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

Profit forecast and profit projectioninto account the increase in the Master Lessee’s net revenue. (See “Certain Agreements Relating to LMIRTrust 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 Retail 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 Trust and its minorityUnitholders.(b)Carpark incomeCarpark income includes revenue earned from the operations of the carparks located at the Retail Malls.The carpark will be operated by third party carpark operators who in turn pay a fixed rent to LMIR Trust.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 Retail Malls.The assessment of other income is based on existing agreements, historical income collections and theManager’s assessment of the Retail Malls.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 Retail Malls, namely Bandung Indah Plaza, CibuburJunction and The Plaza Semanggi. The forecast and projected land rentals are based on the BOTAgreement.For the Retail Spaces, no land rentals are payable.(b)Property management feeThe property management fee for the Retail Malls is based on 2.0% per annum of the gross revenue forthe relevant Retail 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 Retail 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 Retail Mall.For Retail 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