LIPPO-MAPLETREE
INDONESIA RETAIL TRUST
OFFER FOR SUBSCRIPTION BY
LIPPO-MAPLETREE
INDONESIA
RETAIL TRUST MANAGEMENT
LTD.
LIPPO-MAPLETREE
INDONESIA RETAIL TRUST
645,469,000 Units
(A real estate investment trust constituted on 8 August 2007
under the laws of the Republic of Singapore)
(Subject to the Over-allotment Option)
Offering Price
S$0.80 per Unit
Prospectus dated 9 November 2007
Registered with the Monetary Authority of Singapore on 9 November 2007
This document is important. If you are in any doubt as to the action you should take,
you should consult your stockbroker, bank manager, solicitor, accountant or other
professional adviser.
Lippo-Mapletree Indonesia Retail Trust Management Ltd.(Company Registration No.
200707703M), as manager (the “Manager”) of Lippo-Mapletree Indonesia Retail Trust
(“LMIR Trust”), is making an offering (the “Offering”) of 645,469,000 units representing
undivided interests in LMIR Trust (“Units”) for subscription at the offering price (the
“Offering Price”) of S$0.80 for each Unit.
The Offering consists of (i) an international placement of 625,469,000 Units to investors,
including institutional and other investors in Singapore (the “Placement”) and (ii) an
offering of 20,000,000 Units to the public in Singapore (the “Public Offer”). The Offering
will be underwritten at the Offering Price by UBS AG, acting through its business group,
UBS Investment Bank (“UBS”), BNP Paribas Capital (Singapore) Ltd. (“BNP”) and OverseaChinese Banking Corporation Limited (“OCBC Bank”, and together with UBS and BNP,
the “Joint Lead Managers, Issue Managers and Underwriters”). UBS is the sole financial
adviser to the Offering (the “Financial Adviser”).
Separate from the Offering, each of Lippo Strategic Holdings Inc. (“Lippo Strategic”) and
Mapletree LM Pte. Ltd. (“Mapletree LM”) (collectively, the “Cornerstone Investors”)
has entered into a cornerstone subscription agreement with the Manager (collectively,
the “Cornerstone Subscription Agreements”) to subscribe for 287,695,000 units and
127,250,000 units respectively at the Offering Price (the “Cornerstone Units”), conditional
upon the underwriting agreement in connection with the Offering (the “Underwriting
Agreement”) having been entered into and not having been terminated pursuant to its
terms on or prior to the Listing Date (as defined herein).
Prior to the Offering, there has been no market for the Units. The offer of Units under this
Prospectus will be by way of an initial public offering in Singapore. Application has been
made to Singapore Exchange Securities Trading Limited (the “SGX-ST”) for permission
to list on the Main Board of the SGX-ST (i) all the Units to be issued pursuant to the
Offering, (ii) all the Cornerstone Units, and (iii) all the units which will be issued to the
Manager from time to time in full or part payment of the Manager’s management fees,
including its acquisition fee and divestment fee. Such permission will be granted when
LMIR Trust has been admitted to the Official List of the SGX-ST (the “Listing Date”).
Acceptance of applications for Units will be conditional upon issue of the Units and upon
permission being granted by the SGX-ST to list the Units. In the event that such permission
is not granted or if the Offering is not completed for any other reason, application monies
will be returned in full, at each investor’s own risk, without interest or any share of revenue
or other benefit arising therefrom, and without any right or claim against LMIR Trust,
the Manager, HSBC Institutional Trust Services (Singapore) Limited, as trustee of LMIR
Trust (the “Trustee”), PT. Lippo Karawaci Tbk (the “Sponsor”), PT. Consulting &
Management Services Division (the “Property Manager”) or any of the Joint Lead Managers,
Issue Managers and Underwriters.
LMIR Trust has received a letter of eligibility from the SGX-ST for the listing and quotation
of Units on the Main Board of the SGX-ST. LMIR Trust’s eligibility to list on the Main
Board of the SGX-ST is not an indication of the merits of the Offering, LMIR Trust, the
Manager, or the Units. The SGX-ST assumes no responsibility for the correctness of any
statements or opinions made or reports contained in this Prospectus. Admission to the
Official List of the SGX-ST is not to be taken as an indication of the merits of the Offering,
LMIR Trust, the Manager or the Units.
Sole Financial Adviser to the Sponsor
Investors who are members of the Central Provident Fund in Singapore (“CPF”) may use
their CPF Ordinary Account savings to purchase or subscribe for Units as an investment
included under the CPF Investment Scheme — Ordinary Account. CPF members are
allowed to invest up to 35.0% of the Investible Savings (as defined herein) in their CPF
Ordinary Accounts to purchase or subscribe for Units.
LMIR Trust is an authorised scheme under the Securities and Futures Act, Chapter
289 of Singapore (the “Securities and Futures Act” or the “SFA”). A copy of this
Prospectus has been lodged with the Monetary Authority of Singapore (the “MAS”)
on 19 October 2007, amended on 22 October 2007 and registered by the MAS on 9
November 2007, respectively. The MAS assumes no responsibility for the contents
of this Prospectus. Lodgement with, or registration by, the MAS of this Prospectus
does not imply that the Securities and Futures Act or any other legal or regulatory
requirements have been complied with. The MAS has not, in any way, considered
the investment merits of the collective investment scheme. This Prospectus will
expire on 9 November 2008 (12 months after the date of the registration).
See “Risk Factors” commencing on page 65 of this Prospectus for a discussion of
certain factors to be considered in connection with an investment in the Units. None
of the Manager, the Trustee, the Sponsor, the Property Manager or the Joint Lead
Managers, Issue Managers and Underwriters guarantees the performance of LMIR
Trust, the repayment of capital or the payment of a particular return on the Units.
Investors applying for Units by way of Application Forms or Electronic Applications (both
as referred to in “Appendix G – Terms, Conditions and Procedures for Application for and
Acceptance of the Units in Singapore”) in the Public Offer will be required to pay the
Offering Price on application, subject to a refund of the full amount or, as the case may be,
the balance of the application monies (in each case, without interest or any share of revenue
or other benefit arising therefrom), where (i) an application is rejected or accepted in part
only, or (ii) the Offering does not proceed for any reason.
In connection with the Offering, the Underwriters have been granted an over-allotment
option (the “Over-allotment Option”) by Lippo Strategic, as unit lender (the “Unit
Lender”), exercisable by UBS (the “Stabilising Manager”), in consultation with the other
Underwriters, in full or in part, on one or more occasions, no later than the earliest of (i)
the date falling 30 days from the date of commencement of trading of the Units on the
SGX-ST, (ii) the date when the Stabilising Manager has bought on the SGX-ST, an
aggregate of 96,820,000 Units, representing not more than 15.0% of the total Units offered,
to undertake stabilising actions or (iii) the date falling 30 days after the date of adequate
public disclosure of the final price of the Units, to purchase from the Unit Lender up to an
aggregate of 96,820,000 Units at the Offering Price, solely to cover the over-allotment of
Units (if any), subject to any applicable laws and regulations. The total number of outstanding
Units immediately after the completion of the Offering, including the Cornerstone Units,
will be 1,060,414,000 Units. The exercise of the Over-allotment Option will not increase
this total number of Units outstanding.
The Units have not been and will not be registered under the U.S. Securities Act of 1933,
as amended (the “Securities Act”) and, subject to certain exceptions, may not be offered
or sold within the United States. The Units are being offered and sold only outside the
United States (including to institutional and other investors in Singapore) in reliance on
Regulation S under the Securities Act ("Regulation S").
Sole Financial Adviser to the Offering
Joint Lead Managers, Issue Managers and Underwriters
LIPPO-MAPLETREE
INDONESIA RETAIL TRUST
LIPPO-MAPLETREE INDONESIA RETAIL TRUST
Lippo-Mapletree Indonesia Retail Trust (“LMIR Trust”) is a
Singapore-based real estate investment trust (“REIT”) established with the principal investment objective of owning and
investing on a long-term basis in a diversified portfolio of incomeproducing real estate in Indonesia that are primarily used for
retail and/or retail-related purposes, and real estate related
assets in connection with the foregoing purposes.
LMIR Trust’s initial asset portfolio will comprise seven retail
mall properties (“Retail Malls”) and seven retail spaces located
within other retail malls (“Retail Spaces”, and collectively with
the Retail Malls, the “Properties”) valued at S$1,004.7 million(1).
The Properties are strategically located in major cities of
Indonesia with large population catchment areas and are
accessible via major transportation routes and highways.
(1)
As at 30 June 2007, the Properties were valued at an aggregate of S$1,004.7 million
by Knight Frank / PT. Willson Properti Advisindo, as the Independent Valuer to
the Manager (“Knight Frank”) and at S$1,016.3 million by Colliers International /
PT Penilai, as the Independent Valuer to the Trustee (“Colliers”). The Manager has
adopted Knight Frank’s valuation as the basis for determination of the fair market
value of the Properties and the net asset value per Unit.
Gajah Mada Plaza
Metropolis Town Square
The Plaza Semanggi
Mall WTC Matahari
Mal Lippo Cikarang
Medan
Grand Palladium Medan
Depok Town Square
Cibubur Junction
Ekalokasari Plaza
Kalimantan
Sumatra
Sulawesi
Istana Plaza
Palembang
Sarmi
Java Supermal
Irian Jaya
Malang Town Square
Jakarta
Makassar
Semarang
Surabaya
Java
Bandung
Bali
Sumbawa
Plaza Madiun
Retail Malls
Retail Spaces
Bandung Indah Plaza
Three of the Retail Malls are located in Jakarta, two in Greater Jakarta (an area
encapsulated by Jakarta, Bogor, Depok, Tangerang and Bekasi) and the remaining
two in Bandung, the fourth largest populated city in Indonesia. As at 30 June
2007, the Retail Malls had an aggregate Net Lettable Area (“NLA”) of 219,382 sq
m and a weighted average occupancy rate of 91.6% based on Committed Leases.
Supported by their diverse trade mix and strategic locations, the Retail Malls
provide shoppers with comprehensive one-stop shopping, dining and
entertainment destinations. Tenants include leading domestic retailers such as
Matahari and Rimo Department Stores, as well as international specialty tenants
such as Fitness First, Starbucks and McDonald’s.
The Retail Spaces have a total NLA of 94,070 sq m as at 30 June 2007, are
predominantly utilised as department stores, supermarkets, hypermarkets and/or
amusement centres and are housed within other retail malls. Three of the Retail
Spaces are located in Greater Jakarta and the remaining four in the cities of
Semarang, Madiun, Malang and Medan. The Retail Spaces are master-leased to
PT. Matahari Putra Prima Tbk, Indonesia’s largest retailer by sales revenue(2), for
an initial term of 10 years with fixed rental growth of 8.0% per annum for the first
four years and a revenue sharing formula thereafter.
(2)
PT. Matahari Putra Prima Tbk is Indonesia’s largest retailer by sales revenue with
over Rp. 8,487.7 billion (approximately S$1,436.0 million) in annual sales for the
financial year ended 31 December 2006.
1. Gajah Mada Plaza
Prominently located in the heart of
Jakarta’s Chinatown with a strong
leisure and entertainment component
o Location
: Jalan Gajah Mada,
Central Jakarta;
(3)
o Appraised Value : S$103.8 m;
(4)
o Gross Floor Area : 66,160 sq m;
o Net Lettable Area(4) : 34,278 sq m;
o Occupancy Rate(4) : 89.1%.
1. Gajah Mada Plaza
2. Cibubur Junction
Located in the middle of Cibubur, one
of the most affluent and upmarket
residential areas in Jakarta
o Location
: Jalan Jambore
Raya 1, Cibubur,
East Jakarta;
(3)
o Appraised Value : S$94.2 m;
(4)
o Gross Floor Area : 49,341 sq m;
o Net Lettable Area(4) : 34,139 sq m;
o Occupancy Rate(4) : 86.4%
3. The Plaza Semanggi
Located in the heart of Jakarta’s CBD
within the city’s Golden Triangle
o Location
: Jalan Jend.
Sudirman,
South Jakarta;
(3)
o Appraised Value : S$214.8 m;
(4)
o Gross Floor Area : 91,232 sq m;
o Net Lettable Area(4) : 58,685 sq m;
o Occupancy Rate(4) : 96.4%
4. Mal Lippo Cikarang
The main shopping centre in the Lippo
Cikarang estate with limited competition
within an approximately 10-km radius
o Location
o
o
o
o
:
Value(3) :
Appraised
Gross Floor Area(4) :
Net Lettable Area(4) :
Occupancy Rate(4) :
2. Cibubur Junction
3. The Plaza Semanggi
Retail Malls
4. Mal Lippo Cikarang
Jalan MH Thamrin,
Lippo Cikarang;
S$80.2 m;
25,767 sq m;
17,974 sq m;
96.3%.
5. Ekalokasari Plaza
Located south east of the Bogor City
Centre and has recently completed a
S$2.0 million expansion and renovation
programme
o Location
: Jalan Siliwangi
123, Bogor,
Greater Jakarta;
(3)
o Appraised Value : S$66.0 m;
(4)
o Gross Floor Area : 39,895 sq m;
o Net Lettable Area(4) : 20,587 sq m;
o Occupancy Rate(4) : 87.3%.
6. Bandung Indah Plaza
Located in the heart of Bandung’s CBD
o Location
: Jalan Merdeka,
Bandung,
West Java;
(3)
o Appraised Value : S$124.5 m;
(4)
o Gross Floor Area : 55,196 sq m;
o Net Lettable Area(4) : 26,472 sq m;
o Occupancy Rate(4) : 83.2%
7. Istana Plaza
Located in the CBD of Bandung at the
junction between two busy roads
o Location
: Jalan Pasirkaliki,
Bandung,
West Java;
(3)
o Appraised Value : S$125.7 m;
(4)
o Gross Floor Area : 37,434 sq m;
o Net Lettable Area(4) : 27,247 sq m;
o Occupancy Rate(4) : 98.9%.
5. Ekalokasari Plaza
As at Listing Date, LMIR Trust’s
property portfolio will comprise
seven Retail Malls with a NLA
of 219,382 sq m. Five of the
Retail Malls are located in Bogor,
Depok, Tangerang and Bekasi
(“Greater Jakarta”) and the remaining two in Bandung, the
fourth largest populated city in
Indonesia. As at 30 June 2007,
the Retail Malls had a weighted
average occupancy of approximately 91.6% based on Committed Leases.
6. Bandung Indah Plaza
7. Istana Plaza
(3) All appraised values are by Knight Frank as at 30 June 2007.
(4) As at 30 June 2007.
Key
Investment
Highlights
Strong acquisition growth potential
The Sponsor has granted LMIR Trust, for so long as (i) Lippo-Mapletree Indonesia Retail Trust Management Ltd.
remains the manager of LMIR Trust; and (ii) the Sponsor and/or any of its related corporations, alone or in
aggregate, remains a controlling shareholder of the Manager, a right of first refusal (the “ROFR”) over any retail
properties located in Indonesia subject to certain conditions. As at Listing Date, the scope of the ROFR
encompasses five properties currently under development by the Sponsor and/or its subsidiaries:
ROFR Properties
Under Development
Binjai Supermall
Pejaten Mall
Kuta Beach Mall
Kemang City Mall
Puri "Paragon City"
Total
Location
Expected Date of
Completion
North Sumatra
South Jakarta
Kuta, Bali
South Jakarta
West Jakarta
Fourth quarter of 2007
Second quarter of 2008
Second half of 2008
First half of 2009
Second half of 2009
Estimated Gross
Floor Area
("GFA")
(sq m)
Estimated NLA
(sq m)
23,615
57,948
41,562
77,555
196,400
397,080
18,300
40,327
30,735
56,052
127,660
273,074
If LMIR Trust acquires all the ROFR Properties, the aggregate NLA of LMIR Trust’s initial property portfolio will
increase by over 270,000 sq m, an increase of 87.4% of the aggregate NLA of LMIR Trust’s initial property portfolio
as at 30 June 2007.
The Sponsor is expected to continue developing retail malls across Indonesia, further enhancing the acquisition
pipeline for LMIR Trust.
Ownership of retail malls in Indonesia is highly dispersed and fragmented, providing LMIR Trust with significant
opportunities for such acquisitions. As at the Latest Practicable Date, the Manager has entered into non-binding
memoranda of understanding in respect of the potential acquisition of the following malls:
Location
GFA (sq m)
NLA (sq m)
Cosmopolitan Mall Pluit
North Jakarta
131,013
88,040
Sun Plaza
Supermal Pakuwon Indah
and Pakuwon Trade Centre
Total
North Sumatra
West Surabaya,
East Java
73,871
61,348
289,563
494,447
114,834
264,222
Estimated date
of acquisition
by LMIR Trust
Second half of 2008
Within six months
after the Listing Date
Within six months
after the Listing Date
Exposure to the growing Indonesian retail sector
Real GDP growth in Indonesia is forecast to increase from 5.5% in 2006 to 6.0% in 2007 and 6.1% in 2008.
Average growth rate from 2007 to 2011 is forecast at 5.7%(5).
Nominal retail sales growth has averaged 11.0% per annum since 1999 with the growth rate forecast
to continue from 2007 to 2011(5).
Retail sales have also been boosted by a lifestyle shift towards a higher level of consumerism, particularly
among the urban middle income group in major Indonesian cities such as Jakarta, Bandung, Semarang and Medan.
(5)
According to PT Jones Lang LaSalle
Stable and
Growing
Distributions
Forecast and Projected DPU(7) (Cents)
5.84
Majority of Forecast and Projected
Gross Rent Already Committed (S$ m)
6.27
84.8
40.1
2.74
91.6
80.9%
66.8%
Projection
Year
2008
Projection
Year
2009
91.3%
Forecast
Period
2007(8)
Projection
Year
2008
Projection
Year
2009
(7) Based on the Offering Price of S$[•] and the various assumptions set out in the
Prospectus under the heading “Profit Forecast and Profit Projection”.
(8) Based on the number of Units that are assumed to be in issue as at the Listing Date.
It is assumed that the number of Units eligible for distribution is the same throughout
Forecast Period 2007.
(9) Annualised Figures for Forecast Period 2007
LMIR Trust’s distribution policy is to distribute 100% of its tax-exempt income
and capital receipts for the period from Listing Date to 31 December 2007, the
year ending 31 December 2008 (”Projection Year 2008”) and the year ending
31 December 2009 (“Projection Year 2009”) and at least 90% of its tax-exempt
income thereafter.
Distributions will be paid on a quarterly basis for the three-month periods
ending on 31 March, 30 June, 30 September and 31 December each year.
LMIR Trust’s first distribution after the Listing Date will be paid by the manager
on or before 30 May 2008.
Potential for growth through active asset management and tenant re-mixing
The Manager intends to undertake active asset management to maximise the
value and performance of the Properties.
Three of the Retail Malls have recently completed extensive asset enhancement
works and a fourth Retail Mall, The Plaza Semanggi, is currently undergoing
asset enhancement works.
The completion of these asset enhancement works are expected to enhance
the positioning and branding of the Retail Malls within their respective trade
areas and increase shopper traffic.
The Sponsor of LMIR Trust is PT. Lippo Karawaci Tbk, Indonesia’s largest
listed property company
The Sponsor is an internationally recognised corporation and is the largest
listed property company in Indonesia(6) by market capitalisation.
It has a recognised track record and dominant position within the retail and
retail property industry in Indonesia, with the ability to identify and enhance
under-valued retail properties and leverage its extensive retail network.
(6)
Based on its market capitalisation on the Jakarta Stock Exchange (‘‘JSX’’) of Rp. 10,609.2 billion
(approximately S$1.8 billion) and a closing price of Rp. 1,790.0 on the JSX as at 18 October 2007
The Manager, Lippo-Mapletree Indonesia Retail Trust Management Ltd., is
jointly owned by Lippo Karawaci and the Mapletree Group
The Manager is incorporated in Singapore and indirectly 60.0% owned by the
Sponsor and 40.0% owned by Mapletree Capital, a wholly-owned subsidiary
of Mapletree Investments Pte Ltd (“MIPL”).
The Mapletree Group, which MIPL is a part of, has an asset base of approximately S$4.5 billion (as at 30 June 2007) comprising office, logistics, industrial,
residential and retail/lifestyle properties.
The interests of Lippo Strategic, an affiliate of the Sponsor, and the Mapletree
Group are substantially aligned with those of Unitholders
Lippo Strategic and the Mapletree Group (through MIPL) will each own 27.1%
and 12.0%, respectively, of the total issued Units of LMIR Trust as at the Listing
Date, assuming that the Over-Allotment Option is not exercised.
Forecast
Period
2007(9)
Locked-in master leases with rental step-ups for the Retail Spaces
As at the Listing Date, the Retail Spaces will be master-leased to PT. Matahari Putra Prima Tbk (”Matahari”) for 10 years
with an option for the Master Lessee to renew for a further 10 years. Rental income is scheduled to increase by 8.0%
per annum for the period from FY2008 to FY2011 and in accordance with a revenue sharing formula thereafter.
Hedging strategies to minimise exposure arising from interest rates and currency fluctuations
The Trustee has entered into foreign exchange hedges equivalent to 100.0% of LMIR Trust’s estimated distributions
for a total term of five years.
Thereafter it intends to continually hedge distributions on a rolling basis.
Optimal capital structure
LMIR Trust will not incur any borrowings as at the Listing Date and will have substantial ability to incur indebtedness to
fund future acquisitions and asset enhancement initiatives.
Tax exemptions in Singapore
Dividends and interest received in respect of the Properties are exempt from Singapore income tax. Distributions made
out of such tax-exempt income are also exempt from tax in the hands of the Unitholders.
Competent and experienced personnel
LMIR Trust intends to leverage on the experience and expertise of its Board to implement its planned strategies.
Key
Investment
Highlights
Competitive
Strengths
The Properties are located in major cities of Indonesia amidst a growing
and affluent urban middle class
The properties are mainly located within Greater Jakarta and Bandung,
Indonesia’s fourth most populous city. From 2001 to 2006, total household
expenditure in Jakarta and Bandung has increased by an average of 12.8%
and 11.5% per annum respectively.
Retail spending in these cities has been further boosted by a shift in lifestyle
towards a higher level of consumerism, partially brought about by the introduction
of foreign brands and designer labels.
High growth potential from favourable demographics of the Indonesian
population
The share of population of the middle income group in Indonesia has steadily
grown from 50.0% in 2001 to 64.0% in 2006. It is estimated that the urban
middle income population in Indonesia totals approximately 66 million people(10),
(10) (See “Appendix F - Independent Report on the Indonesia Retail Property Market”.)
Retail Malls and Retail Spaces strategically located within well-established
population catchment areas.
The Retail Malls are strategically located throughout Greater Jakarta with a
population range of between approximately 0.4 million and 2.2 million within
their respective primary catchment areas.
The Retail Spaces are strategically located throughout Greater Jakarta and
in the major cities of Semarang, Medan, Madiun and Malang.
Quality Retail Malls which cater to the daily needs of shoppers
The Retail Malls are anchored by supermarkets, hypermarkets or department
stores, which draw significant shopper traffic whilst the specialty, food &
beverage and lifestyle and entertainment tenants provide shoppers with a
wide product offering and a complete shopping experience.
Economies of scale through portfolio management of the Retail Malls
The Retail Malls will be able to leverage upon the Property Manager’s and the
Sponsor’s experience and will be managed by a specialised team of professionals.
Quality tenant base
The Retail Malls have a large combined tenant base of over 1,400 tenants (as
at 30 June 2007) providing trade as well as product diversification.
Top tenants include well-known international and domestic retailers and brand
names such as Giant Hypermarket, Gramedia bookstore, Starbucks, Giordano,
Fitness First, Sports Station, Matahari Department Store, Hypermart and
Studio 21 Cinema.
Advance rental payment structure minimises cashflow volatility
Retail tenants in Indonesia typically pay an advance rental of approximately
10% to 20% of the total rent payable for the duration of the lease upon signing
the lease agreement. This advance rental payment helps to minimise LMIR
Trust’s cash flow volatility due to potential rental arrears.
1. Mall WTC Matahari Units
Strategically located on the main road connecting the BSD residential estate, the largest
residential estate in Greater Jakarta
o Location
: Jalan Raya Serpong,
Tangerang,
Greater Jakarta;
o Appraised Value(3) : S$25.2 m;
o Net Lettable Area(4) : 11,184 sq m;
o Current Utilisation : Hypermart, Matahari
Department Store and
Timezone
1. Mall WTC Matahari Units
2. Metropolis Town Square Units
A one-stop shopping mall located along one
of the main roads in Tangerang
o Location
: Jalan Hartono Raya,
Tangerang,
Greater Jakarta;
o Appraised Value(3) : S$33.5 m;
o Net Lettable Area(4) : 15,248 sq m;
o Current Utilisation : Hypermart, Matahari
Department Store and
Timezone
2. Metropolis Town Square Units
3. Depok Town Square Units
Retail Spaces
The Retail Spaces occupy a
total NLA of 94,070 sq m and
and are strategically located
as anchor spaces within retail
malls. Three of the seven
Retail Spaces are located
within Greater Jakarta and
four are situated in the
major cities of Semarang,
Medan, Madiun and Malang.
4. Java Supermall Units
5. Malang Town Square Units
6. Plaza Madiun
7. Grand Palladium Medan Units
3. Depok Town Square Units
Depok Town Square is located adjacent to the
University of Indonesia and has direct access
to Pondok Cina Railway Station
o Location
: Jalan Margonda Raya,
Depok, Greater Jakarta;
(3)
o Appraised Value
: S$25.7 m;
(4)
o Net Lettable Area : 13,045 sq m;
o Current Utilisation : Hypermart, Matahari
Department Store and
Timezone
4. Java Supermall Units
Located in Semarang, capital of Central Java
province and the fifth largest city in terms of
population in Indonesia
o Location
: Jalan MT Haryono,
Semarang, Central Java;
(3)
o Appraised Value
: S$26.0 m;
(4)
o Net Lettable Area : 11,082 sq m;
o Current Utilisation : Matahari Department Store
and Foodmart supermarket
5. Malang Town Square Units
Conceptualised as an international lifestyle
mall, the biggest and most comprehensive mall
in Malang
o Location
: Jalan Veteran, Malang,
East Java;
(3)
o Appraised Value
: S$25.5 m;
(4)
o Net Lettable Area : 11,065 sq m;
o Current Utilisation : Hypermart, Matahari
Department Store and
Timezone
6. Plaza Madiun
The biggest mall in Madiun, located along
Pahlawan Street, a major road of the city
o Location
Appraised Value(3)
:
o
:
o Net Lettable Area(4) :
o Current Utilisation :
Jalan Pahlawan,
Madiun, East Java;
S$33.4 m;
19,029 sq m;
Matahari Department Store
and Foodmart supermarket
7. Grand Palladium Medan Units
Located within the Medan CBD and surrounded
by government and business offices and the
town hall
o Location
: Jalan Kapt. Maulana Lubis,
Medan, North Sumatra;
o Appraised Value(3) : S$26.2 m;
o Net Lettable Area(4) : 13,417 sq m;
o Current Utilisation : Hypermart, Matahari
Department Store and
Timezone
Strategy
The Manager’s key objectives are to deliver regular and stable
distributions to Unitholders and to achieve long-term growth in
the NAV per Unit in order to provide Unitholders with capital
appreciation on their investments. The Manager plans to achieve
these objectives through the following strategies:
i) Acquisition Growth Strategy
LMIR Trust’s acquisition growth strategy envisages
investments in retail and/or retail-related assets that are
in the interest of Unitholders
ii) Active Asset Enhancement and Management Strategy
Implementing pro-active measures to enhance the returns
from existing and future properties. Such measures may
include:
Addition and alteration works
Leveraging and enhancing the properties’ competitive
strengths to optimise rentals
Enhancement projects to maintain competitive positioning
of the properties
iii) Capital And Risk Management Strategy
The key aspects of the proposed capital and risk management
strategy are as follows:
Maintain a strong balance sheet by adopting and maintaining a target gearing ratio
Secure diversified funding sources from financial institutions and capital markets
Adopt a proactive strategy to manage risks related to interest rate fluctuations
Manage the foreign exchange exposure through hedging,
where appropriate
Notice to investors
No person is authorised to give any information or to make any representation not contained in this
Prospectus and any information or representation not so contained must not be relied upon as having been
authorised by or on behalf of LMIR Trust, the Manager, the Trustee, the Financial Adviser, the Underwriters,
the Sponsor or the Property Manager. Neither the delivery of this Prospectus nor any offer, subscription,
sale or transfer made hereunder shall under any circumstances imply that the information herein is correct
as at any date subsequent to the date hereof or constitute a representation that there has been no change
or development reasonably likely to involve a material adverse change in the business, affairs, conditions
and prospects of LMIR Trust, the Manager, the Trustee or the Units since the date on the front cover of this
Prospectus. Where such changes occur and are material or required to be disclosed by law, the SGX-ST
and/or any other regulatory or supervisory body or agency, the Manager will make an announcement of the
same to the SGX-ST and, if required, lodge and issue a supplementary document or replacement
document pursuant to Section 298 of the Securities and Futures Act and take immediate steps to
comply with the said Section 298. Investors should take notice of such announcements and
documents and upon release of such announcements and documents shall be deemed to have notice
of such changes.
No representation, warranty or covenant, express or implied, is made by any of LMIR Trust, the Manager,
the Trustee, the Financial Adviser, the Underwriters, the Sponsor, the Property Manager or any of their
respective affiliates, directors, officers, employees, agents, representatives or advisers as to the accuracy
or completeness of the information contained herein, and nothing contained in this Prospectus is, or shall
be relied upon as, a promise, representation or covenant by any of LMIR Trust, the Manager, the
Underwriters, the Sponsor, the Property Manager or the Trustee or their respective affiliates, directors,
officers, employees, agents, representatives or advisers.
Investors acknowledge that no person has been authorised to give any information or to make any
representation concerning LMIR Trust or the Units other than as contained in this Prospectus, and, if given
or made, such other information or representation should not be relied upon as having been authorised by
LMIR Trust, the Manager, the Trustee, the Sponsor, the Property Manager, the Financial Adviser or the
Underwriters.
None of LMIR Trust, the Manager, the Financial Adviser, the Underwriters, the Sponsor, the Property
Manager and the Trustee or any of their respective affiliates, directors, officers, employees, agents,
representatives or advisers is making any representation or undertaking to any purchaser or subscriber of
the Units regarding the legality of an investment by such purchaser or subscriber under appropriate legal,
investment or similar laws. In addition, this Prospectus is offered solely for the purpose of the Offering and
investors in the Units should not construe any information contained in this Prospectus as legal, business,
financial or tax advice. Investors should be aware that they are required to bear the financial risks of an
investment in the Units, and may be required to do so for an indefinite period of time. Investors should
consult their own professional advisers as to the legal, tax, business, financial and related aspects of an
investment in the Units.
Copies of this Prospectus and the Application Forms may be obtained on request, subject to availability,
during office hours, from:
UBS AG, acting through
its business group,
UBS Investment Bank
One Raffles Quay
#50-01 North Tower
Singapore 048583
BNP Paribas,
Singapore Branch
Oversea-Chinese Banking
Corporation Limited
20 Collyer Quay
Tung Centre #01-01
Singapore 049319
65 Chulia Street
OCBC Centre
Singapore 049513
and, where applicable, from members of the Association of Banks in Singapore, members of the SGX-ST
and merchant banks in Singapore. A copy of this Prospectus is also available on the SGX-ST website:
http://www.sgx.com.
i
The distribution of this Prospectus and the offering, subscription, purchase, sale or transfer of the Units in
certain jurisdictions may be restricted by law (see “Plan of Distribution—Distribution and Selling
Restrictions”). LMIR Trust, the Manager, the Trustee, the Financial Adviser, the Underwriters, the
Sponsor and the Property Manager require persons into whose possession this Prospectus comes to
inform themselves about and to observe any such restrictions at their own expense and without liability to
LMIR Trust, the Manager, the Trustee, the Financial Adviser, the Underwriters, the Sponsor and the
Property Manager. This Prospectus does not constitute, and the Manager, the Trustee, the Underwriters,
the Sponsor and the Property Manager are not making, an offer of, or an invitation to subscribe for or
purchase, any of the Units in any jurisdiction in which such offer or invitation would be unlawful. Investors
are authorised to use this Prospectus solely for the purpose of considering the subscription for the Units in
the Offering. Persons to whom a copy of this Prospectus has been issued shall not circulate to any other
person, reproduce or otherwise distribute this Prospectus or any information herein for any purpose
whatsoever nor permit or cause the same to occur. No one has taken any action that would permit a public
offering to occur in any jurisdiction other than Singapore.
In connection with the Offering, the Stabilising Manager (or persons acting on behalf of the Stabilising
Manager) may, in consultation with the Underwriters, over-allot or effect transactions which stabilise or
maintain the market price of the Units at levels that might not otherwise prevail in the open market. Such
transactions may be effected on the SGX-ST and in other jurisdictions where it is permissible to do so, in
each case in compliance with all applicable laws and regulations, including the Securities and Futures Act
and any regulations thereunder. However, there is no assurance that the Stabilising Manager (or persons
acting on behalf of the Stabilising Manager) will undertake any such stabilising actions. Such transactions
may commence on or after the date of the commencement of trading of the Units on the SGX-ST and, if
commenced, may be discontinued at any time and shall not be effected after the earliest of (i) the date
falling 30 days from the commencement of trading of the Units on the SGX-ST, (ii) the date when the
Stabilising Manager has bought on the SGX-ST, an aggregate of 96,820,000 Units, representing not more
than 15.0% of the total Units offered, to undertake stabilising actions or (iii) the date falling 30 days after the
date of adequate public disclosure of the final price of the Units.
ii
Forward-looking statements
Certain statements in this Prospectus constitute “forward-looking statements”. This Prospectus also
contains forward-looking financial information in “Profit Forecast and Profit Projection” and other sections.
Such forward-looking statements and financial information involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance or achievements of
LMIR Trust, the Manager, the Sponsor, the Property Manager or industry results, to be materially different
from any future results, performance or achievements expressed or implied by such forward-looking
statements and financial information. Such forward-looking statements and financial information are
based on numerous assumptions regarding the Manager’s present and future business strategies and the
environment in which LMIR Trust, the Manager, the Sponsor or the Property Manager will operate in the
future. Because these statements and financial information reflect the Manager’s current views
concerning future events, these statements and financial information necessarily involve risks,
uncertainties and assumptions. Actual future performance could differ materially from these forwardlooking statements and financial information. You should not place any undue reliance on these forwardlooking statements.
Among the important factors that could cause LMIR Trust’s, the Manager’s, the Sponsor’s or the Property
Manager’s actual results, performance or achievements to differ materially from those in the forwardlooking statements and financial information are the condition of, and changes in, the domestic, regional
and global economies including, but not limited to, factors such as political, economic and social conditions
in Indonesia, environmental conditions, such as earthquakes and floods, and viral epidemics such as avian
flu and severe acute respiratory syndrome (“SARS”) that may adversely affect the performance and
operating results for LMIR Trust’s properties or future acquisitions, changes in government laws and
regulations affecting LMIR Trust, competition in the Indonesian property market, currency exchange rates,
interest rates, inflation, relations with service providers, relations with lenders, the quality of tenants,
hostilities (including future terrorist attacks), the performance and reputation of LMIR Trust’s properties
and/or future acquisitions, difficulties in identifying future acquisitions, difficulties in completing and
integrating future acquisitions, changes in the Manager’s board of directors and executive officers,
risks related to natural disasters, general volatility of the capital markets, the effects of uncertainties in
the Indonesian legal system (which could limit the legal protections available to foreign investors, including
with respect to the enforcement of foreign judgments in Indonesia), general risks relating to retail malls and
the market price of the Units as well as other matters not yet known to the Manager or not currently
considered material by the Manager.
Additional factors that could cause actual results, performance or achievements to differ materially
include, but are not limited to, those discussed under “Risk Factors”, “Profit Forecast and Profit
Projection”, “Business and Properties” and “Appendix F—Independent Report on the Indonesian
Retail Property Market”. These forward-looking statements and financial information speak only as at
the date of this Prospectus. The Manager expressly disclaims any obligation or undertaking to release
publicly any updates of or revisions to any forward-looking statement or financial information contained
herein to reflect any change in the Manager’s expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement or information is based, subject to compliance
with all applicable laws and regulations and/or the rules of the SGX-ST and/or any other relevant
regulatory or supervisory body or agency.
iii
Certain defined terms and conventions
LMIR Trust will publish its financial statements in Singapore dollars. In this Prospectus, references to “S$” or
“Singapore dollars” are to the lawful currency of the Republic of Singapore, references to “Rp.” or “Indonesian
Rupiah” are to the lawful currency of the Republic of Indonesia, references to “MYR” are to the lawful
currency of Malaysia, references to “A$” are to the lawful currency of Australia while references to “US$” or
“US dollars” are to the lawful currency of the United States of America. For the reader’s convenience, except
where the exchange rate between the Indonesian Rupiah and the Singapore dollar is expressly stated
otherwise, certain Indonesian Rupiah amounts in this Prospectus have been translated into Singapore
dollars based on the exchange rate of Rp. 5,908.2 = S$1.00, which was the average exchange rate of Bank
Indonesia for Singapore dollars on 29 June 2007. However, such translations should not be construed as
representations that Indonesian Rupiah amounts have been, could have been or could be converted into
Singapore dollars at that or any other rate (see “Exchange Rates and Exchange Controls”).
Capitalised terms used in this Prospectus shall have the meanings set out in the Glossary.
Unless otherwise stated, data relating to the unaudited pro forma consolidated balance sheet of LMIR
Trust as at the Listing Date has been prepared on the bases set out in “Appendix B—Independent
Accountants’ Report on the Unaudited Pro Forma Consolidated Balance Sheet as at the Listing Date”.
LMIR Trust’s unaudited pro forma consolidated balance sheet as at the Listing Date and its profit forecast
and projection have been prepared in accordance with the Singapore Financial Reporting Standards.
This Prospectus contains certain information with respect to the trade sectors of LMIR Trust’s tenants. The
Manager has determined the trade sectors in which LMIR Trust’s tenants are primarily involved are based
upon the Manager’s general understanding of the business activities conducted by such tenants in the
premises occupied by them. The Manager’s knowledge of the business activities of LMIR Trust’s tenants is
necessarily limited and such tenants may conduct business activities that are in addition to, or different
from, those shown herein.
The forecast and projected yields and yield growth are calculated based on the Offering Price. Such yields
and yield growth will vary accordingly for investors who purchase Units in the secondary market at a market
price different from the Offering Price.
Any discrepancies in the tables, graphs and charts included in this Prospectus between the listed amounts
and totals thereof are due to rounding. Where applicable, figures and percentages are rounded to one
decimal place and measurements in square metres (“sq m”) are converted to square feet (“sq ft”) and vice
versa based on the conversion rate of 1 sq m = 10.7639 sq ft. A “hectare” (“ha”) is a unit of area equal to
10,000 sq m, or approximately 2.471 acres. References to “Appendix” or “Appendices” are to the
appendices set out in this Prospectus. All references in this Prospectus to dates and times shall mean
Singapore dates and times unless otherwise specified.
iv
Market and industry information
This Prospectus includes market and industry data and forecasts that have been obtained from internal
surveys, reports and studies, where appropriate, as well as market research, publicly available information
and industry publications. Industry publications, surveys and forecasts generally state that the information
they contain has been obtained from sources believed to be reliable, but there can be no assurance as to
the accuracy or completeness of such included information. While the Manager has taken reasonable
steps to ensure that the information is extracted accurately and in its proper context, the Manager has not
independently verified any of the data from third party sources or ascertained the underlying economic
assumptions relied upon therein. Consequently, none of LMIR Trust, the Manager, the Trustee, the
Sponsor, the Property Manager or the Underwriters makes any representation as to the accuracy or
completeness of such information.
v
TABLE OF CONTENTS
Page
Summary . . . . . . . . . . . . . . . . . . . . . . . . .
Risk factors . . . . . . . . . . . . . . . . . . . . . . .
Use of proceeds . . . . . . . . . . . . . . . . . . . .
Ownership of Units . . . . . . . . . . . . . . . . . .
Distributions . . . . . . . . . . . . . . . . . . . . . . .
Exchange rates and exchange controls . .
Capitalisation . . . . . . . . . . . . . . . . . . . . . .
Unaudited pro forma consolidated
balance sheet as at the Listing Date . . .
Profit forecast and profit projection . . . . . .
Strategy . . . . . . . . . . . . . . . . . . . . . . . . . .
Business and properties . . . . . . . . . . . . . .
The Manager and corporate
governance . . . . . . . . . . . . . . . . . . . . . .
The Sponsor. . . . . . . . . . . . . . . . . . . . . . .
The formation and structure of LMIR
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain agreements relating to LMIR
Trust and the Properties . . . . . . . . . . . .
Overview of relevant laws and regulations
in Indonesia . . . . . . . . . . . . . . . . . . . . .
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan of distribution . . . . . . . . . . . . . . . . . .
Clearance and settlement. . . . . . . . . . . . .
vi
1
65
88
89
91
93
95
96
98
112
118
188
208
214
223
241
249
255
265
Page
Experts . . . . . . . . . . . . . . . . . . . . . . . . .
General information . . . . . . . . . . . . . . . .
Glossary . . . . . . . . . . . . . . . . . . . . . . . . .
Appendix A—Independent accountants’
report on the profit forecast and profit
projection . . . . . . . . . . . . . . . . . . . . . .
Appendix B—Independent accountants’
report on the unaudited pro forma
consolidated balance sheet as at the
listing date . . . . . . . . . . . . . . . . . . . . .
Appendix C—Independent Singapore
taxation report . . . . . . . . . . . . . . . . . .
Appendix D—Independent Indonesian
taxation report . . . . . . . . . . . . . . . . . .
Appendix E—Independent property
valuation summary reports . . . . . . . . .
Appendix F—Independent report on the
Indonesian retail property market . . . .
Appendix G—Terms, conditions and
procedures for application for and
acceptance of the units in Singapore. .
Appendix H—List of present and past
principal directorships of directors and
executive officers . . . . . . . . . . . . . . . .
.
.
.
266
267
271
.
A-1
.
B-1
.
C-1
.
D-1
.
E-1
.
F-1
.
G-1
.
H-1
Summary
The following summary is qualified in its entirety by, and is subject to, the more detailed information
contained or referred to elsewhere in this Prospectus. Investing in the Units involves risks. Investors
should read this Prospectus in its entirety and, in particular, the sections from which the information in this
summary is extracted and “Risk Factors”. The meanings of terms not defined in this summary can be found
in the “Glossary” or in the Trust Deed (as defined herein). A copy of the Trust Deed can be inspected at the
registered office of the Manager, which is located at 78 Shenton Way, #05-01 Lippo Centre,
Singapore 079120.
Statements contained in this summary that are not historical facts may be forward-looking statements.
Such statements are based on certain assumptions and are subject to certain risks, uncertainties and
assumptions which could cause actual results to differ materially from those forecast or projected (see
“Forward-Looking Statements”). Under no circumstances should the inclusion of such information herein
be regarded as a representation, warranty or prediction with respect to the accuracy of the underlying
assumptions by the Manager, the Trustee, the Underwriters, the Sponsor, the Property Manager or any
other person or that these results would be achieved or are likely to be achieved.
OVERVIEW OF LMIR TRUST—THE FIRST INDONESIAN RETAIL REIT OFFERING IN SINGAPORE
LMIR Trust is a Singapore-based real estate investment trust (“REIT”) constituted by a trust deed dated
8 August 2007 (as amended by a first supplemental deed dated 18 October 2007) entered into between the
Trustee and the Manager (the “Trust Deed”). It is established with the principal investment objective of
owning and investing on a long-term basis in a diversified portfolio of income-producing real estate in
Indonesia that are primarily used for retail and/or retail-related purposes, and real estate related assets in
connection with the foregoing purposes.
Indonesia’s real GDP growth has gathered pace, rising from 3.8% in 2001 to 5.5% in 2006 and is forecast
to grow by 6.0% in 2007 and 6.1% in 2008. Interest rates and inflation are expected to fall when measures
taken by the Indonesian government to improve the business environment and encourage investments
begin to take effect. Spurred by the economic development in Indonesia, the share of population within the
middle income group has grown steadily from 50.0% in 2001 to 64.0% in 2006. It is estimated that the
urban middle income population in Indonesia totals approximately 66 million people. (See “Appendix F—
Independent Report on the Indonesian Retail Property Market”.)
As at Listing Date, LMIR Trust’s property portfolio will comprise seven retail mall properties (the “Retail
Malls”) and seven retail spaces located within other retail malls (the “Retail Spaces”, and collectively with
the Retail Malls, the “Properties”), all of which are located in Indonesia. (See “—Information on the
Properties”.) It is intended that LMIR Trust’s investments will be made on a long-term basis. The Properties
are strategically located in major cities of Indonesia with large population catchment areas and are
accessible via major transportation routes and highways. Three of the Retail Malls are located in Jakarta,
two in Greater Jakarta (an area encapsulated by Jakarta, Bogor, Depok, Tangerang and Bekasi) and the
remaining two in Bandung, the fourth largest populated city in Indonesia. The Retail Malls are popular in
their respective population catchment areas. The Retail Malls are supported by their diverse trade mix and
strategic locations, and provide shoppers with comprehensive one-stop shopping, dining and
entertainment destinations. As at 30 June 2007, the Retail Malls had an aggregate Net Lettable Area
(“NLA”) of 219,382 sq m, and a weighted average occupancy rate of 91.6% based on Committed Leases.
The tenant profile of the Retail Malls includes leading domestic retailers such as Matahari and Rimo
Department Stores, Hero Supermarket and Foodmart supermarket (formerly known as Matahari
Supermarket) and Hypermart, which are well-complemented by international specialty tenants such as
Fitness First, Starbucks, McDonald’s, Kentucky Fried Chicken and Pizza Hut as well as other domestic
tenants.
The Retail Spaces, which have a total NLA of approximately 94,070 sq m as at 30 June 2007, are
predominantly utilised as department stores, supermarkets, hypermarkets and/or amusement centres
and are housed within other retail malls. Three of the Retail Spaces are located in Greater Jakarta and the
remaining four in the cities of Semarang, Madiun, Malang and Medan. As at Listing Date, each of the Retail
Spaces will be leased to PT. Matahari Putra Prima Tbk (“Matahari” or the “Master Lessee”) under master
lease agreements (the “Master Lease Agreements”), for an initial term of 10 years, with an option granted
to Matahari to renew for another 10 years. The Master Lease Agreements contain provisions for increase
in rental revenues through step-ups in the base rent of 8.0% per annum commencing from 1 January 2008
and ending on 31 December 2011 and thereafter, a fixed percentage of 4.25% over the increase in the
1
Master Lessee’s net revenue. (See “Certain Agreements Relating to LMIR Trust and the Properties—
Description of the Master Lease Agreements—Lease Rental”.)
Each of the Properties will be wholly-owned by LMIR Trust through special purpose companies (“SPCs”)
(see “—Structure of LMIR Trust”).
Key investment highlights
The Manager believes that an investment in LMIR Trust offers the following attractions to Unitholders:
LMIR Trust is the first Indonesian retail REIT offering in Singapore
• LMIR Trust will be the first REIT in Singapore to provide exposure to Indonesia’s growing retail sector.
• The Retail Malls are anchored by leading Indonesia retailers and well-complemented by international
and domestic specialty tenants, providing shoppers and their families with a wide offering of products.
• As at the Listing Date, the Retail Spaces will be leased to Matahari, Indonesia’s largest retailer by sales
revenue, for an initial term of 10 years with annual rental step-ups.
• The Retail Malls and Retail Spaces are strategically located within large population catchments
supported by neighbouring residential precincts, offices, schools and industrial estates.
Exposure to the growing Indonesia retail sector, in particular the major cities of Jakarta,
Bandung, Semarang and Medan
• According to PT Jones Lang LaSalle (the “Independent Indonesian Retail Property Consultant”),
real GDP growth in Indonesia has gathered pace, rising from 3.8% in 2001 to 5.5% in 2006 and is
forecast to grow by 6.0% in 2007 and 6.1% in 2008. Average growth rate from 2007 to 2011 is forecast at
5.7%.
• Interest rates and inflation are expected to fall when measures taken by the Indonesian government to
improve the business environment and encourage investments begin to take effect.
• On 26 April 2007, the Indonesian government enacted Law No. 25 of 2007 on Investment (the “New
Investment Law”) which revokes the previous Foreign and Domestic Investment law. The New
Investment Law provides and supports, among others, investment incentives and more open
investments in Indonesia. These will include granting longer periods for property ownership and
land use rights. The New Investment Law further simplifies the investment procedures and certain
other arrangements which the Indonesian government believes will provide Indonesia with more
competitive advantages that will act as incentives to attract increased levels of long-term foreign
investment to Indonesia.
• Economic growth in the past few years and the growth of the middle class have contributed to a
consistent growth in retail sales. The retail sector was the first sector to recover from the economic crisis
which hit Indonesia in 1998, with retail trade increasing by over 60.0% in 1999. The rapid recovery was
driven predominantly by strong domestic consumption, which also served as a primary driver of
Indonesia’s recovery and economic growth.
• Nominal retail sales growth has averaged 11.0% per annum since 1999 with the growth rate forecast to
continue from 2007 to 2011.
• Apart from the favourable macroeconomic conditions, retail sales have also been boosted by a lifestyle
shift towards a higher level of consumerism, in particular, among the urban middle income group
centered in the major Indonesian cities such as Jakarta, Bandung, Semarang and Medan.
(See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
Strong acquisition growth potential supported by robust acquisition pipeline from the Sponsor
and acquisitions from third parties
• The Sponsor has granted LMIR Trust, for so long as:
(i)
Lippo-Mapletree Indonesia Retail Trust Management Ltd. remains the manager of LMIR Trust; and
(ii) the Sponsor and/or any of its related corporations, alone or in aggregate, remains a controlling
shareholder of the Manager;
2
a right of first refusal (the “ROFR”) over any retail properties located in Indonesia (each such property
referred to as a “Relevant Asset”):
(a) which the Sponsor or any of its subsidiaries (each a “Sponsor Entity”) proposes to sell or transfer
(whether such Relevant Asset is wholly-owned or partly-owned by the Sponsor Entity and
excluding any sale of such Relevant Asset 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
(b) for which a proposed 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
Refusal Agreement”.)
As at Listing Date, the scope of the ROFR encompasses five properties currently under development by
the Sponsor and/or its subsidiaries, as set out in the table below (the “ROFR Properties”):
ROFR Properties
under development
Binjai Supermall . . .
Pejaten Mall . . . . . .
Kuta Beach Mall . . .
Kemang City Mall . .
Puri “Paragon City” .
Location
..
..
..
..
..
..
..
..
..
..
.
.
.
.
.
. . North Sumatra
. . South Jakarta
. . Kuta, Bali
. . South Jakarta
. . West Jakarta
Expected date
of completion
Fourth quarter of 2007
Second quarter of 2008
Second half of 2008
First half of 2009
Second half of 2009
Estimated
Gross Floor
Area (‘‘GFA”)
Estimated
NLA
(sq m)
(sq m)
23,615
57,948
41,562
77,555
196,400
397,080
18,300
40,327
30,735
56,052
127,660
273,074
• The ROFR Properties are expected to have an aggregate GFA of approximately 397,080 sq m, and an
aggregate NLA of approximately 273,074 sq m. If LMIR Trust acquires all the ROFR Properties, the
aggregate NLA of LMIR Trust’s initial property portfolio will increase by over 270,000 sq m, and will
represent an increase of approximately 87.4% of the aggregate NLA of LMIR Trust’s initial property
portfolio as at 30 June 2007. The Manager believes that the ROFR granted to LMIR Trust provides a
visible pipeline of future acquisitions and will greatly enhance LMIR Trust’s growth profile and presence
in the Indonesian retail market given the estimated size and quality of the ROFR Properties.
• In addition to the above ROFR Properties, the Sponsor, the largest listed property developer in
Indonesia by market capitalisation and a leading retail mall developer in Indonesia, is expected to
continue developing retail mall properties across Indonesia. These potential developments further
enhance the acquisition pipeline for LMIR Trust.
• The Manager may also acquire retail malls located in Indonesia from third party owners that are not
related to the Sponsor and which satisfy LMIR Trust’s investment criteria and strategy. Ownership of
retail malls in Indonesia is highly dispersed and fragmented. This provides LMIR Trust with significant
opportunities for such acquisitions. As at the Latest Practicable Date, the Manager has entered into a
non-binding memorandum of understanding with:
(i)
PT. Multi Pratama Gemilang Perkasa (Pikko Group) in respect of the potential acquisition by LMIR
Trust of Cosmopolitan Mall Pluit, a retail mall located in North Jakarta;
(ii)
Zellwager Enterprise Limited in respect of the potential acquisition by LMIR Trust of Sun Plaza, a
retail mall located in Medan, North Sumatra; and
(iii)
PT. Pakuwon Permai in respect of the potential acquisition by LMIR Trust of Supermal Pakuwon
Indah and Pakuwon Trade Center, a retail mall located in West Surabaya, East Java.
The Manager understands that Cosmopolitan Mall Pluit is currently undergoing asset enhancement
works, with such works scheduled for completion in the second half of 2008. The acquisition of
Cosmopolitan Mall Pluit is likely to take place by the second half of 2008.
3
Identified property
Location
Estimated
GFA
Estimated
NLA
(sq m)
(sq m)
Estimated date of acquisition
by LMIR Trust
Cosmopolitan Mall Pluit . . .
North Jakarta
131,013
88,040
Second half of 2008
Sun Plaza . . . . . . . . . . . . .
North Sumatra
73,871
61,348
Within six months after the
Listing Date
West Surabaya,
East Java
289,563
114,834
Within six months after the
Listing Date
494,447
264,222
Supermal Pakuwon Indah
and Pakuwon Trade
Center . . . . . . . . . . . . . . . .
(See “Certain Agreements relating to LMIR Trust and the Properties—Description of Non-Binding
Memorandum of Understanding”.)
Potential for growth through active asset management and tenant re-mixing
• The Manager intends to undertake active asset management to maximise the value and performance of
the Properties. (See “Business and Properties—Asset Enhancement”.)
• As at the Latest Practicable Date, three of the Retail Malls, Bandung Indah Plaza, Mal Lippo Cikarang
and Ekalokasari Plaza have recently completed extensive asset enhancement works and a fourth Retail
Mall, The Plaza Semanggi is currently undergoing asset enhancement works.
- Bandung Indah Plaza has recently completed enhancement and renewal works which created an
additional NLA of approximately 3,843 sq m.
- Mal Lippo Cikarang has recently completed the building of an extension which has increased the NLA
of the mall’s hypermarket and specialty space by 10,694 sq m. As at 30 June 2007, 8,539 sq m or
approximately 79.8% of the additional NLA created from such asset enhancement has been precommitted to Hypermart, one of Indonesia’s leading hypermarket chains.
- Ekalokasari Plaza has recently completed asset enhancement works which created an additional
NLA of 5,013 sq m by adding a third floor and a mezzanine floor. This development incorporates a food
court, a proposed fitness centre and potentially a cinema as anchor tenants for the top levels of the
centre. These asset enhancement works are expected to improve shopper traffic throughout all levels
of the mall. As at 30 June 2007, 670 sq m or approximately 13.4% of the additional NLA created from
such asset enhancement has been pre-committed.
- The Plaza Semanggi is undergoing asset enhancement works to include a new alfresco café area
called the “Plangi on the Sky” café, which will increase NLA by approximately 3,000 sq m by the end of
2007.
Each of Bandung Indah Plaza, Mal Lippo Cikarang and Ekalokasari Plaza has either obtained, or is in the
process of obtaining, final local government approval for the recently completed asset enhancement works
which have created additional NLA.
• The completion of these asset enhancement works are expected to enhance the positioning and
branding of the Retail Malls within their respective trade areas and increase shopper traffic. Further, the
Manager has also identified several asset enhancement opportunities at some of the Retail Malls
through reconfiguration of retail unit layouts, improvement of tenancy mix in conjunction with the
repositioning and re-branding of such malls, conversion of ancillary areas into productive retail space
and the implementation of other proactive asset management initiatives such as identifying the latest
retail trends and offerings.
• Lippo Strategic has entered into a rental guarantee deed (“Rental Guarantee Deed”) with the relevant
Retail Mall Singapore SPCs pursuant to which Lippo Strategic will (i) provide a rental guarantee to the
relevant Retail Mall Singapore SPC in respect of existing units and new units in the respective Retail
Malls which are untenanted and (ii) undertake to pay to the relevant Retail Mall Singapore SPC any
shortfall in the maintenance and operation costs which the relevant Operating Company has
undertaken to bear under the respective Operating Costs Agreement. (See “Certain Agreements
Relating to LMIR Trust and the Properties—Description of the Rental Guarantee Deeds”.)
4
• The management of all the Retail Malls will be undertaken by the Property Manager, a wholly-owned
subsidiary of the Sponsor. The Property Manager will adopt international best practices for all the Retail
Malls in order to realise branding, leasing, marketing and operating efficiencies. Being the sole property
manager of all of the Retail Malls, the Property Manager will enjoy economies of scale and synergistic
benefits, including increased buying power, a stronger corporate image, improved retailer relationships,
and a transfer of knowledge to create additional value.
The sponsor of LMIR Trust is PT. Lippo Karawaci Tbk, Indonesia’s largest listed property
company by market capitalisation
• The Sponsor is an internationally recognised corporation and is the largest listed property company in
Indonesia by market capitalisation. It had a market capitalisation of Rp. 10,609.2 billion (approximately
S$1.8 billion) based on the closing price of its shares of Rp. 1,790.0 on the Jakarta Stock Exchange
(“JSX”) as at 18 October 2007. Its property portfolio comprises townships and residential developments
and commercial and retail development properties.
• The Sponsor has a recognised track record and dominant position within the retail and retail property
industry in Indonesia. Its employees have in-depth property management and operating experience,
including extensive experience in owning, managing, leasing, marketing and developing retail
properties. As at 30 June 2007, the Sponsor has completed eight retail development projects in
Indonesia with a total estimated GFA of 581,740 sq m and has six retail development projects with a total
estimated GFA of approximately 483,060 sq m under development.
• The Property Manager, being wholly-owned by the Sponsor, will be able to leverage the Sponsor’s
extensive experience in property management to enhance the value of the Retail Malls.
(See “The Sponsor”.)
• In addition, the Sponsor has the ability to identify and enhance under-valued retail properties and
leverage its extensive retail network in Indonesia. This is reflected by the Sponsor’s redevelopment of
Bandung Indah Plaza. Prior to the Property Manager being appointed as the property manager of
Bandung Indah Plaza, the mall had an average monthly Specialty Base Rent of approximately
Rp. 74,203 per sq m as at 1 January 2005. Subsequent to the Property Manager’s appointment as
the property manager, the average monthly Specialty Base Rent increased by approximately 304.3% to
approximately Rp. 300,000 per sq m as at 30 April 2007.
The interests of Lippo Strategic, an affiliate of the Sponsor, are substantially aligned with those
of the Unitholders
• Lippo Strategic, an affiliate of the Sponsor, will hold a strategic interest in LMIR Trust by subscribing for
287,695,000 Cornerstone Units representing 27.1% of the total issued Units of LMIR Trust as at the
Listing Date, assuming that the Over-allotment Option is not exercised. The interests of Lippo Strategic
and the Sponsor, through this affiliation with Lippo Strategic, will be substantially aligned with those of
Unitholders.
As a substantial Unitholder, the Mapletree Group’s interests are substantially aligned with
those of the Unitholders
• Mapletree LM, a wholly-owned subsidiary of Mapletree Investments Pte Ltd (“MIPL”), will be
subscribing for 127,250,000 Units, representing 12.0% of the total issued Units of LMIR Trust as at
the Listing Date. MIPL is a leading Asia-focused real estate company based in Singapore. MIPL and its
subsidiaries (the “Mapletree Group”), have an asset base of approximately S$4.5 billion (as at 30 June
2007) comprising office, logistics, industrial, residential and retail/lifestyle properties.
Because of the Mapletree Group’s ownership of Units in LMIR Trust, its interests will be substantially
aligned with those of Unitholders.
Locked-in master leases with rental step-ups for the Retail Spaces
• As at Listing Date, each of the Retail Spaces will be leased by the relevant Retail Space Indonesian SPC
to the Master Lessee, pursuant to the terms of the relevant Master Lease Agreement. The term of each
of the Master Lease Agreements is 10 years from the Listing Date, with an option for the Master Lessee
to renew for a further term of 10 years.
5
• Under each of the Master Lease Agreements, the relevant Retail Space Indonesian SPC will be entitled
to receive from the Master Lessee rental payments comprising:
- A fixed base rent amount for the period commencing from Listing Date to 31 December 2007.
- An annual increment of 8.0% over the lease rental payable for the immediately preceding financial
year for each of FY2008 to FY2011.
- For each of FY2012 to FY2016, an amount equivalent to the lease rental payable in respect of FY2011
and 4.25% of the amount by which the net revenue of the Master Lessee derived from the Retail
Spaces for the immediately preceding financial year exceeds the net revenue of the Master Lessee
derived from the Retail Spaces for FY2010. The Master Lessee’s operations in each of the individual
Retail Spaces will be audited annually by an international accounting firm.
• The Manager believes that the structure of the Master Lease Agreements provides LMIR Trust with
stable and growing rental income from the Retail Spaces.
Stable and growing distributions for LMIR Trust
• LMIR Trust’s distribution policy is to distribute 100.0% of its tax-exempt income (after deduction of
applicable expenses) and capital receipts for the period from the Listing Date to 31 December 2007, the
year ending 31 December 2008 (“Projection Year 2008”) and the year ending 31 December 2009
(“Projection Year 2009”) and at least 90.0% of its tax-exempt income (after deduction of applicable
expenses) and capital receipts thereafter. The tax-exempt income comprises dividends received from
the Target Singapore SPCs (see “—Structure of LMIR Trust”). The income of the Target Singapore
SPCs is derived mainly from interest income earned and dividends from the Indonesian SPCs. Capital
receipts comprise amounts received by LMIR Trust from the redemption of its investment in the
redeemable preference shares in the Target Singapore SPCs.
• The actual proportion of tax-exempt income and capital receipts distributed to Unitholders may be
greater than 90.0% if the Manager considers this to be appropriate, having regard to LMIR Trust’s
funding requirements, other capital management considerations, and the need to ensure the overall
stability of distributions.
• Distributions will be paid on a quarterly basis for the three-month periods ending on 31 March, 30 June,
30 September and 31 December each year. LMIR Trust’s first distribution after the Listing Date will be for
the period from the Listing Date to 31 March 2008 and will be paid by the Manager on or before 30 May
2008. Subsequent distributions will be made on a quarterly basis (see “Distributions”).
• The table below sets out the percentage of forecast Gross Rent attributable to Committed Leases for
(i) the period from 1 July 2007 to 31 December 2007 (“Forecast Period 2007”), (ii) the Projection Year
2008, and (iii) the Projection Year 2009.
Percentage of forecast and projected Gross Rent attributable to Committed Leases
Forecast Period 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Projection Year 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Projection Year 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
91.3%
80.9%
66.8%
• The table below sets out the Manager’s forecast and projected distribution yields for the time periods
indicated, which are based on the assumption that LMIR Trust distributes 100.0% of its tax-exempt
income (after deduction of applicable expenses) and capital receipts.
Distribution yield
Based on the
Offering Price
(%)
Forecast Period 2007(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Projection Year 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Projection Year 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.9
7.3
7.8
Note:
(1) Annualised figures for Forecast Period 2007.
• Such yields will vary accordingly for investors who purchase the Units in the secondary market at a
market price different from the Offering Price. The profit forecast and profit projections from which this
6
information was extracted are based on various assumptions set out in “Profit Forecast and Profit
Projection”. There can be no assurance that the profit forecast and profit projection will be met. The
actual yields per Unit may be materially different from the forecast and projected yields (see “Risk
Factors”).
Hedging strategies to minimise exposure arising from interest rates and currency fluctuations
• The value of the Indonesian Rupiah has been subject to fluctuations in the past and may be subject to
fluctuation in the future. The Manager has a policy to undertake foreign exchange hedging of the
expected distributions of LMIR Trust to insulate against movements in exchange rates (whether
favourable or unfavourable). The Trustee, as trustee of LMIR Trust, has entered into foreign
exchange hedges equivalent to 100.0% of LMIR Trust’s estimated distributions for a total term of
five years, effective as of the Listing Date, and thereafter it intends to continuously hedge on a rolling
basis so as to provide a degree of certainty to Unitholders that changes in the exchange rate between
the Indonesian Rupiah and the Singapore dollar will not have a significant impact on the distributions in
Singapore to Unitholders.
Management fees structured to incentivise and align interests of the Manager with those of
Unitholders
• The management fees payable to the Manager have a performance-based element which is designed
to align the interests of the Manager with those of the Unitholders, and incentivise the Manager to grow
revenues and minimise operating costs. The receipt of Units by the Manager in lieu of the performance
fee further aligns the Manager’s interest with the Unitholders.
(See “—Structure of LMIR Trust—Certain Fees and Charges” and “The Manager and Corporate
Governance—Management Fees”.)
Optimal capital structure
• LMIR Trust will not incur any borrowings as at the Listing Date. As a REIT is generally permitted to
borrow up to 35.0% of the value of its Deposited Property (or up to a maximum of 60.0% if a credit rating
from Fitch Inc., Moody’s Investors Services, Inc. (“Moody’s”) or Standard & Poor’s Ratings Group, a
division of the McGraw-Hill Companies, Inc. (“Standard & Poor’s”) is obtained and disclosed to the
public), LMIR Trust will have substantial ability to incur indebtedness to fund future acquisitions and
asset enhancement initiatives.
• To the extent that LMIR Trust incurs borrowings after the Listing Date, the Manager aims to optimise
LMIR Trust’s capital structure and cost of capital by employing a mix of equity and debt funding
alternatives within the aggregate leverage1 (“Aggregate Leverage”) limit set out in the Property Funds
Guidelines. By the Listing Date, LMIR Trust expects to put in place a floating rate secured term loan
facility of up to S$350.0 million (“Debt Facilities”).
(See “Strategy—Capital and Risk Management Strategy”.)
Tax exemptions in Singapore
• Dividends and interest received in Singapore from the Indonesian SPCs will be exempt from Singapore
income tax under Sections 13(8) and 13(12), respectively, of the Income Tax Act, Chapter 134 of
Singapore (the “Income Tax Act”). Distributions made by LMIR Trust out of such income, received
through the Target Singapore SPCs in the form of one-tier (tax-exempt) dividends, will be exempt from
Singapore income tax in the hands of all Unitholders. No tax will be deducted at source from such
distributions.
• Distributions made out of capital receipts comprising amounts received by LMIR Trust from redemption
of redeemable preference shares in the Target Singapore SPCs will be treated as a return of capital for
Singapore income tax purposes and will not be taxed in the hands of all Unitholders. For Unitholders who
hold the Units as trading or business assets and are liable to Singapore income tax on gains arising from
disposal of the Units, the amount of this portion of the distribution will be applied to reduce the cost of the
1
According to the Property Funds Guidelines, this means total borrowings and deferred payments
(including deferred payments for assets whether to be settled in cash or in units of the relevant property
fund).
7
Units for the purpose of calculating the amount of taxable trading gain when the Units are disposed of. If
the amount exceeds the cost or the reduced cost of the Units, as the case may be, the excess will be
subject to tax as trading income of such Unitholders.
• The granting of tax exemption on, among others, foreign-sourced interest income under Section 13(12)
of the Income Tax Act is part of a package of tax changes introduced by the Singapore government to
develop Singapore as the preferred Asian listing destination for Asian REITs.
No capital expenditure requirements with respect to the Retail Spaces in the first 30 months
after the Listing Date
• Under each of the Master Lease Agreements, the Master Lessee is responsible for all land and building
tax and expenses for property repairs, maintenance and management, all operating expenses and
utilities for the duration of the lease term and shall indemnify and keep the relevant landlord indemnified
from the same.
• During the first 30 months of the lease term, the Master Lessee shall be responsible for all repair and
replacement works for the mechanical and electrical equipment, whether or not of a capital nature.
• After the first 30 months of the lease term, (a) the Master Lessee shall continue to be responsible for all
repair and replacement works for the mechanical and electrical equipment, which are not of a capital
nature, and (b) each relevant landlord shall be responsible for any repair and replacement works in
relation to the mechanical and electrical equipment which are of a capital nature as well as replacement
works which are reasonably required by the Master Lessee in connection with changes to the layout of
the Retail Spaces.
Competent and experienced personnel
• The board of directors of the Manager comprise individuals who collectively have extensive experience
in areas including, but not limited to, law, accounting, banking, finance, real estate and fund
management. The Manager believes that the Unitholders will benefit from the experience of key
staff members of the Manager in fund, asset and property management in the retail property
market. LMIR Trust intends to leverage such relevant experience and expertise to implement its
planned strategies (see “The Manager and Corporate Governance”).
Competitive strengths
The Manager believes that the competitive strengths of the Properties include:
• The Properties are located in major cities of Indonesia amidst a growing and affluent urban
middle class
The Properties are mainly located within Greater Jakarta and Bandung, Indonesia’s fourth most
populous city.
Jakarta, Indonesia’s capital and largest city, has seen its total household expenditure increase by an
average of 12.8% per annum from 2001 to 2006, rising from Rp. 19,277 billion in 2001 to
Rp. 35,273 billion in 2006. Bandung has seen a similar growth in its total household expenditure,
rising from Rp. 4,825 billion in 2001 to Rp. 8,317 billion in 2006, an average growth of 11.5% per annum
from 2001 to 2006.
Economic development in Indonesia has seen a significant growth of the middle class over the past five
years. This middle income group is considered one of the vital contributors to the economy and is
perceived as the most prospective target in mass consumer markets. Based on the Social Economic
Survey (SES) by ACNielsen1 conducted in nine major cities in Indonesia, the share of population of the
middle income group (classified as SES A, B & C) has steadily grown from 50.0% in 2001 to 64.0% in
1
8
Source: ACNielsen Social Economic Survey. ACNielsen has not provided its consent, for the purposes of
section 249 (read with section 302) of the SFA, to the inclusion of the information extracted from the
relevant report issued by it, and is thereby not liable for such information under sections 253 and 254
(read with section 302) of the SFA. While the Manager has taken reasonable action to ensure that the
information has been reproduced in its proper form and context, and that it has been extracted
accurately and fairly, neither the Manager nor any other party has conducted an independent review
of, nor verified the accuracy of, such information.
2006. It is estimated that the urban middle income population in Indonesia totals approximately
66 million people. This particular group is likely to be considered a major target market for modern
retail shopping centres.
Retail spending in these cities has been further boosted by a shift in lifestyle towards a higher level of
consumerism, partially brought about by the introduction of foreign brands and designer labels. These
foreign brands and designer labels typically have higher margins and are willing to pay higher rentals for
prime and sizeable retail space. The proliferation of hypermarkets and supermarkets over traditional
markets has also increased shopper traffic to modern retail malls.
In addition, the geographic diversification of the Properties reduces LMIR Trust’s dependence on any
single regional market and, accordingly, contributes to the stability of LMIR Trust’s future income.
(See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
Gross Regional Domestic Product (“GRDP”) Per Capita by Indonesian City
(Current Prices), 2003-2005*
60
2003
2004
2005
Rp Millions
50
40
30
20
10
0
Indonesia
Jakarta
Bandung
Surabaya
Semarang
Medan
City
* Figures for Indonesia, Jakarta & Bandung are for 2003-2005
2005 figures for Surabaya, Semarang and Medan are not available
Source: “Appendix F—Independent Report on the Indonesian Retail Property Market”
Socio-Economic Survey in Indonesia(1), 2001-2006
100%
Monthly
household expenditure
90%
A (Above Rp. 2 mil/month)
80%
B (Rp. 1.5-2 mil/month)
Percentage
70%
C1 (Rp. 1.0-1.5 mil/month)
60%
C2 (Rp. 0.7-1.5 mil/month)
50%
D (Rp. 0.5-0.7 mil/month)
40%
E (Below Rp. 0.5
mil/month)
30%
20%
10%
0%
2001
2002
2003
2004
2005
2006
Note:
(1) AC Nielsen Socio-Economic Survey is based on monthly household expenditure, not actual income.
No standard can be used (or widely accepted) to calculate direct relation between expenditure and
income.
Source: “Appendix F—Independent Report on the Indonesian Retail Property Market”
9
Total household
expenditure
of the middle class
(Rp. billions)
Cities
2001
2006
Average
annual
growth
2001-2006
(%)
Jakarta. . . .
Bodetabek .
Bandung . .
Surabaya . .
Semarang .
Medan . . . .
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10,561
7,493
2,793
4,295
1,758
3,542
17,276
25,817
4,304
6,293
3,691
5,103
10
28
9
8
16
8
Source: “Appendix F—Independent Report on the Indonesian Retail Property Market”
• High growth potential from favourable demographics of the Indonesian population
According to the Independent Indonesian Retail Property Consultant, the Indonesian retail market has
high growth potential, with 50.0% of Indonesia’s estimated population of 222 million in 2006 under the
age of 25. Based on the Independent Report on the Indonesian Retail Property Market, the share of
population of the middle income group has steadily grown from 50.0% in 2001 to 64.0% in 2006. It is
estimated that the urban middle income population in Indonesia totals approximately 66 million people.
(See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
• Retail Malls strategically located within well-established population catchment areas
The Retail Malls are strategically located throughout Greater Jakarta with a population range of
between approximately 0.4 million and 2.2 million within their respective primary catchment areas.
Located in middle to upper income demographic regions, each of the Retail Malls has a variety of strong
characteristics such as:
- Gajah Mada Plaza—The only shopping centre located in the Chinatown district of Jakarta with a
hypermarket, executive club and a swimming pool;
- Cibubur Junction—Located in the heart of Cibubur, one of the most affluent and upmarket residential
areas in Jakarta;
- The Plaza Semanggi—Located in the golden triangle of the Jakarta central business district (“CBD”)
and accessible from all four directions of the capital city;
- Mal Lippo Cikarang—Growing residential and industrial Lippo township;
- Ekalokasari Plaza—A five-minute drive from the Bogor exit gate of the Jagorawi toll road, the highway
which connects Jakarta to Bogor;
- Bandung Indah Plaza—Strategic location at the heart of Bandung and easily accessible to the greater
Bandung population; and
- Istana Plaza—Easily accessible from several transportation hubs in the vicinity, such as the Husein
Sastranegara Airport, Bandung train station and Pasteur tollgate.
The Retail Malls located within Greater Jakarta, such as Gajah Mada Plaza and The Plaza Semanggi,
also enjoy high levels of connectivity via public transportation such as the Transjakarta busway which is
a premium form of public transportation in Jakarta, thereby enhancing the ability of these Retail Malls to
draw high volumes of shoppers.
• Quality Retail Malls which cater to the daily needs of shoppers
The Retail Malls are strategically positioned as “one-stop” shopping destinations for shoppers and their
families, catering to their daily as well as lifestyle and entertainment needs. The Retail Malls are
anchored by supermarkets, hypermarkets or department stores, which draw significant shopper traffic
to the malls and provide a comfortable, hassle-free and low-cost environment for shoppers to purchase
their daily necessities. The specialty, food and beverage and lifestyle and entertainment tenants, which
include foreign labels and brands, restaurants, cinemas and entertainment centres provide shoppers
with a wide product offering and a complete shopping experience.
10
Further, the Retail Malls are managed by competent professionals with retail expertise and experience,
as reflected in the high occupancy rates and the ability of each Retail Mall to differentiate itself from its
competitors within its catchment area. As at 30 June 2007, the Retail Malls had a weighted average
occupancy of approximately 91.6%, reflecting the robust demand for space in the Retail Malls.
• Retail Spaces strategically located within well-established population catchment areas
The Retail Spaces are strategically located throughout Greater Jakarta and in the major cities of
Semarang, Medan, Madiun and Malang. For example, the Mall WTC Matahari Units are located in
Serpong which is part of Tangerang, one of the settlement areas on the outskirts of Jakarta. Mall WTC
Matahari is strategically located along a main road which connects to Bumi Serpong Damai City (“BSD
City”), the largest residential estate in Greater Jakarta. It has a proposed development area of 6,000 ha
with currently 1,500 ha developed and is occupied by over 15,000 households. In recent years, BSD City
has experienced rapid growth in terms of the number of housing units and retail shop houses which have
been built. Another example is the Malang Town Square Units which are located in the city of Malang in
the East Java province. Malang is the second largest city in East Java province with a population of
approximately 0.8 million and a regency population of approximately 2.4 million people. The region is a
popular tourist destination due to its natural attractions (for example, Mount Bromo, one of Java’s
largest volcanoes), cool climate and colonial history. Malang also has a large student population, being
home to five universities (Brawijaya, State, Muhammadiyah, Widya Gama and Merdeka Universities).
• Economies of scale through portfolio management of the Retail Malls
The Property Manager, a wholly-owned subsidiary of the Sponsor, will manage the Retail Malls after the
Listing Date. As the Retail Spaces are master-leased to Matahari, there is no property manager
appointed for the Retail Spaces. The Property Manager believes that there are opportunities to realise
efficiencies and economies of scale so as to maximise the performance of each Retail Mall.
The Property Manager comprises a specialised team of professionals managing the key areas of
operations, leasing, marketing and finance. Best practices are standardised and strictly adhered to
across all assets under its portfolio.
The Retail Malls will be able to leverage upon the Property Manager’s and the Sponsor’s experience in
areas including contractor management, retailer relationships and key negotiations, cost control
mechanisms and strategic leasing, marketing and management initiatives.
• Quality tenant base
The Retail Malls benefit from the quality of their tenants. The Retail Malls’ top tenants include wellknown international and domestic retailers and brand names such as Giant Hypermarket, Gramedia
bookstore, Starbucks, Giordano, Fitness First, Sports Station, Matahari Department Store, Hypermart
and Studio 21 Cinema.
The Manager is of the view that the Retail Malls’ rental values are predominantly at or below market
levels. This will allow the Manager to capture growth on lease expiries while maximising the retail mix of
these malls.
The Retail Malls have a large combined tenant base of over 1,400 tenants (as at 30 June 2007). These
tenants represent a wide variety of mass retailers and specialty stores and provide trade and product
diversification for the Retail Malls.
• Advance rental payment structure helps to minimise cash flow volatility due to potential rental
arrears
Retail tenants in Indonesia typically pay an advance rental of approximately 10% to 20% of the total rent
payable for the duration of the lease upon signing of the lease agreement. This advance rental payment
helps to minimise LMIR Trust’s cash flow volatility due to potential rental arrears, thus enhancing LMIR
Trust’s cash flow stability.
(See “Business and Properties”.)
11
Valuation
As at 30 June 2007, the Properties were valued at an aggregate of S$1,004.7 million by Knight Frank /
PT. Willson Properti Advisindo, as the Independent Valuer to the Manager (“Knight Frank”) and at
S$1,016.3 million by Colliers International / PT Penilai, as the Independent Valuer to the Trustee
(“Colliers”). The Manager has adopted Knight Frank’s valuation as the basis for the determination of
the fair market value of the Properties and the net asset value (“NAV”) per Unit. (See “Unaudited Pro
Forma Consolidated Balance Sheet as at the Listing Date”.)
The following table sets forth the key statistics relating to the valuation of the Properties and the Offering:
Appraised value by Knight Frank as at 30 June 2007 . . . . . . . . . . . . . . . . . . . . . . .
Appraised value by Colliers as at 30 June 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Implied NAV per Unit based on valuation by Knight Frank at the Offering Price . . . .
S$1,004.7 million
S$1,016.3 million
S$0.91
At the Offering Price, the Units under the Offering and the Cornerstone Units will be issued at a 12.1%
discount to the NAV.
12
13
Jakarta
Jakarta
Cibubur
Junction . . .
