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

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 Indonesian 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 Trust to insulate against movements in exchange rates (whetherfavourable or unfavourable). The Trustee, as trustee of LMIR Trust, has entered into foreignexchange hedges equivalent to 100.0% of LMIR Trust’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 Indonesian 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 Trust—Certain Fees and Charges” and “The Manager and CorporateGovernance—Management Fees”.)Optimal capital structure• LMIR Trust 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 Investors 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 Trust will have substantial ability to incur indebtedness to fund future acquisitions andasset enhancement initiatives.• To the extent that LMIR Trust incurs borrowings after the Listing Date, the Manager aims to optimiseLMIR Trust’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 Trust 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 Indonesian 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 Trust 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 Trust 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