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

Risk factors• losses arising from a revaluation of any of the Properties following any diminution in value of any of therelevant Properties. Such losses would adversely affect the level of profits from which the relevantSingapore SPC may distribute dividends;• accounting standards that require profits generated from investment properties to be net of depreciationcharges before such profits are distributed to LMIR Trust;• changes in accounting standards, taxation regulations, corporation laws and regulations relatingthereto; and• insufficient cash flows received by the Singapore SPCs from the Indonesian SPCs.The occurrence of these or other factors that affect the ability of the Singapore SPCs to pay dividends orother distributions to LMIR Trust may adversely affect the level of distributions paid to Unitholders.LMIR Trust may not be able to secure funding to fund future acquisitions or significant capitalexpenditure which the Properties or any future properties may require.The Properties and properties to be acquired by LMIR Trust may require periodic capital outlay for thepurpose of refurbishments, renovation and improvements in order to remain competitive. Acquisitions orenhancement of existing properties by LMIR Trust may require significant capital expenditure.The Master Lease Agreements provide that LMIR Trust will have to bear capital expenditure relating to theRetail Spaces, subject to certain conditions, after the first 30 months of the lease terms. LMIR Trust maynot be able to fund future acquisitions, capital improvements or expenditure, solely from cash derived fromits operating activities and LMIR Trust may not be able to obtain additional equity or debt financing or beable to obtain such financing on favourable terms or at all. Further distributions to Unitholders may also beadversely affected as a result.LMIR Trust may face risks associated with future debt financing.As at Listing Date, LMIR Trust has not incurred any borrowings. In the event that LMIR Trust incurs anyborrowings, it will be subject to risks associated with debt financing, including the risk that its cash flow willbe insufficient to meet required repayments of principal and interest and to make distributions toUnitholders.LMIR Trust will distribute 100.0% of its tax-exempt income (after deduction of applicable expenses) andcapital receipts for Forecast Period 2007, Projection Year 2008 and Projection Year 2009 and at least90.0% of its tax-exempt income (after deduction of applicable expenses) and capital receipts thereafter. Asa result of this distribution policy, LMIR Trust may not be able to meet all of its obligations to repay anyfuture borrowings through its cash flow from operations. As such, LMIR Trust may be required to repaymaturing debt with funds from additional debt, or equity financing, or both. There can be no assurance thatsuch financing will be available on acceptable terms, or at all.The Manager can give no assurance regarding the amount and timing of the payment of distributions, theextent of payout ratios or the composition of distributions or the material income tax considerations ofdistributions, as actual events may differ from the assumptions used in assessing the ability of LMIR Trustto pay these distributions.In the event of any borrowings incurred, LMIR Trust will also be subject to the risk that the terms of anyrefinancing undertaken will be less favourable than the terms of any such borrowings. In addition, LMIRTrust may be subject to certain covenants in connection with any future borrowings that may limit orotherwise adversely affect its operations and its ability to make distributions to Unitholders. Suchcovenants may also restrict LMIR Trust’s ability to acquire properties or undertake other capitalexpenditure or may require it to set aside funds for maintenance or repayment of security deposits.If prevailing interest rates or other factors at the time of refinancing (such as the possible reluctance oflenders to make loans in relation to retail and/or retail-related properties) result in higher interest ratesupon refinancing, the interest expense relating to such refinanced indebtedness would increase, whichmay adversely affect LMIR Trust’s cash flow and the amount of distributions it could make to Unitholders.69