The Plaza
Semanggi . .
Total for
Retail
Malls . . . . .
Istana Plaza . .
Bandung
Indah
Plaza . . . . .
Ekalokasari
Plaza . . . . .
Bandung,
West Java
Bandung,
West Java
Bogor,
Greater Jakarta
Cikarang,
Greater Jakarta
Jakarta
Gajah Mada
Plaza . . . . .
Mal Lippo
Cikarang . . .
Location
Retail Mall
31,371(6)
4,286
5,668
2,296
2,589
8,572
4,233
3,726
Net
property
income
(‘‘NPI”) for
Forecast
Period 2007
(S$’000)
66,629(6)
8,958
11,756
5,798
5,548
17,356
8,895
8,319
NPI for
Projection
Year 2008
(S$’000)
72,800(6)
9,285
12,811
7,503
5,729
18,274
8,943
10,253
NPI for
Projection
Year 2009
(S$’000)
A summary of key information on the Properties is set out below:
Key Information on the Properties
809.2
125.7
124.5
66.0
80.2
214.8
94.2
103.8
Appraised
value by
Knight Frank
as at 30 June
2007(1)
(S$ million)
7.8
6.8
9.1
7.0
6.5
8.0
9.0
7.2
Annualised
Forecast
Period
2007 NPI
yield on
valuation
by Knight Frank
(%)
827.4(6)
114.7
135.1
68.1
79.7
211.1
101.8
117.0
Appraised
value by
Colliers as
at 30 June
2007(1)
(S$ million)
7.6
7.5
8.4
6.7
6.5
8.1
8.3
6.4
Annualised
Forecast
Period
2007 NPI
yield on
valuation
by Colliers
(%)
365,025
37,434
55,196
39,895
25,767
91,232
49,341
66,160
GFA as
at 30 June
2007
(sq m)
219,382
27,247
26,472(5)
20,587(4)
17,974(3)
58,685(2)
34,139
34,278
NLA as
at 30 June
2007
(sq m)
91.6(7)
98.9
83.2
87.3
96.3
96.4
86.4
89.1
Occupancy
as at 30 June
2007
(%)
80.5(6)
12.5
12.4
6.6
8.0
21.4
9.4
10.3
Percentage of
aggregate
value of the
Properties (as
determined
by Knight
Frank)
(%)
14
Tangerang, Greater Jakarta
Tangerang, Greater Jakarta
Depok, Greater Jakarta
Semarang, Central Java
Malang, East Java
Madiun, East Java
Medan, North Sumatra
.
.
.
.
.
.
.
.
Mall WTC Matahari Units . .
Metropolis Town Square
Units . . . . . . . . . . . . . . .
Depok Town Square Units .
Java Supermall Units . . . . .
Malang Town Square Units .
Plaza Madiun . . . . . . . . . .
Grand Palladium Medan
Units . . . . . . . . . . . . . . .
Total for Retail Spaces . . .
2.6
19.5(6)
13,417(9)
94,070
Recently completed asset enhancement works have increased the NLA by 3,843 sq m, bringing the total NLA to 30,315 sq m.
Due to rounding differences.
Weighted average occupancy as at 30 June 2007.
Based on Strata Titles Ownership Certificates.
Based on Kiosks Sale and Purchase Binding Agreements (See “Business and Properties—Information Regarding the Title of the Properties—The Retail Spaces—Kiosks Sale and
Purchase Binding Agreement.”).
(6)
(7)
(8)
(9)
(10) Does not tie in with the NPI in the consolidated statement of total return for the Forecast Period 2007, Projection Period 2008 and Projection Period 2009 as the NPI in the
consolidated statement of total return for these respective periods include the operating expenses of the Singapore SPCs.
Recently completed asset enhancement works for the third floor and mezzanine floor have increased the NLA by 5,013 sq m, bringing the total NLA to 25,600 sq m.
100.0
3.3
2.6
2.6
2.5
3.3
15,248(9)
13,045(9)
11,082(8)
11,065(9)
19,029
313,452
2.5
11,184(8)
(5)
7.5
7.0
6.9
7.2
7.0
6.7
6.5
6.8
6.9
(4)
1,016.3
25.2
188.9(6)
32.2
24.8
25.0
25.8
31.8
24.3
Recently completed asset enhancement works to expand the retail space at Mal Lippo Cikarang have increased the NLA by 10,694 sq m, bringing the total NLA to 28,668 sq m.
7.5
6.8
6.6
6.9
6.7
6.4
6.5
6.5
6.7
(3)
1,004.7
26.2
195.5
33.5
25.7
26.0
25.5
33.4
25.2
NLA as
at 30 June
2007
(sq m)
Percentage of
aggregate
value of the
Properties (as
determined by
Knight Frank)
(%)
Current ongoing asset enhancement works to include a new alfresco café area called the “Plangi on the Sky” café will increase NLA by an estimated 3,000 sq m, bringing total NLA
to approximately 61,685 sq m by the end of 2007.
86,426(10)
1,859
13,626(6)
2,420
1,807
1,754
1,751
2,264
1,770
Annualised
Forecast
Period 2007
NPI yield on
valuation
by Colliers
(%)
(2)
80,037(10)
1,829
13,408
2,382
1,778
1,726
1,723
2,228
1,742
NPI for
Projection
Year 2009
(S$’000)
Appraised
value
by Colliers
as at 30 June
2007(1)
(S$ million)
Based on exchange rate adopted at S$1 = Rp. 5,900
37,868(10)
886
6,497
1,156
861
836
834
1,081
843
NPI for
Projection
Year 2008
(S$’000)
Annualised
Forecast
Period 2007
NPI yield on
valuation by
Knight Frank
(%)
(1)
Notes:
Total for Properties . . . . . .
Location
Retail Space
NPI for
Forecast
Period 2007
(S$’000)
Appraised
value by
Knight Frank
as at 30 June
2007(1)
(S$ million)
15
Location of the Properties in Indonesia
(This page intentionally left blank)
16
INFORMATION ON THE PROPERTIES
The Retail Malls
The Retail Malls are all located in Indonesia and have a total NLA of 219,382 sq m as at 30 June 2007. The
Retail Malls are strategically located within Greater Jakarta and Bandung and are centrally located within
their respective trade areas, with a total population catchment ranging between 0.8 million and 3.7 million.
(See “Business and Properties”.)
A summary of the key features of each Retail Mall is as follows:
Gajah Mada Plaza
JaIan Gajah Mada 19-26, Central Jakarta
Brief description . . . . . . . . . . . . . . . .
Gajah Mada Plaza is a seven storey with one basement level
shopping centre and a carpark comprising 885 parking lots. The
mall is located prominently in the heart of Jakarta’s Chinatown,
an established and well-known commercial area in the city.
Situated along Jalan Gajah Mada, one of the main roads in
Jakarta, Gajah Mada Plaza is positioned as a one-stop
shopping, dining and entertainment destination for middle to
upper income families as well as professional executives and
students from the offices and schools within its vicinity. The 222
tenancies in the mall provide a diverse and complementary
tenant mix anchored by Hypermart and Rimo Department
Store. The mall’s strong leisure and entertainment
component, which includes a cinema, restaurants, family
karaoke outlets, a discotheque, video game centres, a fitness
centre and a swimming pool, adds to the overall attractiveness of
Gajah Mada Plaza.
Population catchment . . . . . . . . . . . .
429,298 households(1)
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Strata Titles as evidenced by certificates :
• No. 438/I/S Kel Petojo Utara, registered under the name of
PT Graha Baru Raya;
• No. 440/II/S Kel Petojo Utara, registered under the name of
PT Graha Baru Raya;
• No. 442/III/S Kel Petojo Utara, registered under the name of
PT Graha Baru Raya;
• No. 325/-I/S Kel Petojo Utara, registered under the name of
PT Graha Baru Raya;
• No. 326/-I/S Kel Petojo Utara, registered under the name of
PT Graha Baru Raya;
• No. 328/I/S Kel Petojo Utara, registered under the name of
PT Graha Baru Raya;
• No. 330/II/S Kel Petojo Utara, registered under the name of
PT Graha Baru Raya;
• No. 332/III/S Kel Petojo Utara, registered under the name of
PT Graha Baru Raya;
• No. 333/IV/S Kel Petojo Utara, registered under the name of
PT Graha Baru Raya;
• No. 334/V/S Kel Petojo Utara, registered under the name of
PT Graha Baru Raya;
17
• No. 335/V-VI-VII/S Kel Petojo Utara, registered under the
name of PT Graha Baru Raya;
• No. 336/VI-VII/S Kel Petojo Utara, registered under the name
of PT Graha Baru Raya;
• No. 337/VII/S Kel Petojo Utara, registered under the name of
PT Graha Baru Raya; and
• No. 338/VIII/S Kel Petojo Utara, registered under the name of
PT Graha Baru Raya.
The above strata titles are constructed on HGB underlying
common land, valid until 24 January 2020 and are extendable
for another term of up to 20 years. Following the expiration of this
additional term, a renewal application may be made. (See
“Overview of Relevant Laws and Regulations in Indonesia—
Rights to Own and/or to Use—Strata Titles”.)
(See “Business and Properties—Gajah Mada Plaza”.)
Year of building completion . . . . . . . .
1982
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$103.8 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$117.0 million
Strata Titles Area . . . . . . . . . . . . . . .
37,501 sq m
GFA as at 30 June 2007 . . . . . . . . . .
66,160 sq m
NLA as at 30 June 2007 . . . . . . . . . .
34,278 sq m
NPI for Forecast Period 2007,
Projection Year 2008 and
Projection Year 2009 (S$’000) . . . . . .
Forecast Period 2007—3,726
Projection Year 2008—8,319
Projection Year 2009—10,253
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 10.5%
Number of tenants as at 30 June
2007 . . . . . . . . . . . . . . . . . . . . . . . . .
222
Occupancy rate as at 30 June 2007. .
89.1%
Key anchors/tenants . . . . . . . . . . . . .
Millennium International Executive Club, Hypermart, Rimo
Department Store, McDonald’s and Inul Vizta Karaoke
Car parking lots . . . . . . . . . . . . . . . . .
885
Motorcycle parking lots . . . . . . . . . . .
665
Note:
(1) The figure comprises the number of households within the primary trade area of the relevant Retail
Mall. (See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
18
Pictures of Gajah Mada Plaza
19
Cibubur Junction
Jalan Jambore Raya 1, Cibubur, East Jakarta
Brief description . . . . . . . . . . . . . . . .
Cibubur Junction is a five storey with one basement level and
partial roof top level shopping centre with a carpark
comprising 611 parking lots. The mall is located strategically
in the middle of Cibubur which is one of the most affluent and
upmarket residential areas in Jakarta. The mall is situated
five km south of Jakarta’s Jagorawi toll road and is easily
accessible and visible from the main road.
Being the only retail mall with a NLA of above 20,000 sq m within
an approximately 10-km radius, Cibubur Junction is the only mall
within its locality that offers a one-stop shopping
experience.
Its
anchor
tenants,
Hypermart
and
Matahari Department Store are well complemented by
international and local specialty tenants which include
restaurants, fashion labels, a cinema, bookstores, a video
game centre and a fitness centre.
Population catchment . . . . . . . . . . . .
422,862 households(1)
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Cibubur Junction is owned by PT Cibubur Utama and was built
pursuant to a BOT Scheme based on the deed of cooperation
agreement and its amendments, between PD Pembangunan
Sarana Jaya DKI Jakarta as BOT Grantor and PT Cibubur
Utama as BOT Grantee.
The Cibubur Junction BOT arrangement between PT Cibubur
Utama and PD Pembangunan Sarana Jaya DKI Jakarta shall be
valid until 28 July 2025 and may be extended.
The underlying BOT land, on which Cibubur Junction is
constructed, is represented by HGB title No. 01210/Cibubur
which is valid until 23 December 2021 and is extendable for
another term of up to 20 years. Following expiration of this
additional term, a renewal application may be made. (See
“Overview of Relevant Laws and Regulations in Indonesia—
Rights to Own and/or to Use—Hak Guna Bangunan (HGB/
Right to Build”).
(See “Business and Properties — Cibubur Junction”.)
Year of building completion . . . . . . . .
2005
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$94.2 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$101.8 million
Land Area . . . . . . . . . . . . . . . . . . . . .
31,987 sq m
GFA as at 30 June 2007 . . . . . . . . . .
49,341 sq m
NLA as at 30 June 2007 . . . . . . . . . .
34,139 sq m
NPI for Forecast Period 2007,
Projection Year 2008 and
Projection Year 2009 (S$’000) . . . . . .
Forecast Period 2007—4,233
Projection Year 2008—8,895
Projection Year 2009—8,943
20
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 11.2%
Number of tenants as at 30 June
2007 . . . . . . . . . . . . . . . . . . . . . . . . .
163
Occupancy rate as at 30 June 2007. .
86.4%
Key anchors/tenants . . . . . . . . . . . . .
Hypermart, Matahari Department Store, Fitness First, Sport
Warehouse and Studio 21 Cinema
Car parking lots . . . . . . . . . . . . . . . . .
611
Motorcycle parking lots . . . . . . . . . . .
500
Note:
(1)
The figure comprises the number of households within the primary trade area of the relevant Retail
Mall. (See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
Pictures of Cibubur Junction
21
The Plaza Semanggi
Jalan Jend. Sudirman Kav.50, South Jakarta
Brief description . . . . . . . . . . . . . . . .
The Plaza Semanggi is a modern shopping centre comprising
seven storey and two basement levels shopping centre and 13
levels of office floors, with a carpark comprising 1,100 parking
lots. The Plaza Semanggi is strategically located in the heart of
Jakarta’s CBD within the city’s Golden Triangle at the Semanggi
interchange, which is a junction channeling north-south and
east-west traffic across central Jakarta. The centre is situated
among many commercial buildings and adjacent to Atmajaya
University, one of Jakarta’s most prominent universities.
Anchored by Centro Department Store and Giant
Hypermarket, the 479 tenants (as at 30 June 2007) provide
all categories of shoppers with a diverse and comprehensive
tenant mix. The Plaza Semanggi offers both destination and
convenience shopping, and is supported by its central location,
which is easily accessible by cars and public transport.
Population catchment . . . . . . . . . . . .
270,387 households(1)
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
The Plaza Semanggi was built pursuant to a BOT Scheme
based on the introductory agreement of revitalisation,
management and transfer (Perjanjian Pengikatan Revitalisasi,
Pengelolaan dan Pengalihan) and its amendments, between
Yayasan Gedung Veteran Republik Indonesia as BOT Grantor
and PT Primatama Nusa Indah as BOT Grantee.
The BOT agreement is valid for 30 years from 8 July 2004.
PT Primatama Nusa Indah as BOT Grantee has an option to
extend the term of the BOT Agreement for a period of 20 years,
with a notification to the BOT Grantor at least six months prior to
the expiration date. Upon this notification, the BOT Grantor then
grants its approval for the extension.
The underlying BOT land, on which Plaza Semanggi is
constructed, is represented by HP title No. 133/Karet
Semanggi, and is valid as long as the land is being used.
(See “Business and Properties—The Plaza Semanggi”.)
Year of building completion . . . . . . . .
2003
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$214.8 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$211.1 million
Land Area . . . . . . . . . . . . . . . . . . . . .
19,000 sq m
GFA as at 30 June 2007 . . . . . . . . . .
91,232 sq m
NLA as at 30 June 2007 . . . . . . . . . .
58,685 sq m(2)
NPI for Forecast Period 2007,
Projection Year 2008 and
Projection Year 2009 (S$’000) . . . . .
Forecast Period 2007—8,572
Projection Year 2008—17,356
Projection Year 2009—18,274
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 20.4%
22
Number of tenants as at 30 June
2007 . . . . . . . . . . . . . . . . . . . . . . . . .
479
Occupancy rate as at 30 June 2007. .
96.4%
Key anchors/tenants . . . . . . . . . . . . .
Centro Department Store, Giant Hypermarket, Electronic
Solution Indonesia, Kentucky Fried Chicken and X Lounge
Car parking lots . . . . . . . . . . . . . . . . .
1,100
Motorcycle parking lots . . . . . . . . . . .
750
Notes:
(1)
(2)
The figure comprises the number of households within the primary trade area of the relevant Retail
Mall. (See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
Current ongoing asset enhancement works to include a new alfresco café area called the “Plangi on
the Sky” café will increase NLA by an estimated 3,000 sq m, bringing total NLA to approximately
61,685 sq m by the end of 2007.
Pictures of The Plaza Semanggi
23
Mal Lippo Cikarang
Jalan MH Thamrin, Lippo Cikarang, Greater Jakarta
Brief description . . . . . . . . . . . . . . . .
Mal Lippo Cikarang is a two-level retail mall located within the
Lippo Cikarang estate. The estate is approximately 40 km east of
Jakarta and is connected to Jakarta via the Jakarta-Cilkampek
toll road. Comprising industrial, commercial and residential
components, the Lippo Cikarang estate is home to
25,000 residents and approximately 65,000 jobs. Mal Lippo
Cikarang is the main shopping centre in the estate and has
limited competition within an approximately 10-km radius. The
mall is anchored by Matahari Department Store, Hypermart and
Hero Supermarket, complemented by a cinema, a bookshop, a
video game centre, restaurants and dining outlets. The mall has
recently completed a S$4.7 million expansion and renovation
programme which has increased its NLA by more than 50.0%.
Population catchment . . . . . . . . . . . .
84,962 households(1)
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Mal Lippo Cikarang was built on a plot of land of 49,250 sq m
based on measurement letter No. 19128/1994 dated 25 August
1994 and Certificate of Right to Build (HGB title) No. 627/
Kelurahan Cibatu, registered under the name of PT Graha
Nusa Raya, issued by Bekasi Land Office on 9 December
1994, and valid until 5 May 2023 and is extendable for
another term of up to 20 years. Following the expiration of
this additional term, a renewal application may be made. (See
“Overview of the Relevant Laws and Regulations in Indonesia—
Rights to Own and/or to Use—Hak Guna Bangunan (HGB/Right
to Build)”.)
(See “Business and Properties—Mal Lippo Cikarang”.)
Year of building completion . . . . . . . .
1995
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$80.2 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$79.7 million
Land Area . . . . . . . . . . . . . . . . . . . . .
49,250 sq m
GFA as at 30 June 2007 . . . . . . . . . .
25,767 sq m
NLA as at 30 June 2007 . . . . . . . . . .
17,974 sq m(2)
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—2,589
Projection Year 2008—5,548
Projection Year 2009—5,729
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 6.8%
Number of tenants as at 30 June
2007 . . . . . . . . . . . . . . . . . . . . . . . . .
116
Occupancy rate as at 30 June 2007. .
96.3%
Key anchors / tenants . . . . . . . . . . . .
Matahari Department Store, Hypermart, Hero Supermarket,
Studio 21 Cinema, Batik Keris and Toko Buku Utama
bookstore(3)
24
Car parking lots . . . . . . . . . . . . . . . . .
513
Motorcycle parking lots . . . . . . . . . . .
950
Notes:
(1)
(2)
(3)
The figure comprises the number of households within the primary trade area of the relevant Retail
Mall. (See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
Recently completed asset enhancement works to expand the retail space at Mal Lippo Cikarang
have increased the NLA by 10,694 sq m, bringing the total NLA to 28,668 sq m.
Following the completion of the asset enhancement works stated in (2), Hypermart has precommitted to lease 8,539 sq m of the extended area.
Pictures of Mal Lippo Cikarang
25
Ekalokasari Plaza
Jalan Siliwangi 123, Bogor, Greater Jakarta
Brief description . . . . . . . . . . . . . . . .
Ekalokasari Plaza is a six storey with three basement levels
retail mall with a carpark comprising 390 parking lots. The mall is
located approximately two km south east of the Bogor City
Centre on a major road, Jalan Siliwangi, and approximately
3.5 km south or five minutes drive from the Bogor exit of the
Jagorawi toll road which connects Jakarta to Bogor. Bogor is
approximately 50 km south of Jakarta and had a population of
approximately 855,000 as at 2002. Ekalokasari Plaza is
positioned as the retail mall of convenience and choice for its
population catchment. It provides a comprehensive retail mix
anchored by Matahari Department Store, Foodmart
supermarket, two large bookstores and a concentration of
fashion labels and outlets. Ekalokasari Plaza has recently
completed S$2.0 million expansion and renovation
programme for the third and mezzanine floors. The new
expanded area will house a food court, and is also intended
to include a fitness centre and a cinema.
Population catchment . . . . . . . . . . . .
144,451 households(1)
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Ekalokasari Plaza is owned by PT Indah Pesona Bogor and was
built pursuant to a BOT Scheme based on the cooperation
agreement (Perjanjian Kerjasama) between Institut Pertanian
Bogor (“IPB”) represented by PT Bogor Life Science and
Technology as BOT Grantor and PT Indah Pesona Bogor
(“PT IPB”).
The BOT Scheme relating to Ekalokasari Plaza is valid from
27 June 2001 to 27 June 2032 and may be extended.
The underlying BOT land, on which Ekalokasari Plaza is
constructed, is represented by HP title No. 1/Sukasari which
is valid as long as the land is being used.
(See “Business and Properties—Ekalokasari Plaza”.)
Year of building completion . . . . . . . .
2003
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$66.0 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$68.1 million
Land Area . . . . . . . . . . . . . . . . . . . . .
10,500 sq m
GFA as at 30 June 2007 . . . . . . . . . .
39,895 sq m
NLA as at 30 June 2007 . . . . . . . . . .
20,587 sq m(2)
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—2,296
Projection Year 2008—5,798
Projection Year 2009—7,503
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 5.8%
Number of tenants as at 30 June
2007 . . . . . . . . . . . . . . . . . . . . . . . . .
26
107
Occupancy rate as at 30 June 2007. .
87.3%
Key anchors / tenants . . . . . . . . . . . .
Matahari Department Store, Foodmart supermarket, Gramedia
bookstore, Karisma, Number 61 and Kentucky Fried Chicken
Car parking lots . . . . . . . . . . . . . . . . .
390
Motorcycle parking lots . . . . . . . . . . .
382
Notes:
(1)
The figure comprises the number of households within the primary trade area of the relevant Retail
Mall. (See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
(2)
Recently completed asset enhancement works for the third floor and mezzanine have increased the
NLA by 5,013 sq m, bringing the total NLA to 25,600 sq m.
Pictures of Ekalokasari Plaza
27
Bandung Indah Plaza
Jalan Merdeka No. 56, Bandung, West Java
Brief description . . . . . . . . . . . . . . . .
Bandung Indah Plaza is a four storey with three basement levels
retail mall with a carpark comprising 602 parking lots. It is located
strategically in the heart of the CBD of Bandung, the fourth most
populous city in Indonesia. The retail mall is easily accessible
from Jalan Merdeka, a major road which connects North
Bandung to South Bandung, and is surrounded by
commercial buildings and middle to upper income residential
areas. It is also attached to Hyatt Regency Hotel, one of the
leading five-star hotels in Bandung. Bandung Indah Plaza is
anchored by Matahari Department Store, Hypermart, Yogya
Supermarket, a bookstore, a cinema and supported by a list
of international and local tenants. It has recently completed a
S$12.6 million expansion and renovation programme.
Population catchment . . . . . . . . . . . .
124,947 households(1)
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Bandung Indah Plaza is owned by PT Megah Semesta Abadi
and was built pursuant to a BOT Scheme based on cooperation
agreement on the renovation, development and management of
Hotel Pakunegara, Bandung (Perjanjian Kerjasama Pemugaran
Pembangunan dan Pengelolaan Hotel Pakunegara) between
Perusahaan Daerah Jasa Dan Kepariwisataan Propinsi Jawa
Barat, and formerly known as Perusahaan Daerah Kerta Wisata
Jawa Barat) and PT Bhuwanatala Indah Permai Tbk (formerly
known as PT Bandung Indah Plaza Permai) (“Bandung Indah
Plaza Cooperation Agreement”) and was novated by a
novation agreement to PT Megah Semesta Abadi from
PT Bhuwanatala Indah Permai Tbk. on 29 December 2003.
The Bandung Indah Plaza Cooperation Agreement, its
amendments and the novation agreement are jointly referred
to as the “Bandung Indah Plaza BOT Agreement”.
The term of the Bandung Indah Plaza BOT Agreement is for
30 years as of the commencement of commercial operation and
will expire on 31 December 2030 and may be extended.
The BOT Grantor has granted the BOT Grantee, the owner of
Bandung Indah Plaza, the right to apply for a HGB title on top of
its HPL title. (See “Business and Properties—Information
Regarding the Title of the Properties—Hak Pengelolaan
(“HPL”) titles”.)
Bandung Indah Plaza was built on the following:
(a)
HGB title No. 26/Citarum valid up to 19 August 2010; and
(b)
The HGB titles on top of HPL titles are as follows:
(i)
HGB titles No. 130/Citarum, No. 131/Citarum, and
No. 64/Citarum, valid up to 20 October 2017;
(ii)
HGB titles No. 65/Citarum and No. 69/Citarum,
valid up to 8 September 2019; and
(iii)
HGB titles No. 89/Merdeka and 90/Merdeka, valid
up to 30 January 2021.
Upon the expiry of the above HGB titles, the term of the HGB
titles can, subject to the provisions of the BOT Agreement, be
extended for another term of up to 20 years. (See “Overview of
Relevant Laws and Regulations in Indonesia—Rights to Own
28
and/or to Use—Hak Guna Bangunan (HGB/Right to Build)” and
“Overview of Relevant Laws and Regulations in Indonesia—
Rights to Own and/or to Use—Hak Pakai (HP/Right to Use)”.)
The HPL titles are valid as long as the land is being used.
(See “Business and Properties—Bandung Indah Plaza”.)
Year of building completion . . . . . . . .
1990
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$124.5 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$135.1 million
Land Area . . . . . . . . . . . . . . . . . . . . .
15,779 sq m
GFA as at 30 June 2007 . . . . . . . . . .
55,196 sq m
NLA as at 30 June 2007 . . . . . . . . . .
26,472 sq m(2)
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—5,668
Projection Year 2008—11,756
Projection Year 2009—12,811
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 14.4%
Number of tenants as at 30 June
2007 . . . . . . . . . . . . . . . . . . . . . . . . .
180
Occupancy rate as at 30 June 2007. .
83.2%
Key anchors / tenants . . . . . . . . . . . .
Matahari Department Store, Hypermart, McDonald’s, Yogya
Supermarket and Toko Gunung Agung bookstore
Car parking lots . . . . . . . . . . . . . . . . .
602
Motorcycle parking lots . . . . . . . . . . .
700
Notes:
(1) The figure comprises the number of households within the primary trade area of the relevant Retail
Mall. (See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
(2) Recently completed asset enhancement works have increased the NLA by 3,843 sq m, bringing the
total NLA to 30,315 sq m.
Pictures of Bandung Indah Plaza
29
Istana Plaza
Jalan Pasirkaliki No. 121-123, Bandung, West Java
Brief description . . . . . . . . . . . . . . . .
Istana Plaza is a four storey with two basement levels retail mall
with a carpark comprising 700 parking lots. It is located
strategically in the CBD of Bandung, the fourth most populous
city in Indonesia. Situated at the junction between two busy
roads of Jalan Pasir Kaliki and Jalan Pajajaran, it is easily
accessible by car and public transport. Anchored by Rimo
Department Store and Hero Supermarket, the 205 tenancies
in Istana Plaza provide one-stop shopping experience for the
middle to upper income residents within its population
catchment. Istana Plaza’s many popular international fashion
labels have also helped to attract the young and trendy shopper
base.
Population catchment . . . . . . . . . . . .
99,525 households(1)
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Istana Plaza is owned by PT Suryana Istana Pasundan and was
built pursuant to BOT scheme based on the cooperation
agreement, dated 9 May 1997 between, Gereja Kristen
Pasundan, Ginawan Chondro, Edi Sukamto Josana, Chandra
Tambayong, Wirawan Chondro, Heryanto Gunawan, and
Subagya Putra Prawira (as investors), and TK Gunawan
Prihatna, Stepanus Tedjasentosa, Tatang Budiarto, and
Abrijanto Effendi (as consultants) (the “Istana Plaza
Cooperation Agreement”).
The Istana Plaza Cooperation Agreement and its amendments
shall be jointly referred to as the “Istana Plaza BOT
Agreement”.
The Istana Plaza BOT Agreement is valid for 32 years from
January 2002.
The underlying BOT land, on which Istana Plaza is constructed,
is held by the BOT Grantor under the following HGB titles:
(i)
No. 43/Pamoyanan, valid until 24 September 2032;
(ii)
No. 58/Pamoyanan, valid until 24 September 2032;
(iii) No. 177/Pajajaran, valid until 24 September 2032;
(iv) No. 59/Pamoyanan, valid until 24 September 2036; and
(v)
No. 60/Pamoyanan, valid until 24 September 2036.
The above HGB titles can be extended for another term of up to
20 years. Following the expiration of this additional term, a
renewal application may be made (See “Overview of Relevant
Laws and Regulations in Indonesia—Rights to Own and/or to
Use—Hak Guna Bangunan (HGB/Right to Build)”.)
(See “Business and Properties—Istana Plaza”.)
Year of building completion . . . . . . . .
2001
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$125.7 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$114.7 million
Land Area . . . . . . . . . . . . . . . . . . . . .
13,082 sq m
GFA as at 30 June 2007 . . . . . . . . . .
37,434 sq m
30
NLA as at 30 June 2007 . . . . . . . . . .
27,247 sq m
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—4,286
Projection Year 2008—8,958
Projection Year 2009—9,285
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 12.0%
Number of tenants as at 30 June
2007 . . . . . . . . . . . . . . . . . . . . . . . . .
205
Occupancy rate as at 30 June 2007. .
98.9%
Key anchors/tenants . . . . . . . . . . . . .
Rimo Department Store, Ace Hardware, Gramedia bookstore,
Game Master and Planet Sport
Car parking lots . . . . . . . . . . . . . . . . .
700
Motorcycle parking lots . . . . . . . . . . .
500
Note:
(1) The figure comprises the number of households within the primary trade area of the relevant Retail
Mall. (See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
Pictures of Istana Plaza
31
The Retail Spaces
The Retail Spaces are all located in Indonesia. The Retail Spaces occupy a total NLA of 94,070 sq m and
are strategically located as anchor spaces within retail malls. Three of the seven Retail Spaces are located
within Greater Jakarta and four are situated in the major cities of Semarang, Madiun, Malang and Medan.
(See “Business and Properties”.)
A summary of each Retail Space is as follows:
Mall WTC Matahari Units
Jalan Raya Serpong, Pondok Jagung, Serpong, Tangerang, Banten, Greater Jakarta
Brief description . . . . . . . . . . . . . . . .
The Mall WTC Matahari Units comprise four strata units on part
of the ground floor, upper ground floor, mezzanine and second
floor of Mall WTC Matahari which are currently occupied by
Hypermart, Matahari Department Store and Timezone.
Locality information . . . . . . . . . . . . . .
Mall WTC Matahari is located along Jalan Serpong Raya,
Serpong within the administrative area of Tangerang regency,
Banten province. It is situated approximately 18 km west of
Jakarta’s CBD.
Tangerang is renowned as an industrial and manufacturing city
in Greater Jakarta, being home to seven industrial estates with a
total area of approximately 1,700 ha.
Due to its proximity to Jakarta, Tangerang benefits from the
urban expansion of Jakarta and is home to commuters who work
in Jakarta. In recent years, residential estates and satellite cities
with their facilities have been developed in Tangerang.
Mall WTC Matahari is strategically located along the main road
connecting the BSD residential estate, the largest residential
estate in Greater Jakarta. It has a proposed development area of
6,000 ha with currently 1,500 ha developed and occupied by over
15,000 households. In recent years, BSD City has experienced
rapid growth in terms of the number of housing units and retail
shop houses which have been built.
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Mall WTC Matahari was built on plots of land covering an area of:
(i)
3,470 sq m with Strata Titles Ownership Certificate
No. 428/Desa Pondok Jagung dated 17 December 2004;
(ii)
5,892 sq m with Strata Titles Ownership Certificate
No. 00153/Desa Pondok Jagung dated 17 December
2004;
(iii) 873 sq m with Strata Titles Ownership Certificate
No. 00372/Desa Pondok Jagung dated 17 December
2004; and
(iv) 949 sq m with Strata Titles Ownership Certificate
No. 00197/Desa Pondok Jagung dated 17 December
2004,
all of which are registered under the name of Matahari and its
underlying HGB common land will expire on 8 April 2018 but is
extendable for another term of up to 20 years. Following the
expiration of this additional term, a renewal application may be
made. (See “Overview of Relevant Laws and Regulations in
Indonesia—Rights to Own and/or to Use—Hak Guna Bangunan
(HGB/Right to Build)”.)
(See “Business and Properties—Mall WTC Matahari Units”.)
32
Year of building completion . . . . . . . .
2003
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$25.2 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$24.3 million
NLA as at 30 June 2007 . . . . . . . . . .
11,184 sq m(1)
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—843
Projection Year 2008—1,742
Projection Year 2009—1,770
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.5%
Note:
(1) Based on Strata Titles Ownership Certificates. (See “Business and Properties—Mall WTC Matahari
Units—Relevant Information relating to the Mall WTC Matahari Units—Title”.)
Picture of the Mall WTC Matahari Units
33
Metropolis Town Square Units
Jalan Hartono Raya, Modernland Cikokol, Tangerang, Banten, Greater Jakarta
Brief description . . . . . . . . . . . . . . . .
The Metropolis Town Square Units comprise three strata units
on part of the ground floor, first floor and second floor of
Metropolis Town Square, a one-stop shopping mall located
along one of the main roads in Tangerang.
The Metropolis Town Square Units are currently occupied by
Hypermart, Matahari Department Store and Timezone.
Locality information . . . . . . . . . . . . . .
Metropolis Town Square is located in Tangerang city, Banten
province, approximately 20 km west of Jakarta’s CBD. The
CBD’s strategic location near the main road connecting the
toll road to Tangerang city provides easy access to the
Jakarta—Merak toll gate and surrounding residential areas in
Tangerang.
Tangerang is an industrial and manufacturing city in Greater
Jakarta, home to seven industrial estates with a total area of
approximately 1,700 ha.
Due to its proximity to Jakarta, Tangerang is a popular residential
location for commuters who work in Jakarta. In recent years,
residential estates and satellite cities (for example, Lippo
Karawaci, Bumi Serpong Damai, Kota Modern, Alam Sutra,
Summarecon Serpong and Bintaro Jaya) have been
developed in Tangerang.
Metropolis Town Square is located along Jalan Hartono Raya
within the Kota Modern residential estate, about 2.6 km south of
the city centre of Tangerang.
Tangerang’s strategic location between Jakarta and the
Soekarno-Hatta International Airport makes it a popular
choice for offices and factories. The Indonesian government
has continuously been improving the quality of infrastructure
between the city and the nation’s capital to accommodate the
ever increasing road traffic.
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Metropolis Town Square Units are constructed on HGB titles and
are currently exclusively controlled by Matahari pursuant to
Kiosks Sale and Purchase Binding Agreement:
(i)
No. 093/AGR/DM/MPP/IX/03, dated 10 September 2003;
(ii)
No. 054/AGR/DM/MPP/VI/03, dated 23 June 2003; and
(iii) No. 084/AGR/DM/MPP/VIII/03, dated 25 August 2003,
all between Matahari and Coldwell Banker Dwimustika Mas.
These Kiosks Sale and Purchase Binding Agreements are
evidence of the parties’ intention to effect the sale and
purchase of Strata Units, but do not have the effect of
transferring ownership. The strata titles are in the process of
being issued by the local land office. Upon issuance, the strata
titles will be purchased by the relevant Retail Space Indonesian
SPC.
(See “Business and Properties — Metropolis Town Square
Units”.)
Year of building completion . . . . . . . .
34
2004
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$33.5 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$32.2 million
NLA as at 30 June 2007 . . . . . . . . . .
15,248 sq m(1)
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—1,156
Projection Year 2008—2,382
Projection Year 2009—2,420
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 3.3%
Note:
(1) Based on Kiosks Sale and Purchase Binding Agreements. (See “Business and Properties—
Metropolis Town Square Units—Relevant Information relating to the Metropolis Town Square
Units—Title”.)
Picture of the Metropolis Town Square Units
35
Depok Town Square Units
Jalan Margonda Raya No. 1, Pondok Cina Beji, Depok, Greater Jakarta
Brief description . . . . . . . . . . . . . . . .
The Depok Town Square Units comprise four strata units on part
of the lower ground floor, first floor and second floor of Depok
Town Square, one of the newest and most comprehensive malls
in Depok.
The Depok Town Square Units are currently occupied by
Hypermart, Matahari Department Store and Timezone.
Locality information . . . . . . . . . . . . . .
Depok is located in the West Java province, situated between
southern Jakarta and the northern side of Bogor regency. The
city is located approximately 16 km south of Jakarta’s CBD.
Depok is renowned as the city of students, being home to four
large universities (University of Indonesia, Gunadarma
University, Tugu Polytechnic and Jakarta Polytechnic).
Depok’s population is estimated at 1.5 million in 2007 and has
shown strong population growth, averaging 3.3% per annum
between 2000 and 2005.
In line with city population growth, the commercial area of Depok
has been growing rapidly for the last few years, as evidenced by
a number of modern shopping centre developments and
commercial buildings built along the main road of Depok,
Jalan Margonda Raya.
Depok Town Square is located on Jalan Margonda Raya,
adjacent to the south eastern side of University of Indonesia,
a prominent university in Indonesia. The centre has direct
access to Pondok Cina Railway Station at its rear entrance,
and therefore connects the station to Jalan Margonda Raya.
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Depok Town Square Units are constructed on HGB titles and are
currently exclusively controlled by Matahari pursuant to Kiosks
Sale and Purchase Binding Agreement:
(i)
No. 031/AGR/DM/MPP/XII/02, dated 19 December 2002
entered into between Matahari and Coldwell Banker
Dwimustika Mas; and
(ii) No. 012/JPN-PPJB/II/04, dated 11 February 2004, entered
into between Matahari and PT Jagat Pertala Nusantara.
These Kiosks Sale and Purchase Binding Agreements are
evidence of the parties’ intention to effect the sale and
purchase of strata units, but do not have the effect of
transferring ownership. The strata titles are in the process of
being issued by the local land office. Upon issuance, the strata
titles will be purchased by the relevant Retail Space Indonesian
SPC.
(See “Business and Properties—Depok Town Square Units”.)
Year of building completion . . . . . . . .
2005
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$25.7 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$24.8 million
NLA as at 30 June 2007 . . . . . . . . . .
13,045 sq m(1)
36
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—861
Projection Year 2008—1,778
Projection Year 2009—1,807
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.5%
Note:
(1) Based on Kiosks Sale and Purchase Binding Agreements. (See “Business and Properties—Depok
Town Square Units—Relevant Information relating to the Depok Town Square Units—Title”.)
Picture of the Depok Town Square Units
37
Java Supermall Units
Jalan MT Haryono No. 992-994, Jomblang, Semarang, Central Java
Brief description . . . . . . . . . . . . . . . .
The Java Supermall Units comprise four strata units on the semibasement, first floor and second floor of Java Supermall.
Java Supermall is located within the vicinity of a middle to upper
class residential area, which is easily accessible from most
areas in Semarang.
The Java Supermall Units are currently occupied by Matahari
Department Store and Foodmart supermarket.
Locality information . . . . . . . . . . . . . .
Semarang is the capital city of the Central Java province and the
fifth largest city in terms of population in Indonesia. With its
location along the northern coast of Java, Semarang is an
important trading port for the region.
Semarang had a population of 1.3 million in 2000 and is
estimated to have grown annually at 2.6% per annum,
registering a total increase of approximately 1.5 million people
over the last seven years.
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Java Supermall was built on a plot of land covering an area of:
(i)
3,839 sq m with Strata Titles Ownership Certificate No. 1/
Desa Lamper Kidul dated 23 November 1998;
(ii)
3,201 sq m with Strata Titles Ownership Certificate No. 2/
Desa Lamper Kidul dated 23 November 1998;
(iii) 3,772 sq m with Strata Titles Ownership Certificate No. 22/
Desa Lamper Kidul dated 23 November 1998; and
(iv)
270 sq m with Strata Titles Ownership Certificate No. 45/
Desa Lamper Kidul dated 18 April 2000,
all of which are registered under the name of Matahari and its
underlying HGB common land will expire on 24 September 2017
and is extendable for another term of up to 20 years. Following
expiration of this additional term, a renewal application may be
made. (See “Overview of Relevant Laws and Regulations in
Indonesia—Rights to Own and/or to Use—Hak Guna Bangunan
(HGB/Right to Build)”).
(See “Business and Properties—Java Supermall Units”.)
Year of building completion . . . . . . . .
2000
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$26.0 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$25.0 million
NLA as at 30 June 2007 . . . . . . . . . .
11,082 sq m(1)
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . .
Forecast Period 2007—836
Projection Year 2008—1,726
Projection Year 2009—1,754
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.4%
38
Note:
(1) Based on Strata Titles Ownership Certificates. (See “Business and Properties—Java Supermall
Units—Relevant Information relating to the Java Supermarket Units—Title”.)
Picture of the Java Supermall Units
39
Malang Town Square Units
Jalan Veteran No. 2, Malang, East Java
Brief description . . . . . . . . . . . . . . . .
The Malang Town Square Units comprise three strata units on
part of the ground floor, upper ground floor, first floor and second
floor of Malang Town Square, a mall conceptualised as an
international lifestyle mall as well as the biggest and most
comprehensive mall in Malang.
The Malang Town Square Units are currently occupied by
Hypermart, Matahari Department Store and Timezone.
Locality information . . . . . . . . . . . . . .
Malang is the second largest city in the East Java province with a
population of approximately 0.8 million and a regency population
of approximately 2.4 million people.
The region is a popular tourist destination due to its natural
attractions (for example, Mount Bromo, one of Java’s largest
volcanoes), cool climate and colonial history. Malang also has a
large student population, being home to five universities
(Brawijaya, State, Muhammadiyah, Widya Gama and
Merdeka Universities).
Malang Town Square, in which Malang Town Square Units are
located, is a mall conceptualised as an international lifestyle mall
as well as the biggest and most comprehensive mall in Malang.
The centre has easy access to public transportation and is
surrounded by exclusive residential communities and several
universities which have more than 50,000 students.
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Malang Town Square Units are constructed on HGB land titles
and are currently exclusively controlled by Matahari pursuant to
Kiosks Sale and Purchase Binding Agreement No. 031/PNPPJB/X/03, dated 7 October 2003 between Matahari and
PT Pendopo Niaga.
The Kiosks Sale and Purchase Binding Agreement is evidence
of the parties’ intention to effect the sale and purchase of strata
units, but do not have the effect of transferring ownership.
The strata titles are in the process of being issued by the local
land office. Upon issuance, the strata titles will be purchased by
the relevant Retail Space Indonesian SPC.
(See “Business and Properties—Malang Town Square Units”.)
Year of building completion . . . . . . . .
2005
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$25.5 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$25.8 million
NLA as at 30 June 2007 . . . . . . . . . .
11,065 sq m(1)
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—834
Projection Year 2008—1,723
Projection Year 2009—1,751
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.4%
40
Note:
(1) Based on Kiosks Sale and Purchase Binding Agreements. (See “Business and Properties—Malang
Town Square Units—Relevant Information relating to the Malang Town Square Units—Title”.)
Picture of the Malang Town Square Units
41
Plaza Madiun
Jalan Pahlawan, Madiun, East Java
Brief description . . . . . . . . . . . . . . . .
Plaza Madiun comprises retail spaces on the basement, first
floor, second floor and third floor. Plaza Madiun is currently
occupied by Matahari Department Store and Foodmart
supermarket.
Plaza Madiun is located along Pahlawan Street, a major road of
the city. The mall is the biggest in Madiun.
Locality information . . . . . . . . . . . . . .
The city of Madiun, with a total population of 0.2 million (based
on a 2005 census), is the capital city of Madiun regency in the
East Java province. The Madiun regency has a total land area of
1,011 sq km and its population exceeds 0.6 million (based on a
2001 census).
Madiun has benefited from its position which connects major
cities in Central and East Java. It is the home of Indonesia’s first
and largest train manufacturer and is a major sugar producer in
Java.
The industrial sector and trade, hotel and restaurant businesses
are key revenue generators for the city, having contributed
around 27.0% and 20.0%, respectively, to Madiun’s GRDP
(based on economic statistics in 2004).
Plaza Madiun is located along Jalan Pahlawan, a major road of
the city which is also the primary thoroughfare in the city of
Madiun. The street is positioned in the centre of the commercial
and administrative zone, at the crossroad of three existing
subdistricts of Madiun. Most of the prominent buildings in
Madiun are included in this precinct, including the City Hall,
Merdeka Hotel, Tentara Hospital and Pasaraya Shopping
Centre. Jalan Pahlawan is accessible from Jalan Sudirman,
another major thoroughfare in the city.
Plaza Madiun enjoys high pedestrian traffic from Jalan
Pahlawan and is in close proximity to various forms of public
transportation options.
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Plaza Madiun was built on a plot of land covering an area of:
(i)
5,501 sq m with HGB Certificate No. 186/Kelurahan
Pangongangan dated 3 June 1997, registered under the
name of Matahari and will expire on 10 February 2012; and
(ii) 82 sq m with HGB Certificate No. 188/Kelurahan
Pangongangan dated 12 February 1998, registered
under the name of Matahari and will expire on
10 February 2012.
Both HGB titles are extendable for another 20 years. Following
the expiration of this additional term, a renewal application may
be made. (See “Overview of Relevant Laws and Regulations in
Indonesia—Rights to Own and/or to Use—Hak Guna Bangunan
(HGB/Right to Build)”.)
(See “Business and Properties—Plaza Madiun”.)
Year of building completion . . . . . . . .
2000
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$33.4 million
42
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$31.8 million
NLA as at 30 June 2007 . . . . . . . . . .
19,029 sq m
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—1,081
Projection Year 2008—2,228
Projection Year 2009—2,264
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 3.1%
Picture of Plaza Madiun
43
Grand Palladium Medan Units
Jalan Kapt. Maulana Lubis, Medan, North Sumatra
Brief description . . . . . . . . . . . . . . . .
The Grand Palladium Medan Units comprise four strata units in
part of the basement, lower ground floor, upper ground floor, first
floor and third floor of Grand Palladium Medan.
The Grand Palladium Medan Units are currently occupied by
Hypermart, Matahari Department Store and Timezone.
Locality information . . . . . . . . . . . . . .
Medan, the provincial capital of North Sumatra, is the largest city
in Sumatra and the third most populous city in Indonesia after
Jakarta and Surabaya. It is a cosmopolitan city with a population
of over 2.0 million.
Medan is a growing commercial centre in the region, mainly with
agriculture and industry businesses. The city was transformed
from a tobacco plantation village in the 19th century to a major
government and commercial centre at present.
Grand Palladium Medan is conveniently located within the
Medan CBD and is only 2.5 km from the Polonia International
Airport. The mall is located in the centre of Medan, hence
drawing shoppers from all around the city. It is surrounded by
government and business offices and the town hall, and
therefore benefits from regular crowds of government and
business visitors.
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
The Grand Palladium Medan Units are constructed on HGB
titles and are currently exclusively controlled by Matahari
pursuant to Kiosks Sale and Purchase Binding Agreement
No. 011/UPI-PPJB/IX/04, dated 14 September 2004 between
Matahari and PT Unitech Prima Indah.
This Kiosks Sale and Purchase Binding Agreement is evidence
of the parties’ intention to effect the sale and purchase of strata
units, but does not have the effect of transferring ownership.
The strata titles are in the process of being issued by the local
land office. Upon issuance, the strata titles will be purchased by
the relevant Retail Space Indonesian SPC. (See “Business and
Properties—Grand Palladium Medan Units”.)
Year of building completion . . . . . . . .
2005
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$26.2 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$25.2 million
NLA as at 30 June 2007 . . . . . . . . . .
13,417 sq m(1)
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—886
Projection Year 2008—1,829
Projection Year 2009—1,859
44
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.6%
Note:
(1) Based on Kiosks Sale and Purchase Binding Agreements. (See “Business and Properties—Grand
Palladium Medan Units—Relevant Information relating to the Grand Palladium Medan Units—Title”.)
Picture of the Grand Palladium Medan Units
45
STRUCTURE OF LMIR TRUST
The following diagram illustrates the relationships among LMIR Trust, the Manager, the Trustee, the
Master Lessee, the Singapore SPCs, the Indonesian SPCs, the Operating Companies, the Property
Manager and the Unitholders as at the Listing Date.
Unitholders
Singapore
Holding of Units
Distributions
Acts on behalf
of Unitholders
Management
fees
Lippo-Mapletree
Indonesia Retail
Trust Management
Ltd.
(the “Manager”)
HSBC Institutional
Trust Services
(Singapore)
Limited
(the “Trustee”)
LMIR Trust
Management
services
Ownership of ordinary and
redeemable preference shares(2)
Trustee’s fees
Dividends
and /or
redemption
proceeds(2)
Dividends
and/or
redemption
proceeds(2)
14 Retail Mall Singapore
SPCs(1)
Ownership of ordinary and
redeemable preference shares(2)
7 Retail Space Singapore
SPCs(3)
Indonesia
Dividends, interest income
and principal repayment of
shareholders’ loans
Ownership and
shareholders’ loans
7 Indonesian SPCs(4)
100.0%
ownership
Rental
payments
Dividends, interest income
and principal repayment of
shareholders’ loans
Retail
Malls
Retail
Spaces
Ownership and
shareholders’ loans
7 Indonesian SPCs(5)
100.0%
ownership
Tenancy
agreements
Master Lease
Agreements
Rental
payments
Tenancies
Tenants
Operating
Costs
Agreement
Master
leases
Service
charge(7)
Operating
Companies(6)
(the “Operating
Companies”)
Property
management
fees
Existing
Property
Management
Agreements
46
PT. Consulting &
Management Services
Division (the “Property
Manager”)(8)
Property
management
services
PT. Matahari Putra
Prima Tbk
(the “Master Lessee”)
Notes:
(1) These 14 Singapore SPCs (collectively, the “Retail Mall Singapore SPCs”) comprise the Tier 1
Retail Mall Singapore SPCs and the Tier 2 Retail Mall Singapore SPCs. Seven of these 14 Retail Mall
Singapore SPCs (the “Tier 1 Retail Mall Singapore SPCs”) will be acquired by LMIR Trust on the
Listing Date. Each of these Tier 1 Retail Mall Singapore SPCs in turn, wholly-own another Singapore
SPC (collectively, the “Tier 2 Retail Mall Singapore SPCs”). (See “Certain Agreements Relating to
LMIR Trust and the Properties—Summary of Ownership Structure of the Retail Malls”.)
(2) LMIR Trust will own ordinary and redeemable preference shares in, and receive dividends and/or
redemption proceeds from, the Tier 1 Retail Mall Singapore SPCs and not from the Tier 2 Retail Mall
Singapore SPCs. LMIR Trust will also own ordinary and redeemable preference shares in, and
receive dividends and/or redemption proceeds from, the Retail Space Singapore SPCs.
(3) These seven Singapore SPCs (collectively, the “Retail Space Singapore SPCs”) will be acquired by
LMIR Trust on the Listing Date.
(4) As at the Listing Date, the entire share capital in each of the seven Indonesian SPCs (the “Retail Mall
Indonesian SPCs”) will be owned by two of the 14 Retail Mall Singapore SPCs. Each of the Retail
Mall Indonesian SPCs owns one of the seven Retail Malls and receives rental payments from the
tenants of the respective Retail Mall. (See “Certain Agreements Relating to LMIR Trust and the
Properties—Summary of Ownership Structure of the Retail Malls”.)
(5) The entire share capital in each of these seven Indonesian SPCs (the “Retail Space Indonesian
SPCs”) is owned by two of the seven Retail Space Singapore SPCs. Each of these Retail Space
Indonesian SPCs will acquire one of the seven Retail Spaces from Matahari on the Listing Date and
will, pursuant to the terms of the Master Lease Agreements, lease it to Matahari, as the Master
Lessee, in consideration for rental payments from the Master Lessee.
(6) The Operating Companies comprise PT Multi Nusantara Karya, PT Selaras Maju, PT Sarana Karya
Megah, PT Antara Nusa Permai, PT Primatama Kreasi Bersama and PT Kharisma Abadi Selaras.
(7) A service charge for the expenses incurred during each lease agreement shall be payable by each
tenant to the relevant Operating Company for three years commencing from 1 January 2007.
(8) A fee for property management services in respect of the Retail Malls shall be payable to the Property
Manager for an initial term of four years from the date of the relevant Existing Property Management
Agreement. (See “—Certain Fees and Charges”.)
The Manager: Lippo-Mapletree Indonesia Retail Trust Management Ltd.
The Manager was incorporated in Singapore under the Companies Act, Chapter 50 of Singapore (the
“Companies Act”) on 3 May 2007. As at the Listing Date, it has a paid-up capital of S$1.0 million and its
registered office is located at 78 Shenton Way, #05-01 Lippo Centre, Singapore 079120. The Manager is
40.0% owned by Mapletree Capital and 60.0% owned by Peninsula Investment Ltd. Peninsula Investment
Ltd is in turn 100.0% owned by Jesselton Investment Ltd, a wholly-owned subsidiary of the Sponsor.
Mapletree Capital, a wholly-owned subsidiary of MIPL, is a private limited company incorporated in
Singapore under the Companies Act on 6 October 2004. As at 30 June 2007, it has a paid-up capital of
S$2.00 and its registered office is located at 1 Maritime Square, #13-01 HarbourFront Centre, Singapore
099253. MIPL is a leading Asia-focused real estate company based in Singapore. The Mapletree Group
has an asset base of approximately S$4.5 billion (as at 30 June 2007) comprising office, logistics,
industrial, residential and retail/lifestyle properties. (See “Strategy—Acquisition Growth Strategy—LMIR
Trust’s relationship with the Mapletree Group”.)
The board of directors of the Manager (the “Board”) is made up of individuals with a broad range of
commercial experience and expertise in areas including, but not limited to, law, accounting, banking,
finance, real estate and fund management. The Board consists of Mr Tan Bar Tien, Mr Lim Ho Seng,
Mr Lok Vi Ming, Ms Viven G. Sitiabudi, Mr Yeo Cheow Tong, Mr Tan Boon Leong and Mr Wong Mun Hoong.
Generally, the Manager will provide the following services to LMIR Trust:
• Investment strategy. Formulate and execute LMIR Trust’s investment strategy, including determining
the location, sub-sector type and other characteristics of LMIR Trust’s property portfolio.
• Acquisitions and divestments. Make recommendations to the Trustee on the acquisition and
divestment of properties.
47
• Strategic asset planning and reporting. Formulate strategic asset/property plans, including asset
enhancement initiatives, marketing plans, budgets and reports, relating to the performance of LMIR
Trust’s properties.
• Financing. Formulate plans for equity and debt financing for LMIR Trust’s property acquisitions,
distribution payments, expense payments and property maintenance payments.
• Administrative and advisory services. Perform day-to-day operational services as LMIR Trust’s
representative, including providing administrative services relating to meetings of Unitholders when
such meetings are convened.
• Investor relations. Communicate and liaise with Unitholders, media and investment community.
• Compliance management. Make all regulatory filings on behalf of LMIR Trust and ensure that LMIR
Trust is in compliance with the applicable provisions of the Securities and Futures Act and all other
relevant legislation, the Listing Manual, the Code on Collective Investment Schemes (including the
Property Funds Guidelines) of Singapore (the “CIS Code”), the Trust Deed, any tax ruling and all
relevant contracts.
• Accounting records.
reports.
Maintain books and prepare or cause to be prepared accounts and annual
(See “The Manager and Corporate Governance—The Manager of LMIR Trust”.)
The Manager’s key objectives are to deliver regular and stable distributions to Unitholders and to achieve
long-term growth in the NAV per Unit in order to maximise Unitholders’ return.
The Manager plans to achieve its key objectives through the following:
Acquisition growth strategy
LMIR Trust’s acquisition growth strategy envisages investments in retail and/or retail-related assets that
are in the interests of Unitholders. The assets in LMIR Trust’s initial portfolio are all located in Indonesia.
LMIR Trust has the principal investment objective of owning and investing on a long-term basis in a
diversified portfolio of income-producing real estate in Indonesia that are primarily used for retail and/or
retail-related purposes, and real estate related assets in connection with the foregoing.
LMIR Trust will benefit from the Sponsor’s ability to identify and enhance under-valued retail properties
and leverage its extensive retail network in Indonesia. LMIR Trust will also benefit from the track record of
the Mapletree Group, with its experience in managing yield-accretive assets in various markets such as
Mapletree Logistics Trust (“MapletreeLog”) and other private real estate funds in Asia. The Mapletree
Group’s total assets under management as at 31 March 2007 is S$1.7 billion.
Active asset enhancement and management strategy
Implementing pro-active measures to enhance returns from existing and future properties in LMIR Trust’s
portfolio. Such measures may include addition and alteration works, including re-zoning, tenancy remixing
and work carried out for the purpose of expanding size and capacity (in relation to properties to be
acquired by LMIR Trust), leveraging and enhancing the properties’ competitive strengths to optimise
rentals and enhancement projects to maintain the competitive positioning of such properties. The
Manager will work with the relevant Indonesian authorities to obtain the necessary approvals to
undertake such active asset enhancement works.
(See “—Key Investment Highlights—Potential for growth through active asset management and tenant remixing”.)
Capital and Risk Management Strategy
While LMIR Trust will not be drawing down on the Debt Facilities as at the Listing Date, to the extent that
LMIR Trust incurs borrowings in the future, the Manager will employ an appropriate mix of debt and equity
in the financing of future acquisitions. The Manager has a policy to undertake foreign exchange hedging of
the expected distributions of LMIR Trust to insulate against movements in exchange rates (whether
favourable or unfavourable). The Trustee, as trustee of LMIR Trust, has entered into a currency hedging
arrangement, effective as of the Listing Date, to optimise risk-adjusted returns to the Unitholders as at
Listing Date.
48
(See “Strategy—Capital and Risk Management Strategy”.)
The Master Lessee: PT. Matahari Putra Prima Tbk
The Master Lessee, Matahari, is a publicly listed company on the JSX and the Surabaya Stock Exchange
(the “SSX”). It is Indonesia’s largest retailer by sales revenue with over Rp. 8,487.7 billion (approximately
S$1,436.0 million) in annual sales for the financial year ended 31 December 2006. This is a 22.7%
increase compared to the Matahari’s annual sales of Rp. 6,916.1 billion (approximately S$1,170.6 million)
for the financial year ended 31 December 2005. Matahari is listed on the JSX and the SSX with a market
capitalisation of Rp. 3,628.2 billion (approximately S$582.9 million) on the JSX as at 18 October 2007. As
at 30 June 2007, Matahari operated 83 department stores, 9 Kids2kids specialty stores, 30 hypermarkets,
36 supermarkets and 96 Timezone amusement centres, in addition to 36 Boston drugstores located within
Hypermart and/or Matahari supermarkets, all of which are located throughout Indonesia. Matahari was
controlled by the Darmawan family until 1997, when the Lippo Group acquired a controlling interest
through PT Multipolar Corporation Tbk.
The Sponsor: PT. Lippo Karawaci Tbk
PT. Lippo Karawaci Tbk is an internationally recognised corporation and is also the largest listed property
developer in Indonesia, based on its market capitalisation on the JSX, of Rp. 10,609.2 billion
(approximately S$1.8 billion) and on the closing price per ordinary share on the JSX of Rp. 1,790.0 as
at 18 October 2007. The Sponsor’s property portfolio comprises townships and residential developments
and commercial and retail development properties.
(See “The Sponsor”.)
The Trustee: HSBC Institutional Trust Services (Singapore) Limited
HSBC Institutional Trust Services (Singapore) Limited is a company incorporated in Singapore and
registered as a trust company under the Trust Companies Act 2005, Chapter 336 of Singapore, with its
place of business located at 21 Collyer Quay, #14-01 HSBC Building, Singapore 049320.
The Trustee’s powers and duties include:
• acting as trustee of LMIR Trust;
• holding the properties of LMIR Trust for the benefit of the Unitholders; and
• exercising all the powers of a trustee and the powers accompanying ownership of the properties of
LMIR Trust.
(See “The Formation and Structure of LMIR Trust—The Trust Deed—The Trustee”.)
Singapore SPCs: the Tier 1 Retail Mall Singapore SPCs, Tier 2 Retail Mall Singapore SPCs and the
Retail Space Singapore SPCs
On the Listing Date, LMIR Trust will, pursuant to the terms of the Singapore SPC Share Purchase
Agreements, complete the acquisition of all of the ordinary shares and redeemable preference shares in
each of the Tier 1 Retail Mall Singapore SPCs and the Retail Space Singapore SPCs (collectively, the
“Target Singapore SPCs”) from the Vendors. Each of the seven Retail Mall Indonesian SPCs is owned by
a Tier 1 Retail Mall Singapore SPC and a Tier 2 Retail Mall Singapore SPC (wholly-owned by the relevant
Tier 1 Retail Mall Singapore SPC), while each of the seven Retail Space Indonesian SPCs is owned by two
of the Retail Space Singapore SPCs.
The Retail Mall Singapore SPCs comprise two tiers whereas the Retail Space Singapore SPCs comprise
one tier. The difference in the holding structures of the Retail Mall Singapore SPCs and the Retail Space
Singapore SPCs is due to the fact that the majority of the Retail Malls were owned by different parties while
all of the Retail Spaces were owned by the same party. The use of the two-layer structure for the Retail
Malls is used to simplify the acquisition by LMIR Trust on the Listing Date.
49
The table below shows the corresponding Vendor for each of the Target Singapore SPCs whose ordinary
shares and redeemable preference shares will be acquired by LMIR Trust upon completion of the
Singapore SPC Share Purchase Agreements:
Vendor
Tier 1 Retail Mall Singapore SPCs
Dellmore Investment Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Belilios International Pte. Ltd.
Dominion Capital Pte. Ltd.
Greenlot Investments Pte. Ltd.
Tangent Investments Pte. Ltd.
Magnus Investments Pte. Ltd.
Thornton Investments Pte. Ltd.
Pierbridge Investments Pte. Ltd.
Market Holdings Ltd. . . . . . . . .
Victoria Investment Ltd. . . . . . .
Millennium Capital Ltd. . . . . . .
Golden Acres Investment Ltd. .
Superior Asset Investment Ltd.
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(See “Certain Agreements Relating to LMIR Trust and the Properties—Summary of Ownership Structure
of the Retail Malls”.)
Vendor
Retail Space Singapore SPCs
Tristar Capital Ltd. (“Tristar”) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Serpong Properties Pte. Ltd.
Metropolis Properties Pte. Ltd.
Matos Properties Pte. Ltd.
Detos Properties Pte. Ltd.
Palladium Properties Pte. Ltd.
Java Properties Pte. Ltd.
Madiun Properties Pte. Ltd.
(See “Certain Agreements Relating to LMIR Trust and the Properties—Summary of Ownership Structure
of the Retail Spaces”.)
All the Vendors, with the exception of Tristar, are not related to the Sponsor or the Manager.
(See “Certain Agreements Relating to LMIR Trust and the Properties—Description of the Singapore SPC
Share Purchase Agreements”.)
Indonesian SPCs: the Retail Mall Indonesian SPCs and the Retail Space Indonesian SPCs
Retail Mall Indonesian SPCs: PT Graha Baru Raya, PT Graha Nusa Raya, PT Cibubur Utama,
PT Megah Semesta Abadi, PT Suryana Istana Pasundan, PT Indah Pesona Bogor, PT Primatama
Nusa Indah
Under the terms of each Retail Mall Indonesian SPC Share Purchase Agreement, each of the seven Retail
Mall Indonesian SPCs will, on the Listing Date, be acquired by two of the 14 Retail Mall Singapore SPCs.
The Retail Mall Indonesian SPCs lease the Retail Malls to tenants in consideration for rental payments
from the tenants under lease agreements. As at Listing Date, the Retail Mall Indonesian SPCs will already
hold the Retail Malls. As a result, upon completion of its purchase of the 14 Retail Mall Singapore SPCs, on
the Listing Date, LMIR Trust will also indirectly own the seven Retail Malls.
Retail Space Indonesian SPCs: PT Dinamika Serpong, PT Gema Metropolis Modern, PT Matos
Surya Perkasa, PT Megah Detos Utama, PT Palladium Megah Lestari, PT Madiun Ritelindo,
PT Java Mega Jaya
Under the terms of each Retail Space Indonesian SPC Share Purchase Agreement, each of the seven
Retail Space Indonesian SPCs will, on the Listing Date, be acquired by two of the seven Retail Space
Singapore SPCs. Under the terms of each Property Purchase Agreement, each of the seven Retail Space
Indonesian SPCs, which is owned by two of the seven Retail Space Singapore SPCs will, on the Listing
Date, complete the acquisition of one of the seven Retail Spaces from Matahari. As a result, upon
completion of its purchase of the seven Retail Space Singapore SPCs on the Listing Date, LMIR Trust will
also indirectly own the seven Retail Spaces.
The Retail Space Indonesian SPCs will lease the Retail Spaces to the Master Lessee in consideration for
rental payments from the Master Lessee under each of the Master Lease Agreements.
50
Operating Companies: PT Multi Nusantara Karya, PT Selaras Maju, PT Sarana Karya Megah,
PT Antara Nusa Permai, PT Primatama Kreasi Bersama and PT Kharisma Abadi Selaras
Pursuant to each of the operating costs agreements entered into between the relevant Retail Mall
Indonesian SPC and Operating Company (collectively, the “Operating Costs Agreements”), each
Operating Company has the right to collect, through the Property Manager, a service charge from the
tenants of the relevant Retail Mall. The Operating Companies will utilise this service charge to cover the
costs directly related to the maintenance and operation of the Retail Malls. The Operating Costs
Agreements will be valid for a period of three years commencing 1 January 2007.
Each of the Operating Companies is an affiliate of the respective Vendor of the relevant Retail Mall.
The table below shows the corresponding Operating Company for each Retail Mall:
Retail Mall
Gajah Mada Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cibubur Junction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Plaza Semanggi. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mal Lippo Cikarang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ekalokasari Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bandung Indah Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Istana Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Company
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PT Multi Nusantara Karya
PT Selaras Maju
PT Primatama Kreasi Bersama
PT Multi Nusantara Karya
PT Sarana Karya Megah
PT Antara Nusa Permai
PT Kharisma Abadi Selaras
Property Manager: PT. Consulting & Management Services Division
The Property Manager, a wholly-owned subsidiary of the Sponsor, was incorporated in Indonesia on
23 March 2006. Its registered office is located at Lippo Cyber Park, 2121 Lippo Karawaci Utara,
Tangerang. Since 2006, the Property Manager has been engaged in the business of managing
properties in Indonesia.
The Property Manager has entered into a property management agreement with each of the Retail Mall
Indonesian SPCs holding the relevant Retail Mall (collectively the “Existing Property Management
Agreements”) under which the Property Manager will provide, among other things:
• retail management services for the relevant Retail Mall including advising and developing a strategic
management policy for tenants and service providers, reviewing and implementing human resources
policies, accounting and finance procedures, maintenance, safety, security, cleaning and parking for the
relevant Retail Mall, reviewing and providing input on vehicular and pedestrian flows and customer
conveniences, public relations and customer services, insurance and tenancy mix policies;
• advertising and promotion services;
• lease documentation and monitoring systems and a management reporting system; and
• building documentation system.
(See “Certain Agreements Relating to LMIR Trust and the Properties—Description of Existing Property
Management Agreements”.)
51
Certain fees and charges
The following is a summary of the amounts of certain fees and charges payable by the Unitholders in
connection with the subscription for the Units (so long as the Units are listed):
Payable by the Unitholders directly
(a)
(b)
(c)
(d)
Amount payable
Subscription fee or preliminary charge . .
Realisation fee . . . . . . . . . . . . . . . . . . . .
Switching fee . . . . . . . . . . . . . . . . . . . . .
Any other fee . . . . . . . . . . . . . . . . . . . . .
.
.
.
.
N.A.(1)
N.A.(1)
N.A.(1)
Clearing fee for trading of Units on the SGX-ST at the
rate of 0.04% of the transaction value, subject to a
maximum of S$600.00 per transaction.
Note:
(1) As the Units will be listed and traded on the SGX-ST and Unitholders will have no right to request the
Manager to redeem their Units while the Units are listed, no subscription fee, preliminary charge,
realisation fee or switching fee is payable in respect of the Units.
The following is a summary of certain fees and charges payable by LMIR Trust in connection with the
establishment and ongoing management and operation of LMIR Trust:
Payable by LMIR Trust
Amount payable
(a) Management fees . . . . . . . . . . . .
Base Fee
0.25% per annum of the value of the Deposited Property.
Performance Fee
4.0% per annum of LMIR Trust’s NPI in the relevant financial
year (calculated before accounting for this additional fee in that
financial year).
Authorised Investment Management Fee
0.5% per annum of the value of Authorised Investments which
are not real estate (whether held directly by LMIR Trust or
indirectly through one or more Special Purpose Vehicles
(“SPVs”)). Where such Authorised Investment is an interest in
a property fund (either a REIT or private property fund) wholly
managed by a wholly-owned subsidiary of the Sponsor, no
Authorised Investment Management Fee shall be payable in
relation to such Authorised Investment.
Management Fee to be paid in cash or Units
The Manager may elect to receive the management fees in cash
or Units or a combination of cash and Units (as it may in its sole
discretion determine). For Forecast Period 2007, Projection Year
2008 and Projection Year 2009, the Manager has opted to
receive 100% of the Performance Fee in the form of Units.
(See “The Manager and Corporate Governance—Management
Fees”.)
(b) Trustee’s fee . . . . . . . . . . . . . . . .
A maximum of 0.03% per annum of the value of the Deposited
Property, subject to a minimum of S$15,000 per month,
excluding out-of-pocket expenses and GST.
LMIR Trust will also pay the Trustee a one-time inception fee of
S$25,000.
The Trustee’s fee will be subject to review three years from the
Listing Date.
52
Payable by LMIR Trust
Amount payable
(c) Any other substantial fee or
charge (i.e. 0.1% or more of LMIR
Trust’s asset value)
(i) Acquisition fee (payable to the
Manager) . . . . . . . . . . . . . . . . .
For any Authorised Investment acquired directly or indirectly
from time to time by the Trustee on behalf of LMIR Trust, the
acquisition fee payable to the Manager shall be 1.0% of the
purchase price of such Authorised Investment acquired by LMIR
Trust.
No acquisition fee is payable for the acquisition of the initial
property portfolio of LMIR Trust.
The acquisition fee is payable to the Manager in the form of cash
and/or Units (as the Manager may elect in its sole discretion) at
the then prevailing market price provided that in respect of any
acquisition of real estate assets from interested parties, such a
fee should, if required by the applicable laws, rules and/or
regulations, be in the form of Units issued by LMIR Trust at
prevailing market price(s) and subject to such transfer
restrictions as may be imposed. At present, the Property
Funds Guidelines prescribe that such Units should not be
sold within one year from the date of their issuance.
Any payment to third party agents or brokers in connection with
the acquisition of any Authorised Investment for LMIR Trust shall
be paid by the Manager to such persons out of the Deposited
Property of LMIR Trust or the assets of the relevant SPV, and not
out of the acquisition fee or the divestment fee received or to be
received by the Manager.
(ii) Divestment fee
(payable to the Manager) . . . . .
0.5% of the sale price (after deducting the interest of any coowners or co-participants) of any Authorised Investment directly
or indirectly sold or divested from time to time by the Trustee on
behalf of LMIR Trust.
The divestment fee is payable to the Manager in the form of cash
and/or Units (as the Manager may elect in its sole discretion) at
the then prevailing market price provided that in respect of any
sale or divestment of real estate assets to interested parties,
such a fee should, if required by the applicable laws, rules and/or
regulations, be in the form of Units issued by LMIR Trust at
prevailing market price(s) and subject to such transfer
restrictions as may be imposed. At present, the Property
Funds Guidelines prescribe that such Units should not be
sold within one year from the date of their issuance.
Any payment to third party agents or brokers in connection with
the sale or divestment of any Authorised Investment for LMIR
Trust shall be paid by the Manager to such persons out of the
Deposited Property of LMIR Trust or the assets of the relevant
SPV, and not out of the acquisition fee or the divestment fee
received or to be received by the Manager.
(iii) Property Manager’s fee
(payable to the Property
Manager) . . . . . . . . . . . . . . . . . .
Under the Existing Property Management Agreements in
respect of each Retail Mall, the Property Manager will provide
retail management services, advertising and promotion
53
Payable by LMIR Trust
Amount payable
services, lease documentation and monitoring systems, and a
building documentation system in relation to that Retail Mall. The
Property Manager is entitled to the following fees:
• 2.0% per annum of the gross revenue for the relevant Retail
Mall;
• 2.0% per annum of the net property income for the relevant
Retail Mall (after accounting for the fee of 2.0% per annum of
the gross revenue for the relevant Retail Mall); and
• 0.5% per annum of the net property income for the relevant
Retail Mall in lieu of leasing commissions otherwise payable to
the Property Manager and/or third party agents.
It is currently intended that the same fees will be paid to the
Property Manager under the Master Property Management
Agreement for any other properties to be acquired by LMIR
Trust after the Listing Date and managed by the Property
Manager.
In relation to Authorised Investments in the form of real estate owned or held, or to be owned or held, either
directly or indirectly, by a SPV, the fees payable to the Manager shall be calculated on the same basis as if
such real estate, or the pro-rated share of such real estate in the case where the interest of LMIR Trust in
the SPV is partial, had been held directly by the Trustee.
54
The offering
LMIR Trust . . . . . . . . . . . . . . . . . . . .
Lippo-Mapletree Indonesia Retail Trust, a REIT established in
the Republic of Singapore and constituted by the Trust Deed.
The Manager . . . . . . . . . . . . . . . . . . .
Lippo-Mapletree Indonesia Retail Trust Management Ltd.
The Trustee . . . . . . . . . . . . . . . . . . . .
HSBC Institutional Trust Services (Singapore) Limited.
The Sponsor . . . . . . . . . . . . . . . . . . .
PT. Lippo Karawaci Tbk.
The Master Lessee . . . . . . . . . . . . . .
PT. Matahari Putra Prima Tbk.
The Master Lessee is a publicly listed company on the JSX and
the SSX, and was controlled by the Darmawan family until 1997,
when the Lippo Group acquired, and still retains, a controlling
interest through PT Multipolar Corporation Tbk.
The Vendors . . . . . . . . . . . . . . . . . . .
Golden Acres Investment Ltd., Market Holdings Ltd., Millennium
Capital Ltd., Superior Asset Investment Ltd., Victoria Investment
Ltd., Dellmore Investment Ltd and Tristar, companies
incorporated in the Federal Territory of Labuan, Malaysia.
Tristar is a wholly-owned subsidiary of Matahari. The
Vendors, with the exception of Tristar, are not owned, whether
wholly or partially, directly or indirectly, by the Sponsor.
Cornerstone Investors . . . . . . . . . . . .
Lippo Strategic and Mapletree LM. Lippo Strategic has also
granted the Stabilising Manager the Over-allotment Option.
The Unit Lender . . . . . . . . . . . . . . . . .
Lippo Strategic.
The Offering . . . . . . . . . . . . . . . . . . .
645,469,000 Units offered under the Placement and the Public
Offer, subject to the Over-allotment Option.
The Placement . . . . . . . . . . . . . . . . .
625,469,000 Units offered by way of an international placement
to investors, including institutional and other investors in
Singapore.
The Units have not been and will not be registered under the
Securities Act and, subject to certain exceptions, may not be
offered or sold within the United States. The Units are being
offered and sold only outside the United States (including to
institutional and other investors in Singapore) in reliance on
Regulation S.
The Public Offer . . . . . . . . . . . . . . . .
20,000,000 Units offered to the public in Singapore.
Clawback and Re-allocation . . . . . . .
The Units may be re-allocated between the Placement and the
Public Offer at the discretion of the Underwriters (subject to the
minimum unitholding and distribution requirements of the SGXST), such as in the event of an excess of applications in one and
a deficit of applications in the other.
Cornerstone Units . . . . . . . . . . . . . . .
Separate from the Offering, Lippo Strategic and Mapletree LM
have subscribed for an aggregate of 287,695,000 Units and
127,250,000 Units respectively at the Offering Price under
Cornerstone Subscription Agreements, subject to certain
conditions, including that the Underwriting Agreement has
been entered into and shall not have been terminated
pursuant to its terms on or prior to the Listing Date. The
Cornerstone Units will in aggregate constitute approximately
39.1% of the total issued Units as at the Listing Date
(assuming no exercise of the Over-allotment Option). The
Offering is conditional upon the completion of subscription of
the Cornerstone Units by each of the Cornerstone Investors.
55
Subscription for the Public Offer . . . .
Investors applying for Units by way of Application Forms or
Electronic Applications (both as referred to in “Appendix G—
Terms, Conditions and Procedures for Application for and
Acceptance of the Units in Singapore”) in the Public Offer will
pay the Offering Price on application, subject to a refund of the
full amount or, as the case may be, the balance of the application
monies (in each case, without interest or any share of revenue or
other benefit arising therefrom) where (i) an application is
rejected or accepted in part only, or (ii) the Offering does not
proceed for any reason. For the purpose of illustration, an
investor who applies for 1,000 Units by way of an Application
Form or an Electronic Application under the Public Offer will
have to pay S$800.00, which is subject to a refund of the full
amount or the balance thereof (without interest or any share of
revenue or other benefit arising therefrom), as the case may be,
upon the occurrence of any of the foregoing events.
The minimum initial subscription is for 1,000 Units. An applicant
may subscribe for a larger number of Units in integral multiples of
1,000.
Investors in Singapore must follow the application procedures
set out in “Appendix G—Terms, Conditions and Procedures for
Application for and Acceptance of the Units in Singapore”.
Subscriptions under the Public Offer must be paid for in
Singapore dollars. No fee is payable by applicants for the
Units, save for an administration fee of S$1.00 for each
application made through ATMs of the Participating Banks.
Offering Price . . . . . . . . . . . . . . . . . .
S$0.80 per Unit.
Over-allotment Option . . . . . . . . . . . .
In connection with the Offering, the Stabilising Manager (on
behalf of the Underwriters) has been granted the Over-allotment
Option by the Unit Lender. The Over-allotment Option is
exercisable by the Stabilising Manager, in consultation with
the other Underwriters, in full or in part, on one or more
occasions, no later than the earliest of (i) the date falling
30 days from the commencement of trading of the Units on
the SGX-ST, (ii) the date when the Stabilising Manager has
bought on the SGX-ST, an aggregate of 96,820,000 Units,
representing not more than 15.0% of the total Units offered,
to undertake stabilising actions or (iii) the date falling 30 days
after the date of adequate public disclosure of the final price of
the Units, to purchase from the Unit Lender up to an aggregate of
96,820,000 Units at the Offering Price, solely to cover the overallotment of Units (if any) subject to any applicable laws and
regulations. The total number of outstanding Units immediately
after the completion of the Offering, including the Cornerstone
Units, will be 1,060,414,000 Units. The exercise of the Overallotment Option will not increase this total number of Units
outstanding. The total number of Units subject to the Overallotment Option will not exceed more than 9.1% of the total
number of Units under the Offering.
Stabilisation. . . . . . . . . . . . . . . . . . . .
In connection with the Offering, the Stabilising Manager (or
persons acting on behalf of the Stabilising Manager) may, in
consultation with the other Underwriters, over-allot or effect
transactions which stabilise or maintain the market price of
the Units at levels which might not otherwise prevail in the
open market. Such transactions may be effected on the SGXST and in other jurisdictions where it is permissible to do so; in
56
each case, in compliance with all applicable laws and
regulations, including the SFA, and any regulations
thereunder. However, there is no assurance that the
Stabilising Manager (or persons acting on behalf of the
Stabilising Manager) will undertake stabilisation action.
