.8%25-45 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,201 31,210 62,411 30.3%45-65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,358 13,682 28,040 13.6%65+......................................... 4,788 4,582 9,370 4.6%Total. ....................................... 103,424 102,455 205,879 100%Source: Central Bureau of Statistics (BPS), 2000 CensusPopulation growth is forecast to average 1.4% per annum between 2006 and 2010. This lower growth rateshould prove positive in the longer term as it places less strain on public services and infrastructure, reducenew entrants to the labour market (currently nearly 2.5 million a year) and eventually facilitate higher levelsof GDP per capita. Increased life expectancy, and falling birth and death rates will lead to a steady ageing ofthe population, and this is expected to change consumption patterns over the long run.Table 1.8.2 Forecast of demographic profile, 2000-2010Population (m) 2000 2005 2010Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205.8 242 258.8Male . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.4 120.8 129.2Female . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.4 121.2 129.6Age profile (% of total population)0-14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.7 29.1 27.615-64 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.7 65.7 66.665+......................................................... 4.6 5.2 5.8Age profile (% of total population) 2000 2005 2010Young-age dependency ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.47 0.44 0.41Old-age dependency ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.07 0.08 0.09Working-age population (million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145.6 158.9 172.3Urbanisation (% of total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 47.9 53.2Labour force (million) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95.7 106.5 115.5Period averages 2001-05 2006-10Population growth (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 1.4Working-age population growth (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8 1.6Labour force growth (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 1.6Crude birth rate (per 1,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.9 19.5Crude death rate (per 1,000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7 6.1Infant mortality rate (per 1,000 live births) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.1 32.1Source: Economist Intelligence Unit estimates and forecasts, February 2007, Central Statistics Bureau(BPS), International Labour Organisation (ILO), labour force projections; National Statistics1.8.2 DistributionIndustrial development in <strong>Indonesia</strong> has resulted in large-scale migration to urban areas. In 2005, 46% ofthe population were living in cities, compared with 31% in 1990 and 22% in 1980. As a result, thepopulation distribution remains highly uneven. Despite attempts from the government to ease congestionin Java, Bali and Madura through transmigration programs, 61% of <strong>Indonesia</strong>ns still live on these threeislands, which constitute only around 7% of <strong>Indonesia</strong>’s land surface area. In 2004, the population densityof Java island stood at an estimated 1,009 people per square kilometre (sq.km), while in Jakarta, theF-19
Overview of <strong>Indonesia</strong> and its Economydensity is as high as 13,177 people per sq.km. Outside Java and Bali, population density averages lessthan 100 people per sq.km, with Papua having only seven people per sq.km.1.8.3 Welfare and povertyOver the last 30 years, <strong>Indonesia</strong> has made good progress in raising the welfare and standard of living of itspoorest citizens. The proportion of the population living below the nationally defined poverty linedecreased from 27% in 1999 to 17% in 2004. Progress has also been made against internationalbenchmarks, with only 7.4% (according to 2003 data) of the population living on less than US$1 per day.However, overall income distribution remains highly unequal. Statistics show that some 53% of thepopulation (110 million people) still live on less than US$2 per day. This group suffers from the lack ofaccess to basic services such as water and sanitation, inadequate provision of healthcare and educationand remains highly vulnerable to shocks in the economy. Geographically, poverty is concentrated in ruralareas and in eastern <strong>Indonesia</strong>. In 2004, approximately 20% of the rural population lived below the povertyline, compared with 12% of the urban population.Figure 1.8.1: Socio-economic survey* in <strong>Indonesia</strong>, 2001-2006Percentage100%90%80%70%60%50%40%30%20%10%0%2001 2002 2003 2004 2005 2006YearA (Above Rp2 mil/month)B (Rp1.5-2 mil/month)C1 (Rp1.0-1.5 mil/month)C2 (Rp 0.7-1.5 mil/month)D (Rp0.5-0.7 mil/month)E (Below Rp 0.5 mil/month)* ACNielsen Socio-Economic Survey is based on monthly household expenditure, not actual income. Nostandard can be used (or widely accepted) to calculate direct relation between expenditure and incomeSource: ACNielsenEconomic development in <strong>Indonesia</strong> has seen a significant increase of the middle class over the past fiveyears. This middle income group is considered one of the vital contributors to the economy and isperceived as the most prospective target in mass consumer markets. Based on the Social EconomicSurvey (SES) by ACNielsen conducted in nine major cities in <strong>Indonesia</strong>, the share of population of themiddle income group (classified as SES A, B & C) has steadily grown from 50% in 2001 to 64% in 2006. Assuch, it is estimated that the urban middle income population in <strong>Indonesia</strong> totals approximately 66 millionpeople. This particular group is likely to be considered a major target market for modern retail shoppingcentres.1.9 TourismTourism is an important element of the <strong>Indonesia</strong>n economy and an important source of foreign exchangerevenues. Comprising more than 17,000 islands, with the second longest shoreline in the world, 300different ethnic groups, 250 languages and a year round tropical climate, <strong>Indonesia</strong> is a major foreigntourist destination.1.9.1 International tourismInternational tourism campaigns have focused largely on tropical coastal destinations such as Bali.Cultural tourism is another important aspect of the industry, with the Toraja, Prambanan and Borobudurtemples, Yogyakarta and Minangkabau being popular destinations for cultural enthusiasts, who are alsoattracted to the many Hindu festivities in Bali.F-20
Overview of <strong>Indonesia</strong> and its EconomyFrom 1986 to the mid 1990s, the growth of the tourism industry accelerated sharply, as did touristspending. Aided by a relatively stable socio-economic and political climate, international visitor numbersreached around 5 million per annum. In 2003, international arrivals to <strong>Indonesia</strong> declined by over 10%,affected by the bombings in Bali in October 2002. However, the number of tourist arrivals in <strong>Indonesia</strong>recovered in 2004.In 2004 tourist arrivals for holiday purposes accounted for 53% of total arrivals, while business visitorsaccounted for around 40%. Repeat visits accounted for over 80% of total arrivals, reflecting visitorsatisfaction with the country as a destination area, as well as ongoing business commitments in <strong>Indonesia</strong>.Table 1.9.1 International visitors to <strong>Indonesia</strong>, 2000-2005—growth of arrivals, expenditure &length of stayYearAverageexpenditure/personInternationalvisitors Per visit Per day(US$)Average stayin day(s)Foreignexchangeincome(million US$)2000 . . . . . . . . . . . . . . . . . . . . . . . . . 5,064,217 1,135.18 92.59 12.3 5,748.82001 . . . . . . . . . . . . . . . . . . . . . . . . . 5,153,620 1,053.36 100.42 10.5 5,396.32002 . . . . . . . . . . . . . . . . . . . . . . . . . 5,033,400 893.26 91.29 9.8 4,305.62003 . . . . . . . . . . . . . . . . . . . . . . . . . 4,467,021 903.74 93.27 9.7 4,037.02004 . . . . . . . . . . . . . . . . . . . . . . . . . 5,321,165 901.66 95.17 9.5 4,797.92005 . . . . . . . . . . . . . . . . . . . . . . . . . 5,002,101 904.00 99.86 9.1 4,521.9Source: Ministry of Culture and Tourism, Republic of <strong>Indonesia</strong>Increased stability will continue to underpin future tourism growth.1.10 Economic outlook and implications for the retail marketThe domestic trade (retail and wholesale) and hotel and restaurant sectors accounted for 15.7% of realGDP in 2005. Growth in these sectors in recent years has been broadly in line with the overall rate ofgrowth in GDP. This trend should continue, leading to strong growth in line with the short-term outlook forthe <strong>Indonesia</strong>n economy.The move towards democracy and a more favourable investment environment have resulted in <strong>Indonesia</strong>heading towards a stronger economic foundation, aimed at regaining its pre-1998 position as one of the‘Tiger’ economies of the region. In the longer term, with its vast population, abundant labour and naturalresources, <strong>Indonesia</strong> is well placed to be a future growth economy. Economic growth over the past fewyears, particularly growth of the middle income group, has opened up considerable opportunities in theretail market and is expected to continue in the future.Drivers of the retail market over the short to medium term include:• Population growth• Untapped potential markets, both geographic and demographic• Growing middle class (more urban population, modern lifestyle)• Consumer spending being a predominant component of <strong>Indonesia</strong>’s GDP structure• Long-term positive economic outlook (“the next eleven” according to Goldman Sachs 2005 report)F-21
<strong>Retail</strong> Market Overview2. RETAIL MARKET OVERVIEWOver the past five years, the retail market in <strong>Indonesia</strong> has grown in line with the country’s GDP growth.The steady growth in consumer purchasing power and the implementation of regional autonomy laws havesupported the development of the industry, thus providing more opportunities for retailers to expand theirbusinesses into new areas. The relaxation of government policies relating to foreign investment has seen amarked increase in foreign retailers and investors particularly in Jakarta and other large cities such asSurabaya, Medan, Bandung and Denpasar.With the largest population in the South East Asian region and an affluent and growing urban middle class,currently estimated at around 66 million people, <strong>Indonesia</strong> has significant potential for future retaildevelopment and growth.2.1 <strong>Retail</strong> sales growth—historical and forecastThe retail sector was the first sector to recover from the economic crisis in 1998, with retail trade increasingby over 60% in 1999. This rapid recovery was driven predominantly by strong domestic consumption, andserved also as a primary driver of <strong>Indonesia</strong>’s economic growth.Since then, nominal retail sales growth has averaged 11% per annum, with this rate forecast to continueover the next five years (to 2011). The two major drivers are low forecast inflation and interest rates. In realterms, retail sales are expected to grow by an average of 5.9% per annum between 2007 and 2011.Figure 2.1.2: <strong>Retail</strong> sales (US$M) (current prices), 1994-2011Source: EIU$USM300,000250,000200,000150,000100,00050,0000Historical <strong>Retail</strong> SalesForecast <strong>Retail</strong> SalesGrowth1994 1996 1998 2000 2002 2004 2006 2008 2010Year80%60%40%20%0%-20%-40%-60%-80%% GrowthF-22
<strong>Retail</strong> Market OverviewTable 2.1.1 <strong>Indonesia</strong> retail sales (US$ Million) (current price), 1994-2011Year<strong>Retail</strong> sales(US$ Million)Annualgrowth1994 (a) ...................................................... 83,6181995 (a) ...................................................... 96,921 15.9%1996 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,130 12.6%1997 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,578 (7.8)%1998 (a) ...................................................... 45,597 (54.7)%1999 (a) ...................................................... 73,216 60.6%2000 (a) ...................................................... 71,836 (1.9)%2001 (a) ...................................................... 70,011 (2.5)%2002 (a) ...................................................... 89,908 28.4%2003 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,846 20.0%2004 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,483 6.2%2005 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,013 5.7%2006 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,186 23.3%2007 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167,587 12.3%2008 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185,141 10.5%2009 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203,264 9.8%2010 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224,717 10.6%2011 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247,935 10.3%a = Actualf = ForecastSource: Economist Intelligence Unit, Country Forecast, February 20072.2 Changes in income and retail spendingThe recovery in <strong>Indonesia</strong>’s economy over the past five years has resulted in strong real income growth,particularly in the nation’s capital, Jakarta. As mentioned earlier, economic growth has lead to aconsiderable increase in the number of middle income households, which contributing significantly toretail growth in the country. However, the growth is concentrated in major urban centres, while growth inrural areas and smaller cities still lags that in the urban centres.The following chart shows the GDP per capita comparison of <strong>Indonesia</strong>’s five major cities.Figure 2.2.1: GRDP per capita by <strong>Indonesia</strong>n city (current prices), 2003-200560Rp Millions50403020200320042005100<strong>Indonesia</strong> Jakarta Bandung Surabaya Semarang MedanCity*) Figures for <strong>Indonesia</strong>, Jakarta & Bandung are for 2003-20052005 figures for Surabaya, Semarang and Medan are n/aSource: Central Bureau of StatisticsJakarta, as the largest city, has the highest GRDP (current prices) per capita with an average growth rate ofabout 14% per annum over the past four years. It is then followed by Surabaya, Semarang, Medan andBandung. The GRDP growth rate of selected major cities above ranges from 10% to 15% per annum.F-23
<strong>Retail</strong> Market OverviewAccording to BPS, private consumption in 2006 was estimated at Rp. 2,093 trillion, representing 62.7% oftotal GDP. Private consumption (current prices) growth over the past five years has averaged around 15%per annum, while GDP (current price) growth has averaged 10% per annum.Apart from increases in income, retail spending growth has also been boosted by a lifestyle shift towards ahigher level of consumerism. This is particularly the case in major cities such as Jakarta, Surabaya,Bandung, Medan, Makassar and Bali. Furthermore, the growing presence of international retail brands,the expansion of local retail franchises and higher loan disbursements to retail consumers have changedthe way people shop and consequently altered their spending pattern.Data from Bank <strong>Indonesia</strong> indicate that over the past 5-years (from 2001 to 2006), non-property loanshave increased at an average of approximately 29% per annum. Jakarta Province holds the largestproportion of such loans, accounting for 37% of the total.Based on ACNielsen’s surveys, household spending has increased by between 9% and 21% over the pastfive years in major <strong>Indonesia</strong> urban markets.Table 2.2.1 Household expenditure in <strong>Indonesia</strong> 2001-2006Average annual householdexpenditure (Rp.)Total householdexpenditure(Rp. billions)Cities 2001 2006 2001 2006Averagegrowth2001-2006Jakarta . . . . . . . . . . . . . . . . . . . . . . . . . . 10,722,000 17,898,000 19,277 35,273 12.8%Botabek . . . . . . . . . . . . . . . . . . . . . . . . . . 6,768,000 12,576,000 13,699 35,979 21.3%Bandung . . . . . . . . . . . . . . . . . . . . . . . . . 10,812,000 17,532,000 4,825 8,317 11.5%Surabaya . . . . . . . . . . . . . . . . . . . . . . . . . 10,614,000 15,864,000 7,575 11,619 8.9%Semarang . . . . . . . . . . . . . . . . . . . . . . . . 9,522,000 15,522,000 2,690 5,554 15.6%Medan . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,904,000 17,400,000 5,182 8,113 9.4%Source: ACNielsen SurveysThe following table provides the household expenditure of middle income group (Social EconomicSurvey B and C).Table 2.2.2 Household expenditure of the middle class in <strong>Indonesia</strong> 2001-2006Total householdexpenditure ofmiddle class(Rp. billions)Cities 2001 2006Averagegrowth2001-2006Jakarta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,561 17,276 10%Botabek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,493 25,817 28%Bandung. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,793 4,304 9%Surabaya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,295 6,293 8%Semarang. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,758 3,691 16%Medan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,542 5,103 8%Source: ACNielsen SurveysHousehold expenditure of middle income group in the Botabek area, which includes Bogor, Depok,Tangerang and Bekasi, reached the highest average growth level at 28% per annum over the past fiveyears. This high growth was driven mainly by the increase in residential estate development in theperimeter suburbs of Jakarta which increased the number of middle class households in the area.Overall, real retail spending is expected to increase gradually over the next few years in urban areas, whilegrowth is likely to be slower in rural areas.F-24
<strong>Retail</strong> Market Overview2.3 Changing consumer behaviour and preferencesThe landscape of consumer purchasing patterns has altered dramatically following the 1998/99 economiccrisis. A December 2004 report by the USDA Foreign Agricultural Service noted the following changes inconsumer behaviour amongst <strong>Indonesia</strong>n consumers:• Extremely price conscious in their purchases and exhibiting less store and brand loyalty;• Private label growing in acceptance;• Younger consumers looking for variety and are less cost conscious;• Consumer advertising growing rapidly and affecting decision making;• Shopping more frequently for food and buying smaller quantities per shopping trip;• Shifting purchases of some staple items to traditional outlets and shopping more frequently at discountvenues in modern centres;• Increased preference for shopping at the supermarket/modern outlet rather than at traditional wetmarkets due to more comfortable shopping space, a more complete range of goods, guaranteed qualityof products (food safety and cleanliness), competitive price, good service, and easier accessibility.Furthermore, the report also mentioned that the patterns of consumer behaviour described above areexpected to continue. Consumers are adjusting to the higher prices paid for imported and local foodproducts, but will remain very selective in their product purchases and will be looking for good qualityproducts at low prices. Promotion will be important as consumers will be more fickle and impressionable,and there will be opportunities to replace traditional brands. Value-for-money will remain important toconsumers, but they will also be looking for greater variety. Over time, brand names should again becomeimportant to consumers and new product introductions will increase.Offering additional in-store services, which is already a relatively common practice, will become even morewidespread. These services include acceptance of credit/debit cards, ATM services, flower departments,laundry counters, food courts, bakery corners and home delivery. Money-back or other guarantees arealso expected to become more common. Ready-to-eat and ready-to-cook meals are becoming verypopular, particularly for expatriates and middle to upper income consumers.2.4 Brand acceptanceSince the <strong>Indonesia</strong>n government lifted the ban on direct foreign investment in the domestic retail industryin 1998, many foreign retailers have been aggressively expanding their presence in the local market. Priorto that, foreign retailers were required to form joint venture companies with a local partner. Since the newregulations came into force, foreign retailers have been allowed to set up a retail business entity with 100%foreign capital.Pioneers that expanded their presence in <strong>Indonesia</strong> were Continent and Carrefour, both operating ashypermarkets. These two retailers have since merged and now operate under the Carrefour brand. Thepositive reception to this format, which offers a more comfortable shopping experience combined with lowprice tags, has led to other hypermarkets expanding their presence in the country. In 2002, Gianthypermarket, a subsidiary of Dairy Farm, commenced operations, followed by Clubstore whichintroduced their own hypermarket in 2003.The expansion of hypermarkets had an impact on the way people shop in <strong>Indonesia</strong>. This is especiallyevident in major cities, where the hypermarket concept has matured. The expansion of hypermarkets andother modern formats has changed consumer shopping behaviour from purchasing their householdnecessities in traditional wet markets, to shopping in air-conditioned supermarkets or hypermarkets. Inaddition, the hypermarket format has been boosted by the aggressive promotion of a number of popularbrands.Success in other retail categories followed that of hypermarket. In the department store, Sogo and Metroare considered as leading foreign brands in this segment and are popular among the middle to upper classcommunities in major cities. This has attracted other brands to expand into <strong>Indonesia</strong>, such as DebenhamsF-25
<strong>Retail</strong> Market Overviewfrom the UK in 2004. More recently, Japanese retailer Seibu has confirmed plans to open their first outlet inJakarta.Increased consumerism, growing expatriate communities (particularly in Jakarta) and changing lifestylepatterns in major urban areas have lead to foreign cafés, restaurants and food operators opening stores.When Starbucks first opened their outlet in Jakarta in 2002, they gained an overwhelming response fromboth local and expatriate communities in <strong>Indonesia</strong>. On four years, they have expanded their outlets toaround 40 throughout <strong>Indonesia</strong>.Breadtalk, a bakery chain from Singapore, has also enjoyed a positive reception, growing to 14 outlets inprime shopping malls in <strong>Indonesia</strong>’s major cities since, from one in 2003.Other international food and beverage (F&B) chains are enjoying strong growth and acceptance in thelocal market. Leading brands that were already present in <strong>Indonesia</strong> before 1998 include McDonald’s,Kentucky Fried Chicken and Pizza Hut. These international fast food chains not only have outlets in majorcities but have also expanded into smaller cities throughout the country.The leisure and entertainment retailing sector, which includes cinemas, amusement parks, fitness clubs,billiard halls and bowling centres, has witnessed growth in line with the growing middle and upper incomegroups, and have become particularly popular with young families and the under 25 age groups. Populardestinations in this sector include Timezone, FitnessFirst, Celebrity Fitness and, more recently, BlitzMegaplex from Singapore. Kidzania, a children’s edutainment (education and entertainment) park fromBrazil is continuing this trend, having entered into pre-commitments to expand into Jakarta.Increasing media exposure, better education and higher levels of domestic and international travel haveprovided consumers with knowledge and exposure to major international brands. Coupled with this newlyacquired knowledge is the development of new shopping malls in major cities which adopt modern lifestyleconcepts.2.5 New retail formats and retailersThe <strong>Indonesia</strong>n retail industry has evolved from traditional markets to modern department stores andshopping malls over the past 30 years. Despite the fact that many <strong>Indonesia</strong>n consumers still purchasedaily necessities at traditional markets, they have become more accustomed to shopping in large, modernmalls. In most larger cities, particularly in Greater Jakarta, which include the surrounding cities of Bogor,Tangerang, Depok and Bekasi, shopping malls have played a significant role in the development of thecountry’s modern retail industry.Some of the more prevalent modern retailing formats are described below.2.5.1 Department storeA department store which carries a wide range of merchandise that is organised into separatedepartments for the purpose of promotion, service and control. This format was first introduced in the1960s with the launch of the government-run department store, Sarinah. Department store expansionincreased in the 1980s with several local privately-owned department stores entering the market. Thesepioneers include Matahari, Ramayana and Pasaraya, which share overall market dominance with foreigndepartment stores such as Sogo and Metro. The former primarily target the middle and middle-lowerincome group, while Sogo and Metro cater to the middle-upper and upper class segment.2.5.2 SupermarketsA large self-service retail market that sells food and grocery items. The supermarket format wasintroduced in <strong>Indonesia</strong> in the 1970s with the launch of Hero and Gelael. The growth of supermarketsis concentrated in major metropolitan markets, focusing more on the middle-upper and upper incomegroups.2.5.3 MinimarketA mini version of supermarkets offering basic and daily necessities. This concept was initially introduced byforeign retailers, such as Circle K and 7 Eleven, starting in the late 1980s in major cities. However, theseF-26
<strong>Retail</strong> Market Overviewretailers have since focussed on catering to the middle to upper income group in major cities. Conversely,the expansion of local minimarkets has outpaced foreign competitors in terms of outlet growth. This growthis further boosted by franchised businesses which are now more common in <strong>Indonesia</strong>. Leading retailerssuch as Indomaret and Alfa have enjoyed strong growth over the past three years, having expanded theirpresence deeper into smaller cities and neighbourhood areas. The total number of Indomaret and Alfaminimarkets is estimated to have reached over 1,300 outlets each.2.5.4 HypermarketA very large commercial establishment that is a combination of a department store and a supermarket. Asmentioned earlier, the development of hypermarkets in <strong>Indonesia</strong> began in 1998 with the opening ofCarrefour and Continent. Their foray into the domestic market had a significant impact on the retail scenein <strong>Indonesia</strong>. With a wide range of goods offered, ample space, complemented by good amenities forcustomers (i.e. more pay points and parking facilities), along with a commitment to provide the lowest pricepossible, this format quickly gained acceptance among local consumers.Currently, there are three major retailers competing in this market—Carrefour, Giant and Hypermart. Thelatter was introduced by the Matahari Group, offering a new concept and flexibility and promoting a “morecompact” hypermarket.2.5.5 Specialty storesSpecialty stores are relatively small retail outlets specialising in a narrow range of merchandise. From theearly period of modern retailing in <strong>Indonesia</strong>, the specialty store format has been the most common form ofretail outlet in the market. However, it was dominated by local “mom-and-pop” retailers. Along with thegrowth in the domestic retail industry and demand from the middle and upper income group in the 1990s,the specialty store format evolved into a more sophisticated and professionally managed business. Sincethe recovery from the financial crisis, there has been a steady growth of specialty store chains entering themarket, including both local and foreign brands as well as premium brands catering to the upper incomegroups and foreign tourists.A recent trend is management companies that control the roll-out of major international brands. Keyplayers in this segment include Mahagaya (Mango, Prada, Hugo Boss, Etiene Aigner etc), Club 21 (DKNY)and the publicly-listed Mitra Adi Perkasa, which has exclusive control of the expansion of popular brandsranging from sport apparel such as Reebok, Spalding, Union Bay, Airwalk, fashion brands including CalvinKlein, Marks & Spencer, NEXT, Zara, Top Shop and Top Man, children’s toys such as Bandai, Nikko,Barbie, Disney, OshKosh and cafés and restaurants such as Starbucks, Krispy Kreme and Pizza Marzano.According to ACNielsen, the growth of the above mentioned modern retail formats is outpacing thetraditional market, yet the latter still dominates <strong>Indonesia</strong>n retailing with a market share around 66%. Thisproportion, however, is expected to continue to diminish over time.Figure 2.5.1: Market share of modern and traditional retail, 2006Percentage Share10090807060504030201002000 2001 2002 2003 2004 2005 2006*YearMinimarketSupermarketTraditional Shop* Notes: Up until JuneSource: ACNielsen <strong>Retail</strong> Index 2006F-27
<strong>Retail</strong> Market Overview2.6 <strong>Retail</strong> provision and pipeline of shopping centresThe opening of the domestic retail industry to global players in 1998 has boosted the development of retailshopping malls in <strong>Indonesia</strong>. In the early post-crisis period (2000-2001), new retail developments wereconcentrated in Jakarta and its surrounding areas, but more recently other cities such as Surabaya,Medan, Bandung, Semarang, Palembang, Denpasar, Makassar and a number of secondary cities havewitnessed shopping centre development.In Greater Jakarta (which includes satellite cities such as Depok, Tangerang, Bekasi and Bogor), there arecurrently 130 shopping centres with a total stock of approximately 4.1 million sq.m, comprising leased andstrata-title retail space.With limited regulations governing where new supply can be established, new centres continue to be built,often as part of mixed use projects and often within close proximity to existing malls.Figure 2.6.1: <strong>Retail</strong> distribution by area and type600,000'000 Sq. m500,000400,000300,000200,000Leased <strong>Malls</strong>Strata-titled <strong>Malls</strong>100,0000CJ SJ NJ WJ EJ BGR BKS DPK TGRLocationSource: Jones Lang LaSalleNote: CJ: Central Jakarta; SJ: South Jakarta; NJ: North Jakarta; WJ: West Jakarta; EJ: East Jakarta,BGR: Bogor; BKS: Bekasi; DPK: Depok; TGR: TangerangIn Jakarta, existing shopping malls are concentrated in Central Jakarta, with around 30% of total stock,followed by South and North Jakarta with around 26% and 23% respectively. Existing shopping malls inWest and East Jakarta make up around 14% and 8% of total stock respectively.Outside Jakarta, most of the retail stock, about 40%, is concentrated in Tangerang, followed by Bekasi(26%) and Bogor (21%). <strong>Retail</strong> stock in Depok accounts for approximately 13% of the “outer Jakarta”stock.Over the next three years, 19 new shopping malls are set to enter the market in Jakarta, with total potentialstock of around 960,972 sq.m. Of this total stock, approximately 42% are Upper Grade, 39% are MiddleGrade and 19% are Lower Grade.A further eight retail projects outside of Jakarta have been proposed. These are planned for completion bythe end of 2008. They will potentially add approximately 234,600 sq.m of retail stock, of whichapproximately 58% and 42% are Middle Grade and Lower Grade respectively.Table 2.6.1: Proposed retail projects in greater jakarta areaA. Within JakartaCompletionyearName ofshopping centre Address Developer SectionNet lettablearea (sq.m)2007 . . . . . . . Grand <strong>Indonesia</strong> Jl. MH Thamrin Djarum Group Central Business108,000District (CBD)2007 . . . . . . . Citywalk Sudirman Jl. KH Mas Mansyur Duta Anggada Realty CBD 17,3002007 . . . . . . . Pacific Place Sudirman CBD PT Metropolitan MuliaPersadaCBD 75,000F-28
<strong>Retail</strong> Market OverviewCompletionyearName ofshopping centre Address Developer SectionNet lettablearea (sq.m)2007 . . . . . . . Gajah Mada Square Jl. Gajah Mada PT Lumbung Artha Gajah Mada 35,000Nugraha2007 . . . . . . . Pluit Junction Jl. Raya Pluit Indah Jakarta Propertindo Pluit 23,0002007 . . . . . . . Mal Kelapa Gading 5 Jl. Blvd Kelapa Gading Summarecon Kelapa Gading 13,0002007 . . . . . . . Jakarta City Center Jl. Kebon Kacang Raya PT Jakarta Realty Tanah Abang 58,960Phase 22007 . . . . . . . <strong>Retail</strong> @ Oakwood Mega Kuningan PT Cozmo International CBD 5,000Cozmo2008 . . . . . . . Mall of <strong>Indonesia</strong> Jl. Blvd Kelapa Gading PT Makmur Jaya Kelapa Gading 110,000Lestari2008 . . . . . . . Main Street Gandaria Jl. Sultan Iskandar Pakuwon Kebayoran 94,000Muda2008 . . . . . . . Season’s City Jl. Latumenten Podomoro Grogol 40,0002008 . . . . . . . Plaza <strong>Indonesia</strong> Jl. MH Thamrin Plaza <strong>Indonesia</strong> Realty CBD 25,386Extension2008 . . . . . . . ITC Pasar Minggu Jl. Pasar Minggu Surya Internusa Pasar Minggu 40,0002008 . . . . . . . Blok M Square Jl. Melawai Raya PT Melawai Jaya Blok M 80,326Realty2008 . . . . . . . Kota Kasablanka Jl. Prof Dr Satrio Pakuwon CBD 62,0002009 . . . . . . . Kemang Village Jl. P. Antasari <strong>Lippo</strong> Karawaci Kemang 65,0002009 . . . . . . . Emporium Jl. Pluit Raya PT Griya Emas Sejati Pluit 63,0002009 . . . . . . . Epicentrum Walk Jl. HR Rasuna Said PT Bakrie Swasakti CBD 26,200Utama2009 . . . . . . . Galeria Glodok Jl. Hayam Wuruk Duta Anggada Realty Glodok 19,800SUB TOTAL WITHIN JAKARTA ........................................................ 960,972Source: Jones Lang LaSalleB. Outside JakartaCompletionyearName ofshopping centre Address Developer SectionNLA(sq.m)2007 . . . . . . . E-Center <strong>Lippo</strong> Karawaci PT Supermal Karawaci Karawaci 9,0002007 . . . . . . . CBD Ciledug Jl. HOS Cokroaminoto PT Sari Indah Lestari Ciledug 12,6002007 . . . . . . . Pondok Gede Plaza 2 Jl. Raya Pondok Gede PT Budi Kencana Pondok Gede 20,000Megah Jaya2007 . . . . . . . Soewarna Junction Jl. Tol Prof. Sedyatmo PT SanggrahaCengkareng 7,000Daksamitra2007 . . . . . . . Summarecon Mal Summarecon Serpong PT. Summarecon Serpong 40,000Serpong Ph. 1Serpong2008 . . . . . . . Cibinong Town Center Jl Raya Bogor PT Jaya AbadiCibinong 9,000Propertindo2008 . . . . . . . Blue Mall Jl. Chairil Anwar PT Rekapastika Asri Bekasi Timur 80,000n/a . . . . . . . . Bekasi Square Jl. Achmad Yani PT Kilap Propertindo Bekasi Barat 57,000SUB TOTAL OUTSIDE JAKARTA. .........................................................234,600Source: Jones Lang LaSalle2.7 <strong>Retail</strong> sales performanceAlong with the growth of modern retailers, retail sales have also grown at a healthy pace. Most majorplayers, both local and foreign, have enjoyed positive revenue growth over the past five years. Based ondata from selected major public-listed retailers, total sales grew at an average of 14% per annum between2002 and 2006.F-29
<strong>Retail</strong> Market OverviewFigure 2.6.1: Annual revenue of <strong>Indonesia</strong>’s largest public retail companies, 2006Annual Sales (Million Rp)9,000,0008,000,0007,000,0006,000,0005,000,0004,000,0003,000,0002,000,0001,000,0000Source: Jones Lang LaSallePT Matahari Putra Prima TbkPT Hero Supermarket TbkPT Ramayana Lestari Sentosa TbkTotal Sales Growth p.a. (RHS)2002 2003 2004 2005 2006Year20%18%16%14%12%10%8%6%4%2%0%Below are the profiles of major players in the retail industry in <strong>Indonesia</strong>.2.7.1 Matahari Putra PrimaOne of the pioneers of the <strong>Indonesia</strong>n retail industry, Matahari was founded by Hari Darmawan back in1958 and was publicly listed in 1992. It has grown from a small fashion store in Jakarta into the largestretailer in the country today, with a market share of around 25%, as reported by industry analysts. Sincebeing acquired by PT Multipolar Corporation in 1997, Matahari has introduced several new formats suchas supermarkets and hypermarkets and other supporting formats such as Timezone family entertainmentcentres and the Boston pharmacy. The number of outlets under Matahari Group management currentlytotals over 270 across more than 50 cities throughout the country. Matahari’s sales grew quite significantlyafter Matahari’s consolidation in 2002-2003. Over the last three years saw sales grow at an average of19% per annum.2.7.2 Ramayana Lestari SentosaRamayana Department Store was founded in 1978 and registered with the Jakarta Stock Exchange in1996. During the 1990s the business expanded into the supermarket format and acquired one localdepartment store and a minimarket. Ramayana is considered the biggest player in the department storeformat in the middle to lower class segment. Currently, Ramayana has around 69 supermarket outlets and94 department stores. Sales growth of around 13% per annum was achieved over the past two years.2.7.3 Hero supermarketThe Hero group is known as the pioneer of the modern supermarket format in <strong>Indonesia</strong>. Opening in 1972,Hero supermarket initially focused on catering to the middle to upper class market. Becoming a publiclylisted company in 1991, Hero continued to dominate this segment, until the expansion of foreignhypermarkets such as Carrefour and Makro in the late 1990s provided significant competition. Sincethen, the group has undergone consolidation and repositioning, particularly after the entry of Dairy FarmInternational (Hong Kong). Currently, Hero caters to a wide segment, from middle-lower through to themiddle-upper income segment. The company has expanded their business by introducing Gianthypermarket in <strong>Indonesia</strong>, in order to compete with other major players in the market.2.7.4 Mitra Adi PerkasaFounded in 1995, the group is one among the leading retailers in specialty formats, controlling numerousinternational brands for the middle to upper income segment, as well as some foreign-labelled departmentstores under their management. Mitra Adi Perkasa was listed in 2004 and since then has continued toexpand aggressively. With more than 40 store concepts, the group now has over 600 stores in 22 cities in<strong>Indonesia</strong>, including Sogo and Debenhams department stores. Revenue in 2006 grew by 16% to aroundRp. 3.3 trillion.F-30
<strong>Retail</strong> Market Overview2.7.5 CarrefourFrance’s Carrefour first entered the <strong>Indonesia</strong>n market in 1998, almost at the same time as Continent (alsofrom France). After its merger with Continent, Carrefour became the largest player in the hypermarketsegment, which was fast gaining popularity in the domestic market. Carrefour’s strengths include lowpricedofferings, a wide range of goods, ample space and a comfortable shopping experience. Thesuccess of Carrefour has outpaced its predecessors such as Makro and Goro (local) and also attractedother new players to compete in this market, such as Giant (Hero Group) and Hypermart (MatahariGroup). In 2006, the company recorded total sales of around e689 million in <strong>Indonesia</strong>, or a 19% growthfrom the previous year.2.8 Supply constraints and the regulatory environmentAccording to <strong>Indonesia</strong>n Agrarian Law, a private company or formal institution can only own land certifiedunder HGB (Hak Guna Bangunan or right to build), HGU (Hak Guna Usaha or right of exploitation) and HP(Hak Pakai or right of use) title.HGB is the most common type of legal ownership by private companies or institutions in <strong>Indonesia</strong>. Thisland right can be sold, exchanged, transferred, bequeathed or mortgaged. This type of right can be held by<strong>Indonesia</strong>n individuals or entities as well as foreign joint-venture companies which are registered undercurrent <strong>Indonesia</strong>n laws. This right is granted for an initial period of 20 or 30 years and by law extendable foranother 20 or 30 year period with further options for renewal. Based on Agrarian Ministry Regulation/Headof National Land Agency No. 4 Year 1998, the payment to the authority for HGB renewal is 1% to 3% ofassessed property tax value, depending on the land size and tenure.HGU is the right to cultivate or exploit state-owned land for agricultural, fishery or husbandry purposes.The ownership is valid for a maximum of 35 years but extendable for another 25 year period with an optionfor renewal. The title can be held by <strong>Indonesia</strong>n individuals or entities as well as foreign joint-venturecompanies and can be mortgaged.HP is the right to use state-owned land or land owned by others for a specific purpose as agreed by bothparties such as for social activities, religious worship, embassies and international organisations. It is validfor a maximum of 25 years but extendable for another period of 20 years or occasionally for an indefiniteperiod as stated in its grant or agreement. <strong>Indonesia</strong>n citizens, individual foreigners residing in <strong>Indonesia</strong>,foreign embassies, or representative offices of foreign banks or other foreign entities are allowed to ownland under this title. However, this type of land cannot be sold, exchanged or transferred unless explicitlyprovided for in the grant or agreement.At 30 March 2007, <strong>Indonesia</strong>’s House of Representative passed the 2007 Investment Law covering keyissues such as guaranteed extension of land rights, equality between foreign and local firms, revamp of thenegative investment list, less bureaucratic process, revamp of overlapping regional by-laws and fiscalincentives. Under the new law services for rights of land use can be provided and extended in advance,and be renewed as requested by an investor, i.e. 80 years for HBG, 95 years for HGU and 70 years for HP.The Government will soon finalize the implementation regulations as mandated by the Law.<strong>Investor</strong>s or developers can buy land under HGB title from other companies/institutions or freehold landfrom individuals. But most of the land in prime locations in <strong>Indonesia</strong> belongs to the state. Typically,developers enter into a BOT (Build-Operate-Transfer) agreement between the developer and the stateownedcompany as the land owner. Under the BOT agreement, the developer (the operator) builds andoperates the building for a predetermined period and transfers the building to the land owner upon thetermination of the BOT agreement and this can be extended for another agreed period. The operator maypay the land owner either a lease payment (ground rent) or a percentage of revenues received from usageof the land. In some cases, the operator may provide space within the development for the land owners.The design, construction, operation, management, maintenance or financing of the development cost isthe responsibility of the operator. All terms and conditions including the BOT term, ground rent, paymentterm, ownership of the improvement and related matters are stipulated in the BOT Agreement.The limited commercial land available in strategic locations for retail development could restrict supply incities such as Jakarta, Bogor and Bandung. With high land prices in the CBD area, retail centredevelopments tend to be combined with other land uses to optimise development potential.F-31
