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

Risk factorsIf the tenure of the underlying BOT land is less than the term of the BOT Agreement, there isno assurance that the BOT Grantor will be able to renew the title of the BOT land.The term of BOT Agreements ranges from 20 years to 30 years. In respect of the BOT Agreement relatingto Cibubur Junction, the title of the underlying BOT Land will expire on 23 December 2021 and can beextended in accordance with the prevailing laws and regulations, while the BOT Agreement will expire on28 July 2025 and may be extended. Based on the BOT Agreement, the BOT Grantor undertakes that it willextend the term of the title of the BOT Land and the cost incurred for such extension will be borne by theBOT Grantor.There is no assurance that the BOT Grantor will be able to renew the title of the BOT Land. If the BOTGrantor for whatever reason is not able to extend the term of the BOT Land, the relevant Retail MallIndonesian SPC as BOT Grantee will have to deliver the Retail Mall situated on the BOT Land without anycompensation from the BOT Grantor. This can result in a material adverse effect on LMIR Trust’s GrossRevenue. If the BOT Grantor cannot renew the term of the BOT land, the BOT Grantee would have the rightto make a claim against the BOT Grantor for a breach of contract.LMIR Trust is dependent on the underlying titles to the Properties.Due to the nature of Indonesian property law and the variety of land titles in Indonesia, there is potential fordisputes over the quality of title purchased from previous land owners. In addition, there is a need tonegotiate with the actual owner of the land each time land is acquired under a licence, which may result inpurchases of property (and thereby the obtaining of title to the relevant land) being delayed or obstructed inthe event that negotiations are unsuccessful. Such delays in acquiring properties required fordevelopment activities could have an adverse effect on LMIR Trust’s business, financial condition andresults of operations.Each of the strata units comprising the relevant Retail Space at the Metropolis Town Square Units, theDepok Town Square Units, the Malang Town Square Units and the Grand Palladium Medan Units, areowned pursuant to a “Kiosks Sale and Purchase Binding Agreement”, which is evidence of the parties’intention to effect the sale and purchase of the relevant strata units, but do not have the effect oftransferring ownership. Any dispute over the enforceability of these agreements or the transferability of thebenefit thereunder could have an adverse effect on LMIR Trust’s business, financial condition and resultsof operation.LMIR Trust’s acquisition of all of the ordinary shares and redeemable preference shares in theTarget Singapore SPCs may be subject to risks associated with the acquisition of newproperties and shares in property holding companies.While the Manager believes that reasonable due diligence investigations have been conducted withrespect to the ordinary shares and redeemable preference shares in the Target Singapore SPCs and theProperties prior to acquisition of the ordinary shares and redeemable preference shares in the TargetSingapore SPCs, there can be no assurance that such shares in the Target Singapore SPCs or theProperties will not have certain defects or deficiencies. The management or condition of some of theProperties may be in breach of laws and administrative regulations including those in relation to real estateor be subject to building defects and deficiencies which the Manager’s due diligence investigations did notuncover or may not comply with certain regulatory requirements. As a result, LMIR Trust may incuradditional financial or other obligations in relation to such defects or deficiencies.In particular, the representations, warranties and indemnities granted in favour of LMIR Trust by theVendors are subject to limitations as to their scope and as to the amount and timing of claims which can bemade thereunder. There can be no assurance that LMIR Trust will be entitled to be reimbursed under suchrepresentations, warranties and indemnities for any and all losses or liabilities suffered or incurred by it asa result of its acquisition, via the Singapore SPCs and Indonesian SPCs, of the Properties.75