Such transactions may commence on or after the date of
commencement of trading in the Units on SGX-ST and, if
commenced, may be discontinued at any time and shall not
be effected after the earliest of (i) the date falling 30 days from
the date of commencement of trading of the Units on the SGXST, (ii) the date when the Stabilising Manager has bought on the
SGX-ST an aggregate of 96,820,000 Units, representing not
more than 15.0% of the total Units offered to undertake
stabilising actions or (iii) the date falling 30 days after the
date of adequate public disclosure of the final price of the Units.
(See “Plan of Distribution—Over-allotment and Stabilisation”.)
Lock-ups . . . . . . . . . . . . . . . . . . . . . .
Lippo Strategic (also the Unit Lender), Lippo Holdings Inc, Lippo
Capital Limited, Lippo Cayman Limited, Lanius Ltd, MIPL,
Mapletree Dextra Pte Ltd and Mapletree LM on 9 November
2007 have each agreed to (i) a lock-up arrangement in respect of
their direct or indirect interests (as the case may be) in the
Cornerstone Units, as at the Listing Date during the First
Lock-Up Period and (ii) a lock-up arrangement in respect of
their direct or indirect interests (as the case may be) in 50.0% of
the Cornerstone Units as at the Listing Date during the Second
Lock-Up Period, subject to certain exceptions.
The Manager has also on 9 November 2007 agreed to a lock-up
arrangement in respect of any offer, issue or contract to issue
any Units, and the making of any announcements in connection
with any offer, issue or contract to issue any Units during the First
Lock-Up Period, subject to certain exceptions.
(See “Plan of Distribution—Lock-up Arrangements”.)
Capitalisation. . . . . . . . . . . . . . . . . . .
S$963.3 million
“Capitalisation”).
(based
on
the
Offering
Price)
(see
Use of Proceeds . . . . . . . . . . . . . . . .
Based on the Offering Price and estimated issue costs of the
Offering, the gross proceeds from the Offering, assuming that
the Over-allotment Option has not been exercised, are
estimated to be approximately S$848.3 million.
The Manager intends to apply the total proceeds from the
Offering and from the issuance of Cornerstone Units towards
the following:
(i) payment of the purchase consideration to the Vendors for
the acquisition of all of the ordinary shares and redeemable
preference shares in the Target Singapore SPCs at
completion under the Singapore SPC Share Purchase
Agreements; and
(ii) costs and expenses related to the Offering and the issuance
of the Cornerstone Units.
(See “Use of Proceeds” and “Certain Agreements Relating to
LMIR Trust and the Properties”.)
Unitholders’ Meetings . . . . . . . . . . . .
The Manager and the Trustee may (and the Manager shall at the
request in writing of not less than 50 Unitholders or the
Unitholders with not less than one-tenth in number of issued
57
Units, whichever is the lesser) at any time convene a meeting of
Unitholders in accordance with the provisions of the Trust Deed.
No Redemption by Unitholders . . . . .
Unitholders have no right to request the Manager to redeem
their Units while the Units are listed. It is intended that
Unitholders may only deal in their listed Units through
trading on the SGX-ST. Listing of the Units on the SGXST does not guarantee a liquid market for the Units.
Distribution Policy . . . . . . . . . . . . . . .
LMIR Trust’s distribution policy is to distribute 100.0% of its taxexempt income (after deduction of applicable expenses) and
capital receipts for Forecast Period 2007, Projection Year 2008
and Projection Year 2009 and at least 90.0% of its tax-exempt
income (after deduction of applicable expenses) and capital
receipts thereafter. Distributions will be paid on a quarterly
basis to Unitholders, except for the first distribution, which will
be paid for the period from the Listing Date to 31 March 2008 and
will be paid by the Manager on or before 30 May 2008 (see
“Distributions”).
Singapore Tax Considerations . . . . . .
Unitholders will be exempt from Singapore income tax on
distributions made by LMIR Trust out of its tax-exempt income.
Unitholders will not be subject to Singapore income tax on
distributions made by LMIR Trust out of its capital receipts,
comprising amounts received from redemption of redeemable
preference shares in the Target Singapore SPCs. These
distributions will be treated as returns of capital for Singapore
income tax purposes. For Unitholders who hold the Units as
trading or business assets and are liable to Singapore income
tax on gains arising from disposal of the Units, the amount of
such distributions will be applied to reduce the cost of the Units
for the purpose of calculating the amount of taxable trading gain
when the Units are disposed of. If the amount distributed
exceeds the cost or the reduced cost of the Units, as the
case may be, the excess will be subject to tax as trading
income of such Unitholders (see “Taxation”).
Indonesia Tax Considerations . . . . . .
The income received by the Indonesian SPCs solely from rental
payments by the Master Lessee and the tenants is subject to
final income tax in Indonesia at the rate of 10.0%.
The Indonesian SPCs charge value-added tax (“VAT”) at the
rate of 10.0% on the rental income from the Master Lessee and
the tenants.
The income received by LMIR Trust through the Target
Singapore SPCs in the form of dividends and interest
payments is subject to tax in Indonesia at the rate of 10.0%
based on the provisions of the Singapore-Indonesia tax treaty.
The withholding tax on the dividends and interest payments is
payable when it is accrued or paid, whichever comes first.
Termination of LMIR Trust . . . . . . . . .
58
LMIR Trust can be terminated if the Unitholders’ approval is
obtained by passing a resolution proposed and approved by a
majority consisting of 75.0% or more of the total number of votes
cast for and against such resolution (an “Extraordinary
Resolution”) at a Unitholders’ meeting duly convened and
held in accordance with the provisions of the Trust Deed. As
specified in the Trust Deed, the Manager or the Trustee may
terminate LMIR Trust under certain circumstances such as
LMIR Trust being delisted permanently from the SGX-ST (see
“The Formation and Structure of LMIR Trust—The Trust Deed—
Termination of LMIR Trust”).
Listing and Trading . . . . . . . . . . . . . .
Prior to the Offering, there has been no market for the Units.
Application has been made to the SGX-ST for permission to list
on the Main Board of the SGX-ST all the Units comprised in the
Offering, all the Cornerstone Units as well as all the Units which
may be issued to the Manager from time to time in full or part
payment of the Manager’s management fees, including its
acquisition fee and divestment fee (see “The Manager and
Corporate
Governance—Management
Fees”).
Such
permission will be granted when LMIR Trust is admitted to the
Official List of the SGX-ST.
The Units will, upon their issue, listing and quotation on the SGXST, be traded in Singapore dollars under the book-entry
(scripless) settlement system of The Central Depository (Pte)
Limited (“CDP”). The Units will be traded in board lot sizes of
1,000 Units.
Governing Law . . . . . . . . . . . . . . . . .
The Trust Deed, pursuant to which LMIR Trust was constituted,
is governed by Singapore law. The (i) Deeds of Indemnity,
(ii) Singapore SPC Share Purchase Agreements and
(iii) Rental Guarantee Deeds are governed by Singapore law
while the (i) Master Lease Agreements, (ii) Property Purchase
Agreements, (iii) Operating Costs Agreements, (iv) Indonesia
SPC Share Purchase Agreements, (v) Master Property
Management Agreement and (vi) Existing Property
Management Agreements are governed by Indonesian law.
Risk Factors . . . . . . . . . . . . . . . . . . .
Prospective investors should carefully consider certain
risks connected with an investment in the Units, as
discussed under “Risk Factors”.
59
Indicative timetable
An indicative timetable for the Offering is set out below for the reference of applicants for the Units:
Date and time
Event
12 November 2007, 9.00 a.m. . . . . . . . . . . . . . . .
15 November 2007, 12 noon . . . . . . . . . . . . . . . .
16 November 2007. . . . . . . . . . . . . . . . . . . . . . . .
Opening date and time for the Offering.
Closing date and time for the Offering.
Balloting of applications, if necessary. Commence
returning or refunding of application monies to
unsuccessful or partially successful applicants.
Completion of the acquisition of the Properties.
Commence trading on a ‘‘ready” basis.
Settlement date for all trades done on a ‘‘ready”
basis on 19 November 2007.
19 November 2007, at or before 2.00 p.m. . . . . .
19 November 2007, 2.00 p.m. . . . . . . . . . . . . . . .
22 November 2007. . . . . . . . . . . . . . . . . . . . . . . .
The above timetable is indicative only and is subject to change. It assumes (i) that the closing of the
application list for the Public Offer (the “Application List”) is 15 November 2007; (ii) that the Listing Date is
19 November 2007; (iii) compliance with the SGX-ST’s unitholding spread requirement; and (iv) that the
Units will be issued and fully paid up prior to 2.00 p.m. on 19 November 2007. All dates and times referred
to above are Singapore dates and times.
Trading in the Units through the SGX-ST on a “ready” basis will commence at 2.00 p.m. on 19 November
2007 (subject to the SGX-ST being satisfied that all conditions necessary for the commencement of
trading in the Units through the SGX-ST on a “ready” basis have been fulfilled), as the completion of the
acquisition of the Properties not already owned by LMIR Trust is expected to take place at or before
2.00 p.m. on 19 November 2007 (see “Certain Agreements Relating to LMIR Trust and the Properties”). If
LMIR Trust is terminated by the Manager or the Trustee under the circumstances specified in the
Trust Deed prior to, or the acquisition of the Properties is not completed by, 2.00 p.m. on 19 November
2007 (being the time and date of commencement of trading in the Units through the SGX-ST), the Offering
will not proceed and the application monies will be returned in full (without interest or any share of revenue
or other benefit arising therefrom and at each applicant’s own risk and without any right or claim against
LMIR Trust, the Trustee, the Manager, the Underwriters, the Unit Lender or the Sponsor).
In the event of any early or extended closure of the Application List or the shortening or extension of the
time period during which the Offering is open, the Manager will publicly announce the same:
• via SGXNET, with the announcement to be posted on the Internet at the SGX-ST website:
http://www.sgx.com; and
• in one or more major Singapore newspapers, such as The Straits Times, The Business Times and
Lianhe Zaobao.
Investors should consult the SGX-ST announcement on the “ready” listing date on the Internet (at the
SGX-ST website), InTv or the newspapers, or check with their brokers on the date on which trading on a
“ready” basis will commence.
The Manager will provide details and results of the Public Offer through SGXNETand in one or more major
Singapore newspapers, such as The Straits Times, The Business Times and Lianhe Zaobao.
The Manager reserves the right to reject or accept, in whole or in part, or to scale down or ballot any
application for Units, without assigning any reason for it, and no enquiry and/or correspondence on the
decision of the Manager will be entertained. In deciding the basis of allotment, due consideration will be
given to the desirability of allotting the Units to a reasonable number of applicants with a view to
establishing an adequate market for the Units.
Where an application is rejected or accepted in part only or if the Offering does not proceed for any reason,
the full amount or the balance of the application monies, as the case may be, will be refunded (without
interest or any share of revenue or other benefit arising therefrom) to the applicant, at his own risk, and
without any right or claim against LMIR Trust, the Trustee, the Manager, the Underwriters, the Sponsor or
the Unit Lender.
Where an application is not successful, the full amount of the application monies will be refunded (without
interest or any share or revenue or other benefit arising therefrom) to the applicant, at his own risk within
24 hours after the balloting of applications (provided that such refunds in relation to applications in
60
Singapore are made in accordance with the procedures set out in “Appendix G—Terms, Conditions and
Procedures for Application for and Acceptance of the Units in Singapore”).
In respect of partially successful applications using printed Application Forms, the balance of the
application monies is expected to be refunded (without interest or any share of revenue or other
benefit arising therefrom) to applicants by ordinary post at their own risk, within 14 Market Days after
the closing date for the Offering, provided that the remittance accompanying such application which has
been presented for payment or other processes has been honoured and the application monies received
in the designated unit issue account.
In respect of partially successful applications via ATM, the balance of the application monies is expected to
be refunded (without interest or any share of revenue or other benefit arising therefrom) through the
crediting of the relevant amount to the applicants’ accounts with their Participating Banks, or by ordinary
post at their own risk within 14 Market Days after the close of the Offering provided that the remittance
accompanying such application which has been presented for payment or other processes has been
honoured and the application monies received in the designated unit issue account.
61
Profit Forecast and Profit Projection
The following is an extract from “Profit Forecast and Profit Projection”. Statements in this extract that are
not historical facts may be forward-looking statements. Such statements are based on the assumptions
set out on pages 100 to 108 of this Prospectus and are subject to certain risks and uncertainties which
could cause actual results to differ materially from those forecast and projected. Under no circumstances
should the inclusion of such information herein be regarded as a representation, warranty or prediction
with respect to the accuracy of the underlying assumptions by LMIR Trust, the Manager, the Underwriters,
the Sponsor, the Property Manager, the Trustee, the Financial Adviser or any other person, nor that these
results will be achieved or are likely to be achieved. (See “Forward-Looking Statements” and “Risk
Factors”). Investors in the Units are cautioned not to place undue reliance on these forward-looking
statements which are valid only as at the date of this Prospectus.
None of LMIR Trust, the Manager, the Financial Adviser, the Underwriters, the Sponsor, the
Property Manager, the Trustee and the Unit Lender guarantees the performance of LMIR Trust,
the repayment of capital or the payment of any distributions, or any particular return on the Units.
The forecast and projected yields stated in the following table are calculated based on (i) the
Offering Price, and (ii) the assumption that the Listing Date is 1 July 2007. Such yields will vary
accordingly since the Listing Date will be after 1 July 2007 and in relation to investors who
purchase Units in the secondary market at a market price that differs from the Offering Price.
The following table below sets forth LMIR Trust’s forecast and projected consolidated statements of total
return for Forecast Period 2007, Projection Year 2008 and Projection Year 2009 respectively. The financial
year-end of LMIR Trust is 31 December. For the purpose of the profit forecast and profit projection, LMIR
Trust’s first accounting period is assumed to be the period from 1 July 2007 to 31 December 2007. The
profit forecast and profit projection will be different if the date of establishment differs from 1 July 2007 or if
the end of the first financial period differs from 31 December 2007. The profit forecast and profit projection
should be read together with the report set out in “Appendix A—Independent Accountants’ Report on the
Profit Forecast and Profit Projection” as well as the assumptions and the sensitivity analysis set out in
“Profit Forecast and Profit Projection”. The following table sets forth LMIR Trust’s forecast and projected
Consolidated Statement of Total Return for Forecast Period 2007, Projection Year 2008 and the Projection
Year 2009 prepared based on the Offering Price.
Forecast and Projected Consolidated Statement of Total Return
Forecast Period
2007
Projection Year
2008
Projection Year
2009
(S$’000)
(S$’000)
(S$’000)
35,018
3,782
1,346
74,660
7,356
2,804
81,632
7,053
2,895
Total Gross Revenue. . . . . . . . . . . . . . . . . . . . . . . . .
Property Operating Expenses
Land rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property management fees . . . . . . . . . . . . . . . . . . . . .
Other property operating expenses . . . . . . . . . . . . . . .
40,146
84,820
91,580
(661)
(1,475)
(461)
(1,618)
(3,134)
(583)
(1,836)
(3,423)
(447)
Total Property Operating Expenses . . . . . . . . . . . . .
(2,597)
(5,335)
(5,706)
Net Property Income . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administrative expenses
Manager’s management fees. . . . . . . . . . . . . . . . . . . .
Trustee’s fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other trust operating expenses . . . . . . . . . . . . . . . . . .
Total administrative expenses . . . . . . . . . . . . . . . . .
37,549
789
(201)
79,485
1,157
(365)
85,874
796
(339)
(2,883)
(191)
(607)
(3,681)
(5,942)
(332)
(830)
(7,104)
(6,198)
(332)
(848)
(7,378)
Gross Revenue
Gross Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carpark income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
62
Total return for the period before tax and
distribution and revaluation . . . . . . . . . . . . . . .
Surplus on the revaluation on investment properties
Total return for the period before tax and
distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Withholding tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total return for the period after tax before
distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forecast Period
2007
Projection Year
2008
Projection Year
2009
(S$’000)
(S$’000)
(S$’000)
..
..
34,456
207,887
73,173
—
78,953
—
..
..
..
..
242,343
(4,173)
(2,893)
(62,366)
73,173
(8,714)
(5,940)
—
78,953
(9,317)
(6,520)
—
..
172,911
58,519
63,116
Distribution to Unitholders
Forecast Period
2007
Projection Year
2008
Projection Year
2009
(S$’000)
(S$’000)
(S$’000)
172,911
58,519
63,116
1,503
3,180
3,435
Total return for the period after tax before distribution . . .
Add back/(less) non-cash items:
—Management fees(1) . . . . . . . . . . . . . . . . . . . . . . . . . .
—Surplus on revaluation of investment properties net of
deferred tax(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—Reversal of FRS adjustment on rental deposit(3) . . . . .
Total Unitholders’ distribution . . . . . . . . . . . . . . . . . . .
(145,521)
201
29,094
—
365
62,064
—
339
66,890
Unitholders’ distribution:
—as distributions from operations . . . . . . . . . . . . . . . . . .
—as return of capital(4) . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Unitholders’ distribution . . . . . . . . . . . . . . . . . . .
23,035
6,059
29,094
48,044
14,020
62,064
55,487
11,403
66,890
Notes:
(1) This relates to the portion of the management fees which are payable in the form of Units.
(2) It is assumed that all of the Properties are purchased at a total consideration of approximately
S$796.8 million based on the Offering Price. The purchase consideration of the Properties is
determined by the difference between the purchase consideration of the Singapore SPCs (see
“Certain Agreements relating to LMIR Trust and the Properties—Description of the Singapore SPC
Share Purchase Agreements” for the formula of determining this purchase consideration) and the fair
value of all the net identifiable assets and liabilities of the Singapore SPCs acquired save for the
Properties. The surplus on revaluation of the investment properties relates to the revaluation of the
Properties to their fair value of S$1,004.7 million immediately upon their acquisition and the capital
expenditures expected to be incurred in the Forecast Period 2007. The fair value of S$1,004.7 million
is based on the value appraised by Knight Frank as at 30 June 2007. It is assumed that the fair value
of the Properties will only increase by the amount of capital expenditure expected to be incurred in the
Forecast Period 2007, the Projection Year 2008 and the Projection Year 2009 and that there is no
change in the exchange rate between the Singapore dollar and the Indonesian Rupiah as at the end
of Forecast Period 2007 and the Projection Year 2008 and the Projection Year 2009. Notwithstanding
whether the valuation of Knight Frank or Colliers is adopted, such adoption has no impact on the
distribution to Unitholders.
(3) This relates to notional interest expense which has no impact on the distribution to Unitholders.
(4) The return of capital comprises the amounts received by LMIR Trust from the redemption of its
investment in the redeemable preference shares in the Target Singapore SPCs (see “Profit Forecast
and Profit Projection—Assumptions—(IX) Distributable Income” and “Distributions”).
63
Forecast and Projected Distributions to Unitholders
Number of Units eligible for distribution (’000)(1) . . .
Forecast Period 2007
Projection Year 2008
Projection Year 2009
Based on the
Offering
Price
Based on the
Offering
Price
Based on the
Offering
Price
1,060,414(2)
1,062,291(3)
1,066,266(4)
Distribution per Unit (cents) . . . . . . . . . . . . . . . . .
2.74
5.84
6.27
Offering Price per Unit (S$) . . . . . . . . . . . . . . . . .
0.80
0.80
0.80
7.3
7.8
Distribution yield (%) . . . . . . . . . . . . . . . . . . . .
6.9(5)
Notes:
(1) The increase in the number of Units in Projection Year 2008 and Projection Year 2009 are due to the
issue of Units to the Manager for the payment of 100.0% of the Manager’s Performance Fees for
Forecast Period 2007 and Projection Year 2008 in the form of Units. These Units are assumed to be
issued at the Offering Price.
(2) Based on the number of Units that are assumed to be in issue as at the Listing Date. It is assumed that
the number of Units eligible for distribution is the same throughout Forecast Period 2007.
(3) Based on the number of Units that are assumed to be in issue on 1 January 2008. It is assumed that
the number of Units eligible for distribution is the same throughout Projection Year 2008.
(4) Based on the number of Units that are assumed to be in issue on 1 January 2009. It is assumed that
the number of Units eligible for distribution is the same throughout Projection Year 2009.
(5) Annualised for Forecast Period 2007.
64
Risk factors
Prospective investors should consider carefully, together with all other information contained in this
Prospectus, the factors described below before deciding to invest in the Units.
This Prospectus also contains forward-looking statements (including profit forecast and profit projection)
that involve risks, uncertainties and assumptions. The actual results of LMIR Trust could differ materially
from those anticipated in these forward-looking statements as a result of certain factors, including the risks
faced by LMIR Trust as described below and elsewhere in this Prospectus.
As an investment in a REIT is meant to produce returns over the long-term, investors should not expect to
obtain short-term gains.
Investors should be aware that the price of Units, and the income from them, may fall or rise. Investors
should note that they may not get back their original investment.
Before deciding to invest in the Units, prospective investors should seek professional advice from their
relevant advisers about their particular circumstances.
RISKS RELATING TO LMIR TRUST’S OPERATIONS
LMIR Trust’s strategy of investing primarily in retail assets may entail a higher level of risk
compared to other types of unit trusts that have a more diverse range of investments.
LMIR Trust is a Singapore-based REIT constituted by the Trust Deed. It is established with the principal
investment objective of owning and investing on a long-term basis in a diversified portfolio of incomeproducing real estate in Indonesia that are primarily used for retail and/or retail-related purposes, and real
estate related assets in connection with the foregoing.
As such, LMIR Trust will be subject to risks inherent in concentrating on investments in a single real estate
sector. The level of risk could be higher compared to other types of unit trusts that have a more diverse
range of investments.
A concentration of investments in a portfolio of specific real estate assets primarily in Indonesia exposes
LMIR Trust to both downturns in the real estate market as well as the retail industry in Indonesia.
In addition, the nature of the retail industry makes it particularly susceptible to a downturn in the economy.
A lagging economy could lead to retrenchments and job losses, which, in turn, would lead to a reduction in
consumer spending. Such downturns could also lead to a decline in occupancy for retail properties
including those in LMIR Trust’s portfolio thereby affecting LMIR Trust’s rental income from the Master
Lessee and the tenants and/or a decline in the capital value of LMIR Trust’s portfolio.
Any decline in the overall retail sector may cause higher levels of non-renewals of leases or vacancies as a
result of failures or defaults by tenants or the market pressures exerted by an increase in available retail
space. There can be no assurance that the tenants of LMIR Trust’s operating retail properties will renew
their leases or that the new lease terms will be as favourable as the existing leases. In the event that a
tenant does not renew its lease, a replacement tenant or tenants would need to be identified, which could
subject LMIR Trust’s operating retail properties to periods of vacancy and/or costly refittings, during which
periods LMIR Trust could experience reductions in rental income.
Such downturns may have an adverse impact on distributions to the Unitholders and/or on the results of
operations and the financial condition of LMIR Trust.
LMIR Trust is dependent on the Master Lessee for rental payments for the Retail Spaces.
LMIR Trust is dependent on rental payments from the Master Lessee for the Retail Spaces, as LMIR Trust
does not directly operate the Retail Spaces. The Master Lessee is the sole tenant of each of the Retail
Spaces. The Retail Spaces are expected to contribute more than 15% of LMIR Trust’s rental revenue.
Therefore, LMIR Trust’s revenue and ability to make distributions to the Unitholders will depend largely
upon the ability of the Master Lessee to make rental payments. As such, the prospects of the Master
Lessee’s other businesses, aside from those relating to LMIR Trust, could impact on the Master Lessee’s
ability to make rental payments to LMIR Trust.
65
Risk factors
Factors that affect shoppers’ volume at the Retail Spaces and, thereby, the ability of the Master Lessee to
meet its obligations include, but are not limited to:
• the financial position of the Master Lessee;
• unemployment levels in Indonesia;
• the local economies;
• seasonal retail cycles;
• local retail competitors and competition in the retail industry;
• the Master Lessee’s ability to attract and retain successful tenants;
• unfavourable publicity;
• material losses in excess of insurance proceeds;
• a possibility of union activities disrupting the operations of the Retail Spaces, severely impacting on its
reputation and ability to function normally;
• social unrest; and
• natural disasters.
There can be no assurance that the Master Lessee will have sufficient assets, income and access to
financing in order to enable it to satisfy its obligations under the respective Master Lease Agreement.
The Master Lessee may not renew its leases of the Retail Spaces.
No assurance can be given that the Master Lessee will exercise any option to renew its leases of the Retail
Spaces upon the expiry of the initial 10-year term of the Master Leases. If the Master Leases are not
renewed, LMIR Trust may not be able to find a suitable purchaser of the Retail Spaces or a suitable
replacement master lessee, as a result of which LMIR Trust may lose a significant source of revenue. In
any event, it may not be possible to replace the Master Lessee immediately upon the expiry of the Master
Leases and this may lead to temporary vacancy.
The failure to renew the Master Lease Agreements, or the termination of any of these Master Lease
Agreements, may have a material adverse effect on LMIR Trust’s Gross Revenue.
The Master Lessee may terminate its leases of the Retail Spaces due to change in law.
Under the Master Lease Agreements, the Master Lessee is entitled to terminate the leases if, as a result of
any change in the laws or regulations, it is prohibited from carrying out its current operations at the Retail
Spaces. In the event of such termination, the security deposit of the Master Lessee will be forfeited to the
landlord but no compensation is payable by the Master Lessee.
The termination of the leases will have a material adverse effect on LMIR Trust’s Gross Revenue.
The loss of key tenants of any of the Retail Malls or a downturn in the businesses of any of
the Retail Malls’ key tenants could have an adverse effect on LMIR Trust’s financial condition
and results of operations.
Based on Committed Leases as at 30 June 2007, the 10 largest tenants of the Retail Malls (in terms of their
contributions to the total Gross Rent) accounted for approximately 37.5% of the total Gross Rent of the
Retail Malls.
LMIR Trust’s financial condition and results of operations and ability to make distributions may be
adversely affected by the bankruptcy, insolvency or downturn in the businesses of one or more of
these tenants, as well as the decision by one or more of these tenants not to renew its lease or to terminate
its lease before expiry. The Manager expects that LMIR Trust will continue to be dependent upon these
tenants for a significant portion of its Gross Revenue. There is a risk that an anchor tenant terminates its
lease or does not renew its lease at expiry. It may not be feasible to operate such large-scale retail malls in
Indonesia without an anchor tenant. It may be difficult to secure replacement tenants at short notice or on
66
Risk factors
similar tenancy terms. In addition, the amount of rent and the terms on which lease renewals and new
leases are agreed may be less favourable than those of current leases.
The loss of key tenants in any one of LMIR Trust’s Properties or future acquisitions could result in periods
of vacancy, which could therefore adversely affect the revenue of the relevant Property, consequently
impacting the Indonesian SPCs’ ability to make distributions to LMIR Trust.
There are potential conflicts of interest amongst LMIR Trust, Mapletree Capital, the Sponsor
and the Master Lessee.
The Manager is 40.0% owned by Mapletree Capital and 60.0% owned by Peninsula Investment Ltd.
Peninsula Investment Ltd is in turn 100.0% owned by Jesselton Investment Ltd, a wholly-owned subsidiary
of the Sponsor. The Sponsor, Mapletree Capital, their respective subsidiaries and associates are, or may
be, engaged in, among other things, portfolio management, investment in, and the development,
management and operation of, retail properties in Indonesia and elsewhere in the region.
The strategy and activities of LMIR Trust may be influenced by the overall interests of the Sponsor and/or
Mapletree Capital. The Sponsor does not have any direct or indirect interest in any Units or any direct
economic interest in LMIR Trust, other than through its relationship with the Manager and Lippo Strategic,
which is an affiliate. Mapletree Capital is a wholly-owned subsidiary of MIPL. The Sponsor and/or
Mapletree Capital may in the future sponsor, manage or invest in other REITs or other vehicles which
may compete directly with LMIR Trust. There can be no assurance that conflicts of interest will not arise
among LMIR Trust, the Manager, the Sponsor and/or Mapletree Capital in the future, or that LMIR Trust’s
interests will not be subordinated to those of the Sponsor and/or Mapletree Capital whether in relation to
the future acquisition of properties or property-related investments or in relation to competition for tenants
within the Indonesia market or regionally (see “The Manager and Corporate Governance—Related Party
Transactions”).
Mapletree Capital confirms that currently, the Mapletree Group does not own, invest or intend to develop
any retail malls in Indonesia. However, there is no assurance that this may not change in the future given
that this is a future commercial decision. In the event that the Mapletree Group decides to undertake any
future investments and/or development of retail malls in Indonesia, any potential conflicts of interest that
may arise will be addressed together with the Manager.
There can be no assurance that the Sponsor and/or Mapletree Capital will not favour properties that it has
retained in its own property portfolio or which it manages or operates over those owned by LMIR Trust.
The Master Lessee, its subsidiaries and associates are engaged in, and/or may engage in, among other
things, portfolio management, investment in, and the development, management and operation of, retail
properties in Indonesia and elsewhere in the region.
Any conflicts of interests could have an adverse impact on LMIR Trust’s operating results, as well as
distributions made to Unitholders.
There are potential conflicts of interest amongst LMIR Trust and the Property Manager.
The Property Manager has entered into an Existing Property Management Agreement with each of the
Retail Mall Indonesian SPCs holding the relevant Retail Mall under which the Property Manager will
operate, maintain, manage and market the relevant Retail Mall. (See “Summary—Structure of LMIR
Trust—Property Manager: PT. Consulting & Management Services Division”.)
The Property Manager is a full service property management company which is engaged in the business
of managing properties in Indonesia. Therefore, the Property Manager may manage retail properties
owned by other clients. There can be no assurance that the Property Manager will not favour other
properties which it manages or operates over those owned by LMIR Trust.
In addition, the Property Manager is a wholly-owned subsidiary of the Sponsor. The Sponsor, its
subsidiaries and associates are engaged in, among other things, portfolio management, investment
in, and the development, management and operation of, retail properties in Indonesia and elsewhere in the
region. There can be no assurance that conflicts of interest will not arise among LMIR Trust, the Property
Manager and the Sponsor in the future, or that LMIR Trust’s interests will not be subordinated to those of
67
Risk factors
the Sponsor in relation to the management of other retail properties which may compete directly with those
owned by LMIR Trust. (See “—There are potential conflicts of interest amongst LMIR Trust, Mapletree
Capital, the Sponsor and the Master Lessee”.)
Any conflicts of interests could have an adverse impact on LMIR Trust’s operating results, as well as
distributions made to Unitholders.
The Retail Spaces, which are located within and are part of retail malls, are subdivided
developments, and there is no assurance that the other owners or tenants of strata lots in
these retail malls will not vote against the interests of the Retail Spaces in matters relating to
the common area, common land and common property.
The Retail Spaces are part of retail malls which are subdivided developments comprising strata lots,
common area, common land and common property. The common area, common land and common
property are jointly owned or used by owners or tenants of the strata lots as tenants-in-common in
proportion to the rights to use attributable to their respective strata lots.
Under the Indonesian law on multi-storey buildings (Undang-Undang Rumah Susun), the ownership of the
strata lots are evidenced by strata titles which include the right to the common area, common land and
common property which constitutes an inseparable part of the ownership of the strata lots. In order to
preserve the common interest among the owners and/or tenants on the use of the common area, common
land and common property, the owners or tenants must establish a tenants association. Subject to the
rules and regulations of the tenants association, certain matters require prior consent of the tenants
association, including, for example, the use or the service charge payable in respect of the common area,
common land and common property.
The term ‘common property’ is known in multi-storey building concepts. According to Indonesian law and
regulations concerning common property, common property (such as infrastructure and area of land) is
defined as properties of a multi-storey building, with such properties being used by the owners or tenants
in the said multi-storey building. Therefore, each of the owners of strata lots in a multi-storey building has a
proprietary interest, collectively, as the owners of such multi-storey building and as such, all rights,
obligations and responsibilities arising thereof shall be borne by these owners.
All of the owners or tenants must vote on certain matters as described in the rules and regulations of the
tenants association in the meeting of the tenants association. As the aggregate share value of each of the
Retail Spaces ranges from 35.0% to 60.0% of the total rights value of the strata lots comprised in the
respective retail malls within which it is located, there is no assurance that the other owners or tenants will
not vote against the interests of LMIR Trust as represented by the Retail Spaces. Further, LMIR Trust
cannot freely deal with the common area, common land and common property of the retail malls within
which the Retail Spaces are located, unlike in the case of a development which is wholly-owned by it.
LMIR Trust will operate substantially through the Singapore SPCs and the Indonesian SPCs and
its ability to make distributions to Unitholders is dependent on the financial position of the
Singapore SPCs.
LMIR Trust will operate substantially through the Singapore SPCs and the Indonesian SPCs and will rely
on payments and other distributions from the Singapore SPCs and the Indonesian SPCs for its income and
cash flows. The ability of the Singapore SPCs to make such payments may be restricted by, among other
things, the Singapore SPCs’ and the Indonesian SPCs’ respective business and financial positions, the
availability of distributable profits, applicable laws and regulations and the terms of agreements to which
they are, or may become, a party.
There can be no assurance that the Singapore SPCs will have sufficient distributable or realised profits or
surplus in any future period to make dividend payments or make advances to LMIR Trust. The level of profit
or surplus of each Singapore SPC available for distribution by way of dividends to LMIR Trust may be
affected by a number of factors including:
• operating losses incurred by the Singapore SPCs in any financial year;
68
Risk factors
• losses arising from a revaluation of any of the Properties following any diminution in value of any of the
relevant Properties. Such losses would adversely affect the level of profits from which the relevant
Singapore SPC may distribute dividends;
• accounting standards that require profits generated from investment properties to be net of depreciation
charges before such profits are distributed to LMIR Trust;
• changes in accounting standards, taxation regulations, corporation laws and regulations relating
thereto; and
• insufficient cash flows received by the Singapore SPCs from the Indonesian SPCs.
The occurrence of these or other factors that affect the ability of the Singapore SPCs to pay dividends or
other distributions to LMIR Trust may adversely affect the level of distributions paid to Unitholders.
LMIR Trust may not be able to secure funding to fund future acquisitions or significant capital
expenditure which the Properties or any future properties may require.
The Properties and properties to be acquired by LMIR Trust may require periodic capital outlay for the
purpose of refurbishments, renovation and improvements in order to remain competitive. Acquisitions or
enhancement of existing properties by LMIR Trust may require significant capital expenditure.
The Master Lease Agreements provide that LMIR Trust will have to bear capital expenditure relating to the
Retail Spaces, subject to certain conditions, after the first 30 months of the lease terms. LMIR Trust may
not be able to fund future acquisitions, capital improvements or expenditure, solely from cash derived from
its operating activities and LMIR Trust may not be able to obtain additional equity or debt financing or be
able to obtain such financing on favourable terms or at all. Further distributions to Unitholders may also be
adversely affected as a result.
LMIR Trust may face risks associated with future debt financing.
As at Listing Date, LMIR Trust has not incurred any borrowings. In the event that LMIR Trust incurs any
borrowings, it will be subject to risks associated with debt financing, including the risk that its cash flow will
be insufficient to meet required repayments of principal and interest and to make distributions to
Unitholders.
LMIR Trust will distribute 100.0% of its tax-exempt income (after deduction of applicable expenses) and
capital receipts for Forecast Period 2007, Projection Year 2008 and Projection Year 2009 and at least
90.0% of its tax-exempt income (after deduction of applicable expenses) and capital receipts thereafter. As
a result of this distribution policy, LMIR Trust may not be able to meet all of its obligations to repay any
future borrowings through its cash flow from operations. As such, LMIR Trust may be required to repay
maturing debt with funds from additional debt, or equity financing, or both. There can be no assurance that
such financing will be available on acceptable terms, or at all.
The Manager can give no assurance regarding the amount and timing of the payment of distributions, the
extent of payout ratios or the composition of distributions or the material income tax considerations of
distributions, as actual events may differ from the assumptions used in assessing the ability of LMIR Trust
to pay these distributions.
In the event of any borrowings incurred, LMIR Trust will also be subject to the risk that the terms of any
refinancing undertaken will be less favourable than the terms of any such borrowings. In addition, LMIR
Trust may be subject to certain covenants in connection with any future borrowings that may limit or
otherwise adversely affect its operations and its ability to make distributions to Unitholders. Such
covenants may also restrict LMIR Trust’s ability to acquire properties or undertake other capital
expenditure or may require it to set aside funds for maintenance or repayment of security deposits.
If prevailing interest rates or other factors at the time of refinancing (such as the possible reluctance of
lenders to make loans in relation to retail and/or retail-related properties) result in higher interest rates
upon refinancing, the interest expense relating to such refinanced indebtedness would increase, which
may adversely affect LMIR Trust’s cash flow and the amount of distributions it could make to Unitholders.
69
Risk factors
Borrowing in certain currencies, such as the Indonesian Rupiah, may incur relatively high interest rates.
LMIR Trust may incur such high interest rates should it require funds in these currencies (see “Strategy—
Acquisition Growth Strategy”).
The amount LMIR Trust may borrow is limited, which may affect the operations of LMIR Trust.
Under the Property Funds Guidelines, LMIR Trust is generally permitted to borrow only up to 35.0% of the
value of its Deposited Property at the time the borrowing is incurred. The Property Funds Guidelines also
provide that the Aggregate Leverage of a REIT may exceed 35.0% of the value of its Deposited Property
(up to a maximum of 60.0%) only if a credit rating of such REIT from Fitch Inc., Moody’s or Standard &
Poor’s is obtained and disclosed to the public. A REIT should maintain and disclose a credit rating so long
as its Aggregate Leverage exceeds 35.0% of its Deposited Property. Upon its listing on the SGX-ST, LMIR
Trust will not have incurred any indebtedness but may, from time to time, require debt financing to achieve
its investment strategies as well as make distributions to Unitholders. A decline in the value of the
Deposited Property may affect LMIR Trust’s ability to make future borrowings as discussed above.
Adverse business consequences of this limitation on borrowings may include:
• an inability to fund capital expenditure requirements in relation to LMIR Trust’s existing portfolio or in
relation to the acquisition by LMIR Trust of further properties to expand its portfolio; and
• cash flow shortages (including with respect to making distributions) which LMIR Trust might otherwise
be able to resolve by borrowing funds.
Occurrence of any acts of God, war and terrorist attacks may adversely and materially affect
the business and operations of the Properties.
Acts of God such as natural disasters are beyond the control of LMIR Trust or the Manager and may
materially and adversely affect the economy, infrastructure and livelihood of the local population in the
communities in which LMIR Trust operates. LMIR Trust’s business and income available for distribution
may be materially and adversely affected should such acts of God occur. There can be no assurance that
any war, terrorist attack or other hostilities in any part of the world, potential, threatened or otherwise, will
not, directly or indirectly, have a material and adverse effect on the operations of the Properties and hence
LMIR Trust’s income available for distribution.
Neither LMIR Trust nor the Manager, as new entities, has an established operating history.
LMIR Trust was established on 8 August 2007 and the Manager was incorporated on 3 May 2007. As such,
neither LMIR Trust (as a REIT) nor the Manager (as the manager of LMIR Trust) has a relevant operating
history by which their past performance may be judged. This will make it difficult for investors to assess
LMIR Trust’s likely future performance. There can be no assurance that LMIR Trust will be able to generate
sufficient income from operations to make distributions or that such distributions will be in line with those
set out in “Profit Forecast and Profit Projection”.
The Manager may not be able to implement its investment strategy for LMIR Trust.
LMIR Trust’s strategy is to own and invest on a long-term basis in a diversified portfolio of incomeproducing real estate in Indonesia that are primarily used for retail and/or retail-related purposes, and real
estate related assets in connection with the foregoing purposes. There can be no assurance that the
Manager will be able to implement its investment strategy successfully or that it will be able to expand
LMIR Trust’s portfolio at all, or at any specified rate or to any specified size. The Manager may not be able
to make acquisitions or investments on favourable terms or within a desired time frame. LMIR Trust faces
active competition in acquiring suitable properties, especially in a low interest rate environment where
other investment vehicles are highly leveraged. As such, LMIR Trust’s ability to make new property
acquisitions under its acquisition growth strategy may be limited.
LMIR Trust will rely on external sources of funding to expand its asset portfolio, which may not be available
on favourable terms, or at all. Even if LMIR Trust were able to successfully make property acquisitions or
investments, there can be no assurance that LMIR Trust will achieve its intended return on such
acquisitions or investments. Since the amount of borrowings that LMIR Trust can incur to finance
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Risk factors
acquisitions is limited by the Property Funds Guidelines (described in more detail above), such
acquisitions are likely to be largely dependent on LMIR Trust’s ability to raise equity capital, which
may result in a dilution of Unitholders’ holdings. Potential vendors may also take a negative view towards
the prolonged time frame and lack of certainty generally associated with the raising of equity capital to fund
any such purchase and may prefer competing purchasers.
There may be significant competition for attractive investment opportunities from other property investors,
including commercial property development companies and private investment funds. There can be no
assurance that LMIR Trust will be able to compete effectively against such entities.
Future acquisitions may not yield the returns expected, resulting in disruptions to LMIR Trust’s
business, a strain on management resources and dilution of holdings.
LMIR Trust’s external growth strategy and its market selection process may not be successful and may not
provide positive returns to Unitholders. Acquisitions may cause disruptions to LMIR Trust’s operations and
divert management’s attention away from day-to-day operations. New Units issued in connection with any
new acquisition could also be substantially dilutive to Unitholders. In addition, the acquisitions themselves
may not be yield accretive to Unitholders.
LMIR Trust depends on certain key personnel, and the loss of any key personnel may adversely
affect its operations.
LMIR Trust’s performance depends, in part, upon the continued service and performance of key staff
members of the Manager. These key personnel may leave the Manager in the future and compete with the
Manager and LMIR Trust. The loss of any of these individuals, or of one or more of the Manager’s other key
employees, could have a material adverse effect on LMIR Trust’s financial condition and results of
operations.
LMIR Trust may suffer material losses in excess of insurance proceeds.
The Properties face the risks of suffering physical damage caused by fire or natural disaster or other
causes, as well as potential public liability claims, including claims arising from the operations of the
Properties, all of which may not be fully compensated by insurance proceeds. LMIR Trust will remain liable
for any debt or other financial obligation related to a particular Property if there are material losses in
excess of insurance proceeds. No assurance can be given that material losses in excess of insurance
proceeds will not occur in the future.
LMIR Trust’s properties could suffer physical damage caused by tsunamis, fire or other causes, or LMIR
Trust may suffer public liability claims, all of which may result in losses (including loss of rent) that may not
be fully compensated by insurance proceeds. In addition, certain types of risks (such as damage caused
by earthquakes, war risk and losses caused by the outbreak of contagious diseases and contamination or
other environmental breaches) may be uninsurable or the cost of insurance may be prohibitive when
compared to the risk. Currently, LMIR Trust’s insurance policies for the Properties do not cover certain
types of risks including acts of war and outbreaks of contagious diseases.
Should an uninsured loss or a loss in excess of insured limits occur, LMIR Trust could be required to pay
compensation and/or lose capital which it had invested in the affected Property as well as anticipated
future revenue from that Property. LMIR Trust will also remain liable for any debt or other financial
obligation related to that Property. No assurance can be given that material losses in excess of insurance
proceeds will not occur in the future.
All of the Properties are subject to various types of taxes in Indonesia.
The Properties are subject to real and personal property taxes. This will change as property tax rates
change and as the Properties are assessed or reassessed by the relevant tax authorities. If LMIR Trust’s
property tax liabilities increase, its ability to make distributions to the Unitholders could be adversely
affected.
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In addition, if LMIR Trust disposes of the Properties at the level of the Indonesian SPCs holding the
Properties, 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 affect
the Unitholders’ investments in LMIR Trust.
The principal investment strategy of the Manager is owning and investing on a long-term basis in a
diversified portfolio of income-producing real estate in Indonesia that are primarily used for retail and/or
retail-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 years
following the Listing Date. However, the Trust Deed and the Property Funds Guidelines permit the
Manager to alter LMIR Trust’s investment strategies and policies, if it determines that such a change is in
the best interests of LMIR Trust and its Unitholders. The methods of implementing LMIR Trust’s investment
strategies and policies may vary as new investment and financing techniques are developed or otherwise
used. 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 LMIR
Trust 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 shares
and redeemable preference shares in the Target Singapore SPCs on the Listing Date. The consideration
paid by LMIR Trust is based on the acquisition value of each of the Properties, which represent a certain
level of discount to the appraised value of each of the Properties as determined by Knight Frank and
Colliers (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 Valuers
may have included a subjective determination of certain factors relating to the Properties such as their
relative 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, a
sale price at that value at present or in the future. The price at which LMIR Trust may sell a Property may be
lower 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 diseases
such as SARS and avian flu. A new and prolonged outbreak of such diseases may have a material adverse
effect on LMIR Trust’s business and financial condition and results of operations. Although the long-term
effect of such diseases cannot be predicted, previous occurrences of SARS and avian flu had an adverse
effect on the economies of those countries in which they were most prevalent. In the event a mutant strain
of the avian flu virus allowing for easy human-to-human transmission is discovered, the consequence for
LMIR Trust’s business could be severe. An outbreak of a communicable disease, like SARS, in Indonesia
may affect LMIR Trust in a number of ways, including, but not limited to, a decline in demand for consumer
goods, a reduction in the number of visitors to the retail property, a decline in revenue of tenants of the retail
property and increased costs of cleaning and maintaining the public facilities in the retail property. The
impact of these factors on the operations of the retail property could materially and adversely affect the
business, financial condition and results of operations of LMIR Trust.
The Manager’s plan to undertake asset enhancement on some of the Properties may not
materialise.
The Manager intends to work with relevant Indonesian authorities to gain the necessary approvals to
undertake 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, there
is a risk that such proposed plans for asset enhancement will not materialise. There is also a risk that even
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after the proposed plans for asset enhancement materialise, the proposed plans may not achieve their
desired results or may incur significant costs unnecessarily.
Triggering events may not occur for the ROFR.
The Sponsor has granted LMIR Trust, for so long as (a) Lippo-Mapletree Indonesia Retail
Trust Management Ltd. remains the manager of LMIR Trust and (b) the Sponsor and/or any of its
related corporations, alone or in aggregate, remains a controlling shareholder of the Manager, a ROFR
over any Relevant Asset (i) which any Sponsor Entity proposes to sell or transfer (whether such Relevant
Asset is wholly-owned or partly-owned by the Sponsor Entity and excluding any sale of such Relevant
Asset 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 a
proposed offer for sale or transfer of such Relevant Asset has been made to a Sponsor Entity.
This ROFR is only triggered if, among others, the foregoing events occur. There is a risk that such
triggering events may not occur or that no suitable properties may be available during the validity period of
the ROFR. There is also a risk that even after the ROFR is triggered, the Trustee may not enter into a
binding agreement with the relevant vendor within the stipulated deadline. (See “Certain Agreements
Relating to LMIR Trust and the Properties—Description of the Right of First Refusal Agreement”.)
RISKS RELATING TO INVESTING IN REAL ESTATE
LMIR Trust may be adversely affected by the illiquidity of real estate investments.
LMIR Trust invests primarily in real estate and real estate-related assets. This involves a higher level of risk
as compared to a portfolio which has a diverse range of investments. Real estate investments, particularly
investments in high value properties such as those in which LMIR Trust has invested or in which it intends
to invest, are relatively illiquid. Such illiquidity may affect LMIR Trust’s ability to vary its investment portfolio
or liquidate a portion of its assets in response to changes in economic, real estate market or other
conditions. For instance, LMIR Trust may be unable to sell its assets on short notice or may be forced to
give a substantial reduction in the price in order to ensure a quick sale. Moreover, LMIR Trust may face
difficulties in securing timely and commercially favourable financing in asset-based lending transactions
secured by real estate due to the illiquid nature of real estate assets. These factors could have an adverse
effect on LMIR Trust’s financial condition and results of operations, with a consequential adverse effect on
LMIR Trust’s ability to deliver expected distributions to Unitholders.
There is no assurance that the HGB, strata titles on HGB underlying common land or HGB on
top of HPL titles of the land on which the Properties are sited, can be renewed.
Cibubur Junction, Mal Lippo Cikarang, Istana Plaza and Plaza Madiun are sited on land with HGB titles,
while Gajah Mada Plaza is held via strata titles on HGB underlying common land.
Bandung Indah Plaza is sited on land with HGB titles on top of HPL titles. (See “Business and Properties—
Information Regarding the Title of the Properties—Hak Pengelolaan (“HPL”) titles”.)
A HGB title is granted for a maximum initial term of 30 years. By application to the relevant local land office
upon the expiration of this initial term, a HGB title may be extended for an additional term not exceeding
20 years. Following expiration of this additional term, a renewal application may be made. (See “Overview
of Relevant Laws and Regulations in Indonesia—Rights to Own and/or to Use”.)
Under Indonesian land law, there is no limitation on the number of extensions and renewal cycles for HGB
titles. However, there is no assurance that there will be approval for such renewal or extension in the future.
The non-renewal of these HGB titles, for any reason, could either adversely affect the operations of the
Properties or result in LMIR Trust losing its ownership of the Properties.
There is no assurance that the BOT Agreements can be extended.
Cibubur Junction, The Plaza Semanggi, Ekalokasari Plaza, Bandung Indah Plaza and Istana Plaza will be
indirectly held by LMIR Trust pursuant to the respective BOT Agreement or the Cooperation Agreement.
The BOT Agreement does not amount to a legal title and is essentially a contractual arrangement and
governed by Indonesian Civil Code. Pursuant to Article 1338 of the Indonesian Civil Code the contracting
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Risk factors
parties are free to arrange their relationship in the BOT Agreement or Cooperation Agreement (freedom of
contract) subject to, among others, the prevailing laws and regulations, the good faith of the contracting
parties and public policy principles.
The terms of the BOT Agreements range from 20 years to 30 years. Since the BOT Agreement is a
contractual arrangement, the term of the respective BOT Agreement may be extended based on
agreement between the BOT Grantor and the BOT Grantee. Except for the BOT Agreement relating to
The Plaza Semanggi, which provides for automatic extension for an additional term of 20 years, upon six
months prior written notification, there is no assurance that the respective BOT Grantor will agree to extend
the term of the BOT Agreements. If there is no agreement to extend the BOT Agreement(s), the operations
of the Properties could be adversely affected or LMIR Trust could lose its indirect ownership of the
Properties.
If the ownership of the BOT land is transferred, there is no assurance that the transferee of the
land will recognise the right of the BOT Grantee.
Five of the seven Retail Malls, namely, Cibubur Junction, The Plaza Semanggi, Ekalokasari Plaza,
Bandung Indah Plaza and Istana Plaza, are held via BOT Schemes. Pursuant to BOT Schemes, the BOT
Grantor has granted the relevant Retail Mall Indonesian SPC (as the BOT Grantee), a right to build and
operate the Retail Mall for a particular period of time as stipulated in the BOT Agreement. Based on the
BOT Agreement, the BOT Grantor is obliged to provide the BOT Land and the BOT Grantee is obliged to
build and operate the building over the BOT Land and to pay a certain amount as compensation to the BOT
Grantor. Therefore, if the BOT Grantor transfers the BOT Land to another party (the “Transferee”) during
the term of the BOT Agreement, the BOT Grantee can make a claim against the BOT Grantor based on a
breach of contract.
Under the Indonesian Civil Code, there are four principal sanctions to a breach of contract:
(i) compensation of costs, damages and lost profits; (ii) cancellation of the contract; (iii) transfer of risk
or responsibility for the object of the contract; and (iv) payment of court costs (which would usually exclude
legal expenses) in the event of a court claim.
Damages may include consequential damages unless expressly excluded by agreement. The parties
may, by specific contractual provision, limit damages to a certain amount, or they may agree on a particular
method of calculating damages. In all cases, the existence of monetary damages suffered and the amount
of such must be proven.
Under Articles 1247, 1248 and 1250 of the Indonesian Civil Code, the following limitations apply to the
types of costs, damages and interest recoverable:
(a) damages which could have been foreseen or anticipated at the time the contract was formed.
According to case law, the scope of the loss as well as the possibility of injury must have been
foreseeable;
(b) damages directly and immediately flowing or resulting from the breach of contract; and
(c) in a case where performance involves the payment of money, damages may include interest.
According to generally accepted rules of jurisprudence in Indonesia, a creditor is required to do what can
reasonably be done to prevent or to reduce the damages (i.e. mitigate damages).
Should the BOT Grantor be wound up, any claims by the BOT Grantee may not be satisfied in part or at all
by the BOT Grantor. In addition, there is no assurance that the Transferee of the BOT Land will recognise
the right of the BOT Grantee to build and operate a Retail Mall on the BOT Land. Under such
circumstances, the BOT Grantee may be required to surrender the ownership of the Retail Mall to the
Transferee of the BOT land and this could have a material adverse effect on LMIR Trust’s financial
condition and results of operations. (See “Profit Forecast and Profit Projection—Sensitivity Analysis—
Retail Malls held via BOT Schemes”.)
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If the tenure of the underlying BOT land is less than the term of the BOT Agreement, there is
no 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 relating
to Cibubur Junction, the title of the underlying BOT Land will expire on 23 December 2021 and can be
extended in accordance with the prevailing laws and regulations, while the BOT Agreement will expire on
28 July 2025 and may be extended. Based on the BOT Agreement, the BOT Grantor undertakes that it will
extend the term of the title of the BOT Land and the cost incurred for such extension will be borne by the
BOT Grantor.
There is no assurance that the BOT Grantor will be able to renew the title of the BOT Land. If the BOT
Grantor for whatever reason is not able to extend the term of the BOT Land, the relevant Retail Mall
Indonesian SPC as BOT Grantee will have to deliver the Retail Mall situated on the BOT Land without any
compensation from the BOT Grantor. This can result in a material adverse effect on LMIR Trust’s Gross
Revenue. If the BOT Grantor cannot renew the term of the BOT land, the BOT Grantee would have the right
to 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 for
disputes over the quality of title purchased from previous land owners. In addition, there is a need to
negotiate with the actual owner of the land each time land is acquired under a licence, which may result in
purchases of property (and thereby the obtaining of title to the relevant land) being delayed or obstructed in
the event that negotiations are unsuccessful. Such delays in acquiring properties required for
development activities could have an adverse effect on LMIR Trust’s business, financial condition and
results of operations.
Each of the strata units comprising the relevant Retail Space at the Metropolis Town Square Units, the
Depok Town Square Units, the Malang Town Square Units and the Grand Palladium Medan Units, are
owned 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 of
transferring ownership. Any dispute over the enforceability of these agreements or the transferability of the
benefit thereunder could have an adverse effect on LMIR Trust’s business, financial condition and results
of operation.
LMIR Trust’s acquisition of all of the ordinary shares and redeemable preference shares in the
Target Singapore SPCs may be subject to risks associated with the acquisition of new
properties and shares in property holding companies.
While the Manager believes that reasonable due diligence investigations have been conducted with
respect to the ordinary shares and redeemable preference shares in the Target Singapore SPCs and the
Properties prior to acquisition of the ordinary shares and redeemable preference shares in the Target
Singapore SPCs, there can be no assurance that such shares in the Target Singapore SPCs or the
Properties will not have certain defects or deficiencies. The management or condition of some of the
Properties may be in breach of laws and administrative regulations including those in relation to real estate
or be subject to building defects and deficiencies which the Manager’s due diligence investigations did not
uncover or may not comply with certain regulatory requirements. As a result, LMIR Trust may incur
additional 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 the
Vendors are subject to limitations as to their scope and as to the amount and timing of claims which can be
made thereunder. There can be no assurance that LMIR Trust will be entitled to be reimbursed under such
representations, warranties and indemnities for any and all losses or liabilities suffered or incurred by it as
a result of its acquisition, via the Singapore SPCs and Indonesian SPCs, of the Properties.
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Risk factors
LMIR Trust will be subject to the operating risks inherent in the retail property industry.
The Properties will all be indirectly owned by LMIR Trust as at Listing Date. As such, LMIR Trust will be
subject to the operating risks inherent in the retail property industry. The risks that LMIR Trust faces
include:
• cyclical downturns arising from changes in general and local economic conditions;
• periodic local oversupply of retail malls, which may adversely affect the results of operations of LMIR
Trust;
• the recurring need for renovation, refurbishment and improvement of the retail malls;
• changes in wages, prices, energy costs and construction and maintenance costs that may result from
inflation, governmental regulations, changes in interest rates or currency fluctuations;
• availability of financing for operating or capital requirements;
• increases in operating costs due to inflation which may not necessarily be offset by corresponding
increases in rental payments from the Properties; and
• other factors, including outbreak of communicable diseases, acts of terrorism, natural disasters,
extreme weather conditions, labour shortages and work stoppages or disputes.
The Gross Revenue earned from, and the value of, the Properties may be adversely affected by
a number of factors.
The Gross Revenue earned from, and the value of the Properties may be adversely affected by a number
of factors, including:
• vacancies following expiry or termination of leases leading to reduced occupancy rates which, in turn,
reduce revenue;
• the Manager’s ability to collect rent from tenants on a timely basis or at all;
• the amount and extent to which the Manager is required to grant rebates on rental rates to tenants due
to market pressure;
• tenants seeking the protection of bankruptcy laws which could result in delays in receipt of rent
payments, inability to collect rentals at all or delays in the termination of the tenant’s lease, or which
could hinder or delay the sale of a Property or the re-letting of the space in question;
• the amount of rent payable by tenants and the terms on which lease renewals and new leases are
agreed being less favourable than current leases;
• the national and international economic climate and property market conditions (such as oversupply of,
or reduced demand for, retail space, the release of land for retail development, changes in market rental
rates and changes in operating expenses for the Properties;
• the Manager’s ability to procure adequate management and maintenance or to purchase adequate
insurance;
• competition for tenants from other similar properties which may affect rental levels or occupancy levels
at the Properties; and
• changes in laws and governmental regulations in relation to property, including those governing usage,
zoning, taxes and government charges. Such revisions may lead to an increase in management
expenses or unforeseen capital expenditure to ensure compliance. Rights related to the relevant
Properties may also be restricted by legislative actions, such as revisions to the building standards laws
or the town planning laws, or the enactment of new laws related to condemnation and redevelopment.
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Risk factors
The 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 and
other expenses increase without a corresponding increase in revenues. Factors which could increase
operating 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 with
such 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 Sponsor
and/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 Retail
Trust Management Ltd. remains the manager of LMIR Trust and (b) the Sponsor and/or any of its
related corporations, alone or in aggregate, remains a controlling shareholder of the Manager, a ROFR
over any Relevant Asset (i) which any Sponsor Entity proposes to sell or transfer (whether such Relevant
Asset is wholly-owned or partly-owned by the Sponsor Entity and excluding any sale of such Relevant
Asset 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 a
proposed 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 Refusal
Agreement”). The Sponsor and/or its related corporations have not given any undertaking to refrain from
disposing any of its shareholding interest in the Manager. In the event that the Sponsor and/or its related
corporations cease to be the controlling shareholder of the Manager, LMIR Trust will no longer have the
ROFR to purchase such properties, including the ROFR Properties. This may adversely affect LMIR
Trust’s pipeline of future acquisitions.
RISKS RELATING TO THE PROPERTIES
LMIR Trust may exercise its rights under the Put Option Agreement and sell four of the Retail
Spaces 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 bound
by Kiosks Sale and Purchase Binding Agreements because their strata titles are in the process of being
issued by the Indonesian government. Accordingly, LMIR Trust does not currently have proper legal and
good 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. The
Trustee and the Master Lessee have entered into a put option agreement pursuant to which, in the event
that the strata titles to these four Retail Spaces are not issued within 24 months from the Listing Date, a
meeting 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 LMIR
Trust for a further six months from the date of the ordinary resolution. In the event that an ordinary
resolution is passed in favour of retaining these four Retail Spaces in the portfolio of LMIR Trust and the
strata titles are still not issued upon expiry of six months from the date of the ordinary resolution, the
Trustee shall be entitled to exercise the put option. In the event that an ordinary resolution is not passed in
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Risk factors
favour of retaining these four Retail Spaces, the Trustee shall be entitled to exercise the put option within
three months of the date of the meeting of the Unitholders.
Upon exercising the put option, the Master Lessee will be required to purchase the entire issued and
paid-up capital of the relevant Singapore SPCs, which through the Indonesian SPCs, own these four Retail
Spaces at the consideration of the higher of (i) the net asset value of the relevant Indonesia SPCs as at the
date of service of the put option notice as determined from the audited consolidated accounts of the SPCs
and (ii) the net asset value based on the value attributed to these four Retail Spaces for the purpose of the
Listing, in each case, also taking into account all transaction costs incurred directly and indirectly by LMIR
Trust for the acquisition of these four Retail Spaces. (See “Certain Agreements relating to LMIR Trust and
the Properties—Description of the Put Option Agreements”.) The Trustee (acting on the advice and
recommendation of, and after discussions with, the Manager) is satisfied with the computation of the said
transaction costs as set out in the put option agreement.
Although the Manager will endeavour to acquire comparable retail spaces in order to maintain or enhance
LMIR’s distribution per Unit, there is no assurance that this can be achieved. In the event that comparable
retail spaces cannot be acquired, the Gross Revenue, the income available for distribution by LMIR Trust
to Unitholders, the distribution per Unit and the distribution yield for the Projection Year 2009 may be
adversely affected.
The market values of the Properties may differ from their values as determined by the
Independent Valuers.
The valuations were generally conducted using a combination of valuation methods such as the
discounted cash flow method and the investment income capitalisation method. Property valuations
generally include a subjective determination of certain factors relating to the relevant properties, such as
their relative market positions, their financial and competitive strengths and their physical conditions. The
market values of the Properties may therefore differ from the values of the Properties as determined by the
Independent Valuers.
The values of the Properties (as determined by the Independent Valuers) are not an indication of, and do
not guarantee, a sale price at that value at present or in the future. The price at which LMIR Trust sells a
property may be lower than its value as determined by the Independent Valuers.
The Properties may face increased competition from future retail developments in Indonesia.
The retail property industry is competitive and may become increasingly so. Each of the Properties is
located in an area that has competing retail malls. They may also compete with retail malls in Indonesia
developed in the future. The income from, and market value of, the Properties will be largely dependent on
the ability of the Properties to compete against other retail properties in Indonesia in attracting and
retaining tenants. An increase in the number of competitive retail malls in Indonesia, particularly in the
areas where the Properties are located, could have a material adverse effect on the revenue of the
Properties, as such increased competition may have an adverse impact on the ability of the lessees of the
Retail Malls or the Master Lessee of the Retail Spaces to make rental payments.
Amenities and transportation infrastructure near the Properties may be closed, relocated or
terminated.
The proximity of amenities and transportation infrastructures, such as train stations and bus interchanges,
to the Properties provides convenient access to the Properties and a constant flow of shopper traffic.
There is no assurance that the amenities and transportation infrastructure and shuttle services will not be
closed, relocated or terminated in the future. Such closure, relocation or termination may adversely affect
the accessibility of the Properties which will reduce the flow of shopper traffic to the Properties. This may
then have an adverse effect on the demand for and the rental rates of the Properties and adversely affect
the financial position of LMIR Trust.
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Risk factors
Renovation work or physical damage to the Properties may disrupt the operations of LMIR
Trust and collection of rental income or otherwise result in adverse impact on the financial
condition of LMIR Trust.
The quality and design of the Properties directly influence the rental rates of and the demand for space in
the Properties, as well as the ability to attract heavy shopper traffic. The Properties may need to undergo
renovation work from time to time to retain their attractiveness to tenants and may also require ad hoc
maintenance or repairs caused by structural defects or because of new planning laws or regulations. The
costs of maintaining a retail property and the risk of unforeseen maintenance or repair requirements tend
to increase over time as the Properties age. While the Manager and the Property Manager will endeavour
to keep any disruptions caused by such renovation work to a minimum, the business and operations of the
Properties may still suffer some disruption and it may not be possible to collect the full rate of, or, as the
case may be, any rental income on space affected by such renovation work. Shopper traffic may also be
adversely affected by potential inconveniences resulting from such renovation work.
Physical damage to the Properties resulting from fire or other causes may lead to a significant disruption to
the business and operation of the Properties and together with the foregoing may result in an adverse
impact on the financial condition and results of operations of LMIR Trust and its ability to make
distributions.
Some of the anchor tenants of the Retail Malls may terminate their leases pursuant to a sixmonth termination clause
Under the respective lease agreements, some of the anchor tenants of the Retail Malls may terminate
their leases with a six-month notice period.
The loss of these anchor tenants in the Retail Malls could result in periods of vacancy, which could
therefore adversely affect the revenue of the relevant Retail Mall, consequently impacting the Indonesian
SPCs’ ability to make distributions to LMIR Trust.
A substantial number of the leases of the Retail Malls are for terms of three to five years,
which exposes the Retail Malls to significant rates of lease expiries each year.
A substantial number of the leases for the Retail Malls are for terms of three to five years. As a result, the
Properties experience lease cycles in which a substantial number of such leases expire each year. This
exposes LMIR Trust to certain risks, including the risk that vacancies following the non-renewal of leases
may lead to reduced occupancy rates, which will in turn reduce LMIR Trust’s Gross Revenue.
The inspections carried out during the valuation exercise on buildings and equipment may not
have identified all material defects, breaches of laws and regulations and other deficiencies.
The Independent Valuers conducted inspections on the physical condition of the Properties as part of the
valuation exercise. There can be no assurance that such reviews, surveys or inspections have revealed all
defects or deficiencies affecting the Properties. In particular, there can be no assurance as to the absence
of: (i) latent or undiscovered defects or deficiencies; or (ii) inaccuracies or deficiencies in such review,
survey or inspection reports, any of which could have a material adverse effect on the operations of the
Properties and, consequently, LMIR Trust’s financial condition and results of operations. The risk of
undisclosed defects, breaches and deficiencies is necessarily increased as a result of the time interval
between completion of the review, survey and inspection process and the date of this Prospectus.
The Master Lessee may not be liable to pay rent if any of the Retail Spaces is damaged or
destroyed.
Under the Master Lease Agreements, if any of the Retail Spaces is damaged or destroyed such that the
Retail Space cannot be used or becomes inaccessible, the relevant landlord has the option to reinstate or
replace such Retail Space (or the affected part, as the case may be) using insurance proceeds received
under the insurance policies. If the relevant landlord opts to reinstate or replace the Retail Space, the
Master Lessee will not be liable to pay rent in respect of the period when the Retail Space cannot be used
79
Risk factors
or is inaccessible. The non-payment of rent by the Master Lessee will have a material adverse effect on
LMIR Trust’s Gross Revenue.
RISKS RELATING TO INDONESIA
LMIR Trust is exposed to economic and real estate market conditions and changes in fiscal
policies in Indonesia.
LMIR Trust is a Singapore-based REIT constituted by the Trust Deed. It is established with the principal
investment objective of owning and investing on a long-term basis in a diversified portfolio of incomeproducing real estate in Indonesia that are primarily used for retail and/or retail-related purposes, and real
estate 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 operations
depend to a large extent on the performance of the Indonesian economy. An economic decline in
Indonesia could adversely affect LMIR Trust’s results of operations and financial growth. Political
upheavals, natural disasters, insurgency movements, riots and governmental policies all play a pivotal
role in the performance of the Properties.
Other local real estate market conditions which may adversely affect the performance of LMIR Trust
include the attractiveness of competing retail properties, an oversupply of or a reduced demand for retail
properties.
LMIR Trust may also be exposed to risks associated with exchange rate fluctuations between the
Indonesian Rupiah or the local currency of foreign countries in which LMIR Trust invests in and the
Singapore dollar.
LMIR Trust will be subject to Indonesian real estate laws, regulations and policies as a result of its property
investments in Indonesia. There may be a negative impact on a property owned by LMIR Trust in Indonesia
as a result of measures and policies adopted by the Indonesian government and regulatory authorities at
national, provincial or local levels, such as governmental control over property investments or regulations
in relation to foreign exchange. Legal protection and recourse available to LMIR Trust in Indonesia may be
limited.
In addition, the income and gains derived from investment in properties in Indonesia will be subject to
various types of taxes in Indonesia, including income tax, withholding tax, capital gains tax and any other
taxes that may be imposed specifically for ownership of real estate. All of these taxes, which are subject to
changes 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 to
Unitholders.
There is also no assurance that LMIR Trust will be able to repatriate to Singapore the income and gains
derived from investment in properties outside Singapore on a timely and regular basis. Any inability to
repatriate the income and gains to Singapore will affect LMIR Trust’s ability to make distributions to
Unitholders out of such income and gains.
The Properties and/or future acquisitions, or a part of them, may be acquired compulsorily by
the Indonesian government.
In Indonesia, pursuant to Law No. 20 of 1961 concerning Revocation of Rights of Land and the Properties
Thereon and Law No. 28 of 2002 concerning Building Construction in conjunction with Presidential
Regulation No. 36 of 2005 (as amended by the Presidential Regulation No. 65 of 2006) concerning Land
Procurement for the Development of Public Interest, after fulfilling certain procedures and compensating
the land owners based on reasonable price and prevailing laws and regulations, the Indonesian
government has the right to revoke any right over the land and any property thereon owned by any
party, in order for the Indonesian government (including local governments) to fulfil public needs, including
public roads, airports, train stations, water embankments or natural reservations. Therefore, there is no
assurance that the Indonesian government will not compulsorily acquire the lands on which the Properties
are situated.
80
Risk factors
Such compulsory acquisitions would have an adverse effect on the financial condition, operating results
and the value of LMIR Trust’s asset portfolio.
Terrorist attacks in Indonesia could destabilise the country.
Terrorist acts in Indonesia could destabilise Indonesia and increase internal divisions within the
Indonesian government as it evaluates responses to that instability and unrest. Violent acts arising
from, and leading to, instability and unrest have in the past had, and may continue to have, a material
adverse effect on investment and confidence in, and the performance of, the Indonesian economy, and
may have a material adverse effect on the Master Lessee’s business, financial condition, results of
operations and future prospects. This could adversely impact the ability of the tenants of the Retail Malls
and the Master Lessee to make rental payments to the Indonesian SPCs.
Economic changes in Indonesia may adversely affect the Master Lessee’s business.
The economic crisis which affected Southeast Asia, including Indonesia, around mid-1997 was
characterised in Indonesia by, among other effects, currency depreciation, negative economic growth,
high interest rates, social unrest and extraordinary political developments. These conditions had material
adverse effects on Indonesian businesses.
The economic difficulties faced by Indonesia during the Asian economic crisis in 1997 resulted in, among
other things, significant volatility in interest rates, which had a material adverse impact on the ability of
many Indonesian companies to service their existing indebtedness.
In addition, Indonesia relies heavily on aid from the International Monetary Fund (“IMF”), loans from the
World Bank and the members of the Paris Club, as well as from the Consultative Group on Indonesia
(“CGI”). The inability of the Indonesian government to obtain adequate funding, in the event of a
termination of the IMF program, or a reduction or elimination of funding from the World Bank and the
members of the Paris Club or the CGI, could have adverse economic, political and social consequences in
Indonesia, which in turn, could have a material adverse effect on the Master Lessee’s business, financial
condition, results of operations and future prospects.
A loss of investor confidence in the financial system of emerging and other markets may cause increased
volatility in the Indonesian financial markets, and a slowdown or negative growth could have material
adverse effects on the Master Lessee’s business, financial condition, results of operations and prospects.
Demand for retail services are largely dependent on the purchasing power of shoppers and their
willingness to pay for retail services. A slowdown in the Indonesian economy or a high unemployment
rate may require more people to adopt a prudent approach towards spending, resulting in a lower demand
for retail services.
The Singapore-Indonesia tax treaty may be applied in a manner adverse to the interests of the
Unitholders.
The Indonesian tax rules generally require a 20.0% tax to be withheld on the payment of a dividend or
interest from an Indonesian taxpayer to an offshore tax resident. Under the double tax treaty between
Singapore and Indonesia, the rate of withholding tax is reduced to 10.0% on the payment of a dividend or
interest to a Singapore tax resident which is the beneficial owner of this payment. The reduced rate is
available to a Singapore company only if the company submits an original copy of the certificate of domicile
to the Indonesian payor prior to the payment of the income.
On 7 July 2005, the Directorate General of Taxation in Indonesia issued a circular letter indicating that the
benefits of Indonesia’s double tax treaties would not be available to a recipient of Indonesian-sourced
income that was not the beneficial owner of such income. The circular letter further elaborated that a SPV
which is a “conduit company”, “paper box company”, “pass through company”, or any similar form of entity
would not qualify as the beneficial owner of payments received by it.
The independent tax advice from PB&Co, the Independent Indonesian Tax Adviser, sets out that the
reduced withholding tax rate of 10.0% should apply to the payment of interest and dividends to a
Singapore tax-resident beneficial owner. Under Singapore income tax law, the Singapore SPCs would
be considered tax resident in Singapore if the control and management of their business is exercised in
81
Risk factors
Singapore. As a general rule, the place where a company’s control and management is exercised and
hence the tax residence of the company is the place where the directors of the company hold their
meetings. The board of directors of the Singapore SPCs will endeavour to ensure that the control and
management of each of the Singapore SPCs is exercised in Singapore so that each would be considered a
tax resident of Singapore. The Singapore SPCs are the beneficial owner of the shares in the Indonesian
SPCs and of the loans to the Indonesian SPCs. Therefore, they should be considered as the beneficial
owner of the interest and dividend income received from the Indonesian SPCs. Nevertheless, it remains
uncertain as to whether the Indonesian tax authorities will view the Singapore SPCs as the beneficial
owners of the interest and dividends. If the Singapore SPCs are not viewed as the beneficial owners, it
should still be possible to obtain the reduced withholding tax rate to the extent that Singapore tax residents
(or any other jurisdiction with the same tax rate under their respective double tax treaty) are the
Unitholders of LMIR Trust. If the higher withholding tax rate of 20.0% would apply to the dividend and
interest payments from the Indonesian SPCs, this will accordingly lower the income paid to the Singapore
SPCs and in turn may adversely affect the financial results of LMIR Trust and its distributions to
Unitholders.
The Indonesian legal system is subject to considerable discretion and uncertainty.
Indonesia’s legal system is a civil law system based on written statutes in which judicial and administrative
decisions do not constitute binding precedents and are not systematically published. Indonesia’s
commercial and civil laws are historically based on Dutch law as in effect prior to Indonesia’s
independence in 1945. Some of these laws have not been revised to reflect the complexities of
modern financial transactions and instruments. There may be uncertainty in the interpretation and
application of legal principles in Indonesia. The application of legal principles in Indonesia depends
upon subjective criteria such as the good faith of the parties to the transaction and principles of public
policy, the practical effect of which is difficult or impossible to predict. Indonesian judges have very broad
fact-finding powers and a high level of discretion in relation to the manner in which those powers are
exercised. As a result, the administration and enforcement of laws and regulations by Indonesian courts
and Indonesian governmental agencies may be subject to considerable discretion and uncertainty.
Indonesian legal principles relating to the rights of debtors and creditors, or their practical implementation
by Indonesian courts, differ materially from those that would apply in, for example, Singapore, the United
States or the European Union. As a result, it may be more difficult for the Trustee, on behalf of LMIR Trust,
to pursue a claim against the tenants of the Retail Malls or the Master Lessee in Indonesia than it would be
in other jurisdictions, such as in Singapore. This may adversely affect or eliminate entirely LMIR Trust’s
ability (and indirectly, the ability of its Unitholders) to obtain and/or enforce a judgment against the Master
Lessee in Indonesia.
The operations of the Properties may be adversely affected by earthquakes, tsunamis, floods
or other natural disasters.
The Indonesian archipelago is one of the most active volcanic regions in the world. As it is located in the
convergence zone of three major lithospheric plates, it is subject to significant seismic activity that can lead
to destructive earthquakes and tidal waves. On 26 December 2004, an underwater earthquake off the
coast of Sumatra resulted in a tsunami that devastated coastal communities in Indonesia, Thailand and Sri
Lanka. In Indonesia, more than 220,000 people died or were recorded as missing in the disaster.
Aftershocks from the December 2004 tsunami have also claimed casualties. In March 2007, a
powerful earthquake hit the Indonesian island of Sumatra, flattening hundreds of buildings and killing
at least 70 people. On 12 September 2007, a strong earthquake occurred in Sumatra which caused
significant aftershocks in the surrounding regions.
The operations of the Properties may be affected by floods. In February 2007, incessant rain caused rivers
to overflow across Jakarta. As a result, homes, government buildings, retail malls and businesses were
flooded. The authorities were forced to cut off electricity and water supplies in certain areas.
There can be no assurance that future geological occurrences will not significantly impact the operations
of the Properties. An earthquake or other geological disturbance in any of Indonesia’s more populated
cities and financial centres could disrupt the Indonesian economy and the operations of the Properties,
82
Risk factors
thereby materially and adversely affecting the ability of the tenants of the Retail Malls and the Master
Lessee to make rental payments to the Indonesian SPCs.
Labour activism and unrest may materially and adversely affect the Properties.
Laws permitting the formation of labour unions, combined with weak economic conditions, have resulted,
and may continue to result, in labour unrest and activism in Indonesia. In March 2003, the Indonesian
government enacted Law No. 13/2003 (the “Labour Law”) that requires further implementation of
regulations that may substantively affect labour relations in Indonesia.
The Labour Law requires bipartite forums with participation from employers and employees, and the
participation of more than 50.0% of the employees of a company, in order for a collective labour agreement
to be negotiated and, in addition, the Labour Law creates procedures that are more permissive to the
staging of strikes.
Labour unrest and activism in Indonesia could disrupt operations of the Properties, and thus could
materially and adversely affect the ability of the tenants of the Retail Malls and the Master Lessee to make
rental payments to the Indonesian SPCs.
RISKS RELATING TO AN INVESTMENT IN THE UNITS
The sale or possible sale of a substantial number of Units by the Cornerstone Investors in the
public market following the lapse of any applicable lock-up arrangements could have adverse
effects on LMIR Trust.
The Cornerstone Investors, being Lippo Strategic and Mapletree LM, will receive Cornerstone Units,
amounting to an aggregate of approximately 39.1% of the total issued Units as at the Listing Date,
(assuming no exercise of the Over-allotment Option).
Lippo Holdings Inc, Lippo Capital Limited, Lippo Cayman Limited and Lanius Ltd are deemed to have
interests in the Cornerstone Units due to their direct or indirect (as the case may be) interests in Lippo
Strategic.
Lippo Strategic (also the Unit Lender), Lippo Holdings Inc, Lippo Capital Limited, Lippo Cayman Limited,
Lanius Ltd, MIPL, Mapletree Dextra Pte Ltd and Mapletree LM have on 9 November 2007 each agreed to
(a) a lock-up arrangement in respect of their direct or indirect interests (as the case may be) in the
Cornerstone Units (or any securities convertible or exchangeable for units or which carry any rights to
subscribe for or purchase units) (adjusted for any bonus issue, consolidation or subdivision), as at the
Listing Date during the First Lock-Up Period; and
(b) a lock-up arrangement in respect of their direct or indirect interests (as the case may be) in 50.0% of
the Cornerstone Units (or any securities convertible or exchangeable for units or which carry any
rights to subscribe for or purchase units) (adjusted for any bonus issue, consolidation or
subdivision)as at the Listing Date during the Second Lock-Up Period, subject to certain exceptions.
(See “Plan of Distribution—Lock-Up Arrangements”).
However, there is no assurance that any of Lippo Strategic (also the Unit Lender), Lippo Holdings Inc,
Lippo Capital Limited, Lippo Cayman Limited, Lanius Ltd, MIPL, Mapletree Dextra Pte Ltd and Mapletree
LM will not dispose of its direct or indirect interest in the Cornerstone Units following the expiry of the First
Lock-Up Period and the Second Lock-Up Period. There is also no assurance that the Cornerstone
Investors will not dispose of their direct or indirect interests in the Cornerstone Units. In the event that any
of the Cornerstone Investors decides to transfer or dispose of its direct or indirect interest in the
Cornerstone Units, there may be a material and adverse impact on the market price of the Units.