<strong>Retail</strong> Market OverviewA further constraint is that commercial buildings, including stand-alone retail developments and shoppingcentres, can only be built on land zoned for commercial use. This regulation is governed by the local cityplanning office that issued the regional master plan which details standard building codes such as sitecoverage, plot ratio and the maximum number of floors. However, the investor or developer may propose arevision/modification of the city planning schedule regarding their site as long as it is still in accordance withthe general master plan.The government has enacted a number of policies and regulations with a view to regulating and controllingmodern retailers and modern market formats and protecting small retailers and traders. So far, theimplementation and supervision of these regulations has not been strong. Legal permits to establish newmodern retail market formats are continuously being issued, even in areas where their issue is ostensiblyprohibited. As a result, government regulations are in many ways failing to control the existence of modernmarkets and retailers, and small domestic traders are becoming vulnerable.Below is the list of government regulations related to the retail industry in <strong>Indonesia</strong>:• Decree from Trade Ministry (SK Menperindag) No. 420/1997Governing the location of modern retail centres such as department stores or supermarkets i.e. must belocated within the commercial zone as in the City Planning and only permitted to build in provincial citylevel (Dati I) and regency level (Dati II).• President Decree (Keppres) No. 99/1998The opening of the retail market for foreign direct investment• Jakarta Provincial Administration Regulation (Perda DKI) No. 2/2002Regulating the operating hours of shopping centres• Decree from Treasury Ministry (SK Menkeu) No. 253/2002The collection of 10% VAT on all retail products in modern market formats• Decree from Tax Directorate (SK Dirjen Pajak) No. SE-14/2003The revision of VAT on service charge in shopping centres from 4% to 10 %2.9 <strong>Retail</strong> rentalsRents in most upper grade shopping malls in <strong>Indonesia</strong>’s major cities are generally quoted in US Dollarsbut are paid in Rupiah on a fixed US Dollar to Rupiah exchange rate, which is typically lower than themarket rate but generally tracks it. However, in many other shopping centres, rents are quoted and paid inRupiah.<strong>Retail</strong> rents in the upper grade shopping malls in Jakarta have seen relatively modest growth in the pastfour years due to intense competition amongst landlords to attract tenants. Rental growth has beenstrongest in a number of “sought-after” shopping malls that enjoy high and stable occupancy rates. Inthese popular malls, which are mainly located in the CBD or near well established residential districts,rentals have increased within a range of 5-10% per annum between 2003 and 2005, while the overall rentgrew by 2-5% annually in Rupiah terms. During this period, annual supply grew by an average of74,000 sq.m, while average occupancy was 91%-93%. However, rental growth declined in 2006 due toa quite significant additional supply of 149,000 sq.m and a weakening of retail sales. Average occupancy atthe end of 2006 decreased to 89%. The government’s decision to increase fuel price by approximately125% in October 2005 triggered high inflation and affected consumer’s buying power, leading to a stagnantretail market.At the end of 2006, the average net effective rent of prime retail space for specialty tenants (positioned onthe first three floors) in Jakarta’s shopping centres was approximately Rp. 398,000 per sq.m per month. Bygrade, Upper Grade shopping malls commanded the highest asking rentals of between Rp. 350,000 persq.m per month and up to Rp. 1.3 million per sq.m per month, while in the Middle Grade shopping centres,rentals varied between Rp. 200,000 per sq.m per month and Rp. 500,000 per sq.m per month for a typicallease of less than 300 sq.m.F-32
<strong>Retail</strong> Market OverviewIn view of the significant new supply coming online in the Upper Grade shopping malls, Jones Lang LaSalleexpects that competition amongst landlords to attract tenants in this market segment is expected to caprental growth over the next one to two years. However, in parts of the city where there is limited newcompetition in the pipeline, rental outlook should be more promising due to demand outpacing supply andstrong growth in retail sales.In addition, it is also anticipated that rental growth in established shopping malls from the Middle Gradecategory is expected to outperform the market as competition in this sub-market is relatively lighter than inthe Upper Grade sub-market. Newly completed retail malls are expected to enter the market between 2007and 2009. Furthermore, the current high rental gap between Middle Grade and Upper Grade shoppingcentres could provide room for growth amongst good quality Middle Grade malls, especially those locatedin prime CBD areas or within close proximity to the established residential districts.In the longer term, improved rental growth from 2009 onwards is possible in view of slower and moreselective retail developments. A stronger economic foundation after the election year (2009) is also seenas a factor that could potentially boost retail sales from 2009 onwards. As such, rentals are expected togrow by around 8-10% per annum between 2009 and 2011. <strong>Malls</strong> with high occupancy, particularly thoselocated in the CBD and near prime residential districts, are expected to outperform the market due to theirmore stable frequency of visitors.2.10 Future outlook for the retail sectorRecovery in consumer purchasing power is key to the revival of the retail market in <strong>Indonesia</strong>. Lookingahead, Jones Lang LaSalle anticipates that the engine of the economy will gear up progressively this year,supported by an improving investment climate and a gradual increase in consumption. Therefore, the retailmarket is expected to gain a stronger foothold, starting mid-2007. In the meantime, competition amongexisting malls to attract tenants will continue to be tough following the emergence of new projects that offermore competitive packages. In Jakarta, Plaza <strong>Indonesia</strong>, Plaza Senayan and other similar projects, whichlead the competition in terms of rents, now face greater challenges from new projects such as SenayanCity, Grand <strong>Indonesia</strong> and Pacific Place. Therefore, competition in the upper grade sub-market, which isconcentrated in the CBD area, is greater than in the middle grade sub-market, where future competitorsare more broadly distributed and the target market is greater. Outside Greater Jakarta, particularly in citieswhere the subject properties are located, the level of competition is forecast to be more modest, thusproviding opportunities for higher rental growth in the future.In terms of demand generators, large format anchor retailers such as department stores, hypermarketsand supermarkets will remain key stimulators of demand while smaller retailers with strong brandrecognition and good positioning in the market are expected to continue to increase their storerollouts. Foreign retailers are also expected to continue expanding their presence in Greater Jakarta,one of the world’s 10 largest urban areas, as well as other major <strong>Indonesia</strong>n cities, as part of theirinvestment strategy.By sector, the F&B sector and fashion and accessories retailers offering modern lifestyle concepts areexpected to remain the leaders in generating demand across all sub-markets. Expansions of chainrestaurants and franchise outlets as well as department stores and hypermarkets are expected togenerate strong demand, particularly in the middle to lower grade retail projects. In the upmarketsegment, foreign department stores, branded fashion stores, cafés and restaurants as well as leisureand entertainment facilities should continue to generate substantial demand in the future.F-33
Overview of Portfolio3. OVERVIEW OF PORTFOLIO3.1 Regional contextThis section analyses the provinces that the subject centres are located. These provinces are:• Jakarta• West Java• East Java• Central Java• North Sumatra• Banten• BogorAs at 2005 <strong>Indonesia</strong>’s population was 219 million people, with population growth over the past five yearsaveraging 1.3% per annum. Of the provinces containing subject centres, Banten has experienced thestrongest population growth at 2.8% per annum over the past five years.In terms of total wealth, Jakarta has the highest level of GRDP per capita, reflecting its role as theadministrative and financial capital of <strong>Indonesia</strong>.Table 3.1.1 Selected <strong>Indonesia</strong>n Provinces: population levelsProvincePopulation(2005)Growth averageannual growth(2001-2005)Jakarta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,464,000 (0.1)%West Java . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,067,000 1.8%East Java . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,550,000 0.4%Central Java . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,887,000 0.4%North Sumatra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,453,000 1.4%Banten. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,309,000 2.8%TOTAL INDONESIA ...................................... 219,205,000 1.3%Source: Central Statistics BureauTable 3.1.2 Selected <strong>Indonesia</strong>n Provinces: GRDP per capitaProvinceGRDP(2004 M Rupiahin current prices)GRDP per capita(M Rupiah incurrent prices)Jakarta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377,159,110 50.5West Java. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305,305,606 8.0East Java . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341,765,923 9.7Central Java . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193,435,263 6.1North Sumatra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118,100,511 9.6Banten . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,562,754 8.2TOTAL INDONESIA ..................................... 2,303,031,449 10.6Source: Central Statistics Bureau3.1.1 JakartaThe province of Jakarta is the capital of <strong>Indonesia</strong>. Jakarta consists of five municipalities—Jakarta Utara(North Jakarta), Jakarta Timur (East Jakarta), Jakarta Selatan (South Jakarta), Jakarta Barat (WestJakarta) and Jakarta Pusat (Central Jakarta).F-34
Overview of PortfolioAs the administrative centre of <strong>Indonesia</strong>, Jakarta’s economy is based on finance and commerce andattracts a particularly high level of foreign investment compared to other parts of <strong>Indonesia</strong>. Income percapita is high partly driven by a large number of expatriates living in the city, as well as the types ofemployment available in the area.At the time of the most recent census, the population of Jakarta was 7.5 million. Despite rapid urbanisationover the past 40 years (with population at just 1.2 million people in 1960), and strong growth for <strong>Indonesia</strong>as a whole, population in Jakarta has been declining over the past five years. This is a result of a decline inthe population of Central Jakarta, driven by the changing composition of the city from relatively high levelsof residential accommodation to an increasing mix of office development, convention centres and hotels.Over the next five years, the population of Jakarta is expected to start increasing, with particularly stronggrowth in South Jakarta.Figure 3.1.1 JakartaSource: Jones Lang LaSalle Research and Consulting3.1.2 West JavaWest Java is the most populous province of <strong>Indonesia</strong>, with around 39 million people. The capital,Bandung, is located in a mountainous region of the province, approximately 128 kilometres southeast ofJakarta. Around 2 million people are resident in Bandung.The economy is based around manufacturing and agriculture, with this contributing around 50% of GRDPin 2001. Manufacturing is expected to continue to take an even greater role in the local economy as theagricultural sector contracts. At present, 60% of <strong>Indonesia</strong>n manufacturing industries are located in WestJava.F-35
Overview of PortfolioFigure 3.1.2 West JavaSource: Jones Lang LaSalle Research and Consulting & Jakarta Map & Street Guide 20043.1.3 East JavaEast Java has 35.6 million people and has experienced population growth of approximately 0.4% perannum over the past five years. The capital of East Java is Surabaya, the second largest city in <strong>Indonesia</strong>and a major industrial centre and port.The economy is driven by the agricultural sector. However, other sectors, manufacturing and trade sectorsare playing a more important role in recent years.Major transport infrastructure developments have led to economic growth in East Java. These include theSuramadu Bridge connecting Surabaya City and Madura Island, the East Java Province Mega Project, theJuanda Airport development, the Paithon electricity generation project, and the development of theseaport and telecommunications networks.Figure 3.1.3 East JavaSource: Jones Lang LaSalle Research and Consulting & Jakarta Map & Street Guide 20043.1.4 Central JavaCentral Java has 31.9 million people and has experienced modest growth of 0.4% per annum over the pastfive years. The capital of Central Java is Semarang.The processing industries contribute around 30% of GRDP, while agriculture is still a major part of theeconomy, contributing 20% with rice and corn being the province’s dominant crops.F-36
Overview of PortfolioFigure 3.1.4: Central JavaSource: Jones Lang LaSalle Research and Consulting & Jakarta Map & Street Guide 20043.1.5 North SumatraThe province of North Sumatra is on the island of Sumatra, between the Indian Ocean and the Straits ofMalacca. The capital is Medan. In 2005, the population of North Sumatra was 12.4 million with averageannual growth of 1.4% per annum over the last 4 years.Agriculture remains the dominant sector (contributing 31% of GRDP). However, the manufacturing sectoris experiencing strong growth and now contributes to 27% of GRDP. North Sumatra’s main crops are palmoil, rubber, coffee, cocoa and tobacco.Figure 3.1.5 North SumatraSource: Jones Lang LaSalle Research and Consulting & Travel Atlas <strong>Indonesia</strong> (Periplus)3.1.6 BantenBanten has 9.3 million people and has experienced strong population growth of 2.8% per annum between2000 and 2005. Banten is located close to Jakarta and hence benefits from economic growth in thisprovince. The rapid increase in non-residential development in Jakarta has benefitted Banten resulting inits strong population growth.F-37
Overview of PortfolioBanten’s economy relies very little on agriculture, contributing just 10% of GRDP. More than 51% of GDRPcomes from industrial services including food processing.Figure 3.1.6 BantenSource: Jones Lang LaSalle Research and Consulting & Jakarta Map & Street Guide 20043.2 Geographic spreadThe majority of the subject centres are located in Greater Jakarta and the surrounding provinces.Figure 3.2.1 Greater Jakarta: subject centresNORTHJAKARTA2MetropolisTown SquareWESTJAKARTAGajah MadaPlaza2CENTRALJAKARTATANGERANG3WTCMatahari1PlazaSemanggiEASTJAKARTAMal <strong>Lippo</strong>Cikarang517 km more bytoll road toCikarang areaDepok TownSquare125 km more bytoll road toBogor City34CibuburJunctionPlazaEkalokasariSource: Jones Lang LaSalle Research and Consulting Jakarta Map (Periplus)F-38
Overview of PortfolioFigure 3.2.2 Bandung, West Java: subject centresIstanaPlaza12Bandung IndahPlazaSource: Jones Lang LaSalle Research and ConsultingF-39
Overview of PortfolioFigure 3.2.3 Medan, North Sumatra: subject centresGrandPaladiumSource: Jones Lang LaSalle Research and Consulting & Medan Map (KPS Surabaya)F-40
Overview of PortfolioFigure 3.2.4 Semarang, Central Java: subject centreJavaSupermallSource: Jones Lang LaSalle Research and Consulting & Semarang Map (KPS Surabaya)F-41
Overview of PortfolioFigure 3.2.5 Malang, East Java: subject centreMalang TownSquareSource: Jones Lang LaSalle Research and Consulting & Travel Map Surakarta (PIN Maps)F-42
Overview of PortfolioFigure 3.2.6 Madiun, East Java: subject centrePlaza MadiunSource: Jones Lang LaSalle Research and Consulting & http://kotamadiun.go.idF-43
Overview of Portfolio3.3 Summary of retail properties3.3.1 Leased mallsTable 3.3.1 summarises the Leased <strong>Malls</strong>. Please refer to Section 4 for more details.Table 3.3.1 Summary of leased malls (data as at 30 June 2007)CentreYearopenedFloorspace(NLA) Major tenants Other factorsCibubur Junction . . . . . 2005 34,139 sq.m Hypermart HypermarketMatahari Department StoreStudio 21 Cinema FitnessFirstPlaza Semanggi . . . . . 2003 Total Office & <strong>Retail</strong>:58,685 (61,685 sq.mfollowing extension)Giant Hypermarket CentroDepartment Store FitnessFirst 21 Cineplex GramediaElectronic SolutionGajah Mada Plaza. . . . 1982 34,278 sq.m Hypermart RimoDepartment StoreMillenium Executive ClubGajah Mada Cinema 21Grand Gajah Mada (EvaBun, Reception Centre)Bandung Indah Plaza. . 1990 26,472 sq.m(30,315 sq.mfollowing extension)Hypermart hypermarket,Matahari Department StoreIstana Plaza . . . . . . . . 2001 27,247 sq.m Rimo Department Store,Hero Supermarket, AceHardwareMal <strong>Lippo</strong> Cikarang . . . 1995 17,974 sq.m(28,668 sq.mfollowing extension)Ekalokasari Plaza . . . . 2003 20,587 sq.m(25,600 sq.mfollowing extension)TOTAL ...........219,382 sq.m(241,932 sq.m followingextension)Hypermart hypermarket(under construction),Matahari Department Store,Hero SupermarketMatahari Department Store,Marketplace SupermarketSource: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, TbkOccupancy Rate 86.4%Trade Area <strong>Retail</strong> SpendingRp. 18,932 billionPedestrian CountWeekdays: 15,000Weekends: 25,000-30,000Occupancy Rate 96.4%Trade Area <strong>Retail</strong> SpendingRp. 19,377 billionPedestrian CountWeekdays: 53,322Weekends: 60,948Occupancy Rate 89.1%Trade Area <strong>Retail</strong> SpendingRp. 20,662 billionPedestrian CountWeekdays: 13,000Weekends: 23,000Occupancy Rate 83.2%Trade Area <strong>Retail</strong> SpendingRp. 5,661 billionPedestrian CountWeekdays: 30,000Weekends: 40,000Occupancy Rate 98.9%Trade Area <strong>Retail</strong> SpendingRp. 4,697 billionPedestrian CountWeekdays: 15-20,000Weekends: 25-30,000Occupancy Rate 96.3%Trade Area <strong>Retail</strong>Spending Rp. 2,865 billionPedestrian CountWeekdays: 10,600Weekends: 17,000Occupancy Rate 87.3%Trade Area <strong>Retail</strong> SpendingRp. 4,243 billionPedestrian CountWeekdays: 12-14,000Weekends: 18-20,000Average Occupancy Rate91.6%F-44
Overview of PortfolioFigure 3.3.1 Leased mallsCibubur JunctionPlaza SemanggiGajah Mada PlazaIstana PlazaMal <strong>Lippo</strong> CikarangEkalokasari PlazaBandung Indah PlazaSource: Jones Lang LaSalle Research and ConsultingF-45
Overview of Portfolio3.3.2 <strong>Retail</strong> spaces mallsTable 3.3.2 summarises the <strong>Retail</strong> Spaces <strong>Malls</strong>. These are each discussed in more detail in Section 5.Table 3.3.2 Summary of retail spaces mallsCentreYearopenedFloorspace(NLA)<strong>Retail</strong> space within the portfolio(NLA)Java Supermall . . . . . . . . . . . . . . . . . . 2000 19,800 Matahari (department store) 11,082Matahari (supermarket)Malang Town Square . . . . . . . . . . . . . . 2005 24,740 Matahari (department store) 11,065HypermartTimezoneGrand Palladium Medan . . . . . . . . . . . . 2005 29,272 Matahari (department store) 13,417HypermartTimezoneMetropolis Town Square . . . . . . . . . . . . 2004 60,734 Matahari (department store) 15,248HypermartTimezoneDepok Town Square . . . . . . . . . . . . . . . 2005 41,129 Matahari (department store) 13,045HypermartTimezonePlaza Madiun . . . . . . . . . . . . . . . . . . . . 2000 19,029 Matahari (department store) 19,029Matahari (supermarket)Mall WTC Matahari. . . . . . . . . . . . . . . . 2003 48,204 Matahari (department store) 11,184HypermartTimezoneTOTAL. ........................ 94,070Source: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, TbkFigure 3.3.2 <strong>Retail</strong> spaces mallsJava SupermallMalang Town SquareGrand Palladium MedanMetropolis Town SquareF-46
Overview of PortfolioMall WTC MatahariPlaza MadiunDepok Town SquareSource: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, TbkF-47
Leased <strong>Malls</strong>4. LEASED MALLS4.1 Cibubur Junction4.1.1 Regional context and local economyCibubur is located in the DKI Jakarta Province, approximately 26 kilometres south east of the centre ofJakarta. As the capital city of <strong>Indonesia</strong>, Jakarta is the administrative and commercial centre of <strong>Indonesia</strong>.Cibubur Junction (CJ) is strategically located within a growing middle to middle-upper class district. Sinceopening in July 2005, CJ has quickly established itself as the key local retail destination for middle tomiddle-upper income residents within the region.CJ is located along Jalan Raya Jambore in East Jakarta, which is located a short distance from theJagorawi toll road. The centre has good accessibility and visibility from this major road. Cibubur is alsoserviced by public transport, including metromini and angkot, as well as taxi services.Local industries within the trade area include the following plants and factories along Jl. Raya Bogor:• PT Indomilk—milk products• PT Bayer <strong>Indonesia</strong>—pharmaceutical• PT Amcol Graha—electronics• PT United Plastics <strong>Indonesia</strong>—plastics• PT ICI—paints• Pfizer—pharmaceuticalsUniversitas <strong>Indonesia</strong> Campus, one of the most prominent universities in <strong>Indonesia</strong>, is locatedapproximately eight kilometres from CJ.Since opening, CJ has quickly become the most prominent shopping centre for the local community andhas captured a significant amount of expenditure from local middle-upper income residents that waspreviously leaving the trade area. As a result of providing these residents with a viable alternative, CJ hasreduced the propensity of trade area residents to conduct discretionary shopping in Central Jakarta.The centre provides a one stop shopping destination to meet the everyday convenience shoppingrequirements of residents in its immediate catchment area. In addition, the centre possessesdestinational appeal and a good mix of non-food retailing to meet the needs of its growing trade area.4.1.2 DescriptionCommencing operation in July 2005, CJ is a modern shopping centre comprising some 34,139 sq.m ofNLA over five levels with a rooftop and basement. Table 4.1.1 provides details of the centre.F-48
Leased <strong>Malls</strong>Figure 4.1.1 Cibubur Junction—main external entranceSource: Jones Lang LaSalleTable 4.1.1 Centre details, Cibubur JunctionCharacteristicsAddress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jl. Raya JamboreYear Opened . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005Last Refurbishment / Extension . . . . . . . . . . . . . . Ongoing tenant rezoningNLA (sq.m): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,139Site Area (sq.m) . . . . . . . . . . . . . . . . . . . . . . . . . . 31,987CarParking ............................. 611Motor Cycle Parking . . . . . . . . . . . . . . . . . . . . . . . 500Levels ................................. 6Opening Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . Weekdays: 10am - 10pmWeekends: 10am - 10pmOccupancy Rate. . . . . . . . . . . . . . . . . . . . . . . . . . 86.4% (as at 30 June 2007)Major <strong>Retail</strong> Tenants:Majors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hypermart, MatahariMini Majors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fitness First, Studio 21 Cinemas, SportWarehouse, Karisma BookstoreSelected Other . . . . . . . . . . . . . . . . . . . . . . . . . . . A&W, Pizza Hut, Starbucks, Giordano, Body Shop,Polo Ralph Lauren, Charles & Keith, Guardian,Planet SurfTotal <strong>Retail</strong> Tenancies. . . . . . . . . . . . . . . . . . . . . . 163Shopper Traffic. . . . . . . . . . . . . . . . . . . . . . . . . . . Weekdays: 15,000Weekends: 25,000 - 30,000Source: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, Tbk4.1.3 Tenant mixSince opening, centre management has taken care to ensure an appropriate tenancy mix is developed atCJ. This has meant that vacancy levels have been slightly higher than would otherwise be the case, asvacancy has been tolerated in favour of leasing space to tenants that do not complement the carefullyformulated tenant mix strategy. Most notably, the centre has successfully targeted a number ofinternationally branded retailers in order to appropriately cater for middle to middle-upper incomeresidents within the trade area. These retailers include The Body Shop, Giordano, Polo Ralph Lauren,Charles & Keith, Guardian, Planet Surf, Starbucks Coffee and Pizza Hut.F-49
Leased <strong>Malls</strong>Table 4.1.2 Tenancy mix by level, Cibubur JunctionLevelTenant MixLower Ground. . . . . . . . . . . Hypermart, food court, exhibition space/casual leasing, other specialtiesGround . . . . . . . . . . . . . . . . Fashion, accessories, exhibition spaceUpper Ground. . . . . . . . . . . Matahari, fashion, beautyFirst . . . . . . . . . . . . . . . . . . Matahari, Sports Warehouse, fashionSecond. . . . . . . . . . . . . . . . Matahari, Timezone, lifestyle & entertainment, electronicsThird. . . . . . . . . . . . . . . . . . Fitness First, cinemasSource: Jones Lang LaSalle Research and ConsultingFigure 4.1.2 Cibubur Junction: lower ground food courtSource: Jones Lang LaSalle Research and ConsultingThe centre is positioned to provide one stop shopping convenience by serving the convenience anddiscretionary retail needs of the local community.The lower ground floor is anchored by Hypermart, which accounts for approximately 25.8% of the NLA.This level is supported by a food court, exhibition space on short term leases and a range of retail services.The ground floor comprises predominantly branded fashion and accessories retailers and quality food andbeverage retailers. The central atrium is utilised for short term exhibition space.The Matahari Department Store anchors the upper ground and first floors and is expanding into level 2.The expanded Matahari store accounts for 16.7% of the centre NLA. Upper Ground and Level 1 comprise amix of specialty retailing including fashion, children’s wear, accessories and beauty. A large SportsWarehouse store is on Level 1 while Karisma Bookstore is on Upper Ground.Level 2 is focussed on entertainment and lifestyle retailing. This level includes the extended Mataharistore, Timezone and the entrance to Fitness First and Cinema 21. There is also a large number of smalltenancies, including electronics and handphone retailers.The top level comprises Fitness First and Cinema 21, which has four screens.F-50
Leased <strong>Malls</strong>Table 4.1.3 Major tenants as at 30 June 2007, Cibubur JunctionTenantExpiry date% Grossmonthly rentHypermart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27-Jul-15 14.2%Matahari . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-Aug-15 11.2%Fitness First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-Apr-21 3.0%Sport Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-Dec-10 2.1%Cinema 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-Mar-16 1.6%Karisma Bookstore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-Nov-10 1.5%Timezone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-Oct-15 1.5%Other tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Varies 64.9%Total Centre ............................................... 100.0%Source: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, TbkNote: Excludes extension to Matahari Department Store, Level 24.1.4 Target marketCJ targets the growing number of middle and middle-upper income households within the region. To caterfor this target market, there has been a particular focus on attracting well known, internationally brandedretailers to the centre. CJ is the only centre within the immediate region that effectively targets this market.4.1.5 Trade area analysisTo assist with the definition of trade areas, a market research survey of visitors to major leased malls wasundertaken in February and March 2007. A total of seven (7) centres were included in the study. The surveywas conducted by TNS on behalf of Jones Lang LaSalle for the purposes of this assessment. The mainfindings of the market research in relation to the profile of shoppers at CJ are as follows:• Visitors to CJ are relatively young (80% of those surveyed are less than 35 years of age), with the vastmajority (i.e. 98%) nominating their ethnicity as Malay;• Visitation to CJ is much higher on weekends than weekdays, and shopper traffic is particularly high inthe afternoon (between 16:00 and 19:00);• CJ is more ‘destinational’ in appeal, as it has the lowest frequency of visitation of all centres included inthe portfolio. However, when patrons visit the centre they stay for long periods: CJ has the highestproportion of visitors who stay for two hours or more of all centres in the portfolio where visitors weresurveyed;• CJ recorded a very low proportion of survey respondents who were visiting the mall alone (i.e. 6%), whilethe proportion of respondents visiting with their partners or spouse is very high (i.e. 40% in total). Mealsare the main reason for visiting the mall, followed by comparison shopping, grocery shopping andmovies.• Of all the malls included in the market research study, CJ has the third highest level of overall customersatisfaction. Visitors surveyed were generally very satisfied with the facilities, the tenancy mix and thelevel of security at CJ.The trade area for CJ has been defined based on the findings on customer origin from the market researchsurvey, the strength of the subject site, the location and relative strength of competing retail facilities andaccessibility to the centre, including the road network, public transport and physical barriers.According to the market research survey, the areas where the level of market penetration is highest for CJare Ciracas, Cipayung, Pasar Rebo and Cimanggis. The primary trade area (PTA) also includes thedistricts of Kramat Jati, Gunung Putri and Pancoran Mas.The STA includes areas form which CJ attracts visitors. However, the level of customer draw (market sharepenetration) is below the level achieved in the PTA. Areas considered to fall within the STA include DurenSawit, Jagakarsa, Pasar Minggu, Bekasi Selatan and Pondok Gede.F-51
Leased <strong>Malls</strong>The trade area, including major competing centres within the trade area, is illustrated in the map below.Figure 4.1.3 Cibubur Junction trade area1. Graha Cijantung2. Mal Depok3. Mal Citra Gran4. Plaza Cibubur5. Mal Cimanggis6. Cileungsi Trade Center7. Depok Town Square8. ITC Depok9. Margo City10. Tamini Square110CibuburJunction72895436NSource: Jones Lang LaSalle Research and Consulting & Jakarta Street Atlas (Gunther W. Holtorf)As at 2007, the PTA is estimated to comprise nearly 423,000 households in the middle and upper incometarget markets while the STA, which is smaller, comprises a further 319,000 such households.Numerous housing estates have been developed in recent years, increasing the market for qualityshopping facilities at Cibubur. These include the following:• Permata Puri Laguna• Permata Puri• Cibubur Indah• Puri Sriwedari• Raffles Hills• Kota Wisata• Legenda Wisata• Bukit Golf Cibubur RiversideBased on recent population trends in the area, middle and upper income households in the PTA is forecastto grow by 2.8% per annum between 2007 and 2011, increasing to 473,000 households. Slightly lowergrowth is expected in the STA.F-52
Leased <strong>Malls</strong>Table 4.1.4 Cibubur Junction trade area: population growth and spending forecasts2007 (f) 2011 (f)%Growth2007-2011(p.a.)Primary Trade Area . . . . . . . Population 2,255,374 2,460,252 2.2%Households* 422,862 472,826 2.8%<strong>Retail</strong> Spending perHousehold (Rp. Million) 18.03 21.10 4.0%Total <strong>Retail</strong> Spend (Rp. Billion) 7,624 9,977 7.0%Secondary Trade Area . . . . . Population 1,608,510 1,728,964 1.8%Households* 318,865 351,311 2.5%<strong>Retail</strong> Spending perHousehold (Rp. Million) 18.62 21.79 4.0%Total <strong>Retail</strong> Spend (Rp. Billion) 5,937 7,655 6.6%Source: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting* Note: Total Households and <strong>Retail</strong> spending market only includes only those households assumed tofall within the target market (i.e., AC Nielsen’ Socio Economic Status (SES) categories A to C, describedas middle and upper income households). Spend market at 2007 prices (i.e. 2011 spend market at2007 prices; average annual retail spending per household and total retail spend market growthforecasts are real, not nominal, growth, excluding the effects of inflation)With real per capita spending expected to increase by an average of approximately 4% over the next fouryears and together with moderate population growth, total retail spend in the PTA for the target market isexpected to grow by 7.0% per annum between 2007 and 2011. Slightly lower growth is expected in theSTA.4.1.6 CompetitionCJ is clearly the most visited mall amongst its customers, with 71% of respondents surveyed reporting thesubject site as the centre they visit most often.The local centres of competitive relevance (i.e. centres larger than 10,000 sq.m), including their distancefrom CJ, opening year, amount of retail floor space and major tenants, are detailed in Table 4.1.5. Thelargest centres are discussed below:• Pondok Indah Mall is a large leased mall located in South Jakarta, 23 kilometres from the subject site.The mall contains around 100,000 sq.m of retail space and is anchored by a number of middle-upperdepartment stores and includes cinemas. Given its distance from the subject site and its tenancy mix(i.e. higher order retailing targeting middle-upper segments), Pondok Indah Mall is only considered likelyto be competing with CJ for discretionary spending rather than weekly convenience retailing.• Depok is situated approximately 10 kilometres west of CJ. Depok contains a number of retail facilitieswhich, when combined, are of competitive relevance to the subject site. The main centres in Depok areDepok Town Square (a strata mall anchored by Matahari and Hypermart), Margo City (a leasedmallanchored by Centro department store and Giant hypermarket), Mal Depok (a lease mall anchoredby a Matahari Department Store and Matahari Supermarket) and ITC Depok (a strata mall anchored byCarrefour). Margo City is considered to be of most relevance to the subject site given it is targetingmiddle-upper income households and as it is the only major centre in Depok with a department storeother than Matahari (i.e. Centro), which is a point of difference.• Graha Cijantung is located 11 kilometres northwest of the subject site. This lease mall contains45,000 sq.m of retail space anchored by a Ramayana Department Store and a Hero Supermarket.The centre is targeting middle-lower income households, therefore not considered as a majorcompetitor to the subject site.• Tamini Square is a strata mall located approximately 9 kilometres north of CJ. The mall is anchored by aCahaya department store and a Carrefour hypermarket. The centre is considered to be of minimalcompetitive relevance as it is targeting a lower income segment compared with the subject site.F-53
Leased <strong>Malls</strong>• There is a small but growing commercial precinct at Cibubur servicing the local community. Thisincludes Plaza Cibubur, Mal Citra Gran and some traditional retailing along Jl. Trans Yogie. Mal CitraGran, which opened in 2001, is located 5 kilometres from CJ, has an NLA of 10,900 sq.m and isanchored by Hero Supermarket. Plaza Cibubur, located 3 kilometres from CJ, also opened in 2001 andhas an NLA of 17,000 sq.m, with Superindo Supermarket as its anchor tenant. These two retail mallsmostly target their immediate population catchments and, reflective of the absence of a departmentstore anchor, serve more as convenience shopping centres as opposed to being a destination mall.The future outlook for trading prospects at CJ is positive, supported by there being very little additionalretail facilities proposed to be added to the trade area in the short term.There are a number of retail projects targeting middle income households currently under construction inJakarta, such as Gajah Mada Square (due to open in the third quarter 2007), Mall of <strong>Indonesia</strong> (due toopen in the first quarter 2008, and Emporium (due to open in the second quarter of 2009), which will add acombined 378,000 sq.m of retail floor space to the Jakarta retail market by the end of 2009. However, giventhe distance of these projects from the subject site, and the continued population growth expected in CJ’strade area, these new centres are expected to have a negligible impact on the performance of the subjectsite.The potential threat for CJ is the possibility of the development of a centre which also targets middle-upperincome households in its trade area. While this threat has not yet materialised, it is possible that adeveloper may seek to capitalise on the strong rise in the resident population which falls within thislucrative market segment and compete with CJ in its immediate vicinity.Table 4.1.5 Main competition, Cibubur JunctionCentre nameDistance fromCibuburJunctionTypeNLA(sq.m)YearopenedAnchor tenantsPondok Indah Mall . . . . . 23 km Lease 100,500 1996 Sogo, Sogo Food Hall,Metro, HeroDepok Town Square. . . . 10 km Strata 59,000 2005 Matahari Dept. Store,HypermartMargo City . . . . . . . . . . . 10 km Lease 49,000 2006 Giant, Centro Dept. Store,Platinum CineplexGraha Cijantung. . . . . . . 11 km Lease 45,000 1997 Hero Supermarket,Ramayana Dept. Store,Studio 21Tamini Square . . . . . . . . 9 km Strata 35,000 2006 Carrefour, Cahaya Dept.StoreMal Depok . . . . . . . . . . . 10 km Lease 28,000 1997 Matahari Dept. Store andSupermarketITC Depok . . . . . . . . . . . 10 km Strata 25,351 2005 CarrefourPlaza Cibubur . . . . . . . . 3 km Lease 17,000 2001 Superindo Supermarket,Karisma Book StoreMal Cimanggis . . . . . . . . 6 km Lease 12,000 2003 Naga supermarketMal Citra Gran . . . . . . . . 5 km Lease 10,900 2001 Hero SupermarketCileungsi Trade Centre. . 8 km Strata 10,000 2004 N/ASource: Jones Lang LaSalle Research and ConsultingF-54
Leased <strong>Malls</strong>4.1.7 SWOT analysisTable 4.1.6 provides a summary of the strengths, weaknesses, opportunities and threats for CJ.Table 4.1.6 SWOT analysis, Cibubur JunctionStrengthsThe centres has a strong and appropriate tenancy mix forits customer base with a good range of internationallyrecognised retailers sought after by middle to middle-upperincome consumersThe centres contains a good lifestyle offering which reflectsthe needs of its relatively young customer base, includingfood and beverage outlets, Fitness First, cinemas andTimezoneCJ also performs well as a destination for non-discretionaryshopping, containing the second best performingHypermart in Jakarta with a high spend per customerThe lack of competition in the region targeting middle toupper income residents makes CJ the leading retaildestination amongst its target marketWeaknessesShortage of parking, particularly onweekendsThe current occupancy level, at 86.4%of NLA, is above the industry averagebut below the level for a ‘strong’ centre.In particular, the higher secondary mallsappear to be underperformingcompared with the rest of the centreOpportunitiesFurther reduce escape expenditure from the middle-upperincome residents that frequent centres closer to JakartaReduce overall vacancy by reconfiguring the mall toincrease NLA and introduce new tenants (such as anelectronics store) that “complete” the retail offer andreinforce the zoning strategyExtending the Matahari Department store by 2,000 sq.mshould also assist in improving the performance ofunderperforming secondary malls on upper levelsThe centre can increase car parking space via the use ofadjoining landSource: Jones Lang LaSalle Research and ConsultingThreatsFuture shopping centre developmentmay emerge to capitalise on thegrowing middle to middle-upper marketin the region that CJ currentlydominates4.1.8 Future outlookThere is considerable upside for the trading performance in the short to medium term at CJ. New housingestates (both existing and proposed) are increasing the pool of middle and middle to upper incomehouseholds within the centre’s trade area. Following the opening of the centre in mid 2005, which led to asignificant reduction in spending by middle to upper income residents at centres outside the trade area infavour of CJ, further opportunities exist to reduce the escape expenditure that is directed towards otherretail centres closer to Central Jakarta.The expansion of the Matahari Department store provides an opportunity to improve traffic flow in thesecondary mall on level two, one of the areas in the centre where vacancy and shopper traffic flows are stilla concern. Furthermore, it is understood that negotiations are in advanced stages with a major electronicsretailer to be located on the lower ground floor. These major new additions to the retail offer could beexpected to decrease the overall vacancy rate in the mall, improve the trading performance of associatedspecialty retailers and also provides the opportunity to further enhance the tenancy mix of the centre.F-55
Leased <strong>Malls</strong>Figure 4.1.4 Cibubur Junction—mall atriumSource: Jones Lang LaSalle Research and ConsultingWhile lack of parking within the centre remains an issue, management is negotiating with an adjoining landowner to gain access to additional parking spaces. This should alleviate congestion at the centre,particularly on weekends, improving customer perceptions of the centre and helping to increaseshopper traffic at peak trading periods.Table 4.1.7: Rental positioning, Cibubur JunctionTenancy categoryAveragecurrent rents(Rp./sqm/month)Estimated rangeof market rents(Rp./sqm/month)Growth prospectsAnchor Tenants . . . . . . . 47,000 45,000 - 50,000 Potential growth upon lease renewalMajor Tenants . . . . . . . . 58,000 50,000 - 70,000 Potential growth upon lease renewalSpecialty Tenants . . . . . 229,000 200,000 - 230,000 Potential growth upon lease renewalF&B, Restaurants . . . . . 192,000 150,000 - 200,000 Potential growth upon lease renewalSource: Jones Lang LaSalle Research and ConsultingWhile rent levels are considered to be currently at market, rental growth should be positively influenced bythe above mentioned factors, which include:• Growth in target middle-upper income market• Expansion of anchor store, Matahari, improving traffic flow• Potential for additional major stores, or mini-anchors• Increased overall occupancy levels• Improved parking• Strong market position, with no new proposals currently in the pipelineGrowth prospects of major and anchor tenants may be limited in the short term due to long lease terms, butconsiderable potential exists to grow specialty and F&B rentals due to the combination of these factors atlease renewal. Furthermore, the care that has been taken with retail zoning and attracting tenants thatcomplement the existing mix should support long term growth in shopper traffic, turnover and ultimatelyrental income. Considering these factors and the potential growth of retail spending in the trade area,average rents of CJ are projected to grow at approximately 11-13% per year across 2007-2009.At present, no proposals currently exist for new centres to compete directly with CJ. However, given theattractiveness of its position as the only centre in the region serving the growing number of middle to upperincome households in its immediate catchment, CJ should aim to consolidate its position as the leadingshopping centre within its trade area. Centre management should ensure it follows through on theabovementioned improvements to the centre to ensure that it is appropriately prepared for the potentialopportunistic entrance into the market by a competing centre in the medium to long term.F-56
