LIPPO-MAPLETREE - Lippo Malls Indonesia Retail Trust - Investor ...

Profit forecast and profit projectionsigned by the parties) for the Properties as at 30 June 2007 (for Retail Malls 1 ) and as at the Listing Date(for Retail Spaces) are estimated as follows:Forecast Period Projection Year Projection Year200720082009(%) (%) (%)Gross Rent attributable to Committed Leases forRetail Malls (as percentage of total Gross Rent). . . . 72.4 62.7 50.0Gross Rent attributable to Committed Leases forRetail 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 Retail Malls and Retail Spaces (net ofrebates) pursuant to tenant leases.Retail MallsIn 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 Retail Malls 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 Retail Malls 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