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

Risk factorsIn addition, if LMIR Trust disposes of the Properties at the level of the Indonesian SPCs holding theProperties, the Indonesian SPCs may be subjected to Indonesian capital gains taxes. In such a situation,LMIR Trust may be indirectly liable to pay these capital gains taxes.Possible change of investment strategies, policies and capital structure, may adversely affectthe Unitholders’ investments in LMIR Trust.The principal investment strategy of the Manager is owning and investing on a long-term basis in adiversified portfolio of income-producing real estate in Indonesia that are primarily used for retail and/orretail-related purposes, and real estate related assets in connection with the foregoing purposes.According to the Listing Manual, this investment strategy must be adhered to for at least three yearsfollowing the Listing Date. However, the Trust Deed and the Property Funds Guidelines permit theManager to alter LMIR Trust’s investment strategies and policies, if it determines that such a change is inthe best interests of LMIR Trust and its Unitholders. The methods of implementing LMIR Trust’s investmentstrategies and policies may vary as new investment and financing techniques are developed or otherwiseused. Any such changes may adversely affect the Unitholders’ investment in LMIR Trust.The appraisals of the Properties are based on various assumptions and the price at which LMIRTrust is able to sell a property may be less than the initial acquisition value of the property.LMIR Trust will use the net proceeds of the Offering to complete its acquisition of all of the ordinary sharesand redeemable preference shares in the Target Singapore SPCs on the Listing Date. The considerationpaid by LMIR Trust is based on the acquisition value of each of the Properties, which represent a certainlevel of discount to the appraised value of each of the Properties as determined by Knight Frank andColliers (the “Independent Valuers”).There can be no assurance that the assumptions relied on are accurate measures of the market, and thus,the values of the Properties may have been evaluated inaccurately. In addition, the Independent Valuersmay have included a subjective determination of certain factors relating to the Properties such as theirrelative market positions, financial and competitive strengths, and physical conditions.The appraised value of any of LMIR Trust’s Properties is not an indication of, and does not guarantee, asale price at that value at present or in the future. The price at which LMIR Trust may sell a Property may belower than its purchase price.Epidemic diseases in Asia and elsewhere may adversely affect LMIR Trust’s operations.Several countries in Asia, including Indonesia, have suffered from outbreaks of communicable diseasessuch as SARS and avian flu. A new and prolonged outbreak of such diseases may have a material adverseeffect on LMIR Trust’s business and financial condition and results of operations. Although the long-termeffect of such diseases cannot be predicted, previous occurrences of SARS and avian flu had an adverseeffect on the economies of those countries in which they were most prevalent. In the event a mutant strainof the avian flu virus allowing for easy human-to-human transmission is discovered, the consequence forLMIR Trust’s business could be severe. An outbreak of a communicable disease, like SARS, in Indonesiamay affect LMIR Trust in a number of ways, including, but not limited to, a decline in demand for consumergoods, a reduction in the number of visitors to the retail property, a decline in revenue of tenants of the retailproperty and increased costs of cleaning and maintaining the public facilities in the retail property. Theimpact of these factors on the operations of the retail property could materially and adversely affect thebusiness, financial condition and results of operations of LMIR Trust.The Manager’s plan to undertake asset enhancement on some of the Properties may notmaterialise.The Manager intends to work with relevant Indonesian authorities to gain the necessary approvals toundertake active asset enhancement works which are currently ongoing, on some of the Properties. (See“Business and Properties—Asset Enhancement”.)In the event that the necessary approvals are not obtained from the relevant Indonesian authorities, thereis a risk that such proposed plans for asset enhancement will not materialise. There is also a risk that even72