Leased <strong>Malls</strong>4.2 Plaza Semanggi4.2.1 Regional context and local economyThe Plaza Semanggi (PS) is located at Jalan Jend. Sudirman Kav. 50, Karet Semanggi, in the Setiabudisubdistrict of Jakarta. The centre is strategically located at the heart of the CBD within the city’s GoldenTriangle at the Semanggi interchange, which is a major thoroughfare for north-south and east-west traffic.Located in the heart of the Jakarta CBD, the centre is situated amongst the key commercial activities of thecity, and near a number of Jakarta’s most prominent universities, including Atmajaya University, which isadjacent to the property.Since opening, The PS has established itself a focal point for the CBD and a meeting point for a wide rangeof visitors. The mall is complemented by a range of non-retail uses within the mixed use development, suchas a convention hall and office tower, including a nightclub.The centre provides a one stop shopping destination to meet the everyday convenience retailrequirements of customers in its target market, both residents in the area and the local workforce andstudent population. The centre also serves a lifestyle and entertainment function, and is a destination forcomparison shopping. The centre possesses destinational appeal and caters for convenience shoppingrequirements in a central location that is easily accessible by car and public transport.4.2.2 DescriptionCommencing operation in November 2003 (with grand opening in March 2004), The PS is a modernshopping centre comprising approximately 58,685 sq.m of NLA over 7 levels of retail space 13 level officespace and 2 basements. Table 4.2.1 provides details of the centre and Table 4.2.2 contains a listing ofmajor tenancies at the subject site, including lease expiry date and the percentage contribution by themajor tenant to gross monthly rent.Figure 4.2.1 The Plaza Semanggi—externalSource: The Plaza Semanggi Business PlanFigure 4.2.2 The Plaza Semanggi: ground floorSource: Jones Lang LaSalle Research and ConsultingF-57
Leased <strong>Malls</strong>Table 4.2.1 Centre details, The Plaza SemanggiCharacteristicsAddress . . . . . . . . . . . . . . . . . . Jl. Jend. Sudirman Kav. 50, Karet Semanggi, JakartaYear Opened. . . . . . . . . . . . . . . 2003Last Refurb/Extension . . . . . . . . NANLA (sq.m): . . . . . . . . . . . . . . . 58,685 (retail and office)(61,685 following extension)Site Area (sq.m): . . . . . . . . . . . . 19,000 (approximately)CarParking................ 1,100Motor Cycle Parking . . . . . . . . . 750Levels . . . . . . . . . . . . . . . . . . . . 7 (retail), 13 (office), 7 (parking), 2 (basement)Opening Hours . . . . . . . . . . . . . Weekdays: 10am - 10pmWeekends: 10am - 10pmOccupancy Rate . . . . . . . . . . . . 96.4% (as at 30 June 2007)Major <strong>Retail</strong> Tenants:Name% NLACentro Department Store . . . . . 13.3%Giant Hypermarket . . . . . . . . . . 10.6%Electronic Solution . . . . . . . . . . 7.2%Fitness First . . . . . . . . . . . . . . . 3.6%Gramedia . . . . . . . . . . . . . . . . . 3.0%Gillian’s Billiard . . . . . . . . . . . . . 1.7%Other Key <strong>Retail</strong>ers . . . . . . . . . .Ajisen Ramen, Balai Sabrini, Gillian’s Billiard, Giordano,Gloria Jeans, Pizza Hut, StarbucksTotal <strong>Retail</strong> Tenancies . . . . . . . . 456Shopper Traffic . . . . . . . . . . . . . Weekdays: 53,000 Weekends: 60,000Source: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, TbkTable 4.2.2 Major tenants as at 30 June 2007, The Plaza SemanggiTenantExpiry date% Grossmonthly rentCentro Department Store . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-Nov-2013 8.6%Giant Hypermarket . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-Feb-2019 5.6%Electronic Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-Oct-2011 5.0%Fitness First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17-May-2020 2.5%Gramedia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-Nov-2010 1.8%Gillian’s Billiard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19-Jul-2009 1.5%Other tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.0%Total Centre ............................................. 100.0%Source: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, Tbk4.2.3 Tenant mixThe PS possesses a good tenancy mix. The centre is anchored by the only Centro department storelocated in Jakarta and a Giant hypermarket. In addition, the centre contains a mix of traditional short-leasespecialty stores, including a number targeting the middle to middle upper segments, as well as long-leasespecialty stores across two precincts in the mall. Table 4.2.3 summarises the tenancy mix by level at ThePS.The lower ground floor is tenanted by Giant hypermarket and the ground floor includes food and beverage,retail services, gifts, and health and beauty outlets. The ground floor also comprises a variety of smalltenants (typically 5 sq.m to 10 sq.m) occupying space over a long lease structure (generally 30 years).The Centro department store anchors three levels, namely the upper ground level, level one and level two,while Fitness First also occupies space across these three levels. The upper ground floor contains aF-58
Leased <strong>Malls</strong>number of international fashion retailers to complement the department store and cater for middle tomiddle-upper segment visitors. High profile tenants on the upper ground level include Planet Surf,Giordano, Adidas and Da Vinci jewellery. Starbucks, Bread Talk and a number of optical retailers arealso located on the upper ground floor.The first floor mainly covers fashion, including accessories and shoes. The second level has a focus onmobile phones, electronics and computers. This level includes long lease tenants, the majority of which arealso focused on small electronics.The third level is dominated by homewares and furniture retailers, some of which are also on a long leasestructure. Duck King, a popular local restaurant, is also on the third level. Level 3A is the location of thecentre’s main food and beverage offering, including a traditional food court with small ‘hawker’ styleretailers and a restaurant precinct. The restaurant precinct includes traders with internal seating andenhanced ambience. The fifth level is the location of the centre’s cinema complex.Table 4.2.3 Tenancy mix of retail component by level, The Plaza SemanggiLevelTenant mixLower Ground Floor. . . . . . . . . . Giant (hypermarket)Ground Floor . . . . . . . . . . . . . . . Food and beverage, retail services, gifts, health and beautyUpper Ground Floor. . . . . . . . . . Centro (department store), Fitness First, fashion accessories,fashion, health and beautyFirst . . . . . . . . . . . . . . . . . . . . . Centro (department store), Fitness First, fashion, fashionaccessories, textilesSecond . . . . . . . . . . . . . . . . . . . Centro (department store), Fitness First, computers, mobilephones, electronicsThird . . . . . . . . . . . . . . . . . . . . . Homewares, FurnitureLevel 3A . . . . . . . . . . . . . . . . . . Food and beverageFifth . . . . . . . . . . . . . . . . . . . . . 21 CineplexSource: Jones Lang LaSalle Research and Consulting4.2.4 Target marketThe PS primarily targets the growing number of consumers within Greater Jakarta that fall within themiddle and middle to upper income segments. In particular, the presence of Centro, a less common butmore upmarket department store, allows the centre to uniquely cater for this market. The centre contains agood mix of well known national and international retailers and has an excellent lifestyle offering whichincludes Fitness First and 21 Cineplex. It also has a very strong food and beverage offering.Given the PS’ strategic location, the centre is a focal meeting point for a wide range of visitors in the city,with its tenant mix suitable for a broader range of customer segments. For example, long-lease tenantslocated in the mall has broaden the centre’s appeal and the food court broadly targets the local market.4.2.5 Trade area analysisTo assist with the definition of trade areas, a market research survey of visitors to the major leased mallswas undertaken in February and March 2007. A total of seven (7) centres were included in the study. Thesurveying was conducted by TNS on behalf of Jones Lang LaSalle for the purposes of this assessment.The main findings of the market research in relation to the profile of shoppers at The PS are as follows:• Visitors to The PS are relatively young (91% of those surveyed are younger than 35 years of age);• While the majority (i.e. more than 60%) nominate their ethnicity as Melayu, the centre also attracts ahigh proportion of Chinese visitors;• The survey indicated that weekend visits to The PS is only slightly higher than weekday visits, whichreflects the surrounding workforce and student population supporting pedestrian counts on weekdays;• Shopper traffic is particularly high in the early and late afternoon (between 12:00 and 15:00 and againbetween 16:00 and 19:00), which reflects the strength of lunch time trading as a result of the surroundingF-59
Leased <strong>Malls</strong>workforce and student population, commuter traffic on weekday afternoons during ‘peak hours’, and theusual peaks for customers in the afternoon on weekends;• Just over half of all visitors surveyed came directly from home to The PS. A significant proportion camefrom work (17%) and campus/school (19%). Home was the destination for the vast majority ofrespondents on leaving the centre (i.e. 86%);• The PS has a high frequency of visitation, with 5% of respondents claiming to visit the mall everyday. Afurther 24% visit more than once a week;• Visitors to The PS generally stay for long periods of time. The centre has the highest proportion ofvisitors who stays for an average of three hours or more (i.e. 45% of respondents) of all centres in theportfolio where visitors were surveyed. Just one in five frequent visitors to the mall stay for an average ofless than two hours during each visit;• Reflecting the centre’s function as a meeting point and its central location for commuters, The PSrecorded a relatively high proportion of survey respondents who usually visit the mall alone, while theproportion of respondents visiting with friends is also very high;• Meals are the main reason for visiting the mall, followed by window shopping, shopping for clothes,shopping for fashion accessories (bags, shoes) and meeting friends;• Of all the malls included in the market research study, The PS has the second highest level of overallcustomer satisfaction. Visitors surveyed were generally satisfied with facilities, the tenancy mix and thelevel of security at the centre.The trade area for The PS has been defined based on the findings on customer origin from the marketresearch survey, the strength of the subject site, the location and relative strength of competing retailfacilities and accessibility to the centre, including the road network, public transport and physical barriers.Based on these considerations, the centre’s PTA has been defined to cover a number of areas. Accordingto the market research survey, the areas where the level of market penetration is highest for The PS areareas in Jakarta including Setiabudi, Tanah Abang, Palmerah and Tebet. Other areas included within theprimary catchment are Kebayoran Baru, Mampang Prapatan and Grogal Petamburan.The survey found that the secondary catchment includes areas where The PS attracts visitors from,however the level of customer draw (market share penetration) is below the level achieved in the PTA.Areas considered to fall within the STA include Pancoran, Kebayoran Lama, Jatinegara, Kebon Jeruk,Pesanggrahan and Pulo Gadung.F-60
Leased <strong>Malls</strong>Taking the survey and the other factors outlined above into account, the trade area, including majorcompeting centres within the trade area, is illustrated in Figure 4.2.3.Figure 4.2.3 The Plaza Semanggi trade area1. Sarinah2. Ratu Plaza3. Plaza <strong>Indonesia</strong>4. Blok M Plaza5. Pondok Indah Mall6. Ciputra Mall7. Plaza Senayan (Phase 1&2)8. Pasar Festival9. Taman Anggrek Mall10. Mal Ambassador11. Senayan City (Forum)12. Pasaraya Blok M 3 (Pasaraya Grande)13. ITC Kuningan14. STC Senayan15. Dharmawangsa Square City Walk16. Plaza <strong>Indonesia</strong> EX17. Grand ITC Permata Hijau18. Setiabudi One d/h Plaza Setiabudi I19. Bellagio Boutique Mall20. Plaza Senayan Annex (Arcadia)21. Jakarta City Center (JaCC) Hyperstore22. Mall Pondok Indah 223. Mal Kelapa Gading 1, 2 & 3PROPOSED24. Grand <strong>Indonesia</strong>25. Citywalk Sudirman @ Cityloft26. Main Street Gandaria27. Pacific Place28. Kota Kasablanka16. Plaza <strong>Indonesia</strong> Extension29. Kemang Village30. Epicentrum Walk31. Sudirman PlaceN06172622 5916 1321242583082010283111 7 2 27 19144 121513295kmPlazaSemanggi23Source: Jones Lang LaSalle Research and Consulting & Jakarta Street Atlas (Gunther W. Holtorf)As at 2003, the PTA is estimated to have a population of 1.18 million (within around 286,000 households)while the STA had a population of 1.90 million (approximately 447,000 households).In recent years, highrise residential development has been accelerating in Central Jakarta. Developmentof condominiums and apartment complexes has added thousands of households to the PTA of The PSserves over recent years. However, the growth in apartments, which are typically domiciled by middle toupper income residents, is being offset by other residents vacating the trade area in search of moreaffordable housing and a result of the dislocation of some residents by new property developments.The PTA population is estimated to remain virtually unchanged in the four years between 2003 and 2007but the population is becoming more affluent. The PTA has declined by 0.1% per annum between 2003 and2007, decreasing to an indicative population of 1.17 million. The STA is estimated to have exhibited a largerdecline in population over the period, falling by 1.2% per annum, to approximately 1.81 million in 2007.Importantly for The PS, 95% of all households in the PTA fall within the targeted middle to upper incomegroup (defined as including households which are classified as SES A, B and C), while a similar proportionof STA residents (92%) are also within this target demographic. As a result, the number of target markethouseholds in the PTA is estimated at 270,400 households in 2007. The corresponding figure for the STAis 417,500 target market households.The population is forecast to decrease over the next four years. However, as a result of a combination ofpopulation changes and reducing household sizes, the number of target market households is expected toF-61
Leased <strong>Malls</strong>continue growing up to 2011. The PTA is forecast to contain around 283,900 target households in 2011,while the STA is forecast to contain approximately 440,100 target households.Average expenditure by households within the subject site’s target market is estimated at Rp. 21.3 millionper annum in 2007. Average annual household retail expenditure is expected to reach Rp. 24.9 million by2011.As a result, the annual total retail spending market in the PTA is forecast to increase from Rp. 5,759 billionin 2007 to Rp. 7,076 billion in 2011, which represents an average annual rise of 5.3%. The correspondingincrease in the secondary retail market is a rise from Rp. 8,893 billion to Rp. 10,971 billion, which reflectsaverage annual growth of 5.4%.Table 4.2.4 details the current and forecast levels of population growth and retail spending by householdsthat fall within the centre’s target market (i.e. middle and upper income households).Table 4.2.4 The Plaza Semanggi trade area: population growth and spending forecasts2007 (f) 2011 (f)%Growth2007-2011(p.a.)Primary Trade Area . . . . . . . Population 1,169,586 1,160,351 (0.2)%Households* 270,387 283,877 1.2%<strong>Retail</strong> Spending perHousehold (Rp. Million) 21.30 24.93 4.0%Total <strong>Retail</strong> Spend (Rp. Billion) 5,759 7,076 5.3%Secondary Trade Area . . . . . Population 1,808,702 1,780,406 (0.4)%Households* 417,531 440,130 1.3%<strong>Retail</strong> Spending perHousehold (Rp. Million) 21.30 24.93 4.0%Total <strong>Retail</strong> Spend (Rp. Billion) 8,893 10,971 5.4%* Note: Total Households and <strong>Retail</strong> spending market only includes only those households assumed to fallwithin the target market (i.e., AC Nielsen’ Socio Economic Status (SES) categories A to C, described asmiddle and upper income households). Spend market at 2007 prices (i.e. 2011 spend market at 2007prices; average annual retail spending per household and total retail spend market growth forecasts arereal, not nominal, growth, excluding the effects of inflation)Source: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting4.2.6 CompetitionThe PS is the most visited mall amongst its customers, with 43% of respondents to the market researchsurvey reporting the subject site as the centre they visit most often.The local centres of competitive relevance (i.e. centres larger than 20,000 sq.m), including their distancefrom The PS, opening year, amount of retail floor space and major tenants, are detailed in Table 4.2.5. Thelargest centres are discussed below:• Mal Kelapa Gading is located 10 kilometres from The PS. However, due to its large size (130,000 sq.m)and established position (the centre has been open since 1990), it is of competitive relevance in abroader sense. Mal Kelapa Gading is anchored by upmarket department stores and supermarketoperators Sogo and Diamond.• Pondok Indah Mall is a large lease mall located in South Jakarta, 6 kilometres southwest of the subjectsite. The mall contains around 100,000 sq.m of retail space and is anchored by a number of departmentstores. The centre also contains cinemas.• Mal Taman Anggrek is situated 5 kilometres to the northwest of The PS, but is easily accessible from thesubject site via Jendral Gatot Subroto, the tollway road. The centre contains nearly 100,000 sq.m ofretail space, including Metro and Galleria department stores and a Hero hypermart. The centre alsoincludes an ice skating rink. Mal Taman Anggrek is targeting a wider market than The PS.F-62
Leased <strong>Malls</strong>• There are two major malls in Senayan, namely Plaza Senayan and the recently opened Senayan City.Situated just 2 kilometres southwest of the subject site, both malls contain around 80,000 sq.m of retailfloor space each. Both centres target customers in the middle-upper income segment, with PlazaSenayan in particular targeting a slightly more affluent market.• Mal Ciputra is situated 6 kilometres north of The PS. The mall is anchored by Batik Keris, Matahari andHero. Given its size (51,000 sq.m) and market position (targeting middle to middle-upper households)this centre is the most similar to The PS when considering the major competing centres in the vicinity.• Jakarta City Centre is located 3 kilometres north of the subject site. While the centre is near, it is ofminimal competitive relevance due to its target market of the lower income segment; it is a strata mallanchored by a Hypermart but no department store.• Plaza <strong>Indonesia</strong> is one of the most exclusive malls in Jakarta, situated 3 kilometres north of The PS. Thecentre contains 42,000 sq.m of mainly high-end retailing, including a Debenham’s department store.The competitive environment of the trade area is expected to intensify over the next five years, with theplanned development of a number of competing retail facilities.The competitive developments targeting middle and upper income households that are currently in thepipeline, which will add a combined 318,900 sq.m of retail floor space to the Jakarta CBD retail market, arescheduled for completion by the end of 2009. These include Grand <strong>Indonesia</strong> (due to open in the thirdquarter of 2007), Pacific Place (due to open in the third quarter of 2007), Kota Kasablanka and Plaza<strong>Indonesia</strong> Extension (both due to open in the fourth quarter of 2008).While these new projects could potentially impact the revenue growth that can be achieved at The PS,given its strategic geographic position in the centre of Jakarta, combined with the subject site’s owndevelopment plans and its ability to withstand past changes to its competitive environment, these mainlyupper new centres are expected to have a relatively small impact on the performance of the subject site.F-63
Leased <strong>Malls</strong>Table 4.2.5 Main competition, The Plaza SemanggiCentre nameDistancefromPlazaSemanggiTypeNLA(sq.m)YearopenedAnchor tenantsMal Kelapa Gading . . . . . . . . . . 10 km Lease 130,000 1990 Sogo, Diamon, Cinema 21Pondok Indah Mall 1 & 2 . . . . . . 6 km Lease 100,000 1991 Giant, Sogo, Metro, Zara,Cinema 21Mal Taman Anggrek . . . . . . . . . 5 km Lease 97,000 1996 Galleria, Hero, Metro,Cinema 21Senayan City . . . . . . . . . . . . . . . 2 km Lease 80,000 2006 Debenhams, The FoodHall, Cinema 21Plaza Senayan . . . . . . . . . . . . . 2 km Lease 76,000 1995 Hero, Metro, Sogo,Cinema 21Mal Ciputra . . . . . . . . . . . . . . . . 6 km Lease 51,000 1993 Batik Keris, Hero,Matahari, Cinema 21Jakarta City Centre . . . . . . . . . . 3 km Strata 50,000 2006 HypermartPlaza <strong>Indonesia</strong> . . . . . . . . . . . . 3 km Lease 42,000 1990 Debenhams, Food HallPasaraya Grande . . . . . . . . . . . 3 km Lease 42,000 1995 Pasaraya, Hero, MPXCinemaBlok M Plaza. . . . . . . . . . . . . . . 3 km Lease 32,000 1990 Matahari, Hero, Cinema 21Grand ITC Permata Hijau . . . . . 3 km Strata 30,000 2004 CarrefourMal Ambassador . . . . . . . . . . . . 1 km Strata 30,000 1997 Matahari, Office OneFuture CompetitionPacific Place . . . . . . . . . . . . . . . 0.6 km Lease 75,000 2007 Metro, KidzaniaGrand <strong>Indonesia</strong> . . . . . . . . . . . . 3 km Lease 108,000 2007 Seibu, Harvey Nichols,Blitz MegaplexCitywalk Sudirman @ Cityloft. . . 1.5 km Lease 17,300 2007 NAMain Street Gandaria . . . . . . . . 4.5 km Lease 94,000 2008 Metro, Fitness First,Studio 21, Amazone,Electronic SolutionsPlaza <strong>Indonesia</strong> Extension . . . . 3 km Lease 25,386 2008 NAKota Kasablanca . . . . . . . . . . . . 3.2 km Lease 62,000 2008 Sogo, Fitness FirstKemang Village . . . . . . . . . . . . . 4.5 km Lease 65,000 2009 NASudirman Place. . . . . . . . . . . . . 1.3 km Lease 31,000 NA NAEpicentrum Walk . . . . . . . . . . . . 2.3 km Lease 26,200 2009 NASource: Jones Lang LaSalle Research and ConsultingF-64
Leased <strong>Malls</strong>4.2.7 SWOT analysisTable 4.2.6 provides a summary of the strengths, weaknesses, opportunities and threats for The PlazaSemanggi.Table 4.2.6 SWOT analysis, The Plaza SemanggiStrengthsThe PS is prominently located in the heart of theJakarta CBD, with good accessibility by privateand public transport from all surrounding areasThe centre has a diverse range of visitors,including local residents within the centre’s targetmarket, the CBD workforce, students and othercommutersThe PS has a unique tenant mix, combining atraditional mall concept with long lease tenants.This allows the centre to cater for a wider rangeof customer segments and also diversifies thecentre’s income streamThe Centro department store is exclusive toThe PS in JakartaThe lifestyle offering is extensive, in particular theselection of food and beverage retailers and thequality of the fitness centreLow rent arrears indicate good cash flowunderpinned by strong trading performanceOpportunitiesIntroduction of an open air retail concept, Plangi onthe Sky—POTS, would further add to the uniquerange of retail concept offerings at The PS, andincrease centre incomeThe opening of a busway interchange bridge to linkThe PS with the busway interchange could improveoccupancy levels on the second and third levels.Similar linkages to other adjoining facilities(i.e. university) would further improve accessibility,pedestrian flows and total centre incomeFurther capitalising on The PS’s central location byreinforcing ‘The Best Meeting Point’ slogan couldfurther increase shopper traffic and centre salesFurther capitalising on the presence of Centro byincreasing the prominence and interaction of Centroentrances with the rest of the mallReacquiring long lease tenancies will assist intighter adherence to tenant mix strategyCasual mall leasing can be more effectively utilisedto integrate the offering with the rest of the centreWeaknessesSimilar to many <strong>Indonesia</strong>n shopping centres,there is a shortage of parking space at peaktimesThe centre can be difficult to navigate which mayrestrict optimal pedestrian flowsThe long lease precincts (particularly on leveltwo) are underperforming relative to the rest ofthe centre and are negatively impacting on theintegrity of the centre’s tenancy mixThe centre is located in the ‘3 in 1’ CBD area(enforced car pooling precinct) which could detervisitation by individuals travelling by private carduring peak hours on weekday afternoonsThreatsFuture shopping centre development in CentralJakarta remains strong which will inevitably dilutethe potential of some centres to maintain currentmarket shareLong lease tenancies may impact on the integrity ofthe centre’s tenancy mix and target market position.Source: Jones Lang LaSalle Research and ConsultingF-65
Leased <strong>Malls</strong>4.2.8 Future outlookDespite the constant threat of new competition in the Jakarta retail market, the future outlook for The PSremains bright. The centre’s strategic location, combined with its unique tenancy mix, means that newentrants to the retail market in Jakarta are unlikely to compete directly with the subject site. Furthermore,The PS benefits from its relatively recent construction date (compared with older malls around Jakarta),meaning it is less likely to appear ‘dated’ in comparison with new competitors.There are a number of strong, well advanced opportunities for The PS to improve upon its performance inthe short to medium term. New retail concepts such as Plangi on the Sky, the proposal to add a 3,000 sq.mcafé and restaurant, is one such opportunity which is well advanced. The opening of the buswayinterchange bridge, which will also include the addition of new tenants around one area of the centrewhich is currently underperforming, is another sound opportunity. Both of these proposals have thepotential to assist centre management with reinforcing the tenancy mix, while they will also add to thecentre’s vibrancy (thereby addressing the challenge posed by new shopping centre developments),diverse retail offering and income.Figure 4.2.5 The Plaza Semanggi—Centre AtriumSource: Jones Lang LaSalle Research and ConsultingThese factors all point to strong growth prospects for income growth at The PS in the short to mediumterm. Furthermore, it is considered that the PS’s current rental positioning is below market, providingconsiderable upside for most tenancy categories at lease renewal. Considering these factors and thepotential growth of retail spending in the trade area, average rents of PS are projected to grow atapproximately 10-12% per year across 2007-2009.Table 4.2.7: Rental positioning, The Plaza SemanggiTenancy categoryAverage currentrents(Rp./sqm/month)Estimatedrange ofmarket rents(Rp./sqm/month)Growth prospectsAnchor Tenants. . . . . . . 55,000 50,000 - 60,000 Potential growth upon lease renewalMajor Tenants . . . . . . . . 72,000 70,000 - 100,000 Potential growth upon lease renewalSpecialty Tenants . . . . . 219,000 225,000 - 275,000 Potential growth upon lease renewalF&B, Restaurants . . . . . 216,000 200,000 - 250,000 Potential growth upon lease renewalSource: Jones Lang LaSalle Research and ConsultingOverall, The PS is well positioned to compete with new entrants to Jakarta’s growing retail market. Thecentre is well positioned in terms of its target market, with the centre targeting a slightly lower market thanmany of its existing and proposed competitors around central Jakarta. The centre is well positioned inF-66
Leased <strong>Malls</strong>terms of its very prominent and central geographic location, and centre management has proactivelysought to capitalise on its positioning by exploring innovative ways to increase centre income.Overall, The PS is considered to be well placed to face new competitive threats, build upon its existingmarket and maximise its trading (and, therefore, its income producing) potential.4.3 Bandung Indah Plaza4.3.1 Regional context and local economyBandung is the capital of West Java Province, the most populous province in <strong>Indonesia</strong>. It is locatedapproximately 128 kilometres southeast of Jakarta and is connected to Jakarta by a toll road.The metropolitan area occupies an elevated basin some 770 metres above sea level, giving Bandung arelatively pleasant, cool climate.Bandung has a strong association with its Dutch colonial past. The Dutch influence can be seen throughthe Dutch colonial architecture prevalent in Bandung.Bandung is also famous for its textile industry, with numerous international labels having set up factories inthe region. The city has become a popular weekend destination for residents from Jakarta, who are drawnto the factory outlets selling internationally famous designer brands and local designers’ clothes at lowprices.Bandung has nearly 50 higher educational institutions, including numerous universities that attractstudents from throughout <strong>Indonesia</strong> and overseas. The most famous and oldest university is theBandung Institute of Technology, which was established in 1920. Other well known institutions includethe University of Parahyangan and the University of Pajajaran.Other industries associated with the Bandung region include agriculture (rice, tea etc.) and high-techindustries (aircraft, military and telecommunications).As at the 2000 National Census, the population of West Java was 35.7 million. This excludes the westernpart of the province, which was split in 2000 to form the province of Banten, and Jakarta, which is its ownprovince. In 2006, the Bandung municipality had a population of approximately 2.3 million.4.3.2 DescriptionBandung Indah Plaza (BIP) is a four level shopping centre with three basements. It is located in the heart ofthe Bandung CBD. The centre comprises two buildings and was developed in conjunction with theadjoining Hyatt Hotel in 1990.BIP is currently undergoing major refurbishment and re-configuration that will see the two existingbuildings integrated and increase the NLA from approximately 26,472 sq.m to 30,315 sq.m. The workincludes the following major changes:• Four-storey extension to the northern end of the centre;• Replacement of Yogya department store and supermarket with additional specialty retailers;• New Hypermart on the ground floor, replacing the previous ground floor space and occupied byMatahari specialty tenants;• Additional floor created for Matahari (Level 1 split into Level 1-a and 1b);• New food court in former level 3 Matahari space, replacing smaller food court on this level;• Creation of plaza area in front of ground floor shops, providing opportunities for al fresco dining;• Improved pedestrian movement via additional escalators, travelator to basement parking andintegration of the two buildings; and,• Additional parking in basement through relocation of centre management offices.F-67
Leased <strong>Malls</strong>Table 4.3.1 provides details of the centre.Figure 4.3.1 Bandung Indah Plaza—ImagesSource: Jones Lang LaSalleTable 4.3.1 Centre details, Bandung Indah PlazaCharacteristicsAddress . . . . . . . . . . . . . . . . . . Jl. MerdekaYear Opened . . . . . . . . . . . . . . 1990Last Refurbishment/Extension. . On-goingNLA (sq.m): . . . . . . . . . . . . . . . 26,472(30,315 following extension)Site Area (sq.m) . . . . . . . . . . . . 15,779CarParking ............... 602Motor Cycle Parking . . . . . . . . . 700Levels. . . . . . . . . . . . . . . . . . . . 4 (retail), 3 (basement)Opening Hours . . . . . . . . . . . . . 10am - 10pmOccupancy Rate . . . . . . . . . . . . 83.2% (as at 30 June 2007)Major <strong>Retail</strong> Tenants:Majors . . . . . . . . . . . . . . . . . . .Mini Majors. . . . . . . . . . . . . . . .Selected Other . . . . . . . . . . . . .Total <strong>Retail</strong> Tenancies . . . . . . . . 180Shopper Traffic . . . . . . . . . . . . . Weekdays: 30,000Weekends: 40,000Hypermart, MatahariCinema 21, Toko Gunung Agung, TimezoneMcDonald’s, Body Shop, Giordano, Quiksilver, Starbucks,Polo Ralph Lauren, Adidas, Levis, A&W, Rice Bowl, X-TreemSource: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, TbkF-68
Leased <strong>Malls</strong>Figure 4.3.2 Bandung Indah Plaza: internal imagesSource: Jones Lang LaSalle Research and Consulting4.3.3 Tenant mixThe current renovation has provided centre management with an opportunity to change the tenancy mix ofBIP. The centre previously comprised two department stores and one supermarket. While this providedrelatively strong anchors, it limited the number and range of specialty shops as the majority of space wastaken up by anchor tenants.The centre provides a one stop shopping destination with a good mix of everyday convenience retailersand specialty retailers. The mix is skewed towards the large youth market, given the location of nearbyuniversities in Bandung.Youth fashion, lifestyle, entertainment and food and beverage offerings are all relatively strong. There issignificant potential to consolidate BIP’s strong destination appeal for youth by attracting additional tenantsthat cater to this market. At the same time, centre management has indicated a desire to increase itsofferings for young families. Areas that could be targeted include electronics and homewares.There is no fitness centre, because of its large space requirement. However, this is mitigated by the higherrents available from specialty tenants.Table 4.3.2 Tenancy mix by level, Bandung Indah PlazaSource: Jones Lang LaSalle Research and ConsultingLevelTenant mix (post renovations)Ground . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Second. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Third. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Source: Jones Lang LaSalle Research and ConsultingHypermart, Branded Fashion & Accessories, CafesMatahari, Lifestyle, FashionMatahari, Toko Gunung Agung, Lifestyle, HobbiesCinemas, Timezone, Food CourtThe Ground Floor is anchored by Hypermart, which accounts for 16.9% of the NLA and 6.5% of thecentre’s gross rental income. Specialty retailers on this level include food and beverage outlets(McDonalds, Starbucks) and fashion and accessories retailers, including Quiksilver and Giordano.Level 1 is anchored by Matahari, which accounts for 22.8% of NLA and 11.6% of gross rental income.Matahari extends across three floors. Youth fashion retailers are well represented, including City Surf andF-69
Leased <strong>Malls</strong>Levis. Vacant tenancies created from the former Yogya department store provide opportunities toconsolidate the fashion offering on this level.Level 2 is anchored by the top level of the Matahari Department Store and Toko Gunung Agung bookstore.Lifestyle retailers such as X-Treem and MG Music cater to the youth segment. A Yogya supermarketanchors the southern end of this level, but it will be replaced upon its lease expiry with additional specialtyretailers in 2008.Level 3 provides the centre’s major entertainment offering, comprising Cinema 21 (6 screens), Timezoneand a new food court, created in the former Matahari Department Store space. Other food tenancies arealso on this level.Table 4.3.3 Major Tenants as at 30 June 2007, Bandung Indah PlazaTenant Expiry date % Gross monthly rentMatahari . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-May-15 11.6%Hypermart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-May-15 6.5%Toko Buku Gunung Agung . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23-May-11 3.9%McDonald’s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-May-09 2.4%Rice Bowl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-Jun-11 2.2%Extreme Store. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-Sep-11 2.2%Felice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-Mar-11 1.9%Cinema 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-Dec-15 1.6%TexasChicken ........................................ 4-Aug-13 1.4%Timezone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-May-15 1.4%Other tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Varies 64.9%Total Centre ......................................... 100.0%Source: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, TbkNote: Yogya Supermarket to be replaced with specialty retailing4.3.4 Target marketBIP targets the middle to middle-upper income market, particularly the youth market. The tenancy mix isconsidered appropriate for this target market, providing a mix of local, national and internationally brandedretailers.The centre also caters to a relatively large local workforce, being centrally located in the CBD.4.3.5 Trade area analysisTo assist with the definition of trade areas, a market research survey of visitors to the major leased mallswas undertaken in February and March 2007. A total of seven (7) centres were included in the study. Thesurveying was conducted by TNS on behalf of Jones Lang LaSalle for the purposes of this assessment.The main findings of the market research in relation to the profile of shoppers at BIP is as follows:• BIP is the most popular centre in the portfolio with young couples, a reflection of the youthfulcharacteristics of the customer profile, especially during weekdays. Older people (30-40 years)generally visit the centre during weekends;• As with all centres in the portfolio, Saturdays and Sundays are the most popular days to visit BIP. Peakhours are between 12:00 and 16:00. Most customers spend between one and three hours in the centre;• Approximately 50% of BIP’s customers visit the centre at least once a week;• The most popular reason given for visiting BIP is sightseeing or comparison shopping. A high proportionof customers indicated they visited BIP to watch a movie;F-70
Leased <strong>Malls</strong>• In terms of reasons for choosing BIP, accessibility is the key reason, including good access via publictransport and close proximity to school/college. The centre is perceived to have a complete mix of storesand is a popular meeting place for the younger generation;• Visitors surveyed were generally very satisfied with facilities, the tenancy mix and the level of security atBIP.The trade area for BIP has been defined based on the findings of customer origin from the market researchsurvey, the strength of the subject site, the location and relative strength of competing retail facilities andaccessibility to the centre, including the road network, public transport and physical barriers.Based on these considerations, the centre’s PTA has been defined to cover a number of areas. Accordingto the market research survey, the areas where the level of market penetration is highest for BIP areCoblong, Sukasari, Bandung Wetan, Cibeunying Kidul, Sumur Bandung, Cicadas and Lengkong.The secondary catchment includes areas where BIP attracts visitors from, however the level of customerdraw (market share penetration) is below the level achieved in the PTA. Areas considered to fall within theSTA include Pancoran Mas, Serang Baru, Gunung and Putri.The trade area, including major competing centres within the trade area, is illustrated in the below map.Figure 4.3.3 Bandung Indah Plaza trade area1. Istana Plaza2. Bandung Trade Center3. Bandung Supermall4. Ciwalk (Cihampelas Walk)5. Dago Plaza6. Parisj Van Java7. Riau JunctionN3 Km6245173Source: Jones Lang LaSalle Research and Consulting & RTRW Kota Bandung (Pemkot Bandung)As at 2005, the PTA included a population of 534,000 persons while the STA included a further562,000 persons. Based on recent population trends in the area, the primary and secondary tradeareas are forecast to grow by 1.0% per annum between 2007 and 2011, increasing to an indicative forecastpopulation of 566,000 (PTA) and 597,000 (STA) respectively.The target market for BIP are middle and upper income households, which represent 90% of allhouseholds in the PTA and 81% of households in the STA.F-71
Leased <strong>Malls</strong>Trade area retail spending and forecast retail spending growth is summarised in Table 4.3.4 below.Together with modest population growth, total retail spending in the PTA and STA is expected to grow by5.0% per annum between 2007 and 2011.Table 4.3.4 Bandung Indah plaza trade area: population growth and spending forecastsSource: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting2007 (f) 2011 (f)% Growth 2007-2011 (p.a.)Primary Trade Area . . . . . . . . . . . . . . . . Population 544,313 566,187 1.0%Households* 124,947 129,968 1.0%<strong>Retail</strong> Spendingper Household(Rp. Million) 19.5 22.8 4.0%Total <strong>Retail</strong> Spend(Rp. Billion) 2,436 2,965 5.0%Secondary Trade Area . . . . . . . . . . . . . Population 573,521 596,569 1.0%Households* 97,213 101,119 1.0%<strong>Retail</strong> Spendingper Household(Rp. Million) 19.5 22.8 4.0%Total <strong>Retail</strong> Spend(Rp. Billion) 1,895 2,307 5.0%* Note: Total Households and <strong>Retail</strong> spending market only includes only those households assumed tofall within the target market (i.e., AC Nielsen’ Socio Economic Status (SES) categories A to C, describedas middle and upper income households). Spend market at 2007 prices (i.e. 2011 spend market at2007 prices; average annual retail spending per household and total retail spend market growthforecasts are real, not nominal, growth, excluding the effects of inflation)Source: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting4.3.6 CompetitionBIP is the most visited mall amongst its customers, with 57% of respondents surveyed reporting thesubject site as the centre they visit most often.The main competing centres to BIP are summarised in Table 4.3.5 and discussed below:• Bandung Supermal is considered the centre of greater competitive relevance, according to the marketresearch undertaken. The centre targets the upper income market in Bandung and is anchored by Metroand Giant Hypermarket. It has a strong entertainment offering, including cinemas, bowling and KotaFantasi. It is the largest shopping centre in the metropolitan area with an NLA of 48,800 sq.m, and isapproximately 4 kilometres south east of BIP. It is considered that Bandung Supermal will primarilycompete for discretionary spending from the upper income market rather than weekly convenienceshopping.• Riau Junction (Yogya) is less than 1 kilometre north of BIP. At the time of the market research, only theYogya supermarket at Riau Junction was opened. This centre will be fully opened by mid 2007 and willinclude a Yogya department store on levels 1 and 2 and food retailers on level 3. Its small size(approximately 6,400 sq.m) and limited offering suggests it will primarily compete with the departmentstore, supermarket and food & beverage retailers at BIP rather than the whole centre.• Istana Plaza is approximately 2 kilometres west of BIP and comprises over 27,000 sq.m of NLA over fivelevels. The centre is anchored by a small Hero supermarket, Rimo department store and Ace Hardwareand targets the middle to middle-upper income market.• Paris Van Java, a recently opened centre, has the potential to increase its competitive relevance once alltenancies are occupied and established. This centre has strong anchor tenants in Sogo and CarrefourF-72
