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

Risk factorsthe Sponsor in relation to the management of other retail properties which may compete directly with thoseowned by LMIR Trust. (See “—There are potential conflicts of interest amongst LMIR Trust, MapletreeCapital, the Sponsor and the Master Lessee”.)Any conflicts of interests could have an adverse impact on LMIR Trust’s operating results, as well asdistributions made to Unitholders.The Retail Spaces, which are located within and are part of retail malls, are subdivideddevelopments, and there is no assurance that the other owners or tenants of strata lots inthese retail malls will not vote against the interests of the Retail Spaces in matters relating tothe common area, common land and common property.The Retail Spaces are part of retail malls which are subdivided developments comprising strata lots,common area, common land and common property. The common area, common land and commonproperty are jointly owned or used by owners or tenants of the strata lots as tenants-in-common inproportion to the rights to use attributable to their respective strata lots.Under the Indonesian law on multi-storey buildings (Undang-Undang Rumah Susun), the ownership of thestrata lots are evidenced by strata titles which include the right to the common area, common land andcommon property which constitutes an inseparable part of the ownership of the strata lots. In order topreserve the common interest among the owners and/or tenants on the use of the common area, commonland and common property, the owners or tenants must establish a tenants association. Subject to therules and regulations of the tenants association, certain matters require prior consent of the tenantsassociation, including, for example, the use or the service charge payable in respect of the common area,common land and common property.The term ‘common property’ is known in multi-storey building concepts. According to Indonesian law andregulations concerning common property, common property (such as infrastructure and area of land) isdefined as properties of a multi-storey building, with such properties being used by the owners or tenantsin the said multi-storey building. Therefore, each of the owners of strata lots in a multi-storey building has aproprietary interest, collectively, as the owners of such multi-storey building and as such, all rights,obligations and responsibilities arising thereof shall be borne by these owners.All of the owners or tenants must vote on certain matters as described in the rules and regulations of thetenants association in the meeting of the tenants association. As the aggregate share value of each of theRetail Spaces ranges from 35.0% to 60.0% of the total rights value of the strata lots comprised in therespective retail malls within which it is located, there is no assurance that the other owners or tenants willnot vote against the interests of LMIR Trust as represented by the Retail Spaces. Further, LMIR Trustcannot freely deal with the common area, common land and common property of the retail malls withinwhich the Retail Spaces are located, unlike in the case of a development which is wholly-owned by it.LMIR Trust will operate substantially through the Singapore SPCs and the Indonesian SPCs andits ability to make distributions to Unitholders is dependent on the financial position of theSingapore SPCs.LMIR Trust will operate substantially through the Singapore SPCs and the Indonesian SPCs and will relyon payments and other distributions from the Singapore SPCs and the Indonesian SPCs for its income andcash flows. The ability of the Singapore SPCs to make such payments may be restricted by, among otherthings, the Singapore SPCs’ and the Indonesian SPCs’ respective business and financial positions, theavailability of distributable profits, applicable laws and regulations and the terms of agreements to whichthey are, or may become, a party.There can be no assurance that the Singapore SPCs will have sufficient distributable or realised profits orsurplus in any future period to make dividend payments or make advances to LMIR Trust. The level of profitor surplus of each Singapore SPC available for distribution by way of dividends to LMIR Trust may beaffected by a number of factors including:• operating losses incurred by the Singapore SPCs in any financial year;68