LMIR Trust may not be able to make distributions to Unitholders or the level of distributions
may fall.
The net operating profit earned from real estate investments depends on, among other factors, the amount
of rental income received, and the level of property, operating and other expenses incurred. If the
properties which are directly or indirectly held by LMIR Trust do not generate sufficient net operating
83
Risk factors
profit, LMIR Trust’s income, cash flow and ability to make distributions will be adversely affected. In
addition, if the Singapore SPCs have insufficient cash flows or distributable profits or surplus, or the
Singapore SPCs do not make the expected level of distributions in any financial year, LMIR Trust’s income,
cash flow and ability to pay or maintain distributions to Unitholders, may be adversely affected.
No assurance can be given as to LMIR Trust’s ability to pay or maintain distributions. Nor is there any
assurance that the level of distributions will increase over time, that there will be contractual increases in
rent under the leases of the Properties or that the receipt of rental income in connection with expansion of
the properties or future acquisitions of properties will increase LMIR Trust’s cash flow available for
distribution to Unitholders.
Market and economic conditions may affect the market price and demand for the Units.
Movements in domestic and international securities markets, economic conditions, foreign exchange
rates and interest rates may affect the market price of, and demand for, the Units. In particular, an increase
in market interest rates may have an adverse impact on the market price of the Units if the annual yield on
the price paid for the Units gives investors a lower return compared to other investments.
The NAV per Unit may be diluted if further issues are priced below the then NAV per Unit.
The Trust Deed contemplates issues of new units, the Offering Price for which may be above, at or below
the then NAV per Unit. Where new units, including units which may be issued to the Manager in payment of
the Manager’s management fees, are issued at less than the current NAV per Unit, the NAV of each
existing Unit may be diluted.
The laws, regulations and accounting standards in Indonesia, Singapore or countries in which
future acquisitions may be situated, may change.
LMIR Trust may be affected by the introduction of new or revised legislation, regulations or accounting
standards. Accounting standards in Indonesia and Singapore are subject to changes as accounting
standards in both countries become more aligned with international accounting standards. The financial
statements of LMIR Trust and the Singapore SPCs may be affected by the introduction of such revised
accounting standards. The extent and timing of these changes in accounting standards are unknown and
are subject to confirmation by the relevant authorities. The Manager has not quantified the effects of these
proposed changes and there can be no assurance that these changes will not have a significant impact on
the presentation of LMIR Trust’s financial statements or on LMIR Trust’s results of operations. Such
changes may adversely affect the ability of LMIR Trust to make distributions to Unitholders. There can be
no assurance that any such changes in laws, regulations and accounting standards will not have an
adverse effect on the ability of the Manager to carry out LMIR Trust’s investment strategy or on the
operations and financial condition of LMIR Trust.
LMIR Trust may be unable to comply with the conditions for the tax exemption and tax ruling,
or the tax exemption or tax ruling may no longer apply.
LMIR Trust has obtained an approval from the Inland Revenue Authority of Singapore (“IRAS”) to exempt
from Singapore income tax any interest received by the Singapore SPCs from the Indonesian SPCs that is
paid out of the underlying rental income derived from the Properties. This tax exemption is given under
Section 13(12) of the Income Tax Act.
LMIR Trust has also received an advance ruling from IRAS issued under Section 108 of the Income Tax Act
which confirms that a return of capital by LMIR Trust is not a taxable distribution to Unitholders.
The approval for the tax exemption under Section 13(12) of the Income Tax Act and the advance ruling
from the IRAS issued under Section 108 of the Income Tax Act are subject to LMIR Trust satisfying the
stipulated conditions. Where these conditions are not satisfied, or are no longer satisfied by LMIR Trust,
the tax exemption and ruling may no longer apply.
The approval and tax ruling are also granted based on the facts presented to IRAS, as well as the IRAS’s
current interpretation of the existing tax laws. Where the facts turn out to be different from those
represented to IRAS, or where there is a subsequent change in the tax laws, or a change in the
84
Risk factors
interpretation by the IRAS of the tax laws that affect the approval and the ruling, the tax exemption and
ruling may no longer apply, possibly on a retroactive basis.
Foreign Unitholders may not be permitted to participate in future rights issues by LMIR Trust.
The Trust Deed provides that in relation to any rights issue, the Manager may, in its absolute discretion,
elect not to extend an offer of Units under a rights issue to those Unitholders whose addresses, as
registered with CDP, are outside Singapore. The rights or entitlements to the Units to which such
Unitholders would have been entitled will be offered for sale and sold in such manner, at such price
and on such other terms and conditions as the Manager may determine, subject to such other terms and
conditions as the Trustee may impose. The proceeds of any such sale will be paid to the Unitholders whose
rights or entitlements have been so sold, provided that where such proceeds payable to the relevant
Unitholders are less than S$10.00, the Manager is entitled to retain such proceeds as part of the
Deposited Property. The holding of the relevant holder of the Units may be diluted as a result of such sale.
The actual performance of LMIR Trust and the Properties could differ materially from the
forward-looking statements in this Prospectus.
This Prospectus contains forward-looking statements regarding, among other things, forecast and
projected distribution levels. These forward-looking statements are based on a number of
assumptions which are subject to significant uncertainties and contingencies, many of which are
outside of the Manager’s control (see “Profit Forecast and Profit Projection—Assumptions”). In
addition, LMIR Trust’s revenue is dependent on a number of factors including the receipt of dividends
and redemption proceeds from the Target Singapore SPCs and rent from the Properties held through the
Singapore SPCs, which may decrease for a number of reasons including the lowering of occupancy and
rental rates, insolvency or delay in rent payment by tenants. This may adversely affect LMIR Trust’s ability
to achieve the forecast and projected distributions as some or all events and circumstances assumed may
not occur as expected, or events and circumstances may arise which are not currently anticipated. Actual
results may be materially different from the forecast and projections. No assurance can be given that the
assumptions will be realised and that actual distributions will be as forecast and projected.
The Manager is not obliged to redeem Units.
Unitholders have no right to request the Manager to redeem their Units while the Units are listed on the SGXST. It is intended that Unitholders may only deal in their listed Units through trading on the SGX-ST.
The Units have never been publicly traded and the listing of the Units on the Main Board of
the SGX-ST may not result in an active or liquid market for the Units.
Prior to the Offering, there was no public market for the Units and an active public market for the Units may not
develop or be sustained after the Offering. While the Manager has received a letter of eligibility from the SGXST to have the Units listed and quoted on the Main Board of the SGX-ST, listing and quotation does not
guarantee the development of a trading market for the Units or, if a market does develop, the liquidity of that
market for the Units. Prospective Unitholders should view the Units as illiquid and should be prepared to hold
their Units for an indefinite length of time. Further, it may be difficult to assess LMIR Trust’s performance
against either domestic or international benchmarks.
There is no assurance that the Units will remain listed on the SGX-ST.
Although it is currently intended that the Units will remain listed on the SGX-ST, there is no guarantee of the
continued listing of the Units. LMIR Trust may not continue to satisfy any future listing requirements of the
SGX-ST.
The Manager may change LMIR Trust’s investment strategy as there is no restriction on
changes in such investment and financing strategies.
LMIR Trust’s policy with respect to certain activities, including investments and acquisitions, will be
determined by the Manager. The Manager has stated its intention to own and invest on a long-term basis in
a diversified portfolio of income-producing real estate in Indonesia that are primarily used for retail and/or
85
Risk factors
retail-related purposes, and real estate related assets in connection with the foregoing purposes. Such
strategy may not be changed for a period of three years commencing from the Listing Date (as the Listing
Manual prohibits a departure from the Manager’s stated investment strategy for LMIR Trust for the said
period unless otherwise approved by an Extraordinary Resolution passed by Unitholders). The Trust Deed
grants the Manager wide power to invest in other types of assets, including real estate, real estate-related
assets, as well as listed and unlisted securities in Singapore and other jurisdictions and the Manager may
change its investment strategy after the expiry of the three-year period. There are risks and uncertainties
with respect to the selection of investments and with respect to the investments themselves.
Certain provisions of the Singapore Code on Take-overs and Mergers could have the effect of
discouraging, delaying or preventing a merger or acquisition, which could adversely affect the
market price of the Units.
The MAS has announced on 8 June 2007 the decision of the Securities Industry Council to extend the
ambit of the Take-over Code to REITs. While the MAS will be making amendments to the SFA and the
Take-over Code, where necessary, to give effect to the extension of the Take-over Code to REITs in due
course, the Securities Industry Council has recommended that parties engaged in take-over or merger
transactions involving REITs comply with the Take-over Code prior to such amendments.
The Take-over Code contains provisions that may delay, deter or prevent a future take-over or change in
control of LMIR Trust. Under the Take-over Code, any person acquiring an interest, either individually or
with parties acting in concert, in 30.0% or more of the Units (being voting units in LMIR Trust) may be
required to extend a take-over offer for the remaining Units in accordance with the Take-over Code. A takeover offer is also required to be made if a person holding between 30.0% and 50.0% inclusive of the Units,
either individually or in concert, acquires an additional 1.0% of the Units in any six-month period under the
Take-over Code. While the application of the Take-over Code is intended to ensure equality of treatment
among Unitholders, its provisions may discourage or prevent certain types of transactions involving an
actual or threatened change of control of LMIR Trust and, as a result, may adversely affect the market price
of the Units and the ability to realise any potential change of control premium.
The price of the Units may decline after the Offering.
The Offering Price of the Units is determined by agreement between the Manager and the Underwriters
and may not be indicative of the market price for the Units after the completion of the Offering. The Units
may trade at prices significantly below the Offering Price after the Offering. The trading price of the Units
will depend on many factors, including:
• the perceived prospects of LMIR Trust’s business and investments and the Indonesian retail real estate
market;
• differences between LMIR Trust’s actual financial and operating results and those expected by
investors and analysts;
• changes in analysts’ recommendations or projections;
• changes in general economic, political or market conditions;
• the market value of LMIR Trust’s assets;
• the perceived attractiveness of the Units against those of other equity or debt securities, including those
not in the real estate sector;
• the balance of buyers and sellers of the Units;
• the future size and liquidity of the Singapore REIT market;
• any future changes to the regulatory system, including the tax system, both generally and specifically in
relation to Singapore REITs;
• the ability of the Manager to successfully implement its investment and growth strategies;
• foreign exchange rates; and
86
Risk factors
• broad market fluctuations, including weakness of the equity market and increases in interest rates.
For these and other reasons, the Units may trade at prices that are higher or lower than the NAV per Unit.
To the extent that LMIR Trust retains operating cash flow for investment purposes, working capital
reserves or other purposes, these retained funds, while increasing the value of its underlying assets, may
not correspondingly increase the market price of the Units. Any failure on LMIR Trust’s part to meet market
expectations with regard to future earnings and cash distributions may adversely affect the market price for
the Units.
In addition, the Units are not capital-safe products and there is no guarantee that Unitholders can regain
the amount invested. If LMIR Trust is terminated or liquidated, it is possible that investors may lose a part or
all of their investment in the Units.
LMIR Trust may be affected by the introduction of new or revised legislation, regulations,
guidelines or directives affecting REITs.
LMIR Trust may be affected by the introduction of new or revised legislation, regulations, guidelines or
directives affecting REITs. There is no assurance that the MAS or any other relevant authority will not
introduce new legislation, regulations, guidelines or directions which would adversely affect REITs
generally, or LMIR Trust specifically.
87
Use of proceeds
The Manager intends to raise an aggregate of approximately S$848.3 million (based on the Offering Price)
from the Offering as well as from the issuance of Cornerstone Units.
The Manager intends to apply the total proceeds from the Offering and from the issuance of Cornerstone
Units towards the following:
(i)
payment of the purchase consideration to the Vendors for the acquisition of all of the ordinary shares
and redeemable preference shares in the Target Singapore SPCs at completion under the Singapore
SPC Share Purchase Agreements; and
(ii) costs and expenses related to the Offering, and the issuance of the Cornerstone Units.
The following tables, included for the purpose of illustration, set out the intended source and application of
the total proceeds from the Offering and from the issuance of the Cornerstone Units.
Based on the Offering Price and estimated issue costs and expenses of the Offering, and assuming that
the Over-allotment Option has not been exercised:
Source
(S$)
Units under the Offering. . . . . . . .
516,375,200
Cornerstone Units . . . . . . . . . . . .
331,956,000
Total . . . . . . . . . . . . . . . . . . . . . .
88
848,331,200
Application
Acquisition of all the ordinary
shares and redeemable
preference shares in the Target
Singapore SPCs . . . . . . . . . . . . .
Issue costs and expenses related
to the Offering . . . . . . . . . . . . . . .
Total
(S$)
815,529,280
32,801,920
848,331,200
Ownership of Units
PRINCIPAL UNITHOLDERS OF LMIR TRUST AND THEIR UNITHOLDINGS
The following table sets out the principal Unitholders of LMIR Trust and their Unitholdings immediately
after the Offering and the issuance of Cornerstone Units:
Units owned after
Offering (assuming that
the Over-allotment Option
is not exercised)
(’000)
Lippo Strategic(1) . . . . . . . . . . . . . . . . . . . . . . .
Mapletree LM(2) . . . . . . . . . . . . . . . . . . . . . . . .
Total for Cornerstone Investors . . . . . . . . . . .
Public and institutional investors . . . . . . . . . . . .
(%)
Units owned after
Offering (assuming that
the Over-allotment Option
is exercised in full)
(’000)
(%)
.
.
.
.
287,695
127,250
414,945
645,469
27.1
12.0
39.1
60.9
190,875
127,250
318,125
742,289
18.0
12.0
30.0
70.0
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,060,414
100.0
1,060,414
100.0
Notes:
(1) Lippo Holdings Inc, Lippo Capital Limited, Lippo Cayman Limited and Lanius Ltd are deemed to have
interests in the Cornerstone Units held by Lippo Strategic due to their direct or indirect (as the case
may be) interests in Lippo Strategic.
(2) MIPL and Mapletree Dextra are deemed to have interests in the Cornerstone Units held by Mapletree
LM due to their direct or indirect (as the case may be) interests in Mapletree LM.
Concurrently with but separate from the Offering, the Cornerstone Investors will receive an aggregate of
414,945,000 Cornerstone Units constituting approximately 39.1% of the total issued Units as at the Listing
Date, of which up to 96,820,000 Units, which constitute approximately 9.1% of the Units expected to be
issued on the Listing Date, will be lent to the Underwriters by Lippo Strategic (as the Unit Lender) in
connection with the Over-allotment Option.
Lippo Strategic (also the Unit Lender), Lippo Holdings Inc, Lippo Capital Limited, Lippo Cayman Limited,
Lanius Ltd, MIPL, Mapletree Dextra Pte Ltd and Mapletree LM have on 9 November 2007 agreed to certain
lock-up periods in respect of their direct or indirect interests (as the case may be) in their respective
interests in their Cornerstone Units, as at Listing Date, subject to certain exceptions (see “Plan of
Distribution—Lock-up Arrangements”).
The Cornerstone Investors (as set out below) have entered into Cornerstone Subscription Agreements
with the Manager to subscribe for an aggregate of 414,945,000 Cornerstone Units at the Offering Price,
conditional upon the Underwriting Agreement having been entered into and not having been terminated
pursuant to its terms on or prior to the Listing Date.
INFORMATION ON THE CORNERSTONE INVESTORS
Lippo Strategic
Lippo Strategic, a wholly-owned subsidiary of Lippo Holdings Inc, is a limited liability company
incorporated in the British Virgin Islands on 2 March 2007. Lippo Holdings Inc is wholly-owned by
Lippo Capital Limited, which is in turn wholly-owned by Lippo Cayman Limited. Lanius Ltd is the registered
and legal owner of the entire issued share capital of Lippo Cayman Limited.
Lanius Ltd is the trustee of a discretionary trust of which Dr Mochtar Riady is the founder. The share capital
of Lippo Cayman Limited are assets comprised in such trust. The beneficiaries of the trust include
Dr Mochtar Riady and his family members.
Lippo Strategic will be subscribing for 287,695,000 Units, representing 27.1% of the total issued Units of
LMIR Trust as at the Listing Date.
89
Ownership of Units
Mapletree LM
Mapletree LM is a wholly-owned subsidiary of Mapletree Dextra, which is in turn, a wholly-owned
subsidiary of MIPL. Mapletree LM is a private limited company incorporated in Singapore under the
Companies Act on 29 May 2007. As at 29 May 2007, it has a paid-up capital of S$2.00 and its registered
office is located at 1 Maritime Square, #13-01 HarbourFront Centre, Singapore 099253. MIPL is a leading
Asia-focused real estate company based in Singapore. MIPL and its subsidiaries, comprising the
Mapletree Group, have an asset base of approximately S$4.5 billion (as at 30 June 2007) comprising
office, logistics, industrial, residential and retail/lifestyle properties.
Mapletree LM will be subscribing for 127,250,000 Units, representing 12.0% of the total issued Units of
LMIR Trust as at the Listing Date.
90
Distributions
The distributable income of LMIR Trust (“Distributable Income”) is substantially based on the cash flow of
LMIR Trust.
The cash flow generated by the Indonesian SPCs, from owning and letting out spaces in the Retail Malls
and the Retail Spaces, will be received by the Singapore SPCS in the form of (1) dividend income; (2)
repayment of principal on the shareholders’ loans extended by the Singapore SPCs to the respective
Indonesian SPCs and (3) interest payment on the shareholders’ loans. The amount of principal repayment
on the shareholders’ loans will be mainly equivalent to the total amount of depreciation expense of the
Properties, thereby extracting such cash trapped in the Indonesian SPCs.
Thereafter, the cash flow will be received by LMIR Trust from the Target Singapore SPCs in the form of
(1) tax-exempt dividends; and (2) proceeds from redemption of the redeemable preference shares in the
Target Singapore SPCs.
The Manager’s distribution policy is to distribute 100.0% of the tax-exempt income (after deduction of
applicable expenses) and capital receipts of LMIR Trust for the Forecast Period 2007, Projection Year
2008 and Projection Year 2009 and at least 90.0% of the tax-exempt income (after deduction of applicable
expenses) and capital receipts of LMIR Trust thereafter. The tax-exempt income comprises dividends
received from the Target Singapore SPCs, which are ultimately paid out of income derived by the
Indonesian SPCs from the leasing of the Properties. The capital receipts comprise amounts received
by LMIR Trust from the redemption of redeemable preference shares in the Target Singapore SPCs.
The Manager believes that it is appropriate to distribute 100.0% of the tax-exempt income (after deduction
of applicable expenses) and capital receipts of LMIR Trust for the Forecast Period 2007, Projection Year
2008 and Projection Year 2009 given that in relation to the Retail Spaces, the Master Lessee under each of
the Master Lease Agreements is responsible for all repair and replacement works in relation to the
mechanical and electrical equipment which are of a capital nature for the first 30 months of the lease term.
In addition, asset enhancement works are currently being carried out at The Plaza Semanggi and have
recently been completed at Bandung Indah Plaza, Mal Lippo Cikarang and Ekalokasari Plaza, and the
Manager expects the capital expenditure required for each of these Retail Malls subsequent to the
carrying out of asset enhancement works to be low for the period leading up to the end of Projection Year
2009.
The Manager’s distribution policy for the period subsequent to the Projection Year 2009 is intended to
provide for some flexibility in the retention of some of the tax-exempt income (after deduction of applicable
expenses) and capital receipts of LMIR Trust for the benefit of LMIR Trust.
The actual level of distribution will be determined at the Manager’s discretion. The actual proportion of taxexempt income and capital receipts to be distributed to Unitholders beyond Projection Year 2009 may be
greater than 90.0% if the Manager believes it to be appropriate, having regard to LMIR Trust’s funding
requirements, other capital management considerations and ensuring the overall stability of distributions.
Distributable Income is generally calculated as follows:
Indonesian SPCs level:
Consolidated net profit from operations is calculated by:
a)
Adding all NPI of the Indonesian SPCs to arrive at consolidated NPI;
b)
Deducting general and administrative expenses (non property-related) and all relevant domestic
taxes (if any), including but not limited to final income tax on rental income received and Indonesian
withholding tax on offshore interest and dividend payable at the Indonesian SPCs level; and
c)
Adding or deducting (as the case may be) the difference (if any) between the amount of rent due for
the relevant period and the amount recorded as rental revenue arising from amortisation of rent free
periods.
91
Distributions
Singapore SPCs level and LMIR Trust level:
Distributable Income is derived from consolidated net profit from operations by making the following
adjustments:
a)
Deducting fees payable to the Manager, general and administrative expenses, other trust expenses,
hedging costs and expenses and taxes (if any), at the Singapore SPCs and LMIR Trust level;
b)
Adding any income from external parties received by the Singapore SPCs and LMIR Trust (for
example, interest income on placement of cash balances with banks);
c)
Deducting unrealised income, gains from the disposal of shares and properties and adding back
unrealised expenses (unrealised income and expenses include unrealised exchange differences
and accretion and fair value adjustments relating to financial instruments and real properties);
d)
Adding back trust expenses (for example, the portion of the Manager’s management fees) paid in
units (as these are non-cash items); and
e)
Adding back non-recurring expenses (as deemed appropriate by the Manager).
After LMIR Trust has been admitted to the Main Board of the SGX-ST, LMIR Trust will make distributions to
Unitholders on a quarterly basis, with the amount calculated as at 31 March, 30 June, 30 September and
31 December each year for the three-month period ending on each of the said dates. However, LMIR
Trust’s first distribution after the Listing Date will be for the period from the Listing Date to 31 March 2008
and will be paid by the Manager on or before 30 May 2008. Subsequent distributions will take place on a
quarterly basis.
In the event that there are gains arising from sales of real properties either directly or indirectly through the
sales of the shares in the Indonesian SPCs or the Singapore SPCs, and only if such gains are surplus to
the business requirements and needs of LMIR Trust and its taxability or otherwise confirmed by the IRAS
in the event that the gains arise from the sale of shares in the Singapore SPCs or from the sale of shares in
the Indonesian SPCs by the Singapore SPCs, the Manager may, at its discretion, direct the Trustee to
distribute such gains. Such gains, if not distributed, will form part of the Deposited Property.
LMIR Trust’s primary source of liquidity to fund distributions, payment of non-property expenses and other
recurring capital expenditure will be from the receipts of Gross Revenue and any future borrowings.
Under the Property Funds Guidelines, if the Manager declares a distribution that is in excess of profits, the
Manager should certify, in consultation with the Trustee, that it is satisfied on reasonable grounds that,
immediately after making the distribution, LMIR Trust will be able to fulfil, from the Deposited Property, the
liabilities of LMIR Trust as they fall due. The certification by the Manager should include a description of the
distribution policy and the measures and assumptions for deriving the amount available to be distributed
from the deposited property of the property fund. The certification should be made at the time the
distribution is declared.
92
Exchange rates and exchange controls
Bank Indonesia is the sole issuer of Indonesian Rupiah and is responsible for maintaining the stability of
the Indonesian Rupiah. Since 1970, Indonesia has implemented three exchange rate systems:
(i)
a fixed rate between 1970 and 1978;
(ii)
a managed floating exchange rate system between 1978 and 1997; and
(iii)
a free floating exchange rate system since 14 August 1997.
Under the second system, Bank Indonesia maintained stability of the Indonesian Rupiah through a trading
band policy, pursuant to which Bank Indonesia would enter the foreign currency market and buy or sell
Indonesian Rupiah, as required, when trading in the Indonesian Rupiah exceeded bid and offer prices
announced by Bank Indonesia on a daily basis. On 14 August 1997, Bank Indonesia terminated the trading
band policy and permitted the exchange rate for the Indonesian Rupiah to float without an announced level
at which it would intervene, which resulted in a substantial decrease in the value of the Indonesian Rupiah
relative to certain foreign currencies, including the US dollar and the Singapore dollar. Under the current
system, the exchange rate of the Rupiah is determined solely by the market, reflecting the interaction of
supply and demand in the market. Bank Indonesia may take measures, however, to maintain a stable
exchange rate.
The following table sets out the average, high and low exchange rates between Indonesian Rupiah and
Singapore dollars (in Indonesian Rupiah per Singapore dollar) for the periods indicated. No representation
is made that the Indonesian Rupiah amounts actually represent such Singapore dollar amounts or could
have been or could be converted into Singapore dollars at the rate indicated, at any other rate, or at all.
Indonesian Rupiah per S$1.00
Period
2001 . . . . . . . . . .
2002 . . . . . . . . . .
2003 . . . . . . . . . .
2004 . . . . . . . . . .
2005 . . . . . . . . . .
2006 . . . . . . . . . .
January 2007 . . . .
February 2007 . . .
March 2007 . . . . .
April 2007 . . . . . .
May 2007 . . . . . . .
June 2007 . . . . . .
July 2007 . . . . . . .
August 2007. . . . .
September 2007. .
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Average(1)
High(2)
Low(2)
Rp.
Rp.
Rp.
5,709.0
5,502.6
4,919.9
5,219.3
5,832.9
5,769.5
5,902.4
5,913.5
6,013.7
6,001.8
5,800.3
5,839.6
5,983.9
6,148.9
6,155.4
6,617.0
5,694.8
5,157.6
5,706.7
6,406.6
5,953.6
5,930.1
5,976.3
6,046.6
6,021.7
5,967.5
5,877.8
6,007.0
6,175.8
6,230.1
4,797.8
4,824.5
4,651.4
4,902.6
5,529.8
5,541.9
5,847.9
5,869.4
5,989.2
5,977.6
5,655.6
5,803.7
5,956.4
6,117.0
6,081.5
Notes:
The rates are the foreign exchange rates as quoted on Bloomberg. Bloomberg has not provided its
consent, for the purposes of section 249 (read with section 302) of the SFA, to the inclusion of the
information on the exchange rates from Bloomberg and is therefore not liable for such information
under sections 253 and 254 (read with section 302) of the SFA. While the Manager has taken
reasonable action to ensure that the information has been reproduced in its proper form and context,
and that it has been extracted accurately and fairly, neither the Manager nor any other party has
conducted an independent review of, nor verified the accuracy of, such information.
(footnotes continued on following page)
93
Exchange rates and exchange controls
(1) For full years, the average shown is calculated based on the middle exchange rate by Bloomberg on
the last day of each month during the year indicated. For monthly averages from January 2007 to
September 2007, the average shown is calculated based on the daily middle exchange rates during
the month indicated.
(2) For full years, the high and low amounts are determined based on the month-end middle exchange
rate by Bloomberg during the year indicated. The high and low figures for 1 January 2007 to
30 September 2007 are determined based on the daily middle exchange rates during the month
indicated.
Source: Bloomberg
Currently, no exchange control restrictions exist in Indonesia. The Indonesian Rupiah has been, and in
general is, freely convertible. Bank Indonesia has introduced regulations to restrict the movement of
Indonesian Rupiah from banks within Indonesia to banks domiciled outside Indonesia or to an offshore
branch or office of an Indonesian bank, or any investment in Rupiah denomination with foreign parties and/
or Indonesian citizens domiciled or permanently residing outside Indonesia without underlying trade or
investment reasons, thereby limiting offshore trading to existing sources of liquidity. In addition, Bank
Indonesia has the authority to request information and data concerning the foreign exchange activities of
all people and legal entities that are domiciled, or who plan to reside, in Indonesia for at least one year.
Bank Indonesia regulations also require resident banks and companies that have total assets or total
annual gross revenues of at least Rp. 100 billion to report to Bank Indonesia all data concerning their
foreign currency activities, if the transaction is not conducted via a domestic bank or domestic non-bank
financial institution (for example, insurance companies, securities companies, finance companies, or
venture capital companies). However, if the transaction is conducted via a domestic bank and/or domestic
non-bank financial institution, the requirement to report to Bank Indonesia is imposed on the relevant
Indonesian banks or non-bank financial institutions that carried out the transaction. The transactions that
must be reported include receipt and payment of foreign currency through bank accounts outside of
Indonesia.
94
Capitalisation
The following table sets forth the pro forma capitalisation of LMIR Trust as at the Listing Date and after
application of the total proceeds from the Offering and the issuance of Cornerstone Units, based on the
Offering Price. The information in the table below should be read in conjunction with “Use of Proceeds” and
“Strategy—Capital and Risk Management Strategy”.
Based on the
Offering Price
(S$’000)
pro forma
Net assets attributable to Unitholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
963,316
Total capitalisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
963,316
95
Unaudited pro forma consolidated balance sheet as at the
Listing Date
The Manager is unable to prepare historical pro forma financial statements of LMIR Trust for the following
reasons:
• Gajah Mada Plaza and Mal Lippo Cikarang were recently acquired by the respective Retail Mall
Indonesian SPCs, namely, PT Graha Baru Raya and PT Graha Nusa Raya, in early March 2006.
Historical financial information for these two Retail Malls prior to their acquisition dates is not available
from the previous vendors and, there is no comparable historical financial information for the full years
ended 31 December 2004 and 31 December 2005;
• Bandung Indah Plaza, Ekalokasari Plaza and Mal Lippo Cikarang have recently undergone major
refurbishments and other repositioning initiatives. Given the repositioning initiatives, the Manager is of
the view that any attempt to present the historical pro forma financial performance based on the actual
results of these three Retail Malls prior to their repositioning initiatives may not be comparable to the
expected results of these Retail Malls after the repositioning initiatives;
• Cibubur Junction commenced its retail space leasing operations in September 2005. Given that there
were no activities for Cibubur Junction prior to September 2005, the historical financial information on
Cibubur Junction’s performance would not be available for the full financial years ended 31 December
2004 and 31 December 2005. Accordingly, any historical pro forma financial information presented in
respect of Cibubur Junction’s short period of operations is unlikely to be meaningful or accurately reflect
its financial performance;
• Each of the Retail Spaces was wholly-owned by Matahari up to the Listing Date and was held for the use
of Matahari’s retail businesses. As the activities relating to the Retail Spaces form an intrinsic part of
Matahari’s core business operations, Matahari does not keep separate financial records on these Retail
Spaces. Accordingly, historical financial data is unavailable for each Retail Space; and
• If historical pro forma financial information is prepared based on the terms of the Master Lease
Agreements to be entered into between the Master Lessee and the relevant Retail Space Indonesian
SPC, such information will be in the nature of a forecast and will not reflect the historical financial results
and position of LMIR Trust with respect to the Retail Spaces. Assumptions and bases which are
prospective in nature would need to be made if LMIR Trust is to assume that such arrangements were in
place throughout the period covered by the historical pro forma financial information. As such, the
Manager believes that such historical pro forma financial information will be of little value to investors in
deciding whether to acquire the Units and a profit forecast and profit projection based on, among other
things, the terms of the Master Lease Agreements would be more meaningful to investors.
For the reasons stated above, the SGX-ST has granted LMIR Trust a waiver from the requirement to
prepare historical pro forma statements of total return, cash flow statements and balance sheets, subject
to the inclusion of the following financial information in this Prospectus:
• profit forecast for Forecast Period 2007 and profit projections for Projection Year 2008 and Projection
Year 2009;
• pro forma consolidated balance sheet of LMIR Trust as at the Listing Date; and
• disclosure of the reasons why the historical pro forma financial statements cannot be provided and the
waiver granted by the SGX-ST.
The Unaudited Pro Forma Consolidated Balance Sheet as at the Listing Date has been prepared on
the bases set out in Section C of “Appendix B—Independent Accountants’ Report on the
Unaudited Pro Forma Consolidated Balance Sheet as at the Listing Date”. The Unaudited Pro
Forma Consolidated Balance Sheet should be read together with these bases.
The objective of the Unaudited Pro Forma Consolidated Balance Sheet as at the Listing Date is to show,
for illustrative purposes, what the financial position of LMIR Trust might be at the Listing Date, prepared on
the bases set out in Section C of “Appendix B—Independent Accountants’ Report on the Unaudited Pro
Forma Consolidated Balance Sheet as at the Listing Date”. The Unaudited Pro Forma Consolidated
96
Unaudited pro forma consolidated balance sheet as at the listing date
Balance Sheet as at the Listing Date, because of its nature, is not necessarily indicative of LMIR Trust’s
actual financial position on the Listing Date.
For the purpose of the consolidation, the balance sheets of the Retail Mall and Retail Space Indonesian
and Singapore SPCs have been translated into Singapore dollars based on the exchange rate of
Rp. 5,900 = S$1.00.
Unaudited
pro forma
consolidated
balance sheet
as at the
Listing Date
(S$’000)
ASSETS
Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86,921
13,583
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100,504
Non-current assets
Investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,004,679
Total non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,004,679
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,105,183
LIABILITIES
Current liabilities
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current tax payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,787
4,463
148
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,398
Non-current liabilities
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
62,366
66,849
5,213
1,041
Total non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135,469
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unitholders’ funds
Net assets attributable to Unitholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
141,867
Total Unitholders’ funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities and Unitholders’ funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
963,316
1,105,183
Number of Units in issue (’000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NAV per unit (S$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,060,414
0.91
963,316
97
Profit forecast and profit projection
Statements contained in the Profit Forecast and Profit Projection section that are not historical facts may
be forward-looking statements. Such statements are based on the assumptions set out on pages 100 to
108 of this Prospectus and are subject to certain risks and uncertainties which could cause actual results
to differ materially from those forecast and projected. Under no circumstances should the inclusion of such
information herein be regarded as a representation, warranty or prediction with respect to the accuracy of
the underlying assumptions by LMIR Trust, the Manager, the Underwriters, the Sponsor, the Property
Manager, the Trustee or any other person, nor that these results will be achieved or are likely to be
achieved. See “Forward-Looking Statements” and “Risk Factors”. Investors in the Units are cautioned not
to place undue reliance on these forward-looking statements which are valid only as at the date of this
Prospectus.
None of LMIR Trust, the Manager, the Financial Adviser, the Underwriters, the Sponsor, the
Property Manager, the Trustee and the Unit Lender guarantees the performance of LMIR Trust,
the repayment of capital or the payment of any distributions, or any particular return on the Units.
The forecast and projected yields stated in the following table are calculated based on (i) the
Offering Price and (ii) the assumption that the Listing Date is 1 July 2007. Such yields will vary
accordingly since the Listing Date will be after 1 July 2007 and in relation to investors who
purchase Units in the secondary market at a market price that differs from the Offering Price.
The following table below sets forth LMIR Trust’s forecast and projected consolidated statements of total
return for Forecast Period 2007, Projection Year 2008 and Projection Year 2009, respectively. The financial
year-end of LMIR Trust is 31 December. For the purpose of the profit forecast and profit projections, LMIR
Trust’s first accounting period is assumed to be for the period from 1 July 2007, being the date of its
establishment, to 31 December 2007. The profit forecast and profit projections will be different if the date of
establishment differs from 1 July 2007 or if the end of the first financial period differs from 31 December
2007. The profit forecast and profit projections should be read together with the report set out in
“Appendix A—Independent Accountants’ Report on the Profit Forecast and Profit Projection” as well
as the assumptions and the sensitivity analysis set out in this section of the Prospectus.
The following table sets forth LMIR Trust’s Forecast and Projected Consolidated Statement of Total Return
for Forecast Period 2007, Projection Year 2008 and the Projection Year 2009 prepared based on the
Offering Price.
Forecast and Projected Consolidated Statement of Total Return
Forecast Period
2007
(S$’000)
Projection Year
2008
(S$’000)
Projection Year
2009
(S$’000)
35,018
3,782
1,346
74,660
7,356
2,804
81,632
7,053
2,895
Total Gross Revenue. . . . . . . . . . . . . . . . . . . . . . . . .
Property Operating Expenses
Land rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property management fees . . . . . . . . . . . . . . . . . . . . .
Other property operating expenses . . . . . . . . . . . . . . .
40,146
84,820
91,580
(661)
(1,475)
(461)
(1,618)
(3,134)
(583)
(1,836)
(3,423)
(447)
Total Property Operating Expenses . . . . . . . . . . . . .
Net Property Income . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,597)
37,549
789
(201)
(5,335)
79,485
1,157
(365)
(5,706)
85,874
796
(339)
Gross Revenue
Gross Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carpark income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98
Profit forecast and profit projection
Forecast Period
2007
(S$’000)
Administrative expenses
Manager’s management fees. . . . . . . . . . . . . . . . . . . .
Trustee’s fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other trust operating expenses . . . . . . . . . . . . . . . . . .
Total administrative expenses . . . . . . . . . . . . . . .
Total return for the period before tax and
distribution and revaluation . . . . . . . . . . . . . . .
Surplus on the revaluation on investment properties
Total return for the period before tax and
distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Withholding tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
..
Projection Year
2008
(S$’000)
Projection Year
2009
(S$’000)
(2,883)
(191)
(607)
(5,942)
(332)
(830)
(6,198)
(332)
(848)
(3,681)
(7,104)
(7,378)
..
..
34,456
207,887
73,173
—
78,953
—
..
..
..
..
242,343
(4,173)
(2,893)
(62,366)
73,173
(8,714)
(5,940)
—
78,953
(9,317)
(6,520)
—
172,911
58,519
63,116
Forecast Period
2007
(S$’000)
Projection Year
2008
(S$’000)
Projection Year
2009
(S$’000)
172,911
58,519
63,116
1,503
3,180
3,435
Total return for the period after tax before
distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution to Unitholders
Total return for the period after tax before
distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Add back/(less) non-cash items:
—Management fees(1) . . . . . . . . . . . . . . . . . . . . . . . . .
—Surplus on revaluation of investment properties net
of deferred tax(2) . . . . . . . . . . . . . . . . . . . . . . . . . . .
—Reversal of FRS adjustment on rental deposit(3) . . . .
Total Unitholders’ distribution . . . . . . . . . . . . . . . . .
(145,521)
201
29,094
—
365
62,064
—
339
66,890
Unitholders’ distribution:
—as distributions from operations . . . . . . . . . . . . . . . .
—as return of capital(4) . . . . . . . . . . . . . . . . . . . . . . . .
Total Unitholders’ distribution . . . . . . . . . . . . . . . . .
23,035
6,059
29,094
48,044
14,020
62,064
55,487
11,403
66,890
Notes:
(1) This relates to the portion of the management fees which are payable in the form of Units.
(2) It is assumed that all of the Properties are purchased at a total consideration of approximately
S$796.8 million based on the Offering Price. The purchase consideration of the Properties is
determined by the difference between the purchase consideration of the Singapore SPCs (see
“Certain Agreements relating to LMIR Trust and the Properties—Description of the Singapore SPC
Share Purchase Agreements” for the formula of determining this purchase consideration) and the fair
value of all the net identifiable assets and liabilities of the Singapore SPCs acquired save for the
Properties. The surplus on revaluation of the investment properties relates to the revaluation of the
Properties to their fair value of S$1,004.7 million immediately upon their acquisition and the capital
expenditures expected to be incurred in the Forecast Period 2007. The fair value of S$1,004.7 million
is based on the value appraised by Knight Frank as at 30 June 2007. It is assumed that the fair value
of the Properties will only increase by the amount of capital expenditure expected to be incurred in the
Forecast Period 2007, the Projection Year 2008 and the Projection Year 2009 and that there is no
change in the exchange rate between the Singapore dollar and the Indonesian Rupiah as at the end
(footnotes continued on following page)
99
Profit forecast and profit projection
of Forecast Period 2007 and the Projection Year 2008 and the Projection Year 2009. Notwithstanding
whether the valuation of Knight Frank or Colliers is adopted, such adoption has no impact on the
distribution to Unitholders.
(3) This relates to notional interest expense which has no impact on the distribution to Unitholders.
(4) The return of capital comprises the amounts received by LMIR Trust from the redemption of its
investment in the redeemable preference shares in the Target Singapore SPCs (see
“—Assumptions—(IX) Distributable Income” and “Distributions”).
Forecast and projected distributions to Unitholders
Forecast Period 2007
Projection Year 2008
Projection Year 2009
Based on the
Offering
Price
Based on the
Offering
Price
Based on the
Offering
Price
Number of Units eligible for distribution (’000)(1) . . . . .
Distribution per Unit (cents) . . . . . . . . . . . . . . . . . . .
Offering Price per Unit (S$) . . . . . . . . . . . . . . . . . . .
1,060,414(2)
2.74
0.80
Distribution yield (%). . . . . . . . . . . . . . . . . . . . . . .
6.9(5)
1,062,291(3)
5.84
0.80
7.3
1,066,266(4)
6.27
0.80
7.8
Notes:
(1) The increase in the number of Units in Projection Year 2008 and Projection Year 2009 are due to the
issue of Units to the Manager for the payment of 100.0% of the Manager’s Performance Fees for
Forecast Period 2007 and Projection Year 2008 in the form of Units. These Units are assumed to be
issued at the Offering Price.
(2) Based on the number of Units that are assumed to be in issue as at the Listing Date. It is assumed that
the number of Units eligible for distribution is the same throughout Forecast Period 2007.
(3) Based on the number of Units that are assumed to be in issue on 1 January 2008. It is assumed that
the number of Units eligible for distribution is the same throughout Projection Year 2008.
(4) Based on the number of Units that are assumed to be in issue on 1 January 2009. It is assumed that
the number of Units eligible for distribution is the same throughout Projection Year 2009.
(5) Annualised for Forecast Period 2007.
ASSUMPTIONS
The Manager has prepared the profit forecast for Forecast Period 2007 and the profit projections for
Projection Year 2008 and Projection Year 2009 based on the assumptions listed below. The Manager
considers these assumptions to be appropriate and reasonable as at the date of this Prospectus. However,
recipients of this Prospectus and all prospective investors in the Units should consider these assumptions
as well as the profit forecast and profit projection and make their own assessment of the future
performance of LMIR Trust.
The major assumptions made in preparing the forecast and projected Consolidated Statement of Total
Return are set out below.
(I)
Gross Revenue
Gross revenue is the aggregate of Gross Rent, carpark income and other income earned primarily from
the Properties. A summary of the key assumptions used in calculating the Gross Revenue is set out below:
(a) Gross Rent
Gross Rent of Retail Malls comprises base rental income and service charges. Gross Rent of Retail
Spaces comprises base rental income. The percentage of forecast and projected Gross Rent attributable
to Committed Leases (including letters of offer which are to be followed up with tenancy agreements to be
100
Profit forecast and profit projection
signed by the parties) for the Properties as at 30 June 2007 (for Retail Malls1) and as at the Listing Date
(for Retail Spaces) are estimated as follows:
Gross Rent attributable to Committed Leases for
Retail Malls (as percentage of total Gross Rent). . . .
Gross Rent attributable to Committed Leases for
Retail Spaces (as percentage of total Gross Rent) . .
Gross Rent attributable to Committed Leases for the
Properties (as percentage of total Gross Rent). . . . .
Forecast Period
2007
(%)
Projection Year
2008
(%)
Projection Year
2009
(%)
72.4
62.7
50.0
18.9
18.2
16.8
91.3
80.9
66.8
Base rental income
Base rental income comprises rental income derived from the Retail Malls and Retail Spaces (net of
rebates) pursuant to tenant leases.
Retail Malls
In order to forecast and project base rental income, the Manager has used rents payable under Committed
Leases (including letters of offer which are to be followed up with tenancy agreements to be signed by the
parties). For Forecast Period 2007, the Projection Year 2008 and the Projection Year 2009, the Manager
has forecast and projected that the base rental income from the Retail Malls will be S$33.5 million,
S$71.3 million and S$77.8 million respectively. Approximately, S$25.3 million (75.6%), S$46.8 million
(65.7%) and S$40.8 million (52.4%) respectively of such forecast and projected base rental income is
attributable to Committed Leases (including letters of offer which are to be followed up with tenancy
agreements to be signed by the parties).
Following the expiry of a Committed Lease during Forecast Period 2007, Projection Year 2008 and
Projection Year 2009, the Manager has used the following process to forecast and project the base rental
income for the periods following such expiry:
• the Manager has assessed the market rent for the NLA of each of the Retail Malls as at 30 June 2007.
The market rent is the rent which the Manager believes could be achieved if each lease was
renegotiated as at 30 June 2007 and is estimated with reference to the rent payable pursuant to
comparable leases for tenancies that have recently been negotiated, the effect of competing retail
malls, assumed tenant retention rates on lease expiry, likely market conditions, inflation levels and
tenant demand levels.
• if a Committed Lease expires in Forecast Period 2007 or Projection Year 2008 and Projection Year 2009,
the Manager has assumed that the rental rate for a new lease (or a lease renewal) which commences in
Forecast Period 2007 or Projection Year 2008 and Projection Year 2009 is the actual rent contracted
immediately prior to the Committed Lease’s expiry adjusted by the forecast or projected growth rate in
accordance with the methodology set out in renewal rental rates discussed below or the actual rent (if
the lease agreement or letter of offer has been entered into).
Renewal leases and vacancy allowances
In respect of the leases that have been contracted as at 30 June 2007 and are expiring in Forecast Period
2007, Projection Year 2008 or Projection Year 2009 (other than the renegotiated Matahari leases), the
Manager has assumed that 80% of these leases will be renewed immediately for the same contractual
period and will not experience any vacancy period unless the actual vacancy periods are known. The
remaining 20% of these leases are assumed to experience a two month vacancy period before rent
becomes payable under a new lease. The assumed renewal rental rates are discussed below.
1
Certain tenancy lease agreements with Matahari and certain of its related entities were renegotiated
after 30 June 2007 and the revised terms, including the revised rents, will take effect from the Listing
Date. Such revised rents have formed the basis for the base rental income from these tenancies and
have been used to estimate the base rental income from these tenancies for Forecast Period 2007,
Projection Year 2008 and Projection Year 2009.
101
Profit forecast and profit projection
New leases
In order to forecast and project base rental income for new leases, the Manager has applied the market
rent taking into account market conditions, tenant demand levels, the expected occupancy rate,
comparable leases for tenancies that have been recently negotiated as well as referred to the market
research report of the Retail Malls.
In addition, Lippo Strategic has entered into a Rental Guarantee Deed with the relevant Retail Mall
Singapore SPCs pursuant to which Lippo Strategic will (i) provide a rental guarantee to the relevant Retail
Mall Singapore SPC in respect of existing and new units in the respective Retail Malls which are
untenanted and (ii) undertake to pay to the relevant Retail Mall Singapore SPC any shortfall in the
maintenance and operation costs which the relevant Operating Company has undertaken to bear under
the respective Operating Costs Agreement. The Rental Guarantee Deed covers the period commencing
from the Listing Date up to 31 December 2009. Pursuant to the Rental Guarantee Deeds, Lippo Strategic
is obliged to pay to the Retail Mall Singapore SPCs a specified sum in respect of each Retail Mall for every
year during the said period. The first of such payments will be paid on or before 31 January 2008, and
subsequent payments will be made on a quarterly basis thereafter. In the event any of the specified units in
the relevant Retail Mall becomes tenanted during such period, the amount of the specified sum payable by
Lippo Strategic in respect of such Retail Mall will be reduced by the amount of the rental payable under the
relevant tenancy, regardless of whether such rental is received by the owner of the relevant Retail Mall and
notwithstanding that such tenancy may be or is terminated prior to the expiry of such period.
(See “Certain Agreements Relating to LMIR Trust and the Properties—Description of the Rental
Guarantee Deeds”.)
Occupancy rates
Based on the assumptions and basis as discussed above, the assumptions on rental rates below and
management strategy (see “Strategy”), the forecast and projected occupancy rates as at 31 December
2007, 2008 and 2009 as compared against the actual occupancy rates as at 30 June 2007 for the Retail
Malls are set out below:
Gajah Mada Plaza . . . .
Cibubur Junction. . . . . .
The Plaza Semanggi . .
Mal Lippo Cikarang. . . .
Ekalokasari Plaza . . . . .
Bandung Indah Plaza . .
Istana Plaza . . . . . . . . .
Weighted Average . . .
Occupancy rate
as at 30 June 2007
(%)
Occupancy rate as
at 31 December 2007
(%)
Occupancy rate as
at 31 December 2008
(%)
Occupancy rate as
at 31 December 2009
(%)
89.1
86.4
96.4
96.3
87.3
83.2
98.9
91.6
94.7
93.5
97.0
96.8
78.5
87.2
99.1
93.2
95.9
98.6
97.8
98.5
91.4
91.9
99.4
96.5
99.3
99.6
98.5
98.4
99.6
99.5
99.2
99.1
Renewal rental rates
When leases in the Retail Malls are renewed in Forecast Period 2007, Projection Year 2008 and Projection
Year 2009, the Manager has assumed these leases will be renewed based on the actual rent contracted
immediately prior to the previous leases’ expiry increased by the rental growth rates below:
Gajah Mada Plaza . . . . . . . . . . . . . . . .
Cibubur Junction. . . . . . . . . . . . . . . . . .
The Plaza Semanggi . . . . . . . . . . . . . .
Mal Lippo Cikarang. . . . . . . . . . . . . . . .
Ekalokasari Plaza . . . . . . . . . . . . . . . . .
Bandung Indah Plaza . . . . . . . . . . . . . .
Istana Plaza . . . . . . . . . . . . . . . . . . . . .
102
.
.
.
.
.
.
.
Rental growth rate
Forecast Period 2007
(%)
Rental growth rate
Projection Year 2008
(%)
Rental growth rate
Projection Year 2009
(%)
12
12
10
12
15
12
15
12
12
10
12
15
12
15
12
12
10
12
15
12
15
Profit forecast and profit projection
Having assessed the likely market conditions and having taken into account the leases that have recently
been renewed, the demand for retail spaces, competing malls and market rent used in the market research
reports (see “Appendix F—Independent Report on the Indonesian Retail Property Market”), the Manager
believes the estimated rental growth rates are reflective of the likely market rent that can be obtained for
the respective Retail Malls if the leases are renewed. The revised rent is then calculated as follows:
“A” x [1+ (N x “Rental growth rate factor in the table above”)] = Revised rental rate
“A” being the rent immediately prior to the expiry of the tenancy lease agreement; and
“N” being the lease period (years) prior to the expiry of the existing lease.
Based on the formula above, the average specialty rent per sq m for Forecast Period 2007, Projection Year
2008 and Projection Year 2009 are as follows:
Gajah Mada Plaza . . . . . . . . . . . . . . . . . . . .
Cibubur Junction . . . . . . . . . . . . . . . . . . . . . .
The Plaza Semanggi. . . . . . . . . . . . . . . . . . .
Mal Lippo Cikarang . . . . . . . . . . . . . . . . . . . .
Ekalokasari Plaza . . . . . . . . . . . . . . . . . . . . .
Bandung Indah Plaza . . . . . . . . . . . . . . . . . .
Istana Plaza . . . . . . . . . . . . . . . . . . . . . . . . .
Forecast Period
2007
(Rp. ’000 per sq m)
Projection Year
2008
(Rp. ’000 per sq m)
Projection Year
2009
(Rp. ’000 per sq m)
156
216
124
172
163
281
211
187
224
129
198
217
291
222
247
236
152
226
296
311
233
Service charges
Service charges paid by tenants are applied towards the operating expenses of the Properties which
comprises (i) maintenance expenses (ii) utility expenses (iii) property tax (iv) insurance and (v) other
expenses relating to the operation of LMIR Trust’s malls.
For the Forecast Period 2007, Projection Year 2008 and 2009, service charges and the above mentioned
operating costs are accrued to the Operating Company pursuant to each Operating Costs Agreement to
be entered between the relevant Retail Mall Indonesian SPC and Lippo Strategic. The Operating Costs
Agreement will lapse on 31 December 2009 and thereafter, all service charges and operating costs related
to the maintenance and operation of the Retail Malls will accrue to LMIR Trust (see “Certain Agreements
Relating to LMIR Trust and the Properties—Description of the Operating Costs Agreements”).
Retail Spaces
Each of the Retail Spaces will be fully leased to Matahari under Master Lease Agreements for an initial
term of 10 years, with an option to renew for another 10 years (see “Certain Agreements relating to LMIR
Trust and the Properties—Description of the Master Lease Agreements”). The Master Lessee will pay a
fixed rent for Forecast Period 2007. The fixed rent for the respective Retail Spaces for Forecast Period
2007 is as follows:
Retail Spaces
Mall WTC Matahari Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Metropolis Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depok Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Java Supermall Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Malang Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plaza Madiun. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grand Palladium Medan Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed rent
(S$’000)
.
.
.
.
.
.
.
860
1,173
878
852
851
1,098
903
Total base rental income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,615
The Master Lease Agreements contain provisions for increase in rental revenues through step-ups in the
base rent of 8.0% per annum for the first four years and thereafter, in accordance with a formula that takes
103
Profit forecast and profit projection
into account the increase in the Master Lessee’s net revenue. (See “Certain Agreements Relating to LMIR
Trust and the Properties—Description of the Operating Costs Agreements”).
Discounts from market rates are generally given to tenants which occupy a large amount of lettable space.
The extent of such discounts depends on, but is not limited to, factors such as the amount of lettable space
occupied by the tenant, the relevant landlord’s analysis of the importance of the tenant in increasing
shopper traffic, especially if the tenant is an anchor tenant, and the landlord’s overall marketing strategy
and positioning.
The valuation for the seven Retail Spaces by Knight Frank has been carried out using a discounted
cashflow analysis over a ten-year horizon from 30 June 2007 to 30 June 2017 based on the terms and
conditions as stipulated in the Master Lease Agreements (see “Appendix E—Independent Property
Valuation Summary Reports”).
The Directors of the Manager are of the view that the rental terms for the period from FY 2008 to FY 2011
are on normal commercial terms and are not prejudicial to the interests of LMIR Trust and its minority
Unitholders.
(b)
Carpark income
Carpark income includes revenue earned from the operations of the carparks located at the Retail Malls.
The carpark will be operated by third party carpark operators who in turn pay a fixed rent to LMIR Trust.
Total carpark income as a percentage of the total Gross Revenue is estimated to be 9.4% for Forecast
Period 2007, and 8.7% and 7.7% for Projection Year 2008 and Projection Year 2009, respectively.
(c)
Other income
Other income includes revenue earned from renting out signage, billboards, etc located at the Retail Malls.
The assessment of other income is based on existing agreements, historical income collections and the
Manager’s assessment of the Retail Malls.
Total other income as a percentage of the total Gross Revenue is estimated to be 3.4%, 3.3% and 3.2% for
Forecast Period 2007, Projection Year 2008 and Projection Year 2009, respectively.
(II)
Property Operating Expenses
Property operating expenses consist of (a) land rental, (b) property management fees and (c) other
property operating expenses.
(a) Land rental
Land rental is required to be paid for three of the seven Retail Malls, namely Bandung Indah Plaza, Cibubur
Junction and The Plaza Semanggi. The forecast and projected land rentals are based on the BOT
Agreement.
For the Retail Spaces, no land rentals are payable.
(b)
Property management fee
The property management fee for the Retail Malls is based on 2.0% per annum of the gross revenue for
the relevant Retail Mall, plus a fee of 2.0% per annum of the net property income (calculated after
accounting for the fee of 2.0% per annum of gross revenue for the relevant Retail Mall), and a fee of 0.5%
per annum of the net property income in lieu of leasing commissions otherwise payable to the Property
Manager and/or third party agents for each Retail Mall.
For Retail Spaces, no property management fee is payable.
(c)
Other property operating expenses
The other property operating expenses comprise mainly fees for corporate secretariat services, annual
tax returns filing services, and accounting and auditing services. The Manager has assumed no growth in
the annual operating expenses for Forecast Period 2007, Projection Year 2008 and Projection Year 2009.
104
Profit forecast and profit projection
(III)
Depreciation
Depreciation expenses at the Indonesian SPCs consist of depreciation of property, plant, equipment,
including capitalised acquisition related expenses. Properties are depreciated on a straight-line basis over
useful life.
(IV)
Interest income
Financial income comprises mainly interest income earned from interest bearing bank balances. The
Manager has calculated the interest earned based on the estimated monthly net cash inflow and has
assumed such cash to earn interest at an interest rate of 2.0% per annum calculated on a monthly basis.
The Manager has assumed that the interest income earned will be subjected to Indonesian withholding tax
of 20.0% and that the cash will be kept in Rupiah and Singapore dollars.
(V) Financial Expenses
LMIR Trust will not incur any borrowings at Listing Date. Financial expenses comprise the notional interest
expense in relation to the FRS adjustment on rental deposit.
(VI)
Administrative Expenses
(a) Manager’s management fees
Under the Trust Deed, the Manager’s Base Fee is 0.25% per annum of the value of the Deposited Property
and a Performance Fee of 4.0% per annum of the NPI of LMIR Trust for each financial year. Both
components are payable quarterly in arrears pursuant to the Trust Deed. (See “The Manager and
Corporate Governance—Management Fees”.)
The Manager may elect to receive the management fees in cash or units or a combination of cash and
units (as it may in its sole discretion decide). For Forecast Period 2007, Projection Year 2008 and
Projection Year 2009, the Manager has assumed that 100.0% of the Performance Fee will be paid in the
form of Units and will be issued at the Offering Price.
(b)
Trustee’s fee
Under the Trust Deed, the Trustee’s fee is up to 0.03% per annum of the value of the Deposited Property,
subject to a minimum amount of S$15,000 per month, and is accrued daily and paid monthly. It is
calculated based on the forecast and projected Deposited Property at the end of each month in
accordance with the Trust Deed. In addition, a one-time inception fee of S$25,000 is payable.
(c)
Other expenses
Other expenses include recurring operating expenses such as annual listing fees, valuation fees, legal
fees, registry and depository charges, accounting, audit and tax adviser’s fees, postage, printing and
stationery costs, costs associated with the preparation of annual reports, investor communications costs
and other miscellaneous expenses. The Manager has assumed no growth in the annual operating
expenses for Forecast Period 2007, Projection Year 2008 and Projection Year 2009.
(VII)
Repayment of Shareholder’s Loan
Based on Indonesian accounting standards, depreciation of real estate is a mandatory expense of the
Indonesian SPCs when determining the net profits from operations of an Indonesian SPC that would be
available for payment as dividends. This effectively traps cash in the Indonesian SPCs as depreciation is
not a cash expense.
However, the Properties are treated as real properties carried at valuation under FRS and hence are not
depreciated. Accordingly, such depreciation of real properties is not treated as an expense item when
computing Distributable Income of LMIR Trust. To distribute this portion, there is a need to extract the cash
that is trapped in the Indonesian SPCs mainly in the form of depreciation expense. Hence a principal
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Profit forecast and profit projection
repayment of the shareholder’s loans by the Indonesian SPCs is made every quarter and this repayment
sum is equal to the lower of:
• Depreciation expense for the period; and
• Profit after taxes and before depreciation.
(VIII) Interest on Shareholder’s Loan
The Manager has assumed that the interest rates on the shareholder’s loans extended by Singapore
SPCs to the Indonesian SPCs will be 14.0% per year. It is assumed the Indonesian SPCs will withhold
10.0% tax on the interest expense and the interest earned by the Singapore SPCs will not be subject to tax.
(IX) Distributable Income
Distributable Income comprises:
(a) Distribution from operations
Distribution from operations includes dividend income, after deduction of applicable expenses, received
from the Target Singapore SPCs. The income of the Target Singapore SPCs is derived mainly from
interest income earned and dividends from the Indonesian SPCs. The Manager has assumed that LMIR
Trust will receive the dividend income from the Target Singapore SPCs in the same distribution period to
which the underlying Indonesian profits out of which the dividends are paid relate.
(b)
Return on capital
Return on capital comprises the amounts received by LMIR Trust from the redemption of its investment in
the redeemable preference shares in the Target Singapore SPCs.
100.0% of the tax-exempt income (after deduction of applicable expenses) and capital receipts will be
distributed to Unitholders for Forecast Period 2007, Projection Year 2008 and Projection Year 2009, either
in the form of distribution from operations or return on capital. Thereafter, the Manager will distribute at
least 90.0% of Distributable Income.
(X) Capital Expenditure
An allowance for expected capital expenditure on the Retail Malls has been included in Forecast Period
2007, Projection Year 2008 and Projection Year 2009 and it is assumed that the capital expenditure will be
funded from internal cash flows. Capital expenditure incurred are capitalised as part of the Deposited
Property and has no impact on distribution other than the Manager’s Base Fee and Trustee’s fee. The
Manager has assumed that the following capital expenditure will be incurred:
Capital Expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forecast Period
2007
(S$’000)
Projection Year
2008
(S$’000)
Projection Year
2009
(S$’000)
456
987
814
The Manager has assumed that no capital expenditure will be incurred for the Retail Spaces for Forecast
Period 2007, Projection Year 2008 and Projection Year 2009 (see “Certain Agreements Relating to LMIR
Trust and the Properties—Description of the Master Lease Agreements”).
(XI) Investment Properties
The Manager has assumed that the value of the Properties will only increase by the amount of forecast
and projected capital expenditure described in “—Capital Expenditure” above for the Forecast Period
2007, the Projection Year 2008 and the Projection Year 2009.
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Profit forecast and profit projection
(XII)
Taxes
The Manager has assumed no significant changes in the taxation regulations in Singapore and Indonesia
and others that will have material impact to the Distributable Income in Forecast Period 2007, Projection
Year 2008 and Projection Year 2009 (see “Taxation”).
(XIII) Accounting Standards and Policies
The Manager has assumed that there will be no change in applicable accounting standards or other
financial reporting requirements that may have a material effect on the total return for Forecast Period
2007, Projection Year 2008 and Projection Year 2009.
Significant accounting policies adopted by the Manager in the preparation of Forecast Period 2007,
Projection Year 2008 and the Projection Year 2009 are set out in “Appendix B—Independent Accountants’
Report on the Unaudited Pro Forma Consolidated Balance Sheet as at the Listing Date”.
(XIV)
Forward Exchange Rates
The Trustee, as trustee of LMIR Trust, has entered into a currency hedging arrangement, effective as of
the Listing Date, to hedge the movements in exchange rates (whether favourable or unfavorable) for a
period of five years from the Listing Date for the notional amount of the expected Indonesian Rupiah cash
flow arising from:
(i)
dividends received or receivable from the Singapore SPCs. The income of the Singapore SPCs is
derived mainly from interest income earned and dividends from the Indonesian SPCs; and
(ii) capital receipts from the redemption of redeemable preference shares in the Target Singapore SPCs.
The redemption of the shares is in turn funded from the repayments of the Indonesian Rupiah
shareholders’ loans.
An affiliate of the Sponsor has guaranteed, on a non-recourse basis to LMIR Trust, all of LMIR Trust’s
liabilities and obligations under such hedging arrangement until the Listing Date. The notional amount of
the expected Indonesian Rupiah cash flow will be hedged at the following forward exchange rates between
Singapore Dollars and Indonesian Rupiah until the end of Projection Year 2009:
Period for which Indonesian Rupiah
cash flow is hedged
Payment Date
Listing Date to
1 January 2008 to 31 March 2008
1 April 2008 to 30 June 2008
1 July 2008 to 30 September 2008
1 October 2008 to 31 December 2008
1 January 2009 to 31 March 2009
1 April 2009 to 30 June 2009
1 July 2009 to 30 September 2009
1 October 2009 to 31 December 2009
15
15
15
15
15
15
15
15
May 2008
August 2008
November 2008
February 2009
May 2009
August 2009
November 2009
February 2010
Forward
exchange rate
(Indonesian Rupiah
per S$1.00)
6,417
6,534
6,647
6,750
6,846
6,948
7,055
7,169
The Manager has assumed that the currency hedging arrangements do not meet the hedge accounting
requirements as stipulated in FRS 39—Financial Instruments: Recognition and Measurement.
Consequently, any gain or loss from fair value measurement of the hedging instrument shall be
recognised in the Consolidated Statement of Total Return.
(XV) Other Assumptions
The following additional assumptions have been made in preparing the Profit Forecast and Profit
Projection:
• There will be no material changes in applicable legislation.
• The tax exemption and tax ruling remain valid.
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Profit forecast and profit projection
• All leases and licences are enforceable and will be performed in accordance with their terms.
• The property portfolio remains unchanged throughout Forecast Period 2007, Projection Year 2008 and
Projection Year 2009.
• 100.0% of the Distributable Income will be distributed over Forecast Period 2007, Projection Year 2008
and Projection Year 2009; and at least 90% of the Distributable Income will be distributed thereafter.
• There will be no changes in the fair value of all financial instruments throughout Forecast Period 2007,
Projection Year 2008 and Projection Year 2009.
• There will be no further capital raised during Forecast Period 2007, Projection Year 2008 and Projection
Year 2009.
• Operating Companies will perform their duties and fulfil their obligations as required.
(See “Certain Agreements Relating to LMIR Trust and the Properties—Description of the Operating
Costs Agreements” and “Certain Agreements Relating to LMIR Trust and the Properties—Description
of the Rental Guarantee Deeds”.)
SENSITIVITY ANALYSIS
The forecast and projected distributions included in this Prospectus are based on a number of
assumptions that have been outlined above. The forecast and projected distributions are also subject
to a number of risks as outlined in “Risk Factors”.
All prospective investors in the Units should be aware that future events cannot be predicted with any
certainty and deviation from the figures forecast or projected in this Prospectus are to be expected. To
assist investors in assessing the impact of these assumptions on the Profit Forecast and Profit Projection,
a series of tables demonstrating the sensitivity of the distribution per Unit to changes in the key
assumptions are set out below.
The sensitivity analysis is intended to provide a guide only and variations and actual performance could
exceed the ranges as shown. Movements in other variables may offset or compound the effect of a change
in any variable beyond the extent shown.
Rental growth rate
Changes in rental growth rate impact the Gross Rent of each Indonesian SPC. The base case rental
growth rate of each Property is set out earlier in this section. The impact of variations in the yield is set out
below.
Yield
Rental growth rate
5% lower. . . . . . . . . . . . . . . . . . . . . . . . .
Base Case . . . . . . . . . . . . . . . . . . . . . .
5% higher . . . . . . . . . . . . . . . . . . . . . . . .
108
Forecast Period 2007
Projection Year 2008
Projection Year 2009
Based on
Offering
Price
Based on
Offering
Price
Based on
Offering
Price
(%)
(%)
(%)
6.85
6.85
6.85
7.29
7.30
7.30
7.81
7.84
7.85
Profit forecast and profit projection
Vacancy allowance
Changes in vacancy allowance impact the Gross Rent of each Indonesian SPC. The base case vacancy
allowance of each Property is set out earlier in this section. The impact of variations in the yield is set out
below.
Yield
Vacancy allowance
1 month . . . . . . . . . . . . . . . . . . . . . . . . .
Base Case . . . . . . . . . . . . . . . . . . . . . .
3 months . . . . . . . . . . . . . . . . . . . . . . . .
Forecast Period 2007
Projection Year 2008
Projection Year 2009
Based on
Offering
Price
Based on
Offering
Price
Based on
Offering
Price
(%)
(%)
(%)
6.85
6.85
6.85
7.30
7.30
7.30
7.85
7.84
7.83
Operating Cost Subsidy
Pursuant to each of the Operating Costs Agreements to be entered into between the relevant Retail Mall
Indonesian SPC and Operating Company, the relevant Operating Company will agree to unconditionally
bear, for a period of three years commencing from 1 January 2007, all costs directly related to the
maintenance and operation of the relevant Retail Mall.
Assuming that there is no subsidy from the Operating Company to each Indonesian SPC, the impact of
variations in the yield is set out below.
Yield
Subsidy
No subsidy . . . . . . . . . . . . . . . . . . . . . . .
Base Case . . . . . . . . . . . . . . . . . . . . . .
Forecast Period 2007
Projection Year 2008
Projection Year 2009
Based on
Offering
Price
Based on
Offering
Price
Based on
Offering
Price
(%)
(%)
(%)
6.70
6.85
7.20
7.30
7.91
7.84
Rental guarantee
Under the Rental Guarantee Deeds, Lippo Strategic will provide rental guarantees to the relevant Retail
Mall Singapore SPCs in respect of existing and new units in the respective Retail Malls which are
untenanted. (See “Certain Agreements Relating to LMIR Trust and the Properties—Description of Rental
Guarantee Deeds”.)
The Rental Guarantee Deeds cover the period commencing from the Listing Date up to 31 December
2009. Pursuant to the Rental Guarantee Deeds, Lippo Strategic is obliged to pay to the Retail Mall
Singapore SPCs a specified sum in respect of each Retail Mall for every year during the said period. The
first of such payments will be paid on or before 31 January 2008, and subsequent payments will be made
on a quarterly basis thereafter. In the event any of the specified units in the relevant Retail Mall becomes
tenanted during such period, the amount of the specified sum payable by Lippo Strategic in respect of such
Retail Mall will be reduced by the amount of the rental payable under the relevant tenancy, regardless of
whether such rental is received by the owner of the relevant Retail Mall and notwithstanding that such
tenancy may be or is terminated prior to the expiry of such period.
Assuming that there is no rental guarantee from Lippo Strategic to the relevant Retail Mall Singapore
SPCs, the impact of variations in the yield is set out below.
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Profit forecast and profit projection
Yield
Rental guarantee
No rental guarantee . . . . . . . . . . . . . . . .
Base Case . . . . . . . . . . . . . . . . . . . . . .
Forecast Period 2007
Projection Year 2008
Projection Year 2009
Based on
Offering
Price
Based on
Offering
Price
Based on
Offering
Price
(%)
(%)
(%)
6.48
6.85
6.55
7.30
6.89
7.84
Capital expenditure on the Retail Spaces
Under each of the Master Lease Agreements, the Master Lessee shall be responsible for the maintenance
of the Retail Space in question and all fixtures, fittings and installations therein, including keeping the same
clean and in good and tenantable condition, undertaking works to make good any damage, maintaining the
mechanical and electrical equipment in accordance with the relevant manufacturers’ guidelines and
maintenance of its own plant and machinery which are required for the operation of its business. The
Master Lessee shall also be responsible for the land and building tax (including any increases) in respect
of the Retail Spaces.
The Master Lessee must comply, at its cost and expense, with all laws and regulations and all
requirements of the relevant authorities in force at the moment relating to the Retail Spaces.
During the first 30 months of the lease term, the Master Lessee shall at its own cost and expense carry out
all repair and replacement works in respect of the mechanical and electrical equipment, whether or not
such works are of a capital nature. After the first 30 months of the lease term, the relevant landlords will be
responsible for repair and replacement works in relation to the mechanical and electrical equipment which
are of a capital nature. Where any replacement works (after the first 30 months of the lease term) is
reasonably required by the Master Lessee in connection with any changes to the layout of the Retail
Spaces, the cost of such replacement works shall be deducted from the rent payable by the Master Lessee
to the relevant landlord for the rest of the lease term.
The Manager has assumed that no capital expenditure will be incurred for the Retail Spaces for Forecast
Period 2007 and Projection Year 2008 and Projection Year 2009 (see “Certain Agreements Relating to
LMIR Trust and the Properties—Description of the Master Lease Agreements”).
Assuming that there is capital expenditure on the Retail Spaces, the impact of variations in the yield is set
out below.
Yield
Capital expenditure
Borne by LMIR Trust. . . . . . . . . . . . . . . .
Base Case . . . . . . . . . . . . . . . . . . . . . . .
Forecast Period 2007
Projection Year 2008
Projection Year 2009
Based on
Offering
Price
Based on
Offering
Price
Based on
Offering
Price
(%)
(%)
(%)
6.85
6.85
7.30
7.30
7.84
7.84
Retail Malls held via BOT Schemes
The relevant Retail Mall Indonesian SPCs will own five of the seven Retail Malls, namely, Cibubur Junction,
The Plaza Semanggi, Ekalokasari Plaza, Bandung Indah Plaza and Istana Plaza, via BOT Schemes. In
the case of Bandung Indah Plaza, the relevant BOT Grantor has granted the BOT Grantee, the owner of
Bandung Indah Plaza, the right to apply for HGB titles on top of its HPL titles. Ownership of the HGB title
allows the BOT Grantee to encumber the land with prior consent of the BOT Grantor and subject to the
BOT Agreement. (See “Overview of Relevant Laws and Regulations in Indonesia—Rights to Own and/or
to Use”.) In the case of the remaining four Retail Malls (i.e. Cibubur Junction, The Plaza Semanggi,
Ekalokasari Plaza and Istana Plaza), the BOT Grantee cannot transfer or encumber the land on which the
relevant Retail Mall is situated.
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Profit forecast and profit projection
The impact of variations in the yield is set out below:
Yield
Base case . . . . . . . . . . . . . . . . . . . . . . .
Excluding the four Retail Malls held via
BOT Schemes. . . . . . . . . . . . . . . . . . .
Forecast Period 2007
Projection Year 2008
Projection Year 2009
Based on
Offering
Price
Based on
Offering
Price
Based on
Offering
Price
(%)
(%)
(%)
6.85
7.30
7.84
3.05
3.30
3.63
The base case is for LMIR Trust’s initial property portfolio to include the four Retail Malls held via BOT
Schemes.
Payment of Management Fee
Assuming that the payment of the Manager’s management fee is entirely in the form of Units (base fee and
performance fee) or entirely in cash (base fee and performance fee), the impact of variations in the yield is
set out below:
Yield
In Units. . . . . . . . . . . . . . . . . . . . . . . . . .
Base case . . . . . . . . . . . . . . . . . . . . . . .
In cash . . . . . . . . . . . . . . . . . . . . . . . . . .
Forecast Period 2007
Projection Year 2008
Projection Year 2009
Based on
Offering
Price
Based on
Offering
Price
Based on
Offering
Price
(%)
(%)
(%)
7.18
6.85
6.50
7.61
7.30
6.94
8.13
7.84
7.48
The base case for the payment of management fees are 100% in cash for the base fee and 100% in form
of Units for the performance fee.
Distribution Policy
Assuming that the distribution policy of LMIR Trust is to distribute 90.0% of its tax exempt-income and
capital receipts, the impact of variations in the yield is set out below.
Yield
Base case . . . . . . . . . . . . . . . . . . . . . . .
Distribute 90.0% of LMIR Trust’s tax
exempt-income and capital receipts. . .
Forecast Period 2007
Projection Year 2008
Projection Year 2009
Based on
Offering
Price
Based on
Offering
Price
Based on
Offering
Price
(%)
(%)
(%)
6.85
7.30
7.84
6.15
6.56
7.05
The base case for LMIR Trust’s distribution policy is to distribute 100.0% of its tax exempt-income and
capital receipts.
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Strategy
The principal investment strategy of the Manager is owning and investing on a long-term basis in a
diversified portfolio of income-producing real estate in Indonesia that are primarily used for retail and/or
retail-related purposes, and real estate related assets in connection with the foregoing purposes.
In accordance with the requirements of the Listing Manual, the Manager’s investment strategy for LMIR
Trust will be adhered to for at least three years following the Listing Date, unless otherwise agreed by an
Extraordinary Resolution passed at a meeting of Unitholders duly convened and held in accordance with
the provisions of the Trust Deed.
The Manager’s key objectives are to deliver regular and stable distributions to Unitholders and to achieve
long-term growth in the NAV per Unit in order to provide Unitholders with capital appreciation on their
investments. The Manager plans to achieve these objectives through the following strategies:
ACQUISITION GROWTH STRATEGY
LMIR Trust’s acquisition growth strategy envisages investments in retail and/or retail-related assets that
are in the interests of Unitholders. The assets in LMIR Trust’s initial portfolio are all located in Indonesia.
ACTIVE ASSET ENHANCEMENT AND MANAGEMENT STRATEGY
Implementing pro-active measures to enhance the returns from the existing and future properties in LMIR
Trust’s portfolio. Such measures may include addition and alteration works, including re-zoning, tenancy
remixing and work carried out for the purpose of expanding size and capacity and (in relation to properties
to be acquired by LMIR Trust), leveraging and enhancing the properties’ competitive strengths to optimise
rentals and enhancement projects to maintain the competitive positioning of such properties. The
Manager intends to work with the relevant Indonesian authorities to gain the necessary approvals to
undertake such active asset enhancement works.
• As at the Latest Practicable Date, three of the Retail Malls, Bandung Indah Plaza, Mal Lippo Cikarang
and Ekalokasari Plaza have recently completed extensive asset enhancement works and a fourth Retail
Mall, The Plaza Semanggi is currently undergoing asset enhancement works.
- Bandung Indah Plaza has recently completed enhancement and renewal works which created an
additional NLA of approximately 3,843 sq m.
- Mal Lippo Cikarang has recently completed the building of an extension which has increased the NLA
of the mall’s hypermarket and specialty space by 10,694 sq m. As at 30 June 2007, 8,539 sq m or
approximately 79.8% of the additional NLA created from such asset enhancement has been precommitted to Hypermart, one of Indonesia’s leading hypermarket chains.
- Ekalokasari Plaza has recently completed asset enhancement works which created an additional
NLA of 5,013 sq m by adding a third floor and a mezzanine floor. This development incorporates a food
court, a proposed fitness centre and potentially a cinema as anchor tenants for the top levels of the
centre. These asset enhancement works are expected to improve shopper traffic throughout all levels
of the mall. As at 30 June 2007, 670 sq m or approximately 13.4% of the additional NLA created from
such asset enhancement has been pre-committed.
- The Plaza Semanggi is undergoing asset enhancement works to include a new alfresco café area
called the “Plangi on the Sky” café, which will increase NLA by approximately 3,000 sq m by the end of
2007.
Each of Bandung Indah Plaza, Mal Lippo Cikarang and Ekalokasari Plaza has either obtained, or is in the
process of obtaining, final local government approval for the recently completed asset enhancement
works which have created additional NLA.
CAPITAL AND RISK MANAGEMENT STRATEGY
By the Listing Date, LMIR Trust expects to put in place the Debt Facilities, being a floating rate secured
term loan facility of up to S$350.0 million. While LMIR Trust will not incur any borrowings as at the Listing
112
Strategy
Date, to the extent that LMIR Trust incurs borrowings in the future, the Manager will employ an appropriate
mix of debt and equity in the financing of future acquisitions. The Trustee, as trustee of LMIR Trust, will
enter into currency hedging arrangements to optimise risk-adjusted returns to the Unitholders as at Listing
Date.
Acquisition growth strategy
The Manager will pursue opportunities for asset acquisitions that will provide attractive cash flows and
yields relative to LMIR Trust’s weighted average cost of capital, and opportunities for future income and
capital growth. In evaluating future acquisition opportunities, the Manager will seek acquisitions that may
enhance the diversification of the portfolio by geography and tenant profile, and optimise risk-adjusted
returns to the Unitholders. The Manager believes it is well qualified to pursue its acquisition strategy. The
management of the Manager has extensive experience and a strong track record in sourcing, acquiring
and financing retail and/or retail-related real estate assets locally in Indonesia. The management’s
industry knowledge, relationships and access to market information provide a competitive advantage
with respect to identifying, evaluating and acquiring retail and/or retail-related real estate assets.
The Manager’s acquisition growth strategy will be underpinned by:
LMIR Trust’s relationship with the Sponsor
LMIR Trust intends to leverage on the Sponsor’s experience, market reach and network of contacts for its
acquisition strategy to evaluate and execute appropriate acquisitions that are in the interests of
Unitholders and provide potential for income and capital growth. The Sponsor intends to support the
growth of LMIR Trust’s portfolio in the following ways:
• allow the Manager to leverage the Sponsor’s established network of relationships to pursue the growth
strategy of LMIR Trust;
• lend its extensive experience and expertise in the retail and property industry to the Manager to assess
potential acquisition opportunities; and
• subject to certain conditions, as stipulated in the Right of First Refusal Agreement, facilitate a pipeline of
acquisitions via the ROFR granted by the Sponsor to LMIR Trust over the ROFR Properties (see
“Certain Agreements Relating to LMIR Trust and the Properties—Description of the Right of First
Refusal Agreement”).
LMIR Trust’s relationship with the Mapletree Group
The Manager is 40.0% owned by Mapletree Capital and 60.0% owned by Peninsula Investment Ltd.
Peninsula Investment Ltd is in turn 100.0% owned by Jesselton Investment Ltd, a wholly-owned subsidiary
of the Sponsor. Mapletree Capital is a wholly-owned subsidiary of MIPL and is part of the Mapletree Group.