Leased <strong>Malls</strong>and approximately 38,000 sq.m of NLA. Its lifestyle offering is quite strong, including Bandung’s onlyBlitz Megaplex cinemas. It is approximately 4 kilometres north west of BIP, which is considerably furtherfrom BIP than other competitors such as Istana Plaza.There are no known major shopping mall developments approved or under construction in the Bandungmetropolitan area. However, given the relative strength of retail supply in recent years, particularly inGreater Jakarta, it is possible that further centres will be developed. Major drivers will be the continuedexpansion plans of major international and national department store and hypermart chains into the mainmetropolitan areas of <strong>Indonesia</strong>.Table 4.3.5 Main competition, Bandung Indah PlazaCentre nameDist. fromBandungIndah PlazaTypeNLA(sq.m)YearopenAnchor tenantsIstana Plaza . . . . . . . . . . . 2 km Lease 27,247 2001 Rimo, Hero, Ace HardwareBandung Supermal . . . . . . 4 km Lease 48,800 2001 Metro, Giant, Kota Fantasi,Cinemas, GUBA (bowling)RiauJunction.......... 1 km Lease 6,400 2007 Yogya supermarket &department storeCihampelas Walk . . . . . . . 2 km Lease 28,400 2004 Yogya supermarket &department store, CinemasParis Van Java . . . . . . . . . 4 km Lease 38,000 2006 Sogo, Carrefour, Blitz MegaplexSource: Jones Lang LaSalle Research and Consulting4.3.7 SWOT analysisTable 4.3.6 provides a summary of the strengths, weaknesses, opportunities and threats for BIP.Table 4.3.6 SWOT analysis, Bandung Indah PlazaStrengthsCentral location with good accessibility fromJl. Merdeka to metropolitan population ofBandung as well as nearby working population.Well established centre and well regarded as ameeting place for Bandung residents, particularlyits large student population.Strong youth retail offer, serving the local studentpopulation.Comprehensive “one stop shopping” centre withfull range of convenience and comparisonshopping.WeaknessesParking space is in high demand and regularly atabove full capacity.Entertainment offer not considered as strong assome of its competitionF-73
Leased <strong>Malls</strong>OpportunitiesThreatsExisting renovation and extension providesopportunities to consolidate in the youth segment,improve entertainment and F&B offer and attractadditional “mini-major” anchors (eg. large formatsports stores, and electronics stores)Increased parking provision by relocating centremanagement offices out of basement.Fully utilising plaza area for al fresco dining andopen air activities/special events. This reinforcesBIP as the meeting place for Bandung.Source: Jones Lang LaSalle Research and Consulting4.3.8 Future OutlookPotential for new centres to come into the marketand compete in the middle income target market.Strong new competition in the leisure and lifestylearea from Bandung Supermal (which isconstructing an adjoining snow centre) and Parisvan Java (Blitz Cinemas, al fresco dining)There is considerable upside for the trading performance in the short to medium term at BIP due to thecurrent renovations. While there is considerable space remaining to be leased, the centre has the benefitof a very good location in the centre of Bandung and is well established in the local market. Its strength inthe youth segment should be consolidated as a result of the current upgrade.The reconfiguration of the Matahari Department Store provides an opportunity to better integrate this storewith the main building fronting Jl. Merdeka. While the loss of Yogya, particularly on level 1 and 2, hasremoved a destination anchor from the southern end of the centre, the reconfigured floor plans provide anopportunity to greatly increase the level of specialty retailing and rental income. Attracting high profilespecialty retailers and mini anchor stores (for example sports stores, and electronics stores) will assist ingenerating foot traffic and leasing up these areas.The plaza area provides significant potential to attract major F&B retailers, which in turn should attractadditional customers to the centre. The refurbished plaza should reinforce BIP as the meeting place inBandung.Parking at the centre remains an issue, despite additional spaces being available nearby. Additionalspaces created through the removal of the basement centre manager’s office will partially relieve theparking congestion.Current rental positioning at BIP is considered to be at the high side of market rentals, suggesting thatincome growth prospects may be limited in the short term. It is considered, however, that the re-positioningof the centre, which will change the tenant balance in favour of higher rental generating specialty and F&Btenants, should have an overall positive influence on rental income in the short to medium term.Considering these factors and the potential growth of retail spending in the trade area, average rentsof BIP are projected to grow at approximately 11-13% per year across 2007-2009.Table 4.3.7: Rental positioning, Bandung Indah PlazaTenancy categoryAveragecurrent rents(Rp./sqm/month)Estimated rangeof market rents(Rp./sqm/month)Growth prospectsAnchor Tenants. . . . . . . 50,000 40,000 - 50,000 New Hypermart and renovatedMatahari should improve overallcentre performanceMajor Tenants . . . . . . . . 112,000 80,000 - 110,000 Potential growth upon rental reviewSpecialty Tenants . . . . . 334,000 200,000 - 325,000 Centre re-positioning will increaseproportion of specialty tenantsF&B, Restaurants . . . . . 214,000 225,000 - 280,000 Centre re-positioning will increaseproportion of F&BSource: Jones Lang LaSalle Research and ConsultingF-74
Leased <strong>Malls</strong>While BIP is likely to continue to be subject to new competition, it has retained its strong position as one ofthe metropolitan area’s most favoured retail destinations by virtue of its central location, popularity with theyouth segment and strong tenancy mix. Current redevelopment should consolidate BIP’s position as amajor shopping destination in Bandung, despite new competition.4.4 Istana Plaza4.4.1 Regional context and local economyBandung is the capital of West Java Province, the most populous province in <strong>Indonesia</strong>. It is locatedapproximately 128 kilometres southeast of Jakarta and is connected to Jakarta by a toll road.The metropolitan area occupies an elevated basin some 770 metres above sea level, giving Bandung arelatively pleasant, cool climate.Bandung has a strong association with its Dutch colonial past. The Dutch influence can be seen throughthe Dutch colonial architecture prevalent in Bandung.Bandung is also famous for its textile industry, with numerous international labels having set up factories inthe region. The city has become a popular weekend destination for residents from Jakarta, who are drawnto the factory outlets selling internationally famous designer brands and local designers’ clothes at lowprices.Bandung has nearly 50 higher educational institutions, including numerous universities that attractstudents from throughout <strong>Indonesia</strong> and overseas. The most famous and oldest university is theBandung Institute of Technology, which was established in 1920. Other well known institutions includethe University of Parahyangan and the University of Pajajaran.Other industries associated with the Bandung region include agriculture (rice, tea etc.) and high-techindustries (aircraft, military and telecommunications).As at the 2000 National Census, the population of West Java was 35.7 million. This excludes the westernpart of the province, which was split in 2000 to form the province of Banten, and Jakarta, which is its ownprovince. In 2006, the Bandung municipality had a population of approximately 2.3 million.4.4.2 DescriptionCommencing operation in November 2001, Istana Plaza (IP) has quickly become a major communityfocus for the northern and western region of Bandung, including the large local Chinese population. Thecentre provides a relatively comprehensive retail offering targeting the middle to middle-upper incomeresidents in this region.The centre is located at the junction of two busy roads, Jl. Pasir Kaliki and Jl. Pajajaran, and is consideredone of the major modern shopping malls serving the population of Bandung. It is approximately2 kilometres west of the centre of Bandung.IP comprises four retail levels and two basements with a total NLA of 27,247 sq.m. Table 4.4.1 providesdetails of the centre.F-75
Leased <strong>Malls</strong>Figure 4.4.1 Istana Plaza, BandungSource: Jones Lang LaSalleTable 4.4.1 Centre details, Istana PlazaCharacteristicsAddress. . . . . . . . . . . . . . . . . . . . . Corner Jl. Pajajaran & Jl. Pasir KalikiYear Opened . . . . . . . . . . . . . . . . . 2001Last Refurbishment / Extension . . . Minor renovations underwayNet Lettable Area (sq.m): . . . . . . . 27,247Site Area (sq.m): . . . . . . . . . . . . . . 13,082CarParking.................. 700Motor Cycle Parking . . . . . . . . . . . 500Levels . . . . . . . . . . . . . . . . . . . . . . 4 (retail), 2 (basement)Opening Hours . . . . . . . . . . . . . . . 10am - 9.30pm Weekdays10am - 10pm WeekendsOccupancy Rate . . . . . . . . . . . . . . 98.9% (as at 30 June 2007)Major <strong>Retail</strong> Tenants:Majors . . . . . . . . . . . . . . . . . . . . . . Rimo Department Store, Hero Supermarket, Ace HardwareMini Majors . . . . . . . . . . . . . . . . . . Gramedia, Eastern Restaurant, Agis Electronics, Game MasterSelected Other . . . . . . . . . . . . . . . Pizza Hut, Adidas, Body Shop, Fila, Giordano, Nike, TheExecutive, McDonalds, Bread Talk, Charles & Keith, NauticaTotal <strong>Retail</strong> Tenancies . . . . . . . . . . 205Shopper Traffic . . . . . . . . . . . . . . . 15 - 20,000 Weekdays25 - 30,000 WeekendsSource: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, TbkF-76
Leased <strong>Malls</strong>Figure 4.4.2 Istana Plaza: imagesSource: Jones Lang LaSalle Research and Consulting4.4.3 Tenant mixIP is a well established centre with a loyal customer profile. It has proved to be popular with the localChinese community as well as young families. It caters to its primary customer base through its strongtenancy mix, which includes a strong offering of food, fashion and accessories, and children’s fashion andentertainment.Since opening, the centre has enjoyed a high occupancy rate, which currently sits at approximately 98.9%.The tenancy mix provides a one stop shopping destination, with three anchor tenancies (Rimo, Hero, ACEHardware), lifestyle and entertainment mini-anchors and a wide range of specialty tenants. Notableexclusions from the tenancy mix are cinemas and a fitness centre.With a large hardware store and electronics store (Agis Electronics), the centre caters particularly well tomale shoppers. This is reinforced further with popular male fashion brands such as The Executive andNautica.The lower ground floor is anchored by a small Hero Supermarket. There is direct access to parking on thislevel and a number of small tenancies and casual leasing. These small tenancies are particularly popularwith the youth segment. A group of external shops are located on this level, including Pizza Hut, banks andHolland Bakery.The ground floor is anchored by ACE Hardware and includes branded fashion and a range of cafes andrestaurants (Eastern Restaurant). The atrium area is utilised for casual leasing, events and exhibitions.This creates a busy market atmosphere within the centre of the mall.Level 1 is anchored by Rimo department store. There is a large children’s themed area, which has fashionand entertainment uses. Agis Electronic provides a further anchor on this level. Major fashion brands suchas Nautica, Planet Surf and The Executive are present, providing a focus for the male shopper.Level 2 comprises the second level of Rimo, addition fashion retailers as well as some food and beverageofferings, including Gloria Jeans and Solaria.Level 3 comprises Bandung’s only ice skating rink, the centre’s food court and a range of other lifestyle andentertainment retailers, including Gramedia bookstore, Game Master and Disc Tarra. A mezzanine diningarea overlooks the ice skating arena.The centre manager has indicated that Level Three is proposed to be redeveloped, with the removal of theice skating rink, providing an opportunity to strengthen the food and entertainment offering of the centre.F-77
Leased <strong>Malls</strong>Table 4.4.2 Tenancy mix by level, Istana PlazaLevelTenant mixLower Ground. . . . . . . .Ground . . . . . . . . . . . . .First . . . . . . . . . . . . . . .Second . . . . . . . . . . . . .Third. . . . . . . . . . . . . . .Hero Supermarket, External tenancies, ATMS, Small Casual Leasing areaACE Hardware, Restaurants, Branded Fashion, Exhibition spaceRimo, Children’s play area, Branded fashionFashion, AccessoriesLifestyle—Books, Games, Game Master, Ice Skating, Food CourtSource: Jones Lang LaSalle Research and ConsultingCompared to other modern shopping malls, the anchor tenants are relatively small and account for arelatively small proportion of NLA and gross rental income. The centre, however, has particularly strongmini-anchors and has consistently achieved high occupancies, suggesting that the anchor tenants areproviding sufficient destination appeal to the centre.It is noted that the Hero Supermarket is relatively small, with an NLA of only 1,341 sq.m, which restricts theproduct lines that it can carry. This may see customers using the supermarket for “top up” style groceryshopping rather than major weekly grocery shopping.Table 4.4.3 Major tenants as at 30 June 2007, Istana PlazaTenant Expiry Date % of Gross Monthly RentRimo.............................................. 28-Feb-12 11.5%Ace Hardware. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-Feb-12 6.5%Gramedia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-Feb-12 3.6%Game Master . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-Nov-11 3.1%Giovanni........................................... 29-Jan-12 2.1%PizzaHut.......................................... 29-Jan-12 2.0%Planet Sport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-Nov-11 1.9%Other tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69.3%Total Centre ....................................... 100.0%Source: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, Tbk4.4.4 Target marketIP targets the primarily middle and middle-upper income segment within the region. A particular focus arefamilies and the local Chinese community. To cater for this target market, the centre has attracted arelatively strong mix of well known, internationally branded retailers in the areas of fashion and food to thecentre.4.4.5 Trade area analysisTo assist with the definition of trade areas, a market research survey of visitors to the major leased mallswas undertaken in February and March 2007. A total of seven (7) centres were included in the study. Thesurveying was conducted by TNS on behalf of Jones Lang LaSalle for the purposes of this assessment.The main findings of the market research in relation to the profile of shoppers at IP is as follows:• Customers tend to be from the higher income groups with a large number of college students, peopleaged under 25 and a significant Chinese customer group;• IP has the lowest percentage of all centres in the portfolio visiting the centre primarily for supermarketshopping. As noted, the Hero supermarket is relatively small compared to larger comprehensivesupermarkets;• Approximately two thirds of customers spend between one and three hours at the centre;• IP appears to be frequented for less multi-purpose trips than other centres within the portfolio. Thissuggests there is scope to increase the length of stay in the centre by increasing the reasons forcustomers to visit the centre;F-78
Leased <strong>Malls</strong>• The main reason stated for visiting IP was its comfortable atmosphere followed by its proximity fromhome and accessibility;• Personal transport (motorcycle, car) was the main form of transport used to visit the centre;• Overall satisfaction level at the centre was relatively high;• As with all centres in the portfolio, IP is primarily a weekend destination mall;• Peak trading hours tend to be between 12:00 and 17:00;• IP’s main competition, based on other malls visited by survey respondents, was BIP (Bandung IndahPlaza). Paris van Java and Bandung Supermal are also frequently visited by a significant proportion ofthose surveyed.The trade area for IP has been defined based on the findings of customer origin from the market researchsurvey, the strength of the subject site, the location and relative strength of competing retail facilities andaccessibility to the centre, including the road network, public transport and physical barriers.Based on these considerations, the centre’s PTA has been defined to cover a number of areas. Accordingto the market research survey, the areas where the level of market penetration is highest for IP are thenorthern and western suburbs of Bandung. Sub-districts within the PTA include Cicendo, Sukasari,Sukajadi, Coblong, Andir, Cimahi, Cimahi Selatan, Soreang, Sumur Bandung, Cidadap and BandungKulon.The secondary catchment includes areas where IP attracts visitors from, however the level of customerdraw (market share penetration) is below the level achieved in the PTA. Areas considered to fall within theSTA include Cimahi Utara, Cimahi Tengah, Batununggal, Regol and Cicadas.The trade area, including major competing centres within the trade area, is illustrated in the below map.Figure 4.4.3: Istana Plaza trade area1. Bandung Indah Plaza2. Bandung Trade Center3. Bandung Supermall4. Ciwalk (Cihampelas Walk)5. Dago Plaza6. Paris Van Java7. Riau JunctionN3 Km6245713Source: Jones Lang LaSalle Research and Consulting & RUTR Kota Bnadung (Pemkot Bandung)As at 2005, the PTA included a population of 389,000 persons while the STA included a further480,000 persons. Based on recent population trends in the area, the primary and STAs are forecast togrow by 1.0% per annum between 2007 and 2011, increasing to an indicative forecast population of412,000 (PTA) and 509,000 (STA).The target market for IP is middle and upper income households, which represent 92% of all households inthe PTA and 83% of households in the STA. Centre management indicated that the PTA has a particularlyF-79
Leased <strong>Malls</strong>strong and loyal Chinese customer base, which was also confirmed through market research. This groupcomprises a high percentage of high income households.Trade area retail spending and forecast retail spending growth is summarised in Table 4.4.2 below.Together with modest population growth, total retail pending in the PTA and STA is expected to grow by 5%per annum between 2007 and 2011.Table 4.4.4 Istana Plaza trade area: population growth and spending forecasts2007 (f) 2011 (f)%Growth2007-2011(p.a.)PrimaryTrade Area . . . . . . . Population 396,430 412,361 1.0%Households* 99,525 103,524 1.0%<strong>Retail</strong> Spending per Household (Rp. Million) 19.5 22.8 4.0%Total <strong>Retail</strong> Spend (Rp. Billion) 1,940 2,362 5.0%SecondaryTrade Area . . . . . . . Population 489,545 509,218 1.0%Households* 84,824 88,233 1.0%<strong>Retail</strong> Spending per Household (Rp. Million) 19.5 22.8 4.0%Total <strong>Retail</strong> Spend (Rp. Billion) 1,654 2,013 5.0%* Note: Total Households and <strong>Retail</strong> spending market only includes only those households assumed tofall within the target market (i.e., AC Nielsen’ Socio Economic Status (SES) categories A to C, describedas middle and upper income households). Spend market at 2007 prices (i.e. 2011 spend market at2007 prices; average annual retail spending per household and total retail spend market growthforecasts are real, not nominal, growth, excluding the effects of inflation)Source: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting4.4.6 CompetitionIP is the most visited mall amongst its customers, with 52% of respondents surveyed reporting the subjectsite as the centre they visit most often.The main competing centres to IP are summarised in Table 4.4.5 and discussed below:• Bandung Indah Plaza is approximately 2km east of IP and comprises 30,315 sq.m of NLA (followingextension) across four levels. The centre is anchored by a Hypermart and Matahari Department Store. Itis currently undergoing renovations which will increase the range of specialty retailers present as well asupgrade the entertainment and lifestyle offering in the centre. According to the market research surveyof visitors to IP, Bandung Indah Plaza is the centre of most competitive relevance, targeting a similarmarket segment to IP (middle to middle-upper income market).• Bandung Supermal is the largest shopping centre in the metropolitan area of Bandung with an NLA of48,800 sq.m NLA, and is located approximately 6km south east of IP. The centre targets the upperincome market in Bandung and is anchored by Metro department store and Giant Hypermart. It has astrong entertainment offering, including cinemas, bowling and Kota Fantasi. Given the largeconsiderable distance between the two centres, Bandung Supermal will primarily compete fordiscretionary spending from the upper income market rather than weekly convenience shoppingand may attract visitors from a wide area to its family oriented entertainment offerings.• Paris Van Java, a recently opened centre, It is approximately 2km north of IP. It has the potential toincrease in competitive relevance once all tenancies are occupied and established. The centrecomprises strong anchor tenants in Sogo department store and Carrefour and approximately38,000 sq.m of floor area. Its lifestyle offering is stronger than IP and includes Bandung’s only BlitzMegaplex cinemas. The centre targets the middle-upper income market.F-80
Leased <strong>Malls</strong>• Cihampelas Walk is located 2km north east of IP. The “open air” centre of approximately 28,400 sq.mhas a significant lifestyle focus, with al fresco dining and cinemas. It also comprises a Yogya departmentstore and supermarket. The centre targets the middle and middle-upper market.• Riau Junction (Yogya) is approximately 2km east of IP. At the time of the market research, only the Yogyasupermarket at Riau Junction was opened. This centre will be fully opened by mid 2007 and will includea Yogya department store on levels 1 and 2 and food retailers on level 3. Its small size (approximately6,400 sq.m) and limited offering suggests it will not be a major competitive threat to IP, but it doesstrengthen the overall retail offering within the Bandung CBD, being near Bandung Indah Plaza.Each of IP’s four major competitors has cinemas and as a result it could be argued that they provide a morecomplete entertainment offering. However, IP enjoys a higher occupancy rate than its major competition,suggesting that it has successfully provided the right combination of retailers for its target market.Other shopping centres within the trade area do not tend to provide the full range of shopping that isavailable at IP.There are no known major shopping mall developments approved or under construction in Bandung.However, given the relative strength of retail supply in recent years, particularly in Greater Jakarta, it ispossible that further centres will be developed. Major drivers will be the continued expansion plans of majorinternational and national department stores and hypermart chains in the main metropolitan areas of<strong>Indonesia</strong>.Table 4.4.5: Main competition, Istana PlazaCentre nameDistancefromIstanaPlazaTypeNLA(sq.m)YearopenAnchortenantsBandung Indah Plaza . . . . . . 2 km Lease 30,315(followingextension)1990 Matahari, Hypermart, Yogyasupermarket, Studio 21Bandung Supermal . . . . . . . 6 km Lease 48,800 2001 Metro, Giant, Kota Fantasi,Cinemas, GUBA (bowling)Paris Van Java . . . . . . . . . . . 2 km Lease 38,000 2006 Sogo, Carrefour, BlitzMegaplexCihampelas Walk . . . . . . . . . 2 km Lease 28,400 2004 Yogya supermarket &department store, CinemasSource: Jones Lang LaSalle Research and Consulting4.4.7 SWOT analysisTable 4.4.6 provides a summary of the strengths, weaknesses, opportunities and threats for IP.Table 4.4.6 SWOT analysis, Istana PlazaStrengthsStrategically located at the junction of two main roads. Ithas a loyal customer base and strong appeal from the largeChinese populationIt acts as a community hub for the middle-upper residentialcommunity within close proximity to the centreProvides a unique and comprehensive tenancy mixincluding Ace Hardware store and Agis Electronic, cateringwell to both male and female shoppersWeaknessesThe Hero supermarket is relativelysmall at 1,341 sq.m, significantlysmaller than the competitionThere are no cinemas or fitness centre,which would appeal to customersotherwiseParking can be very difficult onweekend, although adjacent sitesprovide additional capacityF-81
Leased <strong>Malls</strong>OpportunitiesWhile the tenancy mix is generally very good, anopportunity exists to improve the entertainment/lifestyleoffering by removing the skating rink. The centre managerhas indicated that an improved F&B offering is plannedThere is potential to introduce cinemas to Level 3 if such afacility was deemed feasible. However, generated incomefrom such a use is likely to be lower than specialty retailersImprovements to parking and access will help maintaincustomer loyaltySource: Jones Lang LaSalle Research and ConsultingThreatsParis Van Java is very close, has anabundance of parking, strong anchortenants, outdoor dining as well asBandung’s only Blitz Cinema complex.Once fully functional and established, itposes strong competitionOther potential new competition maydirectly compete for customers,particularly in the core northern andwestern Bandung trade areas4.4.8 Future outlookIP faces considerable competition from centres that provide a strong entertainment and lifestyle offer, suchas Bandung Supermal, Bandung Indah Plaza, Paris van Java and Cihampelas Walk. Improvements to theF&B offering through the redevelopment of the under-utilised skating rink should improve theentertainment offering and also help increase the average length of stay per visit and average spendper customer.The centre is well established and has consistently achieved a very high occupancy rate with significantenquiry from new tenants looking to establish themselves at the centre. The high level of lease expiries in2007 provides considerable upside for the centre to build on its already strong tenancy mix, target newtenants with destinational appeal and grow rental income.The lack of parking space within the centre remains an issue. However, centre management hasnegotiated with an adjoining land owner to gain access to additional parking spaces. This hasalleviated congestion at the centre, particularly on weekends.As indicated below, the current rental positioning for anchor tenants, majors and specialty tenants are allconsidered to be on the low side of the market rentals and, specifically, considerably below one of its maincompetitors, Bandung Indah Plaza. Furthermore, the re-positioning of level 3 provides an opportunity toincrease the number and range of specialty, F&B and restaurant tenancies and to grow rental incomethrough increasing the proportion of higher income generating uses. This should also have a positiveimpact on shopper traffic and future income growth of existing tenants.Table 4.4.7: Rental positioning, Istana PlazaTenancy categoryAveragecurrent rents(Rp./sqm/month)Est. range ofmarket rents(Rp./sqm/month)Growth prospectsAnchor Tenants. . . . . . . . . 39,000 40,000 - 45,000 Potential growth on lease renewalMajor Tenants . . . . . . . . . . 64,000 50,000 - 70,000 Potential growth on lease renewalSpecialty Tenants . . . . . . . 168,000 180,000 - 200,000 Potential growth on lease renewalF&B, Restaurants . . . . . . . 100,000 175,000 - 200,000 Re-positioning on Level Three toimprove offer and rental growthprospectsSource: Jones Lang LaSalle Research and ConsultingOn balance, IP’s strengths far outweigh its weaknesses and there are opportunities to improve the centrefurther, building on its already strong tenancy profile. The most obvious opportunity in the short to mediumterm is the redevelopment of the Level 3 ice skating rink to improve the entertainment and lifestyle offeringon this level.Considering these factors and the potential growth of retail spending in the trade area, average rents of IPare projected to grow at approximately 12-15% per year across 2007-2009.F-82
Leased <strong>Malls</strong>Figure 4.4.4: Istana Plaza at nightSource: Jones Lang LaSalle Research and Consulting4.5 Mal <strong>Lippo</strong> Cikarang4.5.1 Regional context and local economyCikarang is part of Greater Jakarta and is located in West Java, the most populous province in <strong>Indonesia</strong>.<strong>Lippo</strong> Cikarang, near Bekasi, was founded in 1993 and has been developed as a self contained “satellite”city in Greater Jakarta. The estate comprises industrial, commercial and residential elements and hasattracted around 600 companies, including many overseas manufacturers taking advantage of the lowercost of manufacturing in <strong>Indonesia</strong>. Its main shopping centre is Mal <strong>Lippo</strong> Cikarang (MLC).<strong>Lippo</strong> Cikarang is home to 25,000 residents and approximately 65,000 jobs. It is approximately40 kilometres east of Jakarta and is connected to Jakarta via the Jakarta-Cilkampek toll road.The Cikarang Industrial Estate focuses on clean “light” and hi-tech industries. Examples include batikproducers, cosmetics manufacturers and assembly factories for automobiles, motorcycles andcomputers. Companies from Japan (Hitachi, Uniplast), England (BOC Gas) and Taiwan (Kymco) arerepresented, as well as many other Asian and European companies.The Cikarang region continues to grow in importance as a location for foreign investments, with otherprime industrial estates nearby, including the 3,000 hectare Jababeka Industrial Estate. Similarly, thisestate is developing as a self contained city, with the Jababeka CBD complementing the industrial andresidential developments within the estate.4.5.2 DescriptionMLC commenced operations in early 1995 as a relatively small one stop shopping complex serving thesurrounding residential areas and workers in the nearby industrial estates. The centre currently comprisessome 17,974 sq.m of NLA across two levels. Following the completion of the extension, total NLA will be28,668 sq.m. Table 4.5.1 provides details of the centre.Figure 4.5.1 Mal <strong>Lippo</strong> CikarangSource: PT<strong>Lippo</strong> Karawaci TbkF-83
Leased <strong>Malls</strong>Table 4.5.1 Centre details, Mal <strong>Lippo</strong> CikarangCharacteristicsAddress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jl. M.H. ThamrinYear Opened . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1995Last Refurb/Extension . . . . . . . . . . . . . . . . . . . . . N.A.NLA (sq.m): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,974 (28,668 following extension)CarParking ............................. 513Motor Cycle Parking . . . . . . . . . . . . . . . . . . . . . . . 950Levels ................................. 2Opening Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . 10am - 9pmOccupancy Rate. . . . . . . . . . . . . . . . . . . . . . . . . . 96.3% (as at 30 June 2007)Major <strong>Retail</strong> Tenants:Majors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hypermart (under construction), Matahari, HeroSupermarketMini Majors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Studio 21 Cinemas, Toko Buku Utama, TimezoneSelected Other . . . . . . . . . . . . . . . . . . . . . . . . . . . Kentucky Fried Chicken, Pizza Hut, Wendy’s,Solaria, The Executive/Wrangler, Sports Station,Century Healthcare, Toys CityTotal <strong>Retail</strong> Tenancies. . . . . . . . . . . . . . . . . . . . . . 116Shopper Traffic. . . . . . . . . . . . . . . . . . . . . . . . . . . Weekdays: 10,600Weekends: 17,000Figure 4.5.2 Mal <strong>Lippo</strong> Cikarang: ImagesSource: Jones Lang LaSalle Research and Consulting4.5.3 Tenant mixThe tenancy mix combines quality anchor tenants supported by a range of mini anchors and specialtyretailers cater to provide for weekly shopping needs as well as comparison shopping. The completion ofthe Hypermart will increase the destination appeal of the centre and allow the Matahari Department Storeto expand into the existing Matahari Supermarket space.Table 4.5.2 Tenancy mix by level, Mal <strong>Lippo</strong> CikarangLevelGround . . . . . . . . . . . . . . . . . . . .First . . . . . . . . . . . . . . . . . . . . . .Tenant mix (post hypermart extension)Hypermart, Matahari, Hero supermarket, F&B, Fashion,AccessoriesMatahari, Food Court, Cinemas, Timezone, Bookstore, Lifestyle &Entertainment, mixed fashion & beautySource: Jones Lang LaSalle Research and ConsultingF-84
Leased <strong>Malls</strong>On the completion of the current extensions, the ground floor will be anchored by Matahari DepartmentStore, Hypermart and Hero Supermarket. Consequently, the existing secondary malls should benefit fromimproved customer traffic accessing the Hypermart. Specialty retailers comprise food and beverage,fashion and accessories retailers. Key retailers include Kentucky Fried Chicken, Lee/Wrangler, Nokia andWendy’s. This level also includes a considerable amount of casual mall leasing and kiosks, creating amarket atmosphere within the central mall. Local retailers pitched at the middle income market dominate.Level One is anchored by the second level of Matahari and comprises the centre’s main entertainmentprecinct, including cinemas, Timezone and a food court. A book and stationery store (Toko Buku Utama) islocated on this level. There is a broad mix of specialty retailers, including mixed fashion, salons andaccessories.With the completion of the Hypermart, there will be a relatively large proportion of anchor and mini-anchortenants to specialty retailers. The Hero supermarket, Hypermart and Matahari Department Store accountfor over 59% of total NLA while mini anchors (Cinema 21, Timezone, bookstore) account for a further16.6%. This limits the number of specialty tenants within the centre but the strength of the anchor tenantshas kept the occupancy rate high and within the range of 95% to 98% in recent years.Compared to other shopping centres within the portfolio, there are relatively few internationally brandedretailers, a possible reflection of the customer profile. The centre does not include a fitness centre and hasa limited lifestyle and entertainment offer. There are some homewares and home furnishings retailers.However, this offering should be improved considerably with the opening of Hypermart.Nevertheless, the retail mix is considered to provide an appropriate selection of convenience andcomparison shopping for the residents of Cikarang.Table 4.5.3 Major tenants as at 30 June 2007, Mal <strong>Lippo</strong> CikarangTenant Expiry date % Gross monthly rentMatahari Dept Store . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-Feb-26 18.0%Hero Supermarket . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-Aug-08 11.8%Studio 21 Cinemas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-Feb-15 4.2%Solaria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-May-12 4.1%Kentucky Fried Chicken . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-Jun-10 3.1%Toko Buku Utama . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-Aug-07 3.1%Sting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-Jan-12 2.8%Wendy’s Restaurant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14-Mar-12 2.4%Hoka-Hoka Bento . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22-Aug-07 2.2%Timezone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-Sep-11 1.9%Other tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Varies 53.5%Total Centre ......................................... 100.0%Source: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, TbkNote: Hypermart under construction. Matahari Department Store to expand into supermarket space4.5.4 Target marketMLC primarily targets the middle income market, with the majority of its customer base coming from the<strong>Lippo</strong> Cikarang residential and industrial estates. During the week, the centre is also frequented by thelarge working population within the estate, which totals 65,000. On weekends, it is frequented mainly byfamilies.4.5.5 Trade area analysisTo assist with the definition of trade areas and to understand the make-up of the customer base, a marketresearch survey of visitors to the major leased malls was undertaken in February and March 2007. A totalof seven (7) centres were included in the study. The surveying was conducted by TNS on behalf of JonesF-85
Leased <strong>Malls</strong>Lang LaSalle for the purposes of this assessment. The main findings of the market research in relation tothe profile of shoppers at MLC are as follows:• The mall attracts residents and employees of the <strong>Lippo</strong> Cikarang Estate, with Cikarang Selatanaccounting for 55% of shoppers surveyed. Mall visitation is primarily driven by the centre’s locationto either workplace or home;• The majority of shoppers are regular customers to the mall, averaging three visits per month;• MLC enjoys a virtual monopoly amongst its customer base with a very high 95% of survey respondentsindicating this was the centre visited most often;• Weekends are the most popular time to visit the mall, although MLC enjoys strong visitation from thelocal workforce during the week;• Peak traffic hours occur around lunch time (12:00 to 14:00) and 16:00 to 19:00;• The majority of shoppers arrive at the centre by either metromini or motorcycle; and• Most shoppers are satisfied to very satisfied with MLC in terms of facilities, shops available and security.The trade area for MLC has been defined based on the findings of customer origin from the marketresearch survey, the strength of the subject site, the location and relative strength of competing retailfacilities and accessibility to the centre, including the road network, public transport and physical barriers.Based on these considerations, the centre’s PTA has been defined to cover a number of areas. Accordingto the market research survey, the areas where the level of market penetration is highest for MLC areessentially sub-districts within Cikarang, including Cikarang Selatan, Cikarang Utara, Cikarang Pusat,Cikarang Timur and Cikarang Barat. The market penetration by MLC is also relatively strong in SerangBaru.The secondary catchment includes areas where MLC attracts visitors from, however the level of customerdraw (market share penetration) is below the level achieved in the PTA. Areas considered to fall within theSTA include Bekasi Timur, Karawang and Bekasi Utara.The trade area, including major competing centres within the trade area, is illustrated in the map below. Asmentioned earlier, Cikarang Selatan, which includes the <strong>Lippo</strong> Cikarang Estate, provides the major sourceof customers.Figure 4.5.3: Mal <strong>Lippo</strong> Cikarang trade area1. Cikarang Trade Center2. Mal Carrefour Cikarang3. Sentra Grosir Cikarang4. Mega Bekasi Hypermall5. Bekasi Trade Centre6. Metropolitan Mall645132Mall <strong>Lippo</strong> CikarangN5KmSource: Jones Lang LaSalle Research and Consulting & Jakarta Street Atlas (Gunther W. Holtorf)As at 2007, the PTA shown on the above map included a population of 462,000 persons while the STAincluded a further 361,000 persons. Based on recent population trends in the area, the primary andsecondary trade areas are forecast to grow by 1.1% per annum between 2007 and 2011, increasing to anindicative forecast population of 483,000 (PTA) and 378,000 (STA).F-86
Leased <strong>Malls</strong>The target market for MLC are middle-upper income households, which represent 71% of all households inthe PTA and 64% of households in the STA.Trade area retail spending and forecast retail spending growth is summarised in Table 4.5.4 below.Together with modest population growth, total retail spending in the PTA and STA is expected to grow by5.2% per annum between 2007 and 2011.Table 4.5.4 Mal <strong>Lippo</strong> Cikarang trade area: population growth and spending forecasts2007 (f) 2011 (f)%Growth2007-2011(p.a.)Primary Trade Area . . . . . . . . . Population 462,085 483,170 1.1%Households* 84,962 88,839 1.1%<strong>Retail</strong> Spending per Household 15.0 17.6 4.0%(Rp. Million)Total <strong>Retail</strong> Spend (Rp. Billion) 1,277 1,563 5.2%Secondary Trade Area . . . . . . Population 361,362 377,851 1.1%Households* 60,099 62,842 1.1%<strong>Retail</strong> Spending per Household 15.0 17.6 4.0%(Rp. Million)Total <strong>Retail</strong> Spend (Rp. Billion) 903 1,106 5.2%* Note: Total Households and <strong>Retail</strong> spending market only includes only those households assumed tofall within the target market (i.e., AC Nielsen’ Socio Economic Status (SES) categories A to C, describedas middle and upper income households). Spend market at 2007 prices (i.e. 2011 spend market at2007 prices; average annual retail spending per household and total retail spend market growthforecasts are real, not nominal, growth, excluding the effects of inflation)Source: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting4.5.6 CompetitionMLC enjoys the benefit of a very captive market, being the only major shopping centre serving the <strong>Lippo</strong>Cikarang Estate. Therefore, it does not have major competitors for everyday shopping needs. It does,however, compete with a number of other shopping centres in the wider trade area for discretionaryspending.The main competing centres to MLC are summarised in Table 4.5.5 and discussed below:• Mal Metropolitan is located 20 kilometres north west of MLC in Bekasi. The centre comprises74,000 sq.m of NLA and is anchored by Matahari and Ace Hardware. The centre is targeting middleincome households and is considerably larger than MLC but its distance from MLC reduces the level ofdirect competition.• Mal Carrefour Cikarang was completed in early 2007. The two-level centre is 4 kilometres from MLC andis likely to provide competition in the grocery and variety retailing market. It does not, however, providesuch a complete range of retailing as is provided by MLC and is not as conveniently located to the captivetarget market of <strong>Lippo</strong> Cikarang Estate. Apart from Carrefour, there is a limited range of food andbeverage retailers, specialty retailers and “trade mall” style retailing.• SGC Cikarang is a strata titled mall approximately 9 kilometres to the north of MLC. The centre openedin 2006 and is anchored by Ramayana Hypermarket.• Cikarang Trade Centre is located 2 kilometres north of MLC. The strata titled centre comprisesapproximately 10,000 sq.m of NLA, does not include an anchor tenant and targets the low-middleincome market.• Mega Bekasi Hypermall is a relatively large centre of 63,000 sq.m anchored by Giant Hypermarket. Thecentre is located 20 kilometres north west of MLC, which reduces the level of direct competition to thesubject centre.F-87
