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

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 Trust 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 Trust 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 Trust’s cost of capital, and are thereby expected tomaintain or enhance LMIR Trust’s distributions per Unit as well as provide future long-term growthprospects which are consistent with LMIR Trust’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 Trust’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 Trust;• 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