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

Risk factorsThe Properties may be subject to increases in operating and other expenses.LMIR Trust’s ability to make distributions to the Unitholders could be adversely affected if operating andother expenses increase without a corresponding increase in revenues. Factors which could increaseoperating and other costs include:• increase in property tax assessments and other statutory charges;• change in statutory laws, regulations or government policies which increase the cost of compliance withsuch laws, regulations or policies;• increase in sub-contracted service costs;• increase in labour costs;• increase in repair and maintenance costs;• increase in the rate of inflation;• increase in insurance premiums; and• increase in cost of utilities.LMIR Trust will not have a right of first refusal to purchase the ROFR Properties if the Sponsorand/or any of its related corporations cease to be a controlling shareholder of the Manager.The Sponsor has granted LMIR Trust, for so long as (a) Lippo-Mapletree Indonesia RetailTrust Management Ltd. remains the manager of LMIR Trust and (b) the Sponsor and/or any of itsrelated corporations, alone or in aggregate, remains a controlling shareholder of the Manager, a ROFRover any Relevant Asset (i) which any Sponsor Entity proposes to sell or transfer (whether such RelevantAsset is wholly-owned or partly-owned by the Sponsor Entity and excluding any sale of such RelevantAsset by a Sponsor Entity to any related corporation of such Sponsor Entity pursuant to a reconstruction,amalgamation, restructuring, merger or any analogous event) to an unrelated third party or (ii) for which aproposed offer for sale or transfer of such Relevant Asset has been made to a Sponsor Entity (see“Certain Agreements Relating to LMIR Trust and the Properties—Description of the Right of First RefusalAgreement”). The Sponsor and/or its related corporations have not given any undertaking to refrain fromdisposing any of its shareholding interest in the Manager. In the event that the Sponsor and/or its relatedcorporations cease to be the controlling shareholder of the Manager, LMIR Trust will no longer have theROFR to purchase such properties, including the ROFR Properties. This may adversely affect LMIRTrust’s pipeline of future acquisitions.RISKS RELATING TO THE PROPERTIESLMIR Trust may exercise its rights under the Put Option Agreement and sell four of the RetailSpaces to the Master Lessee.As at the Latest Practicable Date, four of the seven Retail Spaces, namely Metropolis Town Square Units,Depok Town Square Units, Malang Town Square Units and Grand Palladium Medan Units, are each boundby Kiosks Sale and Purchase Binding Agreements because their strata titles are in the process of beingissued by the Indonesian government. Accordingly, LMIR Trust does not currently have proper legal andgood marketable titles of these four Retail Spaces.The legal process to obtain these strata titles may be lengthy and may only be issued post listing. TheTrustee and the Master Lessee have entered into a put option agreement pursuant to which, in the eventthat the strata titles to these four Retail Spaces are not issued within 24 months from the Listing Date, ameeting of all the Unitholders will be convened by the Trustee pursuant to which the Unitholders will vote,by way of an ordinary resolution, on whether to retain these four Retail Spaces in the portfolio of LMIRTrust for a further six months from the date of the ordinary resolution. In the event that an ordinaryresolution is passed in favour of retaining these four Retail Spaces in the portfolio of LMIR Trust and thestrata titles are still not issued upon expiry of six months from the date of the ordinary resolution, theTrustee shall be entitled to exercise the put option. In the event that an ordinary resolution is not passed in77