MIPL is a leading Asia-focused real estate company based in Singapore. It has an asset base of about
S$4.5 billion (as at 30 June 2007) comprising office, logistics, industrial and retail/lifestyle properties. Its
business philosophy is to shape new ways of delivering value from real estate and real estate-related
investments to its stakeholders. It aims to be a strategic real estate partner providing real estate solutions,
including capital management and quality property-related services and products to its investors, tenants,
co-development partners and other business partners. To support its regional business, the group has
established an extensive network and presence with ongoing activities in Singapore, China, Hong Kong,
Japan, Malaysia and Vietnam.
One of the ways that MIPL unlocks value is by developing and rejuvenating large scale mixed-used
developments such as the approximately 24-ha HarbourFront Precinct, the centrepiece of which is
VivoCity, the largest retail and lifestyle destination in Singapore.
MIPL is the sponsor of MapletreeLog, the first Asia-focused logistics real estate investment trust in
Singapore. MapletreeLog was listed on the SGX-STon 28 July 2005. It has a principal strategy of investing
in a diversified portfolio of income-producing logistics real estate and real estate-related assets across the
Asian region. Since its listing, MapletreeLog has grown its portfolio size from the initial 15 logistics assets
in Singapore valued at S$422.0 million to 58 logistics assets in Singapore, Hong Kong, China, Malaysia
and Japan, valued at about S$2.1 billion as at 30 June 2007. MIPL’s success with MapletreeLog has
113
Strategy
demonstrated its clear ability to identify and structure a pan-Asian REIT, building a regional portfolio of
good quality logistics assets and supporting the growth of the REIT through a yield plus growth strategy.
As sponsor of MapletreeLog, MIPL is also committed to support the growth of the trust by forging strategic
alliances and undertaking development projects to build a strong pipeline of logistics properties for
MapletreeLog to purchase on a right of first refusal basis. These development projects include logistics
parks, built-to-suit and ready-built logistics facilities in Singapore, Malaysia as well as in new markets such
as China and Vietnam, to cater to the needs of MapletreeLog’s customers.
In addition to the publicly listed MapletreeLog, MIPL also manages a number of private real estate funds,
such as:
• Mapletree Industrial Fund (“MIF”);
• CIMB-Mapletree Real Estate Fund 1; and
• Mapletree Real Estate Mezzanine Fund 1.
It has the experience, and the necessary real estate and financing skills to structure, originate and manage
real estate-related financial products that cater to different pools of investors with different risk appetites.
The following provides a brief summary of the private real estate funds managed by MIPL:
• Mapletree Industrial Fund
Mapletree sponsored the establishment of MIF with the objective of investing in industrial properties in
Asia. It secured Bahrain-based Ahli United Bank’s (“AUB”) Pan Asian Industrial Fund as a cornerstone
investor for its first closing of US$310 million in November 2006. AUB’s Pan Asian Industrial Fund had
committed an investment amount of US$185 million to the MIF, while Mapletree’s commitment was
US$125 million.
MIF is a seven-year private fund which aims to provide stable recurrent income and strong total returns
to investors. It is managed by Mapletree Industrial Fund Management Pte. Ltd. (“MIFM”), a whollyowned subsidiary of Mapletree Capital.
MIF’s target investments are primarily manufacturing facilities, business parks, industrial parks,
research and development facilities, information technology and software parks and industrial
offices. The intent is to tap the shift in production and research and development processes to Asia
by creating a diversified portfolio of good quality industrial real estate assets with stable returns.
• CIMB-Mapletree Real Estate Fund 1
Mapletree jointly manages CIMB-Mapletree Real Estate Fund 1 (“CMREF 1”), a Malaysia focused real
estate fund, through a joint venture with Malaysia’s CIMB. CIMB-Mapletree Real Estate Fund’s
committed capital has almost been fully earmarked for committed projects.
With a mandate to make direct investments in properties in Malaysia, including investments in
distressed assets, real estate investment products and listed real estate securities, CMREF 1 has
committed capital of MYR 402 million. With a target gearing ratio of 3:1, the total asset size could
potentially be about MYR 1.6 billion.
As at 31 March 2007, total committed investments was about MYR 700 million. It has acquired office
buildings and a shopping mall in Kuala Lumpur, and formed a joint venture with a listed Malaysia
developer, E&O Property Development, and Al Salam Bank Bahrain to develop bungalow lots in
Penang. CMREF 1 has also underwritten certain units in a landed residential development in Kuala
Lumpur and invested in real estate investment trusts in Malaysia and the region.
• Mapletree Real Estate Mezzanine Fund 1
As at 31 March 2007, Mapletree Real Estate Mezzanine Fund 1 (“MREM 1”), an Asia-wide real estate
fund that focuses on originating and executing real estate mezzanine loans, had completed and
divested three mezzanine investments aggregating S$51 million.
The aggregated realised internal rate of returns for all the investments well surpassed the targeted
internal rate of returns of MREM 1.
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Strategy
Given that there is limited potential to scale up MREM 1, the Group is in the process of closing the fund
in order to focus on our other real estate funds.
MIPL is a wholly-owned subsidiary of Temasek Holdings (Private) Limited.
LMIR Trust will benefit from the track record of the Mapletree Group, with its experience in acquiring yieldaccretive assets in various markets, including via the management of MapletreeLog and other private real
estate funds in Asia. The Mapletree Group’s total assets under management as at 31 March 2007 was
S$1.7 billion.
Key opportunities arising from trends in the retail industry
The Manager believes that retail service providers are increasingly looking to free up capital for business
expansion which may increase the availability of assets for acquisition. In addition, LMIR Trust can seek
partnership and co-operation opportunities with the Sponsor. In evaluating asset acquisition opportunities,
the Manager will focus on the following criteria:
• Impact on income distributions. The Manager will seek to acquire retail and retail-related real
estate assets that provide returns above LMIR Trust’s cost of capital, and are thereby expected to
maintain or enhance LMIR Trust’s distributions per Unit as well as provide future long-term growth
prospects which are consistent with LMIR Trust’s pre-acquisition portfolio;
• Opportunities for creating value. The Manager will seek retail and retail-related real estate assets
that provide opportunities for creating value such as retail malls or retail spaces which have been undermanaged or under-capitalised, or which offer expansion or enhancement opportunities;
• Location. The Manager will seek to acquire retail and retail-related real estate assets in markets with
high growth potential. Within these markets, the Manager will seek to acquire assets in strategic or
prime locations;
• Geographical diversification. The Manager will seek to acquire properties that improve the
geographical diversification of LMIR Trust’s portfolio;
• Management quality. The Manager will consider the quality and experience of management and the
creditworthiness of the operator of the retail and/or retail-related property;
• Financial soundness. The Manager will consider the retail and/or and retail-related real estate
asset’s historical and forecasted cash flows, its ability to meet operational needs, its capital expenditure
requirements, its lease or debt service obligations as well as its ability to provide a competitive return on
investment to LMIR Trust;
• Regulatory and tax implication. The Manager will consider the tax growth and regulatory
environment of the jurisdiction in which the retail and/or and retail-related real estate asset is located;
• Operational profile. The Manager will consider the occupancy of and demand for similar retail and/or
retail-related real estate assets in the same or nearby communities;
• Building and facility specifications. The Manager will examine building and facility specifications
such as construction quality, condition and design, as well as the size and age of the buildings. The
potential to add value through selective renovation or other enhancements will be assessed; and
• Engineering, environmental and land survey reports. The Manager will rely on reports submitted
by a range of experts that cover matters such as (i) building deterioration; (ii) maintenance, repairs and
capital expenditure requirements; (iii) environmental matters; and (iv) compliance with building
regulations. These reports will be used to assess building conditions and expected levels of capital
expenditure in the short- to medium-term.
The Manager intends to hold the properties it acquires on a long-term basis. However, in the future, where
the Manager considers that any property has reached a stage that offers limited scope for further growth,
the Manager may consider selling the property and using the proceeds for alternative investments in
properties that meet its investment criteria.
115
Strategy
Active asset enhancement and management strategy
The Manager intends to implement pro-active measures, subject to approval by the relevant Indonesian
authorities, to enhance the returns from the existing and future properties in LMIR Trust’s portfolio. Such
measures include:
• addition and alteration works, including work carried out for the purpose of expanding size and capacity
and mall layout efficiency;
• leveraging and enhancing the properties’ competitive strengths to optimise rentals and enhancement
projects to maintain the competitive positioning of such properties;
• promoting a niche position for the properties in LMIR Trust’s portfolio / raising the profile of the
properties in LMIR Trust’s portfolio through retail marketing strategies, mall positioning and branding;
and
• in relation to properties to be acquired by LMIR Trust, obtaining contractual rent escalations under longterm leases, backed by security deposits consisting of irrevocable letters of credit or cash, most of which
will cover at least six months of initial monthly minimum rents. Additional security will be provided
typically by covenants regarding minimum working capital and net worth, liens on accounts receivable
and other operating assets, and various provisions for cross-default, cross-collateralisation, when
appropriate.
Capital and risk management strategy
While LMIR Trust will not be drawing down on the Debt Facilities as at the Listing Date, in the event that
LMIR Trust incurs any future borrowings, the proposed objectives of the Manager in relation to capital and
risk management will be to:
• maintain a strong balance sheet by adopting and maintaining a target gearing ratio;
• secure diversified funding sources from financial institutions and capital markets as LMIR Trust
continually assesses expansion and acquisition opportunities;
• adopt a proactive strategy to manage risks related to interest rate fluctuations; and
• manage foreign exchange exposure through hedging, where appropriate.
By doing so, the Manager believes that LMIR Trust will optimise Unitholders’ returns while maintaining
operating flexibility when considering capital expenditure requirements.
The Manager will, in the event that LMIR Trust incurs any future borrowings, periodically review LMIR
Trust’s capital management policy with respect to its Aggregate Leverage and modify the policy as its
management deems prudent in light of prevailing market conditions. If LMIR Trust takes on debt, the
Manager’s strategy will generally be to match the maturity of LMIR Trust’s indebtedness with the maturity
of LMIR Trust’s investment assets, and to employ long-term, fixed-rate debt to the extent practicable in
view of market conditions in existence from time to time.
The key aspects of the proposed capital and risk management strategy are as follows:
• To maintain an Aggregate Leverage within permitted limits
The Manager will aim to maintain the Aggregate Leverage of LMIR Trust comfortably within borrowing
limits allowable under the Property Funds Guidelines. Furthermore, by achieving the right ratio of debt
and equity, the Manager will be able to minimise LMIR Trust’s cost of capital and maximise returns to
Unitholders.
• To secure diversified funding sources from financial institutions and capital markets as LMIR
Trust continually assesses expansion and acquisition opportunities
In order to finance acquisitions and refurbishment of properties, in addition to any bank borrowings, the
Manager will consider accessing the debt capital markets through the issuance of bonds and/or notes to
diversify its sources of funding. The debt market provides LMIR Trust with the ability to secure longer
116
Strategy
term funding in a more cost-efficient manner. In addition to its debt strategy, the Manager will capitalise
on opportunities to raise additional equity capital for LMIR Trust through the issue of additional Units.
• To adopt a proactive interest rate management strategy
The Manager will adopt a proactive strategy to manage the risk associated with changes in interest
rates on any future loan facilities while also seeking to ensure that LMIR Trust’s ongoing cost of debt
capital remains competitive.
• To manage the foreign exchange exposure through hedging, where appropriate
For future acquisitions, in order to manage the currency risks associated with the capital values of
overseas assets, the Manager will, to the extent possible, adopt a hedging strategy by borrowing in the
same currency as the underlying asset.
117
Business and properties
OVERVIEW
LMIR Trust is a Singapore-based REIT constituted by the Trust Deed. It is established with the principal
investment objective of owning and investing on a long-term basis in a diversified portfolio of incomeproducing real estate in Indonesia that are primarily used for retail and/or retail-related purposes, and real
estate related assets in connection with the foregoing purposes.
LMIR Trust seeks to produce regular and stable distributions to Unitholders and to achieve long-term
growth in NAV per Unit through growth in rental yields and acquisitions which are in the interests of
Unitholders. LMIR Trust’s initial asset portfolio, as at the Listing Date, comprises the seven Retail Malls
and seven Retail Spaces, all of which are located in Indonesia.
The Properties will be the initial assets which LMIR Trust will invest in and own. Subsequently, the Manager
aims to produce attractive total returns for Unitholders by, among other things:
• selective acquisition of properties that meet the Manager’s investment criteria;
• active asset enhancement and management of LMIR Trust’s property portfolio to maximise returns; and
• employment of optimum capital structure and risk management.
Competitive strengths
The Manager believes that the competitive strengths of the Properties include:
• The Properties are located in major cities of Indonesia amidst a growing and affluent urban
middle class.
The Properties are mainly located within Greater Jakarta and Bandung, Indonesia’s fourth most
populous city.
Jakarta, Indonesia’s capital and largest city, has seen its total household expenditure increase by an
average of 12.8% per annum from 2001 to 2006, rising from Rp. 19,277 billion in 2001 to
Rp. 35,273 billion in 2006. Bandung has seen a similar growth in its total household expenditure,
rising from Rp. 4,825 billion in 2001 to Rp. 8,317 billion in 2006, an average growth of 11.5% per annum
from 2001 to 2006.
Economic development in Indonesia has seen a significant growth of the middle class over the past five
years. This middle income group is considered one of the vital contributors to the economy and is
perceived as the most prospective target in mass consumer markets. Based on the Social Economic
Survey (SES) by ACNielsen1 conducted in nine major cities in Indonesia, the share of population of the
middle income group (classified as SES A, B & C) has steadily grown from 50.0% in 2001 to 64.0% in
2006. It is estimated that the urban middle income population in Indonesia totals approximately
66 million people. This particular group is likely to be considered a major target market for modern
retail shopping centres.
Retail spending in these cities has been further boosted by a shift in lifestyle towards a higher level of
consumerism, partially brought about by the introduction of foreign brands and designer labels. These
foreign brands and designer labels typically have higher margins and are willing to pay higher rentals for
prime and sizeable retail space. The proliferation of hypermarkets and supermarkets over traditional
markets has also increased shopper traffic to modern retail malls.
1
Source: ACNielsen Social Economic Survey. ACNielsen has not provided its consent, for the purposes
of section 249 (read with section 302) of the SFA, to the inclusion of the information extracted from the
relevant report issued by it, and is thereby not liable for such information under sections 253 and 254
(read with section 302) of the SFA. While the Manager has taken reasonable action to ensure that the
information has been reproduced in its proper form and context, and that it has been extracted
accurately and fairly, neither the Manager nor any other party has conducted an independent
review of, nor verified the accuracy of, such information.
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Business and properties
In addition, the geographic diversification of the Properties reduces LMIR Trust’s dependence on any
single regional market and, accordingly, contributes to the stability of LMIR Trust’s future income.
(See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
GRDP Per Capita by Indonesian City (Current Prices), 2003-2005*
60
2003
2004
2005
Rp Millions
50
40
30
20
10
0
Indonesia
Jakarta
Bandung
Surabaya
Semarang
Medan
City
* Figures for Indonesia, Jakarta & Bandung are for 2003-2005
2005 figures for Surabaya, Semarang and Medan are not available
Source: “Appendix F—Independent Report on the Indonesian Retail Property Market”
Socio-Economic Survey in Indonesia(1), 2001-2006
100%
Monthly
household expenditure
90%
A (Above Rp. 2 mil/month)
80%
B (Rp. 1.5-2 mil/month)
Percentage
70%
C1 (Rp. 1.0-1.5 mil/month)
60%
C2 (Rp. 0.7-1.5 mil/month)
50%
D (Rp. 0.5-0.7 mil/month)
40%
E (Below Rp. 0.5
mil/month)
30%
20%
10%
0%
2001
2002
2003
2004
2005
2006
Note:
(1) AC Nielsen Socio-Economic Survey is based on monthly household expenditure, not actual income.
No standard can be used (or widely accepted) to calculate direct relation between expenditure and
income.
Source: “Appendix F—Independent Report on the Indonesian Retail Property Market”
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Business and properties
Total household
expenditure of
the middle class
(Rp. billions)
Cities
2001
2006
Average
annual
growth
2001-2006
(%)
Jakarta . . .
Bodetabek.
Bandung . .
Surabaya. .
Semarang .
Medan . . . .
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10,561
7,493
2,793
4,295
1,758
3,542
17,276
25,817
4,304
6,293
3,691
5,103
10
28
9
8
16
8
Source: “Appendix F—Independent Report on the Indonesian Retail Property Market”
• High growth potential from favourable demographics of the Indonesia population
According to the Independent Indonesian Retail Property Consultant, the Indonesia retail market has
high growth potential, with 50.0% of Indonesia’s estimated population of 222 million in 2006 under the
age of 25. Based on the Independent Report on the Indonesian Retail Property Market, the share of
population of the middle income group has steadily grown from 50.0% in 2001 to 64.0% in 2006. It is
estimated that the urban middle income population in Indonesia totals approximately 66 million people.
(See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
• Retail Malls strategically located within well-established population catchment areas.
The Retail Malls are strategically located throughout Greater Jakarta with a population range of
between approximately 0.4 million and 2.2 million within their respective primary catchment areas.
Located in middle to upper income demographic regions, each of the Retail Malls has a variety of strong
characteristics such as:
- Gajah Mada Plaza—The only shopping centre located in the Chinatown district of Jakarta with a
hypermarket, executive club and a swimming pool;
- Cibubur Junction—Located in the heart of Cibubur, one of the most affluent and upmarket residential
areas in Jakarta;
- The Plaza Semanggi—Located in the golden triangle of the Jakarta CBD and accessible from all four
directions of the capital city;
- Mal Lippo Cikarang—Growing residential and industrial Lippo township;
- Ekalokasari Plaza—A five-minute drive from the Bogor exit gate of the Jagorawi toll road, the highway
which connects Jakarta to Bogor;
- Bandung Indah Plaza—Strategic location at the heart of Bandung and easily accessible to the greater
Bandung population; and
- Istana Plaza—Easily accessible from several transportation hubs in the vicinity, such as the Husein
Sastranegara Airport, Bandung train station and Pasteur tollgate.
The Retail Malls located within Greater Jakarta, such as Gajah Mada Plaza and The Plaza Semanggi,
also enjoy high levels of connectivity via public transportation such as the Transjakarta busway which is
a premium form of public transportation in Jakarta, thereby enhancing the ability of these Retail Malls to
draw high volumes of shoppers.
• Quality Retail Malls which cater to the daily needs of shoppers.
The Retail Malls are strategically positioned as “one-stop” shopping destinations for shoppers and their
families, catering to their daily as well as lifestyle and entertainment needs. The Retail Malls are
anchored by supermarkets, hypermarkets or department stores, which draw significant shopper traffic
to the malls and provide a comfortable, hassle-free and low-cost environment for shoppers to purchase
120
Business and properties
their daily necessities. The specialty, food & beverage and lifestyle and entertainment tenants, which
include foreign labels and brands, restaurants, cinemas and entertainment centres provide shoppers
with a wide product offering and a complete shopping experience,
Further, the Retail Malls are managed by competent professionals with retail expertise and experience,
as reflected in the high occupancy rates and the ability of each Retail Mall to differentiate itself from its
competitors within its catchment area. As at 30 June 2007, the Retail Malls had a weighted average
occupancy of approximately 91.6%, reflecting the robust demand for space in the Retail Malls.
• Retail Spaces strategically located within well-established population catchment areas.
The Retail Spaces are strategically located throughout Greater Jakarta and in the major cities of
Semarang, Medan, Madiun and Malang. For example, the Mall WTC Matahari Units are located in
Serpong which is part of Tangerang, one of the settlement areas on the outskirts of Jakarta. Mall WTC
Matahari is strategically located along a main road which connects to BSD City, the largest residential
estate in Greater Jakarta. It has a proposed development area of 6,000 ha with currently 1,500 ha
developed and is occupied by over 15,000 households. In recent years, BSD City has experienced rapid
growth in terms of the number of housing units and retail shop houses which have been built. Another
example is the Malang Town Square Units which are located in the city of Malang in the East Java
province. Malang is the second largest city in East Java province with a population of approximately
0.8 million and a regency population of approximately 2.4 million people. The region is a popular tourist
destination due to its natural attractions (for example, Mount Bromo, one of Java’s largest volcanoes),
cool climate and colonial history. Malang also has a large student population, being home to five
universities (Brawijaya, State, Muhammadiyah, Widya Gama and Merdeka Universities).
• Economies of scale through portfolio management of the Retail Malls.
The Property Manager, a wholly-owned subsidiary of the Sponsor, will manage the Retail Malls after the
Listing Date. As the Retail Spaces are master-leased to Matahari, there is no property manager
appointed for the Retail Spaces. The Property Manager believes that there are opportunities to realise
efficiencies and economies of scale so as to maximise the performance of each Retail Mall.
The Property Manager comprises a specialised team of professionals managing the key areas of
operations, leasing, marketing and finance. Best practices are standardised and strictly adhered to
across all assets under its portfolio.
The Retail Malls will be able to leverage upon the Property Manager’s and the Sponsor’s experience in
areas including contractor management, retailer relationships and key negotiations, cost control
mechanisms and strategic leasing, marketing and management initiatives.
• Quality tenant base.
The Retail Malls benefit from the quality of their tenants. The Retail Malls’ top tenants include wellknown international and domestic retailers and brand names such as Giant Hypermarket, Gramedia
bookstore, Starbucks, Giordano, Fitness First, Sports Station, Matahari Department Store, Hypermart
and Studio 21 Cinema.
The Manager is of the view that the Retail Malls’ rental values are predominantly at or below market
levels. This will allow the Manager to capture growth on lease expiries while maximising the retail mix of
these malls.
The Retail Malls have a large combined tenant base of over 1,400 tenants (as at 30 June 2007). These
tenants represent a wide variety of mass retailers and specialty stores and provide trade and product
diversification for the Retail Malls.
• Advance rental payment structure helps to minimise cash flow volatility due to potential rental
arrears
Retail tenants in Indonesia typically pay an advance rental of approximately 10% to 20% of the total rent
payable for the duration of the lease upon signing of the lease agreement. This advance rental payment
helps to minimise LMIR Trust’s cash flow volatility due to potential rental arrears, thus enhancing LMIR
Trust’s cash flow stability.
121
Business and properties
CERTAIN INFORMATION ON THE PROPERTIES
Year of
building
completion
Name of property
Retail Malls
Gajah Mada Plaza . . . . . . . . .
Cibubur Junction . . . . . . . . . .
The Plaza Semanggi . . . . . . .
Mal Lippo Cikarang . . . . . . . .
Ekalokasari Plaza. . . . . . . . . .
Bandung Indah Plaza . . . . . . .
Istana Plaza . . . . . . . . . . . . . .
Percentage of
contribution
to LMIR
Trust’s gross
rent for
Forecast
Period 2007
NLA as at
30 June 2007
GFA as at
30 June 2007
Occupancy as
at 30 June
2007
(%)
(sq m)
(sq m)
(%)
.
.
.
.
.
.
.
1982
2005
2003
1995
2003
1990
2001
10.5
11.2
20.4
6.8
5.8
14.4
12.0
Total for Retail Malls . . . . . . .
—
81.1
34,278
34,139
58,685(1)
17,974(2)
20,587(3)
26,472(4)
27,247
219,382
66,160
49,341
91,232
25,767
39,895
55,196
37,434
365,025
89.1
86.4
96.4
96.3
87.3
83.2
98.9
91.6(5)
Notes:
(1) Current ongoing asset enhancement works to include a new alfresco café area called the “Plangi on
the Sky” café will increase NLA by an estimated 3,000 sq m, bringing total NLA to approximately
61,685 sq m by the end of 2007.
(2) Recently completed asset enhancement works to expand the retail space at Mal Lippo Cikarang have
increased the NLA by 10,694 sq m, bringing the total NLA to 28,668 sq m.
(3) Recently completed asset enhancement works for the third floor and mezzanine have increased the NLA
by 5,013 sq m, bringing the total NLA to 25,600 sq m.
(4) Recently completed asset enhancement works have increased the NLA by 3,843 sq m, bringing the
total NLA to 30,315 sq m.
(5) Weighted average occupancy as at 30 June 2007.
Year of
building
completion
Name of Property
Retail Spaces
Mall WTC Matahari Units . . . . . . . . . . . . . . . . . . . . . . . . . .
Metropolis Town Square Units . . . . . . . . . . . . . . . . . . . . . . .
Depok Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . .
Java Supermall Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Malang Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . .
Plaza Madiun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grand Palladium Medan Units . . . . . . . . . . . . . . . . . . . . . . .
.
.
.
.
.
.
.
2003
2004
2005
2000
2005
2000
2005
Total for Retail Spaces . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Total for Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Percentage of
contribution
to LMIR
Trust’s gross
rent for
Forecast
Period 2007
NLA as at
30 June 2007
(%)
(sq m)
2.5
3.3
2.5
2.4
2.4
3.1
2.6
18.9(3)
100.0
11,184(1)
15,248(2)
13,045(2)
11,082(1)
11,065(2)
19,029
13,417(2)
94,070
313,452
Notes:
(1) Based on Strata Titles Ownership Certificates. (See “—Information Regarding the Title of the
Properties”.)
(2) Based on Kiosks Sale and Purchase Binding Agreements. (See “—Information Regarding the Title of
the Properties—The Retail Spaces—Kiosks Sale and Purchase Binding Agreement”.)
(3) Due to rounding differences.
122
Business and properties
Valuation
Each of the Properties was valued as at 30 June 2007 by Knight Frank and Colliers. The Appraised Values
of each of the Properties are set out in the following table:
Property
Retail Malls
Gajah Mada Plaza . . . . . . . . . . . . . . . .
Cibubur Junction . . . . . . . . . . . . . . . . .
The Plaza Semanggi . . . . . . . . . . . . . .
Mal Lippo Cikarang . . . . . . . . . . . . . . .
Ekalokasari Plaza. . . . . . . . . . . . . . . . .
Bandung Indah Plaza . . . . . . . . . . . . . .
Istana Plaza . . . . . . . . . . . . . . . . . . . . .
Appraised value by
Knight Frank as at
30 June 2007(1)
Appraised value by
Colliers as at
30 June 2007(1)
Percentage of
aggregate value of the
Properties (as
determined by Knight
Frank)
(S$ million)
(S$ million)
(%)
.
.
.
.
.
.
.
103.8
94.2
214.8
80.2
66.0
124.5
125.7
117.0
101.8
211.1
79.7
68.1
135.1
114.7
10.3
9.4
21.4
8.0
6.6
12.4
12.5
Sub-total . . . . . . . . . . . . . . . . . . . . . . . .
Retail Spaces
Mall WTC Matahari Units . . . . . . . . . . . .
Metropolis Town Square Units . . . . . . . .
Depok Town Square Units . . . . . . . . . . .
Java Supermall Units . . . . . . . . . . . . . . .
Malang Town Square Units. . . . . . . . . . .
Plaza Madiun . . . . . . . . . . . . . . . . . . . . .
Grand Palladium Medan Units . . . . . . . .
809.2
827.4(2)
80.5(2)
25.2
33.5
25.7
26.0
25.5
33.4
26.2
24.3
32.2
24.8
25.0
25.8
31.8
25.2
2.5
3.3
2.6
2.6
2.5
3.3
2.6
Sub-total . . . . . . . . . . . . . . . . . . . . . . . .
Grand Total . . . . . . . . . . . . . . . . . . . . .
195.5
1,004.7
188.9(2)
1,016.3
19.5(2)
100.0
Notes:
(1) See “Appendix E—Independent Property Valuation Summary Reports”.
(2) Due to rounding differences.
123
Business and properties
Tenant profile
The table below sets out information on the 10 largest tenants of the Properties (in terms of Gross Rent
based on Committed Leases as at 30 June 2007).(1)
Tenant
Trade sub-sector
Matahari . . . . . . . . . . . . .
Lease expiry date
Hypermart. . . . . . . . . . . .
Department Store/
Supermarket
Hypermarket
Rimo . . . . . . . . . . . . . . . .
Department Store
Centro . . . . . . . . . . . . . . .
Giant . . . . . . . . . . . . . . . .
Gramedia . . . . . . . . . . . .
Department Store
Hypermarket
Books &
Stationery
Percentage of
total NLA as at
30 June 2007
Percentage of
total Gross
Rent based on
Committed
Leases as at
30 June 2007
(%)
(%)
38.1
30.6
6.2
2.9
2.4
2.1
2.5
2.0
1.3
1.8
1.1
1.1
1.3
1.2
1.0
0.8
0.5
0.8
2.2
0.8
Top 10 tenants . . . . . . .
Other tenants . . . . . . . .
57.7
42.3
43.0
57.0
Total . . . . . . . . . . . . . . . .
100.0
100.0
Electronic Solution
Indonesia PT., . . . . . . .
Fitness First . . . . . . . . . .
23 March 2015 9 Dec 2026
2 May 2015 31 May 2015
30 June 2007(2) and
28 February 2012
4 November 2013
14 February 2019
30 November 2010 22 May 2014
Electronics
Sports & Fitness
Ace Hardware . . . . . . . . .
Millennium Executive
Club. . . . . . . . . . . . . . .
31
14
17
28
Houseware
Leisure and
Entertainment
October 2011
April 2021 and
May 2020
February 2012
29 October 2014
Notes:
(1) Includes the gross rental income from the Retail Spaces and assuming that the Master Lease
Agreement was in effect as at 30 June 2007
(2) Rimo’s lease has been renewed till 30 June 2008.
The following table sets out the expiry profile of the tenancies of the Retail Malls as at 30 June 2007:
Monthly
gross rent
of expiring
leases as a
percentage
of forecast
rental
Expiring
leases as a
percentage
of NLA as at
30 June 2007
Total
number of
expiring
leases
NLA of
expiring
leases
(sq m)
(%)
(%)
.
.
.
.
.
193
262
222
795
—
8,360
24,592
15,797
152,102
18,531
5.1
11.4
12.0
55.1
16.3
3.8
11.2
7.2
69.3
8.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,472
219,382
100.0(1)
100.0(1)
Period
2007 . . . . . . .
2008 . . . . . . .
2009 . . . . . . .
Beyond 2009 .
Vacant . . . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
.
.
.
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.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Note:
(1) Due to rounding differences
124
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
.
.
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.
.
.
.
.
.
.
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.
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.
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.
.
.
Business and properties
The following table sets out the expiry profile of the tenancies of the Properties(1) as at 30 June 2007:
Total
number of
expiring
leases
Period
2007 . . . . . . .
2008 . . . . . . .
2009 . . . . . . .
Beyond 2009 .
Vacant . . . . . .
Total . . . . . . .
.
.
.
.
.
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
.
.
.
.
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
.
.
.
.
.
193
262
222
802
—
1,479
NLA of
expiring
leases
Monthly
gross rent
of expiring
leases as a
percentage
of forecast
rental
(sq m)
(%)
8,360
24,592
15,797
246,172
18,531
313,452
3.8
8.5
9.0
66.5
12.2
100.0
Expiring
leases as a
percentage
of NLA as at
30 June 2007
2.7
7.8
5.0
78.5
5.9
100.0(2)
Note:
(1) Assuming that the Master Lease Agreements for the Retail Spaces were executed on 30 June 2007.
(2) Due to rounding differences.
Purchase price of the Properties(1)
The table below shows the purchase price of each of the Properties, taking into account estimated issue
costs of the Offering and issue costs of the Cornerstone Units (assuming that the Over-allotment Option is
not exercised). (See “Certain Agreements Relating to LMIR Trust and the Properties”).
Property
Purchase price
based on
Offering Price
(S$ million)
Retail Malls
Gajah Mada Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cibubur Junction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Plaza Semanggi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mal Lippo Cikarang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ekalokasari Plaza. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bandung Indah Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Istana Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retail Spaces
Mall WTC Matahari Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Metropolis Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depok Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Java Supermall Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Malang Town Square Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plaza Madiun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grand Palladium Medan Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
77.8
74.5
175.8
61.0
54.5
97.5
94.4
635.5
20.8
27.7
21.2
21.4
21.1
27.6
21.6
161.2(2)
796.8(2)
Notes:
(1) The purchase consideration of the Properties is determined by the difference between the purchase
consideration of the Singapore SPCs (See “Certain Agreements relating to LMIR Trust and the
Properties—Description of the Singapore SPC Share Purchase Agreements” for the formula of
determining this purchase consideration) and the fair value of all the net identifiable assets and
liabilities of the Singapore SPCs acquired save for the Properties.
(2) Due to rounding differences.
125
Business and properties
ASSET ENHANCEMENT
The Manager will continually review and investigate asset enhancement works for each Property. The aim
of this is to create further income streams and maximise retail offering at each mall. To do this, the
Manager intends to work with relevant Indonesian authorities to gain the necessary approvals. The table
below gives a summary of potential and completed asset enhancement works.
Property
Key asset enhancement plans
Gajah Mada Plaza . . . . . . . .
• Potential improvements to the façade, main lobby, atrium and further
enhancement of the tenancy mix will be investigated.
• Expansion of Matahari Department Store at the third level has been
recently completed.
• Relocation of the food court from the upper level to the basement.
• Development of “Plangi on the Sky”, a rooftop open air cafe, adding
approximately 3,000 sq m to the NLA.
• Expansion of NLA by 10,694 sq m from construction of an extension
annex has been recently completed.
• As at 30 June 2007, 8,539 sq m or approximately 79.8% of the
additional NLA created from asset enhancement has been precommitted to Hypermart.
• Reconfiguration of the Matahari Department Store.
• Addition of a third floor with NLA of approximately 3,263 sq m and a
mezzanine with NLA of approximately 1,750 sq m has been recently
completed. The additional NLA will be occupied by a food court,
proposed fitness centre and potentially, a cinema which, together,
anchor the top levels of the centre, which is expected to enhance
shopper traffic on the higher floors of the mall and average gross
rentals for the entire mall.
• As at 30 June 2007, 670 sq m or approximately 13.4% of the additional
NLA created from the asset enhancement works has been precommitted.
• An additional NLA of approximately 3,843 sq m has been recently
completed.
• Investigate converting ice skating rink to retail.
Cibubur Junction . . . . . . . . . .
The Plaza Semanggi. . . . . . .
Mal Lippo Cikarang . . . . . . . .
Ekalokasari Plaza . . . . . . . . .
Bandung Indah Plaza . . . . . .
Istana Plaza . . . . . . . . . . . . .
Each of Bandung Indah Plaza, Mal Lippo Cikarang and Ekalokasari Plaza has either obtained, or is in the
process of obtaining, final local government approval for the recently completed asset enhancement
works which have created additional NLA.
INSURANCE
The Properties are insured consistent with industry practice in Indonesia. This includes property damage,
public liability insurance (including personal injury) policies, earthquakes, terrorism and sabotage. There
are no significant or unusual excess or deductible amounts required under such policies. There are,
however, certain types of risks that are not covered by such insurance policies, including acts of war and
outbreaks of contagious diseases.
LEGAL PROCEEDINGS
None of LMIR Trust, the Manager and the Master Lessee is currently involved in any material litigation nor,
to the best of the Manager’s knowledge, is any material litigation currently contemplated or threatened
against LMIR Trust, the Manager and the Master Lessee.
ENCUMBRANCES
As at the Listing Date, there are no encumbrances which are outstanding with regard to any of the
Properties.
126
Business and properties
INFORMATION REGARDING THE TITLE OF THE PROPERTIES
The Retail Malls
Each of the seven Retail Malls is wholly-owned by a Retail Mall Indonesian SPC which is, in turn, owned by
two Retail Mall Singapore SPCs (See “—Summary of Ownership Structure of the Retail Malls”). LMIR
Trust will, via its direct or indirect ownership of 100% of the shares of each of the Retail Mall Singapore
SPCs, indirectly hold the Retail Malls. (See “Certain Agreements Relating to LMIR Trust and the
Properties—Summary of Ownership Structure of the Retail Malls”.) With the exception of Gajah Mada
Plaza and Mal Lippo Cikarang, LMIR Trust owns the remaining five Retail Malls via BOT Schemes (as
defined below) and does not directly own the land on which the relevant Retail Mall is situated.
The table below sets out the types of titles held by LMIR Trust:
Retail mall
Gajah Mada Plaza . . . . . . . . .
Cibubur Junction . . . . . . . . . . .
The Plaza Semanggi. . . . . . . .
Mal Lippo Cikarang . . . . . . . . .
Ekalokasari Plaza . . . . . . . . . .
Bandung Indah Plaza . . . . . . .
.
.
.
.
.
.
Istana Plaza . . . . . . . . . . . . . . .
Title held by the land owner(1)
Title/right held by LMIR Trust(2)
Strata titles
HGB title
HP title
HGB title
HP title
HPL titles
Strata titles
BOT Scheme
BOT Scheme
HGB title
BOT Scheme
BOT Scheme and HGB titles on
top of HPL titles(3)
BOT Scheme
HGB titles
Notes:
(1) The title held by the owner of the land on which the Retail Mall is situated.
(2) The title/right held by LMIR Trust via its ownership of shares in the respective Retail Mall Singapore
SPCs.
(3) The BOT Grantor has granted the BOT Grantee, the owner of Bandung Indah Plaza, the right to apply
for HGB titles on top of its HPL titles. (See “—Hak Pengelolaan (“HPL”) titles”.)
Build, operate and transfer schemes (“BOT schemes”)
The relevant Retail Mall Indonesian SPCs will own five of the seven Retail Malls, namely, Cibubur Junction,
The Plaza Semanggi, Ekalokasari Plaza, Bandung Indah Plaza and Istana Plaza, via BOT Schemes. The
relevant Retail Mall Indonesian SPCs are in turn owned by two Retail Mall Singapore SPCs. As at the
Listing Date, LMIR Trust will, via its direct or indirect ownership of 100% of the shares of each of the Retail
Mall Singapore SPCs, indirectly hold these Retail Malls. A BOT Scheme is not registrable with any
Indonesian authority. Rights under a BOT Scheme do not amount to a legal title and represent only
contractual interests.
Pursuant to BOT Schemes, the owner of the land on which the relevant Retail Mall is situated or the party
that is appointed by the land owner (the “BOT Grantor”) has granted the relevant Retail Mall Indonesian
SPC (the “BOT Grantee”), a right to build and operate the Retail Mall for a particular period of time as
stipulated in the BOT Agreement.
The respective BOT Grantor for the relevant Retail Malls are not related or affiliated with the respective
Vendors or the Sponsor. The relevant BOT Grantors are regional Indonesian Government enterprises,
Indonesian Government agencies and a church foundation.
In exchange for the right to build and operate the Retail Mall on the land owned by the BOT Grantor, the
BOT Grantee is obliged to pay a certain compensation (as stipulated in the BOT Agreement) to the BOT
Grantor. The relevant Retail Mall Indonesian SPC, as the BOT Grantee, financed the construction of the
relevant Retail Mall and on an ongoing basis, pays for the asset enhancement works of the Retail Mall (if
any). Depending on the terms of the relevant BOT agreement, the payment by the BOT Grantee may be
made in the form of a lump sum (Istana Plaza and Ekalokasari Plaza, both of which have been fully paid) or
staggered (Bandung Indah Plaza, Cibubur Junction and The Plaza Semanggi).
127
Business and properties
LMIR Trust has, via its wholly-owned Retail Mall Singapore SPCs, entered into share purchase
agreements to acquire the entire share capital of the relevant Retail Mall Indonesian SPC. LMIR Trust
will, through the Retail Mall Singapore SPCs, indirectly own the Retail Mall for the period stipulated in the
respective BOT Agreement. The term of BOT Agreements ranges from 20 years to 30 years and may be
extended upon agreement of both parties. During the term of the BOT Agreement, the respective BOT
Grantor is not allowed to sell or transfer the land on which the relevant Retail Mall is situated. Upon the
expiry of the term of the BOT Agreement, the BOT Grantee must return the land, together with any
buildings and fixtures on top of the land, without either party providing any form of compensation to the
other.
The BOT Grantee may assign its rights under the BOT Agreement with prior consent of the BOT Grantor.
The BOT Agreements are silent on the circumstances under which the respective BOT Grantor may
withhold its consent to such an assignment. Under Indonesian law, a transfer of rights under an agreement
must be approved or acknowledged by the opposite party. Therefore, if a BOT Grantee assigns its rights
under the BOT Agreement without the consent of the BOT Grantor, the assignment will not be effective and
the BOT Grantee shall be deemed to have caused a breach of contract. Instead of a transfer of a BOT
Grantee’s right through an assignment of the BOT Agreement, which requires consent from the BOT
Grantor, the transfer of the BOT interest may also be made through a transfer of shares in the BOT Grantee
by the shareholders of the BOT Grantee. Except for the BOT Agreement relating to Cibubur Junction, the
transfer of shares in the BOT Grantee does not require consent from the BOT Grantor. In respect of
Cibubur Junction, the BOT Grantor has approved the transfer of shares in Cibubur Junction to its relevant
Retail Mall Singapore SPCs, as evidenced by Letter No. 306/076.11, dated 4 April 2007, issued by the
respective BOT Grantor.
(See “Overview of Relevant Laws and Regulations in Indonesia—Rights to Own and/or Use—Build,
Operate and Transfer or BOT”).
LMIR Trust owns the Retail Malls, via its 100% ownership interests of shares in the Retail Mall Singapore
SPCs, under BOT Schemes because:
• Freehold land in Indonesia may not be owned by companies (whether Indonesian or foreign-owned) or
by foreign individuals. Under Indonesian land law, the closest form of land title to an internationally
recognised concept of “freehold” title is Hak Milik (“HM”) or “Right of Ownership”. A Hak Milik title is
available only to Indonesian individuals and certain Indonesian religious and social organisations and
government bodies. In the Indonesian property market, it is common for properties to be held under
agreements or schemes without the legal title being transferred. (See “Overview of Relevant Laws and
Regulations in Indonesia—Rights to Own and/or to Use—Hak Milik (HM/Right to Own)”);
• Instead of transferring the ownership of the land, the land owner may prefer to use the BOT Scheme for
commercial reasons. The land owner may not intend to transfer the ownership of the land because the
land is located at commercially strategic locations or has historical value. Alternatively, the land owner
may have limited financial capability to develop the land. Under such circumstances, the land owner
may prefer to enter into a BOT Agreement with a BOT Grantee who are property developers with strong
financial support and proven track records; or
• A BOT Grantee may prefer to use the BOT Scheme because the compensation for obtaining the BOT
rights could be considered as more price feasible and cash flow effective as compared to an outright
purchase of the land.
Strata titles
One of the seven Retail Malls, namely, Gajah Mada Plaza, is held via strata titles. Under Indonesian land
law, a building developer must divide a multi-storey building into (i) rights of ownership (strata title) for each
unit, (ii) rights on common properties and (iii) rights to the common land in the form of a sketch plan, which
must be approved by the relevant authority. Such sketch plan must also provide an explanation on (i) unit
separation that can be used by individuals, (ii) the limitation and separation of the strata title right over
common properties, and (iii) the strata title right over the common land.
In general, if a party holds a property via strata titles, the party that owns the strata title unit, will also own
the common areas, common property and common land (i.e. the underlying land) proportionately with the
128
Business and properties
other strata title unit owners. LMIR Trust indirectly owns, via the relevant Retail Mall Indonesian SPC,
approximately 99.0% of the units of strata titles that are constructed on the relevant plot of land on which
Gajah Mada Plaza is situated on.
(See “Overview of Relevant Laws and Regulations in Indonesia—Rights to Own and/or to Use—Strata
Titles”.)
Hak Guna Bangunan (“HGB”) titles
One of the Retail Malls, namely, Mal Lippo Cikarang, is held via a HGB title. Under Indonesian land law, the
highest title 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 Indonesia including foreign investment companies
(Penanaman Modal Asing, or “PMA”). A holder of HGB title has the right to erect, occupy and use
buildings on that particular parcel 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 initial term of 30 years. By application to the
relevant local land office upon the expiration of this initial term, a HGB title may be extended for an
additional term not exceeding 20 years. Following expiration of this additional term, a renewal application
may be made. The application should be made no later than two years prior to the expiration of the
additional term. The land office has discretion to grant the various extensions.
(See “Overview of Relevant Laws and Regulations in Indonesia—Rights to Own and/or to Use”.)
Hak Pakai (“HP”) titles
Two of the Retail Malls, namely The Plaza Semanggi and Ekalokasari Plaza, are situated on plots of land
which are owned by the land owner under HP (Right to Use) titles. LMIR Trust does not own these plots of
land directly and instead, holds the two Retail Malls via BOT schemes. The land owner (as the BOT
Grantor) has granted the relevant Retail Mall Indonesian SPC (as BOT Grantee), a right to build and
operate the relevant Retail Mall for a particular period of time as stipulated in the BOT Agreement. The HP
titles where Plaza Semanggi and Ekalokasari Plaza are constructed will be valid as long as the lands are
being used by the respective land owner.
A HP title allows its holder (i.e. the land owner) the right to use and/or collect the products of land directly
administered by the State or of land owned by other persons. Hak Pakai over land can be granted by the
Indonesian government in the form of a decree or by an Indonesian citizen in the form of an agreement.
The decree or the agreement gives the user the rights and obligations laid down in that decree or
agreement.
A HP title in Indonesia may be obtained and owned by the following entities: (a) an Indonesian citizen, (b) a
legal entity established under Indonesian law and domiciled in Indonesia, (c) any Indonesian government
department or government agency, (d) any social or religious entity, (e) a foreign citizen residing in
Indonesia and who has provided benefit to Indonesia, (f) a foreign legal entity that has a registered
representative office in Indonesia, and (g) a state representative or a representative of certain
international bodies.
(See “Overview of Relevant Laws and Regulations in Indonesia—Rights to Own and/or to Use”.)
Hak Pengelolaan (“HPL”) titles
In the case of Bandung Indah Plaza, the BOT Grantor owns the land on which the Retail Mall is situated
under a HPL (Right to Manage) title. A HPL title provides its holder (i.e. the land owner) with the right to
manage on a parcel of land created by the state, in which the executing authorities of such right to manage
is partially granted and in common practice (only) to Indonesian government entities. Such holder of a
Right to Manage title may use the granted executing authority for the purpose of land utilisation and
allocation planning, utilisation of the land related to the role of such Indonesian government entities, partial
assignment of the land to third parties and/or land management in cooperation with third parties. Bandung
129
Business and properties
Indah Plaza is constructed on land under HPL titles which will be valid as long as the land is being used by
the land owner.
In respect of Bandung Indah Plaza, the land owner (as BOT Grantor) has granted the relevant Retail Mall
Indonesian SPC (as BOT Grantee) the right to apply for a HGB title on top of its HPL (Right to Manage) title.
Pursuant to this BOT Scheme, the BOT Grantee is granted the right to build and operate the Retail Mall and
to own a HGB title for the term of the BOT Agreement. Ownership of the HGB title allows the BOT Grantee
to encumber the land with prior consent of the BOT Grantor and subject to the BOT Agreement.
(See “Overview of Relevant Laws and Regulations in Indonesia—Rights to Own and/or to Use”.)
The Retail Spaces
Each of the seven Retail Spaces is wholly-owned by a Retail Space Indonesian SPC which is, in turn,
owned by two Retail Space Singapore SPCs. LMIR Trust will, via its ownership of 100% of the shares of the
respective Retail Space Singapore SPCs, indirectly own the Retail Spaces. (See “Certain Agreements
Relating to LMIR Trust and the Properties—Summary of Ownership Structure of the Retail Spaces”.)
The Retail Spaces are held by the respective Indonesian SPCs under the following types of title:
Retail Space
Mall WTC Matahari Units . . . . . . . . . . . . . . . . . .
Metropolis Town Square Units . . . . . . . . . . . . . .
Depok Town Square Units . . . . . . . . . . . . . . . . .
Java Supermall Units . . . . . . . . . . . . . . . . . . . . .
Malang Town Square Units. . . . . . . . . . . . . . . . .
Plaza Madiun . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grand Palladium Medan Units . . . . . . . . . . . . . .
Held by LMIR Trust via:
.
.
.
.
.
.
.
Strata titles ownership certificates
Kiosks Sale and Purchase Binding Agreement
Kiosks Sale and Purchase Binding Agreement
Strata titles ownership certificates
Kiosks Sale and Purchase Binding Agreement
HGB titles
Kiosks Sale and Purchase Binding Agreement
Strata titles
Two of the Retail Spaces, namely Mall WTC Matahari Units and Java Supermall Units are held via Strata
Titles.
(See “—The Retail Malls—Strata Titles”.)
Kiosks Sale and Purchase Binding Agreement
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 bound
by Kiosks Sale and Purchase Binding Agreements because their strata titles are in the process of being
issued by the Indonesian government.
A Kiosks Sale and Purchase Binding Agreement is regulated by Article 1338 of the Indonesian Civil Code.
In addition, for a strata title, it is a common practice to enter into a Kiosks Sale and Purchase Binding
Agreement prior to entering into a deed of sale and purchase of land. Under a Kiosks Sale and Purchase
Binding Agreement, each of the parties agree on the terms and conditions for the transaction (i.e. the sale
and purchase of land) but the Kiosks Sale and Purchase Binding Agreement does not have the effect of
transferring the ownership of the land to the other party. Instead, subject to certain conditions in the Kiosks
Sale and Purchase Binding Agreement, the vendor is bound to sell the land and the purchaser is bound to
purchase the land. These agreements shall be executed in good faith and cannot be revoked except by
mutual agreement or pursuant to certain reasons which have been legally declared as sufficient.
Upon the completion of the conditions stipulated in the said agreement (including the issuance of the strata
title certificate), the parties enter into a deed of sale and purchase which shall be made before the local
land deed official. Once the parties enter into a deed of sale and purchase agreement, the vendor is
deemed to have sold and transferred its rights of ownership of the land to the purchaser, who is in turn,
deemed to have accepted the transfer of the said rights from the vendor. Pursuant to the Basic Principal of
Agrarian Law No. 5/1960, the transfer of ownership rights over the land is perfected upon registration at
the local land office.
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Business and properties
Because of this unique nature of Indonesian land law, the SGX-ST has granted LMIR Trust a waiver from
compliance with Rule 222(1) of the SGX-ST Listing Manual (the “Listing Manual”) which requires
properties that have remaining leases of less than 30 years not to, in aggregate, account for more
than 50.0% of a company’s operating profits for the past three years.
The Sponsor intends to procure the strata titles of these Retail Spaces prior to the Listing Date. However,
the legal process to obtain these strata titles may be lengthy and may only be issued post listing. The
Trustee and the Master Lessee have entered into a put option agreement pursuant to which, in the event
that the strata titles to these four Retail Spaces are not issued within 24 months from the Listing Date, a
meeting 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 LMIR
Trust for a further six months from the date of the ordinary resolution. In the event that an ordinary
resolution is passed in favour of retaining these four Retail Spaces in the portfolio of LMIR Trust and the
strata titles are still not issued upon expiry of six months from the date of the ordinary resolution, the
Trustee shall be entitled to exercise the put option. In the event that an ordinary resolution is not passed in
favour of retaining these four Retail Spaces, the Trustee shall be entitled to exercise the put option within
three months of the date of the meeting of the Unitholders.
Upon exercising the put option, the Master Lessee will be required to purchase the entire issued and
paid-up capital of the relevant Indonesian SPCs of these four Retail Spaces at the consideration of the
higher of (i) the net asset value of the relevant Indonesia SPCs as at the date of service of the put option
notice as determined from the audited consolidated accounts of the SPCs and (ii) the net asset value
based on the value attributed to these four Retail Spaces for the purpose of the Listing, in each case, also
taking into account all transaction costs incurred directly and indirectly by LMIR Trust for the acquisition of
these four Retail Spaces. (See “Certain Agreements relating to LMIR Trust and the Properties—
Description of the Put Option Agreements”.) The Trustee (acting on the advice and recommendation
of, and after discussions with, the Manager) is satisfied with the computation of the said transaction costs
as set out in the put option agreement. A 24-month period is sought as the length of time required for the
land title office to issue the strata title is estimated to be more than 12 months. The parties will operate as if
LMIR Trust exclusively controls the strata titles to these four Retail Spaces during this 24-month period.
The transfer of strata titles without prior written approval from Matahari will result in a breach of the Kiosks
Sale and Purchase Binding Agreement.
On 9 August 2007, the Trustee, the Manager and the Sponsor entered into a letter of undertaking,
pursuant to which the Sponsor will to use its best endeavors to procure that the relevant Retail Space
SPCs obtain the strata titles to the Metropolis Town Square Units, Depok Town Square Units, Malang
Town Square Units and Grand Palladium Medan Units. (See “Certain Agreements relating to LMIR Trust
and the Properties—Description of the Letter of Undertaking”.)
The Trustee (acting on the advice and recommendation of, and after discussions with the Manager) is of
the view that the proposed arrangements, namely the put option agreement and the letter of undertaking,
adequately safeguard the interest of Unitholders if the legal titles to the four Retail Spaces are not issued
on the expiry of 24 months from the Listing Date.
HGB titles
One of the Retail Spaces, namely Plaza Madiun is held via a HGB title.
(See “—The Retail Malls—Hak Guna Bangunan (“HGB”) titles”.)
131
Business and properties
GAJAH MADA PLAZA
JaIan Gajah Mada 19-26, Central Jakarta
Jakarta profile
The province of Jakarta is the capital of Indonesia. It consists of five municipalities—North Jakarta, East
Jakarta, South Jakarta, West Jakarta and Central Jakarta.
As the administrative centre of Indonesia, Jakarta’s economy is based on finance and commerce and
attracts a particularly high level of foreign investment compared to other parts of Indonesia. Income per
capita is also high driven partly by a high number of expatriates living in the city, as well as the types of
employment available in the area.
According to a 2005 Census, the population of Greater Jakarta was 7.5 million. Despite rapid urbanisation
over the past 40 years (with population at only 1.2 million in 1960), and solid growth for Indonesia as a
whole, population in Greater Jakarta has been declining over the past five years. This is a result of a
decline in the population of Central Jakarta, driven by the changing composition of the city from relatively
high levels of residential accommodation to an increasing mix of office development, convention centres
and hotels. Over the next five years, the population of Central Jakarta is expected to begin increasing, and
particularly strong growth is also expected in South Jakarta.
As the largest city in Indonesia, Jakarta has the highest GRDP (current prices) per capita with average
growth rate of about 14% per annum over the past four years. Total household expenditure in Jakarta grew
at an average rate of 12.8% for the period from 2001 to 2006, from Rp. 19,277 billion in 2001 to
Rp. 35,273 billion in 2006.
Apart from increases in income driving retail spending growth, spending has also been boosted by a
lifestyle shift towards a higher level of consumerism.
Description
Gajah Mada Plaza is a seven storey with one basement level shopping centre and a carpark comprising
885 parking lots. The mall is located prominently in the heart of Jakarta’s Chinatown, an established and
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Business and properties
well-known commercial area in the city. Situated along Jalan Gajah Mada, one of the main roads in
Jakarta, Gajah Mada Plaza is positioned as a one-stop shopping, dining and entertainment destination for
middle to upper income families as well as professional executives and students from the offices and
schools within its vicinity. The 222 tenancies in the mall provide a diverse and complementary tenant mix
anchored by Hypermart and Rimo Department Store. The mall’s strong leisure and entertainment
component, which includes a cinema, restaurants, family karaoke outlets, a discotheque, video game
centres, a fitness centre and a swimming pool, adds to the overall attractiveness of Gajah Mada Plaza.
Tenant profile
Gajah Mada Plaza has 222 retail tenants, based on Committed Leases as at 30 June 2007. The tenant
profile of the mall comprises a diverse set of tenants from a wide variety of industries. The mall is anchored
by Hypermart and Rimo Department Store, which occupy approximately 14.5% and 8.0% of the mall’s
NLA, respectively. The other prominent tenants include Millennium International Executive Club, which
operates as a restaurant during the day and as a discotheque late at night, McDonald’s, Kentucky Fried
Chicken and Inul Vista Karaoke.
The mall has a good tenancy mix which caters to the daily needs of its customers. It is also well known for
its specialty stores providing products and services such as pets, jewellery, information technology
products, dining and entertainment.
Asset enhancement plans
In late 2007, a new cellphone centre on the semi-ground level will be set up, the pet centre will be improved
and enlarged, and the second floor will be converted to provide for a more family-oriented merchandise
mix.
Other plans under consideration include enhancement of the external and internal presentation of the
mall. This includes improvements to the facade, main entrance and atrium, as well as enhancement to the
tenancy mix.
The following chart provides a breakdown (by area) of the various trade sub-sectors represented in Gajah
Mada Plaza as at 30 June 2007:
Gajah Mada Plaza—Trade sector analysis (By area)
Trade sub sector
Contribution (%)
Leisure & Entertainment
35.5
Supermarket/Hypermarket
16.6
Food & Beverage/Food Court
10.8
Department Store
9.2
Other
8.0
Gifts & Specialty
7.0
Electronic/IT
5.2
Fashion
2.8
Home Furnishings
2.0
Sports & Fitness
1.2
Services
1.1
Books & Stationery
0.3
Hobbies
0.3
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Business and properties
The table below sets out information on the 10 largest tenants of Gajah Mada Plaza based on Committed
Leases as at 30 June 2007:
Tenant
Business sector
Millennium International
Executive Club . . . . . . .
Rimo Department Store . .
Hypermart. . . . . . . . . . . .
McDonald’s . . . . . . . . . . .
Inul Vista . . . . . . . . . . . .
Resto Mart . . . . . . . . . . .
Gajah Mada 21 . . . . . . . .
Hanamasa . . . . . . . . . . .
Platinum Resto . . . . . . . .
Optical Seis. . . . . . . . . . .
.
.
.
.
.
.
.
.
.
.
Lease expiry date
Percentage of
total NLA
Percentage of the
total base rental
income of Gajah
Mada Plaza based
on Committed
Leases as at
30 June 2007
(%)
(%)
Leisure & Entertainment
Department Store
Supermarket/Hypermarket
F&B
Leisure & Entertainment
F&B
Leisure & Entertainment
F&B
F&B
Gifts & Specialty
29 October 2014
30 June 2008
2 February 2015
28 July 2013
31 August 2011
30 April 2009
31 March 2013
31 October 2007
30 April 2009
30 April 2009
20.2
8.0
14.5
1.8
2.6
1.2
4.9
0.5
0.7
0.2
10 largest tenants . . . . . . .
Other tenants . . . . . . . . . .
—
—
—
—
54.5(1)
45.5
Total . . . . . . . . . . . . . . . .
—
—
8.6
7.7
7.3
3.6
2.5
2.1
1.9
1.8
1.8
1.6
38.7(1)
61.3
100.0
100.0
Note:
(1) Due to rounding differences.
Expiry profile
The following table sets out the expiry profiles of the tenancies at Gajah Mada Plaza as at 30 June 2007:
Total number of
leases expiring
Period
FY2007 . . . . . . .
FY2008 . . . . . . .
FY2009 . . . . . . .
Beyond FY2009.
Vacant. . . . . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
NLA of expiring
leases
Monthly Gross
Rent of expiring
leases as a
percentage of
forecast rental
income
Expiring leases as
a percentage of
NLA as at 30 June
2007
(sq m)
(%)
(%)
.
.
.
.
.
64
107
27
24
—
3,241
12,069
1,225
14,002
3,741
13.6
33.0
10.5
24.2
18.8
9.5
35.2
3.6
40.8
10.9
Total . . . . . . . . . . . . . . . . . . . . . .
222
34,278
100.0(1)
100.0
Note:
(1) Due to rounding differences.
Competition
Existing: Located in Jakarta’s affluent Chinatown’s precinct, Gajah Mada Plaza currently faces strong
competition from 13 retail malls with an aggregate NLA in excess of 20,000 sq m and located within a
six km radius. Many of these retail malls compete for the same target segment as Gajah Mada Plaza and
may potentially impact the sales growth that can be achieved at Gajah Mada Plaza.
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Business and properties
The largest competing retail malls are:
• Mal Taman Anggrek, situated three km to the southwest of Gajah Mada Plaza, which comprises
approximately 97,000 sq m of retail space including Metro and Galleria department stores and also a
Hero Supermarket;
• Cosmopolitan Mall Pluit, situated six km northwest of Gajah Mada Plaza and anchored by both Matahari
Department Store and Carrefour hypermarket, is currently undergoing extensive asset enhancements
which will potentially increase its retail space and improve the positioning of the mall with shoppers in its
catchment areas. The estimated NLA is 88,040 sq m after asset enhancements. As at Listing Date,
LMIR Trust has entered into a non-binding memorandum of understanding with PT. Multi Pratama
Gemilang Perkasa (Pikko Group) to acquire Cosmopolitan Mall Pluit (see “—Potential Acquisition of
Properties from Third Party Vendors”);
• Mal Ciputra, situated three km west of Gajah Mada Plaza and anchored by Batik Keris, Matahari
Department Store and Hero Supermarket, comprises around 51,000 sq m of retail space;
• Mega Glodok Kemayoran is situated three km east of Gajah Mada Plaza and anchored by Indonesia
Marine Centre and Home Ciento. The strata mall has a tenancy mix dominated by automotive parts
retailers;
• Plaza Indonesia is a high-end retail mall targeting the upper income shopper segment and is situated
three km south of Gajah Mada Plaza. The mall contains 42,000 sq m of mainly high-end retailing,
including a Debenham’s department store;
• Jakarta City is located three km south of Gajah Mada Plaza and is a strata mall anchored by a
Hypermart but without a department store; and
• Mangga Dua contains a number of retail facilities, predominantly strata malls, and located three km
north of Gajah Mada Plaza. The main malls include Mangga Dua Square (60,000 sq m of NLA), WTC
Mangga Dua (45,000 sq m of NLA), ITC Mangga Dua (44,000 sq m) and Mal Mangga Dua (35,000 sq m).
These retail malls target the lower to middle income segment households.
Future: The competitive environment of Gajah Mada Plaza’s trade area is expected to intensify over the
next five years, with the planned development of a number of new competing retail malls.
There are a number of retail projects currently under construction which will target middle income
households within Gajah Mada Plaza’s population catchment. These developments include:
• Gajah Mada Square, a lease mall with an estimated NLA of 35,000 sq m, which is scheduled to begin
operations in the third quarter of 2007 and is located one km from Gajah Mada Plaza;
• Mall of Indonesia, which is scheduled to begin operations in the first quarter of 2008;
• Season’s City, a strata mall with an estimated NLA of 40,000 sq m, which is scheduled to begin
operations in 2008, located three km from Gajah Mada Plaza and anchored by Carrefour hypermarket;
and
• Emporium, a lease mall with an estimated NLA of 63,000 sq m, which is scheduled to begin operations
in the second quarter of 2009 and will be located five km from Gajah Mada Plaza.
These new retail malls may potentially reduce the sales growth at Gajah Mada Plaza.
(See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
Other information
The following table sets out other relevant information relating to Gajah Mada Plaza.
Year of building completion . . . . . . . .
1982
Strata Title Area . . . . . . . . . . . . . . . .
37,501 sq m
GFA as at 30 June 2007 . . . . . . . . . .
66,160 sq m
NLA as at 30 June 2007 . . . . . . . . . .
34,278 sq m
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Business and properties
Occupancy rate as at 30 June 2007. .
89.1%
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$103.8 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$117.0 million
Car parking lots . . . . . . . . . . . . . . . . .
885
Motorcycle parking lots . . . . . . . . . . .
665
Population catchment . . . . . . . . . . . .
429,298 households(1)
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Strata Titles as evidenced by certificates :
(i)
No. 438/I/S Kel Petojo Utara, registered under the name
of PT Graha Baru Raya, covering an area of 5,186.1 sq m;
(ii)
No. 440/II/S Kel Petojo Utara, registered under the name
of PT Graha Baru Raya, covering an area of 4,755.6 sq m;
(iii)
No. 442/III/S Kel Petojo Utara, registered under the name
of PT Graha Baru Raya, covering an area of 4,918.6 sq m;
(iv)
No. 325/-I/S Kel Petojo Utara, registered under the name
of PT Graha Baru Raya, covering an area of 5,228.0 sq m;
(v)
No. 326/-I/S Kel Petojo Utara, registered under the name
of PT Graha Baru Raya, covering an area of 135.0 sq m;
(vi)
No. 328/I/S Kel Petojo Utara, registered under the name
of PT Graha Baru Raya, covering an area of 18 sq m;
(vii)
No. 330/II/S Kel Petojo Utara, registered under the name
of PT Graha Baru Raya, covering an area of 17 sq m;
(viii)
No. 332/III/S Kel Petojo Utara, registered under the name
of PT Graha Baru Raya, covering an area of 43 sq m;
(ix)
No. 333/IV/S Kel Petojo Utara, registered under the name
of PT Graha Baru Raya, covering an area of 4,618 sq m;
(x)
No. 334/V/S Kel Petojo Utara, registered under the name
of PT Graha Baru Raya, covering an area of 2,645 sq m;
(xi)
No. 335/V-VI-VII/S Kel Petojo Utara, registered under the
name of PT Graha Baru Raya, covering an area of
3,205 sq m;
(xii)
No. 336/VI-VII/S Kel Petojo Utara, registered under the
name of PT Graha Baru Raya, covering an area of
4,534 sq m;
(xiii)
No. 337/VII/S Kel Petojo Utara, registered under the
name of PT Graha Baru Raya, covering an area of
1,607 sq m; and
(xiv)
No. 338/VIII/S Kel Petojo Utara, registered under the
name of PT Graha Baru Raya, covering an area of
591 sq m.
The above strata titles are constructed on underlying HGB
common land, valid until 24 January 2020 and are extendable
for another term of up to 20 years. Following expiration of this
additional term, a renewal application may be made. (See
136
Business and properties
“Overview of the Relevant Laws and Regulations in Indonesia—
Rights to Own and/or to Use—Strata Titles”)
Average Specialty Base Rent as at
30 June 2007 (Rp.’000 per sq m per
month) . . . . . . . . . . . . . . . . . . . . . . .
106
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—3,726
Projection Year 2008—8,319
Projection Year 2009—10,253
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 10.5%
Note:
(1) The figure comprises the number of households within the primary trade area of the relevant Retail
Mall. (See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
137
Business and properties
CIBUBUR JUNCTION
Jalan Jambore Raya 1, Cibubur, East Jakarta
Jakarta profile
(See “—Gajah Mada Plaza—Jakarta Profile”.)
Description
Cibubur Junction is a five storey with one basement level and partial roof top level shopping centre with a
carpark comprising 611 parking lots. The mall is located strategically in the middle of Cibubur which is one
of the most affluent and upmarket residential areas in Jakarta. The mall is situated five km south of
Jakarta’s Jagorawi toll road and is easily accessible and visible from the main road.
Being the only retail mall with a NLA of above 20,000 sq m within an approximately 10-km radius, Cibubur
Junction is the only mall within its locality that offers shoppers a one-stop shopping experience. Its anchor
tenants, Hypermart and Matahari Department Store are well complemented by international and local
specialty tenants which include restaurants, fashion labels, a cinema, bookstores, a video game centre
and a fitness centre.
Tenant profile
As at 30 June 2007, Cibubur Junction has 163 retail tenants based on Committed Leases. The tenant
profile of the mall comprises international brand names which target the middle to upper middle income
residents within the trade area. These retailers include The Body Shop, Giordano, Polo Ralph Lauren,
Charles & Keith, Guardian, Planet Surf, Starbucks Coffee and Pizza Hut.
The lower ground floor is anchored by Hypermart, which accounts for approximately 25.8% of the NLA.
The ground floor predominantly comprises retailers selling branded fashion and accessories, and quality
F&B retailers. The lower ground floor and the ground floor are also used for exhibition and temporary
leasing. The standard lease period for exhibition is two weeks per period. The standard lease period for
temporary leases is six months per period. The area for exhibition on the lower level is approximately
138
Business and properties
200 sq m and is usually leased out for specialty products. The ground floor area is approximately 400 sq m
and is usually leased out for automotive exhibitions.
The upper ground and first floor are anchored by the Matahari Department Store, which is expanding to the
second floor. The expanded Matahari Department Store accounts for 16.7% of the NLA as at 30 June
2007. The upper ground and first floor comprise a mix of specialty retailers in trade sectors such as
fashion, children’s wear, accessories and beauty. A large Sports Warehouse store is on the first floor while
Karisma Bookstore is on the upper ground.
The tenant mix on the second floor focuses on entertainment and lifestyle. This floor includes the
expanded Matahari Department Store, Timezone, Fitness First and Studio 21 Cinema. There are also
a large number of small tenancies such as electronics and handphone retailers. The top level comprises
Fitness First and Studio 21 Cinema (which has four screens).
As at 30 June 2007, the average monthly rental rate of specialty stores in Cibubur Junction is
approximately Rp. 200,000 per sq m.
Asset enhancement plans
Current asset enhancement plans include the expansion of the Matahari Department Store to the third
level and relocation of the food court to the basement to achieve better synergies.
The following chart provides a breakdown (by area) of the various trade sub-sectors represented in
Cibubur Junction as at 30 June 2007:
Cibubur Junction—Trade sector analysis (By area)
Trade sub sector
Contribution (%)
Supermarket/Hypermarket
26.4
Department Store
17.1
Food & Beverage/Food Court
15.2
Fashion
9.7
Leisure & Entertainment
7.8
Sports & Fitness
7.2
Home Furnishings
5.5
Services
2.6
Books & Stationery
2.5
Other
2.2
Electronic/IT
1.8
Toys
1.0
Gifts & Specialty
0.7
Hobbies
0.3
139
Business and properties
The table below sets out information on the 10 largest tenants of Cibubur Junction based on Committed
Leases as at 30 June 2007:
Tenant
Business sector
Hypermart. . . . . . . . . .
Matahari Department
Store . . . . . . . . . . . .
Fitness First . . . . . . . .
Solaria . . . . . . . . . . . .
Sport Warehouse. . . . .
Studio 21 . . . . . . . . . .
A&W . . . . . . . . . . . . . .
Karisma . . . . . . . . . . .
TimeZone . . . . . . . . . .
Ring Master . . . . . . . . .
Lease expiry date
Percentage of
total NLA
Percentage of the
total base rental
income of Cibubur
Junction based on
Committed Leases
as at 30 June 2007
(%)
(%)
.
Supermarket/Hypermarket
27 July 2015
25.8
14.2
.
.
.
.
.
.
.
.
.
Department Store
Sports & Fitness
F&B
Fashion
Leisure & Entertainment
F&B
Books and Stationery
Leisure & Entertainment
F&B
30 August 2015
14 April 2021
14 April 2012
9 December 2010
23 March 2016
30 November 2012
30 November 2010
30 October 2015
29 March 2011
16.7
4.9
1.4
2.1
4.7
0.7
2.1
2.3
0.6
11.2
3.0
2.8
2.1
1.6
1.6
1.5
1.5
1.3
10 largest tenants . . . . .
Other tenants . . . . . . . .
—
—
—
—
61.3(1)
38.7
40.8
59.2
Total . . . . . . . . . . . . . .
—
—
100.0
100.0
Note:
(1) Due to rounding differences.
Expiry profile
The following table sets out the expiry profiles of the tenancies at Cibubur Junction as at 30 June 2007:
Total number of
leases expiring
Period
FY2007 . . . . . . .
FY2008 . . . . . . .
FY2009 . . . . . . .
Beyond FY2009 .
Vacant . . . . . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
NLA of expiring
leases
Monthly gross rent
of expiring leases
as a percentage of
forecast rental
income
Expiring leases as
a percentage of NLA
as at 30 June 2007
(sq m)
(%)
(%)
.
.
.
.
.
4
6
7
146
—
83
237
287
28,892
4,641
Total . . . . . . . . . . . . . . . . . .
163
34,139(1)
0.7
1.7
1.8
71.5
24.3
0.2
0.7
0.8
84.6
13.6
100.0
100.0(1)
Note:
(1) Due to rounding differences.
Competition
Existing: Cibubur Junction currently faces competition from the following smaller retail malls within a
10-km radius.
• Plaza Cibubur, located three km from Cibubur Junction, which commenced operations in 2001 and has
a NLA of 17,000 sq m, anchored by Superindo Supermarket and Karisma bookstore.
• Mal Citra Gran, which commenced operations in 2001 and located five km from Cibubur Junction, has a
NLA of 10,900 sq m and is anchored by Hero Supermarket.
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Business and properties
• Mal Cimanggis, which commenced operations in 2003, is located six km away with a NLA of
12,000 sq m, and is anchored by Naga supermarket.
The above three competing retail malls position themselves as a convenient shopping location, as
opposed to a destination mall, therefore targeting only their immediate population catchment.
Within a 10-km radius, other competing retail malls include:
• Cileungsi Trade Centre, a strata mall with a NLA of 10,000 sq m, located eight km away with no anchor
tenants.
• Tamini Square, a strata mall with a NLA of 35,000 sq m, located nine km away and anchored by
Carrefour hypermarket and Cahaya Department Store.
Despite the distance from Cibubur Junction, Cileungsi Trade Centre and Tamini Square compete for
shoppers within their primary and secondary trade areas.
Future: “Appendix F—Independent Report on the Indonesian Retail Property Market” indicates that, at
present, there are no known proposals for new centres to compete directly with Cibubur Junction.
However, given the relative strength of retail supply in recent years, it is possible that competing
centres will be developed in the future.
(See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
Other information
The following table sets out other relevant information relating to Cibubur Junction.
Year of building completion . . . . . . . .
2005
Land Area . . . . . . . . . . . . . . . . . . . . .
31,987 sq m
GFA as at 30 June 2007 . . . . . . . . . .
49,341 sq m
NLA as at 30 June 2007 . . . . . . . . . .
34,139 sq m
Occupancy rate as at 30 June 2007. .
86.4%
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$94.2 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$101.8 million
Car parking lots . . . . . . . . . . . . . . . . .
611
Motorcycle parking lots . . . . . . . . . . .
500
Population catchment . . . . . . . . . . . .
422,862 households(1)
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Cibubur Junction is owned by PT Cibubur Utama and was built
pursuant to a BOT Scheme based on the deed of cooperation
agreement on Land Utilisation for Construction and
Development of a Shopping Centre Located at Cibubur—East
Jakarta (Perjanjian Kerjasama tentang Pendayagunaan Lahan
Untuk Pembangunan dan Pengembangan Gedung Pusat
Perbelanjaan terletak di Cibubur—Jakarta Timur) No. 68,
dated 28 July 2003, between PD Pembangunan Sarana Jaya
DKI Jakarta as BOT Grantor and PT Cibubur Utama as BOT
Grantee, made before Imas Fatimah S.H., Notary in Jakarta, as
amended by Addendum I dated 25 November 2004 and
Addendum II dated 26 November 2004.
PD Pembangunan Sarana Jaya DKI Jakarta, as BOT Grantor,
owns a plot of land located in Cibubur covering an area of 31,987
sq m based on Certificate of HGB No. 01210/Cibubur dated
141
Business and properties
24 December 2001 and valid until 23 December 2021. Under the
BOT agreement, PD Pembangunan Sarana Jaya DKI Jakarta
and PT Cibubur Utama agree to enter into a cooperation
agreement, at which PD Pembangunan Sarana Jaya DKI
Jakarta agrees to provide the land and PT Cibubur Utama
agrees to construct a shopping centre over the land. Cibubur
Junction BOT arrangement between PT Cibubur Utama and
PD Pembangunan Sarana Jaya DKI Jakarta shall be valid
until 28 July 2025.
PT Cibubur Utama (as BOT Grantee) cannot assign its rights
under the BOT agreement and transfer the share ownership of
the shareholders of PT Cibubur Utama to another party unless
prior written approval is obtained from PD Pembangunan
Sarana Jaya DKI Jakarta (as BOT Grantor). Consent of the
transfer of shares in Cibubur Junction to its relevant Retail Mall
Singapore SPC has been obtained as evidenced by Letter
No. 306/076.11, dated 4 April 2007, issued by the BOT Grantor.
The land on which Cibubur Junction is situated is owned by
PD Pembangunan Sarana Jaya DKI Jakarta. Therefore,
PT Cibubur Utama has no right to encumber or transfer the land.
Average Specialty Base Rent as at
30 June 2007 (Rp.’000 per sq m per
month) . . . . . . . . . . . . . . . . . . . . . . .
200
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—4,233
Projection Year 2008—8,895
Projection Year 2009—8,943
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 11.2%
Note:
(1) The figure comprises the number of households within the primary trade area of the relevant Retail
Mall. (See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
142
Business and properties
THE PLAZA SEMANGGI
Jalan Jend. Sudirman Kav.50, South Jakarta
Jakarta profile
(See “—Gajah Mada Plaza—Jakarta Profile”.)
Description
The Plaza Semanggi is a modern shopping centre comprising seven storey and two basement levels
shopping centre and 13 levels of office floors, with a carpark comprising approximately 1,100 parking lots.
The Plaza Semanggi is strategically located in the heart of Jakarta’s CBD within the city’s Golden Triangle
at the Semanggi interchange, which is a junction channelling north-south and east-west traffic across
central Jakarta. The centre is situated among many commercial buildings and adjacent to Atmajaya
University, one of Jakarta’s most prominent universities. Anchored by Centro Department Store and Giant
Hypermarket, the 479 tenants (as at 30 June 2007) provide all categories of shoppers with a diverse and
comprehensive tenant mix. The Plaza Semanggi offers both destination and convenience shopping, and
is supported by its central location, which is easily accessible by cars and public transport.
Tenant profile
As at 30 June 2007, The Plaza Semanggi had 479 retail tenants based on Committed Leases. The mall is
anchored by the only Centro Department Store located in Jakarta. This Centro Department Store
occupies three levels, namely the upper ground level, level one and level two, with Fitness First also
occupying space across these three levels.
The lower ground floor is occupied by Giant Hypermarket. The ground floor includes a significant number
of retailers selling F&B, retail services, gifts, and health and beauty products.
The upper ground floor contains a number of international fashion retailers to complement the department
store and to cater for middle to upper middle income visitors. High profile tenants on the upper ground level
143
Business and properties
include Planet Surf, Giordano, Adidas, Da Vinci jewellery, Starbucks, Bread Talk and a number of optical
retailers.
The first floor mainly comprises fashion retailers selling accessories and shoes. The second level focuses
on mobile phones, electronics and computers.
The third level is dominated by household wares and furniture retailers. Duck King, a popular local
restaurant, is also on the third level. Level 3A houses a traditional food court with small hawker style
retailers and a restaurant precinct. The cinema complex is located on the fifth level.
As at 30 June 2007, the average monthly rental rate of specialty stores in The Plaza Semanggi is
approximately Rp. 119,000 per sq m.
Asset enhancement plans
Current asset enhancement plans include a new alfresco café area called “Plangi on the Sky” which will
increase the existing NLA by an estimated 3,000 sq m. Other asset enhancement plans include the
continued upgrade of the tenancy mix to introduce the most current and innovative retailers to cater to the
multi-dimensional customer profile.
The following chart provides a breakdown (by area) of the various trade sub-sectors represented in The
Plaza Semanggi as at 30 June 2007:
The Plaza Semanggi—Trade sector analysis (By area)
Trade sub sector
144
Contribution (%)
Department Store
16.4
Food & Beverage/Food Court
16.0
Leisure & Entertainment
13.2
Supermarket/Hypermarket
13.0
Electronic/IT
12.4
Home Furnishings
7.1
Fashion
5.5
Sports & Fitness
4.4
Other
4.3
Books & Stationery
3.8
Services
1.2
Jewelry
0.9
Hobbies
0.7
Gifts & Specialty
0.7
Optic
0.4
Business and properties
The table below sets out information on the 10 largest tenants of The Plaza Semanggi based on
Committed Leases as at 30 June 2007:
Percentage of
total NLA
Percentage of the
total base rental
income of The Plaza
Semanggi based on
Committed Leases
as at 30 June 2007
(%)
(%)
Tenant
Business sector
Lease expiry date
Centro Department
Store. . . . . . . . . . . .