Leased <strong>Malls</strong>• Plaza JB (Jababeka) is located 5 kilometres northwest of MLC. The centre comprises 8,800 sq.m ofNLA and is anchored by Pojok Busana. This primarily serves the growing residential and workingpopulation within the Jababeka Estate.Table 4.5.5 Main competition, Mal <strong>Lippo</strong> CikarangCentre nameDist. fromMLCTypeNLA(sq.m)YearopenAnchortenantsMal Metropolitan . . . . . . . . . . 20 km Lease 74,000 1993 Matahari, Ace HardwareMal Carrefour Cikarang . . . . . 4 km Lease 8,000 2007 CarrefourSGC Cikarang . . . . . . . . . . . . 9 km Strata 29,150 2006 Ramayana HypermarketCikarang Trade Centre . . . . . . 2 km Strata 10,000 2005 N.A.Mega Bekasi Hypermall . . . . . 20 km Strata 63,000 2003 GiantPlaza JB . . . . . . . . . . . . . . . . 5 km Lease 8,800 2003 Pojok BusanaSource: Jones Lang LaSalle Research and Consulting4.5.7 SWOT analysisTable 4.5.6 provides a summary of the strengths, weaknesses, opportunities and threats for MLC.Table 4.5.6 SWOT analysis, Mal <strong>Lippo</strong> CikarangSource: Jones Lang LaSalle Research and ConsultingStrengthsEnjoys a strong trading position with limitedcompetitive centres within its immediate tradearea of <strong>Lippo</strong> CikarangVery good access for both residents and workersof <strong>Lippo</strong> Cikarang via Jl. M.H. ThamrinExcellent exposure from main roadAmple parking providedWeaknessesRelatively small centre, currently 17,974 sq.m.This will increase with the completion of theHypermart extension in 2007Limited entertainment and lifestyle offeringsOpportunitiesOpening of Hypermart will counter the recentlyopened Carrefour and provide a more completeretail offer at MLC. This also provides theopportunity for Matahari to extend its retailoffering into the space vacated by MatahariSupermarket.Additional specialty retailers may be considered,given the relative imbalance between anchortenant NLA and specialty NLASurvey results suggest a relatively high proportionof SES A and B customers. Opportunity toincrease the proportion of retailers cateringspecifically to this marketThreatsNew Carrefour Hypermarket, locatedapproximately 4 kilometres from MLCFuture competition such as Plaza JB and theKota Deltamas retail centre may providealternative destinations, particularly fordiscretionary spending4.5.8 Future outlookMLC has changed little since opening in 1995 but continues to successfully provide a one stop shoppingconvenience for its main target market of <strong>Lippo</strong> Cikarang Estate. Its size, however, has limited the range ofretailing available to local residents.F-88
Leased <strong>Malls</strong>The current Hypermart extension provides a significant opportunity to improve the retail offering as well asthe overall trading performance and income of the centre. Not only will Hypermart provide improvedsupermarket and variety shopping at MLC but it should strengthen the performance of specialty retailers byincreasing the overall destination appeal of the centre. The extension also provides the opportunity forMatahari Department Store to extend its floor space into the existing Matahari Supermarket (which willclose once Hypermart opens) and therefore increase its department store offering.While population growth is forecast to be quite modest over the short to medium term, the centre’s currentexpansion has the potential to increase market share and attract more customers to the centre, particularlyfrom outside the <strong>Lippo</strong> Cikarang Estate. The expansion should also provide scope for income growth.There has been quite limited refurbishment of the centre since it opened 12 years ago. It is considered thatthe centre requires minor refurbishment and maintenance to ensure the captive customer base remainsloyal in the face of future competition.Additional specialty retailers focusing on the middle-upper market is an area for consideration in the future.Relatively few retailers cater for the wealthier income brackets despite a relatively large middle to upperincome customer base in the PTA.The factors above should all provide considerable upside to growth prospects for rental income over theshort to medium term. It is considered that current specialty, F&B and restaurant rent levels are on the lowside of market rentals, suggesting there is potential to increase rental levels upon lease renewal. This isfurther boosted by the addition of a new anchor tenant in Hypermart and an expanded MatahariDepartment Store.Considering these factors and the potential growth of retail spending in the trade area, average rents ofMLC are projected to grow at approximately 12-15% per year across 2007-2009.Table 4.5.7: Rental positioning, Mal <strong>Lippo</strong> CikarangTenancycategoryAverage currentrents(Rp./sqm/month)Estimated rangeof market rents(Rp./sqm/month)Growth prospectsAnchor Tenants . . . . . . . . . . . 46,000 45,000 - 50,000 Potential growth on leaserenewalMajor Tenants . . . . . . . . . . . . 42,000 60,000 - 70,000 Potential growth on leaserenewalSpecialty Tenants . . . . . . . . . . 144,000 150,000 - 175,000 Potential growth on leaserenewal.Upside due to new Hypermartand expanded MatahariF&B, Restaurants . . . . . . . . . . 121,000 125,000 - 150,000 Potential growth on leaserenewal.Upside due to new Hypermartand expanded MatahariSource: Jones Lang LaSalle Research and Consulting4.6 Gajah Mada Plaza4.6.1 Regional context and local economyGajah Mada Plaza (GMP) is located at Jalan Gajah Mada 19-26, Jakarta, in the city’s traditional Chinatownprecinct. This area includes a mix of residential and commercial uses. The centre is also located just northof Gambir, where a number of the city’s main civic buildings are located.Having been opened for 25 years, the centre is well established as one the first enclosed malls with ananchor tenant and a number of supporting specialty stores operating in Jakarta. The centre has firmed itsposition as a shopping destination able to meet the everyday retail requirements of local residentsconsidered to be in the middle and middle-upper segments. Similarly, the centre also performs the broaderF-89
Leased <strong>Malls</strong>function of being a major destination for comparison shopping in a number of specialist categories, inparticular jewellery and pet shops.GMP effectively mixes traditional retail uses with lifestyle and entertainment facilities targeted primarily atthe local Chinese market. As a result, a significant part of the centre remains open beyond the core retailtrading hours.4.6.2 DescriptionCommencing operation in 1982, GMP is a well established shopping centre comprising 34,278 sq.m ofNLA of retail space over seven levels and a basement. Table 4.6.1 provides details of the centre andTable 4.6.2 contains a listing of major tenancies at the subject site, including lease expiry date and thepercentage contribution to gross monthly rent by the major tenant.Figure 4.6.1Gajah Mada Plaza—externalSource: Gajah Mada Plaza Business Plan, PT. <strong>Lippo</strong> Karawaci, TbkTable 4.6.1 Centre details, Gajah Mada PlazaCharacteristicsAddress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Jl. Gajah Mada 19-26, JakartaYear Opened . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1982Last Refurb / Extension . . . . . . . . . . . . . . . . . . . . 2005NLA (sq.m): . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,278Property Area (sq.m): . . . . . . . . . . . . . . . . . . . . . . 37,501CarParking ............................. 885Motor Cycle Parking . . . . . . . . . . . . . . . . . . . . . . . 665Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 (retail), 1 (basement)Opening Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . Weekdays: 10am - 10pmWeekends: 10am - 10pmOccupancy Rate. . . . . . . . . . . . . . . . . . . . . . . . . . 89.1% (as at 30 June 2007)Major <strong>Retail</strong> Tenants:Name. ................................. % NLAMillenium Executive Club . . . . . . . . . . . . . . . . . . . 20.2%Hypermart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.5%Rimo Department Store . . . . . . . . . . . . . . . . . . . . 8.0%Gajah Mada Cinema 21 . . . . . . . . . . . . . . . . . . . . 4.9%InulViesta .............................. 2.6%McDonald’s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8%Total <strong>Retail</strong> Tenancies. . . . . . . . . . . . . . . . . . . . . . 222Shopper Traffic. . . . . . . . . . . . . . . . . . . . . . . . . . . Weekdays: 23,000Weekends: 35,000Source: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, TbkF-90
Leased <strong>Malls</strong>Figure 4.6.2 Gajah Mada Plaza: food courtSource: Jones Lang LaSalle Research and ConsultingTable 4.6.2 Major tenants as at 30 June 2007, Gajah Mada PlazaTenant Expiry Date % Gross Monthly RentMillenium International . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-Oct-2014 8.6%Rimo Department Store . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30-Jun-2008 7.7%Hypermart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-Feb-2015 7.3%McDonald’s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28-Jul-2013 3.6%Inul Viesta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-Aug-2011 2.5%Gajah Mada Cinema 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31-Mar-2013 1.9%Other tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Varies 68.4%Total Centre ....................................... 100.0%Source: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, Tbk4.6.3 Tenant mixGMP is somewhat unique in terms of its tenancy mix. The department store anchor is only located on onelevel (level three) and the Hypermart on the semi ground floor was opened following renovations in 2005.Pedestrian movements throughout the centre are supported by the specialty shop mix, which includes anumber of zoned precincts where clusters of like-tenants are located. Table 4.6.3 summarises the tenancymix by level at GMP.Table 4.6.3 Tenancy mix by level, Gajah Mada PlazaLevelTenant mixSemi Ground . . . . . . . . . .Ground . . . . . . . . . . . . . . .First . . . . . . . . . . . . . . . . .Second . . . . . . . . . . . . . . .Third . . . . . . . . . . . . . . . . .Third - A . . . . . . . . . . . . . .Fifth . . . . . . . . . . . . . . . . .Sixth . . . . . . . . . . . . . . . . .Seventh . . . . . . . . . . . . . .Source: Jones Lang LaSalle Research and ConsultingHypermart, casual mall leasing, mobile phone precinct (underdevelopment)Food and beverage, retail services, fashion, fashion accessoriesJewellery, pet shops, fashion, retail servicesEntertainment and leisure, restaurants, jewelleryRimo department store, assorted specialtiesFood court, ITRestaurant/discotheque, cinemasOffices, to be sport and entertainment spaceFitness centre, swimming pool, reception centreThe semi ground floor is tenanted by Hypermart and a small amount of casual mall leasing. A large sectionof the semi ground level is currently vacant and is set to be converted to a mobile phone retailing precinct.The ground floor includes food and beverage operators, retail services, a small selection of fashionretailers, fashion accessories and optical stores. The first floor at GMP includes the pet shop precinct (petcentre), a number of jewellery retailers and a mix of fashion retailing, retail services and small electricalretailers.F-91
Leased <strong>Malls</strong>Level 2 is predominantly a lifestyle precinct, with a number of ‘games centres’, karaoke and restaurants.There are also a number of specialty stores, with jewellery dominating on this level. Level 3 is dominated bythe Rimo department store. The store, which appears to be in need of additional floorspace, is currentlytrading from its core tenancy of 2,745 sq.m and a number of specialty shop spaces around its entrance(increasing its selling area by around 200 sq.m).While food and beverage is available throughout the centre, the main food court is located on level 3A. Thefood court includes around 20 small, hawker style tenancies with communal seating. Level 3A alsocontains a considerable number of IT-related shops and other small electronics retailers (e.g. cameras).Level 5 contains Millenium Executive Club, which operates during the day as a restaurant and late at nightas a discotheque. Gajah Mada Cinema 21 is also located on this level. The seventh level comprises a smallfitness centre and an outdoor swimming pool and the upper level of level seven is the location of GrandGajah Mada and the Eva Bun reception centre regularly used for weddings and other large private events.4.6.4 Target marketGMP primarily targets the growing number of consumers within its trade area that fall within the middle andmiddle to upper income segments. GMP also has a Chinese-skew in its target market, with the centre beinglocated in Chinatown and a number of retailers in the centre directly targeting this lucrative ethnic group.The centre also targets a broader market for comparison shopping purposes as a result of the centre’sdestinational appeal within the product categories in which it is strong, namely jewellery and pet shops, andto a lesser extent IT and small electronics (including mobile phones following the opening of the newprecinct in the lower ground floor).4.6.5 Trade area analysisTo assist with the definition of trade areas, a market research survey of visitors to the major leased mallswas undertaken in February and March 2007. A total of seven (7) centres were included in the study. Thesurveying was conducted by TNS on behalf of Jones Lang LaSalle for the purposes of this assessment.The main findings of the market research in relation to the profile of shoppers at GMP are as follows:• Visitors to GMP are relatively young (86% of those surveyed are younger than 35 years of age);• The survey found that Saturday and Sunday were the most popular days to visit GMP, in line with othercentres within the portfolio;• Shopper traffic is particularly high in the early and late afternoon (between 12:00 and 14:00 and againbetween 16:00 and 19:00);• One third of all visitors surveyed came directly from home to visit GMP. A significant proportion camefrom work (11%) and school (12%). Upon leaving the centre, home was the next destination for themajority of respondents (i.e. 84%);• GMP has a high frequency of visitation, with 6% of visitors claiming to visit the mall everyday. A further44% visit more than once a week;• Visitors to GMP generally stay for relatively short periods. The centre has the lowest proportion ofvisitors who stay for an average of two hours or more (i.e. 48% of respondents) of all centres in theportfolio where visitors were surveyed. Just one in five frequent visitors to the mall stay for an average ofmore than three hours during each visit;• Most respondents to the survey indicated that they mostly visit the mall with friends (68%; this is amultiple response question). 23% of respondents regularly visit the centre alone;• Reflecting the centre’s status as a destination for comparison shopping in certain product categories(e.g. jewellery, pet shops, IT), the most commonly cited reason for visiting GMP is comparison shopping(i.e. 70%; this is a multiple response question). Eating was the second most common reason for visitingthe mall. The strength of the lifestyle offer is reflected in statistics which show that a significantproportion (i.e. 38%) of respondents said meeting friends was one of the reasons for visiting the subjectsite;F-92
Leased <strong>Malls</strong>• Of all the malls included in the market research study, GMP has the third highest level of overallcustomer satisfaction. Visitors surveyed were generally very satisfied with facilities, the tenancy mix andthe level of security at the centre.The trade area for GMP has been defined based on the findings of customer origin from the marketresearch survey, the strength of the subject site, the location and relative strength of competing retailfacilities and accessibility to the centre, including the road network, public transport and physical barriers.Based on these considerations, the centre’s PTA has been defined to cover a number of areas. Accordingto the market research survey, the areas where the level of market penetration is highest for GMP are areasin Jakarta including Gambir, Taman Sari and Tambora. Other areas included within the primary catchmentare Kebayoran, Sawah Besar, Senen and Tanah Abang.The secondary catchment includes areas where GMP attracts visitors from, however the level of customerdraw (market share penetration) is below the level achieved in the PTA. Areas considered to fall within theSTA include Cengkareng, Palmerah, Kebayoran Baru and Kebon Jeruk. Taking the survey and the otherfactors outlined above into account, the trade area, including major competing centres within the tradearea, is illustrated in the map below.Figure 4.6.3 Gajah Mada Plaza trade area1. Mega Glodok Kemayoran,2. Glodok Plaza3. Istana Pasar Baru4. Plaza <strong>Indonesia</strong>5. ITC Mangga Dua6. Plaza Atrium7. Ciputra Mall8. Roxy Square9. Mega Mall Pluit10. Mal Mangga Dua11. Lindeteves Trade Centre12. Taman Anggrek Mall13. Wisma Maspion14. ITC Harco Mas Mangga Dua15. WTC Mangga Dua16. Plaza <strong>Indonesia</strong> EX17. Mangga Dua Square18. JaCC Hyperstore19. Plaza Semanggi20. Plaza Senayan21. Senayan CityPROPOSED22. Gajah Mada Square23. Grand <strong>Indonesia</strong>24. Season’s City16. Plaza <strong>Indonesia</strong> Extension25. Galeria Glodok26. Emporium (CBD Pluit)27. Pluit JunctionN092726247 81221 205km5 1510 1413172251122361641823191Gajah madaPlazaSource: Jones Lang LaSalle Research and Consulting & Jakarta Street Atlas (Gunther W. Holtorf)As at 2003, the PTA is estimated to have included a population of 1.91 million (within around 474,000households) while the STA included 1.17 million persons (with approximately 312,000 households).Recent population trends in the immediate surrounding area include the growing number of apartmentstypically domiciled by middle to upper income residents being offset by other residents vacating the tradearea in search of more affordable housing and a result of the dislocation of some residents following newproperty developments.As a result, the net outcome is that the PTA population is estimated to have declined by 1.0% per annumbetween 2003 and 2007, decreasing to an indicative population of 1.83 million. Conversely, the STA isestimated to have exhibited modest population growth of 0.4% per annum, with population increasing toapproximately 1.19 million in 2007. However, population declines are forecast for the STA moving forward.F-93
Leased <strong>Malls</strong>Importantly for GMP, 92% of all households in the PTA fall within the targeted middle to upper income group(defined as including households which are classified as SES A, B and C), while a similar proportion of STAresidents (91%) are also within this target demographic. As a result, the number of target markethouseholds in the PTA is estimated at 429,300 households in 2007. The corresponding figure for theSTA is 297,600 households.The population is forecast to decrease over the next four years, however as a result of the composition ofpopulation changes and reducing household sizes, the number of target market households is expected tocontinue growing up to 2011. The PTA is forecast to contain around 456,500 target households in 2011,while the STA is forecast to contain 315,500 target households.Average expenditure by households within the subject site’s target market is estimated at Rp. 21.3 millionper annum in 2007. Over the next four years, average annual household retail expenditure is expected toreach Rp. 24.93 million by 2011.As a result, the annual total retail spending market in the PTA is forecast to increase from Rp. 9,144 billionin 2007 to Rp. 11.380 billion in 2011, which represents an average annual rise of 5.6%. The correspondingincrease in the STA is a rise from Rp. 6,339 billion to Rp. 7,872 billion, which reflects an average annualgrowth of 5.6%.Table 4.6.4 details the current and forecast levels of population growth and retail spending by householdsthat fall within the centre’s target market (i.e. middle and upper income households).Table 4.6.4 Gajah Mada Plaza trade area: population growth and spending forecastsSource: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting2007 (f) 2011 (f)%Growth2007-2011(p.a.)Primary Trade Area . . . . . . . . . Population 1,826,353 1,767,411 (0.8)%Households 429,298 456,523 1.5%<strong>Retail</strong> Spending per Household (Rp. Million) 21.30 24.93 4.0%Total <strong>Retail</strong> Spend (Rp. Billion) 9,144 11,380 5.6%Secondary Trade Area . . . . . . . Population 1,190,502 1,167,889 (0.8)%Households 297,587 315,823 1.5%<strong>Retail</strong> Spending per Household (Rp. Million) 21.30 24.93 4.0%Total <strong>Retail</strong> Spend (Rp. Billion) 6,338 7,872 5.6%* Note: Total Households and <strong>Retail</strong> spending market only includes only those households assumed tofall within the target market (i.e., AC Nielsen’ Socio Economic Status (SES) categories A to C, describedas middle and upper income households). Spend market at 2007 prices (i.e. 2011 spend market at2007 prices; average annual retail spending per household and total retail spend market growthforecasts are real, not nominal, growth, excluding the effects of inflation)Source: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting4.6.6 CompetitionGMP is the most visited mall amongst its customers, with 53% of respondents surveyed reporting thesubject site as the centre they visit most often.Located in the affluent Chinatown precinct of Jakarta, GMP faces strong competition locally from 13 largemalls located within a 6 kilometre radius of the centre. However, a large number of the nearby centres arepositioned to cater for a higher or lower market segment than that being catered for at GMP.The local centres of competitive relevance (i.e. centres larger than 20,000 sq.m), including their distancefrom GMP, opening year, amount of retail floor space and major tenants, are detailed in Table 4.6.5. Thelargest centres are discussed below:• Mal Taman Anggrek is situated 3 kilometres to the south west of the subject site. The centre containsnearly 100,000 sq.m of retail space, including Metro and Galleria department stores and a HeroF-94
Leased <strong>Malls</strong>hypermart. The centre also includes an ice skating rink. Mal Taman Anggrek is targeting a wider marketthan GMP.• Megamall Pluit is located 6 kilometres northwest of GMP. The centre is anchored by Matahari andCarrefour and contains around 84,000 sq.m of retail space. While this centre is much larger than thesubject site, and is located 6 kilometres away, it is considered to be of competitive relevance as it ispositioned to cater for a similar target market as GMP. A major redevelopment of this mall is imminent asthe centre responds to competitive threats from new retail developments in its immediate vicinity.• Mangga Dua contains a number of retail facilities, predominantly strata malls, located 3 kilometres northof the subject site. The main malls include Mangga Dua Square (60,000 sq.m), WTC Mangga Dua(45,000 sq.m), ITC Mangga Dua (44,000 sq.m) and Mal Mangga Dua (35,000 sq.m). Based on the retailoffering at these centres, the area is targeting lower to middle income segment households which isbelow the customer profile targeted by GMP.• Mal Ciputra is situated 3 kilometres west of GMP. The mall is anchored by Batik Keris, Matahari andHero. This centre is also considered to be of particular competitive relevance, given it is located just3 kilometres away and as it is targeting a similar market to GMP, although without the Chinese targetmarket skew.• Mega Glodok Kemayoran is situated 3 kilometres east of GMP. Anchored by <strong>Indonesia</strong> Marine Centreand Home Ciento, the tenancy mix of the mall is dominated by automotive part retailers. Hence, it is ofminimal competitive relevance to the subject site.• Plaza <strong>Indonesia</strong> is one of the most exclusive malls in Jakarta, situated 3 kilometres south of GMP. Thecentre contains 42,000 sq.m of mainly high-end retailing, including a Debenham’s department store.Plaza <strong>Indonesia</strong> is targeting a more exclusive market than GMP.• Jakarta City Centre is located 3 kilometres south of the subject site. While the centre is relatively close, itis of minimal competitive relevance due to its lower target market position. It is a strata mall anchored bya Hypermart but no department store.The competitive environment of the trade area is expected to intensify over the next five years, with theplanned development of a number of competing retail facilities.There are a number of retail projects targeting middle income households currently under construction inJakarta, such as Gajah Mada Square (due to open in the third quarter of 2007), Mall of <strong>Indonesia</strong> (due toopen in the first quarter of 2008, and Emporium (due to open in the second quarter of 2009) , which will adda combined 378,000 sq.m of retail floor space to the Jakarta retail market by the end of 2009.These new projects are expected to reduce the sales growth that could have been achieved at GMP.However, given ongoing improvements proposed to the subject site, combined with its established marketposition as a value centre catering for middle to middle upper income Chinese households, GMP is wellplaced to withstand the new competitive threats. Furthermore, given GMP’s well defined target market,these centres are expected to have a relatively small impact on the performance of the subject site(compared with their impact on other centres in Jakarta).F-95
Leased <strong>Malls</strong>Table 4.6.5: Main competition, Gajah Mada PlazaCentre nameDistancefrom GMPTypeNLA(sq.m)YearopenedAnchor tenantsMal Taman Anggrek . . . . . . . . . . 3 km Lease 97,000 1996 Galleria, Hero, Metro,Cinema 21Megamal Pluit . . . . . . . . . . . . . . . 6 km Lease 84,000 1996 Matahari, CarrefourMangga Dua Square . . . . . . . . . . 3 km Strata 60,000 2005 1st Computer SquareMal Ciputra . . . . . . . . . . . . . . . . . 3 km Lease 51,000 1993 Batik Keris, Hero,Matahari, WatsonMega Glodok Kemayoran . . . . . . 3 km Strata 47,000 2005 <strong>Indonesia</strong> Marine Center,Home CientroWTC Mangga Dua. . . . . . . . . . . . 3 km Strata 45,000 2003 Electronic World,Life Spa FitnessITC Mangga Dua . . . . . . . . . . . . . 3 km Strata 44,000 1992 N/APlaza <strong>Indonesia</strong>. . . . . . . . . . . . . . 3 km Lease 42,000 1990 Debenhams, Food HallJaCC (Jakarta City Centre) . . . . . 3 km Strata 38,000 2006 HypermartMal Mangga Dua. . . . . . . . . . . . . 3 km Strata 35,000 1995 YogyaPlaza Atrium . . . . . . . . . . . . . . . . 3 km Lease 34,000 1992 Matahari, Cinema 21Lindeteves Trade Centre . . . . . . . 2 km Strata 30,000 2006 Giant, Ace HardwareGlodok Plaza. . . . . . . . . . . . . . . . 2 km Lease 26,000 2001 Golden CrownEntertainmentFuture CompetitionGajah Mada Square . . . . . . . . . . 1 km Lease 35,000 2007 NAPluit Junction. . . . . . . . . . . . . . . . 5 km Lease 23,000 2007 Studio 21, TimezoneSeason’s City . . . . . . . . . . . . . . . 3 km Strata 40,000 2008 CarrefourGaleria Glodok . . . . . . . . . . . . . . 2 km Lease 19,800 2009 NAEmporium (CBD Pluit) . . . . . . . . . 5 km Lease 63,000 2009 NASource: Jones Lang LaSalle Research and ConsultingF-96
Leased <strong>Malls</strong>4.6.7 SWOT analysisTable 4.6.6 provides a summary of the strengths, weaknesses, opportunities and threats for GMP.Table 4.6.6: SWOT analysis, Gajah Mada PlazaStrengthsGMP is a well established, prominently locatedcentre located near Chinatown, an area with alarge number of middle and middle uppersegment residents, with an above averageproportion of Chinese residentsGMP effectively caters for its target market(i.e. middle and middle to upper income segmentwith Chinese skew) as a one stop destination forshopping and leisure needsThe centre is unique as it offers value for moneyretailing without compromising its target market’srequirements for quality and ambienceThe centre benefits from a number of non-retailuses which generate income outside of normalshopping hoursOpportunitiesWeaknessesThe Rimo department store is poorly presentedand appears to be in need of more spaceThe centre is relatively old, hence it faces greaterchallenges in terms of competing with recentlyconstructed centres (e.g. building services,ambience, etc.)The centre is located in the ‘3 in 1’ CBD area(enforced car pooling precinct) which could detervisitation by individuals travelling by private carduring peak hours on weekday afternoonsThreatsReconfigure level 3 in conjunction with arefurbishment and expansion of the Rimodepartment storeFurther cement zoning strategy by fine tuningtenant mix throughout the centre (jewellery isconcentrated around levels 1 and 2, there arejewellersThe mobile phone precinct proposed for thebasement level should reduce vacancy in thisarea and add further credence to GMP’s profileas a comparison shopping centre destination(e.g. pets, jewellery, IT)Expand customer profile by capturing a highershare of the growing middle class marketDevise strategies to increase average visitduration and average spending levelsThere is an opportunity to further enhance thetenancy mix by branding and minor refurbishmentworks such as lighting finishes and main entrancewhich enhance the ambienceSource: Jones Lang LaSalle Research and Consulting4.6.8 Future outlookFuture shopping centre development in GMP’strade area remains strong which will inevitablydilute the potential of some centres in the area tomaintain current market shareThe centre should avoid moving to an highermarket position in line with its existing and newcompetitors as it would risk alienating corecustomers and jeopardise a point of difference forthe centreDespite the threat of new competitors, the centre has a well established position in the market which shouldremain intact. GMP also has a number of opportunities to counteract new competition and consolidate itsposition as a leading destination offering value for middle to middle-upper income residents (particularlyChinese residents) in its trade area.F-97
Leased <strong>Malls</strong>A number of planned and potential improvements to the centre will be beneficial. Further enhancements tocertain precincts in the centre (such as the new mobile phone precinct on the basement level) will improvethe ambience of the centre, helping it to compete with newer shopping centre developments. If undertakenin coordination with a broader reinforcement of the tenancy mix strategy, these enhancements shouldimprove centre income by maximising pedestrian flows, reducing vacancy levels and increasing revenues.Figure 4.6.4 Gajah Mada Plaza—centre atriumSource: Jones Lang LaSalle Research and ConsultingReinforcing the centre zoning strategy by creating stronger ‘destinations’ around the mall should alsoassist with improving average spending levels and length of visitation. Given that visitors to the centre, andresidents of the trade area more broadly, have relatively high levels of disposable income, furtheropportunities exist to increase GMP’s market share of total retail spending amongst its target marketby increasing visitors’ time spent at the centre (and, ultimately, increasing their average spend at thecentre).The Rimo department store is considered to have further potential. Currently trading from a number ofspecialty store as well as its own main tenancy, reconfiguring the specialty shop layout near the entrance toRimo would have a number of benefits. Firstly, it could increase the area of the department store anchorand improve its presentation. In addition, converting some specialty shop space to department store spacewould trigger some further remix of tenants, which could result in some inappropriately located tenanciesmoving to a location which reflects the tenancy mix strategy to create a number of ‘destination’ zoneswhere comparison shopping opportunities are stronger, resulting in customers staying for longer periods.With current rent levels considered to be below market and positive improvements to the tenancy mixcurrently taking place, the rental growth prospects for GMP are sound. As highlighted earlier, there is alsopotential upside from increasing existing occupancy levels. Considering these factors and the potentialgrowth of retail spending in the trade area, average rents of GMP are projected to grow at approximately11-13% per year across 2007-2009.F-98
Leased <strong>Malls</strong>Table 4.6.7: Rental positioning, Gajah Mada PlazaTenancy categoryAve.current rents(Rp./sqm/mo)Est. range ofmarket rents(Rp./sqm/mo)Growth prospectsAnchor Tenants. . . . . . . 33,000 40,000 - 45,000 Potential growth on lease renewalMajor Tenants . . . . . . . . 44,000 50,000 - 55,000 Potential growth on lease renewalSpecialty Tenants . . . . . 159,000 160,000 - 170,000 Potential growth on lease renewal.Ongoing tenancy re-mix may improveprospects.F&B, Restaurants . . . . . 137,000 175,000 - 200,000 Ongoing tenancy re-mix may improvegrowth prospects.Source: Jones Lang LaSalle Research and ConsultingFurther increases in the centre’s market share in its trade area are possible, in particular by attracting newvisitors to the centre by improving its retail offerings and by increasing the average time spent by currentvisitors. However, any strategies should not compromise GMP’s strongly established position as a valuecentre for middle and middle-upper residents.4.7 Ekalokasari Plaza4.7.1 Regional context and local economyThe municipality of Bogor is located in West Java Province, the most populous province in Java. It isapproximately 50 kilometres south of Jakarta and is connected to Jakarta via the Jagorawi toll road. It is onone of the main routes that connect Jakarta to Bandung. The population of Bogor municipality in 2002 wasapproximately 855,000 while the metropolitan area comprises nearly 3 million residents.The surrounding area is a prime agricultural area with tea, coffee, rice, and rubber being important crops.An agricultural research centre, as well as an agricultural university and other research institutesassociated with rural industries, is located in the City of Bogor. The city is also famous for itsextensive botanical gardens, which is a significant tourist attraction.Bogor is part of Greater Jakarta referred to as Jabotabek, or Jabodetabek, a name formed from taking thefirst two or three letters of each major municipality in the metropolitan area.The metropolitan area of greater Jakarta comprises Jakarta (a province on its own), Bogor, Depok andBekasi (all in West Java Province) and Tangerang (in Banten Province). Its population in 2005 wasestimated to be 22.3 million, making it the largest metropolitan area in <strong>Indonesia</strong>, and one of the ten largestmetropolitan areas in the world.The greater Jakarta metropolitan area is the political and economic heart of <strong>Indonesia</strong>.Ekalokasari Plaza (EP) is located in the municipality of Bogor, south-east of the city centre. It is one of themajor modern shopping malls serving the Bogor metropolitan area.4.7.2 DescriptionEP is a large modern shopping centre over six retail levels and three basements, which commencedoperation in December 2003. The shopping centre is located approximately 2 kilometres south east of theBogor City Centre on a major road, Jl. Siliwangi, approximately 1 kilometre west of the Jagorawi Tollroad.The centre is currently undergoing major refurbishment and extensions that will see the addition of twonew floors (level 3 and Mezzanine) comprising a range of lifestyle and entertainment facilities. Aconvention centre is also being built above the mezzanine, however this facility will be under separateownership and does not form part of this market report.Upon completion of the current upper level extensions, the centre will have a NLA of 25,600 sq.m.Table 4.7.1 provides details of the centre.F-99
Leased <strong>Malls</strong>Figure 4.7.1 Ekalokasari Plaza—main external entranceSource: Jones Lang LaSalleTable 4.7.1 Centre details, Ekalokasari PlazaCharacteristicsAddress. . . . . . . . . . . . . . . . . . . . . . Jl. Siliwangi No. 123, BogorYear Opened . . . . . . . . . . . . . . . . . . 2003Last Refurb/Extension . . . . . . . . . . . OngoingNLA (sq.m):. . . . . . . . . . . . . . . . . . . 20,587 (25,600 following extension)Site Area . . . . . . . . . . . . . . . . . . . . . 10,500CarParking................... 390Motor Cycle Parking . . . . . . . . . . . . 382Levels . . . . . . . . . . . . . . . . . . . . . . . 6 (retail), 3 (basement)Opening Hours . . . . . . . . . . . . . . . . 10am - 10pmOccupancy Rate . . . . . . . . . . . . . . . 87.3% (as at 30 June 2007)Major <strong>Retail</strong> Tenants:Majors . . . . . . . . . . . . . . . . . . . . . . . Matahari, Marketplace supermarketMini Majors . . . . . . . . . . . . . . . . . . . Fit by Beat, Studio 21 Cinemas, Gramedia, Karisma, TimezoneSelected Other. . . . . . . . . . . . . . . . . KFC, Dunkin Donuts, Popeyes Fried Chicken, Giordano,The Executive, Disk TarraTotal <strong>Retail</strong> Tenancies . . . . . . . . . . . 107Shopper Traffic . . . . . . . . . . . . . . . . Weekdays: 12,000 - 14,000Weekends: 18,000 - 20,000Source: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, TbkFigure 4.7.2 Ekalokasari Plaza: interiorSource: Jones Lang LaSalle Research and ConsultingF-100
Leased <strong>Malls</strong>4.7.3 Tenant mixThe current extension to EP has the potential to alter the tenancy mix substantially. This analysis focuseson the existing tenancy mix of levels from Lower Ground to Level Two and provides an overview of theproposed uses for the two new upper levels.EP is one of the larger modern shopping centres in the Bogor, providing a range of both convenience andcomparison shopping.Since being acquired by its current owners in 2005, the centre has undergone a remix and re-positioning,culminating in the current extension program. This repositioning is aimed at capturing a larger share of themiddle-upper income segment.The Lower Ground level houses Matahari Marketplace, an upmarket “ranch” style supermarket that targetsthe middle-upper income households. There is a food court on this level, although this will be relocated toLevel Three. The balance of this level comprises car parks.The Ground level provides mixed fashion and accessories, food and beverage and children’sentertainment offerings. There is considerable scope for exhibition space/casual mall leasing. Thecommon mall areas are very generous and centre management indicated there is scope to moveforward existing lease lines.Upper Ground has a fashion focus. The level is anchored by the Matahari Department Store, whichextends across three levels. Karisma Bookstore is also located on this level.Similarly, specialty retailers on level 1 are primarily fashion retailers.Level 2 has a small concentration of children’s fashion, which complements Matahari’s childrendepartment. Household and electronics retailers are also featured on this level, as is Gramedia.The two new levels focus on lifestyle and entertainment. Level 3 will comprise a large food court with25 kiosks, mid to large sized restaurants, cinemas, Timezone, a range of small specialty retailers and acasual leasing area. The mezzanine level will comprise a fitness centre and a billiards centre.Table 4.7.2 Tenancy mix by level, Ekalokasari PlazaSource: Jones Lang LaSalle Research and ConsultingLevel*Formerlevel nameTenant mix(post Additions)Lower Ground. . . . . Basement 1 Marketplace Supermarket, Electronics, Household goodsGround . . . . . . . . . . Ground Fashion, Jewellery, Accessories, Beauty, Restaurants,Kids entertainmentUpper Ground . . . . First Matahari, Fashion Focus, Karisma BookstoreFirst . . . . . . . . . . . . Second Matahari, Fashion, BeautySecond. . . . . . . . . . Third Matahari, Gramedia, Kids fashion, homewaresThird. . . . . . . . . . . . NA Food Court, Cinemas, Restaurants, Timezone, Electronic storesMezzanine . . . . . . . NA Fitness Centre, Billiards, Access to Convention Centre(separate ownership)Source: Jones Lang LaSalle Research and ConsultingNote: *) New level naming has been in used starting January 2007It is considered that EP provides the most comprehensive retail mix in the Bogor, with strengths in fashion,two large bookstores and strong anchor tenants. Entertainment and lifestyle retailing will be strengthenedupon completion of the upper two levels in 2007.F-101
Leased <strong>Malls</strong>Table 4.7.3 Major tenants as at 30 June 2007, Ekalokasari PlazaTenantExpiry Date% Grossmonthly rentMatahari Department Store & Market Place Supermarket . . . . . . . . . . . . . . 23-Mar-15 21.6%Gramedia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21-May-14 5.4%Karisma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29-Feb-24 4.0%Number 61 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11-Dec-08 3.6%Other tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Varies 65.4%Total Centre ............................................... 100.0%Source: Jones Lang LaSalle Research and Consulting, PT. <strong>Lippo</strong> Karawaci, TbkNote: *Excludes current extensions at Level 3 & Mezzanine4.7.4 Target marketEP targets the middle to middle-upper income segment within Bogor, particularly East and South Bogor(Bogor Timur and Bogor Selatan). Its current market is quite young.Current visitation to the centre is predominantly from the middle income groups. The re-positioning of thecentre, including extensions, aims to attract a greater proportion of the upper income group and istargeting both the youth and young family markets.4.7.5 Trade area analysisTo assist with the definition of trade areas, a market research survey of visitors to the major leased mallswas undertaken in February and March 2007. A total of seven (7) centres were included in the study. Thesurveying was conducted by TNS on behalf of Jones Lang LaSalle for the purposes of this assessment.The main findings of the market research in relation to the profile of shoppers at EP are as follows:• The majority of customers come from East and South Bogor, within close proximity to the centre;• 72% of the survey respondents were aged below 25 years old, the highest proportion of youth across allcentres surveyed;• Relatively low average income reported by respondents (the lowest across the eight centres) but this ispartly due to the high proportion of youth in the profile. EP taps into the local middle income(SES C) market, which accounted for 41% of all respondents;• Of the eight centres surveyed, respondents ranked EP highest in terms of customer satisfaction(facilities, range of shops and overall customer satisfaction);• Prime times to visit the mall were on weekends. The busiest times tended to be between 3pm and 6pm.Night time is less popular, but entertainment uses are being added to the centre, which may wellincrease night time visitation;• Main activities undertaken by shoppers were sightseeing/comparison shopping followed by eating,shopping for clothes, meeting friends and visiting bookstores; and• Customers surveyed chose to shop at EP for a range of reasons, including its comfortable atmosphereand complete mix of stores. Customers perceive the mall as a trendy, popular location to visit.EP is in a very good position to build on what is already regarded by its customers as a high quality centrewith a strong tenancy mix. The lifestyle and entertainment uses being added to the centre has the potentialto not only improve the overall shopping experience but increase market share within its trade area.The trade area of EP has been defined based on the findings from the market research survey, the strengthof the subject site, the location and relative strength of competing retail facilities and accessibility to thecentre, including the road network, public transport and physical barriers.Based on these considerations, the centre’s PTA has been defined to cover a number of areas. Accordingto the market research survey, the areas where the level of market penetration is highest for EP areF-102
