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

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 Retail Malls are managed by competent professionals with retail expertise and experience,as reflected in the high occupancy rates and the ability of each Retail Mall to differentiate itself from itscompetitors within its catchment area. As at 30 June 2007, the Retail Malls had a weighted averageoccupancy of approximately 91.6%, reflecting the robust demand for space in the Retail Malls.• Retail Spaces strategically located within well-established population catchment areas.The Retail 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 Retail Malls.The Property Manager, a wholly-owned subsidiary of the Sponsor, will manage the Retail Malls after theListing Date. As the Retail Spaces are master-leased to Matahari, there is no property managerappointed for the Retail Spaces. The Property Manager believes that there are opportunities to realiseefficiencies and economies of scale so as to maximise the performance of each Retail 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 Retail Malls 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 Retail Malls benefit from the quality of their tenants. The Retail Malls’ 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 Retail Malls’ 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 Retail Malls 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 Retail Malls.• Advance rental payment structure helps to minimise cash flow volatility due to potential rentalarrearsRetail tenants in Indonesia 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 Trust’s cash flow volatility due to potential rental arrears, thus enhancing LMIRTrust’s cash flow stability.121