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

Leased MallsOpportunitiesWhile the tenancy mix is generally very good, anopportunity exists to improve the entertainment/lifestyleoffering by removing the skating rink. The centre managerhas indicated that an improved F&B offering is plannedThere is potential to introduce cinemas to Level 3 if such afacility was deemed feasible. However, generated incomefrom such a use is likely to be lower than specialty retailersImprovements to parking and access will help maintaincustomer loyaltySource: Jones Lang LaSalle Research and ConsultingThreatsParis Van Java is very close, has anabundance of parking, strong anchortenants, outdoor dining as well asBandung’s only Blitz Cinema complex.Once fully functional and established, itposes strong competitionOther potential new competition maydirectly compete for customers,particularly in the core northern andwestern Bandung trade areas4.4.8 Future outlookIP faces considerable competition from centres that provide a strong entertainment and lifestyle offer, suchas Bandung Supermal, Bandung Indah Plaza, Paris van Java and Cihampelas Walk. Improvements to theF&B offering through the redevelopment of the under-utilised skating rink should improve theentertainment offering and also help increase the average length of stay per visit and average spendper customer.The centre is well established and has consistently achieved a very high occupancy rate with significantenquiry from new tenants looking to establish themselves at the centre. The high level of lease expiries in2007 provides considerable upside for the centre to build on its already strong tenancy mix, target newtenants with destinational appeal and grow rental income.The lack of parking space within the centre remains an issue. However, centre management hasnegotiated with an adjoining land owner to gain access to additional parking spaces. This hasalleviated congestion at the centre, particularly on weekends.As indicated below, the current rental positioning for anchor tenants, majors and specialty tenants are allconsidered to be on the low side of the market rentals and, specifically, considerably below one of its maincompetitors, Bandung Indah Plaza. Furthermore, the re-positioning of level 3 provides an opportunity toincrease the number and range of specialty, F&B and restaurant tenancies and to grow rental incomethrough increasing the proportion of higher income generating uses. This should also have a positiveimpact on shopper traffic and future income growth of existing tenants.Table 4.4.7: Rental positioning, Istana PlazaTenancy categoryAveragecurrent rents(Rp./sqm/month)Est. range ofmarket rents(Rp./sqm/month)Growth prospectsAnchor Tenants. . . . . . . . . 39,000 40,000 - 45,000 Potential growth on lease renewalMajor Tenants . . . . . . . . . . 64,000 50,000 - 70,000 Potential growth on lease renewalSpecialty Tenants . . . . . . . 168,000 180,000 - 200,000 Potential growth on lease renewalF&B, Restaurants . . . . . . . 100,000 175,000 - 200,000 Re-positioning on Level Three toimprove offer and rental growthprospectsSource: Jones Lang LaSalle Research and ConsultingOn balance, IP’s strengths far outweigh its weaknesses and there are opportunities to improve the centrefurther, building on its already strong tenancy profile. The most obvious opportunity in the short to mediumterm is the redevelopment of the Level 3 ice skating rink to improve the entertainment and lifestyle offeringon this level.Considering these factors and the potential growth of retail spending in the trade area, average rents of IPare projected to grow at approximately 12-15% per year across 2007-2009.F-82