Giant Hypermarket . . .
Electronic Solution
Indonesia . . . . . . . . . .
Fitness First . . . . . . . .
X Lounge . . . . . . . . . .
Gramedia . . . . . . . . . .
3 Store . . . . . . . . . . . .
Duck King. . . . . . . . . .
Gillian’s Billiard . . . . . .
Game Master . . . . . . .
Department Store
4 November 2013
13.3
8.6
.
.
Supermarket/Hypermarket 14 February 2019
10.6
5.6
.
.
.
.
.
.
.
.
Electronics
Sports & Fitness
Entertainment & Leisure
Bookstore & Stationery
Electronic/IT
F&B
Entertainment & Leisure
Entertainment & Leisure
31
17
30
30
29
31
19
28
7.2
3.6
3.2
3.0
0.3
0.6
1.7
1.4
5.0
2.5
2.4
1.8
1.7
1.5
1.5
1.0
10 largest tenants . . . . .
Other tenants . . . . . . . .
—
—
—
—
44.8(1)
55.2
31.6
68.4
Total . . . . . . . . . . . . . .
—
—
October 2011
May 2020
November 2009
November 2010
February 2012
July 2009
July 2009
February 2015
100.0
100.0
Note:
(1) Due to rounding differences.
Expiry Profile
The following table sets out the expiry profiles of the tenancies(1) at The Plaza Semanggi as at 30 June
2007:
Total number of
leases expiring
Period
FY2007 . . . . . . .
FY2008 . . . . . . .
FY2009 . . . . . . .
Beyond FY2009 .
Vacant . . . . . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
NLA of expiring
leases
Monthly gross rent
of expiring leases
as a percentage of
forecast rental
income
Expiring leases as
a percentage of NLA
as at 30 June 2007
(sq m)
(%)
(%)
.
.
.
.
.
15
57
113
294
—
1,346
5,813
9,334
40,084
2,106
Total . . . . . . . . . . . . . . . . . .
479
58,685(2)
4.3
13.6
30.1
49.0
3.0
2.3
9.9
15.9
68.3
3.6
100.0
100.0
Notes:
(1) Includes office leases.
(2) Due to rounding differences.
Competition
Existing: The Plaza Semanggi, located in the heart of Jakarta’s CBD, currently faces competition from a
number of retail malls in the immediate trade area. There are 12 competing malls, each with a NLA in
excess of 20,000 sq m, and located within a 10 km radius from The Plaza Semanggi. Some of these
competing retail malls are anchored by international retailers such as Sogo Department Store, Giant
145
Business and properties
Hypermarket, Galleria, Zara, Watson’s Personal Care Store, Metro department store, Nichols Edwards,
and local retailers such as Hero Supermarket and Matahari Department Store. Many of these retail malls
compete for the same target segment as The Plaza Semanggi and may potentially impact the sales
growth that can be achieved at The Plaza Semanggi.
The largest competing retail malls within a six-km radius are:
• Pondok Indah Mall, situated six km to the southwest of The Plaza Semanggi, with a NLA of
approximately 100,000 sq m, and is anchored by Giant Hypermarket, Sogo and Metro department
stores, Zara and Studio 21 Cinema.
• Mal Taman Anggrek, situated five km to the northwest of The Plaza Semanggi, with a NLA of
approximately 97,000 sq m, with a tenant profile including Metro and Galleria department stores as
well as Hero Supermarket.
• Plaza Senayan and the recently opened Senayan City, situated just two km to the southwest of The
Plaza Semanggi, with an aggregate NLA of approximately 80,000 sq m. Both retail malls target
shoppers in the middle to upper income segment, with Plaza Senayan focusing on a slightly more
affluent target segment.
• Mal Ciputra, situated six km north of The Plaza Semanggi, with a NLA of 51,000 sq m, and anchored by
Batik Keris, Matahari and Hero Supermarket.
• Plaza Indonesia, situated three km north of The Plaza Semanggi, with a NLA of approximately
42,000 sq m, is a high-end retail mall targeting the upper income shopper segment which
comprises mainly high-end retailers, including a Debenham’s department store.
• Jakarta City, situated three km north of The Plaza Semanggi, is a strata mall anchored by a Hypermart
but does not house a department store.
Future: The competitive environment of The Plaza Semanggi’s trade area is expected to intensify over
the next five years, with the planned development of a number of new competing retail malls.
There are a number of new retail projects currently under construction which will target the middle income
households within The Plaza Semanggi’s population catchment. These developments will add an
aggregate NLA of 318,900 sq m to Jakarta’s CBD and are scheduled to be completed by the end of 2009.
These developments include:
• Pacific Place, located one km from The Plaza Semanggi, with a NLA of approximately 75,000 sq m, and
will be anchored by Metro department store and Kidzania.
• Grand Indonesia, located three km away from The Plaza Semanggi, with a NLA of approximately
108,000 sq m, and will be anchored by Seibu, Harvey Nichols and Blitz Megaplex (a cinema operator).
• Citywalk Sudirman @ Cityloft, located two km away from The Plaza Semanggi, with a NLA of
approximately 17,300 sq m.
• Main Street Gandaria, located five km away from The Plaza Semanggi, with a NLA of approximately
94,000 sq m, and will be anchored by Metro department store, Fitness First, Studio and Electronic
Solutions.
• Plaza Indonesia extension, which will increase its current NLA of 42,000 sq m by an additional
25,386 sq m.
• Kota Kasablanca, located three km away from The Plaza Semanggi, with a NLA of approximately
62,000 sq m and anchored by Sogo department store and Fitness First.
• Kemang City Mall, located five km away from The Plaza Semanggi, with a NLA of approximately
56,052 sq m.
• Sudirman Place, located one km away from The Plaza Semanggi, with a NLA of approximately
31,000 sq m.
146
Business and properties
• Epicentrum Walk, located two km away from The Plaza Semanggi, with a NLA of approximately
26,200 sq m.
(See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
Other information
The following table sets out other relevant information relating to The Plaza Semanggi.
Year of building completion . . . . . . . .
2003
Land Area . . . . . . . . . . . . . . . . . . . . .
19,000 sq m
GFA as at 30 June 2007 . . . . . . . . . .
91,232 sq m
NLA as at 30 June 2007 . . . . . . . . . .
58,685 sq m(1)
Occupancy rate as at 30 June 2007. .
96.4%
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$214.8 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$211.1 million
Car parking lots . . . . . . . . . . . . . . . . .
1,100
Motorcycle parking lots . . . . . . . . . . .
750
Population catchment . . . . . . . . . . . .
270,387 households(2)
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
The Plaza Semanggi was built pursuant to a BOT Scheme
based on the Introductory agreement of revitalisation,
management and transfer (Perjanjian Pengikatan Revitalisasi,
Pengelolaan dan Pengalihan) dated 5 January 2000 between
Yayasan Gedung Veteran Republik Indonesia as BOT Grantor
and PT Primatama Nusa Indah as BOT Grantee, as confirmed
by deed of revitalisation, development, management and
transfer (Perjanjian Revitalisasi, Pembangunan, Pengolahan
dan Pengalihan) No. 56 dated 29 March 2000 and as
amended by deeds of addendum Nos. 25 and 26, both dated
26 May 2000, made before Popie Savitri M Pharmanto S.H.,
Notary in Jakarta and Addendum dated 29 January 2002.
Yayasan Gedung Veteran Republik Indonesia was given a
permit to use a plot of land and buildings in an area of 19,000
sq m located at Kecamatan Setiabudi, Karet Semanggi, DKI
Jakarta (known as Jalan Jend Sudirman Kav. 50 RT 002/RW01),
With Right to Use (Hak Pakai—“HP”) Title No. 133 by State
Secretary of the Republic of Indonesia as the land owner.
Yayasan Gedung Veteran Republik Indonesia and PT
Primatama Nusa Indah have agreed to enter into a BOT
Scheme to construct a shopping centre and an office building.
HP Title no. 133/Karet Semanggi is registered under the name of
State Secretary of the Republic of Indonesia and will be valid as
long as the land is being used. This BOT agreement is valid for
30 years from 8 July 2004.
PT Primatama Nusa Indah, with consent from Yayasan Gedung
Veteran Republik Indonesia (as BOT Grantor) and the State
Secretariat of the Republic of Indonesia, may assign its rights
and obligations under the BOT agreement to other parties or
bank or financial institutions that finance new construction,
provided that the BOT agreement shall bind the transferee.
147
Business and properties
Instead of the transfer of the right of the BOT Agreement, which
requires consent from the BOT Grantor, the transfer of the interest
of the BOT agreement may also be conducted through transfer of
shares of the shareholders of PT Primatama Nusa Indah. The
BOT Agreement does not prohibit the transfer of shares by the
shareholders of PT Primatama Nusa Indah.
Since PT Primatama Nusa Indah does not own the land on which
The Plaza Semanggi is situated, it cannot transfer or encumber
the land.
Average Specialty Base Rent as at
30 June 2007 (Rp.’000 per sq m per
month) . . . . . . . . . . . . . . . . . . . . . . .
119
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—8,572
Projection Year 2008—17,356
Projection Year 2009—18,274
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 20.4%
Notes:
(1) Current ongoing asset enhancement works to include a new alfresco café area called the “Plangi on
the Sky” café will increase NLA by an estimated 3,000 sq m, bringing total NLA to approximately
61,685 sq m by the end of 2007.
(2) The figure comprises the number of households within the primary trade area of the relevant Retail
Mall. (See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
148
Business and properties
MAL LIPPO CIKARANG
Jalan MH Thamrin, Lippo Cikarang, Greater Jakarta
Jakarta profile
(See “—Gajah Mada Plaza—Jakarta Profile”.)
Description
Mal Lippo Cikarang is a two-level retail mall located within the Lippo Cikarang estate. The estate is
approximately 40 km east of Jakarta and is connected to Jakarta via the Jakarta-Cilkampek toll road.
Comprising industrial, commercial and residential components, the Lippo Cikarang estate is home to
25,000 residents and approximately 65,000 jobs. Mal Lippo Cikarang is the main shopping centre in the
estate and has limited competition within an approximately 10-km radius. The mall is anchored by
Matahari Department Store, Hypermart and Hero Supermarket, complemented by a cinema, a bookshop,
a video game centre, restaurants and dining outlets. The mall has recently completed a S$4.7 million
expansion and renovation program which has increased its NLA by more than 50%.
Tenant profile
As at 30 June 2007, Mal Lippo Cikarang has 116 retail tenants based on Committed Leases. The mall is
anchored by Matahari Department Store, Hypermart, Hero Supermarket and Studio 21 Cinema which
collectively occupy approximately 55.0% of the mall’s NLA, and is well complemented by a diverse set of
specialty tenants from a wide variety of industries. The prominent specialty tenants include Nokia,
Timezone, Toko Buku Utama bookstore, Kentucky Fried Chicken, Wendy’s Restaurant, Pizza Hut, The
Executive, Dunkin Donuts and Johnny Andrean Salon.
The mall has achieved an occupancy rate of 96.3% as at 30 June 2007.
With the completion of the extension for Hypermart, the three anchor tenants, Matahari Marketplace
supermarket and Matahari Department Store, Hero Supermarket and Hypermart will account for over
66% of the NLA of Mal Lippo Cikarang, which will provide stable and long-term rental income and attract
149
Business and properties
shoppers to the mall. The leases of 51 existing tenants expire in 2007 and this will present opportunities to
review the tenancy mix and potentially achieve higher rentals for the expiring leases.
Asset enhancement plans
Construction of an extension annex, which increased the mall’s NLA by 10,694 sq m, has recently been
completed. As at 30 June 2007, 8,539 sq m or approximately 79.8% of this additional NLA space created
has been pre-committed to Hypermart. The remaining additional NLA will be leased out to specialty
tenants.
The following chart provides a breakdown (by area) of the various trade sub-sectors represented in Mal
Lippo Cikarang as at 30 June 2007:
Mal Lippo Cikarang—Trade sector analysis (By area)
Trade sub sector
150
Contribution (%)
Department Store
23.7
Supermarket/Hypermarket
21.3
Leisure & Entertainment
14.0
Food & Beverage/Food Court
12.1
Fashion
12.1
Home Furnishings
5.4
Books & Stationery
3.7
Services
2.9
Electronic/IT
1.5
Other
1.2
Toys
0.8
Sports & Fitness
0.7
Gifts & Specialty
0.6
Business and properties
The table below sets out information on the 10 largest tenants of Mal Lippo Cikarang based on Committed
Leases as at 30 June 2007:
Tenant
Business sector
Matahari Department
Store . . . . . . . . . . . .
Hero supermarket . . . .
Studio 21 Cinema. . . . .
Solaria . . . . . . . . . . . .
Kentucky Fried
Chicken . . . . . . . . . .
Toko Buku Utama . . . . .
Sting . . . . . . . . . . . . . .
Wendy’s Restaurant . . .
Hoka-Hoka Bento . . . . .
TimeZone . . . . . . . . . .
Lease expiry date
Percentage of
total NLA
Percentage of the
total base rental
income of Mal Lippo
Cikarang based on
Committed Leases as
at 30 June 2007
(%)
(%)
. Department store
9 December 2026
. Supermarket/Hypermarket 9 August 2008
. Leisure & Entertainment
16 February 2015
. F&B
16 May 2012
.
.
.
.
.
.
F&B
Bookstore
Furniture
F&B
F&B
Leisure & Entertainment
9 June 2010
31 August 2007
31 January 2012
14 March 2012
22 August 2007
30 September 2011
10 largest tenants. . . . . .
Other tenants. . . . . . . . .
—
—
—
—
Total . . . . . . . . . . . . . . .
—
—
33.4
12.5
9.4
2.8
18.0
11.8
4.2
4.1
1.1
3.4
1.1
1.5
1.4
3.8
3.1
3.1
2.8
2.4
2.2
1.9
70.3(1)
29.7
53.5(1)
46.5
100.0
100.0
Note:
(1)
Due to rounding differences.
Expiry Profile
The following table sets out the expiry profiles of the tenancies at Mal Lippo Cikarang as at 30 June 2007:
Total number
of leases
expiring
Period
FY2007 . . . . . . .
FY2008 . . . . . . .
FY2009 . . . . . . .
Beyond FY2009.
Vacant . . . . . . . .
Total . . . . . . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
51
29
11
25
—
116
NLA of
expiring
leases
Monthly gross rent
of expiring leases
as a percentage of
forecast rental
income
Expiring leases as
a percentage of NLA
as at 30 June 2007
(sq m)
(%)
(%)
2,187
3,589
342
11,195
661
17,974
14.7
27.9
5.9
46.2
5.3
100.0
12.2
20.0
1.9
62.3
3.7
100.0(1)
Note:
(1)
Due to rounding differences.
Competition
Existing: Mal Lippo Cikarang is the only major shopping centre serving the Lippo Cikarang Township.
Competing retail malls within a 10 km radius and each comprising an estimated NLA of at least 8,000 sq m
include:
• Mal Carrefour Cikarang, which began operations in early 2007, is located four km away from Mal Lippo
Cikarang, with a NLA of approximately 8,000 sq m, and is anchored by Carrefour hypermarket. The mall
151
Business and properties
mainly focuses on providing day-to-day necessities and groceries, with limited F&B and product
offerings.
• SGC Cikarang, a strata mall located nine km to the north of Mal Lippo Cikarang, with a NLA of
approximately 29,150 sq m, and is anchored by Ramayana hypermarket.
• Cikarang Trade Centre, a strata mall located two km north of Mal Lippo Cikarang, with a NLA of 10,000
sq m. The mall does not have an anchor tenant and targets the low to middle income segment of
shoppers.
Future: “Appendix F—Independent Report on the Indonesian Retail Property Market” indicates that, at
present, there are no known proposals for new centres that may compete directly with Mal Lippo Cikarang.
However, given the relative strength of retail supply in recent years, it is possible that such competing
centres will be developed in the future.
(See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
Other information
The following table sets out other relevant information relating to Mal Lippo Cikarang.
Year of building completion . . . . . . . .
1995
Land Area . . . . . . . . . . . . . . . . . . . . .
49,250 sq m
GFA as at 30 June 2007 . . . . . . . . . .
25,767 sq m
NLA as at 30 June 2007 . . . . . . . . . .
17,974 sq m(1)
Occupancy rate as at 30 June 2007. .
96.3%
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$80.2 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$79.7 million
Car parking lots . . . . . . . . . . . . . . . . .
513
Motorcycle parking lots . . . . . . . . . . .
950
Population catchment . . . . . . . . . . . .
84,962 households(2)
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Mal Lippo Cikarang was built on a plot of land of 49,250 sq m
based on Measurement Letter No. 19128/1994 dated 25 August
1994 and Certificate of Right to Build (HGB title)
No. 627/ Kelurahan Cibatu, registered under the name of
PT Graha Nusa Raya, issued by Bekasi Land Office on
9 December 1994, and valid until 5 May 2023 and is
extendable for another term of up to 20 years. Following
expiration of this additional term, a renewal application may
be made. (See “Overview of the Relevant Laws and
Regulations in Indonesia—Rights to Own and/or to Use—Hak
Guna Bangunan (HGB/Right to Build)”.)
Average Specialty Base Rent as at
30 June 2007 (Rp.’000 per sq m per
month) . . . . . . . . . . . . . . . . . . . . . . .
105
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—2,589
Projection Year 2008—5,548
Projection Year 2009—5,729
152
Business and properties
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 6.8%
Notes:
(1)
(2)
Recently completed asset enhancement works to expand the retail space at Mal Lippo Cikarang
have increased the NLA by 10,694 sq m, bringing the total NLA to 28,668 sq m.
The figure comprises the number of households within the primary trade area of the relevant Retail
Mall. (See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
153
Business and properties
EKALOKASARI PLAZA
Jalan Siliwangi 123, Bogor, Greater Jakarta
Bogor profile
Bogor, a city in West Java, has a total population of approximately of 3.0 million, made up of approximately
0.9 million in the town area and 2.0 million in the suburban areas. From 2000 to 2004, the city’s population
grew annually at 3.9%. The city is on the main road from Jakarta to Bandung, over the Puncak pass. It is
also a popular weekend getaway for families from Jakarta.
Description
Ekalokasari Plaza is a six storey with three basement levels retail mall with a carpark comprising 390
parking lots. The mall is located approximately two km south east of the Bogor City Centre on a major road,
Jalan Siliwangi, and approximately 3.5 km south or five minutes drive from the Bogor exit of the Jagorawi
toll road which connects Jakarta to Bogor. Bogor is approximately 50 km south of Jakarta and had a
population of approximately 855,000 as at 2002. Ekalokasari Plaza is positioned as the retail mall of
convenience and choice for its population catchment and provides a comprehensive retail mix anchored
by Matahari Department Store, Foodmart supermarket, two large bookstores and a concentration of
fashion labels and outlets. Ekalokasari Plaza has recently completed a S$2.0 million expansion and
renovation programme for the third and mezzanine floors. The new expanded area will house a food court
and is also intended to include a fitness centre and a cinema.
Tenant profile
As at 30 June 2007, Ekalokasari Plaza has 107 retail tenants based on Committed Leases. The tenant
profile of the mall comprises a diverse set of tenants. There are 107 specialty stores to cater to family
shoppers, with products and services ranging from fashion to music. The mall is anchored by Matahari
Department Store and Foodmart supermarket which account for 21.6% of monthly Gross Rent. The
anchor tenants, together with the Timezone amusement centre, occupy the lower ground to the second
154
Business and properties
floor. The other prominent tenants include Karisma bookstore, Gramedia bookstore, Number 61, Botanical
Food Court, Kentucky Fried Chicken and Popeye restaurant.
As at 30 June 2007, the occupancy rate of the mall was 87.3% of the total existing NLA of 20,587 sq m.
Asset enhancement plans
The mall has recently completed asset enhancement works for the third floor and mezzanine level which
have increased the NLA by 5,013 sq m, bringing the total NLA to 25,600 sq m. This development will
incorporate a new food court and potentially, a fitness centre and a cinema which will anchor the top levels
of the centre, giving the advantage of increasing traffic through all levels of the centre.
The following chart provides a breakdown (by area) of the various trade sub-sectors represented in
Ekalokasari Plaza as at 30 June 2007:
Ekalokasari Plaza—Trade sector analysis (By area)
Trade sub sector
Contribution (%)
Department Store
40.4
Supermarket/Hypermarket
13.4
Fashion
12.1
Books & Stationery
11.8
Food & Beverage/Food Court
8.0
Leisure & Entertainment
6.1
Services
2.8
Other
2.1
Hobbies
1.1
Gifts & Specialty
0.9
Toys
0.5
Home Furnishings
0.4
Sports & Fitness
0.2
Electronic/IT
0.2
155
Business and properties
The table below sets out information on the 10 largest tenants of Ekalokasari Plaza based on Committed
Leases as at 30 June 2007:
Tenant
Business sector
Matahari Department Store/
Matahari Marketplace
supermarket . . . . . . . . . .
Lease expiry date
Department Store/
Supermarket
Books & Stationery
Books & Stationery
Fashion
F&B
F&B
F&B
Fashion
F&B
Hobbies
22
29
11
12
18
30
12
20
05
10 largest tenants . . . . . . . .
Other tenants . . . . . . . . . . .
—
—
—
—
Total . . . . . . . . . . . . . . . . .
—
—
Gramedia bookstore . . .
Karisma . . . . . . . . . . . .
Number 61 . . . . . . . . . .
Kentucky Fried Chicken .
Popeye restaurant . . . . .
Es Teler 77 . . . . . . . . . .
Bata. . . . . . . . . . . . . . .
Steak 21 . . . . . . . . . . .
Duta Suara . . . . . . . . . .
..
..
..
..
..
..
..
..
..
.
.
.
.
.
.
.
.
.
Percentage of
total NLA
Percentage of the
total base rental income
of Ekalokasari Plaza
based on Committed
Leases as at 30 June 2007
(%)
(%)
23 March 2015
May 2014
February 2024
December 2008
December 2023
December 2013
April 2009
March 2009
June 2010
March 2009
48.2
21.6
5.9
4.7
1.3
2.1
1.5
0.6
0.5
0.7
0.5
5.4
4.0
3.6
3.0
2.9
2.2
1.8
1.7
1.7
66.1(1)
33.9
48.0(1)
52.0
100.0
100.0
Note:
(1)
Due to rounding differences.
Expiry profile
The following table sets out the expiry profiles of the tenancies at Ekalokasari Plaza as at 30 June 2007:
Total number of
leases expiring
Period
FY2007 . . . . . . .
FY2008 . . . . . . .
FY2009 . . . . . . .
Beyond FY2009
Vacant . . . . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
NLA of
expiring
leases
Monthly Gross Rent
of expiring leases
as a percentage of
forecast rental
income
Expiring leases as
a percentage of NLA
as at 30 June 2007
(sq m)
(%)
(%)
.
.
.
.
.
13
15
33
46
—
256
1,186
1,683
14,838
2,624
2.9
8.8
16.7
31.8
39.8
1.2
5.8
8.2
72.1
12.7
Total. . . . . . . . . . . . . . . . . . . . . . .
107
20,587
100.0
100.0
Competition
Existing: Ekalokasari Plaza currently faces competition within a 10-km radius from seven retail malls
with an aggregate NLA of 192,300 sq m.
The competing retail malls within a six-km radius include:
• Botani Square, which commenced operations in late 2006, is located two km northwest of Ekalokasari
Plaza. It has a NLA of approximately 30,000 sq m and is anchored by Giant Hypermarket and a small
Rimo Department Store.
156
Business and properties
• Pangrango Plaza, a strata mall located three km northwest of Ekalokasari Plaza, with a NLA of
30,000 sq m, is anchored by Sarinah department store, Toka Bookstore and occupied by a large number
of strata units. The mall targets the low to middle income market.
• Bogor Trade Mall, a strata mall located four km west of Ekalokasari Plaza, with a NLA of 45,000 sq m, is
anchored by Ramayana department store.
• Plaza Jambu Dua, located seven km north of Ekalokasari Plaza, with a NLA of 20,800 sq m, is anchored
by Ramayana department store.
• Plaza Bogor, located three km west of Ekalokasari Plaza, with a NLA of 27,500 sq m, is anchored by
Robinson’s department store.
Future: Future competition will come from the proposed extension to Botani Square as mentioned
above. Apart from this, “Appendix F—Independent Report on the Indonesian Retail Property Market”
indicates that, at present, there are no known proposals for new centres to compete directly with
Ekalokasari Plaza. However, given the relative strength of retail supply in recent years, it is possible
that competing centres will be developed in the future.
(See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
Other information
The following table sets out other relevant information relating to Ekalokasari Plaza.
Year of building completion . . . . . . . .
2003
Land Area . . . . . . . . . . . . . . . . . . . . .
10,500 sq m
GFA as at 30 June 2007 . . . . . . . . . .
39,895 sq m
NLA as at 30 June 2007 . . . . . . . . . .
20,587 sq m(1)
Occupancy rate as at 30 June 2007. .
87.3%
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$66.0 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$68.1 million
Car parking lots . . . . . . . . . . . . . . . . .
390
Motorcycle parking lots . . . . . . . . . . .
382
Population catchment . . . . . . . . . . . .
144,451 households(2)
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Ekalokasari Plaza is owned by PT Indah Pesona Bogor and was
built pursuant to a BOT Scheme based on the Cooperation
Agreement (Perjanjian Kerjasama) between IPB represented
by PT Bogor Life Science and Technology as BOT Grantor and
PT IPB as BOT Grantee, as stipulated under Deed No. 133 dated
27 June 2001, made before Natalia Lini Handayani S.H., Notary
in Bogor and amended by Addendum dated 9 February 2004,
Notary in Bogor, as amended by Deed of Amendment
Agreement No. 7 dated 25 April 2007, drawn up before Dindin
Saepudin, SH, Notary in Bandung.
Pursuant to this BOT Agreement, IPB grants to PT IPB a plot of
land with HP Title No. 1/Sukasari, an area of approximately
10,500 sq m, located at JI Siliwangi No. 123, Bogor, registered
under the ame of the Department of Education and Culture
(Departemen Pendidikan dan Kebudayaan) c.q IPB, which will
be valid as long as the land is being used. The operating period
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Business and properties
of the BOT Scheme of Ekalokasari Plaza is from 27 June 2001
through 27 June 2032.
If PT IPB (as BOT Grantee) wants to assign its rights under the
BOT Agreement, PT IPB must submit written notification to
PT Bogor Life Science and Technology (as BOT Grantor).
Instead of the transfer of the right of the BOT Agreement, which
requires the consent of the BOT Grantor, the transfer of the
interest of the BOT agreement may also be conducted through
transfer of shares of the shareholders of PT IPB. The BOT
Agreement does not prohibit the transfer of shares by the
shareholders of PT IPB.
As PT IPB is not the owner of the land on which Ekaloksari Plaza
is situated on, PT IPB has no right to assign or encumber the
land.
Average Specialty Base Rent as at
30 June 2007 (Rp.’000 per sq m per
month) . . . . . . . . . . . . . . . . . . . . . . .
141
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—2,296
Projection Year 2008—5,798
Projection Year 2009—7,503
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 5.8%
Notes:
(1)
(2)
158
Recently completed asset enhancement works for the third floor and mezzanine have increased the
NLA by 5,013 sq m, bringing the total NLA to 25,600 sq m.
The figure comprises the number of households within the primary trade area of the relevant Retail
Mall. (See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
Business and properties
BANDUNG INDAH PLAZA
Jalan Merdeka No. 56, Bandung, West Java
Bandung profile
(See “—Istana Plaza—Bandung Profile”.)
Description
Bandung Indah Plaza is a four storey with three basement levels retail mall with a carpark comprising 602
parking lots. It is located strategically in the heart of the CBD of Bandung, the fourth most populous city in
Indonesia. The retail mall is easily accessible from Jalan Merdeka, a major road which connects North
Bandung to South Bandung, and is surrounded by commercial buildings and middle to upper income
residential areas. It is also attached to Hyatt Regency Hotel, one of the leading five-star hotels in Bandung.
Bandung Indah Plaza is anchored by Matahari Department Store, Hypermart, Yogya Supermarket, a
bookstore, a cinema and supported by a list of international and local tenants. It has recently completed a
S$12.6 million expansion and renovation programme.
Tenant profile
As at 30 June 2007, Bandung Indah Plaza has 180 retail tenants based on Committed Leases. The mall
provides a one-stop shopping destination with a comprehensive tenant mix of everyday convenience
retailers. The mall is well positioned to cater to the youth market, which has strong demand in central
Bandung due to the student population from nearby universities.
The ground floor of the mall is anchored by Hypermart, which accounts for 16.9% of total NLA. This level
also includes F&B outlets such as McDonald’s and Starbucks, and fashion and accessories retailers such
as Quiksilver and Giordano.
The first level of the mall is anchored by Matahari Department Store, which accounts for 22.8% of total
NLA. Youth fashion retailers such as City Surf and Levis are also well represented.
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Business and properties
The second level of the mall is anchored by Matahari Department Store and Toko Gunung Agung
bookstore. Lifestyle retailers include Extreme Store and MG Music. Yogya Supermarket anchors the
southern end of this level.
The third level of the mall comprises Studio 21 Cinema (which has six screens), Timezone and a new food
court.
As at 30 June 2007, the average monthly rental rate of specialty stores is approximately Rp. 274,000 per
sq m.
Asset enhancement plans
The mall has recently completed asset enhancement works which have increased NLA by 3,843 sq m.
These asset enhancement initiatives have added another 50 parking lots to the basement carpark;
relocate existing tenants to create new lease units in accordance with the new building lay out
arrangement; improved the mall appearance through more colourful and attractive lighting; and
improved the mall directory with an elegant and trendy design.
The following chart provides a breakdown (by area) of the various trade sub-sectors represented in
Bandung Indah Plaza as at 30 June 2007:
Bandung Indah Plaza—Trade sector analysis (By area)
Trade sub sector
160
Contribution (%)
Department Store
20.7
Supermarket/Hypermarket
15.4
Other
12.6
Food & Beverage/Food Court
11.9
Leisure & Entertainment
11.3
Fashion
10.3
Sports & Fitness
5.5
Books & Stationery
3.2
Services
2.3
Hobbies
2.2
Gifts & Specialty
1.8
Toys
1.3
Home Furnishings
0.7
Education/School
0.6
Electronic/IT
0.2
Business and properties
The table below sets out information on the 10 largest tenants of Bandung Indah Plaza based on
Committed Leases as at 30 June 2007:
Tenant
Business sector
Lease expiry date
Matahari Department
Store . . . . . . . . . .
Hypermart . . . . . . . .
Toko Buku Gunung
Agung . . . . . . . . .
McDonald’s . . . . . . .
Rice Bowl . . . . . . . .
Extreme Store . . . . .
Felice. . . . . . . . . . . .
Studio 21 Cinema . . .
Texas Chicken . . . . .
Timezone . . . . . . . . .
Department Store
Supermarket/Hypermarket
31 May 2015
31 May 2015
Books & Stationery
F&B
F&B
Fashion
Fashion
Leisure & Entertainment
F&B
Leisure & Entertainment
23 May 2011
16 November 2009
29 June 2011
15 September 2011
16 March 2011
31 December 2015
4 Aug 2013
31 May 2015
10 largest tenants . . .
Other tenants . . . . . .
—
—
Total . . . . . . . . . . . .
—
(1)
Percentage of
total NLA
Percentage of the
total base rental
income of Bandung
Indah Plaza based
on Committed Leases
as at 30 June 2007
(%)
(%)
22.8
16.9
11.6
6.5
3.5
2.2
0.8
1.2
0.4
6.8
1.1
2.1
3.9
2.4
2.2
2.2
1.9
1.6
1.4
1.4
—
—
57.8
42.2
35.0(1)
65.0
—
100.0
100.0
Due to rounding differences
Expiry profile
The following table sets out the expiry profiles of the tenancies at Bandung Indah Plaza as at 30 June
2007:
Total number of
leases expiring
Period
FY2007 . . . . . . .
FY2008 . . . . . . .
FY2009 . . . . . . .
Beyond FY2009 .
Vacant . . . . . . . .
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
NLA of expiring
leases
Monthly gross rent
of expiring leases
as a percentage of
forecast rental
income
Expiring leases as
a percentage of NLA
as at 30 June 2007
(sq m)
(%)
(%)
.
.
.
.
.
3
7
5
165
—
157
208
221
21,430
4,456
0.2
1.3
1.0
69.1
28.4
0.6
0.8
0.8
81.0
16.8
Total . . . . . . . . . . . . . . . . . .
180
26,472
100.0
100.0
Competition
Existing: Bandung Indah Plaza currently faces competition within its trade area from five competing
retail malls, each located within a five km radius from Bandung Indah Plaza, and comprising an aggregate
NLA of approximately 145,000 sq m, being Bandung Supermall, Riau Junction, Cihampelas Walk, Paris
Van Java and Istana Plaza (one of the Retail Malls). Among these competing retail malls, Riau Junction
and Paris Van Java are new malls which commenced operations in the first half of 2007.
• Bandung Supermall, located four km southeast of Bandung Indah Plaza, with a NLA of 48,800 sq m, is
anchored by Metro department store and Giant Hypermarket. The mall targets the upper income retail
segment in Bandung and has a strong entertainment offering, including a cinema, a bowling centre and
a video games centre.
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Business and properties
• Paris Van Java, located four km northwest of Bandung Indah Plaza, with a NLA of 38,000 sq m, is
anchored by Sogo Department Store, Carrefour hypermarket and Blitz Megaplex Cinemas. The mall
commenced its operations in 2006, and is still in process of leasing its retail space. It’s retail offering and
competitive position may improve once all of its tenancies are occupied and completed.
• Istana Plaza, which is located two km from Bandung Indah Plaza, and is one of the Retail Malls in LMIR
Trust’s initial property portfolio.
• Cihampelas Walk, located two km away from Bandung Indah Plaza, with a NLA of 28,400 sq m, is
anchored by Yogya Supermarket and department store.
• Riau Junction, located less than one km away from Bandung Indah Plaza, with a NLA of 6,400 sq m, is
anchored by Yogya Supermarket and department store with a number of food retailers on its third level.
With its relative small size and limited offering, the mall mainly offers daily necessity shopping to
shoppers.
Future: “Appendix F—Independent Report on the Indonesian Retail Property Market” indicates that, at
present, there are no known proposals for new centres to compete directly with Bandung Indah Plaza.
However, given the relative strength of retail supply in recent years, particularly in Greater Jakarta, it is
possible that future centres will be developed in Bandung.
(See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
Other information
The following table sets out other relevant information relating to Bandung Indah Plaza.
Year of building completion . . . . . . . .
1990
Land Area . . . . . . . . . . . . . . . . . . . . .
15,779 sq m
GFA as at 30 June 2007 . . . . . . . . . .
55,196 sq m
NLA as at 30 June 2007 . . . . . . . . . .
26,472 sq m(1)
Occupancy rate as at 30 June 2007. .
83.2%
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$124.5 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$135.1 million
Car parking lots . . . . . . . . . . . . . . . . .
602
Motorcycle parking lots . . . . . . . . . . .
700
Population catchment . . . . . . . . . . . .
124,947 households(2)
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Bandung Indah Plaza is owned by PT Megah Semesta Abadi
and was built pursuant to a BOT Scheme based on the
cooperation agreement on the renovation development and
management of Hotel Pakunegara, Bandung (Perjanjian
Kerjasama Pemugaran Pembangunandan Pengelolaan Hotel
Pakunegara) between Perusahaan Daerah Jasa Dan
Kepariwisataan Propinsi Jawa Barat, and formerly known as
Perusahaan Daerah Kerta Wisata Jawa Barat and
PT Bhuwanatala Inda Permai Tbk (formerly known as
PT Bandung Indah Plaza Permai) (“Bandung Indah Plaza
Cooperation Agreement”) and was novated by a novation
agreement to PT Megah Semesta Abadi from PT Bhuwanatala
Indah Permai Tbk. on 29 December 2003.
The Bandung Indah Plaza Cooperation Agreement has been
amended several times, among others with (i) Restatement and
162
Business and properties
Amendment to the Cooperation Agreement on the Renovation,
Development and Management of Hotel Pakunegara, Bandung
(Expansion and Renovation of Shopping Centre—Pernyataan
Kembali dan Perubahan Perjanjian Kerjasama Pemugaran,
Pembangunan dan Pengelolaan Hotel Pakunegara Bandung
(Kerjasama, Perluasan dan/atau Renovasi Mall)) as stipulated
under Deed No. 50, dated 19 July 2005, made before Ina Yulanti
S.H., substitute for Tien Norman Lubis S.H., Notary in Bandung
and (ii) Cooperation Agreement as stipulated under Deed No. 34,
dated 22 December 2005, drawn up before Tien Norman Lubis
S.H.Notary in Bandung (“Amendment of the Cooperation
Agreement”). The Bandung Indah Plaza Cooperation
Agreement, its amendments and the novation agreement are
jointly referred to as the “Bandung Indah Plaza BOT Agreement”.
The term of the Bandung Indah Plaza BOT Agreement is for
30 years as of the commencement of commercial operation and
will expire on 31 December 2030.
Bandung Indah Plaza was built on the following:
(a)
HGB Title No. 26/Citarum registered under the name of
PT Megah Semesta Abadi expiring on 14 August 2010,
covering an area of 1,066 sq m; and
(b)
The following HGB titles over HPL Titles No. 1/Cihapit,
No. 1/Citarum, No. 1/Merdeka, and No. 2/Citarum,
registered under the name of Perusahaan Daerah Jasa
Dan Kepariwisataan Propinsi Jawa Barat, which will be
valid as long as the lands are being used:
(i)
HGB Title No. 130/Citarum, registered under the
name of PT Megah Semesta Abadi expiring on
20 October 2017, covering an area of 160 sq m;
(ii)
HGB Title No. 131/Citarum, registered under the
name of PT Megah Semesta Abadi, expiring on
20 October 2017, covering an area of 1,121 sq m;
(iii)
HGB Title No. 64/Citarum, registered under the
name of by PT Megah Semesta Abadi, expiring on
20 October 2017, covering an area of 5,015 sq m;
(iv)
HGB Title No. 65/Citarum, registered under the
name of by PT Megah Semesta Abadi expiring on
8 September 2019, covering an area of 1,355 sq m;
(v)
HGB Title No. 69/Citarum, registered under the
name of by PT Megah Semesta Abadi expiring on
8 September 2019, covering an area of 527 sq m;
(vi)
HGB Title No. 89/Merdeka, registered under the
name of by PT Megah Semesta Abadi expiring on
30 January 2021, covering an area of 3,665 sq m;
and
(vii) HGB Title No. 90/Merdeka, registered under the
name of by PT Megah Semesta Abadi expiring on
30 January 2021, covering an area of 2,870 sq m.
Perusahaan Daerah Jasa & Keparawisataan Jawa Barat (as
BOT Grantor) allows PT Megah Semesta Abadi (as BOT
163
Business and properties
Grantee) to sell or assign part of the HGB Certificates (owned by
the BOT Grantee) to another party with prior written approval
from PD Pariwisata and subject to written approval from the
Governor of West Java.
Instead of the transfer of the right of the BOT Agreement, which
requires the consent of the BOT Grantor, the transfer of the
interest of the BOT agreement may also be conducted through
transfer of shares of the shareholders of PT Megah Semesta
Abadi. The BOT Agreement does not prohibit the transfer of
shares by the shareholders of PT Megah Semesta Abadi.
Average Specialty Base Rent as at
30 June 2007 (Rp.’000 per sq m per
month) . . . . . . . . . . . . . . . . . . . . . . .
274
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—5,668
Projection Year 2008—11,756
Projection Year 2009—12,811
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 14.4%
Notes:
(1)
Recently completed asset enhancement works have increased the NLA by 3,843 sq m, bringing the
total NLA to 30,315 sq m.
(2)
The figure comprises the number of households within the primary trade area of the relevant Retail
Mall. (See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
164
Business and properties
ISTANA PLAZA
Jalan Pasirkaliki No. 121-123, Bandung, West Java
Bandung profile
Bandung, the capital of West Java, is the fourth largest city in Indonesia. The population of Bandung was
2.1 million in 2001 and 2.2 million in 2004. These figures represent an average growth of 1.23% per
annum. The population growth in Bandung is likely to generate strong consumer demand for retail
facilities.
The value of Bandung’s GRDP grew by 7.4% per annum from Rp. 7,173 billion in 2003 to Rp. 7,704 billion
in 2004. Meanwhile, the current value increased by 17.1% per annum from Rp. 23,420 billion in 2003 to
Rp. 27,422 billion in 2004.
Since the completion of the new Bandung-Jakarta highway in 2004, Bandung’s retail industry has been
developing rapidly and new retail concepts have been introduced. This includes specialised shopping
centres (Bandung Electronic Centre and Be-Mall for computers and electronics, Istana Bandung
Commodities Centre for home appliances and construction), stand-alone department stores (Yogya,
Riau Junction and Carrefour hypermarket), and lifestyle shopping centres specialising in F&B and
entertainment (Cihampelas Walk and Paris Van Java).
Description
Istana Plaza is a four storey with two basement levels retail mall with a carpark comprising 700 parking
lots. It is located strategically in the heart of the CBD of Bandung, the fourth most populous city in
Indonesia. Situated at the junction between two busy roads of Jalan Pasir Kaliki and Jalan Pajajaran, it is
easily accessible by car and public transport. Anchored by Rimo Department Store and Hero
Supermarket, the 205 tenancies in Istana Plaza provide one-stop shopping experience for the middle
to upper income residents within its population catchment. Istana Plaza’s many popular international
fashion labels have also helped to attract the young and trendy shopper base.
165
Business and properties
Tenant profile
As at 30 June 2007, Istana Plaza has 205 retail tenants based on Committed Leases. The tenant profile of
the mall comprises a diverse set of tenants from a wide variety of industries. The mall is anchored by Rimo
Department Store, which occupies the first and second floors, amounting to approximately 17.9% of the
mall’s total NLA. Other prominent tenants include Ace Hardware which occupies 5.9% of the mall’s total
NLA. In addition, it is the only mall in its catchment area with a Nokia Professional Centre and a HewlettPackard Centre.
As at 30 June 2007, the mall enjoys an occupancy rate of approximately 98.9%.
The following chart provides a breakdown (by area) of the various trade sub-sectors represented in Istana
Plaza as at 30 June 2007:
Istana Plaza—Trade sector analysis (By area)
Trade sub sector
166
Contribution (%)
Department Store
18.9
Fashion
14.3
Food & Beverage/Food Court
13.8
Leisure & Entertainment
9.5
Home Furnishings
6.8
Books & Stationery
6.7
Supermarket / Hypermarket
5.5
Gifts & Specialty
5.1
Electronic/IT
4.8
Other
4.6
Sports & Fitness
3.5
Services
2.9
Toys
2.6
Hobbies
1.0
Business and properties
The table below sets out information on the 10 largest tenants of Istana Plaza based on Committed Leases
as at 30 June 2007:
Tenant
Percentage of
total NLA
Percentage of the
total base rental
income of Istana
Plaza based on
Committed Leases as
at 30 June 2007
(%)
(%)
Business sector
Lease expiry date
Department Store
Houseware
Books & Stationery
Leisure &
Entertainment
Leisure &
Entertainment
Fashion
F&B
Sports & Fitness
Fashion
Fashion
28 February 2012
28 February 2012
29 February 2012
17.9
5.9
4.5
11.5
6.5
3.6
30 November 2011
3.8
3.1
28
29
29
29
29
30
0.8
1.2
1.2
1.0
0.5
0.5
2.3
2.1
2.0
1.9
1.9
1.9
10 largest tenants . . . . . . . .
Other tenants . . . . . . . . . . .
—
—
—
—
37.3
62.7
36.8
63.2
Total . . . . . . . . . . . . . . . . .
—
—
100.0
100.0
Rimo Department Store . . .
Ace Hardware . . . . . . . . . .
Gramedia bookstore . . . . .
Game Master . . . . . . . . . .
.
.
.
.
Kiddy Land . . . . . . . . . . . . .
Giovanni . . . . . . . . . . . . . .
Pizza Hut . . . . . . . . . . . . .
Planet Sport . . . . . . . . . . .
Nike . . . . . . . . . . . . . . . . .
Giordano. . . . . . . . . . . . . .
.
.
.
.
.
May 2007
January 2012
January 2012
November 2011
January 2012
September 2009
Expiry profile
The following table sets out the expiry profile of the tenancies at Istana Plaza as at 30 June 2007:
Total number of
leases expiring
Period
FY2007 . . . . . . .
FY2008 . . . . . . .
FY2009 . . . . . . .
Beyond FY2009 .
Vacant . . . . . . . .
Total . . . . . . . . .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
.
.
.
.
.
43
41
26
95
—
205
NLA of expiring
leases
Monthly gross rent
of expiring leases
as a percentage of
forecast rental
income
Expiring leases as
a percentage of NLA
as at 30 June 2007
(sq m)
(%)
(%)
1,089
1,490
2,705
21,661
303
27,247(1)
8.1
9.0
9.1
72.4
1.5
100.0(1)
4.0
5.5
9.9
79.5
1.1
100.0
Note:
(1) Due to rounding differences.
Competition
Existing: Istana Plaza, located two km from Bandung Indah Plaza, shares the same competitive
landscape as Bandung Indah Plaza. (See “—Bandung Indah Plaza—Competition”.)
Future: “Appendix F—Independent Report on the Indonesian Retail Property Market” indicates that, at
present, there are no known proposals for new centres to compete directly with Istana Plaza. However,
given the relative strength of retail supply in recent years, particularly in Greater Jakarta, it is possible that
future centres will be developed in Bandung.
(See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
167
Business and properties
Other information
The following table sets out other relevant information relating to Istana Plaza.
Year of building completion . . . . . . . .
2001
Land Area . . . . . . . . . . . . . . . . . . . . .
13,082 sq m
GFA as at 30 June 2007 . . . . . . . . . .
37,434 sq m
NLA as at 30 June 2007 . . . . . . . . . .
27,247 sq m
Occupancy rate as at 30 June 2007. .
98.9%
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$125.7 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$114.7 million
Car parking lots . . . . . . . . . . . . . . . . .
700
Motorcycle parking lots . . . . . . . . . . .
500
Population catchment . . . . . . . . . . . .
99,525 households(1)
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Istana Plaza is owned by PT Suryana Istana Pasundan and was
built pursuant to a BOT Scheme based on cooperation
agreement, dated 9 May 1997 between, Gereja Kristen
Pasundon, Ginawan Chandra, Edi Sukainto Josona, Chandra
Tambayang, Wirawan Chandra, Heryanto Gunawan Prihatra,
Stepanus Tedjasentosa, Tat Ong Budiarta and Abrijanto Effendi
(as consultants) (“the Istana Plaza Cooperation
Agreement”). This Istana Plaza Cooperation Agreement was
amended by (i) Amendment Agreement dated 28 April 2001 and
(ii) Addendum Agreement dated 10 June 2004 (the Istana Plaza
Cooperation Agreement and its amendments shall be jointly
referred to as the “Istana Plaza BOT Agreement”).
Based on this Istana Plaza BOT Agreement, Gereja Kristen
Pasundan as BOT Grantor grants a right to PT Suryana
Istana Pasundan as BOT grantee to construct a shopping
centre building on top of the following HGB titles:
168
(i)
HGB Title No. 43/Pamoyanan, registered under the name
of Gereja Kristen Pasundan, expiring on 24 September
2032, covering an area of 12,350 sq m;
(ii)
HGB Title No. 177/Pajajaran, registered under the name of
Gereja Kristen Pasundan, expiring on 24 September 2032,
covering an area of 40 sq m;
(iii)
HGB Title No. 58/Pamoyanan, registered under the name
of Gereja Kristen Pasundan, expiring on 24 September
2032, covering an area of 86 sq m;
(iv)
HGB Title No. 59/Pamoyanan, registered under the name
of Gereja Kristen Pasundan, expiring on 24 September
2036, covering an area of 361 sq m; and
(v)
HGB Title No. 60/Pamoyanan, registered under the name
of Gereja Kristen Pasundan, expiring on 24 September
2036, covering an area of 245 sq m.
Business and properties
The Istana Plaza BOT Agreement is valid for 32 years from
January 2002.
Under the Istana Plaza BOT Agreement, assignment of
ownership or encumbering the retail mall is prohibited except
as security for a loan in relation to the construction of the retail
mall.
Instead of the transfer of the right of the BOT Agreement, which
requires the consent of the BOT Grantor, the transfer of the
interest of the BOT agreement may also be conducted through
transfer of shares of the shareholders of PT Suryana Istana
Pasundan. The BOT Agreement does not prohibit the transfer of
shares by the shareholders of PT Suryana Istana Pasundan.
As Pasundan Christian Church owns the land on which Istana
Plaza is situated PT Suryana Istana Pasundan has no right to
assign or encumber the land.
Average Specialty Base Rent as at
30 June 2007 (Rp.’000 per sq m per
month) . . . . . . . . . . . . . . . . . . . . . . .
170
NPI for Forecast Period 2007,
Projection Year 2008 and Projection
Year 2009 (S$’000) . . . . . . . . . . . . . .
Forecast Period 2007—4,286
Projection Year 2008—8,958
Projection Year 2009—9,285
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 12.0%
Note:
(1) The figure comprises the number of households within the primary trade area of the relevant Retail
Mall. (See “Appendix F—Independent Report on the Indonesian Retail Property Market”.)
169
Business and properties
MALL WTC MATAHARI UNITS
Jalan Raya Serpong, Pondok Jagung, Serpong, Tangerang, Banten, Greater Jakarta
Description
Mall WTC Matahari is located along Jalan Serpong Raya, Serpong within administrative area of Tangerang
regency, Banten province. It is situated approximately 18 km west of Jakarta’s CBD.
Tangerang is renowned as an industrial and manufacturing city in the Greater Jakarta area, being home to
seven industrial estates with a total area of approximately over 1,700 ha.
Due to its proximity to Jakarta, Tangerang benefits from the urban expansion of Jakarta and is home to
commuters who work in Jakarta. In recent years, residential estates and satellite cities with their facilities
have been developed in Tangerang.
Mall WTC Matahari is strategically located along the main road connecting the BSD residential estate, the
largest residential estate in Greater Jakarta. It has proposed development area of 6,000 ha with currently
1,500 ha developed and occupied by over 15,000 households. In recent years, BSD City has experienced
rapid growth in terms of the number of housing units and retail shop houses which have been built. This
has also successfully enhanced Mall WTC Matahari’s target market segment from middle to middle-upper
and upper class.
The Mall WTC Matahari Units comprise four strata units on part of the ground floor, upper ground floor,
mezzanine and second floor of the building, aggregating a total NLA of 11,184 sq m, representing 23.2% of
the total NLA of Mall WTC Matahari. The Mall WTC Matahari Units are currently utilised as a department
store, hypermarket and entertainment and game centre.
170
Business and properties
Relevant information relating to the Mall WTC Matahari Units
The following table sets out other relevant information relating to the Mall WTC Matahari Units.
NLA in respect of the Retail Space as
at 30 June 2007 . . . . . . . . . . . . . . . . 11,184 sq m
NLA as a percentage of the NLA of Mall
WTC Matahari as at 30 June 2007 . . 23.2%
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.5%
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$25.2 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$24.3 million
NPI contribution from the Retail Space
for Forecast Period 2007, Projection
Year 2008 and Projection Year 2009
(S$’000) . . . . . . . . . . . . . . . . . . . . . . Forecast Period 2007—843
Projection Year 2008—1,742
Projection Year 2009—1,770
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Mall WTC Matahari was built on plots of land covering an area of
(i) 3,470 sq m with Strata Titles Ownership Certificate
No. 428/Desa Pondok Jagung dated 17 December 2004,
(ii) 5,892 sq m with Strata Titles Ownership Certificate
No. 00153/Desa Pondok Jagung dated 17 December 2004,
(iii) 873 sq m with Strata Titles Ownership Certificate
No. 00372/Desa Pondok Jagung dated 17 December 2004,
and (iv) 949 sq m with Strata Titles Ownership Certificate
No. 00197/Desa Pondok Jagung dated 17 December 2004, all
of which are registered under the name of Matahari and its
underlying HGB common land will expire on 8 April 2018 but is
extendable for another term of up to 20 years. Following the
expiration of this additional term, a renewal application may be
made. (See “Overview of Relevant Laws and Regulations in
Indonesia—Rights to Own and/or to use—Hak Guna Bangunan
(HGB/Right to Build)”.) (See “Business and Properties—Mall
WTC Mahatari Units”.)
Relevant information relating to Mall WTC Matahari
The following table sets out other relevant information relating to Mall WTC Matahari.
Year of building completion . . . . . . .
Land Area . . . . . . . . . . . . . . . . . . . .
NLA . . . . . . . . . . . . . . . . . . . . . . . .
Carpark Lots . . . . . . . . . . . . . . . . . .
Motorcycle Parking Lots . . . . . . . . .
.
.
.
.
.
2003
35,886 sq m
48,204 sq m
1,101
500
171
Business and properties
METROPOLIS TOWN SQUARE UNITS
Jalan Hartono Raya, Modernland Cikokol, Tangerang, Banten, Greater Jakarta
Description
Metropolis Town Square is located in Tangerang city, Banten province, approximately 20 km west of
Jakarta’s CBD. The CBD’s strategic location near the main road connecting the toll road to Tangerang city
provides easy access to the Jakarta—Merak toll gate and surrounding residential areas in Tangerang.
Tangerang is an industrial and manufacturing city in Greater Jakarta, home to seven industrial estates with
a total area of approximately 1,700 ha. Due to its proximity to Jakarta, Tangerang is a popular residential
location for commuters who work in Jakarta. In recent years, residential estates and satellite cities (for
example, Lippo Karawaci, Bumi Serpong Damai, Kota Modern, Alam Sutra, Summarecon Serpong and
Bintaro Jaya) have been developed in Tangerang.
Metropolis Town Square is located along Jalan Hartono Raya within the Kota Modern residential estate,
about 2.6 km south of the city centre of Tangerang.
Tangerang’s strategic location between Jakarta and the Soekarno-Hatta International Airport makes it a
popular choice for offices and factories. The Indonesian government has continuously been improving the
quality of infrastructure between the city and the nation’s capital to accommodate the ever increasing road
traffic.
Metropolis Town Square is a one-stop shopping mall located along one of the main roads in Tangerang.
Hence, the mall has good accessibility to passing traffic. In addition, the mall is the only major retail
development in the Tangerang Municipality. The mall is designed in an art deco style and is located within
the Modernland development, a large middle to upper income housing complex.
The Metropolis Town Square Units comprise three strata units on part of the ground floor, first floor and
second floor of the building, aggregating a total NLA of 15,248 sq m and representing 25.1% of the total
NLA of Metropolis Town Square. The Metropolis Town Square Units are currently utilised as a department
store, hypermarket and entertainment and games centre.
172
Business and properties
Relevant information relating to the Metropolis Town Square Units
The following table sets out other relevant information relating to the Metropolis Town Square Units.
NLA in respect of the Retail Space as
at 30 June 2007 . . . . . . . . . . . . . . . . 15,248 sq m
NLA as a percentage of the NLA of
Metropolis Town Square as at 30 June
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 25.1%
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 3.3%
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$33.5 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$32.2 million
NPI contribution from the Retail Space
for Forecast Period 2007, Projection
Year 2008 and Projection Year 2009
(S$’000) . . . . . . . . . . . . . . . . . . . . . . Forecast Period 2007—1,156
Projection Year 2008—2,382
Projection Year 2009—2,420
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Metropolis Town Square Units are currently held by Matahari
pursuant to Kiosks Sale and Purchase Binding Agreement
(i) No. 093/AGR/DM/MPP/IX/03, dated 10 September 2003,
(ii) No. 054/AGR/DM/MPP/VI/03, dated 23 June 2003 and
(iii) No. 084/AGR/DM/MPP/VIII/03, dated 25 August 2003, all
between Matahari and Coldwell Banker Dwimustika Mas.
These Kiosks Sale and Purchase Binding Agreements are
evidence of the parties’ intention to effect the sale and
purchase of Strata Units, but do not have the effect of
transferring ownership. This is a common practice in
Indonesia. (See “Risk Factors—Risks Relating to Investing in
Real Estate—LMIR Trust is dependent on the quality of the titles
to the Properties”.)
Relevant information relating to Metropolis Town Square
The following table sets out other relevant information relating to Metropolis Town Square.
Year of building completion . . . . . . .
Land Area . . . . . . . . . . . . . . . . . . . .
NLA . . . . . . . . . . . . . . . . . . . . . . . .
Carpark Lots . . . . . . . . . . . . . . . . . .
Motorcycle Parking Lots . . . . . . . . .
.
.
.
.
.
2004
38,905 sq m
60,734 sq m
800
1,200
173
Business and properties
DEPOK TOWN SQUARE UNITS
Jalan Margonda Raya No. 1, Pondok Cina Beji, Depok, Greater Jakarta
Description
Depok is located in the West Java province, situated between southern Jakarta and the northern side of
Bogor regency. The city is located approximately 16 km south of Jakarta’s CBD. Depok is renowned as the
city of students, being home to four large universities (University of Indonesia, Gunadarma University,
Tugu Polytechnic and Jakarta Polytechnic).
Depok’s population is estimated at 1.5 million in 2007 and has shown strong population growth, averaging
3.3% per annum between 2000 and 2005. In line with city population growth, the commercial area of
Depok has been growing rapidly for the last few years, as evidenced by a number of modern shopping
centre developments and commercial buildings built along the main road of Depok, Jalan Margonda Raya.
Depok Town Square is located on Jalan Margonda Raya, adjacent to the south eastern side of University
of Indonesia, a prominent university in Indonesia. The centre has direct access to Pondok Cina Railway
Station at its rear entrance, and therefore connects the station to Jalan Margonda Raya.
The Depok Town Square Units comprise four strata units on part of the lower ground floor, first floor and
second floor of the building, aggregating a total NLA of 13,045 sq m and representing 31.7% of the total
NLA of Depok Town Square. The Depok Town Square Units are currently utilised as a department store,
hypermarket and entertainment and games centre.
174
Business and properties
Relevant information relating to the Depok Town Square Units
The following table sets out other relevant information relating to the Depok Town Square Units.
NLA in respect of the Retail Space as
at 30 June 2007 . . . . . . . . . . . . . . . . 13,045 sq m
NLA as a percentage of the NLA of
Depok Town Square as at 30 June
2007 . . . . . . . . . . . . . . . . . . . . . . . . .
31.7%
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.5%
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$25.7 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$24.8 million
NPI contribution from the Retail Space
for Forecast Period 2007, Projection
Year 2008 and Projection Year 2009
(S$’000) . . . . . . . . . . . . . . . . . . . . . . Forecast Period 2007—861
Projection Year 2008—1,778
Projection Year 2009—1,807
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Depok Town Square Units are currently held by Matahari
pursuant to Kiosks Sale and Purchase Binding Agreement
(i) No. 031/AGR/DM/MPP/XII/02, dated 19 December 2002
entered into between Matahari and Coldwell Banker
Dwimustika Mas, and (ii) No. 012/JPN-PPJB/II/04, dated
11 February 2004, entered into between Matahari and
PT Jagat Pertala Nusantara.
These Kiosks Sale and Purchase Binding Agreements are
evidence of the parties’ intention to effect the sale and
purchase of strata units, but do not have the effect of
transferring ownership. The strata titles are in the process of
being issued by the local land office. Upon issuance, the strata
titles will be purchased by the relevant Retail Space Indonesian
SPC. (See “Business and Properties—Depok Town Square
Units.”)
Relevant information relating to Depok Town Square
The following table sets out other relevant information relating to Depok Town Square.
Year of building completion . . . . . . .
Land Area . . . . . . . . . . . . . . . . . . . .
NLA . . . . . . . . . . . . . . . . . . . . . . . .
Carpark Lots . . . . . . . . . . . . . . . . . .
Motorcycle Parking Lots . . . . . . . . .
.
.
.
.
.
2005
24,634 sq m
41,129 sq m
870
1,200
175
Business and properties
JAVA SUPERMALL UNITS
Jalan MT Haryono No. 992-994, Jomblang, Semarang, Central Java
Description
Semarang is the capital city of the Central Java province and the fifth largest city in terms of population in
Indonesia. With its location along the northern coast of Java, Semarang is an important trading port for the
region. Semarang had a population of 1.3 million in 2000 and is estimated to have grown annually at 2.6%
per annum, registering a total increase of approximately 1.5 million over the last seven years.
Java Supermall is located within the vicinity of a middle to upper class residential area which is easily
accessible from most areas in Semarang. The Java Supermall Units comprise four strata units on the
semi-basement, first floor and second floor of the building, aggregating a total NLA of 11,082 sq m,
representing 56.0% of the total NLA of Java Supermall. The Java Supermall Units are currently utilised as
a department store and supermarket.
Relevant information relating to the Java Supermall Units
The following table sets out other relevant information relating to the Java Supermall Units.
NLA in respect of the Retail Space as
at 30 June 2007 . . . . . . . . . . . . . . . . 11,082 sq m
NLA as a percentage of the NLA of
Java Supermall as at 30 June 2007. .
56.0%
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.4%
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
176
S$26.0 million
Business and properties
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$25.0 million
NPI from the Retail Space contribution
for Forecast Period 2007, Projection
Year 2008 and Projection Year 2009
(S$’000) . . . . . . . . . . . . . . . . . . . . . . Forecast Period 2007—836
Projection Year 2008—1,726
Projection Year 2009—1,754
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Java Supermall was built on a plot of land covering an area of:
(i)
3,839 sq m with Strata Titles Ownership Certificate
No. 1/Desa Lamper Kidul dated 23 November 1998;
(ii)
3,201 sq m with Strata Titles Ownership Certificate
No. 2/Desa Lamper Kidul dated 23 November 1998;
(iii)
3,772 sq m with Strata Titles Ownership Certificate
No. 22/Desa Lamper Kidul dated 23 November 1998; and
(iv)
270 sq m with Strata Titles Ownership Certificate
No. 45/Desa Lamper Kidul dated 18 April 2000,
all of which are registered under the name of Matahari and its
underlying HGB common land will expire on 24 September 2017
and is extendable for another term of up to 20 years. Following
the expiry of this additional term, a renewal application may be
made.
(See “Risk Factors—Risks Relating to Investing in Real
Estate—LMIR Trust is dependent on the quality of the titles to
the Properties”.)
Relevant information relating to Java Supermall
The following table sets out other relevant information relating to Java Supermall.
Year of building completion . . . . . . . .
2000
Land Area . . . . . . . . . . . . . . . . . . . . .
10,800 sq m
NLA . . . . . . . . . . . . . . . . . . . . . . . . .
19,800 sq m
Carpark Lots . . . . . . . . . . . . . . . . . . .
700
Motorcycle Parking Lots . . . . . . . . . .
2,000
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Business and properties
MALANG TOWN SQUARE UNITS
JaIan Veteran No. 2, Malang, East Java
Description
Malang is the second largest city in the East Java province with a population of approximately 0.8 million
and a regency population of approximately 2.4 million.
The region is a popular tourist destination due to its natural attractions (for example, Mount Bromo, one of
Java’s largest volcanoes), cool climate and colonial history. Malang also has a large student population,
being home to five universities (Brawijaya, State, Muhammadiyah, Widya Gama and Merdeka
Universities).
Malang Town Square, in which Malang Town Square Units are located, is a mall conceptualised as an
international lifestyle mall as well as the biggest and most comprehensive mall in Malang. The centre has
easy access to public transportation and is surrounded by exclusive residential communities and several
universities which have more than 50,000 students.
The Malang Town Square Units comprise three strata units on part of the ground floor, upper ground floor,
first floor and second floor of the building, aggregating a total NLA of 11,065 sq m, representing 44.7% of
the total NLA of Malang Town Square. The Malang Town Square Units are currently utilised as a
department store, hypermarket and entertainment and games centre.
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Business and properties
Relevant information relating to the Malang Town Square Units
The following table sets out other relevant information relating to the Malang Town Square Units.
NLA in respect of the Retail Space as
at 30 June 2007 . . . . . . . . . . . . . . . . 11,065 sq m
NLA as a percentage of the NLA of
Malang Town Square as at 30 June
2007 . . . . . . . . . . . . . . . . . . . . . . . . .
44.7%
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.4%
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$25.5 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$25.8 million
NPI contribution from the Retail Space
for Forecast Period 2007, Projection
Year 2008 and Projection Year 2009
(S$’000) . . . . . . . . . . . . . . . . . . . . . . Forecast Period 2007—834
Projection Year 2008—1,723
Projection Year 2009—1,751
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Malang Town Square Units are constructed on HBG land titles
and are exclusively controlled currently by Matahari pursuant to
Kiosks Sale and Purchase Binding Agreement No. 031/PNPPJB/X/03, dated 7 October 2003 between Matahari and PT
Pendopo Niaga.
The Kiosks Sale and Purchase Binding Agreement is evidence
of the parties’ intention to effect the sale and purchase of strata
units, but do not have the effect of transferring ownership. This is
a common practice in Indonesia. (See “Risk Factors—Risks
Relating to Investing in Real Estate—LMIR Trust is dependent
on the quality of the titles to the Properties”.)
Relevant information relating to Malang Town Square
The following table sets out other relevant information relating to Malang Town Square.
Year of building completion . . . . . . . .
2005
Land Area . . . . . . . . . . . . . . . . . . . . .
18,500 sq m
NLA . . . . . . . . . . . . . . . . . . . . . . . . .
24,740 sq m
Carpark Lots . . . . . . . . . . . . . . . . . . .
544
Motorcycle Parking Lots . . . . . . . . . .
720
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Business and properties
PLAZA MADIUN
Jalan Pahlawan, Madiun, East Java
Description
The city of Madiun, with a total population of 0.2 million (based on a 2005 census), is the capital city of
Madiun regency in the East Java province. The Madiun regency has a total land area of 1,011 sq km and its
population exceeds 0.6 million (based on a 2001 census). (See “Appendix F—Independent Report on the
Indonesian Retail Property Market”.)
Madiun has benefited from its position which connects major cities in Central and East Java. It is the home
of Indonesia’s first and largest train manufacturer and is a major sugar producer in Java. The industrial
sector and trade, hotel and restaurant businesses are key revenue generators for the city, having
contributed around 27.0% and 20.0%, respectively, to Madiun’s GRDP (based on economic statistics
in 2004).
Plaza Madiun is located along Jalan Pahlawan, a major road of the city which is also the primary
thoroughfare in the city of Madiun. The street is positioned in the centre of the commercial and
administrative zone, at the crossroad of three existing subdistricts of Madiun. Most of the prominent
buildings in Madiun are included in this precinct, including the City Hall, Merdeka Hotel, Tentara Hospital
and Pasaraya Shopping Centre. Jalan Pahlawan is accessible from Jalan Sudirman, another major
thoroughfare in the city.
Plaza Madiun enjoys high pedestrian traffic from Jalan Pahlawan and is in close proximity to various forms
of public transportation options.
Plaza Madiun, aggregating a total NLA of 19,029 sq m situated on two HGB titles, comprises the
basement, first floor, second floor and third floor and are currently occupied by a supermarket and a
department store.
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Business and properties
Relevant information relating to Plaza Madiun
The following table sets out other relevant information relating to Plaza Madiun.
NLA as at 30 June 2007 . . . . . . . . . .
19,029 sq m
NLA as a percentage of the NLA of
Plaza Madiun as at 30 June 2007 . . .
100.0%
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 3.1%
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$33.4 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$31.8 million
NPI contribution for Forecast Period
2007, Projection Year 2008 and
Projection Year 2009 (S$’000) . . . . . .
Forecast Period 2007—1,081
Projection Year 2008—2,228
Projection Year 2009—2,264
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
Plaza Madiun was built on a plot of land covering an area of
(i)
5,501 sq m with HGB Certificate No. 186/Kelurahan
Pangongangan dated 3 June 1997, registered under the
name of Matahari and will expire on 10 February 2012; and
(ii)
82 sq m with HGB Certificate No. 188/ Kelurahan
Pangongangan dated 12 February 1998, registered
under the name of Matahari and will expire on
10 February 2012.
Both HGB titles are extendable for another 20 years. Following
the expiry of this additional term, a renewal application may be
made.
(See “Overview of Relevant Laws and Regulations in
Indonesia—Rights to Own and/or to Use—Hak Guna
Bangunuan (HGB/Right to Build)”.)
(See “Business and Properties—Plaza Madiun”.)
Year of building completion . . . . . . . .
2000
Land Area . . . . . . . . . . . . . . . . . . . . .
5,583 sq m
Carpark Lots . . . . . . . . . . . . . . . . . . .
80
Motorcycle Parking Lots . . . . . . . . . .
400
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Business and properties
GRAND PALLADIUM MEDAN UNITS
Jalan Kapt. Maulana Lubis, Medan, North Sumatra
Description
Medan, the provincial capital of the North Sumatra, is the largest city in Sumatra and the third most
populous city in Indonesia after Jakarta and Surabaya. It is a cosmopolitan city with a population of over
2.0 million.
Medan is a growing commercial centre in the region, mainly with agriculture and industry businesses. The
city was transformed from a tobacco plantation village in the 19th century to a major government and
commercial centre at present.
In terms of economic activity, Medan relies on its natural resources as well as processing industries. Over
the years, Medan has been a supplier of vegetable oil, seafood, crafts and various agricultural products to
a number of Asian and European countries.
Grand Palladium Medan is conveniently located within the Medan CBD and is only 2.5 km from the Polonia
International Airport. The mall is located in the centre of Medan, hence drawing shoppers from all around
the city. It is surrounded by government and business offices and the town hall, and therefore benefits from
regular crowds of government and business visitors. The mall will potentially witness greater visitor traffic
from the proposed office and hotel developments in the vicinity.
The Grand Palladium Medan Units comprise four strata units in part of the basement, lower ground floor,
upper ground floor, first floor and third floor of the building, aggregating a total NLA of 13,417 sq m,
representing 45.8% of the total NLA of Grand Palladium Medan. The Grand Palladium Medan Units are
currently utilised as a department store, hypermarket and entertainment and games centre.
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Business and properties
Relevant information relating to the Grand Palladium Medan Units
The following table sets out other relevant information relating to the Grand Palladium Medan Units.
NLA in respect of the Retail Space as
at 30 June 2007 . . . . . . . . . . . . . . . . 13,417 sq m
NLA as a percentage of the NLA of
Grand Palladium Medan as at 30 June
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 45.8%
Percentage of contribution to LMIR
Trust’s Gross Rent for Forecast Period
2007 . . . . . . . . . . . . . . . . . . . . . . . . . 2.6%
Appraised value by Knight Frank as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$26.2 million
Appraised value by Colliers as at
30 June 2007 . . . . . . . . . . . . . . . . . .
S$25.2 million
NPI contribution from the Retail Space
for Forecast Period 2007, Projection
Year 2008 and Projection Year 2009
(S$’000) . . . . . . . . . . . . . . . . . . . . . . Forecast Period 2007—886
Projection Year 2008—1,829
Projection Year 2009—1,859
Title . . . . . . . . . . . . . . . . . . . . . . . . . .
The Grand Palladium Medan Units are constructed on HGB titles
and are currently exclusively controlled by Matahari pursuant to
Kiosks Sale and Purchase Binding Agreement No. 011/UPIPPJB/IX/04, dated 14 September 2004 between Matahari and
PT Unitech Prima Indah.
This Kiosks Sale and Purchase Binding Agreement is evidence
of the parties’ intention to effect the sale and purchase of strata
units, but does not have the effect of transferring ownership. The
strata titles are in the process of being issued by the local land
office. Upon issuance, the strata titles will be purchased by the
relevant Retail Space Indonesian SPC. (See “Business and
Properties—Grand Palladium Medan Units”.) This is a
common practice in Indonesia. (See “Risk Factors—Risks
Relating to Investment in Real Estate—LMIR Trust is
dependent on the quality of the titles to the Properties”.)
Relevant information relating to Grand Palladium Medan
The following table sets out other relevant information relating to Grand Palladium Medan.
Year of building completion . . . . . . . .
2005
Land Area . . . . . . . . . . . . . . . . . . . . .
10,640 sq m
NLA . . . . . . . . . . . . . . . . . . . . . . . . .
29,272 sq m
Carpark Lots . . . . . . . . . . . . . . . . . . .
1,200
Motorcycle Parking Lots . . . . . . . . . .
700
ACQUISITION PIPELINE
The Sponsor has granted LMIR Trust, for so long as (a) Lippo-Mapletree Indonesia Retail
Trust Management Ltd. remains the manager of LMIR Trust and (b) the Sponsor and/or any of its
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Business and properties
related corporations, alone or in aggregate, remains a controlling shareholder of the Manager, a ROFR
over any Relevant Asset (i) which any Sponsor Entity proposes to sell or transfer (whether such Relevant
Asset is wholly-owned or partly-owned by the Sponsor Entity and excluding any sale of such Relevant
Asset 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 a
proposed 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 Refusal
Agreement”).
As at the Latest Practicable Date, the ROFR Properties are expected to have an aggregate GFA of
approximately 397,080 sq m, and an aggregate NLA of approximately 273,074 sq m. If LMIR Trust
acquires all the ROFR Properties, the aggregate NLA of LMIR Trust’s initial property portfolio will increase
by over 270,000 sq m, and will represent approximately 87.1% of the aggregate NLA of LMIR Trust’s initial
property portfolio as at 30 June 2007.
The Manager believes that the ROFR granted to LMIR Trust provides a visible pipeline of future
acquisitions and will greatly enhance LMIR Trust’s growth profile given the size and quality of the
ROFR Properties, as well as significantly increase LMIR Trust’s presence in the Indonesian retail markets.
The following tables set out the relevant information relating to the ROFR Properties.
Binjai Supermall
Jalan Soekarno Hatta, Binjai, North Sumatra
Expected completion date . . . . . . . . . . . . . . . . . .
Fourth quarter of 2007
Estimated GFA . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated NLA . . . . . . . . . . . . . . . . . . . . . . . . . .
23,615 sq m
18,300 sq m
Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .
Middle to middle-upper income groups in Medan,
North Sumatra and the surrounding suburban
areas.
Medan, North Sumatra
District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description
Binjai Supermall, when completed, will be a two-level retail mall prominently located along the main road
from North Sumatra to Medan. The mall has a wide population catchment area which covers Binjai and
Medan. There are approximately 2.2 million people within its immediate catchment area.
Positioned as a lifestyle mall for the middle to upper middle income segments of the retail market, Binjai
Supermall targets a wide range of customers, including families, business people and teenagers. The
potential strong tenancy mix, which includes an amusement centre and plentiful food and cafe outlets, will
draw shoppers to the mall.
Pejaten Mall
Jalan Warung Jati Barat, South Jakarta
Expected completion date . . . . . . . . . . . . . . . . . .
Estimated GFA . . . . . . . . . . . . . . . . . . . . . . . . . .
Second quarter of 2008
57,948 sq m
Estimated NLA . . . . . . . . . . . . . . . . . . . . . . . . . .
40,327 sq m
Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .
Middle to upper income residents from South
Jakarta and the surrounding suburban areas.
District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Jakarta
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Business and properties
Description
Pejaten Mall is located along Jalan Warung Jati Barat, a major road linking central Jakarta to the southern
part of Jakarta. This proposed six-level retail mall will cater to the upper income housing estates,
surrounding this site in South Jakarta. It is intended that the tenant mix will comprise a hypermarket,
a department store and specialty shops.
Kuta Beach Mall
Kartika Plaza Road, Kuta, Bali
Expected completion date . . . . . . . . . . . . . . . . . .
Second half of 2008
Estimated GFA . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated NLA . . . . . . . . . . . . . . . . . . . . . . . . . .
41,562 sq m
30,735 sq m
Target Segment. . . . . . . . . . . . . . . . . . . . . . . . . .
District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tourists and residents of Kuta, Bali
Kuta, Bali
Description
Kuta Beach Mall is located along Kartika Plaza road which is the main road connecting Ngurah Rai Airport
to the Kuta Beach area. This proposed retail mall targets the tourist and local population. The theme of
Kuta Beach Mall reflects the relaxed lifestyle of Bali and includes a tenant mix comprising F&B, fashion,
entertainment and a variety of stores catering to daily convenience needs.
Kemang City Mall
Jalan Pangeran Antasari, South Jakarta
Expected completion date . . . . . . . . . . . . . . . . . .
First half of 2009
Estimated GFA . . . . . . . . . . . . . . . . . . . . . . . . . .
77,555 sq m
Estimated NLA . . . . . . . . . . . . . . . . . . . . . . . . . .
Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .
56,052 sq m
Middle to upper income residents from South
Jakarta and the surrounding suburban areas
South Jakarta
District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Description
Kemang City Mall is located in Kemang, South Jakarta. It will be positioned to blend a tenant mix including
tenants specialising in leisure, hospitality, entertainment, education, retail, and residential. It offers
enjoyable views of both the river and the scenic Pangeran Antasari Street. The scale of this project
will enable customers to be drawn from a vast catchment area across Jakarta.
Puri “Paragon City”
Jalan Puri Indah Raya, West Jakarta
Expected completion date . . . . . . . . . . . . . . . . . .
Second half of 2009
Estimated GFA . . . . . . . . . . . . . . . . . . . . . . . . . .
196,400 sq m
Estimated NLA . . . . . . . . . . . . . . . . . . . . . . . . . .
Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .
127,660 sq m
Middle to upper income residents from West
Jakarta and the surrounding suburban areas.
West Jakarta
District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Business and properties
Description
Puri “Paragon City” will be the first of its kind in West Jakarta, offering a mixed-used development
comprising a retail mall, residential apartments, a school, and a hotel. It is located along Puri Indah Raya
Street with access from Tomang, Tangerang, and Daan Mogot. A major benefit will be its direct access to
the major toll road linking Jakarta to West Jakarta and Tangerang.
POTENTIAL ACQUISITION OF PROPERTIES FROM THIRD PARTY VENDORS
As at the Latest Practicable Date, the Manager has entered into a non-binding memorandum of
understanding with:
(i)
PT. Multi Pratama Gemilang Perkasa (Pikko Group) in respect of the potential acquisition by LMIR
Trust of Cosmopolitan Mall Pluit, a retail mall located in North Jakarta;
(ii)
Zellwager Enterprise Limited in respect of the potential acquisition by LMIR Trust of Sun Plaza, a
retail mall located in Medan, North Sumatra; and
(iii)
PT. Pakuwon Permai in respect of the potential acquisition by LMIR Trust of Supermal Pakuwon
Indah and Pakuwon Trade Center, a retail mall located in West Surabaya, East Java.
(See “Certain Agreements relating to LMIRT and the Properties—Description of Non-Binding
Memorandum of Understanding”.) The Manager understands that Cosmopolitan Mall Pluit is currently
undergoing asset enhancement works, with such works scheduled for completion in the second half of
2008.
Cosmopolitan Mall Pluit
Pluit, North Jakarta
Expected completion date of renovation . . . . . . .
Second half of 2008
Estimated GFA . . . . . . . . . . . . . . . . . . . . . . . . . .
131,013 sq m
Estimated NLA . . . . . . . . . . . . . . . . . . . . . . . . . .
Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .
88,040 sq m
Middle to upper income residents of North
Jakarta
North Jakarta
District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated acquisition price . . . . . . . . . . . . . . . . .
To be negotiated and agreed in good faith
between the parties, provided that such
acquisition price shall not be more than the
appraised value of Cosmopolitan Mall Pluit as
determined by an independent property valuer to
be appointed by the Trustee before the signing of
the conditional sale and purchase agreement.
Description
Located in the heart of the affluent Pluit residential district of North Jakarta, Cosmopolitan Mall Pluit offers
an exciting cultural and retail experience, with urban sculptures along the waterfront, blending
harmoniously with a variety of lifestyle and cuisines outlets.
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Business and properties
Sun Plaza
Medan, North Sumatra
Estimated GFA . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated NLA . . . . . . . . . . . . . . . . . . . . . . . . . .
