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

Risk factorsor is inaccessible. The non-payment of rent by the Master Lessee will have a material adverse effect onLMIR Trust’s Gross Revenue.RISKS RELATING TO INDONESIALMIR Trust is exposed to economic and real estate market conditions and changes in fiscalpolicies in Indonesia.LMIR Trust is a Singapore-based REIT constituted by the Trust Deed. It is established with the principalinvestment objective of owning and investing 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.All of the Properties are situated in Indonesia. As a result, LMIR Trust’s revenue and results of operationsdepend to a large extent on the performance of the Indonesian economy. An economic decline inIndonesia could adversely affect LMIR Trust’s results of operations and financial growth. Politicalupheavals, natural disasters, insurgency movements, riots and governmental policies all play a pivotalrole in the performance of the Properties.Other local real estate market conditions which may adversely affect the performance of LMIR Trustinclude the attractiveness of competing retail properties, an oversupply of or a reduced demand for retailproperties.LMIR Trust may also be exposed to risks associated with exchange rate fluctuations between theIndonesian Rupiah or the local currency of foreign countries in which LMIR Trust invests in and theSingapore dollar.LMIR Trust will be subject to Indonesian real estate laws, regulations and policies as a result of its propertyinvestments in Indonesia. There may be a negative impact on a property owned by LMIR Trust in Indonesiaas a result of measures and policies adopted by the Indonesian government and regulatory authorities atnational, provincial or local levels, such as governmental control over property investments or regulationsin relation to foreign exchange. Legal protection and recourse available to LMIR Trust in Indonesia may belimited.In addition, the income and gains derived from investment in properties in Indonesia will be subject tovarious types of taxes in Indonesia, including income tax, withholding tax, capital gains tax and any othertaxes that may be imposed specifically for ownership of real estate. All of these taxes, which are subject tochanges in laws and regulations that may lead to an increase in tax rates or the introduction of new taxes,could adversely affect and erode the returns from these properties and hence the distribution toUnitholders.There is also no assurance that LMIR Trust will be able to repatriate to Singapore the income and gainsderived from investment in properties outside Singapore on a timely and regular basis. Any inability torepatriate the income and gains to Singapore will affect LMIR Trust’s ability to make distributions toUnitholders out of such income and gains.The Properties and/or future acquisitions, or a part of them, may be acquired compulsorily bythe Indonesian government.In Indonesia, pursuant to Law No. 20 of 1961 concerning Revocation of Rights of Land and the PropertiesThereon and Law No. 28 of 2002 concerning Building Construction in conjunction with PresidentialRegulation No. 36 of 2005 (as amended by the Presidential Regulation No. 65 of 2006) concerning LandProcurement for the Development of Public Interest, after fulfilling certain procedures and compensatingthe land owners based on reasonable price and prevailing laws and regulations, the Indonesiangovernment has the right to revoke any right over the land and any property thereon owned by anyparty, in order for the Indonesian government (including local governments) to fulfil public needs, includingpublic roads, airports, train stations, water embankments or natural reservations. Therefore, there is noassurance that the Indonesian government will not compulsorily acquire the lands on which the Propertiesare situated.80