Leased <strong>Malls</strong>primarily the city of Bogor (Bogor Timur, Bogor Selatan, Bogor Barat, Bogor Utara, Bogor Tengah) andTanah Sereal.The secondary catchment includes areas where EP attracts visitors from, however the level of customerdraw (market share penetration) is below the level achieved in the PTA. Areas considered to fall within theSTA include Pancoran Mas, Serang Baru and Gunung Putri.The trade area, including major competing centres within the trade area, is illustrated in the below map.Figure 4.7.3: Ekalokasari Plaza trade area1. Plaza Jambu Dua2. Plaza Bogor3. Merdeka Bogor4. Bogor Trade Mall5. Bellanova Country Mall6. Botani Square7. Pangrango Plaza8. Plaza Indah Bogor85342176EkalokasariPlazaN5KmSource: Jones Lang LaSalle Research and Consulting & Jakarta Street Atlas (Gunther W. Holtorf)As at 2005, the PTA shown on the above map included a population of 808,000 persons while the STAincluded a further 334,000 persons. Based on recent population trends in the area, the primary andsecondary trade areas are forecast to grow by 3.0% and 3.4% per annum respectively between 2007 and2011, increasing to an indicative forecast population of 967,000 (PTA) and 408,000 (STA).The target market for EP are middle-upper income households, which represent 74% of all households inthe PTA and 72% of households in the STA.Trade area retail spending and forecast retail spending growth is summarised in Table 4.7.4 below.Together with strong population growth, total retail spending in the PTA is expected to grow by 6.2% perannum between 2007 and 2011 while total retail spending is forecast to grow by 6.9% per annum.There is also potential for the proportion of middle-upper income households to increase significantlywithin the trade area as new residential estates within commuting distance of Jakarta are developed. Thisshould increase EP’s target market.F-103
Leased <strong>Malls</strong>Table 4.7.4 Ekalokasari Plaza trade area: population growth and spending forecasts2007 (f) 2011 (f)%Growth2007-2011(p.a.)PrimaryTrade Area . . . . . . . Population 857,518 966,786 3.0%Households* 144,451 157,165 2.1%<strong>Retail</strong> Spending per Household (Rp. Million) 15.0 17.6 4.0%Total <strong>Retail</strong> Spend (Rp. Billion) 2,172 2,765 6.2%SecondaryTrade Area . . . . . . . Population 356,950 407,508 3.4%Households* 60,319 67,446 2.8%<strong>Retail</strong> Spending per Household (Rp. Million) 15.0 17.6 4.0%Total <strong>Retail</strong> Spend (Rp. Billion) 907 1,187 6.9%* Note: Total Households and <strong>Retail</strong> spending market only includes only those households assumed tofall within the target market (i.e., AC Nielsen’ Socio Economic Status (SES) categories A to C, describedas middle and upper income households). Spend market at 2007 prices (i.e. 2011 spend market at2007 prices; average annual retail spending per household and total retail spend market growthforecasts are real, not nominal, growth, excluding the effects of inflation)Source: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting4.7.6 CompetitionEP is the most visited mall amongst its customers, with 66% of respondents surveyed reporting the subjectsite as the centre they visit most often.The main competing centres to EP are summarised in Table 4.7.5 and discussed below:• Botani Square opened in late 2006 and is potentially the strongest competitor to EP. Located2 kilometres north west of the subject centre, the two level mall of approximately 30,000 sq.mtargets a similar market to EP (middle income) and is anchored by a Giant Hypermarket and smallRimo department store. A third level of retail is expected to be added to the centre in 2008. As the centrebecomes established and achieves higher occupancy, its potential competitiveness to EP is likely toincrease.• Pangrango Plaza is a strata mall approximately 3 kilometres northwest of EP. The centre comprises aSarinah department store, Toko Bookstore and a large number of strata units over 7 levels. Total NLA is30,000 sq.m, although a large proportion of the upper floors are vacant. The centre targets thelow-middle income segment.• Bogor Trade Mall is located 3.5 kilometres west of EP and opened in 2006. It is anchored by Ramayanadepartment store and targets a lower income segment than the subject site.• Plaza Jambu Dua is located 7 kilometre north of EP and is a relatively small lease mall of 20,800 sq.m. Itis anchored by Ramayana and targets the middle lower income segment.• Plaza Bogor is a lease mall approximately 3 kilometres to the west of EP. The centre opened in 1993 andis anchored by Robinson and targets the middle income segment.Future competition will come from the proposed extension to Botani Square as mentioned above. Apartfrom this extension, there are no other known shopping mall developments within the Bogor region thatwould be considered a competitive threat to EP. Continued expansion, however, by major department storeretailers, hypermarkets and supermarkets may see further supply in the medium term, particularly in thisrelatively fast growing area of Greater Jakarta.F-104
Leased <strong>Malls</strong>Table 4.7.5: Main competition, Ekalokasari PlazaCentre nameDistancefrom EPTypeNLA(sq.m)YearopenedAnchor tenantsBotani Square . . . . . . . . . . . . 2.5 km Lease 30,000 2006 Giant, Rimo, Electronic City,GramediaPangrango Plaza . . . . . . . . . . 3 km Strata 30,000 2005 Sarinah, Hero,Gunung Agung BookstoreBogor Trade Mall . . . . . . . . . . 3.5 km Strata 45,000 2006 RamayanaPlaza Jambu Dua . . . . . . . . . 7 km Lease 20,800 1997 RamayanaPlaza Indah Bogor . . . . . . . . . 8 km Lease 18,000 1999 YogyaPlaza Bogor . . . . . . . . . . . . . . 3 km Lease 27,500 1993 RobinsonBellanova Country Mall . . . . . 7 km Strata 21,000 2006 HypermartSource: Jones Lang LaSalle Research and Consulting4.7.7 SWOT analysisTable 4.7.6 provides a summary of the strengths, weaknesses, opportunities and threats for EP.Table 4.7.6 SWOT analysis, Ekalokasari PlazaStrengthsThe supermarket (Matahari Marketplace) isunique and helps the centre serve its core middleto middle-upper income trade areaThe centre is considered the dominant shoppingmall in Bogor, with the most complete range ofconvenience and comparison shoppingThe factory outlet retailers located nearby areconsidered to complement the retail offeringTenancy mix, particularly fashion retail, isconsidered to be strong and the best in BogorOpportunitiesWeaknessesThere are insufficient parking space on weekendsand this may become a greater issue once centrerenovations and extensions are completedAn existing lack of food options is perceived bysome customers as a weaknessThreatsA major refurbishment and expansion of the F&B,lifestyle, cinema and gym precinct shouldcomplete the retail offering and increase itscustomer baseThe level 3 and Mezzanine extension should pullshoppers up through the mall, thereby improvingtrade on level 2The completion of the extensions prior to BotaniSquare becoming well established provides a‘first mover advantage’ over this new marketentrantRepositioning provides opportunity to improvetenancy zoning and mix, although customersconsider the tenancy mix to be already quite goodCentre management has considered movingforward lease lines at ground floor, reducingexcessive common mall areas and increasing NLASource: Jones Lang LaSalle Research and ConsultingBotani Square is a potential threat to EP, howeverit has yet to establish its market. Once the thirdlevel is completed (in 2008) it may providegreater competitionOther future competition may target the growingmiddle to middle-upper marketF-105
Leased <strong>Malls</strong>4.7.8 Future outlookSince opening in December 2003, EP has become the leading modern shopping mall in Bogor. Itscustomer base is derived primarily from nearby residential areas and market research suggests itscustomers are very satisfied with the atmosphere and retail offering currently available. With the centrecurrently undergoing a major re-positioning that is aimed to greatly improve both these aspects, EP is wellplaced to build further on its strengths.With vacant space within the shopping centre, the owners have the potential to greatly increase rentalincome at the centre by leasing up such space.Over time, the proportion of SES A and B customers is forecast to show strong growth in the trade area,providing further opportunities for the centre to tap into this lucrative market by targetting retailers thatappeal to the middle-upper income segment.The market research surveys indicated relatively low per visit spend and a large proportion of windowshoppers at the centre. Increasing the average spend per customer will be aided by the introduction of thelifestyle and entertainment precinct, which should also increase the average length of stay at the centre.The entertainment offer should also improve night time customer numbers, ensuring greater utilisation ofthe shopping centre throughout the day and night.On the competition front, Botani Square, once established, may provide increased competition in themiddle-upper income segment. The current re-positioning at EP, however, should safeguard against thiscompetitive threat and strengthen the market position of EP as the leading retail centre in Bogor.Parking issues are likely to increase as the new levels become fully functional and establish a customerbase. Centre management has indicated that this is a priority and are considering alternatives to increaseparking spaces on the site, improve efficiency and provide overflow spaces on neighbouring sites.It is considered that rental levels for anchor tenants are at the low side of market rentals whilst othercategories are at the market average. The re-positioning of the centre through the centre expansion and remixwill potentially increase customer traffic and sales across the various tenancy categories. This willprovide further rental income growth prospects. Considering these factors and the potential growth of retailspending in the trade area, average rents of EP are projected to grow at approximately 12-15% per yearacross 2007-2009.Table 4.7.7: Rental Positioning, Ekalokasari PlazaTenancy categoryAveragecurrent rents(Rp./sqm/month)Estimatedrange ofmarket rents(Rp./sqm/month)Growth prospectsAnchor Tenants. . . . . . . . . 28,000 35,000 - 40,000 Potential growth on lease renewalMajor Tenants . . . . . . . . . . 49,000 50,000 - 60,000 Potential growth on lease renewalSpecialty Tenants . . . . . . .157,000 150,000 - 175,000 Potential growth due to centreexpansion and re-positioningF&B, Restaurants . . . . . . .136,000 125,000 - 150,000 Potential growth due to centreexpansion and re-positioningSource: Jones Lang LaSalle Research and ConsultingF-106
<strong>Retail</strong> Spaces <strong>Malls</strong>5. RETAIL SPACES MALLS5.1 Java Supermall5.1.1 Regional context and local economyLocated 423 kilometres east of Jakarta, Semarang is the capital city of Central Java Province and the fifthlargest city in terms of population in <strong>Indonesia</strong>. With its location along the northern coast of Java,Semarang is an important trading port for the region.According to Central Bureau of Statistics, Central Java Province comprised 31.2 million people in 2000,recording average annual growth of 1.0% between 1995 and 2000. The municipality of Semarang had apopulation of 1.3 million in 2000 and this is estimated to have increased by 1.5 million in 2007, or 2.6% perannum. Of particular note is that Semarang contains a sizeable middle to upper income segment fromvarious ethnic backgrounds.Figure 5.1.1 Java supermall, external frontageSource: Jones Lang LaSalle Research and Consulting5.1.2 DescriptionCommencing operations in 2000, Java Supermall comprises approximately 19,800 sq.m of NLA. Thecentre is located in the centre of Semarang.The subject strata units are currently occupied by Matahari Department Store and Matahari Supermarket.Table 5.1.1 contains some key facts regarding Java Supermall, including details of the subject strata units.Table 5.1.1 Centre details, Java SupermallSource: Jones Lang LaSalle Research and ConsultingCentre nameJava SupermallYear Completed . . . . . . . . . . . . . 2000NLA (sq.m.) . . . . . . . . . . . . . . . . 19,800Car Park Spaces . . . . . . . . . . . . 700Motor Cycle Spaces . . . . . . . . . . 2,000Strata Unit Area (sq.m) . . . . . . . 11,082*Major Tenants in the Centre. . . Matahari Supermarket, Matahari Department Store, food court,entertainment (including karaoke, bowling)Source: Jones Lang LaSalle Research and Consulting* Note: The total area is based on the Strata Title Ownership Certificates.Java Supermall differs from other retail spaces malls in the portfolio due to the fact that specialty traders inthe mall operate under a lease, rather than a strata ownership structure. As a result the centre includes anumber of high profile retailers, including The Body Shop, Pizza Hut and McDonalds.With its mix of mall tenants, high profile retailers and major anchors, Java Supermall caters for a widemarket, from the middle-lower to the middle-upper income segment.F-107
<strong>Retail</strong> Spaces <strong>Malls</strong>Matahari Department StoreMatahari Department Store at Java Supermall is a full-line department store, offering a good selection ofproducts in the core cosmetics, apparel and homewares categories.Matahari at Java Supermall is one of four Matahari Department Stores in Semarang. The subject site isfacing strong competition from other and department store operators at nearby centres such as MalCiputra (Robinsons) and local operators such as Sriratu.The subject store targets the middle to middle-upper income segment, while competing department storesin the region are primarily targeting the middle or low to middle income segments.Figure 5.1.2 Java supermall, Matahari department storeSource: Jones Lang LaSalle and ConsultingFuture revenue growth is expected to be supported by renovation to the store which are planned to beconducted in mid 2007. While there may be a short-term disruption to sales, it is expected that therenovation will bring the subject site up to the latest Matahari fitout standards and will cement thedepartment store as the most professionally presented in Semarang.Matahari SupermarketThe Matahari Supermarket is a single level supermarket. It is likely to face more intense competition asCarrefour is expected to enter the local market by late 2007.Figure 5.1.3 Java supermall, Matahari supermarketSource: Jones Lang LaSalle Research and Consulting5.1.3 Trade area analysisBased on discussions with the store managers of Matahari Department Store and Matahari Supermarket,the trade area for Java Supermall is considered to approximate the extent of the Semarang municipality.In terms of competition, Java Supermall competes with the major malls in Semarang, in particular PlazaSimpang Lima and Mal Ciputra (which are interconnected via a pedestrian bridge in the centre of town).Overall, Mal Ciputra is considered to be pitched to a slightly higher income segment than Java Supermalland Plaza Simpang Lima is considered to be targeting a lower income segment. However, as noted earlier,both centres’ anchor department stores are considered to be targeting a lower income segment thanMatahari at Java Supermall.F-108
<strong>Retail</strong> Spaces <strong>Malls</strong>In addition, local hypermarket operators are also of competitive relevance. In particular, ADA Setiabudi,approximately 15 minutes, drive from the subject site, is understood to attract a strong proportion ofSemarang residents for their large monthly non-perishable grocery shopping needs.Future competition will come from DP Mall, a leased mall, located along Jl. Pemuda, about 3 km northwestof Java Supermall. Total NLA will be 19,000 sq.m with Carrefour as the anchor tenant. It will be completedin September 2007.The location of Java Supermall within Semarang, together with the locations of major competing centres,is illustrated in the map below.Figure 5.1.4 Java Supermall trade areaShopping Centra (red dot)1. Mal Ciputra2. Plaza Simpang Lima3. Plaza Johar4. Semarang Plaza5. Plaza Candi6. Maja MallDepartment Store (blue dot)1. Ada Dept Store2. Sri Ratu Dept Store3. Sri Ratu Dept Store4. Ada Dept Store5. Ada Dept Store13 42123Java Supermall564Source: Jones Lang LaSalle Research and Consulting & Travel Map Surakarta (PIN Maps)Target market household growth in the PTA is forecast to be significant between 2007 and 2011, increasingat an average annual rate of 4.8% per annum. By 2011, total target households is forecast to increase to385,200 households.Table 5.1.2 Java Supermall trade area: population growth2007 (f) 2011 (f)%Growth2007-2011(p.a.)Primary Trade Area . . . . . . . . . . . . . . . . Population* 1,286,906 1,486,968 3.7%Households* 318,877 385,233 4.8%Source: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting* Note: Total Population and Households only includes those population and households assumed to fallwithin the target market (i.e., Socio Economic Status (SES) categories A-C, described as middle andupper income households).5.2 Malang Town Square5.2.1 Regional context and local economyMalang is the second largest city in East Java Province with a population of approximately 800,000 and aregency population of approximately 2.4 million. Due to its elevation, it has a comparatively cool climate.The city is located less than 100 kilometres from Surabaya, <strong>Indonesia</strong>’s second largest city, and the regionis a popular tourist destination due to its natural attractions (eg. Mount Bromo, one of Java’s largestvolcanoes), cool climate and colonial history. Malang also has a large student population, being home tofive universities (Brawijaya, State, Muhammadiyah, Widya Gama and Merdeka Universities).F-109
<strong>Retail</strong> Spaces <strong>Malls</strong>As at the 2000 National Census, East Java Province had a population of nearly 35 million people, thesecond largest population of all <strong>Indonesia</strong>n provinces after West Java.Malang Town Square is the largest modern shopping centre in the greater metropolitan area, and islocated at Jl. Veteran No. 2. The centre opened for trade in 2005 and has quickly established itself as amajor shopping destination for residents of Malang and from nearby cities and towns. It has also reducedthe need for middle and middle-upper income residents of Malang to travel to Surabaya for higher qualityretail goods.Figure 5.2.1: Malang Town SquareSource: Jones Lang LaSalle5.2.2 DescriptionCommencing operation in 2005, Malang Town Square comprises some 24,740 sq.m of NLA. The centre islocated approximately 3 kilometres northwest of the centre of Malang.The subject strata units are currently occupied by Hypermart, Matahari Department Store and Timezone.Other major stores represented at Malang Town Square include a bookstore (Gramedia) and cinemas.Table 5.2.1 Relevant information, Malang Town SquareCentre nameMalang Town SquareYear Completed . . . . . . . . . . . . . . . . . 2005NLA (sq.m.) . . . . . . . . . . . . . . . . . . . . 24,740Car Park Spaces . . . . . . . . . . . . . . . . 544Motor Cycle Spaces. . . . . . . . . . . . . . 720Strata Unit Area (sq.m.) . . . . . . . . . . 11,065*Major Tenants in the Centre . . . . . . Hypermart, Matahari Department Store, Gramedia, Timezone,Cinemas, EntertainmentSource: Jones Lang LaSalle Research and Consulting* Note: The total area is based on Kiosks Sale and Purchase Binding Agreements and may not be thesame as reflected on the Strata Title Ownership Certificates that are currently being processed.There is a relatively high concentration of fashion retailers in Malang Town Square, particularly aimed atthe youth segment.The centre targets the middle to middle-upper income segment, being located near prime residential areasof Malang. During the week, the centre is popular with the youth segment due to the proximity of nearbymajor educational establishments. On weekends, the centre attracts a large number of young families.Matahari Department StoreThe Matahari Department Store is one of two Matahari stores in Malang. It is relatively small atapproximately 3,079 sq.m and is not considered a full-line department store, with its range limited tofashion, beauty and accessories.F-110
<strong>Retail</strong> Spaces <strong>Malls</strong>The store targets the middle to middle-upper income segment. Competing department stores are primarilytargeting the middle-lower income segment and located in the Malang CBD. These stores includeRamayana, Sarinah, Mitra and Ratu.HypermartHypermart is the only hypermarket in Malang. As such, the store enjoys a very strong market position,illustrated by it being the third best performing Hypermart within <strong>Indonesia</strong> in terms of total revenue.5.2.3 Trade area analysisBased on discussions with the store manager of Matahari and Hypermart, the trade area for Malang TownSquare is considered to approximate the whole city of Malang. The centre is conveniently located along amajor road (Jl. Veteran No. 2), providing the centre with good access to the surrounding population base,which includes prime residential districts and a large student population.The location of Malang Town Square within the context of the City of Malang, together with the locations ofmajor competing centres, is illustrated in the map below.Figure 5.2.2: Malang Town Square trade areaLeased <strong>Malls</strong>1. Plaza Araya2. Plaza Dieng3. Gajah Mada4. Plaza MalangFuture Project5. Mal Olympic GardenDepartment Store6. Mitra II7. Mitra IMalang Town Square2573461Source: Jones Lang LaSalle Research and Consulting & Malang City Map (KPS)It is noted that a major competing centre, Mal Olympic Garden, is currently under construction. The stratatitled centre will be anchored by a Giant Hypermarket with potential for a department store, although this isnot yet confirmed. It is located approximately 2 kilometres from Malang Town Square.Between 2007 and 2011, the population of the PTA is forecast to growth by an average annual rate of 2.2%.Future demand for high quality retail centres and retail stores is likely to be driven by income growth,population growth and changing patterns in customer shopping away from traditional markets towardsmodern shopping complexes.The number of target market households in the PTA is estimated at around 147,300 households in 2007.The PTA is forecast to contain approximately 160,700 target households in 2011.F-111
<strong>Retail</strong> Spaces <strong>Malls</strong>Table 5.2.2 Malang Town Square trade area: population growth2007 (f) 2011 (f)%Growth2007-2011(p.a.)Primary Trade Area . . . . . . . . . . . . . . . . . . . Population* 441,880 482,218 2.2%Households* 147,293 160,739 2.2%Source: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting* Note: Total Population and Households only includes those population and households assumed to fallwithin the target market (i.e., Socio Economic Status (SES) categories A-C, described as middle andupper income households).5.3 Grand Palladium Medan5.3.1 Regional context and local economyMedan, the provincial capital of North Sumatra, is the largest city in Sumatra, and the fourth largest in thenation after Jakarta, Surabaya and Bandung. It is a cosmopolitan city with a population of over 2 millionplus a regency population of an additional 1.8 millon (e.g Deli Serdang and Binjai).Medan is renowned as a growing commercial centre in the region mainly with agriculture and industrybusinesses. The city has developed from a tobacco plantation village in the 19th century to a majorgovernment and commercial centre at present.Based on the 2000 National Census and Central Statistics Bureau projections, North Sumatra Provincehad a population of nearly 12.5 million people in 2005, the most populous province outside of Java. The cityhas a mix of communities, predominantly consisting of Batak, Melayu, Chinese, Javanese, and Tamil.Grand Palladium Medan is the newest strata title shopping centre in Greater Medan, commencingoperations in October 2005. The centre is located along Jl. Kapten Maulana Lubis within the CBD. Ithas easy access to the other city amenities and is situated approximately 2.5 kilometres north of PoloniaInternational Airport.Figure 5.3.1: Grand Palladium Medan: externalSource: Jones Lang LaSalle5.3.2 DescriptionGrand Palladium Medan comprises about 29,272 sq.m of NLA. The centre is located in the centre ofMedan, surrounded by office and government buildings.The subject strata units are currently occupied by Hypermart, Matahari Department Store and Timezone.Other major stores represented at Grand Palladium Medan include a cinema (Cineplex 21).F-112
<strong>Retail</strong> Spaces <strong>Malls</strong>Table 5.3.1: Centre details, Grand Palladium MedanCentre nameGrand Palladium MedanYear Completed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2005NLA (sq.m) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,272Car Park Spaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200Motor Cycle Spaces . . . . . . . . . . . . . . . . . . . . . . . . . . . 700Strata Unit Area (sq.m.) . . . . . . . . . . . . . . . . . . . . . . . 13,417*Major Tenants in the Centre . . . . . . . . . . . . . . . . . . . Hypermart, Matahari, Cineplex 21, TimezoneSource: Jones Lang LaSalle Research and Consulting* Note: The total area is based on Kiosks Sale and Purchase Binding Agreements and may not be thesame as reflected on the Strata Title Ownership Certificates that are currently being processedStrata title shop units in Grand Palladium Medan are dominated by non-branded fashion retailers targetingthe middle income segments. Due to its location in the CBD area, visitors to the centre are mainly peoplewho work in the office buildings in the surrounding area on weekdays and from people in the surroundingresidential areas on weekends.The centre currently has some vacancies on the upper levels and this may improve over time as additionalstrata units are sold and the centre becomes more established.Matahari Department StoreThe Matahari Department Store in Grand Palladium Medan is the smallest of the four Matahari stores inMedan, the other stores being located at Thamrin Plaza, Medan Fair and Medan Mall. Matahari occupies5,020 sq.m. It is not considered a full-line department store, with its range limited to fashion, beauty andaccessories. The store targets the middle to middle-upper income segment.HypermartThe Hypermart is one of only three hypermarkets in Medan with other hypermarkets being the Hypermartin Sun Plaza and Carrefour in Medan Fair. Currently, the store with the Hypermart at Sun Plaza dominatesthe Medan hypermarket segment and compete directly with other hypermarkets within the city. Futurecompetition will arrive in July 2007, with the opening of another Hypermart in the Binjai area.5.3.3 Trade area analysisBased on discussions with the store manager of Matahari and Hypermart, the PTA for Grand PalladiumMedan covers the central areas of Medan. The centre’s strategic location along a major road (Jl. KaptenMaulana Lubis) creates high exposure to passing traffic from Jalan Gatot Subroto and good access to thesurrounding population base, which includes prime residential districts.F-113
<strong>Retail</strong> Spaces <strong>Malls</strong>The trade area of Grand Palladium Medan is illustrated in the map below.Figure 5.3.2: Grand Palladium Medan trade areaGrand PaladiumSource: Jones Lang LaSalle Research and Consulting & Medan Street Map (ADL)In 2007, the estimated target households of the PTA is approximately 247,500 households with growth ofaround 1.3% per annum expected over the next four years.Table 5.3.2 Grand Palladium Medan trade area: population growth2007 (f) 2011 (f)%Growth2007-2011(p.a.)Primary Trade Area . . . . . . . . . . . . . . . . Population* 1,075,843 1,135,062 1.3%Households* 247,537 261,162 1.3%Source: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting* Note: Total Population and Households only includes those population and households assumed to fallwithin the target market (i.e., Socio Economic Status (SES) categories A-C, described as middle andupper income households).The major competing centre is Medan Fair which is located approximately 1 kilometre west of GrandPalladium Medan. This centre commenced operations in 2004 with 53,500 sq.m of NLA across four levelsand is anchored by Matahari and Carrefour. The other competing centres are Thamrin Plaza and MedanMall, situated 1.5 kilometres and 2.3 kilometres to the east respectively. Both centres have an NLA ofapproximately 20,000 sq.m.Future competition will come from Deli Grand City, a redevelopment of Deli Plaza, located at JalanSoekarno-Hatta, about 600 metres north of the Grand Palladium Medan. This centre is a leased mall withina mixed used complex comprising apartments, a hotel and a convention centre. The tenancy is acombination of short and long term lease. It will be completed in 2010 with 35,000 sq.m of NLA.F-114
<strong>Retail</strong> Spaces <strong>Malls</strong>Figure 5.3.3: Grand Palladium Medan competition mapGrand Palladium23541Source: Jones Lang LaSalle Research and Consulting & Medan Map (KPS)5.4 Metropolis Town Square5.4.1 Regional context and local economyMetropolis Town Square is located in Tangerang, Banten Province, approximately 20 kilometres west ofthe Jakarta CBD. The centre’s strategic location near the main road connecting the toll road to Tangerangcity provides easy access to the Jakarta-Merak toll gate and to surrounding residential areas in Tangerang.Tangerang is an industrial and manufacturing city in Greater Jakarta, being home to seven industrialestates occupying 1,700 hectares of land. Due to its proximity to Jakarta, Tangerang is a popularresidential location for commuters who work in Jakarta. In recent years, residential estates andsatellite cities such as <strong>Lippo</strong> Karawaci, Bumi Serpong Damai, Kota Modern, Alam Sutra, SummareconSerpong and Bintaro Jaya have been developed in Tangerang.According to the Central Statistics Bureau, Tangerang has a city and regency population of approximately1.5 million and 3.3 million respectively, totalling approximately 4.8 million in 2005. Between 2000 and 2005,the population of Tangerang grew by an average of 3.5% per annum.Metropolis Town Square is located along Jalan Hartono Raya within the Kota Modern residential estate,about 2.6 kilometres south of the city centre of Tangerang. The centre commenced operations in 2004 andhas become the largest strata title shopping centre in Tangerang, catering for the needs of a growingnumber of middle income residents.Figure 5.4.1 Metropolis Town SquareSource: Jones Lang LaSalle Research and ConsultingF-115
<strong>Retail</strong> Spaces <strong>Malls</strong>5.4.2 DescriptionCommencing operations in 2004, Metropolis Town Square comprises about 60,734 sq.m of NLA.The subject strata units are currently occupied by Hypermart, Matahari Department Store and Timezone.Other major stores represented in Metropolis Town Square include a bookstore (Utama Bookstore) and acinema (Cineplex 21).Table 5.4.1 Relevant information, Metropolis Town SquareCentre nameMetropolis Town SquareYear Completed. . . . . . . . . . . . . . . . 2004NLA(sq.m)................... 60,734Car Park Spaces . . . . . . . . . . . . . . . 800Motor Cycle Spaces . . . . . . . . . . . . 1,200Strata Unit Area (sq.m.). . . . . . . . . 15,248*Major Tenants in the Centre . . . . . Hypermart, Matahari, Timezone, Utama Bookstore, Cineplex 21Source: Jones Lang LaSalle Research and Consulting* Note: The total area is based on Kiosks Sale and Purchase Binding Agreements and may not be thesame as reflected on the Strata Title Ownership Certificates that are currently being processed.Strata title shop units in Metropolis Town Square are dominated by non-branded fashion retailers,particularly targeted at youth segment. Electronics and telecommunication retailers are highlyrepresented on the Second Floor.The centre targets the middle income segment, particularly young families from residential estates inTangerang.In general, the centre has performed well in relation to the number of shop openings with the estimatedoccupancy rate at above 80%. As a strata title mall, it is reasonably well tenanted and well laid out in termsof zoning.Matahari Department StoreThe Matahari Department Store in Metropolis Town Square is one of three Matahari stores in Tangerang.The department store opened in 2004 but has since relinquished some space to allow Hypermart toexpand.Despite its reduced size, the store accommodates most product lines including fashion, accessories,cosmetics and homewares. The store has performed well since opening and achieved good growth inrevenues.The store targets the middle income segment, as does the Matahari store in Mall WTC Matahari, differingfrom Matahari store in <strong>Lippo</strong> Karawaci Supermal, which targets the middle-upper income segment. Mostother department stores in Tangerang mainly target the middle to middle-lower income segment. Thesestores include Robinson in Plaza Tangerang, Diamond in D’Best, Ramayana in ITC BSD and PojokBusana in Plaza Serpong.HypermartHypermart is one of six hypermarkets in Tangerang. The other hypermarkets include Giant in SerpongTown Square and a stand-alone Giant hypermarket along Jalan Serpong Raya, Carrefour stores in D’BestPlaza and ITC BSD, as well as other Hypermart stores in Mall WTC Matahari and <strong>Lippo</strong> KarawaciSupermal. The strongest competition to Hypermart comes from Carrefour in D’Best Plaza, due to itsproximity.5.4.3 Trade area analysisBased on discussions with the store manager of Matahari and Hypermart, the PTA for Metropolis TownSquare covers approximately the whole of Tangerang.F-116
<strong>Retail</strong> Spaces <strong>Malls</strong>This relatively high population growth together with changing patterns in customer shopping behavioraway from traditional markets towards modern shopping centres is expected to continue to drive demandwithin modern shopping centres in Tangerang.The location of Metropolis Town Square within Tangerang, together with the locations of major competingcentres, is illustrated in the map below.Figure 5.4.2: Metropolis Town Square trade area map1. Supermal Karawaci2. D’Best Plaza3. Plaza Tangerang4. Serpong Town Square5. Mal ITC Matahari6. Plaza BSD7. Plaza Serpong8. ITC BSD9. BSD Junction3Metropolis Town Square2147568 9Source: Jones Lang LaSalle Research and Consulting & Jakarta Street Atlas (Gunther W. Holtorf)The total population of the PTA in 2007 is approximately 1.6 million. This locality is a growing urban areawith an average population growth of about 3.4% over the past five years, driven by strong growth inresidential estate developments. It is expected that the population in the area will continue to increase at asimilar level over the next five years.Between 2007 and 2011, target market household growth in the PTA is forecast to be significant,increasing at an average annual rate of 5.2% per annum. By 2011, total target households is forecastto increase to approximately 400,000 households.Table 5.4.2 Metropolis Town Square trade area: population growth2007 (f) 2011 (f)%Growth2007-2011(p.a.)Primary Trade Area . . . . . . . . . . . . . . . . . . . . . Population* 1,186,507 1,358,702 3.4%Households* 327,446 401,153 5.2%Source: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting* Note: Total Population and Households only includes those population and households assumed tofall within the target market (i.e., Socio Economic Status (SES) categories A-C, described as middleand upper income households).F-117
<strong>Retail</strong> Spaces <strong>Malls</strong>5.5 Depok Town Square5.5.1 Regional context and local economyDepok is located in West Java Province, situated between South Jakarta and the northern side of Bogor.The city is located approximately 16 kilometres south of Jakarta CBD. Depok is renowned as a city ofstudents, being home to four large universities (University of <strong>Indonesia</strong>, Gunadarma University, TuguPolytechnic and Jakarta Polytechnic).Depok’s population is estimated at 1.5 million in 2007 and has shown strong growth recently, averaging3.3% per annum between 2000 to 2005. The growth is predominantly driven by demands for residentialaccommodation within close proximity to Jakarta, which is being served by new residential estatedevelopment in the region.In line with city population growth, the commercial area of Depok has been growing rapidly for the last fewyears, as evidenced by modern shopping centre developments (eg. ITC Depok, Margo City and DepokTown Square) and commercial buildings built along the main road of Depok, Jalan Margonda Raya.Depok Town Square is located along Jalan Margonda Raya, adjacent to the southeastern side of theUniversity of <strong>Indonesia</strong>, the largest university in the country. The centre has a direct access to Pondok CinaRailway Station from its rear entrance, and therefore connect the Station to Jalan Margonda Raya.Developments in the surrounding area comprise mainly shopping centres, commercial buildings, shopsand shophouses along Jalan Margonda Raya.Figure 5.5.1 Depok Town SquareSource: Jones Lang LaSalle Research and Consulting5.5.2 DescriptionCommencing operations in October 2005, Depok Town Square comprises about 41,129 sq.m of NLA.The subject strata units are currently occupied by Hypermart, Matahari Department Store and Timezone.Other major stores represented at Depok Town Square include a cinema (Cineplex 21).Table 5.5.1 Relevant information, Depok Town SquareSource: Jones Lang LaSalle Research and ConsultingCentre nameDepok Town SquareYear Completed. . . . . . . . . . . . . . . . 2005NLA(sq.m)................... 41,129Car Park Spaces . . . . . . . . . . . . . . . 870Motor Cycle Spaces. . . . . . . . . . . . . 1,200Strata Unit Area (sq.m.) ......... 13,045*Major Tenants in the Centre . . . . . Hypermart, Matahari Department Store, Timezone, Cineplex 21Source: Jones Lang LaSalle Research and Consulting* Note: The total area is based on Kiosks Sales and Purchase Binding Agreements and may not be thesame as reflected on the Strata Title Ownership Certificates that are currently being processed.F-118
<strong>Retail</strong> Spaces <strong>Malls</strong>Strata title shop units in the Depok Town Square are dominated by non-branded fashion retailers,particularly those targeting the youth segment.The centre targets the middle income segment, particularly young families from residents of middleincome segment residential estates in Depok, and the student community around Depok.At present, the centre has an occupancy rate of around 70% based on all tenant types. The vacancies aremainly on the upper floors.Matahari Department StoreThe Matahari Department Store in Depok Town Square is the larger of two Matahari stores in Depok, at6,989 sq.m. The store includes primarily fashion, accessories and cosmetics departments with a smallsection on homewares.Both Matahari stores in Depok target the relatively large middle income segment. Other department storesin Depok include Centro in Margo City, which targets the middle-upper income segment, and RamayanaDepartment Store in Plaza Depok, which targets the middle-lower income segment.HypermartHypermart is one of three hypermarkets competing in the grocery and variety trade in Depok, the other twobeing Giant at Margo City and Carrefour in ITC Depok. The store targets the middle to middle-lower incomesegment.5.5.3 Trade area analysisBased on discussions with the store manager of Matahari and Hypermart, the PTA for Depok Town Squarecovers approximately the whole of Depok.In 2007, the estimated residential population of the PTA is approximately 1.2 million. Recent populationgrowth has averaged 3.3% per annum. It is expected that similar population growth will be achieved overthe next five years.The location of Depok Town Square, together with the locations of major competing centres, are illustratedin the map below.Figure 5.5.2: Depok Town Square trade area map1. Margo City2. ITC Depok3. Mal Depok4. Plaza Depok5. Cibubur Junction152 3 4Source: Jones Lang LaSalle Research and Consulting & Jakarta Street Atlas (Gunther W. Holtorf)F-119