73,871 sq m
61,348 sq m
Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .
District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Middle to upper income residents of Medan
Medan
Estimated acquisition price . . . . . . . . . . . . . . . . .
To be negotiated and agreed in good faith
between the parties, provided that such
acquisition price shall not be more than the
appraised value of Sun Plaza as determined by
an independent property valuer to be appointed
by the Trustee before the signing of the
conditional sale and purchase agreement.
Description
Sun Plaza is a six-level retail mall located in the Indonesian city of Medan, the third most populous city in
Indonesia after Jakarta and Surabaya. Sun Plaza is surrounded by government and business offices and
is accessible from all parts of Medan City.
The titanium façade of Sun Plaza resembles a sculpture and offers visitors an experience of luxury and
elegance.
Supermal Pakuwon Indah and Pakuwon Trade Center
West Surabaya, East Java
Estimated GFA . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated NLA . . . . . . . . . . . . . . . . . . . . . . . . . .
289,563 sq m
114,834 sq m
Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .
Middle to upper income residents of West
Surabaya
District/Area . . . . . . . . . . . . . . . . . . . . . . . . . . . .
West Surabaya
Estimated acquisition price . . . . . . . . . . . . . . . . .
To be negotiated and agreed in good faith
between the parties, provided that such
acquisition price shall not be more than the
appraised value of Supermal Pakuwon Indah and
Pakuwon Trade Center as determined by an
independent property valuer to be appointed by
the Trustee and the appraised value is agreed by
the Vendor before the signing of the conditional
sale and purchase agreement.
Description
Supermal Pakuwon Indah and Pakuwon Trade Center is strategically located in the heart of West
Surabaya’s affluent residential district. The tenants of Supermal Pakuwon Indah and Pakuwon Trade
Center provide a variety of shopping, dining and entertainment options to shoppers. Together with the
convention centre facilities, the retail mall aims to deliver a memorable and exciting retail experience.
In the future, the Manager will identify other potential acquisitions and will enter into negotiations and nonbinding memoranda of understanding with regard to these potential acquisitions.
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The Manager and corporate governance
THE MANAGER OF LMIR TRUST
The Manager, Lippo-Mapletree Indonesia Retail Trust Management Ltd., was incorporated in Singapore
under the Companies Act on 3 May 2007. As at the Listing Date, it has a paid-up capital of S$1.0 million, its
registered office is located at 78 Shenton Way, #05-01 Lippo Centre, Singapore 079120 and its telephone
and facsimile numbers are (65) 6410 9138 and (65) 6220 6557, respectively.
The Manager is 40.0% owned by Mapletree Capital and 60.0% owned by Peninsula Investment Ltd.
Peninsula Investment Ltd is in turn 100.0% owned by Jesselton Investment Ltd, a wholly-owned subsidiary
of the Sponsor.
Mapletree Capital, a wholly-owned subsidiary of MIPL, is a private limited company incorporated in
Singapore under the Companies Act on 6 October 2004. As at 30 June 2007, it has a paid-up capital of
S$2.00 and its registered office is located at 1 Maritime Square, #13-01 HarbourFront Centre, Singapore
099253. MIPL is a leading Asia-focused real estate company based in Singapore. The Mapletree Group,
which MIPL is a part of, has an asset base of approximately S$4.5 billion (as at 30 June 2007) comprising
office, logistics, industrial, residential and retail/lifestyle properties. (See “Strategy—Acquisition Growth
Strategy—LMIR Trust’s relationship with the Mapletree Group”.)
Directors of the Manager
The Board is entrusted with the responsibility for the overall management of the Manager. The following
table sets forth information regarding the Directors:
Name
Age
Address
Position
Tan Bar Tien . . . . . .
57
Lim Ho Seng. . . . . .
64
Chairman,
Non-Executive and Independent Director
Non-Executive and Independent Director
Lok Vi Ming . . . . . .
46
Viven G. Sitiabudi . .
52
Yeo Cheow Tong. . .
60
Tan Boon Leong . . .
54
Wong Mun Hoong . .
41
129 Aroozoo Avenue
Singapore 539880
100 Neo Tiew Road
Singapore 719026
21 Fernwood Terrace
Singapore 458559
130 Tanjong Rhu Road
Pebble Bay
Block M #17-12
Singapore 436918
25 Maryland Drive
Singapore 277519
89 Chuan Drive
Singapore 554734
12A Lorong J
Telok Kurau
Singapore 423489
Non-Executive and Independent Director
Executive Director and Chief Executive Officer
Non-Executive Director
Non-Executive Director
Non-Executive Director
Ms Viven G. Sitiabudi and Mr Yeo Cheow Tong are nominees of the Sponsor. Mr Tan Boon Leong and
Mr Wong Mun Hoong are nominees of the Mapletree Group. Mr Tan Bar Tien, Mr Lim Ho Seng and Mr Lok
Vi Ming are independent directors.
Save as disclosed in this Prospectus, none of the Directors is related to one another, any substantial
shareholder of the Manager or any Substantial Unitholder.
Experience and expertise of the Board of Directors
Information on the business and working experience of each Director is set out below:
Mr Tan Bar Tien
Mr Tan Bar Tien is the Chairman as well as a Non-Executive and Independent Director of the Manager. A
lawyer, Mr Tan has been running his own law firm, M/s B.T. Tan & Co, since 1982. With 30 years of
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experience in practice, Mr Tan has extensive experience in various aspects of law including corporate law,
property law and litigation matters.
Mr Tan has represented clients in transactions in relation to completed properties and properties under
construction. Having been involved in conveyancing work for the last 28 years, Mr Tan is familiar with real
estate matters such as property mortgages, sale and purchase of properties, construction loans and
developer’s projects, including the construction of properties on a progressive basis.
Mr Tan graduated from the University of Singapore in 1976 with a degree in Bachelor of Laws (Honours),
and was admitted as an Advocate and Solicitor of the High Court of Singapore in January 1977.
Mr Lim Ho Seng
Mr Lim Ho Seng is a Non-Executive and Independent Director of the Board. Mr Lim has over 20 years of
experience in the retail industry. Mr Lim was formerly the Chief Executive Officer of NTUC Fairprice Cooperative Ltd, which has investments in real estate and leases retail spaces to other retail tenants.
From October 1992 to August 1997, Mr Lim was a director of Tampines Mall Pte Ltd which was
incorporated to develop and manage Tampines Mall shopping centre, which was subsequently
acquired by CapitaMall Trust.
Currently, Mr Lim is the Chairman of Baker Technology Limited and Sim Siang Choon Ltd, in addition to
holding directorships on the boards of several other publicly listed companies in Singapore.
Mr Lim is a Fellow of the Institute of Certified Public Accountants of Singapore, the Institute of Certified
Public Accountants, Australia, the Association of Chartered Certified Accountants, United Kingdom, the
Institute of Chartered Secretaries and Administrators, United Kingdom and the Singapore Institute of
Directors.
Mr Lok Vi Ming
Mr Lok Vi Ming is a Non-Executive and Independent Director of the Board. He is currently a partner and
head of the Aviation Practice Group at M/s Rodyk & Davidson. Appointed as a Senior Counsel in 2005,
Mr Lok is an internationally renowned aviation lawyer. He is featured in Euromoney Legal Media’s Guide
and Guide to the World’s Leading Insurance and Reinsurance lawyers and also in the International Who’s
Who of Aviation lawyers 2005.
Mr Lok is a Fellow of the Singapore Institute of Arbitrators and has been appointed to the Regional Panel of
Arbitrators with the Singapore International Arbitration Centre. He is a Fellow of the Singapore Academy of
Law and is on the committee for the International Promotion of Singapore Law. He has been appointed by
the Honourable Chief Justice of Singapore to chair Disciplinary Committees convened to hear complaints
into the conduct of lawyers. Mr Lok has lectured on Aviation Law at the Law Faculty of the National
University of Singapore and at the Singapore Aviation Academy. He is also the immediate past Chairman
of the Aerospace Committee of the Inter-Pacific Bar Association and is on the International Advisory Panel
of the Registry of Aircraft Parts established under the Cape Town Convention.
Mr Lok currently holds directorships in various companies including Singapore Cruise Center Pte Ltd,
Singex Exhibitions Pte Ltd, and Singapore Food Industries Ltd. Since 2003, Mr Lok has been appointed as
a director of Singex Venues Pte Ltd, which operates and manages Singapore Expo, the largest exhibition
and convention centre in Singapore.
Mr Lok graduated with a Bachelor of Law (Honours) from the National University of Singapore in 1986.
Ms Viven G. Sitiabudi
Ms Viven G. Sitiabudi (also known as Mrs Viven Gouw) is an Executive Director of the Board and the Chief
Executive Officer of the Manager. Ms Sitiabudi has more than 20 years of experience in management,
marketing and sales.
Since 2004, Ms Sitiabudi has been appointed the President Director of the Sponsor, especially following
the Sponsor’s internal restructuring which involved the merger of eight different entities. Under her
stewardship in the past three years, the Sponsor has become the largest listed property company in
Indonesia to date. She has been integral in identifying the opportunity for the Sponsor to invest in retail
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properties (the strata malls and the planned leased malls), enhancing existing assets and ensuring the
delivery of the Sponsor’s development projects, which span across a variety of real estate sectors,
including urban/township, residential clusters, condominium, hospitals as well as hotel projects,
throughout Indonesia.
Prior to her appointment as the President Director of the Sponsor, Ms Sitiabudi was a senior adviser to the
board of directors of Lippo Land Development (“LLD”) from 1990 to 1995. LLD is a property arm/flagship of
the Lippo Group during the said period and has since been merged with seven other property-related
companies to form the Sponsor. In her 5-year period at LLD, she led LLD to complete Citra Graha (formerly
known as LippoCenter) and Wisma BCA. She also identified opportunities and oversaw the construction of
various property projects throughout Indonesia for LLD. These projects include LippoCenter Bandung,
Sudirman Tower, LippoCikarang (formerly known as Bekasi Industrial Estate), Puncak Resort (formerly
known as CipanasHill Resort), Lippo Karawaci township (formerly known as JakartaBaru township),
Seaworld Indonesia, Supermal Karawaci (formerly known as LippoVillageMall), Imperial Aryaduta
Karawaci (formerly known as Century Hotel), Asia Tower, Dynaplast Tower, UPH building, Sudirman
Tower Condominium, Carita Bay Resort, Golf Karawaci Condo, Crown Court Condo, Siloam Hospital,
Pacific Tower, Amartapura Condo, Hotel Sahid Lippo Cikarang, Mal Lippo Cikarang, a golf course in Lippo
Karawaci and Tanjung Bunga township in Makassar.
From 1984 to 1995, Ms Sitiabudi was the President Director of PT Lippo Life Insurance. Under her
leadership, PT Lippo Life Insurance became one of the largest life insurance companies in Indonesia, with
Ms Sitiabudi leading its initial public offering in 1989. In 1996, Ms Sitiabudi was appointed Chief Executive
Officer of Legal and General Australia’s operations in Indonesia. Three years later, Ms Sitiabudi joined
Allianz Life Indonesia as its Vice President Director.
Ms Sitiabudi graduated from the University of New South Wales, Australia in 1977 with a degree in
Computer Science and Statistics.
Mr Yeo Cheow Tong
Mr Yeo Cheow Tong is a Non-Executive Director of the Board. He has been a prominent figure in the
Singapore political landscape for over 20 years and had previously held different ministerial positions in
the Singapore government such as Minister of Transport, Minister of Health, Minister for Community
Development, Minister for Trade and Industry and Minister for the Environment. He is currently a Member
of Parliament for Hong Kah Group Representation Constituency. Mr Yeo sits on the panel of advisers for
Temasek Holdings (Private) Limited, Lippo Group, Raffles Education Corporation as well as that for the
University of Chicago Graduate School of Business. In addition, he holds the position of chairman of the
Board of Governors of Raffles University, and is also a director of KillyInvest Pte Ltd.
Mr Yeo graduated from the University of Western Australia in 1971 with a Bachelor’s degree in
Engineering.
Mr Tan Boon Leong
Mr Tan Boon Leong is a Non-Executive Director of the Manager. He has 32 years of experience in the real
estate industry and is currently the Chief Operating Officer of MIPL. He is also a director of Mapletree
Logistics Trust Management Ltd, the manager of MapletreeLog (which is listed on the SGX-ST), from July
2005. He chairs the Asset Control Group for VivoCity, the largest retail mall in Singapore.
Prior to joining MIPL in June 2003, he was a managing director of Temasek Holdings (Private) Limited,
overseeing private equity investments in the property and infrastructure sectors, both locally and
overseas. He was with Temasek Holdings (Private) Limited from December 1995.
Mr Tan is a Colombo Plan scholar and studied urban valuation (real estate) at the University of Auckland,
New Zealand and worked with IRAS upon his graduation, from 1975 to 1995. While at IRAS, he was
involved in the valuation of real estate in Singapore and rose to become a Superscale Officer and held the
appointments of Tax Director (Technical Services—Property) and Head of Property and Valuation
Services.
Mr Tan is a member of the Valuation Review Board of Singapore.
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Mr Wong Mun Hoong
Mr Wong Mun Hoong is a Non-Executive Director of the Manager. He joined MIPL as Chief Financial
Officer in January 2006. As the Chief Financial Officer, he is responsible for Finance, Treasury, Corporate
Planning & Investor Relations, Risk Management and Information Technology of the Mapletree Group. He
is also a director of Mapletree Logistics Trust Management Ltd, the manager of MapletreeLog (which is
listed on the SGX-ST), since July 2006.
Prior to joining MIPL, Mr Wong has over 14 years’ investment banking experience in Asia, the last 10 years
of which were with Merrill Lynch & Co, which included stints in Singapore, Hong Kong and Tokyo. He was a
Director and Head of its Singapore Investment Banking Division prior to leaving Merrill Lynch (Singapore)
Pte Ltd in late 2005.
Mr Wong graduated with a Bachelor of Accountancy (Honours) from the National University of Singapore
in 1990. He is a non-practising member of the Institute of Certified Public Accountants of Singapore. He
holds the professional designation of Chartered Financial Analyst from the CFA Institute of the United
States.
A list of the present and past directorships of each Director of the Manager over the last five years
preceding the Latest Practicable Date is set out in “Appendix H—List of Present and Past Principal
Directorships of Directors and Executive Officers”.
Experience and expertise of the Board
Each of Mr Lim Ho Seng, Mr Lok Vi Ming, Mr Tan Boon Leong and Mr Wong Mun Hoong have experience in
being a director of a public listed company in Singapore. Ms Viven G. Sitiabudi has experience in being a
President Commissioner of public listed companies in Indonesia. Indonesian companies are managed by
a two-tiered management structure. The executive functions of an Indonesian company are run by a board
of directors, which is supervised by a board of commissioners.
They therefore have the appropriate experience to act as directors of the Manager and are familiar with the
rules and responsibilities of a director of a public listed company.
The Manager will arrange for the relevant training to prepare Mr Tan Bar Tien and Mr Yeo Cheow Tong for
the roles and responsibilities of a director of the manager of a public listed REITsubsequent to the listing of
LMIR Trust.
The key roles of the Board
The key roles of the Board are to:
• guide the corporate strategy and directions of the Manager;
• ensure that senior management discharges business leadership and demonstrates the highest quality
of management skills with integrity and enterprise; and
• oversee the proper conduct of the Manager.
The Board comprises seven Directors. The Audit Committee of the Board comprises Mr Tan Bar Tien,
Mr Lim Ho Seng and Mr Lok Vi Ming. Mr Lim Ho Seng has been appointed as the Chairman of the Audit
Committee.
The Board shall meet to review the key activities and business strategies of the Manager. The Board
intends to meet regularly, at least once every quarter, to deliberate the strategic policies of LMIR Trust,
including acquisitions and divestments, approval of the annual budget and review of the performance of
LMIR Trust.
Each Director has been appointed on the basis of his professional experience and his potential to
contribute to the proper guidance of LMIR Trust. The Directors will contribute in different ways, including
using their personal networks to further the interest of LMIR Trust.
The Board has the intention of approving a set of internal controls which sets out approval limits for capital
expenditure, investments and divestments and bank borrowings as well as arrangements in relation to
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cheque signatories. In addition, sub-limits are also delegated to various management levels to facilitate
operational efficiency.
The members of the Board’s Audit Committee will monitor changes to regulations and accounting
standards closely. To keep pace with regulatory changes, where these changes have an important
bearing on the Manager’s or Directors’ disclosure obligations, the Directors will be briefed either during
Board meetings or at specially convened sessions involving the relevant professionals. The management
will also provide the Board with complete and adequate information in a timely manner through regular
updates on financial results, market trends and business developments.
The majority of the Directors are non-executive. Further, three of the seven Directors are independent of
the management. This enables the management to benefit from their external, diverse and objective
perspective on issues that are brought before the Board. It would also enable the Board to interact and
work with the management through a robust exchange of ideas and views to help shape the strategic
process. This, together with a clear separation of the roles of the Chairman and the Chief Executive Officer,
provides a healthy professional relationship between the Board and the management, with clarity of roles
and robust oversight as they deliberate on the business activities of the Manager.
The positions of Chairman of the Board and Chief Executive Officer are separately held by two persons in
order to maintain an effective check and balance. The Chairman of the Board, Mr Tan Bar Tien, is an
Independent Director, while the Chief Executive Officer, Ms Viven G. Sitiabudi, is an Executive Director of
the Board.
There is a clear separation of the roles and responsibilities between the Chairman and the Chief Executive
Officer of the Manager. The Chairman is responsible for the overall management of the Board as well as
ensuring that the members of the Board and the management work together with integrity and
competency, and that the Board engages the management in constructive debate on strategy,
business operations, enterprise risk and other plans while the Chief Executive Officer has full
executive responsibilities over the business directions and operational decisions in the day-to-day
management of the Manager.
The Board has separate and independent access to senior management and the Company Secretary at
all times. The Company Secretary attends to corporate secretarial administration matters and attends all
Board meetings. The Board also has access to independent professional advice where appropriate and
whenever requested.
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Management reporting structure of the Board
Board of Directors
Tan Bar Tien
(Chairman, Non-Executive and
Independent Director)
Lim Ho Seng
(Non-Executive and Independent
Director)
Lok Vi Ming
(Non-Executive and Independent
Director)
Viven G. Sitiabudi
(Executive Director and Chief
Executive Officer)
Yeo Cheow Tong
(Non-Executive Director)
Tan Boon Leong
(Non-Executive Director)
Wong Mun Hoong
(Non-Executive Director)
Chief Executive Officer
Viven G. Sitiabudi
Asset Manager
Investment
Manager
Andreas Kartawinata
Jeremy S. Walker
Chief Financial
Officer / Investor
Relations Manager /
Compliance Officer
Rudi Chuan Hwee
Hiow
EXECUTIVE OFFICERS OF THE MANAGER
The Executive Officers of the Manager are entrusted with the responsibility for the daily operations of the
Manager.
Roles of the Executive Officers of the Manager
The Chief Executive Officer of the Manager will work with the Board to determine the strategy for LMIR
Trust. He will also work with the other members of the Manager’s management team, such as the
investment, asset management and financial personnel, in meeting the stated strategic, investment, and
operational objectives of LMIR Trust. Additionally, the Chief Executive Officer will be responsible for
planning the future strategic development and the day-to-day operations of LMIR Trust.
The Chief Financial Officer / Investor Relations Manager / Compliance Officer of the Manager will
work with the Chief Executive Officer and other members of the Manager’s management team to
formulate strategic plans for LMIR Trust in accordance with the Manager’s stated investment strategy.
The Chief Financial Officer / Investor Relations Manager / Compliance Officer will be responsible for
applying the appropriate capital management strategy, overseeing implementation of LMIR Trust’s shortand medium-term business plans and financial condition, as well as coordinating fund management
activities. He is responsible for compliance issues concerning LMIR Trust in relation to the Listing Manual
and the relevant Singapore laws and regulations. In the area of investor relations, he is responsible for
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facilitating communications and liaison with Unitholders. This includes statutory reporting, such as
producing annual reports to Unitholders, and reporting to the SGX-ST in compliance with the Listing
Manual. The principal objective of this role is to maintain continuous disclosure and transparent
communications with Unitholders and the market. He is also tasked with the responsibility of
promoting and marketing LMIR Trust to Unitholders, prospective investors and the media through
regular communications, roadshows, events and a corporate website.
The Asset Manager is responsible for formulating the business plans in relation to LMIR Trust’s properties
with short, medium and long-term objectives, and with a view to maximising the rental income of LMIR
Trust via active asset management. The Asset Manager will work closely with the Property Manager to
implement LMIR Trust’s strategies so as to ensure that the properties in LMIR Trust’s portfolio maximise
their income generation potential and minimise their expense base without compromising their
marketability. The Asset Manager will focus on the operations of LMIR Trust’s properties, the
implementation of the short to medium term objectives of LMIR Trust’s portfolio and will supervise the
Property Manager in the implementation of LMIR Trust’s property-related strategies.
The Investment Manager is responsible for identifying, researching and evaluating potential acquisitions
and related investments with a view to enhancing LMIR Trust’s portfolio or divestments where a property is
no longer strategic, fails to enhance the value of LMIR Trust’s portfolio or fails to be yield accretive. The
Investment Manager also recommends and analyses potential asset enhancement initiatives. In order to
support these various initiatives, the Investment Manager will develop financial models to test the financial
impact of different courses of action. These findings will be research-driven to help develop and implement
the proposed initiatives.
Experience and Expertise of Executive Officers
Information on the working experience of the executive officers of the Manager is set out below:
Ms Viven G. Sitiabudi
(See “—Directors of the Manager—Experience and Expertise of the Board of Directors—Ms Viven
G.Sitiabudi”.)
Mr Rudi Chuan Hwee Hiow
Mr Rudi Chuan Hwee Hiow is the Chief Financial Officer, the Investor Relations Manager and the
Compliance Officer of the Manager. He has experience in corporate finance. Prior to joining the
Manager in April 2007, he was the Senior Vice President (Finance & Accounting) with Macquarie
Pacific Star Prime REIT Management Limited from March 2005. As the Senior Vice President,
Mr Chuan was in charge of finance and finance-related duties, human resource, information
technology as well as serving as the co-company secretary.
From July 2000 to February 2005, Mr Chuan was a financial controller with a private property development
company, Suntec City Development Pte. Ltd. From December 1995 to July 2000, Mr Chuan was a Senior
Manager, Finance with NatSteel Chemicals Limited.
From February 1990 to October 1995, Mr Chuan worked with Unilever Singapore Pte. Ltd., Mars
Confectionary, Australia and Effem Foods Inc (a wholly-owned subsidiary of Mars Incorporated, USA).
From January 1989 to January 1990, Mr Chuan was a Senior Accountant with a logistics company, Freight
Links Express Ltd.
From July 1986 to December 1988, Mr Chuan was a project analyst at a real estate company, United
Industrial Corporation Ltd. As a project analyst, Mr Chuan was responsible for evaluating and making
recommendations on potential take-over targets.
Mr Chuan is a certified public accountant and has been a member of the Institute of Certified Public
Accountants of Singapore since 1988. He graduated in 1981 from the University of Otago, New Zealand,
with a Bachelor of Commerce degree in Accounting and holds a Master’s degree in Business
Administration from the State University of New York, Buffalo.
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Mr Andreas Kartawinata
Mr Andreas Kartawinata is the Asset Manager of the Manager. Prior to joining PT Lippo Karawaci Tbk in
February 2007, Mr Andreas Kartawinata was the Director of Leasing/Marketing and Operations with
PT Metropolitan Kentjana Tbk where he was responsible for managing properties such as Pondok Indah
Mall, Puri Indah Mall, Wisma Pondok Indah Office Tower, Apartment Golf Pondok Indah (service
apartment), Pondok Indah Real Estate, Puri Indah Real Estate, and Bumi Shangrila Batam Real
Estate. Under Mr Kartawinata’s management, Pondok Indah Mall was awarded the Prix d’Excellence
(Retail Category) in 2006 by FIABCI, an international real estate federation. Mr Kartawinata was with
PT Metropolitan Kentjana Tbk from June 1995.
From June 1987 to May 1995, Mr Kartawinata held various positions with the Ometraco Group, including
the position of a Leasing/Marketing manager with PT Schneider Ometraco, a joint venture between the
Schneider Group (France) and the Ometraco Group. From August 1985 to June 1987, Mr Kartawinata was
a Leasing/Marketing manager with PT Inti Datamas Sukses.
Mr Kartawinata has over twenty years of experience in all phases of leasing, management, marketing and
sales, including building a team of property professionals, market research, market planning, product
management, advertising, promotion, sales and property management.
Mr Kartawinata has been appointed as the President of the Association of Shopping Centres of Jakarta—
Indonesia for two consecutive periods, namely 2003-2007 and 2007-2010. Mr Kartawinata has
participated in international events such as sitting as a panelist on the Council of Asian Shopping
Centre Seminar in Malaysia (2005) and Indonesia (2006). Mr Kartawinata is also a part-time lecturer
for ‘retail business’ at Tarumanegara University Jakarta, Petra University Surabaya and Bina Retail
Indonesia.
Mr Kartawinata graduated from Institute Technology of Bandung with a major in Electro-technique
Engineering.
Mr Jeremy S. Walker
Mr Jeremy S. Walker is the Investment Manager of the Manager. In December 2006, Mr Walker joined
PT Lippo Karawaci Tbk as Director—Asset Management. Having worked in the Australian property sector
since 1990, Mr Walker has extensive experience in the Australian listed property trust market and has
been involved in sharing his knowledge of international best practices with the Lippo Group.
Prior to joining PT Lippo Karawaci Tbk, Mr Walker was the National Director—Retail at Jones Lang
LaSalle. During his 12 years at Jones Lang LaSalle, Mr Walker’s experience covered many aspects of the
retail property industry, spanning areas such as retail leasing, management and sales across all states of
Australia. From 1995 to 1996, Mr Walker was the Retail Leasing Executive responsible for a portfolio of
shopping centres and new projects. This included the successful repositioning of Wendouree Village
Shopping Centre after major renovations. From 1998 to 1999, Mr Walker was the National Portfolio
Manager with Jones Lang LaSalle for Schroders Australia. This included overall responsibility of asset
management, marketing and leasing of six retail shopping centres in three states of Australia with a total
value of around A$300 million.
From 1999 to 2000, Mr Walker was the Manager of Investment Sales. Based in Melbourne and working
with a national team of experts, Mr Walker was responsible for working with key clients to acquire and
dispose assets in relation to retail shopping centres across Victoria and other parts of Australia. From 2000
to 2006, Mr Walker was responsible for the asset management and client relationship of many properties
in Australia with an approximate value in excess of A$500 million, and represented various clients in the
management, marketing and leasing of 16 shopping centres in Australia. Mr Walker provided advice on
development, acquisition and divestment to institutional clients such as AMP Limited, Deutshe Bank along
with other syndicated vehicles such as MCS and Australian Unity and private investors.
Mr Walker is a licensed real estate agent in Australia and graduated with a degree in Bachelor of Business
Property from RMIT University in 1998. He also graduated with a graduate Diploma in Business
Administration from Mt. Eliza Business School, Australia in 2002.
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A list of the present and past directorships of each Executive Officer of the Manager over the last five years
preceding the Latest Practicable Date is set out in “Appendix H—List of Present and Past Principal
Directorships of Directors and Executive Officers”.
Roles and responsibilities of the Manager
The Manager has general powers of management over the assets of LMIR Trust. The Manager’s main
responsibility is to manage LMIR Trust’s assets and liabilities for the benefit of Unitholders.
The Manager will set the strategic direction of LMIR Trust and give recommendations to the Trustee on the
acquisition, divestment or enhancement of assets of LMIR Trust in accordance with its stated investment
strategy.
The Manager has covenanted in the Trust Deed to use its best endeavours to
• carry on and conduct its business in a proper and efficient manner;
• ensure that LMIR Trust’s operations are carried on and conducted in a proper and efficient manner; and
• conduct all transactions with or for LMIR Trust at arm’s length and on normal commercial terms.
Furthermore, the Manager will prepare property plans on a regular basis, which may contain proposals
and forecasts on net income, capital expenditure, sales and valuations, explanations of major variances to
previous forecasts, written commentary on key issues and any relevant assumptions. The purpose of
these plans is to explain the performance of LMIR Trust’s properties.
The Manager will also be responsible for ensuring compliance with the applicable provisions of the SFA
and all other relevant legislation, the Listing Manual, the CIS Code (including the Property Funds
Guidelines), the Trust Deed, any tax ruling and all relevant contracts. The Manager will be responsible
for all regular communications with Unitholders.
The Manager may require the Trustee to borrow on behalf of LMIR Trust (upon such terms and conditions
as the Manager deems fit, including the charging or mortgaging of all or any part of the Deposited
Property) whenever the Manager considers, among other things, that such borrowings are necessary or
desirable in order to enable LMIR Trust to meet any liabilities or to finance the acquisition of any property.
However, the Manager must not direct the Trustee to incur a borrowing if to do so would mean that LMIR
Trust’s total borrowings and deferred payments exceed 35.0% of the value of its Deposited Property at the
time the borrowing is incurred, taking into account deferred payments (including deferred payments for
assets whether to be settled in cash or in Units). The Property Funds Guidelines allow a REIT to borrow
more than 35.0% of the value of its Deposited Property (up to a maximum of 60.0%) only if a credit rating
from Fitch Inc., Moody’s or Standard & Poor’s is obtained and disclosed to the public.
In the absence of fraud, negligence, wilful default or breach of the Trust Deed by the Manager, it shall not
incur any liability by reason of any error of law or any matter or thing done or suffered to be done or omitted
to be done by it in good faith under the Trust Deed. In addition, the Manager shall be entitled, for the
purpose of indemnity against any actions, costs, claims, damages, expenses or demands to which it may
be put as Manager, to have recourse to the Deposited Property or any part thereof save where such action,
cost, claim, damage, expense or demand is occasioned by the fraud, negligence, wilful default or breach of
the Trust Deed by the Manager. The Manager may, in managing LMIR Trust and in carrying out and
performing its duties and obligations under the Trust Deed, with the written consent of the Trustee, appoint
such person to exercise any or all of its powers and discretions and to perform all or any of its obligations
under the Trust Deed, provided always that the Manager shall be liable for all acts and omissions of such
persons as if such acts and omissions were its own.
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THE PROPERTY MANAGER OF LMIR Trust
Management reporting structure of the Property Manager
Chairman
Tjokro Libianto
Chief Executive Officer
Yuke Elia Susiloputro
Chief Financial
Officer
Asset Manager
Susanto
Wilfredo Z. Pineda
Centre Managers
Heads of Department
Executive Officers of the Property Manager
Information on the working experience of the Executive Officers of the Property Manager is set out below:
Mr Tjokro Libianto
Mr Tjokro Libianto is the Chairman of the Property Manager. He has many years of experience in property
development as well as related regulatory requirements. He has been instrumental in negotiating most of
the land acquisitions by the Lippo-related companies. He was formerly the Administrative and Finance
Manager of PT Dwi Satya Utama in Surabaya as well as that of PT Tifa Finance and PT Tifa Securities.
Mr Libianto holds a degree in Accountancy from Brawijaya University, Malang, Indonesia.
Mr Yuke Elia Susiloputro
Mr Yuke is the Chief Executive Officer of the Property Manager. He started his career as a design architect
in Future Systems, Los Angeles, California from 1986 to 1988. From 1988 to 1992, he was the Associate
Director of Glenwood L. Garvey & Associates, Santa Monica, California.
Mr Yuke has extensive experience in property development. In 1992, he joined the Lippo Group to develop
the first regional shopping centre in Cikarang, Bekasi, West Java and since then, he was actively involved
in most of the Lippo Group’s development of shopping centres in Indonesia. He also serves in the
Indonesian Real Estate Association as Head of the New Township Development. In addition, he is the
Chairman of the Indonesian Industrial Estate Association for Infrastructure Facilities Development.
Presently, he is the President Director in the International Zone Area (Special Economic Zone),
Bekasi, West Java, Indonesia.
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Mr Yuke graduated from the Southern California Institute of Architecture, Santa Monica, California in 1986
with a degree in Architecture.
Mr Susanto
Mr Susanto is the Chief Financial Officer of the Property Manager. He is an experienced finance and
accounting professional who started his career as a Consultant at Prasetio Utomo & Co—Arthur Andersen
Public Accountant Firm where his last position was as the Andersen World Wide Manager. He joined the
Lippo-related companies in 2000 as a Finance & Accounting Division Head in PT Lippo Karawaci Tbk. In
2001, he was appointed Director of PT Lippo Cikarang Tbk and in August 2004, he was appointed Chief
Controller of PT Lippo Karawaci Tbk.
Mr Susanto holds an Accounting degree from STIE “YAI”, Jakarta, Indonesia.
Mr Wilfredo Z. Pineda
Mr Wilfredo Z. Pineda is the Asset Manager of the Property Manager. He joined PT Lippo Karawaci Tbk in
December 2006 and is responsible for finance and accounting.
Mr Pineda has 28 years of professional experience covering the areas of Corporate and Project Finance;
Financial and Operation Audit; Financial Budgeting and Controlling; System Development and General
Administration. His industry experiences include direct-to-home satellite pay television broadcasting;
property development and management of hotel, shopping malls, office buildings, condominiums,
membership clubs and real estate housing.
Mr Pineda has 20 years experience in property development and management which includes his stint as
Assistant Vice President Comptroller with Rockwell Land Corporation, a real estate development
company in the Philippines, as Financial Controller and Management Advisor to PT Plaza Indonesia
Realty Tbk, a property development and management company in Indonesia, and as Finance and
Accounting Manager with PT. Bimantara Siti Wisesa, an Indonesian investment company.
Mr Pineda holds a Bachelor of Science degree in Commerce with a major in Accounting from Holy Angel
University, Philippines, and he is a Certified Public Accountant in the Philippines.
MANAGEMENT FEES
The Manager is entitled under the Trust Deed to the following management fees:
• (in respect of Authorised Investments which are in the form of real estate whether held directly by LMIR
Trust or indirectly through one or more SPVs) a Base Fee of 0.25% per annum of the value of the
Deposited Property and a Performance Fee of 4.00% per annum of LMIR Trust’s NPI in the relevant
financial year (calculated before accounting for the Performance Fee in that financial year); and
• (in respect of Authorised Investments which are not in the form of real estate whether held directly by
LMIR Trust or indirectly through one or more SPVs) an Authorised Investment Management Fee of
0.5% per annum of the value of such Authorised Investments which, unless such Authorised Investment
is an interest in a property fund (either a REIT or private property fund), wholly managed by a whollyowned subsidiary of the Sponsor in which case no Authorised Investment Management Fee shall be
payable in relation to such Authorised Investment.
For Forecast Period 2007, Projection Year 2008 and Projection Year 2009, the Manager has opted to
receive 100% of the Performance Fee in the form of Units.
The Manager may elect to receive the management fees in cash or Units or a combination of cash and
Units (as it may in its sole discretion determine) after the Projection Year 2009, having regard to the
distribution yields to Unitholders and the cash flow of LMIR Trust.
Any increase in the rate above the maximum permitted level or any change in the structure of the
Manager’s management fees must be approved by an Extraordinary Resolution of the Unitholders passed
at a Unitholders’ meeting duly convened and held in accordance with the provisions of the Trust Deed.
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The Manager is also entitled to:
• (for any Authorised Investment acquired directly or indirectly from time to time by the Trustee on behalf
of LMIR Trust) an acquisition fee of 1.0% of the purchase price in the case of any Authorised Investment
acquired by LMIR Trust; and
• a divestment fee of 0.5% of the sale price (after deducting the interest of any co-owners or coparticipants) of any Authorised Investment sold directly or indirectly or divested from time to time by the
Trustee on behalf of LMIR Trust.
No acquisition fee is payable for the acquisition of the initial property portfolio of LMIR Trust.
Any payment to third party real estate agents or brokers in connection with the acquisition or divestment of
any Authorised Investment of LMIR Trust shall be paid by the Manager to such persons out of the
Deposited Property of LMIR Trust or the assets of the relevant SPV, and not out of the acquisition fee or the
divestment fee received or to be received by the Manager.
The acquisition fee and the divestment fee are payable to the Manager in the form of cash and/or Units (as
the Manager may elect in its sole discretion) at the then prevailing market price provided that in respect of
any acquisition and sale or divestment of real estate assets from/to interested parties, such a fee should, if
required by the applicable laws, rules and/or regulations, be in the form of Units issued by LMIR Trust at
prevailing market price(s) and subject to such transfer restrictions as may be imposed. At present, the
Property Funds Guidelines prescribe that such Units should not be sold within one year from date of their
issuance. Any increase in the rate above the maximum permitted level or any change in the structure of the
Manager’s acquisition fee or divestment fee must be approved by an Extraordinary Resolution of the
Unitholders passed at a Unitholders’ meeting duly convened and held in accordance with the provisions of
the Trust Deed.
In relation to Authorised Investments in the form of real estate owned or held, or to be owned or held, either
directly or indirectly, by a SPV, the fees payable to the Manager shall be calculated on the same basis as if
such real estate, or the pro-rated share of such real estate in the case where the interest of LMIR Trust in
the SPV is partial, had been held directly by the Trustee.
ANNUAL REPORTS
An annual report will be issued by the Manager to Unitholders within three months from the end of each
financial year of LMIR Trust, containing, among other things, the following key items:
(i)
details of all real estate transactions entered into during the financial accounting period;
(ii)
details of LMIR Trust’s real estate assets;
(iii)
if applicable, with respect to investments other than real property:
(a) a brief description of the business;
(b) proportion of share capital owned;
(c) cost;
(d) (if relevant) Directors’ valuation and in the case of listed investments, market value;
(e) dividends received during the year (indicating any interim dividends);
(f)
dividend cover or underlying earnings;
(g) any extraordinary items; and
(h) net assets attributable to investments;
(iv)
cost of each property held by LMIR Trust;
(v)
annual valuation of each property of LMIR Trust;
(vi)
analysis of provision for diminution in value of each property of LMIR Trust (to the extent possible);
(vii)
annual rental income for each property of LMIR Trust;
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(viii)
occupancy rates for each property of LMIR Trust;
(ix)
remaining term for each of LMIR Trust’s leasehold properties;
(x)
amount of Distributable Income held pending distribution;
(xi)
details of assets other than real estate;
(xii)
details of LMIR Trust’s exposure to derivatives;
(xiii)
details of LMIR Trust’s investments in other property funds;
(xiv)
details of borrowings by the Trustee and other financial accommodation to the Trustee in relation
to LMIR Trust;
(xv)
value of the Deposited Property and the NAV of LMIR Trust at the beginning and end of the
financial year under review;
(xvi)
the prices at which the Units were quoted at the beginning and end of the accounting period, and
the highest and lowest prices at which the Units were traded on the SGX-ST during the financial
accounting period;
(xvii)
volume of trade in the Units during the accounting period;
(xviii)
the aggregate value of all transactions entered into by the Trustee (for and on behalf of LMIR Trust)
with an “interested party” (as defined in the Property Funds Guidelines) or with an “interested
person” (as defined in the Listing Manual) during the financial year under review;
(xix)
total operating expenses of LMIR Trust in respect of the accounting period, including expenses
paid to the Manager and interested parties (if any) and the Trustee, and taxation incurred in
relation to LMIR Trust’s properties;
(xx)
historical performance of LMIR Trust, including rental income obtained and occupancy rates for
each property in respect of the accounting period and other various periods of time (e.g. one-year,
three-year, five-year or 10-year) and any distributions made;
(xxi)
total amount of fees paid to the Trustee;
(xxii)
name of the manager of LMIR Trust, together with an indication of the terms and duration of its
appointment and the basis of its remuneration;
(xxiii)
total amount of fees paid to the Manager and the price(s) of the Units at which they were issued in
part payment thereof;
(xxiv)
an analysis of realised and unrealised surpluses or losses, stating separately profits and losses as
between listed and unlisted investments, if applicable; and
(xxv)
any extraordinary items.
The first annual report will cover the period from the date of constitution of LMIR Trust to 31 December
2008.
Additionally, the Manager has given an undertaking to the SGX-ST that it will announce LMIR Trust’s NAV
per Unit on a quarterly basis. Such announcements will be based on the latest available valuation of LMIR
Trust’s real estate and real estate-related assets, which the Manager has undertaken to conduct at least
once a year. The first such valuation will be conducted by 31 December 2008.
RETIREMENT OR REMOVAL OF THE MANAGER
The Manager shall have the power to retire in favour of a corporation approved by the Trustee to act as the
manager of LMIR Trust.
Also, the Manager may be removed by notice given in writing by the Trustee if:
• the Manager goes into liquidation (except a voluntary liquidation for the purpose of reconstruction or
amalgamation upon terms previously approved in writing by the Trustee) or a receiver is appointed over
its assets or a judicial manager is appointed in respect of the Manager;
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• the Manager ceases to carry on business;
• the Manager fails or neglects after reasonable notice from the Trustee to carry out or satisfy any
material obligation imposed on the Manager by the Trust Deed;
• if the Unitholders by an Ordinary Resolution duly proposed and passed by Unitholders present and
voting at a meeting of Unitholders convened in accordance with the Trust Deed, with no Unitholder
(including the Manager and its Related Parties) being disenfranchised, vote to remove the Manager;
• for good and sufficient reason, the Trustee is of the opinion, and so states in writing, that a change of the
Manager is desirable in the interests of the Unitholders; or
• the MAS directs the Trustee to remove the Manager.
Where the Manager is removed on the basis that a change of the Manager is desirable in the interests of
the Unitholders, the Manager has a right under the Trust Deed to refer the matter to arbitration. Any
decision made pursuant to such arbitration proceedings is binding upon the Manager, the Trustee and all
Unitholders.
CORPORATE GOVERNANCE OF THE MANAGER
The following outlines the main corporate governance practices of the Manager.
Board of Directors of the Manager
The Board is responsible for the overall corporate governance of the Manager including establishing goals
for management and monitoring the achievement of these goals. The Manager is also responsible for the
strategic business direction and risk management of LMIR Trust. All Board members will participate in
matters relating to corporate governance, business operations and risks, financial performance, and the
nomination and review of Directors. The Board will establish a framework for the management of the
Manager and LMIR Trust, including a system of internal audit and control and a business risk management
process. The Board consists of seven members, three of whom are Independent Directors. None of the
Directors has entered into any service contract directly with LMIR Trust.
The composition of the Board is determined using the following principles:
• the Chairman of the Board should be a non-executive Director;
• the Board should comprise Directors with a broad range of commercial experience including expertise
in funds management, law, finance and the property industry; and
• at least one-third of the Board should comprise independent Directors.
The composition will be reviewed regularly to ensure that the Board has the appropriate mix of expertise
and experience.
Audit Committee
The Audit Committee is appointed by the Board from among the Directors and is composed of three
members, a majority of whom (including the Chairman of the Audit Committee) are required to be
independent Directors. As at the date of this Prospectus, the members of the Audit Committee are Mr Tan
Bar Tien, Mr Lim Ho Seng and Mr Lok Vi Ming. Mr Lim Ho Seng has been appointed as the Chairman of the
Audit Committee. All of them are independent Directors and resident in Singapore.
The role of the Audit Committee is to monitor and evaluate the effectiveness of the Manager’s internal
controls. The Audit Committee will review the quality and reliability of information prepared for inclusion in
financial reports, and will be responsible for the nomination of external auditors and reviewing the
adequacy of external audits in respect of cost, scope and performance.
The Audit Committee’s responsibilities also include:
• monitoring the procedures established to regulate Related Party Transactions, including ensuring
compliance with the provisions of the Listing Manual relating to “interested person transactions” (as
defined therein) and the provisions of the Property Funds Guidelines relating to “interested party
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transactions” (as defined therein) (both such types of transactions constituting “Related Party
Transactions”);
• monitoring the procedures in place to ensure compliance with applicable legislation, the Listing Manual
and the Property Funds Guidelines;
• reviewing arrangements by which employees of LMIR Trust may, in confidence, raise concerns about
possible improprieties in matters of financial reporting or other matters and ensuring that arrangements
are in place for the independent investigation of such matters and for appropriate follow-up action;
• examining the effectiveness of financial, operating and compliance controls and risk management
policies and systems at least annually;
• reviewing external audit reports to ensure that where deficiencies in internal controls have been
identified, appropriate and prompt remedial action is taken by the management;
• reviewing the adequacy of external audits in respect of cost, scope and performance;
• making recommendations to the Board on the appointment, reappointment and removal of external
auditors and approving the remuneration and terms of engagement of external auditors;
• reviewing, on an annual basis, the independence and objectivity of the external auditors and where the
external auditors also provide a substantial volume of non-audit services to LMIR Trust, keeping the
nature and extent of such services under review, seeking to balance the maintenance of objectivity and
value for money;
• reviewing internal audit reports annually to ascertain that the guidelines and procedures established to
monitor Related Party Transactions have been complied with;
• ensuring that the internal audit function is adequately resourced and has appropriate standing with
LMIR Trust;
• ensuring, at least annually, the adequacy of the internal audit function;
• meeting with external and internal auditors, without the presence of the executive officers of the
Manager, at least on an annual basis;
• reviewing the significant financial reporting issues and judgements so as to ensure the integrity of the
financial statements of LMIR Trust and any formal announcements relating to LMIR Trust’s financial
performance;
• investigating any matters within the Audit Committee’s terms of reference, whenever it deems
necessary; and
• reporting to the Board on material matters, findings and recommendations.
Dealings in Units
The Trust Deed requires each Director to give notice to the Manager of his acquisition of Units or of
changes in the number of Units which he holds or in which he has an interest, within two Business Days
after such acquisition or the occurrence of the event giving rise to changes in the number of Units which he
holds or in which he has an interest (see “The Formation and Structure of LMIR Trust—The
Trust Deed—Directors’ Declaration of Unitholdings”).
All dealings in Units by Directors will be announced via SGXNET, with the announcement to be posted on
the Internet at the SGX-ST website http://www.sgx.com
The Directors and employees of the Manager are encouraged, as a matter of internal policy, to hold Units
but are prohibited from dealing in the Units:
• in the period commencing one month before the public announcement of LMIR Trust’s annual results
and (where applicable) property valuations and two weeks before the public announcement of LMIR
Trust’s quarterly results, and ending on the date of announcement of the relevant results or, as the case
may be, property valuations; and
• at any time while in possession of price sensitive information.
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The Directors and employees of the Manager are also prohibited from communicating price sensitive
information to any person.
In addition, the Manager has given an undertaking to the MAS that it will announce to the SGX-ST the
particulars of its holdings in the Units and any changes thereto within two Business Days after the date on
which it acquires or disposes of any Units, as the case may be. The Manager has also undertaken that it
will not deal in the Units in the period commencing one month before the public announcement of LMIR
Trust’s annual results and (where applicable) property valuations and two weeks before the public
announcement of LMIR Trust’s quarterly results, and ending on the date of announcement of the
relevant results or, as the case may be, property valuations.
Management of business risk
The Board will meet quarterly or more often if necessary and will review the financial performance of the
Manager and LMIR Trust against a previously approved budget. The Board will also review the business
risks of LMIR Trust, examine liability management and will act upon any comments from the auditors of
LMIR Trust.
The Manager has appointed experienced and well-qualified management personnel to handle the
day-to-day operations of the Manager and LMIR Trust. In assessing business risk, the Board will
consider the economic environment and risks relevant to the property industry. It will review
management reports and feasibility studies on individual development projects prior to approving
major transactions. The management will meet regularly to review the operations of the Manager and
LMIR Trust and discuss any disclosure issues.
Conflicts of interest
The Manager has also instituted the following procedures to deal with conflicts of interest issues:
• The Manager will not manage any other REIT which invests in the same type of properties as LMIR
Trust.
• All executive officers will be employed by the Manager.
• All resolutions in writing of the Directors in relation to matters concerning LMIR Trust must be approved
by a majority of the Directors, including at least one Independent Director.
• At least one-third of the Board shall comprise Independent Directors.
• In respect of matters in which the Sponsor and/or its subsidiaries have an interest, direct or indirect, any
nominees appointed by the Sponsor and/or its subsidiaries to the Board to represent its/their interests
will abstain from voting. In such matters, the quorum must comprise a majority of the Independent
Directors and must exclude nominee Directors of the Sponsor and/or its subsidiaries.
• In respect of matters in which MIPL and/or its subsidiaries have an interest, direct or indirect, any
nominees appointed by MIPL and/or its subsidiaries to the Board to represent its/their interests will
abstain from voting. In such matters, the quorum must comprise a majority of the Independent Directors
and must exclude nominee Directors of MIPL and/or its subsidiaries.
• It is also provided in the Trust Deed that if the Manager is required to decide whether or not to take any
action against any person in relation to any breach of any agreement entered into by the Trustee for and
on behalf of LMIR Trust with a related party of the Manager, the Manager shall be obliged to consult with
a reputable law firm (acceptable to the Trustee) which shall provide legal advice on the matter. If the said
law firm is of the opinion that the Trustee, on behalf of LMIR Trust, has a prima facie case against the
party allegedly in breach under such agreement, the Manager shall be obliged to take appropriate
action in relation to such agreement. The Directors will have a duty to ensure that the Manager so
complies. Notwithstanding the foregoing, the Manager shall inform the Trustee as soon as it becomes
aware of any breach of any agreement entered into by the Trustee for and on behalf of LMIR Trust with a
related party of the Manager and the Trustee may take such action as it deems necessary to protect the
rights of Unitholders and/or which is in the interests of Unitholders. Any decision by the Manager not to
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take action against a related party of the Manager shall not constitute a waiver of the Trustee’s right to
take such action as it deems fit against such related party.
RELATED PARTY TRANSACTIONS
The Manager’s internal control system
The Manager will establish an internal control system to ensure that all future Related Party Transactions
• will be undertaken on normal commercial terms; and
• will not be prejudicial to the interests of LMIR Trust and the Unitholders.
As a general rule, the Manager must demonstrate to its Audit Committee that such transactions satisfy the
foregoing criteria, which may entail obtaining (where practicable) quotations from parties unrelated to the
Manager, or obtaining one or more valuations from independent professional valuers (in accordance with
the Property Funds Guidelines).
The Manager will maintain a register to record all Related Party Transactions which are entered into by
LMIR Trust and the bases, including any quotations from unrelated parties and independent valuations
obtained to support such bases, on which they are entered into.
The Manager will also incorporate into its internal audit plan a review of all Related Party Transactions
entered into by LMIR Trust. The Audit Committee shall review the internal audit reports at least twice a year
to ascertain that the guidelines and procedures established to monitor Related Party Transactions have
been complied with. In addition, the Trustee will also have the right to review such audit reports to ascertain
that the Property Funds Guidelines have been complied with. Furthermore, the following procedures will
be undertaken:
• transactions (either individually or as part of a series or if aggregated with other transactions involving
the same related party during the same financial year) equal to or exceeding S$100,000 in value but
below 3.0% of the value of LMIR Trust’s net tangible assets will be subject to review by the Audit
Committee at regular intervals;
• transactions (either individually or as part of a series or if aggregated with other transactions involving
the same related party during the same financial year) equal to or exceeding 3.0% but below 5.0% of the
value of LMIR Trust’s net tangible assets will be subject to the review and prior approval of the Audit
Committee. Such approval shall only be given if the transactions are on normal commercial terms and
are consistent with similar types of transactions made by the Trustee with third parties which are
unrelated to the Manager; and
• transactions (either individually or as part of a series or if aggregated with other transactions involving
the same related party during the same financial year) equal to or exceeding 5.0% of the value of LMIR
Trust’s net tangible assets will be reviewed and approved prior to such transactions being entered into,
on the basis described in the preceding paragraph, by the Audit Committee which may, as it deems fit,
request advice on the transaction from independent sources or advisers, including the obtaining of
valuations from independent professional valuers. Furthermore, under the Listing Manual and the
Property Funds Guidelines, such transactions would have to be approved by the Unitholders at a
meeting of Unitholders duly convened and held in accordance with the provisions of the Trust Deed.
Where matters concerning LMIR Trust relate to transactions entered into or to be entered into by the
Trustee for and on behalf of LMIR Trust with a related party of the Manager (which would include relevant
associates thereof) or LMIR Trust, the Trustee is required to consider the terms of such transactions to
satisfy itself that such transactions are
• conducted on normal commercial terms;
• not prejudicial to the interests of LMIR Trust and the Unitholders; and
• in accordance with all applicable requirements of the Property Funds Guidelines and/or the Listing
Manual relating to the transaction in question.
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Further, the Trustee has the discretion under the Trust Deed to decide whether or not to enter into a
transaction involving a related party of the Manager or LMIR Trust. If the Trustee is to sign any contract with
a related party of the Manager or LMIR Trust, the Trustee will review the contract to ensure that it complies
with the requirements relating to interested party transactions in the Property Funds Guidelines (as may
be amended from time to time) and the provisions of the Listing Manual relating to interested person
transactions (as may be amended from time to time) as well as such other guidelines as may from time to
time be prescribed by the MAS and the SGX-ST to apply to REITs.
Save for the transactions described under “—Related Party Transactions in connection with the setting up
of LMIR Trust and the Offering” and “—Exempted Agreements”, LMIR Trust will comply with Rule 905 of
the Listing Manual by announcing any interested person transaction in accordance with the Listing Manual
if such transaction, by itself or when aggregated with other interested person transactions entered into with
the same interested person during the same financial year, is 3.0% or more of LMIR Trust’s latest audited
net tangible assets.
The aggregate value of all Related Party Transactions which are subject to Rules 905 and 906 of the
Listing Manual in a particular financial year will be disclosed in LMIR Trust’s annual report for that financial
year.
Role of the Audit Committee for Related Party Transactions
The Audit Committee will periodically review all Related Party Transactions to ensure compliance with the
Manager’s internal control system and with the relevant provisions of the Listing Manual as well as the
Property Funds Guidelines. The review will include the examination of the nature of the transaction and its
supporting documents or such other data deemed necessary by the Audit Committee.
If a member of the Audit Committee has an interest in a transaction, he is to abstain from participating in
the review and approval process in relation to that transaction.
Related Party Transactions in connection with the setting up of LMIR Trust and the Offering
The Trustee, on behalf of LMIR Trust, has entered into a number of transactions with the Manager and
certain related parties of the Manager in connection with the setting up of LMIR Trust and the Offering.
These Related Party Transactions are as follows:
• The Trustee has entered into the Trust Deed with the Manager. The terms of the Trust Deed are
generally described in “The Formation and Structure of LMIR Trust”.
• The Retail Space Indonesian SPCs, which will be indirectly owned by the Trustee as at the Listing Date,
have entered into the Master Lease Agreements with the Master Lessee for the operation,
maintenance, management and marketing of the Retail Spaces. These agreements are more
particularly described in “Certain Agreements Relating to LMIR Trust and the Properties—
Description of the Master Lease Agreements”.
The Manager considers that the Master Lessee has the necessary expertise and resources to perform
the property management, lease management and marketing services for the Retail Spaces.
Based on its experience, expertise and knowledge of contracts, the Manager believes that the Master
Lease Agreements were made on normal commercial terms and are not prejudicial to the interests of
LMIR Trust and the Unitholders.
• The Retail Mall Indonesian SPCs, which will be indirectly owned by the Trustee as at the Listing Date,
have entered into the Operating Costs Agreements with the Operating Companies. This agreement is
more particularly described in “Certain Agreements Relating to LMIR Trust and the Properties—
Description of the Operating Costs Agreements”.
• The Trustee has entered into the Singapore SPC Share Purchase Agreements with the Vendors for the
acquisition of all the ordinary shares and redeemable preference shares in each of the Target Singapore
SPCs. These agreements are more particularly described in “Certain Agreements Relating to LMIR
Trust and the Properties—Description of the Singapore SPC Share Purchase Agreements”. The
Trustee has also entered into the Deeds of Indemnity with Lippo Capital Limited pursuant to which
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Lippo Capital Limited will, subject to certain conditions, indemnify the Trustee against liabilities or
damage suffered by the Trustee arising from any of the Singapore SPC Share Purchase Agreements.
These agreements are more particularly described in “Certain Agreements Relating to LMIR Trust and
the Properties—Description of the Deeds of Indemnity”.
• The Retail Mall Indonesian SPCs, which will be indirectly owned by the Trustee as at the Listing Date,
have entered into the Existing Property Management Agreements with the Property Manager for the
operation, management, maintenance and marketing of the Retail Malls. These agreements are more
particularly described in “Certain Agreements Relating to LMIR Trust and the Properties—Description
of the Existing Property Management Agreements”.
The Manager considers that the Property Manager has the necessary expertise and resources to
perform the retail management, lease management and marketing services for the Retail Malls.
Based on its experience, expertise and knowledge of contracts, the Manager believes that the Existing
Property Management Agreements were made on normal commercial terms and are not prejudicial to
the interests of LMIR Trust and the Unitholders.
• The Trustee, the Manager and the Property Manager have entered into the Master Property
Management Agreement pursuant to which the Property Manager was appointed to operate,
maintain, manage and market all the properties of LMIR Trust located in Indonesia acquired after
the Listing Date, subject to the overall management of the Manager. This agreement is more particularly
described in “Certain Agreements Relating to LMIR Trust and the Properties—Description of the Master
Property Management Agreement”.
The Manager considers that the Property Manager has the necessary expertise and resources to
perform the operation, maintenance, management and marketing services for the properties of LMIR
Trust located in Indonesia acquired after the Listing Date.
Based on its experience, expertise and knowledge of contracts, the Manager believes that the Master
Property Management Agreement was made on normal commercial terms and is not prejudicial to the
interests of LMIR Trust and the Unitholders.
Save as disclosed in this Prospectus, the Trustee has not entered into any other transactions with the
Manager or any related party of the Manager or the Property Manager in connection with the setting up of
LMIR Trust.
Exempted agreements
The Master Lease Agreements, the Operating Costs Agreements, the Existing Property Management
Agreements and the Master Property Management Agreement, each of which constitutes a Related Party
Transaction, is deemed to have been specifically approved by the Unitholders upon subscription for the
Units and are therefore not subject to Rules 905 and 906 of the Listing Manual to the extent that there is no
subsequent change to the rates and/or bases of the fees charged thereunder which will adversely affect
LMIR Trust. However, the renewal of such agreements will be subject to Rules 905 and 906 of the Listing
Manual.
Future Related Party Transactions
As a REIT, LMIR Trust is regulated by the Property Funds Guidelines and the Listing Manual. The Property
Funds Guidelines regulate, among other things, transactions entered into by the Trustee (for and on behalf
of LMIR Trust) with an interested party relating to LMIR Trust’s acquisition of assets from or sale of assets
to an interested party, LMIR Trust’s investment in securities of or issued by an interested party and the
engagement of an interested party as property management agent or marketing agent for LMIR Trust’s
properties. Depending on the materiality of transactions entered into by LMIR Trust for the acquisition of
assets from, the sale of assets to or the investment in securities of or issued by, an interested party, the
Property Funds Guidelines may require that an immediate announcement to the SGX-ST be made, and
may also require that the approval of the Unitholders be obtained.
The Listing Manual regulates all interested person transactions, including transactions already governed
by the Property Funds Guidelines. Depending on the materiality of the transaction, LMIR Trust may be
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required to make a public announcement of the transaction (Rule 905 of the Listing Manual), or to make a
public announcement of and to obtain Unitholders’ prior approval for the transaction (Rule 906 of the
Listing Manual). The Trust Deed requires the Trustee and the Manager to comply with the provisions of the
Listing Manual relating to interested person transactions as well as such other guidelines relating to
interested person transactions as may be prescribed by the SGX-ST to apply to REITs.
The Manager may seek a general annual mandate from the Unitholders pursuant to Rule 920(1) of the
Listing Manual for recurrent transactions of a revenue or trading nature or those necessary for its
day-to-day operations, including a general mandate in relation to leases and/or licence agreements to be
entered into with interested persons. All transactions conducted under such general mandate for the
relevant financial year will not be subject to the requirements under Rules 905 and 906 of the Listing
Manual. In seeking such a general annual mandate, the Trustee will appoint an independent financial
adviser (without being required to consult the Manager) pursuant to Rule 920(1)(b)(v) of the Listing Manual
to render an opinion as to whether the methods or procedures for determining the transaction prices of the
transactions contemplated under the annual general mandate are sufficient to ensure that such
transactions will be carried out on normal commercial terms and will not be prejudicial to the interests
of LMIR Trust and the Unitholders.
The Property Funds Guidelines and the Listing Manual requirements would have to be complied with in
respect of a proposed transaction which is prima facie governed by both sets of rules. Where matters
concerning LMIR Trust relate to transactions entered or to be entered into by the Trustee for and on behalf
of LMIR Trust with a related party (either an “interested party” under the Property Funds Guidelines or an
“interested person” under the Listing Manual) of the Manager or LMIR Trust, the Trustee is required to
ensure that such transactions are conducted in accordance with applicable requirements of the Property
Funds Guidelines and/or the Listing Manual relating to the transaction in question.
The Manager is not prohibited by either the Property Funds Guidelines or the Listing Manual from
contracting or entering into any financial, banking or any other type of transaction with the Trustee (when
acting other than in its capacity as trustee of LMIR Trust) or from being interested in any such contract or
transaction, provided that any such transaction shall be on normal commercial terms and is not prejudicial
to the interests of LMIR Trust and the Unitholders. The Manager shall not be liable to account to the Trustee
or to the Unitholders for any profits or benefits or other commissions made or derived from or in connection
with any such transaction. The Trustee shall not be liable to account to the Manager or to the Unitholders
for any profits or benefits or other commission made or derived from or in connection with any such
transaction.
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The Sponsor
In July 2004, the Sponsor was formed from a merger of eight property-related companies. The Sponsor is
an internationally recognised corporation and is also the largest listed property company in Indonesia,
based on its market capitalisation on the JSX of Rp. 10,609.2 billion (approximately S$1.8 billion) based on
the closing price of Rp. 1,790.0 on the JSX as at 18 October 2007. The Sponsor develops residential,
commercial and retail properties, and light industrial areas throughout Indonesia, with the majority of its
current developments based in and around Greater Jakarta.
The Sponsor’s property portfolio comprises townships and residential developments, commercial and
retail development projects, healthcare, hospitality and infrastructure. It has three townships and one
residential cluster as well as eight developed commercial and retail centres. It manages four hospitals, one
of which it owns. In addition, it owns three hotels, two of which it also manages.
The merger strengthened recurring cash flows, achieved economies of scale and reduced exposure to
business cycles. As a result of the merger, all assets and liabilities of the merged companies became the
Sponsor’s assets and liabilities. The effect of the merger was to expand the Housing and Land
Development business segment as well as to increase the Sponsor’s market capitalisation. Since the
merger, the Sponsor has established itself as the largest property developer in Indonesia with a strong
recurring income base.
The Sponsor is listed on the JSX and the SSX in Indonesia. It is also included in the LQ 45 Index, which is a
capitalisation-weighted index of the 45 most heavily traded stocks on the JSX.
In November 2005, Euromoney conferred two awards on the Sponsor, naming it the “Best Property
Developer in Indonesia” as well as placing it among the top 10 property developers in the Asia-Pacific
region. Subsequently in July 2006, the Sponsor received, from Businessweek Magazine, the “Indonesia’s
Most Admired Company (IMAC) 2006” award in the category of property developers. The methodologies
applied by Euromoney on the rating survey were (i) creativity of the developer in composing product and
ability to create investment opportunities, (ii) quality of the products, and (iii) financial ability. Inputs from
commercial banks, investment banks and real estate advisers were taken into consideration when
determining the award recipient.
The Sponsor is staffed by experienced professionals, all of whom have in-depth property management
and operating experience.
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The Sponsor
The business structure of the Sponsor comprises the following three main aspects:
HEALTHCARE
The Sponsor owns Siloam Hospitals Lippo Cikarang and manages four hospitals being, Siloam Hospitals
Lippo Cikarang, Siloam Hospitals Lippo Karawaci, Siloam Hospitals West Jakarta and Siloam Hospitals
Surabaya, with a total 591 operational beds, and a maximum bed capacity of 835, located in Jakarta,
Greater Jakarta and Surabaya. Specialist medical services offered include complex surgical procedures,
laboratory, radiology and imaging, general healthcare and emergency services. In its hospitals, the
Sponsor has developed “centres of excellence”1 in various areas of healthcare which are recognised as
providing premium healthcare services in Indonesia.
HOSPITALITY AND INFRASTRUCTURE
The Sponsor manages hotel operations and operates a number of restaurants and other facilities located
around Indonesia. The Sponsor has developed over 280 km of roads, water treatment plants, traffic
control services, in addition to four hotels with a total of over 800 rooms and a 2,125 sq m food court. The
Sponsor also provides quality urban management services such as security, water and sewage treatment,
daily garbage collection, health and hygiene services, landscape, roads and drains maintenance and
public transportation services to the residents of Lippo Karawaci, Lippo Cikarang and Tanjung Bunga
urban developments. This provision of high quality, privately operated and commercially-run urban
management is unique in Indonesia.
HOUSING AND LAND DEVELOPMENT
This business aspect deals with the urban development of residential, commercial, retail and industrial real
estate. Starting in 1993 with the development of the Lippo Karawaci urban development and subsequent
Lippo Cikarang and Tanjung Bunga urban developments, the Sponsor has pioneered the development of
“Edge Cities” in Indonesia. “Edge Cities” are designed and constructed with all necessary infrastructure to
establish self-contained cities beyond the boundaries of larger cities, in the case of Lippo Karawaci and
Lippo Cikarang, to the west and east of Jakarta, respectively. The Sponsor is internationally recognised
and has won awards for such “Edge Cities” developments. These three urban developments have a
combined population of more than 70,000 residents, 20,000 homes and employ more than 120,000
workers. In addition, the Sponsor owns eight commercial and retail centres, amounting to over
250,000 sq m of saleable area and 40,000 sq m of retail space available for leasing.
The Sponsor’s total revenue was Rp. 1,905.0 billion (approximately S$330.2 million) in the financial year
ended 31 December 2006. Its market capitalisation on the JSX was Rp. 10,609.2 billion (approximately
S$1.8 billion) based on the closing price per ordinary share on the JSX of Rp. 1,790.0 as at 18 October
2007. 50.0% of its revenue in 2006 was derived from recurring income (including rental income from its
residential, commercial and retail, and revenues from the operation of five medical facilities and operation
of its hotels. 50.0% of its revenue in 2006 was derived from development income (including the
development and sale of residential, commercial and retail and light industrial properties).
The table below, which was prepared based on Indonesian generally accepted accounting principles, sets
forth the unaudited consolidated revenues, generated by each of the Sponsor’s Housing and Land
Development, Healthcare and Hospitals as well as Hospitality and Infrastructure business segments in the
period indicated.
The consolidated revenues shown in the table below have been translated for convenience and as a
matter of arithmetical computation only. The consolidated revenue is translated at an average rate of
Rp. 5,770 per S$1.00. Such translations should not be construed as a representation that the Singapore
dollar amounts could be converted into Indonesian Rupiah at the above rate or other rate.
1
“Centres of excellence” is a term used by the Sponsor to describe a particular area of medical
specialisation, proficiency and excellence, with the relevant specialist doctors, nursing staff and
state-of-the-art medical equipment and facilities, at a hospital.
209
The Sponsor
Financial year ended 31 December 2006
Housing and Land Development .
Healthcare. . . . . . . . . . . . . . . . . . .
Hospitality and Infrastructure . . .
Total . . . . . . . . . . . . . . . . . . . . . . .
..
..
..
..
.
.
.
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
.
.
.
..
..
..
..
..
..
..
..
..
..
..
..
.
.
.
.
(Rp. millions)
(S$’000)
(%)
952,246
573,496
379,588
1,905,330
165,034
99,393
65,786
330,213
50.0
30.1
19.9
100.0
A formal credit rating on the Sponsor has been carried out by various credit rating agencies. The Sponsor
was rated “B1” by Moody’s and “B+” by Standard & Poor’s.
As at 31 March 2007, the Sponsor has completed eight commercial and retail development projects with a
total GFA of 581,740 sq m and has six commercial and retail development projects under development
with an estimated total GFA of approximately 483,060 sq m. Significant projects that have already been
developed or are currently being developed by the Sponsor include:
• Lippo Karawaci township, located in Lippo Karawaci, Greater Jakarta (see profile below);
• Lippo Cikarang township located in Lippo Cikarang, Greater Jakarta (see profile below);
• Tanjung Bunga located in Makassar (see profile below);
• Puncak Resort International, a 60-ha development located in Cipanas, West Java, consisting of
480 villas and unique sports, recreation and meeting facilities;
• Metropolis Town Square, a three-level strata mall located in Tangerang, an industrial and manufacturing
city in Greater Jakarta;
• Mall WTC Matahari, a five-level strata mall located within the proximity of the Bumi Serpong Damai
residential estate, the largest residential estate in Greater Jakarta;
• GTC Makassar, a four-level strata mall located in Makassar, South Sulawesi;
• Malang Town Square, a three-level strata mall located in Malang, the second largest city in the East
Java province;
• Depok Town Square, a five-level strata mall located in Depok and next to the University of Indonesia, the
biggest university in Greater Jakarta;
• Grand Palladium Medan, a six-level strata mall located in Medan, a city renowned as a growing
commercial centre in the North Sumatra province;
• City of Tomorrow, a four-level retail mall, five-storey office tower, 17-storey residential tower and eightstorey hotel, located in Surabaya, East Java;
• Puri “Paragon City”, a mixed-used development located in West Jakarta comprising a retail mall,
residential apartments, a school, and a hotel;
• Kemang Village located in South Jakarta, offering enjoyable views of both the river and the scenic
Pangeran Antasari Street;
• Bellanova Country Mall, a one-level strata mall opened in July 2005 and located in Sentul, Greater
Jakarta;
• Binjai Supermall, a two-level retail mall located in Binjai, North Sumatra (see “Business and
Properties—Acquisition Pipeline”); and
• Pejaten Mall, a retail mall located in South Jakarta (see “Business and Properties—Acquisition
Pipeline”).
The Lippo Karawaci urban development was the Sponsor’s first significant project which commenced
construction in 1993 and is located approximately 30 km west of central Jakarta. The development
currently has a population of approximately 40,000 residents and has been developed on an area of
approximately 1,032 ha of land. It includes 11,257 homes, shophouses and four apartment/condominium
towers with a total of 1,146 units. The development has become a regional centre for office properties,
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The Sponsor
shopping, entertainment and recreation (with a five-star hotel, a resort and a 67-ha golf course). Notable
establishments within the Lippo Karawaci urban development include Siloam Hospitals Lippo Karawaci,
the Pelita Harapan University and an internationally accredited English language educational institution
offering preschool through secondary school facilities. More than 108 km of roads were built by the
Sponsor within the development.
The Sponsor has developed and operated urban developments at Lippo Cikarang located in the east of
Jakarta and Tanjung Bunga in Makassar, respectively. Lippo Cikarang was launched in 1993 and Tanjung
Bunga in 1996. The Sponsor also developed the Royal Serpong Village, a gated micro-suburb at Serpong
located to the west of Jakarta, which includes a secure and exclusive 150-home residential development.
In 2002, the Sponsor launched its first retail strata-titled project, Mall WTC Matahari, a retail shopping mall
located in Greater Jakarta. Since that time, it has developed the retail and commercial properties of
Metropolis Town Square in Modernland, Greater Jakarta; Depok Town Square in Depok, Greater Jakarta;
Malang Town Square in Malang, East Java; GTC Makassar in Makassar, South Sulawesi and Medan
Grand Palladium Medan in Medan, North Sumatra.
As at 31 December 2006, the Sponsor has approximately 2,046 ha of land available for future township
development, in addition to land banks for future commercial retail development, which is among the
largest landbanks among all Indonesian property companies. This is anticipated to be sufficient for the
Sponsor’s planned development projects for the next 15 to 20 years. The significant size of its landbank
provides the Sponsor with the flexibility to develop or divest areas of land to take advantage of cyclical
property market conditions and reduces its exposure to the complexities of land acquisitions in Indonesia.
The Sponsor has formulated the following strategies for its property business, especially its retail property
business:
• Expansion of portfolios in strategic locations. For the past three years, the Sponsor has acquired key
sites in strategic locations to build retail malls and other mixed use developments such as residential
towers, hospitals and hotels. These developments include Puri Paragon in West Jakarta, Kemang
Village in South Jakarta and Kuta Beach Mall in Bali. The Sponsor will continue to seek opportunities to
acquire new sites for future developments.
• Continuing strong relations with business partners. The Sponsor has established and continues to
maintain strong relations with its network of business partners and other business groups and has
gained their trust and confidence.
• Experienced key personnel. The Sponsor has strong industry experience and established track
record. Its management team, through a combination of local knowledge and global experience, will
continue to strive towards international best practice by attracting and developing its key people.
• Asset enhancement. The Sponsor has planned ongoing asset enhancements on the malls which it
owns and/or manages. This includes the constant upkeep and improvement of all Retail Malls. The
Sponsor is aware of the need to continuously monitor and improve retail properties in a dynamic global
environment.
• Leverage its broad based property development experience and platform. The Sponsor will leverage
its wide ranging property development capabilities and platform to consistently source for new retail
developments and third party acquisition opportunities.
• Tenant relationship. The Sponsor values its tenants as key stakeholders in the growth and success of
itself, its subsidiaries, their business associates and controlled affiliates. It has established and will
continue to build greater relationships to drive both the Sponsor’s as well as LMIR Trust’s success.
(See “Business and Properties—Acquisition Pipeline”.)
211
The Sponsor
LOCATION OF DEVELOPMENTS
The following map shows, as at 31 December 2006, the geographic distribution of the Sponsor’s
developments in Indonesia. Its operations are located in diverse and the more economically
developed regions of Indonesia.
The following map shows, as at 31 December 2006, the geographic distribution of the Sponsor’s
developments in Greater Jakarta. The Sponsor’s significant presence in the property market in
Jakarta and the surrounding areas demonstrates its belief that these areas offer high consumer
demand which are currently under-served.
212
The Sponsor
KEY SHAREHOLDERS OF THE SPONSOR
• Lippo-related companies
In 1990, the Riady family founded PT. Tunggal Reksa Kencana which was subsequently merged with
LLD, PT. Siloam Healthcare Tbk, PT. Aryaduta Hotels Tbk, PT. Kartika Abadi Sejahtera, PT. Sumber
Waluyo, PT. Ananggadipa Berkat Mulia and PT. Metropolitan Tatanugraha to form the Sponsor. The
Riady family currently has an indirect shareholding in the Sponsor through various companies,
including Pacific Asia Holdings Ltd and other Lippo-related companies which collectively hold
25.63% of the Sponsor. Pacific Asia Holdings Ltd holds 13.95% of the Sponsor, and none of the
other Lippo-related companies individually hold more than 5.0% of the Sponsor. The Lippo-related
companies are involved in retail, telecommunications, entertainment, multimedia and financial
services. Benefits that the Lippo-related companies bring to the Sponsor are synergies with other
group entities including, but not limited to, Matahari retail stores, hypermarkets and Timezone
amusement centres. These companies take an interest, as shareholders, in the performance of the
Sponsor.
• China Resources group of companies
The China Resources group of companies beneficially own 15.42% of the Sponsor through a
subsidiary, Greatmind Investments Limited. The China Resources group of companies is a Chinese
government-owned conglomerate with diverse and substantial investments and operations in the PRC,
Hong Kong and Asia. It is also one of the leading property developers in the PRC, having developed
nearly 50 real estate projects, including the Xidan commercial area, Dongguanying residential area,
Jiangongnanli residential area and Sunny Up town. It also has substantial businesses in food products,
retailing, infrastructure and trading. Listed entities under its stable include China Resources Enterprise,
China Resources Land, China Resources Logic, China Resources Cement Holdings, China Resources
Power Holdings Co. and China Resources Peoples Telephone Co. The China Resources group of
companies benefit the Sponsor by providing its vast experience in property development,
institutionalising better business practices and providing support for future capital raising.
• CP Inlandsimmobilien Holding Gmbh (“CPIHG”)
CPIHG owns 7.75% of the Sponsor beneficially through its wholly-owned subsidiary, Capital Bloom
Investment Limited. CPIHG, which is mandated to invest in properties in developing countries, is the
investment banking real estate arm of Austria’s Raiffeisen Bank, which was established in 1990 and, as
at the date of this Prospectus, has 15 subsidiaries in Austria.
The public owns the remaining 51.2% of the Sponsor, as at the Listing Date.
SOLE FINANCIAL ADVISER TO THE SPONSOR: PT. CIPTADANA CAPITAL
PT. Ciptadana Capital is an Indonesian-incorporated company which undertakes predominantly
investment banking activities, and owns various subsidiary companies dealing in, among others,
securities, asset management and multifinance. It is the sole financial adviser to the Sponsor and
assists the Sponsor in, among other things, the structuring of the Offering, the provision of
information and data relating to the Properties and the Sponsor, and liaising with Indonesian
regulators and professional advisers.
213
The formation and structure of LMIR Trust
The Trust Deed is a complex document and the following is a summary only and is qualified in its entirety
by, and is subject to, the contents of the Trust Deed. Investors should refer to the Trust Deed itself to
confirm specific information or for a detailed understanding of LMIR Trust. The Trust Deed is available for
inspection at the registered office of the Manager at 78 Shenton Way, #05-01 Lippo Centre, Singapore
079120.
THE TRUST DEED
LMIR Trust is a REITconstituted by the Trust Deed which was entered into on 8 August 2007 (as amended
by a first supplemental deed dated 18 October 2007) between the Trustee and the Manager, and is
principally regulated by the SFA and the CIS Code (including the Property Funds Guidelines).
The terms and conditions of the Trust Deed shall be binding on each Unitholder (and persons claiming
through such Unitholder) as if such Unitholder had been a party to the Trust Deed and as if the Trust Deed
contains covenants by such Unitholder to observe and be bound by the provisions of the Trust Deed and
an authorisation by each Unitholder to do all such acts and things as the Trust Deed may require the
Manager and/or the Trustee to do.
Operational structure
LMIR Trust is a Singapore-based REIT constituted by the Trust Deed. It is established with the principal
investment objective of owning and investing on a long-term basis in a diversified portfolio of incomeproducing real estate in Indonesia that are primarily used for retail and/or retail-related purposes, and real
estate related assets in connection with the foregoing purposes.
LMIR Trust aims to generate returns for its Unitholders by owning, buying and actively managing such
properties in line with its investment strategy, including the divestment of any property that is identified by
the Manager at any time, to have limited scope for growth.
Subject to the restrictions and requirements in the Property Funds Guidelines and the Listing Manual, the
Manager is also authorised under the Trust Deed to invest in investments which need not be real estate.
Although the Manager may use certain financial derivative instruments for hedging purposes or efficient
portfolio management provided that such financial derivative instruments are not used to gear LMIR
Trust’s overall investment portfolio or are intended to be borrowings of LMIR Trust, the Manager presently
does not have any intention to invest in options, warrants, commodities, futures contracts, unlisted
securities and precious metals.
For further details of the investment objectives and policies of the Manager, see Clause 10.2 of the
Trust Deed.
The Units and Unitholders
The rights and interests of Unitholders are contained in the Trust Deed. Under the Trust Deed, these rights
and interests are safeguarded by the Trustee.
Each Unit represents an undivided interest in LMIR Trust. A Unitholder has no equitable or proprietary
interest in the underlying assets of LMIR Trust and is not entitled to the transfer to it of any asset (or any
part thereof) or of any real estate, any interest in any asset and real estate-related assets (or any part
thereof) of LMIR Trust. A Unitholder’s right is limited to the right to require due administration of LMIR Trust
in accordance with the provisions of the Trust Deed, including, without limitation, by suit against the
Trustee or the Manager.
