Circular - Lippo Malls Indonesia Retail Trust - Investor Relations

Based on the Manager’s experience in relation to the existing portfolio of LMIRTrust, the Manager is of the view that the Pejaten Village Related TenancyAgreements and the Binjai Supermall Related Tenancy Agreements(collectively, the “Related Tenancy Agreements”) are made on normalcommercial terms and are not prejudicial to the interests of LMIR Trust andUnitholders.(See Appendix F “Related Tenancy Agreements” for further details.)3.7. Hak Guna Bangunan (“HGB”)/“Right to Build” Land TitlesLMIR Trust holds some of the September 2012 Portfolio via HGB titles. These are (i) MalLippo Cikarang, (ii) Plaza Madiun and (iii) Sun Plaza. Similarly, LMIR Trust will also holdthe Proposed Properties via HGB titles. Under Indonesian Agrarian Law, the highesttitle which can be obtained by a company incorporated or located in Indonesia is a‘Right to Build’ or HGB title. HGB titles can only be obtained by an Indonesian citizen,or by a legal entity which is incorporated under Indonesian law and located in Indonesiaincluding foreign capital investment (Penanaman Modal Asing, or“PMA”) companies. Aholder of HGB title has the right to erect, occupy and use buildings on that particularparcel of land, and also has the right to encumber and sell all or part of the parcel.The validity period for a HGB title is different from that of a “freehold” title. A “freehold”title has no limitation on the validity period. A HGB title is granted for a maximum initialterm of 30 years. By application to the relevant local land office upon or prior to theexpiration of this initial term, a HGB title may be extended for an additional term notexceeding 20 years. Following expiration of this additional term, a renewal applicationmay be made. The application should be made no later than two years prior to theexpiration of the additional term. The land office has discretion whether to grant thevarious extensions. If the term of HGB titles could not be extended, after the expirationdate of such HGB titles:(i)(ii)(iii)in the event that the HGB title is on state-owned land, such land will become stateowned land;in the event that the HGB title is on right to manage land, such land shall bereturned to the holder of the “right to manage” (hak pengelolaan) in accordancewith the agreement for the granting of HGB title entered into between the formerHGB holder and the holder of the right to manage; andin the event that the HGB title is on “right to own” (hak milik) land, such land shallbe returned to the holder of the right to own in accordance with the agreement forthe granting of HGB title entered into between the former HGB holder and theholder of the right to own.The costs for the extension of HGB title will be determined based on a certain formulasas stipulated by the National Land Office. The land office has discretion to approve orreject the application for the extension of HGB title. The National Land Office, however,tends to grant an extension of HGB titles when the land is still duly used in accordancewith the condition, nature and objective of the granting of such HGB title, all terms andconditions of the granting of such HGB title have been duly fulfilled by the title holder,the title holder is still eligible to hold an HGB title and there has been no change in thezoning policies of the government, abandonment or destruction of land, or revocation ofthe HGB title due to public interest considerations.21