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

Risk factorsBorrowing in certain currencies, such as the Indonesian Rupiah, may incur relatively high interest rates.LMIR Trust may incur such high interest rates should it require funds in these currencies (see “Strategy—Acquisition Growth Strategy”).The amount LMIR Trust may borrow is limited, which may affect the operations of LMIR Trust.Under the Property Funds Guidelines, LMIR Trust is generally permitted to borrow only up to 35.0% of thevalue of its Deposited Property at the time the borrowing is incurred. The Property Funds Guidelines alsoprovide that the Aggregate Leverage of a REIT may exceed 35.0% of the value of its Deposited Property(up to a maximum of 60.0%) only if a credit rating of such REIT from Fitch Inc., Moody’s or Standard &Poor’s is obtained and disclosed to the public. A REIT should maintain and disclose a credit rating so longas its Aggregate Leverage exceeds 35.0% of its Deposited Property. Upon its listing on the SGX-ST, LMIRTrust will not have incurred any indebtedness but may, from time to time, require debt financing to achieveits investment strategies as well as make distributions to Unitholders. A decline in the value of theDeposited Property may affect LMIR Trust’s ability to make future borrowings as discussed above.Adverse business consequences of this limitation on borrowings may include:• an inability to fund capital expenditure requirements in relation to LMIR Trust’s existing portfolio or inrelation to the acquisition by LMIR Trust of further properties to expand its portfolio; and• cash flow shortages (including with respect to making distributions) which LMIR Trust might otherwisebe able to resolve by borrowing funds.Occurrence of any acts of God, war and terrorist attacks may adversely and materially affectthe business and operations of the Properties.Acts of God such as natural disasters are beyond the control of LMIR Trust or the Manager and maymaterially and adversely affect the economy, infrastructure and livelihood of the local population in thecommunities in which LMIR Trust operates. LMIR Trust’s business and income available for distributionmay be materially and adversely affected should such acts of God occur. There can be no assurance thatany war, terrorist attack or other hostilities in any part of the world, potential, threatened or otherwise, willnot, directly or indirectly, have a material and adverse effect on the operations of the Properties and henceLMIR Trust’s income available for distribution.Neither LMIR Trust nor the Manager, as new entities, has an established operating history.LMIR Trust was established on 8 August 2007 and the Manager was incorporated on 3 May 2007. As such,neither LMIR Trust (as a REIT) nor the Manager (as the manager of LMIR Trust) has a relevant operatinghistory by which their past performance may be judged. This will make it difficult for investors to assessLMIR Trust’s likely future performance. There can be no assurance that LMIR Trust will be able to generatesufficient income from operations to make distributions or that such distributions will be in line with thoseset out in “Profit Forecast and Profit Projection”.The Manager may not be able to implement its investment strategy for LMIR Trust.LMIR Trust’s strategy is to own and invest on a long-term basis in a diversified portfolio of incomeproducingreal estate in Indonesia that are primarily used for retail and/or retail-related purposes, and realestate related assets in connection with the foregoing purposes. There can be no assurance that theManager will be able to implement its investment strategy successfully or that it will be able to expandLMIR Trust’s portfolio at all, or at any specified rate or to any specified size. The Manager may not be ableto make acquisitions or investments on favourable terms or within a desired time frame. LMIR Trust facesactive competition in acquiring suitable properties, especially in a low interest rate environment whereother investment vehicles are highly leveraged. As such, LMIR Trust’s ability to make new propertyacquisitions under its acquisition growth strategy may be limited.LMIR Trust will rely on external sources of funding to expand its asset portfolio, which may not be availableon favourable terms, or at all. Even if LMIR Trust were able to successfully make property acquisitions orinvestments, there can be no assurance that LMIR Trust will achieve its intended return on suchacquisitions or investments. Since the amount of borrowings that LMIR Trust can incur to finance70