<strong>Retail</strong> Spaces <strong>Malls</strong>The number of target market households in the PTA is estimated at around 195,800 households in 2007.The PTA is forecast to contain approximately 222,400 target households in 2011.Table 5.5.2 Depok Town Square trade area: population growthSource: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting2007 (f) 2011 (f)%Growth2007-2011(p.a.)Primary Trade Area . . . . . . . . . . . . . . . . . . . . . . . . Population* 846,907 961,196 3.2%Households* 195,784 222,383 3.2%Source: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting* Note: Total Population and Households only includes those population and households assumed to fallwithin the target market (i.e., Socio Economic Status (SES) categories A-C, described as middle andupper income households).The closest competing centre is Margo City, a leased mall, located directly opposite Depok Town Square.The centre comprises 50,000 sq.m of NLA and is anchored by Centro Department Store and GiantHypermarket. It commenced operations in March 2006 and is targeting the middle to middle-upper incomesegment.ITC Depok is a similar strata title concept mall and also competes with Depok Town Square. It has31,000 sq.m of NLA across five levels with Carrefour Hypermarket as its anchor tenant. It is located furthersouth, next to Depok Bus Terminal and Depok Baru Railway Station.The other two competing malls are leased malls developed in the 1990s. Mal Depok is anchored byMatahari and Plaza Depok is anchored by Ramayana Department Store.Whilst there is considerable competition within close proximity of Depok Town Square, demand isincreasing within the trade area. Demand for modern shopping centres in Depok is being driven by acombination of strong population growth, a growth of the middle income segment and the increasedpreference for modern “one stop shopping” malls.5.6 Plaza Madiun5.6.1 Regional context and local economyMadiun is a second-administrative level city in East Java Province. It is located around 169 km west ofSurabaya (the capital city of East Java Province) and 114 km east of Solo. Madiun is the capital city of aregency of the same name.Madiun is the largest city in the western part of East Java Province with total land area of around33.23 sq.km and the population of around 197,000 (2005 census). The regency has a total land area of1,011 sq.km and a population of more than 641,000 (2001 census).Madiun is home to <strong>Indonesia</strong>’s first and largest train manufacturer, PT. Inka, which produces modern trainsand locomotives for both domestic and overseas markets. Other than train manufacturing, Madiun is alsoknow, as a major sugar producer in Java. There are two prominent sugar companies based in the city,PT. PG Rejoagung and PT. Kanigoro.The industrial sector had contributed significantly to Madiun’s economy as reflected in its GRDP. In 2004,the industrial sector generated around 27% of Madiun’s GRDP.Furthermore, Madiun is also known as one of the major airforce bases in <strong>Indonesia</strong>. The Iswahyudi AirfieldBase is located in the eastern part of the city.5.6.2 DescriptionPlaza Madiun is located along Pahlawan Street, the primary thoroughfare in the city of Madiun. The streetis positioned in the centre of the commercial and administrative zone. Most of the prominent buildings inF-120
<strong>Retail</strong> Spaces <strong>Malls</strong>Madiun are located in this precinct, including City Hall, Merdeka Hotel (the best hotel in town), TentaraHospital and Pasaraya Shopping Centre. Pahlawan Street is accessible from Sudirman Street, anothermajor thoroughfare in the the city that connects Solo and Surabaya.Plaza Madiun enjoys high exposure from Pahlawan Street and is well served by public transport.Figure 5.6.1 Location of Plaza MadiunSource: Jones Lang LaSalle Research & Consulting & http://kotamadiun.go.idPlaza Madiun is one of the few established major shopping centres in the city, providing a relativelycomprehensive range of retailing and one-stop shopping convenience to residents.Plaza Madiun was built in 2000 and commenced operations fully in June 2001 with the opening of MatahariDepartment Store. The centre has a total NLA of 19,029 sq.m.The subject property is currently occupied by Matahari Department Store and Matahari Supermarket.Figure 5.6.2: External view of Plaza MadiunSource: Jones Lang LaSalle Research and ConsultingThe centre is anchored by Matahari Department Store and Matahari Supermarket. Matahari in PlazaMadiun is the only nationwide retailer (in the department store and supermarket format) present in themarket. The brand has provided Plaza Madiun with a good image as a prominent shopping destination inthe region. In addition, there are also some mini anchors complementing the centre, including Timezoneand G-Fun (entertainment). The combination of the department store, supermarket and children’sentertainment has bolstered the positioning of Plaza Madiun as a one-stop family shopping centre.F-121
<strong>Retail</strong> Spaces <strong>Malls</strong>Table 5.6.1 Centre details, Plaza MadiunSource: Jones Lang LaSalle Research and ConsultingPlaza MadiunYear Completed . . . . . . . . . . . . 2000NLA (sq m). . . . . . . . . . . . . . . . 19,029*Major Tenants in the Centre. . Matahari Supermarket, Matahari Department Store, Timezone,Boston PharmacySource: Jones Lang LaSalle Research and Consulting* Note: Total are is based on building measurement.The primary target market for Plaza Madiun is local city residents. Based on observation and informationfrom the Matahari store manager, the majority of visitors coming to the centre are primarily from the middleto upper income segment compring mainly local residents and employees who are familiar with theMatahari brand and its products. While the brand is relatively new to Madiun compared to other localdepartment stores or supermarket operators, it continues to show positive growth as seen in the increasein Matahari’s market share over the past three years. Furthermore, customers from a wider marketsegment are becoming familiar with the brand as the result of effective marketing and promotion.The majority of shoppers coming to Plaza Madiun are families followed by the youth segment.Matahari Department StoreThis is the only Matahari Department Store in Madiun. It provides numerous lines ranging from fashion,accessories and some other necessities i.e stationery, tools and children’s toys. According to the Mataharistore manager, product offerings from the outlet in Madiun are lower quality and prices.Being the only nationwide player in the market, Matahari has positioned itself slightly higher than otherlocal department stores. The closest competition comes from the department store located across theroad from Plaza Madiun, Pasaraya Sri Ratu, which other products similar to Matahari’s. Others includesmaller local players such as Bandung Department Store and President Department Store.Matahari SupermarketMatahari Supermarket caters to Madiun’s middle-upper income segment. A good selection of freshproducts coupled with quality professional services has put Matahari Supermarket far above itscompetitors in the local market. Again, the nearest competition comes from Pasaraya Sri Ratu, whichcombines a department store and supermarket in its outlet. Other competition comes from minimarketssuch as Alfa and Superindo, which have expanded within local neighbourhoods.5.6.3 Trade area analysisThe centre’s trade area is considered to cover the whole of Madiun as the primary catchment and severalcities within the Madiun Regency as the secondary catchment. The extensive greographic reach is due tothere being few comparable modern retail facilities available within the region.In the PTA, Plaza Madiun shares the market with few shopping centres. However, based on interviews withMatahari management, the most significant competition is considered to be Pasaraya Sri Ratu. This centrehas more retail space and variety of retailers compared to Plaza Madiun but Plaza Madiun is considered tohave stronger anchor tenants. The two centres dominate the middle and middle-upper income segment inMadiun.Other competition for Plaza Madiun comes primarily from stand-alone department stores andsupermarkets.F-122
<strong>Retail</strong> Spaces <strong>Malls</strong>Figure 5.6.3 Plaza Madiun trade areaSource: Jones Lang LaSalle Research and Consulting & http://kotamadiun.go.idOverall, it is estimated that the total population of Madiun city currently is approximately 200,000 and this isexpected to grow moderately over the next five years.In 2007, the estimated target households of the PTA is approximately 29,400 households. The PTA isforecast to contain around 30,200 target households in 2011.Table 5.6.2 Plaza Madiun trade area: population growth2007 (f) 2011 (f)%Growth2007-2011(p.a.)Primary Trade Area . . . . . . . . . . . . . . . . . . . . . Population* 105,758 108,848 0.7%Households* 29,377 30,236 0.7%Source: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting* Note: Total Population and Households only includes those population and households assumed to fallwithin the target market (i.e., Socio Economic Status (SES) categories A-C, described as middle andupper income households).F-123
<strong>Retail</strong> Spaces <strong>Malls</strong>5.7 Mall WTC Matahari5.7.1 Regional context and local economyMall WTC Matahari is located along Jalan Serpong Raya, Serpong within Tangerang Regency, BantenProvince. It is situated approximately 18 kilometres west of the Jakarta CBD.Mall WTC Matahari is strategically located on the main road, connecting the toll road to the Bumi SerpongDamai City (BSD City) residential estate, the largest residential estate in Greater Jakarta. It has aproposed development area of 6,000 hectares with currently 1,500 hectares of area developed andoccupied by over 15,000 households. In recent years, BSD City has experienced rapid growthdevelopment in terms of the number of houses and shophouses that have been built. The estate hasalso successfully enhanced its target market segment from middle to middle-upper and upper incomesegment. This has improved the quality of development and facilities in the estate.The centre opened for trade in 2003, being the first strata title shopping centre in Tangerang. It hasestablished itself as a major modern shopping destination particularly for middle income residents in theregion.Figure 5.7.1 Mall WTC MatahariSource: Jones Lang LaSalle5.7.2 DescriptionMall WTC Matahari comprises about 48,204 sq.m of NLA.The subject strata units are currently occupied by Hypermart, Matahari Department Store and Timezone.Other major stores represented at Mall WTC Matahari include a bookstore (Gramedia) and Cineplex 21.Table 5.7.1 Centre details, Mall WTC MatahariSource: Jones Lang LaSalle Research and ConsultingCentre nameMall WTC MatahariYear Completed . . . . . . . . . . . . . . . . . . . . . 2003NLA (sq.m) . . . . . . . . . . . . . . . . . . . . . . . . . 48,204Car Park Spaces. . . . . . . . . . . . . . . . . . . . . 1,101Motor Cycle Spaces . . . . . . . . . . . . . . . . . . 500Strata Unit Area .................... 11,184sq.m*Major Tenants in the Centre . . . . . . . . . . . Hypermart, Matahari, Timezone, Gramedia, Cineplex 21Source: Jones Lang LaSalle Research and Consulting* Note: The total area is based on the Strata Title Ownership Certificates.Strata title shop units in the Mall WTC Matahari are dominated by non-branded fashion retailers,particularly targeted at the youth segment.The centre targets the middle income segment, particularly young families from residential estates inSerpong.F-124
<strong>Retail</strong> Spaces <strong>Malls</strong>The centre has the benefit of being the first strata title centre built after 2000 in Serpong, with most of theshop units sold to individual owners. It has performed well with an estimated occupancy rate of about 90%based on all tenant types. The vacancies are mostly on the low visitor traffic areas on the upper floors.Matahari Department StoreThe Matahari Department Store in Mall WTC Matahari is one of three Matahari stores in Tangerang. It isrelatively small in size at approximately 3,470 sq.m and is not considered a full-line department store. Thestore focuses on products in the apparel, beauty and accessories categories.The store targets the middle income segment in line with the target market of the centre in general. Thetarget market is the same as the Matahari store in Metropolis Town Square, differing from the Mataharistore in <strong>Lippo</strong> Karawsaci Supermal, as this is targeting the middle-upper income segment. The otherdepartment stores in the Serpong area target the middle to middle-lower income segment. These storesinclude Ramayana in ITC BSD and Pojok Busana in Plaza Serpong.HypermartOpened in 2005, the Hypermart is one of six hypermarkets in Tangerang. The other hypermarkets includetwo Giant stores, one in Serpong Town Square and a stand alone Giant hypermarket along Jalan SerpongRaya, Carrefour stores in D’Best Plaza and ITC BSD, as well as other Hypermarts in Metropolis TownSquare and Supermal Karawaci.The store’s primary competition is considered to be the Giant hypermarket at Jalan Raya Serpong (whichis located about 400 metres south of the centre) and Carrefour in ITC BSD, about 2.5 kilometres furthersouth.5.7.3 Trade area analysisBased on discussions with the store manager of Matahari and Hypermart, the PTA for Mall WTC Matahariis considered to cover residential estates in the Serpong area which is located within Tangerang Regency.The trade area of Mall WTC Matahari is illustrated in the map below.Figure 5.7.2 Mall WTC Matahari trade area1. ITC BSD2. BSD Junction3. Plaza BSD4. Plaza Serpong5. Supermal Karawaci6. Serpong Town Square7. Metropolis Town Square8. Giant (Stand Alone)9. Summarecon Mal Serpong76594Mall WTC Matahari831 2Source: Jones Lang LaSalle Research and Consulting & Jakarta Street Atlas (Gunther W. Holtorf)F-125
<strong>Retail</strong> Spaces <strong>Malls</strong>In 2007, the total number of housholds of the PTA was estimated at approximately 152,400 households.This locality is a growing residential area with an average household growth forecast of around 5% over thenext four years.Between 2007 and 2011, target market household growth in the PTA is forecast to be significant,increasing at an average annual rate of 5% per annum. By 2011, total target households is forecast toincrease to 133,700 households.Table 5.7.2 Mall WTC Matahari trade area: population growthSource: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting2007 (f) 2011 (f)%Growth2007-2011(p.a.)Primary Trade Area . . . . . . . . . . . . . . . . . . . Population* 397,694 452,699 3.3%Households* 109,754 133,658 5.0%Source: AC Nielsen; Economic Intelligence Unit; Jones Lang LaSalle Research and Consulting* Note: Total Population and Households only includes those population and households assumed to fallwithin the target market (i.e., Socio Economic Status (SES) categories A-C, described as middle andupper income households).The major competing strata title mall to Mall WTC Matahari is ITC BSD which has a similar target marketand is within walking distance of Mall WTC Matahari. ITC BSD, together with adjacent BSD Junction, anewly completed lifestyle strata mall, is much larger in size, comprising over 80,000 sq.m of NLA. BSDJunction has adopted a more lifestyle centred concept, with the ground floors allocated for café andrestaurants (F&B outlets).Other competitors in the vicinity of Mall WTC Matahari are Serpong Plaza and BSD Plaza, both leasedcentres but without high profile anchor tenants. <strong>Lippo</strong> Karawaci Supermal, a prominent leased mall inKarawaci, Serpong Town Square and Metropolis Town Square are competing malls within the subjectsite’s STA.The future competition for Mall WTC Matahari is Summarecon Mall Serpong, a leased mall, located withinSummarecon Serpong Residential Estate, Serpong, approximately 4 km north west of the centre. The firstphase will have 40,000 sq.m NLA. It will open in June 2007 and may have a department store and asupermarket or a hypermarket, which is yet to be confirmed.Future demand for high quality shopping centres is likely to be driven by high population growth andincome growth as indicated by more middle-upper to upper income segment housing being built in thesurrounding residential estates including Bumi Serpong Damai, Alam Sutra, Villa Melati Mas, RoyalSerpong Village, Summarecon Serpong and Paramount Lake.F-126
Appendix GTERMS, CONDITIONS AND PROCEDURES FOR APPLICATION FOR AND ACCEPTANCE OF THEUNITS IN SINGAPOREApplications are invited for the subscription of the Units at the Offering Price of S$0.80 per Unit on theterms and conditions set out below and in the relevant Application Forms or, as the case may be, theElectronic Applications (as defined below). <strong>Investor</strong>s applying for the Units in the Public Offer or thePlacement by way of Application Forms or Electronic Applications are required to pay the Offering Price ofS$0.80, subject to a refund of the full amount or, as the case may be, the balance of the application monies(in each case without interest or any share of revenue or other benefit arising therefrom) where (i) anapplication is rejected or accepted in part only, or (ii) the Offering does not proceed for any reason.(1) Your application must be made in lots of 1,000 Units or integral multiples thereof. Yourapplication for any other number of Units will be rejected.(2) You may apply for the Units only during the period commencing at 9.00 a.m. on 12 November 2007and expiring at 12 noon on 15 November 2007. The Offering period may be extended or shortenedto such date and/or time as the Manager may agree with the Joint Lead Managers, Issue Managersand Underwriters, subject to all applicable laws and regulations and the rules of the SGX-ST.(3) (a) Your application for the Units offered in the Public Offer (the “Offer Units”) may be made byway of the printed WHITE Offer Units Application Forms or by way of Automated TellerMachines (“ATMs”) of the Participating Banks (“Electronic Applications”).(b)Your application for the Units offered in the Placement (the “Placement Units”) may be madeby way of the printed BLUE Placement Units Application Forms (or in such other manner as theJoint Lead Managers, Issue Managers and Underwriters may in their absolute discretion deemappropriate).(4) You may use up to 35.0% of your CPF Investible Savings (“CPF Funds”) to apply for the Units.Approval has been obtained from the Central Provident Fund Board (the “CPF Board”) for the use ofsuch CPF Funds pursuant to the Central Provident Fund (Investment Schemes) Regulations, asmay be amended from time to time, for the purchase of the Units. You may also use up to 35.0% ofyour CPF Funds for the purchase of the Units in the secondary market.(5) If you are using CPF Funds to apply for the Units, you must have a CPF Investment Accountmaintained with the relevant CPF approved bank (which includes the Participating Banks). You donot need to instruct the CPF Board to transfer CPF Funds from your CPF Ordinary Account to yourCPF Investment Account.The use of CPF Funds to apply for the Units is further subject to the terms and conditions set out inthe section on “Terms and Conditions for Use of CPF Funds” on page G-15 of this Prospectus.(6) Only one application may be made for the benefit of one person for the Offer Units in his ownname. Multiple applications for the Offer Units will be rejected, except in the case ofapplications by approved nominee companies where each application is made on behalfof a different beneficiary.You may not submit multiple applications for the Offer Units via the Offer Units ApplicationForm or Electronic Applications. A person who submits an application for the Offer Units byway of the Offer Units Application Form may not submit another application for the OfferUnits by way of an Electronic Application and vice versa.A person, other than an approved nominee company, who submits an application for theOffer Units in his own name should not submit any other applications for the Offer Units,whether on a Application Form or through an Electronic Application, for any other person.Such separate applications will be deemed to be multiple applications and shall be rejected.Joint or multiple applications for the Offer Units shall be rejected. Persons submitting orprocuring submissions of multiple applications for the Offer Units may be deemed to haveG-1
Appendix Gcommitted an offence under the Penal Code, Chapter 224 of Singapore and the Securitiesand Futures Act, and such applications may be referred to the relevant authorities forinvestigation.(7) Applications from any person under the age of 21 years, undischarged bankrupts, soleproprietorships, partnerships, chops or non-corporate bodies, or joint Securities Account holdersof CDP will be rejected.(8) Applications from any person whose addresses (furnished in their Application Forms or in the caseof Electronic Applications, contained in the records of the Participating Banks, as the case may be)bear post office box numbers will be rejected. No person acting or purporting to act on behalf of adeceased person is allowed to apply under the Securities Account with CDP in the deceased’s nameat the time of application.(9) The existence of a trust will not be recognised. Any application by a trustee or trustees must bemade in his/her or their own name(s) and without qualification or, where the application is made byway of a Application Form by a nominee, in the name(s) of an approved nominee company orapproved nominee companies after complying with paragraph 10 below.(10) Nominee applications may only be made by approved nominee companies. Approvednominee companies are defined as banks, merchant banks, finance companies, insurancecompanies, licensed securities dealers in Singapore and nominee companies controlled bythem. Applications made by nominees other than approved nominee companies will be rejected.(11) If you are not an approved nominee company, you must maintain a Securities Account withCDP in your own name at the time of your application. If you do not have an existing SecuritiesAccount with the CDP in your own name at the time of application, your application will be rejected (ifyou apply by way of an Application Form) or you will not be able to complete your application (if youapply by way of an Electronic Application).(12) Subject to paragraph 18 below, your application is liable to be rejected if your particulars such asname, National Registration Identity Card (“NRIC”) or passport number, nationality and permanentresidence status, and/or CDP Securities Account number provided in your Application Form, or inthe records of the Participating Banks at the time of your Electronic Application, as the case may be,differ from those particulars in your Securities Account as maintained by CDP. If you have more thanone individual direct Securities Account with the CDP, your application shall be rejected.(13) If your address as stated in the Application Form or, in the case of an Electronic Application,contained in the records of the relevant Participating Bank is different from the addressregistered with CDP, you must promptly inform CDP of your updated address, failing whichthe notification letter on successful allocation from CDP will be sent to your address lastregistered with CDP.(14) This Prospectus and its accompanying Application Forms have not been registered in anyjurisdiction other than in Singapore. The distribution of this Prospectus and its ApplicationForms may be prohibited or restricted (either absolutely or unless various securitiesrequirements, whether legal or administrative, are complied with) in certain jurisdictions underthe relevant securities laws of those jurisdictions. Without limiting the generality of the foregoing,neither this Prospectus (including its Application Forms) nor any copy thereof may be taken,transmitted, published or distributed, directly or indirectly, in whole or in part, in or into the U.S. andthey do not constitute an offer of securities for sale into the U.S. or any jurisdiction in which such offeris not authorised or to any person to whom it is unlawful to make such an offer. The Units have notbeen and will not be registered under the United States Securities Act of 1933, as amended (the“Securities Act”) and, accordingly may not be offered or sold within the U.S., except in certaintransactions exempt from the registration requirements of the Securities Act. The Units are beingoffered and sold in offshore transactions (as defined in Regulation S under the Securities Act(“Regulation S”)) in reliance on Regulation S. Any failure to comply with this restriction mayconstitute a violation of U.S. securities laws.G-2
Appendix G(15) The Manager reserves the right to reject any applications for Units where the Managerbelieves or has reason to believe that such applications may violate the securities laws ofany jurisdiction.(16) No person in any jurisdiction outside Singapore receiving this Prospectus or its accompanyingApplication Forms may treat the same as an offer or invitation to subscribe for any Units unless suchan offer or invitation could lawfully be made without compliance with any regulatory or legalrequirements in those jurisdictions.(17) The Manager reserves the right to reject any application which does not conform strictly to theinstructions set out in this Prospectus (including the instructions set out in the Application Forms orin the ATMs of the Participating Banks) or, in the case of an application by way of an ApplicationForm, which is illegible, incomplete, incorrectly completed or which is accompanied by an improperlydrawn up or improper form of remittance.(18) The Manager further reserves the right to treat as valid any applications not completed or submittedor effected in all respects in accordance with the instructions set out in this Prospectus (including theinstructions set out in the Application Forms and in the ATMs of the Participating Banks), and also topresent for payment or other processes all remittances at any time after receipt and to have fullaccess to all information relating to, or deriving from, such remittances or the processing thereof.(19) Without prejudice to the rights of the Manager, the Joint Lead Managers, Issue Managers andUnderwriters, as agents of the Manager, have been authorised to accept, for and on behalf of theManager, such other forms of application as the Joint Lead Managers, Issue Managers andUnderwriters may, in consultation with the Manager, deem appropriate.(20) The Manager reserves the right to reject or to accept, in whole or in part, or to scale down or to ballot,any application, without assigning any reason therefor, and none of the <strong>Trust</strong>ee, the Manager andthe Joint Lead Managers, Issue Managers and Underwriters will entertain any enquiry and/orcorrespondence on the decision of the Manager. This right applies to applications made by way ofApplication Forms and by way of Electronic Applications and by such other forms of application asthe Joint Lead Managers, Issue Managers and Underwriters may, in consultation with the Manager,deem appropriate. In deciding the basis of allocation, the Manager will give due consideration to thedesirability of allocating the Units to a reasonable number of applicants with a view to establishing anadequate market for the Units.(21) The Units may be reallocated between the Placement and the Public Offer at the discretion of theJoint Lead Managers, Issue Managers and Underwriters, in the event of an excess of applications inone and a deficit of applications in the other.(22) It is expected that CDP will send to you, at your own risk, within 15 Market Days after the close of theOffering, and subject to the submission of valid applications and payment for the Units and theOffering Price being agreed upon between the Joint Lead Managers, Issue Managers andUnderwriters and the Manager, a statement of account stating that your Securities Account hasbeen credited with the number of Units allocated to you. This will be the only acknowledgement ofapplication monies received and is not an acknowledgement by the Manager. You irrevocablyauthorise CDP to complete and sign on your behalf as transferee or renouncee any instrument oftransfer and/or other documents required for the issue or transfer of the Units allocated to you. Thisauthorisation applies to applications made both by way of Application Forms and by way ofElectronic Applications.(23) You irrevocably authorise CDP to disclose the outcome of your application, including the number ofUnits allocated to you pursuant to your application, to the Manager, the Joint Lead Managers, IssueManagers and Underwriters and any other parties so authorised by Manager and/or the Joint LeadManagers, Issue Managers and Underwriters.(24) Any reference to “you” or the “Applicant” in this section shall include a person, a corporation, anapproved nominee company and trustee applying for the Units by way of an Application Form or byway of an Electronic Application.G-3
Appendix G(25) By completing and delivering an Application Form and, in the case of an Electronic Application, bypressing the “Enter” or “OK” or “Confirm” or “Yes” key or any other relevant key on the ATM, you:(a)(b)(c)(d)(e)(f)irrevocably agree and undertake to purchase the number of Units specified in your application(or such smaller number for which the application is accepted) at the Offering Price for eachUnit and agree that you will accept such number of Units as may be allocated to you, in eachcase on the terms of, and subject to the conditions set out in, this Prospectus and itsaccompanying Application Forms and the <strong>Trust</strong> Deed;agree that, in the event of any inconsistency between the terms and conditions for applicationset out in this Prospectus and its accompanying Application Forms or ATMs of theParticipating Banks, the terms and conditions set out in this Prospectus and itsaccompanying Application Forms shall prevail;in the case of an application by way of an Offer Units Application Form or ElectronicApplication, agree that the aggregate Offering Price for the Units applied for is due andpayable to the Manager upon application;in the case of an application by way of a Placement Units Application Form or such other formsof application as the Joint Lead Managers, Issue Managers and Underwriters may, inconsultation with the Manager, deem appropriate, agree that the aggregate Offering Pricefor the Units applied for is due and payable to the Manager upon application;warrant the truth and accuracy of the information contained, and representations anddeclarations made, in your application, and acknowledge and agree that such information,representations and declarations will be relied on by the Manager in determining whether toaccept your application and/or whether to allocate any Units to you; andagree and warrant that, if the laws of any jurisdictions outside Singapore are applicable to yourapplication, you have complied with all such laws and none of the Manager nor any of the JointLead Managers, Issue Managers and Underwriters will infringe any such laws as a result of theacceptance of your application.(26) Acceptance of applications will be conditional upon, inter alia, the Manager being satisfied that:(a)(b)permission has been granted by the SGX-ST to deal in and for quotation of all of the Units onthe Official List of the SGX-ST; andthe Underwriting Agreement has become unconditional and has not been terminated.(27) Additional terms and conditions for applications by way of Application Forms are set out in thesection entitled “Additional Terms and Conditions for Applications using Application Forms” onpages G-5 to G-8 of this Prospectus.(28) Additional terms and conditions for applications by way of Electronic Applications are set out in thesection entitled “Additional Terms and Conditions for Electronic Applications” on pages G-9 to G-14of this Prospectus.(29) Terms and conditions governing the use of CPF funds are set out in the section entitled “Terms andConditions for Use of CPF Funds” on page G-15 of this Prospectus.(30) No application will be held in reserve.(31) This Prospectus is dated 9 November 2007. No Units will be allocated on the basis of thisProspectus later than 12 months after the date of this Prospectus.G-4
Appendix GAdditional Terms and Conditions for Applications using Application FormsApplications by way of an Application Form shall be made on, and subject to the terms and conditions ofthis Prospectus, including but not limited to the terms and conditions set out below, as well as those set outunder the section on “Terms, Conditions and Procedures for Application for and Acceptance of the Units inSingapore” on pages G-1 to G-15 of this Prospectus, and the <strong>Trust</strong> Deed.(1) Applications for the Offer Units must be made using the printed WHITE Offer Units ApplicationForms and printed WHITE official envelopes “A” and “B”, accompanying and forming part of thisProspectus.Applications for the Placement Units must be made using the printed BLUE Placement UnitsApplication Forms, accompanying and forming part of this Prospectus.Without prejudice to the rights of the Manager, the Joint Lead Managers, Issue Managers andUnderwriters, as agents of the Manager, have been authorised to accept, for and on behalf of theManager, such other forms of application, as the Joint Lead Managers, Issue Managers andUnderwriters may (in consultation with the Manager) deem appropriate.Your attention is drawn to the detailed instructions contained in the respective Application Formsand this Prospectus for the completion of the Application Forms, which must be carefully followed.The Manager reserves the right to reject applications which do not conform strictly to theinstructions set out in the Application Forms and this Prospectus or which are illegible,incomplete, incorrectly completed or which are accompanied by improperly drawn up orimproper form of remittances.(2) You must complete your Application Forms in English. Please type or write clearly in ink usingBLOCK LETTERS.(3) You must complete all spaces in your Application Forms except those under the heading “FOROFFICIAL USE ONLY” and you must write the words “NOT APPLICABLE” or “N.A.” in any spacethat is not applicable.(4) Individuals, corporations, approved nominee companies and trustees must give their names in full.If you are an individual, you must make your application using your full name as it appears on youridentity card (if you have such an identification document) or in your passport and, in the case of acorporation, in your full name as registered with a competent authority. If you are not an individual,you must complete the Application Form under the hand of an official who must state the name andcapacity in which he signs the Application Form. If you are a corporation completing the ApplicationForm, you are required to affix your Common Seal (if any) in accordance with your Memorandumand Articles of Association or equivalent constitutive documents of the corporation.(5) If you are a corporate applicant and your application is successful, a copy of your Memorandumand Articles of Association or equivalent constitutive documents must be lodged with LMIR <strong>Trust</strong>’sUnit Registrar and Unit Transfer Office. The Manager reserves the right to require you to producedocumentary proof of identification for verification purposes.(a) You must complete Sections A and B and sign page 1 of the Application Form.(b) If you apply for the Units using cash only or cash and CPF Funds to pay for the Units, you arerequired to delete either paragraphs 6(c) or 6(d) on page 1 of the Application Form. Whereparagraph 6(c) is deleted, you must also complete Section C of the Application Form withparticulars of the beneficial owner(s).(c) If you fail to make the required declaration in paragraph 6(c) or 6(d), as the case may be, onpage 1 of the Application Form, your application is liable to be rejected.(6) You (whether an individual or corporate applicant, whether incorporated or unincorporated andwherever incorporated or constituted) will be required to declare whether you are a citizen orpermanent resident of Singapore or a corporation in which citizens or permanent residents ofSingapore or any body corporate constituted under any statute of Singapore have an interest in theaggregate of more than 50.0% of the issued share capital of or interests in such corporation. If youare an approved nominee company, you are required to declare whether the beneficial owner of theG-5
Appendix GUnits is a citizen or permanent resident of Singapore or a corporation, whether incorporated orunincorporated and wherever incorporated or constituted, in which citizens or permanent residentsof Singapore or any body corporate incorporated or constituted under any statute of Singaporehave an interest in the aggregate of more than 50.0% of the issued share capital of or interests insuch corporation.(7) You may apply and make payment for your application for the Units in Singapore currency in thefollowing manner:(a)(b)Cash only—You may apply for the Units using only cash. Each application must beaccompanied by a remittance in Singapore currency for the full amount payable at theOffering Price of S$0.80 for each Offer Unit, or the Offering Price for each Placement Unit, asthe case may be, in respect of the number of Units applied for. The remittance must be in theform of a BANKER’S DRAFT or CASHIER’S ORDER drawn on a bank in Singapore, madeout in favour of “LMIR TRUST UNIT ISSUE ACCOUNT” crossed “A/C PAYEE ONLY” withthe name, Securities Account number and address of the applicant written clearly on thereverse side. Applications not accompanied by any payment or accompanied by any otherform of payment will not be accepted. No combined Bankers’ Draft or Cashiers’ Order fordifferent Securities Accounts shall be accepted. Remittances bearing “NOTTRANSFERABLE” or “NON-TRANSFERABLE” crossings will be rejected.CPF Funds only—You may apply for the Units using only CPF Funds. Each application mustbe accompanied by a remittance in Singapore currency for the full amount payable at theOffering Price of S$0.80 for each Offer Unit, or the Offering Price for each Placement Unit, asthe case may be, in respect of the number of Units applied for. The remittance must be in theform of a CPF CASHIER’S ORDER (available for purchase at the CPF approved bank withwhich the applicant maintains his CPF Investment Account), made out in favour of “LMIRTRUST UNIT ISSUE ACCOUNT” with the name, Securities Account number and address ofthe applicant written clearly on the reverse side. Applications not accompanied by anypayment or accompanied by any other form of payment will not be accepted. Foradditional terms and conditions governing the use of CPF Funds, please refer to page G-15 of this Prospectus.(c) Cash and CPF Funds—You may apply for the Units using a combination of cash and CPFFunds, PROVIDED THAT the number of Units applied for under each payment method is inlots of 1,000 Units or integral multiples thereof. Such applications must comply with therequirements for applications by cash and by CPF Funds as set out in the precedingparagraphs. In the event that applications for Offer Units are accepted in part only, thecash portion of the application monies will be used in respect of such applications before theCPF Funds are used. In the case of applications for Placement Units that are accepted in partonly, the CPF Funds portion of the application monies will be used in respect of suchapplications before the cash portion is used.An applicant applying for 1,000 Units must use either cash only or CPF Funds only. Noacknowledgement of receipt will be issued for applications and application monies received.(8) Monies paid in respect of unsuccessful applications are expected to be returned (without interest orany share of revenue or other benefit arising therefrom) to you by ordinary post within 24 hours (orsuch shorter period as the SGX-ST may require) after the balloting at your own risk. Where yourapplication is accepted in full or in part only, the balance of the application monies will be refunded(without interest or any share of revenue or other benefit arising therefrom) to you by ordinary postat your own risk within 14 Market Days after the close of the Offering, PROVIDED THAT theremittance accompanying such application which has been presented for payment or otherprocesses has been honoured and the application monies received in the designated unitissue account. If the Offering does not proceed for any reason, the full amount of applicationmonies (without interest or any share of revenue or other benefit arising therefrom) will be returnedto you within three Market Days after the Offering is discontinued.(9) Capitalised terms used in the Application Forms and defined in this Prospectus shall bear themeanings assigned to them in this Prospectus.G-6
Appendix G(10) By completing and delivering an Application Form, you agree that:(a)(b)(c)(d)(e)(f)(g)(h)in consideration of the Manager having distributed the Application Form to you and bycompleting and delivering the Application Form before the close of the Offering :(i)(ii)(iii)your application is irrevocable;your remittance will be honoured on first presentation and that any monies returnablemay be held pending clearance of your payment without interest or any share of revenueor other benefit arising therefrom; andyou represent and agree that you are not a U.S. person (within the meaning ofRegulation S);all applications, acceptances or contracts resulting therefrom under the Offering shall begoverned by and construed in accordance with the laws of Singapore and that you irrevocablysubmit to the non-exclusive jurisdiction of the Singapore courts;in respect of the Units for which your application has been received and not rejected,acceptance of your application shall be constituted by written notification by or on behalf ofthe Manager and not otherwise, notwithstanding any remittance being presented for paymentby or on behalf of the Manager;The Manager may return (without interest or any share of revenue or other benefit arisingtherefrom) to you by ordinary post, at your own risk:(i)(ii)(iii)where your application is unsuccessful, the monies paid within 24 hours (or such shorterperiod as the SGX-ST may require) after the close of the balloting;where your application is accepted in full or in part only, the balance of the applicationmonies within 14 Market Days after the close of the Offering; and;where the Offering does not proceed for any reason, the monies paid within three MarketDays after the Offering is discontinued,PROVIDED THAT the remittance accompanying such application which has been presentedfor payment or other processes has been honoured and the application monies received in thedesignated unit issue account;you will not be entitled to exercise any remedy of rescission for misrepresentation at any timeafter acceptance of your application;reliance is placed solely on information contained in this Prospectus and that none of theManager, the <strong>Trust</strong>ee, the Joint Lead Managers, Issue Managers and Underwriters or anyother person involved in the Offering shall have any liability for any information not containedtherein;you consent to the disclosure of your name, NRIC/passport number, address, nationality,permanent resident status, Securities Account number, CPF Investment Account number andUnit application amount to our Unit Registrar, CDP, CPF, Securities Clearing ComputerServices (Pte) Ltd (“SCCS”), SGX-ST, the Manager, the <strong>Trust</strong>ee and the Joint LeadManagers, Issue Managers and Underwriters (the “Relevant Parties”); andyou irrevocably agree and undertake to purchase the number of Units applied for as stated inthe Application Form or any smaller number of such Units that may be allocated to you inrespect of your application. In the event that the Manager decides to allocate any smallernumber of such Units or not to allocate any Units to you, you agree to accept such decision asfinal.Applications for the Offer Units by way of Application Forms(1) Your application for the Offer Units by way of Application Forms must be made using the WHITEOffer Units Application Forms and WHITE official envelopes “A” and “B”. ONLY ONEAPPLICATION should be enclosed in each envelope.G-7
Appendix G(2) You must:(a) enclose the WHITE Offer Units Application Form, duly completed and signed, together withcorrect remittance for the full amount payable at the Offering Price of S$0.80 per Unit inSingapore currency in accordance with the terms and conditions of the Prospectus and itsaccompanying documents, in the WHITE official envelope “A” provided;(b) in appropriate spaces on the WHITE official envelope “A”:(i) write your name and address;(ii) state the number of Offer Units applied for; and(iii) affix adequate Singapore postage;(c) SEAL THE WHITE OFFICIAL ENVELOPE “A”;(d) write, in the special box provided on the larger WHITE official envelope “B” addressed toOCBC BANK, 63 CHULIA STREET, OCBC CENTRE EAST #03-03, SINGAPORE 049514,the number of Offer Units you have applied for;(e) insert the WHITE official envelope “A” into the WHITE official envelope “B” and seal theWHITE OFFICIAL ENVELOPE “B” and DESPATCH BY ORDINARY POST OR DELIVERBY HAND the documents at your own risk to OCBC BANK, 63 CHULIA STREET, OCBCCENTRE EAST #03-03, SINGAPORE 049514, so as to arrive by 12 noon on 15 November2007 or such other date(s) and time(s) as the Manager may agree with the Joint LeadManagers, Issue Managers and Underwriters. Courier services or Registered Post must NOTbe used.(3) Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or which are not honoured upon their first presentation are liable to be rejected.(4) No acknowledgement of receipt will be issued for any application or remittance received.Applications for the Placement Units by way of Application Forms(1) Your application for the Placement Units by way of Application Forms must be made using theBLUE Placement Units Application Forms. ONLY ONE APPLICATION should be enclosed ineach envelope.(2) The completed and signed BLUE Placement Units Application Form and your remittance, inaccordance with the terms and conditions of this Prospectus, for the full amount payable at theOffering Price of S$0.80 per Unit in respect of the number of Placement Units applied for, with yourname, Securities Account number and address clearly written on the reverse side, must beenclosed and sealed in an envelope to be provided by you. Your application for PlacementUnits must be delivered to OCBC BANK, 63 CHULIA STREET, OCBC CENTREEAST #03-03, SINGAPORE 049514, to arrive by 12 noon on 15 November 2007 or such otherdate(s) and time(s) as the Manager may agree with the Joint Lead Managers, Issue Managers andUnderwriters.(3) In respect of an application for Placement Units, you may alternatively remit your applicationmonies by electronic transfer to the account of OCBC BANK, OCBC CENTRE BRANCH, CurrentAccount number 517-206108-001 in favour of “LMIR TRUST UNIT ISSUE ACCOUNT” by 12 noonon 15 November 2007 or such other date(s) and time(s) as the Manager may agree with the JointLead Managers and Underwriters. Applicants who remit their application monies via electronictransfer should send a copy of the telegraphic transfer advice slip to OCBC BANK, 63 CHULIASTREET, OCBC CENTRE EAST #03-03, SINGAPORE 049514, to arrive by 12 noon on15 November 2007 or such other date(s) and time(s) as the Manager may agree with the JointLead Managers, Issue Managers and Underwriters.(4) Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittances or which are not honoured upon their first presentation are liable to be rejected.(5) No acknowledgement of receipt will be issued for any application or remittance received.G-8
Appendix GAdditional Terms and Conditions for Electronic ApplicationsElectronic Applications shall be made on and subject to the terms and conditions of this Prospectus,including but not limited to the terms and conditions set out below and those under the section “Terms,Conditions and Procedures for Application for and Acceptance of the Units in Singapore” onpages G-1 to G-15 of this Prospectus, as well as the <strong>Trust</strong> Deed.(1) The procedures for Electronic Applications are set out on the ATM screens of the ParticipatingBanks.(2) For illustration purposes, the steps for Electronic Applications through ATMs of OCBC Bank (the“Steps”) are set out in pages G-13 to G-14 of this Prospectus. The Steps set out the actions that youmust take at the ATMs to complete an Electronic Application.Please read carefully the terms and conditions of this Prospectus, the Steps and the terms andconditions for Electronic Applications set out below before making an Electronic Application.(3) Any reference to “you” or the “Applicant” in these Additional Terms and Conditions for ElectronicApplications and the Steps shall refer to you making an application for the Units through an ATM ofa Participating Bank.(4) If you are making an Electronic Application:(a)(b)(c)You must have an existing bank account with and be an ATM cardholder of one of theParticipating Banks. An ATM card issued by one Participating Bank cannot be used to applyfor Units at an ATM belonging to other Participating Banks. The Steps set out the action thatyou must take at ATMs of OCBC Bank to complete an Electronic Application. The actions thatyou must take at ATMs of other Participating Banks are set out on the ATM screens of therelevant Participating Banks.You must ensure that you enter your own Securities Account number when using the ATMcard issued to you in your own name. If you fail to use your own ATM card or do not key in yourown Securities Account number, your application will be rejected. If you operate a joint bankaccount with a Participating Bank, you must ensure that you enter your own SecuritiesAccount number when using the ATM card issued to you in your own name. Using your ownSecurities Account number with an ATM card which is not issued to you in your own name willrender your Electronic Application liable to be rejected.Upon the completion of your Electronic Application, you will receive an ATM transaction slip(“Transaction Record”), confirming the details of your Electronic Application. The TransactionRecord is for your retention and should not be submitted with any printed Application Form.(5) In connection with your Electronic Application of Offer Units, you are required to confirmstatements to the following effect in the course of activating the Electronic Application:(a)(b)(c)that you have received a copy of this Prospectus and have read, understood and agreed to allof the terms and conditions of application for the Units and this Prospectus prior to effectingthe Electronic Application and agree to be bound by the same;that you consent to the disclosure of your name, NRIC/passport number, address, nationality,permanent resident status, CDP Securities Account number, CPF Investment Accountnumber (if applicable) and Unit application amount (the “Relevant Particulars”) from youraccount with the relevant Participating Bank to the Relevant Parties; andwhere you are applying for the Offer Units, that this is your only application for the Offer Unitsand it is made in your name and at your own risk.Your application will not be successfully completed and cannot be recorded as a completedtransaction unless you press the “Enter” or “OK” or “Confirm” or “Yes” or any other relevant keyin the ATM. By doing so, you shall be treated as signifying your confirmation of each of thethree statements above. In respect of statement 5(b) above, your confirmation, by pressingthe “Enter” or “OK” or “Confirm” or “Yes” or any other relevant key, shall signify and shall betreated as your written permission, given in accordance with the relevant laws of Singapore,G-9
Appendix Gincluding Section 47(2) of the Banking Act, Chapter 19 of Singapore, to the disclosure by theParticipating Bank of the Relevant Particulars of your account(s) with the Participating Bank tothe Relevant Parties.(6) By making an Electronic Application, you confirm that you are not applying for Offer Unitsas nominee of any other person and that any Electronic Application that you make is theonly application made by you as beneficial owner. You shall make only one ElectronicApplication for the Offer Units and shall not make any other application for the Offer Units,whether at the ATMs of any Participating Bank or on the Application Forms. Where youhave made an application for Offer Units or Placement Units on an Application Form, youshall not make an Electronic Application for Offer Units and vice versa.(7) You must have sufficient funds in your bank account with the Participating Bank at the time youmake your Electronic Application, failing which such Electronic Application will not be completed.Any Electronic Application which does not conform strictly to the instructions set out in thisProspectus or on the screens of the ATMs of the Participating Banks through which your ElectronicApplication is being made shall be rejected.(8) You may apply and make payment for your application for the Offer Units in Singapore currency inthe following manner:(a)(b)(c)Cash only—You may apply for the Offer Units through any ATM of the Participating Banksusing only cash by authorising the Participating Bank to deduct the full amount payable fromyour bank account(s) with the Participating Bank.CPF Funds only—You may apply for the Offer Units through any ATM of the ParticipatingBanks using only CPF Funds by authorising the Participating Bank to deduct the full amountpayable from your CPF Investment Account with the Participating Bank. For additional termsand conditions governing the use of CPF Funds, please refer to page G-15 of thisProspectus.Cash and CPF Funds—You may apply for the Offer Units through any ATM of theParticipating Banks using a combination of cash and CPF Funds, PROVIDED THAT thenumber of Offer Units applied for under each payment method is in lots of 1,000 Units orintegral multiples thereof. Such applications must comply with the requirements forapplications by cash and by CPF Funds as set out in the preceding paragraphs. In theevent that such applications are accepted in part only, the cash portion of the applicationmonies will be used in respect of such applications before the CPF Funds are used.An applicant applying for 1,000 Offer Units must use either cash only or CPF Fundsonly.(9) You irrevocably agree and undertake to subscribe for and to accept the number of Offer Unitsapplied for as stated on the Transaction Record or the Confirmation Screen or any lesser number ofsuch Offer Units that may be allocated to you in respect of your Electronic Application. In the eventthat the Manager decides to allocate any lesser number of such Offer Units or not to allocate anyOffer Units to you, you agree to accept such decision as final. If your Electronic Application issuccessful, your confirmation (by your action of pressing the “Enter” or “OK” or “Confirm” or “Yes” orany other relevant key on the ATM) of the number of Offer Units applied for shall signify and shall betreated as your acceptance of the number of Offer Units that may be allocated to you and youragreement to be bound by the <strong>Trust</strong> Deed.(10) The Manager will not keep any applications in reserve. Where your Electronic Application isunsuccessful, the full amount of the application monies will be returned (without interest or anyshare of revenue or other benefit arising therefrom) to you by being automatically credited to youraccount with the Participating Bank, at your own risk, within 24 hours (or such shorter period as theSGX-ST may require) after the close of the balloting provided that the remittance in respect of suchapplication which has been presented for payment or other processes has been honoured and theapplication monies received in the designated unit issue account.G-10
Appendix GWhere your Electronic Application is accepted in full or in part only, the balance of the applicationmonies will be returned (without interest or any share of revenue or other benefit arising therefrom)to you by being automatically credited to your account with the Participating Bank, at your risk, within14 Market Days after the close of the Offering provided that the remittance in respect of suchapplication which has been presented for payment or other processes has been honoured and theapplication monies received in the designated unit issue account.If the Offering does not proceed for any reason, the full amount of application monies (withoutinterest or any share of revenue or other benefit arising therefrom) will be returned to you within threeMarket Days after the Offering is discontinued.Responsibility for timely refund of application monies (whether from unsuccessful or partiallysuccessful Electronic Applications or otherwise) lies solely with the Participating Banks.Therefore, you are strongly advised to consult the relevant Participating Bank as to the status ofyour Electronic Application and/or the refund of any money to you from an unsuccessful or partiallysuccessful Electronic Application, to determine the exact number of Offer Units, if any, allocated toyou before trading the Units on the SGX-ST. None of the SGX-ST, CDP, SCCS, the CPF Board, theParticipating Banks, the Manager, the <strong>Trust</strong>ee, or the Joint Lead Managers and Underwritersassume any responsibility for any loss that may be incurred as a result of you having to cover any netsell positions or from buy-in procedures activated by the SGX-ST.(11) If your Electronic Application is unsuccessful, no notification will be sent by the Participating Banks.Applicants who make Electronic Applications through the Participating Banks may check theprovisional results of their Electronic Applications as follows:Bank Telephone Other Channels Operating Hours Service expected fromOCBC Bank 1 800 363 3333 ATM / Internet Banking / 24 hours a day Evening of thePhone Banking (1) balloting dayDBS Bank 1 800 339 6666(POSB accountholders)1 800 111 1111(DBS accountholders)Internet Bankingwww.dbs.com24 hours a day Evening of theballoting dayUOB Group 1 800 222 2121 ATM (“OtherTransactions—IPOEnquiry”) (2)www.uobgroup.com (2)Notes:ATM / PhoneBanking—24 hours a dayInternetBanking—24 hours a dayEvening of theballoting day(1) If you have made your Electronic Application through the ATMs of the OCBC Bank, you maycheck your results of your application through OCBC Personal Internet Banking, OCBC ATMsand OCBC Phone Banking Services.(2) If you have made your Electronic Application through the ATM of UOB Group, you may checkthe results of your application through UOB Personal Internet Banking, UOB Group’s ATMs orUOB Phone Banking services.(12) Electronic Applications shall close at 12.00 p.m. on 15 November 2007 or such other date(s) andtime(s) as the Manager may agree with the Joint Lead Managers, Issue Managers andUnderwriters.(13) You are deemed to have irrevocably requested and authorised the <strong>Trust</strong>ee or the Manager to:(a)register the Offer Units allotted and/or allocated to you in the name of CDP for deposit into yourSecurities Account;G-11
Appendix G(b)(c)return or refund (without interest or any share of revenue or other benefit arising therefrom) theapplication monies, should your Electronic Application be rejected or if the Offering does notproceed for any reason, by automatically crediting your bank account with the ParticipatingBank, by ordinary post at your risk, with the relevant amount within 24 hours after balloting, orwithin three Market Days if the Offering does not proceed for any reason, after the close ordiscontinuation (as the case may be) of the Offering, PROVIDED THAT the remittance inrespect of such application which has been presented for payment or such other processeshas been honoured and application monies received in the designated unit issue account; andreturn or refund (without interest or any share of revenue or other benefit arising therefrom) thebalance of the application monies should your Electronic Application be accepted or acceptedin part only, by automatically crediting your bank account with the Participating Bank, byordinary post at your risk, with the relevant amount within 14 Market Days after the close of theOffering, PROVIDED THAT the remittance in respect of such application which has beenpresented for payment or such other processes has been honoured and application moniesreceived in the designated unit issue account.(14) You irrevocably agree and acknowledge that your Electronic Application is subject to risks ofelectrical, electronic, technical and computer-related faults and breakdown, fires, acts of God andother events beyond the control of the Participating Bank, the Manager, the <strong>Trust</strong>ee and the JointLead Managers, Issue Managers and Underwriters, and if, in any such event the Manager, the<strong>Trust</strong>ee, the Joint Lead Managers, Issue Managers and Underwriters and/or the Participating Bankdo not receive your Electronic Application, or any data relating to your Electronic Application or thetape or any other devices containing such data is lost, corrupted or not otherwise accessible,whether wholly or partially for whatever reason, you shall be deemed not to have made an ElectronicApplication and you shall have no claim whatsoever against the Manager, the <strong>Trust</strong>ee, the Joint LeadManagers, Issue Managers and Underwriters and/or the Participating Bank for any Offer Unitsapplied for or for any compensation, loss or damage.(15) The existence of a trust will not be recognised. Any Electronic Application by a trustee must be madein his own name and without qualification. The Manager shall reject any application by any personacting as nominee except those made by approved nominee companies only.(16) All your particulars in the records of the Participating Bank at the time you make your ElectronicApplication shall be deemed to be true and correct and the Participating Bank and the RelevantParties shall be entitled to rely on the accuracy thereof. If there has been any change in yourparticulars after making your Electronic Application, you must promptly notify the ParticipatingBank.(17) You should ensure that your personal particulars as recorded by both CDP and theParticipating Bank are correct and identical. Otherwise, your Electronic Application isliable to be rejected. You should promptly inform CDP of any change in address, failing whichthe notification letter on successful allocation will be sent to your address last registered with CDP.(18) In consideration of the Manager making available the Electronic Application facility, through theATMs of the Participating Bank acting as agent of the Manager at the ATMs of the ParticipatingBanks and agreeing to close the Application List as at 12 noon on 15 November 2007 or such othertime or date as the Joint Lead Managers, Issue Managers and Underwriters may, in consultationwith the Manager, decide, and by making and completing an Electronic Application, you agree that:-(a)(b)(c)your Electronic Application is irrevocable;your Electronic Application, the acceptance by the Manager and the contract resultingtherefrom under the Offering shall be governed by and construed in accordance with thelaws of Singapore and you irrevocably submit to the non-exclusive jurisdiction of theSingapore courts;none of CDP, the CPF Board, the Manager, the Joint Lead Managers, Issue Managers andUnderwriters and the Participating Bank shall be liable for any delays, failures or inaccuraciesin the recording, storage or in the transmission or delivery of data relating to your ElectronicG-12
Appendix GApplication to the Manager, the <strong>Trust</strong>ee or CDP due to breakdowns or failure of transmission,delivery or communication facilities or any risks referred to in paragraph 14 above or to anycause beyond their respective controls;(d)(e)(f)in respect of the Offer Units for which your Electronic Application has been successfullycompleted and not rejected, acceptance of your Electronic Application shall be constituted bywritten notification by or on behalf of the Manager and not otherwise, notwithstanding anypayment received by or on behalf of the Manager;you will not be entitled to exercise any remedy for rescission for misrepresentation at any timeafter acceptance of your application; andin making your application, reliance is placed solely on information contained in thisProspectus and that none of the Manager, the <strong>Trust</strong>ee, the Joint Lead Managers, IssueManagers and Underwriters, or any other person involved in the Offering shall have anyliability for any information not contained therein.Steps for Electronic ApplicationsInstructions for Electronic Applications will appear on the ATM screens of the Participating Banks. Forillustration purposes, the steps for making an Electronic Application through ATMs of OCBC Bank areshown below. Certain words appearing on the screen are in abbreviated form (“a/c”, “appln”, “ESA”, “no.”and “&” refer to “account”, “application”, “electronic share application”, “number” and “and” respectively).Instructions for Electronic Applications appearing on the ATM screens of the other Participating Banksmay differ from those represented below.Step 1: Insert your personal OCBC ATM card2: Enter your Personal Identification Number3: Select “Other Services”4: Select “Electronic Security Appln”5: Select “LMIRT”6: For an applicant making an Electronic Application at the ATM for the first time(a)(b)For non-SingaporeanPress the “Yes” key if you are a permanent resident of Singapore, otherwise, press the“No” key.Enter your own Securities Account number (12 digits) eg. 168101234567 and press “Yes”key to confirm that the Securities Account number you have entered is correct.7: Check your particulars appearing on the screen and press the “Correct” key to confirm that yourparticulars are correct.8: Press the “Confirm” key to confirm that you have read the following messages:-- A copy of this Prospectus has been lodged with and registered by the MonetaryAuthority of Singapore, which assumes no responsibility for its contents- The Prospectus is available at various Participating Banks9: Press the “Confirm” key again to confirm that you have read the following messages:-- Anyone who intends to submit an application for these securities should read theProspectus before submitting his/her application in the manner set out in theProspectus10: Press the “Confirm” key again to confirm that you have read the following messages:-- You have read, understood and agreed to all terms of application set out in theProspectusG-13
Appendix G- You consent to the disclosure of your NRIC/Passport No., address, nationality,securities a/c no., quantity of securities applied for and CPF investment accountno. to share registrar, CDP, CPF, SCCS, Issuer & Vendors- This application is made in your own name and at your own risk11: Select the number of Units you wish to apply for:-- For fixed price ESA, this is the only application submitted- Fixed Price S$0.8012: Select the type of bank account to debit your application monies13: Check the details of your application appearing on the screen and press the “Confirm” key toconfirm your application.14: For customers with multiple bank accounts, select the bank account from which to debit yourapplication moniesG-14
Appendix GTerms and Conditions for Use of CPF Funds(1) If you are using CPF Funds to subscribe for the Units, you must have a CPF Investment Accountmaintained with the relevant CPF approved bank at the time of your application. If you are applying forthe Units through an Electronic Application, you must have an ATM card with the Participating Bank atthe time of your application before you can use the ATMs of the Participating Banks to apply for theUnits. The CPF Investment Account is governed by the Central Provident Fund (InvestmentSchemes) Regulations, as amended.(2) CPF Funds may only be withdrawn for applications for the Units in lots of 1,000 Units or integralmultiples thereof.(3) If you are applying for the Units using a printed Application Form and you are using CPF Funds toapply for the Units, you must submit a CPF Cashier’s Order for the total amount payable for thenumber of Units applied for using CPF Funds.(4) Before you apply for the Units using your CPF Funds, you must first make sure that you havesufficient funds in your CPF Investment Account to pay for the Units. You need not instruct the CPFBoard to transfer your CPF Funds from your CPF Ordinary Account to your CPF Investment Account.If the balance in your CPF Investment Account is insufficient and you have sufficient investible CPFFunds in your CPF Ordinary Account, the relevant CPF approved bank with which you maintain yourCPF Investment Account will automatically transfer the balance of the required amount from yourCPF Ordinary Account to your CPF Investment Account immediately for you to use these funds tobuy a CPF Cashier’s Order from the relevant CPF approved bank in the case of an application by wayof a printed Application Form or submit your application through the Participating Bank in the case ofan application by way of an Electronic Application. The automatic transfer facility is available until theclose of the Public Offer within the operating hours of the facility which are between 12 noon and10.00 p.m. from Mondays to Saturdays, and between 12 noon and 5.00 p.m. on Sundays and publicholidays.(5) The special CPF securities sub-account of the nominee company of the relevant CPF approved bank(with whom you maintain a CPF Investment Account) maintained with CDP will be credited with theprincipal amount of the Units you subscribed for with CPF Funds.(6) Where you are using CPF Funds, you cannot apply for the Units as nominee for any other person.(7) All instructions or authorisations given by you in a printed Application Form or through an ElectronicApplication are irrevocable.(8) CPF Investment Accounts may be opened with any branch of the relevant CPF approved bank.(9) All information furnished by the CPF Board, the relevant CPF approved bank and the ParticipatingBank on your authorisation will be relied on as being true and correct.G-15
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Appendix HLIST OF PRESENT AND PAST PRINCIPAL DIRECTORSHIPS OF DIRECTORS AND EXECUTIVE OFFICERSThe principal present directorships, other than those held in the Manager and the principal pastdirectorships in the last five years of each of the directors and executive officers (named in “TheManager and Corporate Governance”) of the Manager are as follows:Directors of the Manager(1) Mr Tan Bar TienCurrent DirectorshipsMillennium Assets Pte Ltd(2) Mr Lim Ho SengCurrent DirectorshipsKian Ann Engineering LtdBollywood Veggies Pte LtdBaker Technology LimitedSim Siang Choon LtdPan Asian Water Solutions LimitedK S Energy Services LimitedPast Directorships (for a period of fiveyears preceding 3 April 2007)NilPast Directorships (for a period of fiveyears preceding 11 September 2007)Flairis Technology Corp. LtdIntegra2000 Pte Ltd<strong>Retail</strong> Promotions Centre Pte LtdecoWise Holdings LimitedPrima LimitedSinwa LimitedNorelco UMS Holdings LtdWant Want Foundation LtdRotol Singapore LtdWant Want Holdings Ltd(3) Ms Viven G. Sitiabudi (alsoknown as Mrs Viven Gouw)Current DirectorshipsPT <strong>Lippo</strong> Karawaci Tbk.PT Sentra DwimandiriPT Prudential DevelopmentPT Dinamika IntertransPT Taman Sari <strong>Lippo</strong> KarawaciPT Sentra Office RealtyPT Sentra Asritama RealtyPT Prudential Town House DevelopmentPT Imperial Karawaci GolfPT Saptapersada JagatnusaPT Wahana Tatabangun CemerlangPT Wahana Tatabangun Cemerlang MatahariPT Bahterapratama WirasaktiPT Mulia Sentosa DinamikaPt Sejatijaya SelarasPT Sentragraha MandiriPT Suryamakmur Alam PersadaPast Directorships (for a period of fiveyears preceding 16 April 2007)NilH-1
Appendix HCurrent DirectorshipsPT Paragon CityPT <strong>Lippo</strong> Karawaci Infrastructure & UtilitiesDivisionPT Sentra Realtindo DevelopmentPT Darma Sarana Nusa PratamaPT Tata Mandiri Daerah Villa PermataPT Agung SepadanPT Golden PradamasPT Mulia Bangun SemestaPT Villa Permata CibodasPT Puncak Resort InternationalPT Dona Indo PrimaPT Sukmaprima SejahteraPT Adigraha Rancang SempurnaPT Sentosa SeksamaPT Pesanggarahan Suri Permata AgungPT Purimegah Swarga BuanaPT Graha Tata Cemerlang MakassarPT Niaga UtamaPT Siloam Sarana KaryaPT Siloam Karya SejahteraPT East Jakarta MedikaPT Almaron PerkasaPT Siloam Graha UtamaPT Siloam Dinamika PerkasaPT Siloam Tata PrimaPast Directorships (for a period of fiveyears preceding 16 April 2007)(4) Mr Yeo Cheow TongCurrent DirectorshipsKillyInvest Pte LtdPast Directorships (for a period of fiveyears preceding 3 November 2007)Central Asia Mineral Exploration Pte. Ltd.(5) Mr Lok Vi MingCurrent DirectorshipsSingapore Cruise Centre Pte LtdSingex Venues Pte LtdSingex Exhibitions Pte LtdSingex Exhibitions Venture Pte LtdMount Faber Leisure Group Pte LtdSingapore Food Industries LimitedBethesda Bedok-Tampines Church LtdPast Directorships (for a period of fiveyears preceding 18 May 2007)Changi International Airport Services Pte LtdInternational Factors (Singapore) LtdCIAS International LtdH-2
Appendix H(6) Mr Tan Boon LeongCurrent DirectorshipsThe HarbourFront Pte LtdHarbourFront One Pte LtdHarbourFront Two Pte LtdHarbourFront Three Pte LtdHarbourFront Four Pte LtdHarbourFront Place Pte. Ltd.HarbourFront Centre Pte. Ltd.VivoCity Pte. Ltd.HarbourFront Eight Pte LtdSt James Power Station Pte. Ltd.HarbourFront Dalian Pte. Ltd.Bougainvillea Realty Pte LtdHeliconia Realty Pte LtdCantonment Realty Pte LtdHF (USA), Inc.(incorporated in the State of Delaware)Dalian Marina Centre Development Co., Ltd(incorporated in the Republic of China)Mapletree Treasury Services LimitedMapletree Capital Management Pte. Ltd.Mapletree Mezzanine Managers Pte. Ltd.Meranti Investments Pte. Ltd.Mapletree Logistics <strong>Trust</strong> Management Ltd.CIMB-Mapletree Management Sdn. Bhd.(incorporated in Malaysia)Sienna Pte. Ltd.Mangrove Pte. Ltd.Mapletree Dextra Pte. Ltd.Mapletree Overseas Holdings Ltd.(incorporated in the Cayman Islands)Mapletree Amethyst Ltd.(incorporated in the Cayman Islands)Shanghai Mapletree Management ConsultancyCo., Ltd(incorporated in the Republic of China)Mapletree WND (Wuxi) Ltd.(incorporated in the Cayman Islands)Mapletree Emerald Ltd.(incorporated in the Cayman Islands)Mapletree Citrine Ltd(incorporated in the Cayman Islands)Mapletree VSIP 2 Phase 2 (Cayman) Co. Ltd.(incorporated in the Cayman Islands)Mapletree VSIP 2 Phase 1 (Cayman) Co. Ltd.(incorporated in the Cayman Islands)Mapletree VSIP 1 Warehouse (Cayman) Co.Ltd.Past Directorships (for a period of fiveyears preceding 16 May 2007)LCD (Vietnam) Pte LtdPlumtree Investments Pty LtdMCH Services (Sydney) Pte LtdSing-Mas Investments Pte LtdP T Bintan LagoonBintan Lagoon Resort LimitedAvondale Properties LtdGasin (Suzhou) Property Development Co LtdKingsdale Development Pte LtdPrestige Landmark Pte LtdSuzhou Property Development Pte LtdUnion Charm Development LtdP T Purimas Straits ResortsKunming Yunxin Tourist Development Co LtdShanghai Hua Qing Real Estate DevelopmentCo LtdHua Qing Holdings Pte LtdHard Rock Hotels & Resorts Management PteLtdWesclove Investments Pte LtdHua Yuan Holdings Pte LtdShanghai Pudong Xinxiang Real EstateDevelopment Co LtdMarina Centre Holdings Pte LtdCrown Million Enterprises LimitedAscendas Holdings (Manila) Pte LtdJTCI Industrial Holdings (Bangkok) Pte LtdSembCorp Parks Management Pte LtdSingapore-Suzhou Industrial Holdings Pte LtdAsean Bintulu Fertilizer Sdn BhdCrown Pacific Development LtdBeijing Hong Gong Garden Villa HouseProperty Development Co LtdKeppel Regional Infrastructure Pte LtdSembCorp Gas Pte LtdSembCorp Parks Management Pte Ltd.Germiston Developments LtdCatalyst Enterprises LtdSingapore Cruise Centre Pte LtdMapletree Topaz Ltd.Mapletree Opal Ltd.H-3
Appendix HCurrent Directorships(incorporated in the Cayman Islands)Mapletree Lingang Ltd.(incorporated in the Cayman Islands)Mapletree Logistics Properties Pte. Ltd.Mapletree <strong>Trust</strong>ee Pte. Ltd.Mapletree ALP (Tianjin) Ltd.(incorporated in the Cayman Islands)Mapletree First Warehouse (Vietnam) Co., Ltd.(incorporated in Vietnam)Mapletree (Tianjin) Airport LogisticsDevelopment Co., Ltd.(incorporated in the People’s Republic of China)Mapletree Industrial Holdings Ltd.(incorporated in the Cayman Islands)Vista Real Estate Investments Pte LtdAlexandra Distripark Pte LtdMapletree Vietnam Management ConsultancyCo., Ltd.(incorporated in Vietnam)Mapletree Industrial Fund Ltd.(incorporated in the Cayman Islands)Mapletree Industrial Fund Management Pte. Ltd.Mapletree Lingang Logistics Warehouse(Shanghai) Co., Ltd.(incorporated in the People’s Republic of China)Mapletree Emerald (HKSAR) Limited(incorporated in Hong Kong)Mapletree Changxing (Shanghai) Ltd.(incorporated in the Cayman Islands)Mapletree MIC Changsha Ltd.(incorporated in the Cayman Islands)Mapletree MIC Shenyang <strong>Retail</strong> Ltd.(incorporated in the Cayman Islands)Mapletree Changxing (Shanghai) (HKSAR)Limited(incorporated in Hong Kong)Mapletree MIC Changsha (HKSAR) Limited(incorporated in Hong Kong)Mapletree MIC Shenyang <strong>Retail</strong> (HKSAR)Limited(incorporated in Hong Kong)Mapletree Caoan Ltd.(incorporated in the Cayman Islands)Mapletree Jinshajiang Ltd.(incorporated in the Cayman Islands)Mapletree MIC Xi’an Ltd.(incorporated in the Cayman Islands)Freesia Investments Ltd.(incorporated in the Cayman Islands)Clematis Investments Ltd.(incorporated in the Cayman Islands)Past Directorships (for a period of fiveyears preceding 16 May 2007)H-4
Appendix HCurrent DirectorshipsMapletree MIC Xi’an (HKSAR) Limited(incorporated in Hong Kong)<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>Management Ltd.Lot A Sentral Sdn. Bhd.(incorporated in Malaysia)Xi’an Yajian Real Estate Development Co., Ltd.(incorporated in the People’s Republic of China)Mapletree Commercial <strong>Trust</strong> Management Ltd.Mapletree Developments Pte. Ltd.Mapletree MIC China Holdings Ltd.(incorporated in the Cayman Islands)Mapletree MIC India Holdings Ltd.(incorporated in the Cayman Islands)Mapletree MIC Shenyang SA Ltd.(incorporated in the Cayman Islands)Binh Duong Industrial 1 Ltd.(incorporated in the Cayman Islands)Binh Duong Real Estate 1 Ltd.(incorporated in the Cayman Islands)Binh Duong Real Estate 2 Ltd.(incorporated in the Cayman Islands)Mapletree MIC Shenyang SA (HKSAR) Limited(incorporated in Hong Kong)Mapletree Logistics Park Phase 1 (Vietnam)Co., Ltd.(incorporated in Vietnam)Mapletree Logistics Park Phase 2 (Vietnam)Co., Ltd.(incorporated in Vietnam)Past Directorships (for a period of fiveyears preceding 16 May 2007)(7) Mr Wong Mun HoongCurrent DirectorshipsThe HarbourFront Pte LtdHarbourFront Four Pte LtdHarbourFront Place Pte. Ltd.HarbourFront Centre Pte. Ltd.VivoCity Pte. Ltd.St James Power Station Pte. Ltd.Bougainvillea Realty Pte LtdHeliconia Realty Pte LtdAlexandra Distripark Pte LtdAlexandra Terrace Pte LtdMapletree Treasury Services LimitedMapletree <strong>Trust</strong>ee Pte. Ltd.Mapletree Capital Management Pte. Ltd.Meranti Investments Pte. Ltd.Mapletree Dextra Pte. Ltd.Past Directorships (for a period of fiveyears preceding 16 May 2007)Merrill Lynch (Singapore) Pte LtdH-5
Appendix HCurrent DirectorshipsMapletree Overseas Holdings Ltd.(incorporated in the Cayman Islands)Mapletree Amethyst Ltd.(incorporated in the Cayman Islands)Mapletree WND (Wuxi) Ltd.(incorporated in the Cayman Islands)Mapletree Emerald Ltd.(incorporated in the Cayman Islands)Mapletree Citrine Ltd(incorporated in the Cayman Islands)Mapletree VSIP 2 Phase 2 (Cayman) Co. Ltd.(incorporated in the Cayman Islands)Mapletree VSIP 2 Phase 1 (Cayman) Co. Ltd.(incorporated in the Cayman Islands)Mapletree VSIP 1 Warehouse (Cayman) Co.Ltd.(incorporated in the Cayman Islands)Mapletree Mezzanine Managers Pte. Ltd.CIMB-Mapletree Management Sdn. Bhd.(incorporated in Malaysia)Era One Ventures Sdn. Bhd.(incorporated in Malaysia)Jaya Section Fourteen Sdn. Bhd.(incorporated in Malaysia)Mapletree First Warehouse (Vietnam) Co., Ltd.(incorporated in Vietnam)Mapletree (Tianjin) Airport LogisticsDevelopment Co., Ltd.(incorporated in the People’s Republic of China)Mapletree Industrial Holdings Ltd.(incorporated in the Cayman Islands)HarbourFront Two Pte LtdHarbourFront Three Pte LtdCantonment Realty Pte LtdDynamic Concept One Sdn. Bhd.(incorporated in Malaysia)Mapletree Logistics <strong>Trust</strong> Management Ltd.Mapletree Industrial Fund Management Pte. Ltd.Mapletree Real Estate Mezzanine Fund ILimited(incorporated in the Cayman Islands)Mapletree Lingang Logistics Warehouse(Shanghai) Co., Ltd.(incorporated in the People’s Republic of China)Mapletree MIC Changsha Ltd.(incorporated in the Cayman Islands)Mapletree MIC Shenyang <strong>Retail</strong> Ltd.(incorporated in the Cayman Islands)Mapletree MIC Changsha (HKSAR) Limited(incorporated in Hong Kong)Past Directorships (for a period of fiveyears preceding 16 May 2007)H-6
Appendix HCurrent DirectorshipsMapletree MIC Shenyang <strong>Retail</strong> (HKSAR)Limited(incorporated in Hong Kong)Mapletree Caoan Ltd.(incorporated in the Cayman Islands)Mapletree Jinshajiang Ltd.(incorporated in the Cayman Islands)Mapletree MIC Xi’an Ltd.(incorporated in the Cayman Islands)Freesia Investments Ltd.(incorporated in the Cayman Islands)Clematis Investments Ltd.(incorporated in the Cayman Islands)Mapletree MIC Xi’an (HKSAR) Limited(incorporated in Hong Kong)Mapletree Tianjin Free Port Development Ltd.(incorporated in the Cayman Islands)Mapletree Shunyi (Beijing) Ltd.(incorporated in the Cayman Islands)Mapletree Tianjin Free Port Development(HKSAR) Limited(incorporated in Hong Kong)Mapletree India China Fund Ltd.(incorporated in the Cayman Islands)<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong>Management Ltd.Mapletree Shunyi (Beijing) (HKSAR) Limited(incorporated in Hong Kong)Mapletree Hinjewadi (Mauritius) Ltd.(incorporated in Mauritius)Lot A Sentral Sdn. Bhd.(incorporated in Malaysia)Mapletree Mauritius 1 Ltd.(incorporated in Mauritius)Mapletree Mauritius 2 Ltd.(incorporated in Mauritius)Mapletree Mauritius 3 Ltd.(incorporated in Mauritius)Mapletree MIC China Holdings Ltd.(incorporated in the Cayman Islands)Mapletree MIC India Holdings Ltd.(incorporated in the Cayman Islands)Mapletree MIC Shenyang SA Ltd.(incorporated in the Cayman Islands)Binh Duong Industrial 1 Ltd.(incorporated in the Cayman Islands)Binh Duong Real Estate 1 Ltd.(incorporated in the Cayman Islands)Binh Duong Real Estate 2 Ltd.(incorporated in the Cayman Islands)Mapletree MIC Shenyang SA (HKSAR) Limited(incorporated in Hong Kong)Past Directorships (for a period of fiveyears preceding 16 May 2007)H-7
Appendix HCurrent DirectorshipsMapletree Logistics Park Phase 1 (Vietnam)Co., Ltd.(incorporated in Vietnam)Mapletree Logistics Park Phase 2 (Vietnam)Co., Ltd.(incorporated in Vietnam)Surbana Township Development Fund Pte. Ltd.Executive Officers of the Manager(1) Mr Rudi Chuan Hwee HiowCurrent DirectorshipsNilPast Directorships (for a period of fiveyears preceding 16 May 2007)Past Directorships (for a period offive years preceding 8 March 2007)Nil(2) Mr Jeremy Scott WalkerCurrent DirectorshipsNilPast Directorships (for a period offive years preceding 21 April 2007)Nil(3) Ms Viven G. Sitiabudi (alsoknown as Mrs Viven Gouw)Current DirectorshipsPlease refer to the relevant section under the listof directors above.Past Directorships (for a period offive years preceding 8 March 2007)Please refer to the relevant section under the listof directors above.(4) MR ANDREAS KARTAWINATACurrent DirectorshipsPT <strong>Lippo</strong> Karawaci TbkPast Directorships (for a period offive years preceding 8 March 2007)PT Metropolitan Kentjana TbkH-8
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<strong>LIPPO</strong>-<strong>MAPLETREE</strong> INDONESIA RETAIL TRUSTSPONSORPT. <strong>Lippo</strong> Karawaci TbkMenara Matahari, 22nd floorJl. Boulevard Palem Raya No. 7<strong>Lippo</strong> Karawaci Tangerang 15811, Banten, <strong>Indonesia</strong>MANAGER<strong>Lippo</strong>-Mapletree <strong>Indonesia</strong> <strong>Retail</strong> <strong>Trust</strong> Management Ltd.78 Shenton Way#05-01 <strong>Lippo</strong> CentreSingapore 079120SOLE FINANCIAL ADVISER TO THE SPONSORSOLE FINANCIAL ADVISER TO THE OFFERINGPT. Ciptadana CapitalUBS AG, acting through its business group,UBS Investment BankCitra Graha 8th FloorOne Raffles QuayJalan Jend. Gatot Subroto Kav 35-36#50-01 North TowerJakarta 12950, <strong>Indonesia</strong>Singapore 048583JOINT LEAD MANAGERS, ISSUE MANAGERS AND UNDERWRITERSUBS AG, acting through itsbusiness group,UBS Investment BankOne Raffles Quay#50-01 North TowerSingapore 048583BNP Paribas Capital(Singapore) Ltd.20 Collyer Quay#08-01 Tung CentreSingapore 049319UNIT REGISTRAR ANDUNIT TRANSFER OFFICEBoardroom Corporate & Advisory Services Pte. Ltd.(formerly known as Lim Associates (Pte) Ltd)3 Church Street#08-01 Samsung HubSingapore 049483LEGAL ADVISERSOversea-Chinese BankingCorporation Limited65 Chulia Street#29-02/04 OCBC CentreSingapore 049513TRUSTEEHSBC Institutional <strong>Trust</strong> Services(Singapore) Limited21 Collyer Quay#14-01 HSBC BuildingSingapore 049320Legal Adviser to the Offering, and to the Manager, the Sponsor and the VendorsAllen & Gledhill LLPOne Marina Boulevard #28-00Singapore 018989Legal Adviser to the Underwritersas to Singapore LawStamford Law Corporation9 Raffles Place#32-00 Republic PlazaSingapore 048619Legal Adviser to the Underwriters as toU.S. federal securities and English lawsLatham & Watkins LLP9 Raffles Place#42-02 Republic PlazaSingapore 048619Legal Adviser to the Manager and theSponsor as to <strong>Indonesia</strong>n LawLegal Adviser to the Vendorsas to <strong>Indonesia</strong>n LawLegal Adviser to the Underwriters as to<strong>Indonesia</strong>n LawMakes & Partners Law Firm Hadiputranto Hadinoto & Partners Ery Yunasri & PartnersMenara Batavia 7th FloorJI.K.H. Mas Mansyur Kav. 126Jakarta 10220<strong>Indonesia</strong>The Jakarta Stock ExchangeBuildingTower II, 21st FloorSudirman Central Business DistrictJl. Jendral Sudirman Kav. 52-53Jakarta 12190, <strong>Indonesia</strong>Graha Niaga 11th FloorJI. Jenderal Sudirman Kav. 58Jakarta 12190<strong>Indonesia</strong>RSM Chio Lim18 Cross Street #09-01Marsh & McLennan CentreSingapore 048423INDEPENDENT SINGAPORE TAX ADVISERErnst & YoungOne Raffles QuayNorth Tower, Level 18Singapore 048583INDEPENDENT VALUER TO THE MANAGERKnight Frank / PT. Willson Properti AdvisindoWisma Nugra Santana#17-03 Jl. Jend. Sudirman Kav. 7-8Jakarta 10220, <strong>Indonesia</strong>Legal Adviser to the <strong>Trust</strong>eeShook Lin & Bok LLP1 Robinson Road#18-00 AIA TowerSingapore 048542INDEPENDENT REPORTING ACCOUNTANTSRSM Aryanto Amir Jusuf & Mawar(RSM AAJ Associates)INDEPENDENT INDONESIAN RETAIL PROPERTY CONSULTANTPT Jones Lang LaSalleJakarta Stock Exchange Building Tower 128th floor Jl Jenderal Sudirman Kav 52-53Jakarta 12190, <strong>Indonesia</strong>Plaza ABDA 10th FloorJl. Jend.Sudirman Kav.59Jakarta 12190<strong>Indonesia</strong>INDEPENDENT INDONESIAN TAX ADVISERPB & Co.Menara Imperium 27th FloorJl. H.R. Rasuna Said Kav. 1Jakarta 12980<strong>Indonesia</strong>INDEPENDENT VALUER TO THE TRUSTEEColliers International / PT Penilai10F World Trade CentreJl Jenderal Sudirman Kav 29-31Jakarta 12920, <strong>Indonesia</strong>
<strong>LIPPO</strong>-<strong>MAPLETREE</strong>INDONESIA RETAIL TRUST78 Shenton Way #05-01 <strong>Lippo</strong> Centre Singapore 079120t [65] 6410 9138 f [65] 6220 6557 www.lmir-trust.com
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