Under the Trust Deed, each Unitholder acknowledges and agrees that it will not commence or pursue any
action against the Trustee or the Manager seeking an order for specific performance or for injunctive relief
in respect of the assets of LMIR Trust (or any part thereof), including all its Authorised Investments (as
defined in the Trust Deed), and waives any rights it may otherwise have to such relief. If the Trustee or the
Manager breaches or threatens to breach its duties or obligations to the Unitholder under the Trust Deed,
the Unitholder’s recourse against the Trustee or the Manager is limited to a right to recover damages or
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The formation and structure of LMIR Trust
compensation from the Trustee or the Manager in a court of competent jurisdiction, and the Unitholder
acknowledges and agrees that damages or compensation is an adequate remedy for such breach or
threatened breach.
Further, unless otherwise expressly provided in the Trust Deed, a Unitholder may not interfere or seek to
interfere with the rights, powers, authority or discretion of the Manager or the Trustee, exercise any right in
respect of the assets of LMIR Trust or any part thereof or lodge any caveat or other notice affecting the real
estate assets and real estate-related assets of LMIR Trust (or any part thereof), or require that any
Authorised Investments forming part of the assets of LMIR Trust be transferred to such Unitholder.
No certificate shall be issued to Unitholders by either the Manager or the Trustee in respect of Units issued
to Unitholders. For so long as LMIR Trust is listed, quoted and traded on the SGX-ST and/or any other
Recognised Stock Exchange and the Units have not been suspended from such listing, quotation and
trading for more than 60 consecutive calendar days or de-listed permanently, the Manager shall pursuant
to the Depository Services Agreement dated 10 August 2007 entered into between CDP, the Manager and
the Trustee, appoint CDP as the Unit depository for LMIR Trust, and all Units issued will be represented by
entries in the register of Unitholders kept by the Trustee or the agent appointed by the Trustee in the name
of, and deposited with, CDP as the registered holder of such Units. The Manager or the agent appointed by
the Manager shall issue to CDP not more than 10 Business Days after the issue of Units a confirmation
note confirming the date of issue and the number of Units so issued and, if applicable, also stating that the
Units are issued under the First Lock-Up Period and the Second Lock-Up Period and the expiry date of
such lock-up and for the purposes of the Trust Deed, such confirmation note shall be deemed to be a
certificate evidencing title to the Units issued.
The MAS has announced on 8 June 2007 the decision of the Securities Industry Council to extend the
ambit of the Take-over Code to REITs. While the MAS will be making amendments to the SFA and the
Take-over Code, where necessary, to give effect to the extension of the Take-over Code to REITs in due
course, the Securities Industry Council has recommended that parties engaged in take-over or merger
transactions involving REITs comply with the Take-over Code prior to such amendments.
Under the Take-over Code, any person acquiring an interest, either individually or with parties acting in
concert, in 30.0% or more of the Units (being voting units in LMIR Trust) may be required to extend a takeover offer for the remaining Units in accordance with the Take-over Code. A take-over offer is also required
to be made if a person holding between 30.0% and 50.0% inclusive of the Units, either individually or in
concert, acquires an additional 1.0% of the Units in any six-month period under the Take-over Code.
Issue of Units
The following is a summary of the provisions of the Trust Deed relating to the issue of Units in LMIR Trust.
Subject to the following sub-paragraphs (1), (2) and (3) below and to such laws, rules and regulations as
may be applicable, for so long as LMIR Trust is listed on the SGX-ST or any other Recognised Stock
Exchange, the Manager may issue Units on any Business Day at an Issue Price equal to the “market
price”, without the prior approval of Unitholders in a Unitholders’ meeting duly convened and held in
accordance with the provisions of the Trust Deed. For this purpose, “market price” shall mean (i) the
volume weighted average price for a Unit for all trades on the SGX-ST, or such other Recognised Stock
Exchange on which the LMIR Trust is listed, in the ordinary course of trading on the SGX-STor, as the case
may be, such other Recognised Stock Exchange, for the period of 10 Business Days (or such other period
as may be prescribed by the SGX-STor relevant Recognised Stock Exchange) immediately preceding the
relevant Business Day; or (ii) if the Manager believes that the calculation in paragraph (i) above does not
provide a fair reflection of the market price of a Unit, an amount as determined by the Manager and the
Trustee (after consultation with a stockbroker approved by the Trustee), as being the fair market price of a
Unit.
(1)
The Manager shall comply with the rules in the Listing Manual in determining the Issue Price per
Unit, including the Issue Price per Unit for a rights issue on a pro rata basis to all existing Unitholders,
the Issue Price per Unit issued other than by way of a rights issue offered on a pro rata basis to all
existing Unitholders and the Issue Price per Unit for any reinvestment or distribution arrangement.
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The formation and structure of LMIR Trust
(2)
Where Units are issued as full or partial consideration for the acquisition of an Authorised Investment
by LMIR Trust in conjunction with an issue of Units to raise cash for the balance of the consideration
for the said Authorised Investment (or part thereof) or to acquire other Authorised Investments in
conjunction with the said Authorised Investment, the Manager shall have the discretion to determine
that the Issue Price of a Unit so issued as partial consideration shall be the same as the Issue Price
for the Units issued in conjunction with an issue of Units to raise cash for the aforesaid purposes.
(3)
Following the new Rule 887 of the Listing Manual which came into effect on 1 September 2006, the
Manager may issue new Units without the prior approval of Unitholders in a general meeting if the
issue (together with any other issue of Units in the same financial year) would not exceed 10.0% of
the Units in issue. The scope of the general mandate to be given in a general meeting of the
Unitholders is limited to the issue of an aggregate number of additional Units which must not exceed
50.0% of the total number of Units in issue, of which the aggregate number of additional Units to be
issued other than on a pro rata basis to the existing Unitholders must not exceed 20.0% of the total
number of Units in issue. The first financial period of LMIR Trust will commence on 8 August 2007,
being the date of its constitution, and end on 31 December 2007.
By purchasing the Units under the Offering, investors are deemed to have given the Manager the
above general mandate to issue new Units, to be automatically renewed on an annual basis, with the
effective date of renewal being the start of LMIR Trust’s financial year, subject to revocation or
variation by ordinary resolution of Unitholders in general meeting pursuant to Rule 887(3)(b) of the
Listing Manual.
If in connection with an issue of a Unit, any requisite payment of the Issue Price for such Unit has not been
received by the Trustee before the seventh Business Day after the Unit was agreed to be issued (or such
other date as the Manager and the Trustee may agree), the Manager may cancel its agreement to issue
such Unit and upon notice being given to the Trustee, such Unit will be deemed never to have been issued
or agreed to be issued. In such an event, the Manager may, at its discretion, charge the investor (and retain
the same for its own account) (i) a cancellation fee of such amount as the Manager may from time to time
determine to represent the administrative costs involved in processing the application for such Unit, and
(ii) an amount (if any) by which the Issue Price of such Unit exceeds the repurchase price applying if such
Unit was requested to have been repurchased or redeemed on the same day.
Suspension of issue of Units
The Manager or the Trustee may, with the prior written approval of the other and subject to the Listing
Manual, suspend the issue of Units during:
• any period when the SGX-ST or any other relevant Recognised Stock Exchange is closed (otherwise
than for public holidays) or during which dealings are restricted or suspended;
• the existence of any state of affairs which, in the opinion of the Manager or the Trustee (as the case may
be), might seriously prejudice the interests of the Unitholders as a whole or the Deposited Property;
• any breakdown in the means of communication normally employed in determining the price of any
assets of LMIR Trust or the current price thereof on the SGX-STor any other relevant Recognised Stock
Exchange, or when for any reason the prices of any assets of LMIR Trust cannot be promptly and
accurately ascertained;
• any period when remittance of money which will or may be involved in the realisation of any asset of
LMIR Trust or in the payment for such asset of LMIR Trust cannot, in the opinion of the Manager, be
carried out at normal rates of exchange;
• any period where the issuance of Units is suspended pursuant to any order or direction issued by the
MAS;
• in relation to any general meeting of Unitholders, the period of 48 hours before such general meeting or
any adjournment thereof; or
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The formation and structure of LMIR Trust
• any period when the business operations of the Manager or the Trustee in relation to LMIR Trust are
substantially interrupted or closed as a result of, or arising from, pestilence, acts of war, terrorism,
insurrection, revolution, civil unrest, riots, strikes or acts of God.
Such suspension shall take effect forthwith upon the declaration in writing thereof by the Manager or the
Trustee (as the case may be) and shall terminate on the day following the first Business Day on which the
condition giving rise to the suspension ceases to exist and no other conditions under which suspension is
authorised (as set out above) exists, upon the declaration in writing thereof by the Manager or the Trustee
(as the case may be).
In the event of any suspension while LMIR Trust is listed on the SGX-ST, the Manager shall ensure that
immediate announcement of such suspension is made through the SGX-ST.
Redemption of Units
The Trust Deed provides that any redemption of Units will be carried out in accordance with the Property
Funds Guidelines, the rules of the Listing Manual (if applicable) and all other applicable laws and
regulations. With respect to any terms which are necessary to carry out such redemption but are not
prescribed by the Property Funds Guidelines, the rules in the Listing Manual and any laws and regulations,
these terms shall be determined by mutual agreement between the Manager and the Trustee.
However, for so long as the Units are listed on the SGX-ST, the Unitholders have no right to request the
Manager to repurchase or redeem their Units while the Units are listed on the SGX-ST and/or any other
Recognised Stock Exchange. It is intended that the Unitholders may only deal in their listed Units through
trading on the SGX-ST.
Rights and liabilities of Unitholders
The key rights of Unitholders include rights to:
• receive income and other distributions attributable to the Units held;
• receive audited accounts and the annual reports of LMIR Trust; and
• participate in the termination of LMIR Trust by receiving a share of all net cash proceeds derived from
the realisation of the assets of LMIR Trust less any liabilities, in accordance with their proportionate
interests in LMIR Trust.
No Unitholder has a right to require that any asset of LMIR Trust be transferred to him.
Further, Unitholders cannot give any directions to the Trustee or the Manager (whether at a meeting of
Unitholders duly convened and held in accordance with the provisions of the Trust Deed or otherwise) if it
would require the Trustee or the Manager to do or omit doing anything which may result in:
• LMIR Trust ceasing to comply with applicable laws and regulations; or
• the exercise of any discretion expressly conferred on the Trustee or the Manager by the Trust Deed or
the determination of any matter which, under the Trust Deed, requires the agreement of either or both of
the Trustee and the Manager.
The Trust Deed contains provisions that are designed to limit the liability of a Unitholder to the amount paid
or payable for any Unit. The provisions seek to ensure that if the Issue Price of the Units held by a
Unitholder has been fully paid, no such Unitholder, by reason alone of being a Unitholder, will be personally
liable to indemnify the Trustee or any creditor of LMIR Trust in the event that the liabilities of LMIR Trust
exceed its assets.
Under the Trust Deed, every Unit carries the same voting rights.
Amendments of the Trust Deed
Subject to the third paragraph below, save where an amendment to the Trust Deed has been approved by
an Extraordinary Resolution passed at a meeting of Unitholders duly convened and held in accordance
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The formation and structure of LMIR Trust
with the provisions of the Trust Deed, no amendment may be made to the provisions of the Trust Deed
unless the Trustee certifies, in its opinion, that such amendment:
• does not materially prejudice the interests of Unitholders and does not operate to release, to any
material extent, the Trustee or the Manager from any responsibility to the Unitholders;
• is necessary in order to comply with applicable fiscal, statutory or official requirements (whether or not
having the force of law); or
• is made to remove obsolete provisions or to correct a manifest error.
No such amendment shall impose upon any Unitholder any obligation to make any further payments in
respect of his Units or to accept any liability in respect thereof.
Notwithstanding any of the above, the Manager and the Trustee may, with the written approval of the
competent authorities, alter certain provisions in Clause 9 of the Trust Deed relating to the use of
derivatives.
Meeting of Unitholders
Under applicable law and the provisions of the Trust Deed, LMIR Trust will not hold any meetings for
Unitholders unless the Trustee or the Manager convenes a meeting or unless not less than 50 Unitholders
or Unitholders representing not less than 10.0% of the total Units issued requests a meeting to be
convened.
A meeting of Unitholders when convened may, by Extraordinary Resolution and in accordance with the
provisions of the Trust Deed:
• sanction any modification, alteration or addition to the Trust Deed which shall be agreed by the Trustee
and the Manager as provided in the Trust Deed;
• sanction a supplemental deed increasing the maximum permitted limit or any change in the structure of
the Manager’s management fees, acquisition fee and divestment fee and the Trustee’s fee;
• remove the auditors;
• remove the Trustee;
• direct the Trustee to take any action pursuant to Section 295 of the SFA; and
• delist LMIR Trust after it has been listed.
A meeting of Unitholders may, also by an Ordinary Resolution of Unitholders present and voting at a
meeting of Unitholders convened in accordance with the Trust Deed, vote to remove the Manager (with the
Manager and its related parties being permitted to vote) or the Trustee.
Any decision to be made by resolution of Unitholders other than the above shall be made by Ordinary
Resolution, unless an Extraordinary Resolution is required by the SFA, the CIS Code or the Listing
Manual.
Except as otherwise provided for in the Trust Deed, at least 14 days’ notice (not inclusive of the day on
which the notice is served or deemed to be served and of the day for which the notice is given) of every
meeting shall be given to the Unitholders in the manner provided in the Trust Deed.
Each notice shall specify the place, day and hour of the meeting, and the terms of the resolutions to be
proposed, and each such notice may, in general, be given by advertisement in the daily press and in writing
to each stock exchange on which LMIR Trust is listed. Any notice of a meeting called to consider special
business shall be accompanied by a statement regarding the effect of any proposed resolutions in respect
of such special business.
The quorum at a meeting shall not be less than two Unitholders present in person or by proxy, holding or
representing one-tenth in value of all the Units for the time being in issue.
Voting at a meeting shall be by a show of hands unless a poll is demanded by the chairman of the meeting,
or by five or more Unitholders present in person or by proxy, or holding or representing one tenth in value of
218
The formation and structure of LMIR Trust
all the Units represented at the meeting. Unitholders do not have different voting rights on account of the
number of votes held by a particular Unitholder. On a show of hands, every Unitholder has one vote. On a
poll, every Unitholder has one vote for each Unit of which it is the Unitholder. The Trust Deed does not
contain any limitation on non-Singapore resident or foreign Unitholders holding Units or exercising the
voting rights with respect to their unitholdings.
Neither the Manager nor any of its Associates shall be entitled to vote or be counted as part of a quorum at
a meeting convened to consider a matter in respect of which the Manager or any of its Associates has a
material interest save for an Ordinary Resolution duly proposed to remove the Manager, in which case, no
Unitholder shall be disenfranchised.
For so long as the Manager is the manager of LMIR Trust, the controlling shareholders (as defined in the
Listing Manual) of the Manager and of any of its Associates are prohibited from voting or being counted as
part of a quorum for any meeting of Unitholders convened to consider a matter in respect of which the
relevant controlling shareholders of the Manager and/or of any of its Associates have a material interest.
Substantial holdings
Under Section 137B of the Securities and Futures Act, Substantial Unitholders will be required to notify the
Trustee of their deemed and direct holdings and any subsequent change in the percentage level of such
holdings (rounded down to the next whole number) or their ceasing to hold 5.0% or more of the total
number of Units within two Business Days of acquiring such holdings or of such changes or such
cessation.
Under Section 137A of the Securities and Futures Act, Substantial Unitholders must also, within the same
time limit, submit such notifications to the SGX-ST.
Failure to comply with either Section 137A or Section 137B of the Securities and Futures Act constitutes an
offence and will render a Substantial Unitholder liable to a fine on conviction.
Directors’ declaration of Unitholdings
Under the Trust Deed, the Directors are required to give notice to the Manager of their acquisition of Units
or of changes to the number of Units which they hold or in which they have an interest, within two Business
Days after such acquisition or the occurrence of the event giving rise to changes in the number of Units
which they hold or in which they have an interest, as applicable. Upon such notification, the Manager will
promptly announce such interests or changes to the SGX-ST.
A Director is deemed to have an interest in Units in the following circumstances:
• Where the Director is the beneficial owner of a Unit (whether directly through a direct Securities Account
or indirectly through a depository agent or otherwise), he is deemed to have an interest in that Unit.
• Where a body corporate is the beneficial owner of a Unit and the Director is entitled to exercise or control
the exercise of not less than 20.0% of the votes attached to the voting shares in the body corporate, he is
deemed to have interest in that Unit.
• Where the Director’s spouse or infant child (including step-child and adopted child) has any interest in a
Unit, he is deemed to have an interest in that Unit.
• Where the Director, his spouse or infant child (including step-child and adopted child):
- has entered into a contract to purchase a Unit;
- has a right to have a Unit transferred to any of them or to their order, whether the right is exercisable
presently or in the future and whether on the fulfilment of a condition or not;
- has the right to acquire a Unit under an option, whether the right is exercisable presently or in the
future and whether on the fulfilment of a condition or not; or
- is entitled (otherwise than by reason of any of them having been appointed a proxy or representative
to vote at a meeting of Unitholders) to exercise or control the exercise of a right attached to a Unit, not
being a Unit which any of them holds,
the Director is deemed to have an interest in that Unit.
219
The formation and structure of LMIR Trust
• Where the property subject to a trust consists of or includes a Unit and the Director knows or has
reasonable grounds for believing that he has an interest under the trust and the property subject to the
trust consists of or includes such Unit, he is deemed to have an interest in that Unit.
The Trustee
The trustee of LMIR Trust is HSBC Institutional Trust Services (Singapore) Limited. The Trustee is a
company incorporated in Singapore and registered as a trust company under the Trust Companies Act
2005, Chapter 336 of Singapore. It is approved to act as a trustee for authorised collective investment
schemes under the SFA. The Trustee has a paid-up capital of S$5,150,000 and has a place of business in
Singapore at 21 Collyer Quay, #14-01 HSBC Building, Singapore 049320. The Trustee is independent of
the Manager.
Powers, duties and obligations of the Trustee
The Trustee’s powers, duties and obligations are set out in the Trust Deed. The powers and duties of the
Trustee include:
• acting as trustee of LMIR Trust and, in such capacity, safeguarding the rights and interests of the
Unitholders, for example, by satisfying itself that transactions it enters into for and on behalf of LMIR
Trust with a related party of the Manager or LMIR Trust are conducted on normal commercial terms, are
not prejudicial to the interests of LMIR Trust and the Unitholders, and in accordance with the rules of all
applicable requirements under the Property Funds Guidelines and/or the Listing Manual or other
relevant Recognised Stock Exchange(s) relating to the transaction in question;
• holding the assets of LMIR Trust on trust for the benefit of the Unitholders in accordance with the
Trust Deed; and
• exercising all the powers of a trustee and the powers that are incidental to the ownership of the assets of
LMIR Trust.
The Trustee has covenanted in the Trust Deed that it will exercise all due diligence and vigilance in carrying
out its functions and duties, and in safeguarding the rights and interests of Unitholders.
In the exercise of its powers, the Trustee may (on the recommendation of the Manager) and subject to the
provisions of the Trust Deed, acquire or dispose of any real or personal property, borrow and encumber
any asset.
The Trustee may, subject to the provisions of the Trust Deed, appoint and engage:
• a person or entity to exercise any of its powers or perform its obligations; and
• any real estate agents or managers, including a related party of the Manager, in relation to the
management, development, leasing, purchase or sale of any of real estate assets and real estaterelated assets.
Although the Trustee may borrow money and obtain other financial accommodation for the purposes of
LMIR Trust, both on a secured and unsecured basis, the Manager must not direct the Trustee to incur a
liability if to do so would mean that total liabilities of LMIR Trust exceed 35.0% (or such other limit as may be
stipulated by the MAS) of the value of its Deposited Property in accordance with the provisions of the
Property Funds Guidelines.
The Trustee must carry out its functions and duties and comply with all the obligations imposed on it and
set out in the Trust Deed, the Listing Manual, the SFA, the CIS Code (including the Property Funds
Guidelines), any tax ruling and all other relevant laws. It must retain LMIR Trust’s assets, or cause LMIR
Trust’s assets to be retained, in safe custody and cause LMIR Trust’s accounts to be audited. It can appoint
valuers to value the real estate assets and real estate-related assets of LMIR Trust.
The Trustee is not personally liable to a Unitholder in connection with the office of the Trustee except in
respect of its own fraud, gross negligence, wilful default, breach of duty or breach of trust. Any liability
incurred and any indemnity to be given by the Trustee shall be limited to the assets of LMIR Trust over
which the Trustee has recourse, provided that the Trustee has acted without fraud, negligence, wilful
220
The formation and structure of LMIR Trust
default, breach of trust or breach of the Trust Deed. The Trust Deed contains certain indemnities in favour
of the Trustee under which it will be indemnified out of the assets of LMIR Trust for liability arising in
connection with certain acts or omissions. These indemnities are subject to any applicable laws.
Retirement and replacement
The Trustee may retire or be replaced under the following circumstances:
• The Trustee shall not be entitled to retire voluntarily except upon the appointment of a new trustee (such
appointment to be made in accordance with the provisions of the Trust Deed).
• The Trustee may be removed by notice in writing to the Trustee by the Manager:
- if the Trustee goes into liquidation (except a voluntary liquidation for the purpose of reconstruction or
amalgamation upon terms previously approved in writing by the Manager) or if a receiver is appointed
over any of its assets or if a judicial manager is appointed in respect of the Trustee;
- if the Trustee ceases to carry on business;
- if the Trustee fails or neglects after reasonable notice from the Manager to carry out or satisfy any
material obligation imposed on the Trustee by the Trust Deed;
- if an Ordinary Resolution is passed at a Unitholders’ meeting duly convened and held in accordance
with the provisions of the Trust Deed, and of which not less than 21 days’ notice has been given to the
Trustee and the Manager, shall so decide; or
- if the MAS directs that the Trustee be removed.
Trustee’s fee
Under the Trust Deed, the maximum fee payable to the Trustee is 0.03% per annum of the value of the
Deposited Property, subject to a minimum of S$15,000 per month, excluding out-of-pocket expenses and
GST.
LMIR Trust will also pay the Trustee a one-time inception fee of S$25,000.
The Trustee’s fee will be subject to review three years from the Listing Date.
Any increase in the maximum permitted amount or any change in the structure of the Trustee’s fee must be
passed by an Extraordinary Resolution at a Unitholders’ meeting duly convened and held in accordance
with the provisions of the Trust Deed.
Termination of LMIR Trust
Under the provisions of the Trust Deed, the duration of LMIR Trust shall end on:
• such date as may be provided under written law;
• the date on which LMIR Trust is terminated by the Manager in such circumstances as set out under the
provisions of the Trust Deed as described below; and
• the date on which LMIR Trust is terminated by the Trustee in such circumstances as set out under the
provisions of the Trust Deed as described below.
The Manager may in its absolute discretion terminate LMIR Trust by giving notice in writing to all
Unitholders and the Trustee no later than three months in advance and to the MAS not less than
seven days before the termination in any of the following circumstances:
• if any law shall be passed which renders it illegal or in the opinion of the Manager impracticable or
inadvisable to continue LMIR Trust;
• if the NAV of the Deposited Property shall be less than S$50,000,000 after the end of the first
anniversary of the date of the Trust Deed or any time thereafter; and
• if at any time LMIR Trust becomes unlisted after it has been listed.
221
The formation and structure of LMIR Trust
Subject to the SFA and any other applicable law or regulation, LMIR Trust may be terminated by the
Trustee by notice in writing in any of the following circumstances, namely:
• if the Manager shall go into liquidation (except a voluntary liquidation for the purpose of reconstruction
or amalgamation upon terms previously approved in writing by the Trustee) or if a receiver is appointed
over any of its assets or if a judicial manager is appointed in respect of the Manager or if any
encumbrance shall take possession of any of its assets or if it shall cease business and the Trustee
fails to appoint a successor manager in accordance with the provisions of the Trust Deed;
• if any law shall be passed which renders it illegal or in the opinion of the Trustee impracticable or
inadvisable to continue LMIR Trust; or
• if within the period of three months from the date of the Trustee expressing in writing to the Manager the
desire to retire, the Manager shall have failed to appoint a new trustee in accordance with the provisions
of the Trust Deed.
The decision of the Trustee in any of the events specified above shall be final and binding upon all the
parties concerned but the Trustee shall be under no liability on account of any failure to terminate LMIR
Trust pursuant to the paragraph above or otherwise. The Manager shall accept the decision of the Trustee
and relieve the Trustee of any liability to it therefor and hold it harmless from any claims whatsoever on its
part for damages or for any other relief.
Generally, upon the termination of LMIR Trust, the Trustee shall, subject to any authorisations or directions
given to it by the Manager or the Unitholders pursuant to the Trust Deed, sell the Deposited Property and
repay any borrowings incurred on behalf of LMIR Trust in accordance with the Trust Deed (together with
any interest accrued but remaining unpaid) as well as all other debts and liabilities in respect of LMIR Trust
before distributing the balance of the Deposited Property to the Unitholders in accordance with their
proportionate interests in LMIR Trust.
222
Certain agreements relating to LMIR Trust and the
Properties
The agreements discussed in this section are complex documents and the following is a summary only.
Investors should refer to the agreements themselves to confirm specific information or for a detailed
understanding of LMIR Trust. The agreements are available for inspection at the registered office of the
Manager at 78 Shenton Way, #05-01 Lippo Centre, Singapore 079120 for a period of six months from the
date of this Prospectus.
DESCRIPTION OF THE SINGAPORE SPC SHARE PURCHASE AGREEMENTS
On 18 October 2007, the Trustee and the Vendors entered into 14 Singapore SPC Share Purchase
Agreements, pursuant to which the Trustee will, on the Listing Date and subject to the listing of LMIR Trust
on the SGX-ST, acquire all the ordinary shares and redeemable preference shares in each of the Target
Singapore SPCs.
The minimum purchase consideration (the “Base Amount”) payable to the respective Vendors in respect
of each Property is set out below.
Property
Retail Mall
Gajah Mada Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cibubur Junction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Plaza Semanggi. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mal Lippo Cikarang . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ekalokasari Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bandung Indah Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Istana Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retail Spaces
Mall WTC Matahari Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Metropolis Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depok Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Java Supermall Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Malang Town Square Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plaza Madiun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grand Palladium Medan Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Base Amount
(S$)
.
.
.
.
.
.
.
85,607,345
77,693,943
177,226,637
66,145,410
54,457,065
102,664,500
103,713,095
.
.
.
.
.
.
.
20,762,193
27,668,942
21,167,650
21,433,294
21,069,781
27,571,074
21,573,107
Aggregate Base Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
828,754,036
The aggregate purchase consideration payable to the Vendors on completion for the acquisition of all of
the ordinary shares and redeemable preference shares in the Target Singapore SPCs will be determined
according to the following formula:
[(A + B) ⫺ C]
Where
A is the total proceeds raised from the Offering;
B is the total proceeds raised from the issuance of the Cornerstone Units; and
C is the issue expenses.
Retail Mall Singapore SPC
In the event that the aggregate purchase consideration is greater than the aggregate Base Amount
payable to the Vendors, the purchase consideration payable to the respective Vendor on completion for
223
Certain agreements relating to LMIR Trust and the Properties
the acquisition of all of the ordinary shares and redeemable preference shares in the respective Retail Mall
Singapore SPC will be determined in accordance with the following formula:
[(A + B) ⫺ C] ⫻ (D / E)
where
A is the total proceeds raised from the Offering;
B is the total proceeds raised from the issuance of the Cornerstone Units;
C is the issue expenses;
D is the valuation of the relevant Property by Knight Frank; and
E is the aggregate valuation of all the Properties by Knight Frank.
Retail Space Singapore SPC
In respect of the Retail Space Singapore SPCs, the relevant Base Amount of each Retail Space Singapore
SPC (“Retail Space Singapore SPC Base Amount”) shall be determined in accordance with the
following formula:
(0.95 ⫻ F) + (0.05 ⫻ G)
where
F
is the Base Amount of the Retail Space which is indirectly 95.0% owned by the relevant Retail
Space Singapore SPC; and
G
is the Base Amount of the Retail Space which is indirectly 5.0% owned by the relevant Retail
Space Singapore SPC.
In the event that the aggregate purchase consideration is greater than the aggregate Base Amount
payable to the Vendors, the purchase consideration payable to the respective Vendor on completion for
the acquisition of all the ordinary shares and redeemable preference shares in the respective Retail Space
Singapore SPC will be the higher of:
(a)
the Base Amount for the relevant Retail Space Singapore SPC as described above; or
(b)
the amount determined in accordance with the following formula:
[(A + B) ⫺ C] ⫻ (D / E)
where
A is the total proceeds raised from the Offering;
B is the total proceeds raised from the issuance of the Cornerstone Units;
C is the issue expenses;
D is the Retail Space Singapore SPC Base Amount; and
E is the Aggregate Base Amount.
In the event that the aggregate purchase consideration falls below the aggregate Base Amount, LMIR
Trust will cover for the shortfall (i.e. the difference between the aggregate Base Amount and the aggregate
purchase consideration) with the cash balance in the respective Indonesian SPC as at the Listing Date and
pay the relevant Base Amount (in respect of the Retail Mall Singapore SPC) or Retail Space Singapore
SPC Base Amount (in respect of the Retail Space Singapore SPC) to the respective Vendor.
Each Singapore SPC Share Purchase Agreement provides that completion will be subject to the
satisfaction of a number of conditions including but not limited to the following:
(a)
224
the occurrence of the listing, and the commencement of trading, of the Units on the SGX-ST;
Certain agreements relating to LMIR Trust and the Properties
(b)
(with regard to the Retail Space Singapore SPCs) the completion of the sale and purchase of each of
the Properties in accordance with the terms and conditions of the relevant Property Purchase
Agreement;
(c)
the concurrent completion of the sale and purchase of all the ordinary shares and redeemable
preference shares of each of the other Target Singapore SPCs in accordance with the terms and
conditions of the relevant Singapore SPC Share Purchase Agreement;
(d)
there being no damage to the relevant Property and no breach of warranties which in the reasonable
opinion of the Trustee, acting on the recommendation of the Manager, will have a material adverse
effect on the financial condition, prospects, earnings, business, undertaking or assets of the
Property, the relevant Target Singapore SPC or the relevant Indonesian SPC, in each case,
taken as a whole; and
(e)
(with regard to the Retail Space Singapore SPCs) the entry into the Master Lease Agreements by
the Master Lessee and the relevant Retail Space Indonesian SPCs.
The Vendors have undertaken to the Trustee to fulfil or to procure the fulfilment of the conditions of the
Singapore SPC Share Purchase Agreements.
In the event the listing and trading of the Units on the SGX-ST does not occur on the Listing Date or such
other date as agreed by the Trustee and the Vendors, each of the Trustee and the Vendors is entitled to
rescind the Singapore SPC Share Purchase Agreements for the sale and purchase of all the ordinary
shares and redeemable preference shares in the Target Singapore SPCs with, among other things, full
repayment by the Vendors to the Trustee of the completion amount under each of the respective Singapore
SPC Share Purchase Agreements.
Each Singapore SPC Share Purchase Agreement contains customary representations and warranties
made by the Vendors, subject to certain limitations on its liability, in respect of the relevant Target
Singapore SPC ordinary and redeemable preference shares, the relevant Indonesian SPC and the
relevant Property.
225
226
95.0%
Prism
Investments
Pte. Ltd.
100.0%
95.0%
Silver Dory
Holdings Pte.
Ltd.
100.0%
100.0%
Mal Lippo Cikarang
Gajah Mada Plaza
PT Graha Nusa Raya
5.0%
Dominion Capital Pte.
Ltd.
100.0%
100.0%
PT Graha Baru Raya
5.0%
Belilios International
Pte. Ltd.
100.0%
100.0%
Cibubur Junction
100.0%
PT Cibubur Utama
5.0%
Vernon
Investments
Pte. Ltd.
95.0%
Greenlot Investments
Pte. Ltd.
100.0%
100.0%
LMIR Trust
100.0%
100.0%
Istana Plaza
PT Suryana Istana
Pasundan
Bandung Indah Plaza
100.0%
5.0%
Fenton
Investments
Pte. Ltd.
95.0%
Magnus Investments
Pte. Ltd.
100.0%
PT Megah Semesta
Abadi
5.0%
100.0%
Maxia
Investments
Pte. Ltd.
95.0%
Tangent Investments
Pte. Ltd.
SUMMARY OF OWNERSHIP STRUCTURE OF THE RETAIL MALLS
Certain agreements relating to LMIR Trust and the Properties
100.0%
Ekalokasari Plaza
100.0%
PT Indah Pesona
Bogor
5.0%
Langston
Investments
Pte. Ltd.
95.0%
Thornton Investments
Pte. Ltd.
100.0%
The Plaza Semanggi
100.0%
PT Primatama Nusa
Indah
Retail Mall
Singapore SPCs
Tier 1
Retail
Malls
Retail Mall
Indonesian
SPCs
Singapore SPCs
Retail Mall
Tier 2
100.0%
5.0%
Bowland
Investments
Pte. Ltd.
95.0%
Pierbridge
Investments Pte. Ltd.
100.0%.
227
Java Properties
Pte. Ltd.
100.0%
5.0%
Mall WTC Matahari
Units
100.0%
PT Dinamika
Serpong
95.0%
Serpong
Properties Pte.
Ltd.
100.0%
95.0%
Metropolis Town
Square Units
100.0%
PT Gema
Metropolis Modern
5.0%
Metropolis
Properties Pte.
Ltd.
100.0%
5.0%
Malang Town
Square Units
100.0%
PT Matos Surya
Perkasa
95.0%
Matos Properties
Pte. Ltd.
5.0%
95.0%
Detos Properties
Pte. Ltd.
100.0%
Depok Town
Square Units
100.0%
PT Megah Detos
Utama
LMIR Trust
100.0%
SUMMARY OF OWNERSHIP STRUCTURE OF THE RETAIL SPACES
Certain agreements relating to LMIR Trust and the Properties
5.0%
Grand Palladium
Medan Units
100.0%
PT Palladium
Megah Lestari
95.0%
Palladium
Properties Pte.
Ltd.
100.0%
5.0%
Plaza Madiun
100.0%
PT Madiun
Ritelindo
95.0%
Madiun
Properties Pte.
Ltd.
100.0%
5.0%
Java Supermall
Units
100.0%
PT Java Mega
Jaya
95.0%
Java Properties
Pte. Ltd.
100.0%
Retail
Spaces
Retail Space
Indonesian
SPCs
Retail Space
Singapore
SPCs
Certain agreements relating to LMIR Trust and the Properties
DESCRIPTION OF THE DEEDS OF INDEMNITY
On 18 October 2007, Lippo Capital Limited, which indirectly owns 100.0% of the issued shares of Lippo
Strategic, entered into 14 Deeds of Indemnity with the Trustee pursuant to which Lippo Capital Limited will
indemnify the Trustee against certain liabilities or damage suffered by the Trustee arising out of or in
connection with the 14 Singapore SPC Share Purchase Agreements respectively, subject to certain terms
and conditions including the following:
(a)
if any Singapore SPC Share Purchase Agreement is rescinded or terminated in accordance with the
terms and conditions of the relevant Singapore SPC Share Purchase Agreement, Lippo Capital
Limited shall, except for certain obligations, be released and discharged from its obligations under
the relevant Deed of Indemnity;
(b)
the maximum aggregate liability of Lippo Capital Limited to the Trustee under each of the Deeds of
Indemnity shall not exceed the completion amount under the relevant Singapore SPC Share
Purchase Agreement;
(c)
no liability shall attach to Lippo Capital Limited under a Deed of Indemnity unless the aggregate
amount of all claims for which the Vendor would be liable under that Deed of Indemnity equals to or
exceeds an amount equivalent to S$1,500,000 (for a Singapore SPC Share Purchase Agreement
relating to a Retail Mall) or S$500,000 (for a Singapore SPC Share Purchase Agreement relating to a
Retail Space), but if the aggregate liability in respect of all such claims equals to or exceeds such
amount, then all claims, including claims previously notified, shall accrue against and be recoverable
against Lippo Capital Limited;
(d)
no claim shall be brought against Lippo Capital Limited unless it is notified in writing before the expiry
of a period of 48 months for taxation claims and 24 months for any other claims from the date of
completion of the relevant Singapore SPC Share Purchase Agreement; and
(e)
the Trustee shall not be entitled to recover from Lippo Capital Limited for breach of a warranty more
than once in respect of the same damage suffered.
Each Deed of Indemnity contains customary representations and warranties made to the Trustee by Lippo
Capital Limited.
DESCRIPTION OF THE MASTER LEASE AGREEMENTS
On 18 October 2007, each of the Retail Space Indonesian SPCs (as landlord) and the Master Lessee (as
tenant) entered into a Master Lease Agreement, pursuant to which the Retail Spaces were leased to the
Master Lessee in accordance with the terms and conditions of the Master Lease Agreements.
Lease term and renewal of lease term
The term of each Master Lease Agreement is for 10 years with an option for the Master Lessee to renew
the lease for a further term of 10 years based on substantially the same terms and conditions, except for
the renewal rent. The renewal rent for the further term shall be at the then prevailing market rent, as may
be agreed by the relevant landlord and the Master Lessee in good faith. If there is no agreement by the
relevant landlord and the Master Lessee on such prevailing market rent, the relevant landlord and the
Master Lessee may refer the determination of the prevailing market rent to an independent property valuer
or valuers.
The renewal of lease must be made by written request to the relevant landlord 12 months before the expiry
of the lease term.
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Certain agreements relating to LMIR Trust and the Properties
Lease rental
The Master Lessee is required to make lease rental payments to the relevant landlords on a monthly basis
in advance, such lease rental payments to be determined as follows:
• Period commencing from Listing Date to end of FY 2007
The lease rental for the period commencing from Listing Date to end of FY 2007, shall be a sum
equivalent to the applicable rental rate1 multiplied by the GFA of the relevant Retail Space and multiplied
by the number of months in the period commencing from Listing Date to end of FY 2007.
• FY 2008 to FY 2011
The lease rental for FY 2008 shall be based on the rental rate which is 108.0% of the rental rate
applicable to the period commencing from the Listing Date to end of FY 2007.
The lease rental for each of FY 2009, FY 2010 and FY 2011 shall be based on the rental rate which is
108.0% of the rental rate applicable to the immediately preceding financial year.
• FY 2012 to FY 2016
The lease rentals for each financial year from FY 2012 to FY 2016, shall comprise:
(A)
an amount equivalent to the lease rental payable in respect of FY 2011; and
(B)
an amount equivalent to 4.25% of the amount by which the net revenue of the Master Lessee
derived from the Retail Spaces for the immediately preceding financial year exceeds the net
revenue of the Master Lessee derived from Retail Spaces for the Base Year2.
The table below depicts the total lease rentals for FY 2012 to FY 2016, which is equivalent to the sum of
column (A) and column (B) in the table.
Lease rental
(A)
(B)
FY2012 . . . . . . . . . .
Amount equal to
lease rental for
FY 2011
FY2013 . . . . . . . . . .
Amount equal to
lease rental for
FY 2011
FY2014 . . . . . . . . . .
Amount equal to
lease rental for
FY 2011
FY2015 . . . . . . . . . .
Amount equal to
lease rental for
FY 2011
FY2016 . . . . . . . . . .
Amount equal to
lease rental for
FY 2011
4.25% x
(net revenue of Master Lessee derived from Retail
Spaces for FY 2011 - net revenue of Master Lessee
derived from Retail Spaces for FY 2010)
4.25% x
(net revenue of Master Lessee derived from Retail
Spaces for FY 2012 - net revenue of Master Lessee
derived from Retail Spaces for FY 2010)
4.25% x
(net revenue of Master Lessee derived from Retail
Spaces for FY 2013 - net revenue of Master Lessee
derived from Retail Spaces for FY 2010)
4.25% x
(net revenue of Master Lessee derived from Retail
Spaces for FY 2014 - net revenue of Master Lessee
derived from Retail Spaces for FY 2010)
4.25% x
(net revenue of Master Lessee derived from Retail
Spaces for FY 2015 - net revenue of Master Lessee
derived from Retail Spaces for FY 2010)
1
2
This rental rate is Rp. 80,000 per sq m per month for the Metropolis Town Square Units, the Mall WTC
Matahari Units, the Java Supermall Units and the Malang Town Square Units, Rp. 70,000 per square
metre per month for the Depok Town Square Units and the Grand Palladium Medan Units and
Rp. 60,000 per sq m per month for Plaza Madiun.
The Base Year is fixed as calendar year 2010.
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Certain agreements relating to LMIR Trust and the Properties
Other material terms
Security deposit
The Master Lessee will provide a security deposit equivalent to (i) six months’ rent for the first five years of
the lease term and (ii) three month’s rent for the next five years of the lease term, in the form of cash or a
bank guarantee, under the Master Lease Agreements as security for the compliance by the Master Lessee
of the terms of the Master Lease Agreements as well as against any loss or damage resulting from the
Master Lessee’s default and against any claim by the relevant landlord against the Master Lessee.
Liabilities of Master Lessee
The Master Lessee shall be responsible for the maintenance of the Retail Spaces and all fixtures, fittings
and installations therein, including keeping the same clean and in good and tenantable condition,
undertaking works to make good any damage, maintaining the mechanical and electrical equipment in
accordance with the relevant manufacturers’ guidelines and maintenance of its own plant and machinery
which are required for the operation of its business. The Master Lessee shall also be responsible for the
land and building tax (including any increases) in respect of the Retail Spaces.
The Master Lessee must comply, at its cost and expense, with all laws and regulations and all requirements
of the relevant authorities in force at the moment relating to the Retail Spaces.
Works of a capital nature during the first 30 months
During the first 30 months of the lease term, the Master Lessee shall at its own cost and expense carry out
all repair and replacement works in respect of the mechanical and electrical equipment, whether or not
such works are of a capital nature. After the first 30 months of the lease term, the relevant landlords will be
responsible for repair and replacement works in relation to the mechanical and electrical equipment which
are of a capital nature. Where any replacement works (after the first 30 months of the lease term) is
reasonably required by the Master Lessee in connection with any changes to the layout of the Retail
Spaces, the cost of such replacement works shall be deducted from the rent payable by the Master Lessee
to the relevant landlord for the rest of the lease term.
Addition and alteration works
The Master Lessee must obtain the prior written consent of the relevant landlord (such consent not to be
unreasonably delayed or withheld) for addition and alteration works to or affecting the Retail Spaces if such
works require the approval of the relevant authorities or involves the hacking of floors or structural columns
and beams.
Assignment
The Master Lessee may sub-let to sub-lessees of good repute and sound financial standing any part of
each of the Retail Spaces, not exceeding 30.0% of the total leased area of the relevant Retail Space and for
a term not exceeding one year.
The Master Lessee is not permitted to assign any of the Master Lease Agreements except where such
assignment is in respect of (a) its subsidiary and the performance of the assignee’s obligations under the
relevant Master Lease Agreement is guaranteed by the Master Lessee or (b) its associated company
which is of equivalent or better financial standing than the Master Lessee.
Insurance
The Master Lessee must at its own cost take out and maintain, inter alia, all risks and public liability
insurance policies in the joint names of the Master Lessee and the relevant landlord covering the relevant
Retail Space.
Damage or destruction
If any of the Retail Spaces is damaged or destroyed such that the Retail Space cannot be used or becomes
inaccessible, the relevant landlord has the option to reinstate or replace such Retail Space (or the affected
part, as the case may be) using insurance proceeds received under the insurance policies. If the relevant
landlord opts to reinstate or replace the Retail Space, the Master Lessee will not be liable to pay rent in
respect of the period when the Retail Space cannot be used or is inaccessible. If the relevant landlord opts
not to reinstate or replace the Retail Space, the Master Lessee may either terminate the relevant Master
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Certain agreements relating to LMIR Trust and the Properties
Lease Agreement or opt to reinstate or replace the Retail Space using insurance proceeds received under
the insurance policies. If the Retail Space is partly unusable, the Master Lessee’s liability for the rent will be
reduced in proportion to the reduction in the usability caused by the damage from the date of the damage
or destruction.
Increase in tax
If any change in or amendment to the relevant laws or treaties increases the taxes payable by the relevant
landlord, except for any increases in building tax, the increased tax shall be borne in the following manner:
(i)
if such increase is less than or equal to 10.0% of the original taxes payable by the landlord, then the
amount of such increase shall be solely borne by the Master Lessee;
(ii)
if such increase is more than 10.0% but less than or equal to 15.0% of the original taxes payable by
the landlord, then:
(iii)
(a)
the Master Lessee shall bear such part of the amount of increase as is equivalent to 10.0% of
the original taxes payable by the landlord; and
(b)
the landlord and Master Lessee shall bear the balance of the amount of increase in equal
shares; and
if such increase is more than 15.0% of the original taxes payable by the landlord, then:
(a)
the Master Lessee shall bear such part of the amount of increase as is equivalent to 10.0% of
the original taxes payable by the landlord;
(b)
additionally, the landlord and Master Lessee shall bear in equal shares such part of the amount
of increase as is equivalent to 5.0% of the original taxes payable by the landlord; and
(c)
the balance of the amount of increase shall be solely borne by the landlord.
Vacation of premises
The Master Lessee is required to vacate the Retail Spaces after the expiry of the lease term. If the Master
Lessee fails to vacate at the end of the expiry of the lease term, the landlord is entitled to charge the Master
Lessee double the amount of the Rent for the period of holding over.
On vacating the Retail Spaces, the Master Lessee must reinstate the premises to a good and tenantable
condition to the reasonable satisfaction of the relevant landlord.
Change in laws affecting Master Lessee’s operations
If as a result of any change in or amendment to the applicable laws or regulations, the Master Lessee is
prohibited from carrying out its current operations at any of the Retail Spaces, the Master Lessee shall be
entitled to terminate the lease with a three-month termination notice and upon such termination, the
security deposit will be forfeited to the landlord. The Master Lessee shall use its best endeavours to
procure a replacement tenant.
DESCRIPTION OF THE OPERATING COSTS AGREEMENTS
Pursuant to each of the Operating Costs Agreements to be entered into between the relevant Retail Mall
Indonesian SPC and Operating Company, the relevant Operating Company will agree to unconditionally
bear, for a period of three years commencing from 1 January 2007, all costs directly related to the
maintenance and operation of the relevant Retail Mall.
In consideration of its agreements under the relevant Operating Costs Agreement, the relevant Operating
Company has the right to collect, through the Property Manager, a service charge and statutory income
from the tenants of the relevant Retail Mall. The service charge is intended to cover the costs directly
related to the maintenance and operation of the Retail Mall. The amount of the service charge will be
recommended by the Property Manager as a result of its review of the prevailing market rates. The
statutory income is intended to cover the costs directly related to the provision of utilities to the Retail Mall.
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Certain agreements relating to LMIR Trust and the Properties
The right to collect the service charge and statutory income shall be in accordance with the lease
agreements entered into by and between the Retail Mall Indonesian SPC and the respective tenants of the
Retail Mall and such collection shall be coordinated by the Property Manager.
The Operating Costs Agreements will lapse on 31 December 2009 and LMIR Trust will bear all costs
directly related to the maintenance and operation of the Retail Malls thereafter.
The rationale for the Operating Costs Agreement is to provide certain protection to LMIR Trust in relation to
the costs directly related to the maintenance and operation of the Retail Malls, in particular for Bandung
Indah Plaza, Mal Lippo Cikarang, Ekalokasari Plaza and The Plaza Semanggi which are in the process of
undergoing asset enhancement works and may incur higher operating costs, with a reduction in service
charges received from tenants due to tenant relocation or loss at the areas which are affected by the asset
enhancement works, in the initial period subsequent to the completion of the asset enhancement works.
DESCRIPTION OF THE RENTAL GUARANTEE DEEDS
On 10 August 2007, Lippo Strategic entered into a Rental Guarantee Deed with the following Retail Mall
Singapore SPCs pursuant to which Lippo Strategic will (i) provide a rental guarantee to the relevant Retail
Mall Singapore SPC in respect of existing and new units in the respective Retail Malls which are
untenanted and (ii) undertake to pay to the relevant Retail Mall Singapore SPC any shortfall in the
maintenance and operation costs which the relevant Operating Company has undertaken to bear under
the respective Operating Costs Agreement.
Retail Mall
Gajah Mada Plaza . . . . . . . . . . . . . . . . . . . . . . .
Mal Lippo Cikarang . . . . . . . . . . . . . . . . . . . . . .
Cibubur Junction . . . . . . . . . . . . . . . . . . . . . . . .
Bandung Indah Plaza . . . . . . . . . . . . . . . . . . . . .
Istana Plaza . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ekalokasari Plaza . . . . . . . . . . . . . . . . . . . . . . . .
The Plaza Semanggi . . . . . . . . . . . . . . . . . . . . .
Relevant Retail Mall Singapore SPC
.
.
.
.
.
.
.
Belilios International Pte. Ltd.
Dominion Capital Pte. Ltd.
Greenlot Investments Pte. Ltd.
Tangent Investments Pte. Ltd.
Magnus Investments Pte. Ltd.
Thornton Investments Pte. Ltd.
Pierbridge Investments Pte. Ltd.
The Rental Guarantee Deeds cover the period commencing from the Listing Date up to 31 December
2009. Pursuant to the Rental Guarantee Deeds, Lippo Strategic is obliged to pay to the Retail Mall
Singapore SPCs a specified sum in respect of each Retail Mall for every year during the said period. The
first of such payments will be paid on or before 31 January 2008, and subsequent payments will be made
on a quarterly basis thereafter. In the event any of the specified units in the relevant Retail Mall becomes
tenanted during such period, the amount of the specified sum payable by Lippo Strategic in respect of such
Retail Mall will be reduced by the amount of the rental payable under the relevant tenancy, regardless of
whether such rental is received by the owner of the relevant Retail Mall and notwithstanding that such
tenancy may be or is terminated prior to the expiry of such period.
To secure Lippo Strategic’s performance under each of the Rental Guarantee Deeds, Lippo Strategic is
required to furnish to the Retail Mall Singapore SPCs bank guarantees. The aggregate amount of all the
bank guarantees to be furnished under the Rental Guarantee Deeds is S$10.0 million.
DESCRIPTION OF THE RIGHT OF FIRST REFUSAL AGREEMENT
On 14 August 2007, an agreement was entered into between the Trustee and the Sponsor pursuant to
which the Sponsor granted to LMIR Trust, for so long as (a) Lippo-Mapletree Indonesia Retail
Trust Management Ltd. remains the manager of LMIR Trust and (b) the Sponsor and/or any of its
related corporations, alone or in aggregate, remains a controlling shareholder of the Manager, a ROFR
over any Relevant Asset (i) which any Sponsor Entity proposes to sell or transfer (whether such Relevant
Asset is wholly-owned or partly-owned by the Sponsor Entity and excluding any sale of such Relevant
Asset 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 a
proposed offer for sale or transfer of such Relevant Asset has been made to a Sponsor Entity.
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Certain agreements relating to LMIR Trust and the Properties
For the purposes of the ROFR,
(a)
a “controlling shareholder” of a company means a person who (i) holds directly or indirectly 15.0% or
more of the nominal amount of all voting shares of that company, or (ii) in fact exercises control over
that company, and (ii) “control” of a company means the capacity to dominate decision-making,
directly or indirectly, in relation to the financial and operating policies of that company; and
(b)
a “related corporation” means a corporation which is (i) the holding company of another corporation,
(ii) a subsidiary of another corporation; or (iii) a subsidiary of the holding company of another
corporation.
Where (a) a Sponsor Entity proposes to sell or transfer a Relevant Asset (whether wholly-owned or partlyowned and excluding a sale of a Relevant Asset 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 (b) a proposed offer for sale or transfer of a Relevant Asset is made to a
Sponsor Entity, the Sponsor shall give written notice thereof to the Trustee, and will grant to the Trustee the
first right to purchase the Relevant Asset for the benefit of LMIR Trust.
If (i) the Trustee does not enter into a binding commitment for the purchase of the Relevant Asset within
30 days (or such longer period as may be mutually agreed) from the date of the Trustee’s receipt of the
relevant documents or (ii) the Trustee indicates in writing that it will not be purchasing the Relevant Asset or
(iii) the proposed purchase of the Relevant Asset is aborted by the Trustee, the relevant Sponsor Entity is
entitled to (as the case may be) (a) sell its Relevant Asset to a third party on terms and conditions no more
favourable to the third party than those offered by the Sponsor Entity to the Trustee or (b) purchase the
Relevant Asset offered to it without any accountability, liability or obligation to the Trustee.
The Right of First Refusal Agreement will come into effect as at Listing Date. As at Listing Date, the scope
of the ROFR will encompass the ROFR Properties, being:
ROFR Properties
under development
Binjai Supermall
Pejaten Mall
Kuta Beach Mall
Kemang City Mall
Puri “Paragon City”
Location
North Sumatra
South Jakarta
Kuta, Bali
South Jakarta
West Jakarta
Expected date of
completion
Fourth quarter of 2007
Second quarter of 2008
Second half of 2008
First half of 2009
Second half of 2009
Estimated GFA
Estimated NLA
(sq m)
(sq m)
23,615
57,948
41,562
77,555
196,400
18,300
40,327
30,735
56,052
127,660
397,080
273,074
The ROFR shall be subject to all prevailing laws, regulations and governmental policies as well as
overriding contractual obligations of the relevant Sponsor Entity (if any), including obligations under
existing and future joint ventures.
Where a property which is subject to the ROFR is jointly owned with one or more third parties (i.e. parties
which are not subject to the ROFR), the ROFR shall be subject to the consent of these third parties to the
sale of that property to the Trustee, and in this respect, the Sponsor shall use reasonable endeavours to
obtain such consent.
DESCRIPTION OF NON-BINDING MEMORANDUM OF UNDERSTANDING
On 21 May 2007, the Manager entered into a non-binding memorandum of understanding with PT. Multi
Pratama Gemilang Perkasa (Pikko Group) with regard to the potential acquisition by LMIR Trust of
Cosmopolitan Mall Pluit, a retail mall located in North Jakarta, Indonesia. The Manager understands that
Cosmopolitan Mall Pluit is currently undergoing asset enhancement works, with such works scheduled for
completion in the second half of 2008.
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Certain agreements relating to LMIR Trust and the Properties
The details of Cosmopolitan Mall Pluit are set out below:
Cosmopolitan Mall Pluit
Pluit, North Jakarta
Expected completion date of renovation . . . . . . .
Second half of 2008
Estimated GFA . . . . . . . . . . . . . . . . . . . . . . . . . .
131,013 sq m
Estimated NLA . . . . . . . . . . . . . . . . . . . . . . . . . .
88,040 sq m
Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .
Middle to upper income residents of North Jakarta
District/Area. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
North Jakarta
Estimated acquisition price . . . . . . . . . . . . . . . . .
To be negotiated and agreed in good faith between
the parties, provided that such acquisition price
shall not be more than the appraised value of
Cosmopolitan Mall Pluit as determined by an
independent property valuer to be appointed by
the Trustee before the signing of the conditional
sale and purchase agreement.
Description
Located in the heart of the affluent Pluit residential district of North Jakarta, Cosmopolitan Mall Pluit offers
an exciting cultural and retail experience, with urban sculptures along the waterfront, blending
harmoniously with a variety of lifestyle and cuisines outlets.
In the future, the Manager will identify other potential acquisitions and will enter into negotiations and nonbinding memoranda of understanding with regard to these potential acquisitions.
On 22 June 2007, the Manager entered into a non-binding memorandum of understanding with Zellwager
Enterprise Limited with regard to the potential acquisition by LMIR Trust of Sun Plaza, a retail mall located
in Medan, North Sumatra.
The details of Sun Plaza are set out below:
Sun Plaza
Medan, North Sumatra
Estimated GFA . . . . . . . . . . . . . . . . . . . . . . . . . .
73,871 sq m
Estimated NLA . . . . . . . . . . . . . . . . . . . . . . . . . .
61,348 sq m
Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .
Middle to upper income residents of Medan
District/Area. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Medan
Estimated acquisition price . . . . . . . . . . . . . . . . .
To be negotiated and agreed in good faith between
the parties, provided that such acquisition price
shall not be more than the appraised value of
Sun Plaza as determined by an independent
property valuer to be appointed by the Trustee
before the signing of the conditional sale and
purchase agreement.
Description
Sun Plaza is a six-level retail mall located in the Indonesian city of Medan, the third most populous city in
Indonesia after Jakarta and Surabaya. Sun Plaza is surrounded by government and business offices and
is accessible from all parts of Medan City.
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Certain agreements relating to LMIR Trust and the Properties
The titanium façade of Sun Plaza resembles a sculpture and offers visitors an experience of luxury and
elegance.
On 26 June 2007, the Manager entered into a non-binding memorandum of understanding with
PT. Pakuwon Permai in respect of the potential acquisition by LMIR Trust of Supermal Pakuwon Indah
and Pakuwon Trade Center, a retail mall located in West Surabaya, East Java.
The details of Supermal Pakuwon Indah and Pakuwon Trade Center are set out below:
Supermal Pakuwon Indah and Pakuwon Trade Center
West Surabaya, East Java
Estimated GFA . . . . . . . . . . . . . . . . . . . . . . . . . .
289,563 sq m
Estimated NLA . . . . . . . . . . . . . . . . . . . . . . . . . .
114,834 sq m
Target segment . . . . . . . . . . . . . . . . . . . . . . . . . .
Middle to upper income residents of West
Surabaya
District/Area. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
West Surabaya
Estimated acquisition price . . . . . . . . . . . . . . . . .
To be negotiated and agreed in good faith between
the parties, provided that such acquisition price
shall not be more than the appraised value of
Supermal Pakuwon Indah and Pakuwon Trade
Center as determined by an independent
property valuer to be appointed by the Trustee
and the appraised value is agreed by the Vendor
before the signing of the conditional sale and
purchase agreement.
Description
Supermal Pakuwon Indah and Pakuwon Trade Center is strategically located in the heart of West
Surabaya’s affluent residential district. The tenants of Supermal Pakuwon Indah and Pakuwon Trade
Center provide a variety of shopping, dining and entertainment options to shoppers. Together with the
convention centre facilities, the retail mall aims to deliver a memorable and exciting retail experience.
DESCRIPTION OF THE EXISTING PROPERTY MANAGEMENT AGREEMENTS
On 9 April 2006, each of the Retail Mall Indonesian SPCs have entered into an Existing Property
Management Agreement with the Property Manager pursuant to which the Property Manager will
operate, manage, maintain and market the Retail Malls.
The initial term for each of these Existing Property Management Agreements is four years from the date of
the agreement.
Property Manager’s services
The services provided by the Property Manager for the relevant Retail Mall under its management shall
include, among other things, the following:
• Retail management services for the relevant Retail Mall, including (i) advising and developing a
strategic management policy for tenants and service providers; (ii) reviewing the existing
organisational structure for the operation of the Retail Mall and making changes if necessary;
(iii) reviewing and implementing policies relating to human resource administration, accounting and
finance, the collection of rental payments and service charges, financial reporting, maintenance, safety,
security, insurance, tenancy mix, cleaning and car parking for the Retail Mall; (iv) reviewing and
providing input on vehicular and pedestrian flows and customer conveniences of the Retail Mall; and
(v) providing public relations and customer services;
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Certain agreements relating to LMIR Trust and the Properties
• Coordinating with the relevant service providers or contractors for the advertising and promotion of the
Retail Mall;
• Preparing and implementing a lease documentation and monitoring system, and management
reporting system; and
• Liaising with the relevant parties with regard to the building documentation system for the Retail Mall.
Fees
Under each Existing Property Management Agreement, the Property Manager is entitled to the following
fees in respect of each Retail Mall under its management:
• 2.0% per annum of the Gross Revenue for the relevant Retail Mall;
• 2.0% per annum of the NPI for the relevant Retail Mall (after accounting for the fee of 2.0% per annum of
the gross revenue for the relevant Retail Mall); and
• 0.5% per annum of the NPI for the relevant Retail Mall in lieu of leasing commissions otherwise payable
to the Property Manager and/or third party agents.
Reimbursable amounts
Under each Existing Property Management Agreement, each of the Retail Mall Indonesian SPCs agrees
to reimburse the Property Manager, upon request made from time to time, for its expenses incurred in
connection with the provision of property management services and with the performance of its duties
which are in compliance with the approved annual business plan and budget as stated in the Existing
Property Management Agreement.
Such expenses include, but are not limited to:
• rent, service charge and VAT payable by the Property Manager for its lease of its office premises;
• advertising and promotion costs; and
• salaries of the Property Manager’s employees who are approved by the relevant Retail Mall Indonesian
SPC.
Indemnity
Under each Existing Property Management Agreement, each of the Retail Mall Indonesian SPCs agrees
to indemnify the Property Manager against all actions, suits, proceedings, claims, demands, costs,
expense and liability whatsoever (present, future, contingent or otherwise) arising as a result of the
discharge, performance or exercise by the Property Manager of its duties, powers and exertions under and
in accordance with the terms of the Existing Property Management Agreement.
Termination
If the relevant Retail Mall Indonesian SPC does not wish to extend the period of the Existing Property
Management Agreement beyond the initial four year term, the Retail Mall Indonesian SPC shall provide
written notice of such intention to the Property Manager at least 90 days prior to the maturity date of the
initial term. The Property Manager may also terminate (without penalty) the Existing Property
Management Agreement with 30 days prior written notice. The Retail Mall Indonesian SPCs do not
have any right to terminate the Existing Property Management Agreements without penalty. The Existing
Property Management Agreements do not provide for any termination fee. Should any of the Existing
Property Management Agreements be prematurely terminated unilaterally by the relevant Retail Mall
Indonesian SPC, this may be considered to be a breach of contract and the Property Manager may be
entitled to damages for breach of contract, with the amount to be assessed by the relevant court of law.
DESCRIPTION OF THE MASTER PROPERTY MANAGEMENT AGREEMENT
Any properties located in Indonesia acquired by LMIR Trust after the Listing Date, whether such properties
are directly or indirectly held by LMIR Trust, or are wholly or partly-owned by LMIR Trust will be managed by
the Property Manager in accordance with the terms of a master property management agreement (the
“Master Property Management Agreement”).
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Certain agreements relating to LMIR Trust and the Properties
The Master Property Management Agreement was entered into on 18 October 2007 by the Trustee, the
Manager and the Property Manager pursuant to which the Property Manager was appointed to operate,
maintain, manage and market all the properties of LMIR Trust located in Indonesia acquired after the
Listing Date, subject to the overall management of the Manager.
The Master Property Management Agreement provides that each of the Retail Malls currently the subject
of an Existing Property Management Agreement will continue to be managed in accordance with the terms
of that Existing Property Management Agreement, and the terms of the Master Property Management
Agreement shall not apply to the relevant Retail Mall during the subsistence of the Existing Property
Management Agreement.
The Master Property Management Agreement also provides that in respect of each property acquired after
the Listing Date, the Trustee, the Manager and the Property Manager will enter into a separate property
management agreement in the form and on the terms set out in a schedule to the Master Property
Management Agreement, in order to incorporate the specific terms set out in the Master Property
Management Agreement in their application to each of such properties.
The initial term of the Master Property Management Agreement is four years from the Listing Date.
Six months prior to expiry of the initial term of the Master Property Management Agreement, the Property
Manager may request to extend its appointment for a further four years on the same terms and conditions,
except for revision of all fees payable to the Property Manager to market rates prevailing at the time of such
extension.
Two months before expiry of the initial term, the Trustee will decide the prevailing rates for the extension
term, based on the recommendation of the Manager. If the Property Manager disagrees with the Trustee’s
decision on the prevailing market rates for the extension term, the matter will be referred to an independent
expert whose determination of the prevailing market rates shall be final and binding on the parties.
The Trustee shall, based on the recommendation of the Manager, agree to extend the appointment of the
Property Manager for the extension term, on the revised fees based on the prevailing market rates
determined as aforesaid, subject to the approval of the Unitholders of LMIR Trust, if such approval is
required pursuant to any applicable legislation or regulations (including any Singaporean legislation,
regulation and/or requirement, and regulatory requirements on Related Party Transactions relating to real
estate investment trusts).
The Trustee shall not be obliged to extend the appointment of the Property Manager if the above conditions
are not fulfilled.
Property Manager’s services
The services provided by the Property Manager for each property subject to the Master Property
Management Agreement will be substantially the same as those services provided by the Property
Manager under the Existing Property Management Agreements.
Fees
The fees payable to the Property Manager under the Master Property Management Agreement will be
substantially the same as those fees the Property Manager is entitled to under the Existing Property
Management Agreements.
Reimbursable amounts
In addition to its fees, the Property Manager will be fully reimbursed for each property under its
management under the Master Property Management Agreement as follows:
• the employment and remuneration costs of the team of personnel employed by the Property Manager
for the provision of services to that property; and
• the employment and remuneration costs relating to the centralised team of employees of the Property
Manager who provide group services for all properties the subject of the Master Property Management
Agreement under its management, which costs are apportioned by the Property Manager to that
property,
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as approved in each annual budget by the Trustee following the recommendation of the Manager.
Expenses
The Property Manager is authorised to utilise funds deposited in operating accounts maintained in the
name of the Trustee and to make payment of all costs and expenses incurred in the operation,
maintenance, management and marketing of each property within each annual budget approved by
the Trustee on the recommendation of the Manager.
Provision of office space
Where applicable, the Trustee shall permit employees of the Property Manager engaged to manage a
property to occupy suitable office space at such property (as approved by the Trustee on the
recommendation of the Manager) without the Property Manager being required to pay any rent,
service charge, utility charges or other sums.
Termination
The Trustee or the Manager may terminate the appointment of the Property Manager in relation to all the
properties of LMIR Trust under the management of the Property Manager pursuant to the Master Property
Management Agreement on the occurrence of certain specified events, which include the liquidation or
cessation of business of the Property Manager.
The Trustee or the Manager may also terminate the appointment of the Property Manager specifically in
relation to a property under its management in the event of the sale of such property, but the Master
Property Management Agreement will continue to apply with respect to the remaining properties managed
by the Property Manager under the terms of the Master Property Management Agreement.
In addition, if the Property Manager, within 90 days of receipt of written notice, fails to remedy any breach
(which is capable of remedy) of its obligations in relation to a property, the Trustee or the Manager may
terminate the appointment of the Property Manager in relation only to such property in respect of which the
breach relates, upon giving 30 days’ written notice to the Property Manager.
On the termination of the appointment of the Property Manager, the Manager shall, as soon as practicable,
procure the appointment of a replacement property manager for the affected property.
Novation
The Trustee and the Manager are entitled to novate their respective rights, benefits and obligations under
the Master Property Management Agreement to a new trustee of LMIR Trust or a new manager of LMIR
Trust appointed in accordance with the terms of the Trust Deed. With the approval of the Trustee, which
approval shall not be unreasonably withheld, the Property Manager is also entitled to novate its respective
rights, benefits and obligations under the Master Property Management Agreement to any wholly-owned
direct or indirect subsidiary of the Sponsor.
Exclusion of liability
In the absence of fraud, negligence, wilful default or breach of the Master Property Management
Agreement by the Property Manager, it shall not incur any liability by reason of any error of law or any
matter or thing done or suffered or omitted to be done by it in good faith under the Master Property
Management Agreement.
In addition, the Trustee shall indemnify the Property Manager against any actions, costs, claims, damages,
expenses or demands to which it may suffer or incur as Property Manager, save where such action, cost,
damage, expense or demand is occasioned by the fraud, negligence, wilful default or breach of the Master
Property Management Agreement by the Property Manager, its employees or agents.
No restriction on Property Manager
The Property Manager may provide services similar to those contemplated under the Master Property
Management Agreement to other parties operating in the same or similar business as LMIR Trust or in
other businesses.
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Certain agreements relating to LMIR Trust and the Properties
DESCRIPTION OF THE PUT OPTION AGREEMENTS
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 bound
by Kiosks Sale and Purchase Binding Agreements because their strata titles are in the process of being
issued by the Indonesian government.
In relation to each of the Metropolis Town Square Units, Depok Town Square Units, Malang Town Square
Units and Grand Palladium Medan Units, a put option agreement has been entered into between, inter alia,
the Trustee and the Master Lessee, pursuant to which, in the event that the strata titles to these four Retail
Spaces are not issued within 24 months from the Listing Date, a meeting 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 LMIR Trust for a further six months from the
date of the ordinary resolution. In the event that an ordinary resolution is passed in favour of retaining these
four Retail Spaces in the portfolio of LMIR Trust and the strata titles are still not issued upon expiry of six
months from the date of the ordinary resolution, the Trustee shall exercise the put option. In the event that
an ordinary resolution is not passed in favour of retaining these four Retail Spaces, the Trustee shall be
entitled to exercise the put option within three months of the date of the meeting of the Unitholders.
Upon the Trustee’s exercise of the put option in relation to one of these four Retail Spaces, the Master
Lessee will be required to purchase the relevant Retail Space at the consideration of (a) all transaction
costs incurred directly or indirectly by the Trustee in relation to the acquisition of the relevant Retail Space
and (b) the higher of the
• sell-back NAV
The sell-back NAV is based on the average of two valuations conducted by two independent valuers. It
is the NAV of the relevant Indonesia SPCs as at the date of service of the put option notice (the “Service
Date”) as determined from the audited consolidated accounts of the relevant Indonesian SPCs, duly
audited by an independent public accounting firm appointed by agreement between the Master Lessee
and the Trustee within ten days after the Service Date. Failing agreement, the independent public
accounting firm shall be appointed by the chairman for the time being of the Singapore International
Arbitration Centre.
The Master Lessee and the Trustee shall procure that two independent valuers be each appointed by
the Manager and the Trustee within five days after the Service Date. Each independent valuer shall
determine within 30 days from the Service Date, the value of the relevant Retail Space as at the Service
Date by adopting the same method and basis of valuation as that adopted for purposes of the listing of
LMIR Trust.
• IPO NAV
The IPO NAV is based on the value attributed to the four relevant Retail Spaces for the purpose of the
listing of the LMIR Trust, in each case, also taking into account all transaction costs incurred directly and
indirectly by the LMIR Trust for the acquisition of these four Retail Spaces. The IPO NAV will not take into
account depreciation costs of the Retail Spaces incurred from the date LMIR Trust is listed on the
SGX-ST.
The Master Lessee and the Trustee shall procure that the independent accountants shall determine the
IPO NAV within 60 days from the Service Date. The IPO NAV of the relevant Retail Space is calculated
based on the following formula:
Z
⫻
X
Y
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Certain agreements relating to LMIR Trust and the Properties
Where:
“X” is the valuation of the relevant Retail Space adopted for purposes of the Offering;
“Y” is the valuation of the total portfolio of LMIR Trust adopted for purposes of the Offering; and
“Z” is the implied value of the total portfolio of LMIR Trust at the Offering based on the following formula:
Y + [(A ⫺ B) ⫻ C]
Where:
“A” is the purchase price per Unit under the Offering;
“B” is the NAV per Unit under the Offering based on the valuation of the total portfolio of LMIR Trust
adopted for purposes of the Offering; and
“C” is the total number of Units in issue immediately after completion of the Offering.
The Trustee (acting on the advice and recommendation of, and after discussions with, the Manager) is
satisfied with the computation of the said transaction costs as set out in each of the put option agreements.
Using the Metropolis Town Square Units as an example, in the event that the put option in respect of the
Metropolis Town Square Units is exercised, each of the following events will happen concurrently on the
date of completion:
(i)
the Trustee will transfer Metropolis Properties Pte. Ltd. (“Metropolis Properties”) to Matahari at the
purchase consideration described above;
(ii)
Serpong Properties Pte. Ltd. (“Serpong Properties”) will transfer its 5.0% interest in PT Gema
Metropolis Modern to an entity to be nominated by Matahari for consideration of S$1.00; and
(iii)
Metropolis Properties will transfer its 5.0% interest in PT Matos Surya Perkasa to Serpong
Properties for consideration of S$1.00.
DESCRIPTION OF THE LETTER OF UNDERTAKING
On 9 August 2007, the Trustee, the Manager and the Sponsor entered into a letter of undertaking, pursuant
to which the Sponsor will use its best endeavours to procure that the relevant Retail Space SPCs obtain the
strata titles to the Metropolis Town Square Units, Depok Town Square Units, Malang Town Square Units
and Grand Palladium Medan Units.
The Trustee (acting on the advice and recommendation of, and after discussions with the Manager) is of
the view that the proposed arrangements, namely the put option agreements and the letter of undertaking,
adequately safeguard the interest of Unitholders if the legal titles to the four Retail Spaces are not issued
on or prior to the expiry of 24 months from the Listing Date.
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Overview of relevant laws and regulations in Indonesia
Indonesian real property rights are governed under Law No. 5 Year 1960 regarding Agrarian Law (the
“Agrarian Law”) and various implementing regulations issued by the Indonesian central government and
the Indonesian provincial governments.
The Agrarian Law recognises the rights of legal persons to own and to use lands subject to various type of
rights granted by the Agrarian Law which are, among others, (a) Right of Ownership (“Hak Milik”), (b) Right
to Use (“Hak Pakai”), (c) Right to Cultivate (“Hak Guna Usaha”), (d) Right to Build (“Hak Guna Bangunan”),
(e) Right to Lease (“Hak Sewa), and (f) other rights issued pursuant to the implementing laws and
regulations such as Strata Title Rights (“Hak Atas Satuan Rumah Susun”).
Pursuant to the Indonesian Government Regulation No. 10 of 1961 as further amended by the Indonesian
Government Regulation No. 24 of 1997 ownership of lands are evidenced by the registration of the holder
of the land in the Land Register of the relevant local land office (Badan Pertanahan) where such land is
located.
RIGHTS TO OWN AND/OR TO USE
Referring to the above there are various forms of rights for the use of land pursuant to the Agrarian Law,
some of such forms are set out below.
Hak Milik (HM/Right to Own). The closest form of land title to an internationally recognised concept of
“freehold” title is Hak Milik or “Right of Ownership”. A Hak Milik title is available only to Indonesian
individuals and certain Indonesian religious and social organisations and government bodies, as regulated
in Government Regulation No. 38 of 1963. Hak Milik title cannot be obtained by companies (whether
Indonesian or foreign owned) or by foreign individuals.
Hak Guna Bangunan (HGB/Right to Build). HGB is a land right to build on land that belongs to another
party. Indonesian individuals and Indonesian companies (or foreign investment companies incorporated in
Indonesia) may acquire HGB titles. HGB titles can be granted on (i) State-owned land by the decision of the
appointed relevant authority, (ii) Hak Pengelolaan (“HPL/Right to Manage”) land by the decision of the
appointed relevant authority decision based on the recommendation of the HPL holder and (iii) Hak Milik
land by a mutual agreement between the Hak Milik holder and the prospective HGB holder stated in the
deed made before the Land Official. In a piece of a land, a number of HGB certificates can be issued
depending on the ownership of the land. A HGB title is granted for a maximum initial term of 30 years. By
application to the relevant local land office upon the expiration of this initial term, a HGB title may be
extended for an additional term not exceeding 20 years. Following expiration of this additional term, a
renewal application may be made. Certain requirements and procedures for a HGB renewal application
must be complied with and followed including submitting relevant supporting documents and paying
certain amount of administrative fee chargeable by the local land office and subject to an inspection to the
location by the local land office.
The New Investment Law provides incentives which includes offering land title for longer periods such that
eligible investors may hold HGB title in the form of grant and an advance acceleration of land title for a
period of 50 years, and may be renewed for an additional term of 30 years.
Hak Pakai (HP/Right to Use). Hak Pakai is the right to use and/or collect the products of land directly
administered by the State (State-owned land), or of land owned by other persons (based on Hak Milik).
Hak Pakai over land can be granted by the government in the form of a decree or by an Indonesian citizen
in the form of an agreement. The decree or the agreement gives the user the rights and obligations laid
down in that decree or agreement. Only (i) Indonesian citizens, (ii) Indonesian foreigners domiciled in
Indonesia, (iii) legal entities established under Indonesian law and having domicile in Indonesia and
(iv) foreign entities that have representative in Indonesia, may have such rights and the holder of such land
right may mortgage the land as security. Hak Pakai titles can be granted on (i) State-owned land by the
decision of the appointed relevant authority, (ii) HPL pursuant to the decision of the relevant Minister or the
relevant appointed authority based on the recommendation of the owner of the HPL title or (iii) Hak Milik
land by a mutual agreement between the Hak Milik holder and the prospective HGB holder stated in the
deed made before the Land Official.
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Overview of relevant laws and regulations in Indonesia
Hak Pakai can be granted for a definite period of time or indefinite period of time. For definite of time, Hak
Pakai is granted for a maximum of 25 years and may be extended for an additional term of 20 years.
Following expiration of this additional term, an extension cannot be granted but a renewal application may
be made. Like a HGB renewal application, certain requirements and procedures for a Hak Pakai renewal
application must be complied with and followed including submitting relevant supporting documents and
paying certain amount of administrative fee chargeable by the local land office and subject to an inspection
to the location by the local land office. Hak Pakai with an indefinite period of time can be granted as long as
it is in use to governmental departments or institutions, local governments, embassies/representatives of
other countries, representatives of international institutions, religious bodies and social institutions.
Under the New Investment Law, Hak Pakai with definite period may also be granted for a longer periods for
an advance acceleration of land title for a period of 45 years and it may be renewed for an additional term of
25 years.
The extension and/or renewal of HGB or Hak Pakai title is granted if the following conditions are met:
(a)
the land is being properly used in accordance with the situation, nature and objective of the granting
of the right;
(b)
the requirements of the granting of the right are fulfilled by the title holder;
(c)
the titleholder still meets the requirements as a titleholder of the land; and
(d)
the land is still used in accordance with the Spatial Plan (Rencana Tata Ruang Wilayah) of the area.
The granting of acceleration and renewal of HGB and Hak Pakai based on the New Investment Law may
only be granted if the following conditions are met:
(a)
the investment will be conducted for a long period and related to structural changes of the Indonesian
economy;
(b)
the investment with a level of investment risk that requires a long term investment return in
accordance with the type of investment being conducted;
(c)
the investment which does not require an extensive area;
(d)
the investment which uses state-owned land rights; and
(e)
the investment which does not disturb the sense of impartiality in the community as well as public
interest.
The renewal of the HGB and Hak Pakai based on the New Investment Law may be granted after it is
evaluated as to whether the land can be further appropriately used according to the condition, nature and
objective of granting of the rights.
It is unclear how the land office will respond to the issuance of the New Investment Law, which grants a
longer period of the term of the land title.
A HGB or Hak Pakai title holder has the right to erect, occupy and use buildings on such parcel of land and
sell all or part of such parcel to a third party. Further, the HGB or Hak Pakai title can be revoked if the
following occur:
(a)
the period of the title as stated in the decision/agreement of granting or extending the title is expired;
(b)
the authority or the HPL or Hak Milik holder terminates the period before the expiry of the land title
due to (i) non fulfilment of the obligations of the land title, (ii) non compliance of the requirements or
obligations stated in the decision/agreement between the HGB or Hak Pakai holder and the HPL or
Hak Milik holders, or (iii) the final and binding court decision;
(c)
the revocation of the land title; or
(d)
if the land title holder who is not an eligible party to hold the title does not transfer the land title to other
party within one year.
If the HGB or Hak Pakai title on State-owned land is revoked, is not renewed or extended, the HGB or Hak
Pakai holder must demolish the buildings erected on such land and return the land to the state within one
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year after the land title is revoked. If the HGB or Hak Pakai title on Hak Milik or HPL land is not renewed or
extended, the HGB or Hak Pakai holder must return the land to the Hak Milik or HPL land in accordance
with agreement among the parties.
The application should be made no later than two years prior to the expiration of the additional term. The
land office has discretion to grant the various extensions.
Hak Pengelolaan (HPL/Right to Manage). HPL is the right to (i) plan the purpose and the use of the
land, (ii) use the land for the needs of the business of the holder, and (iii) surrender plots of land to third
parties in accordance with the terms and conditions laid down by the holder of the HPL title. HPL titles can
be granted to (i) Indonesian governmental institutions including local government, (ii) State-owned
enterprises (ii) Indonesian regional government enterprises, (iv) Persero Limited Liability Company,
(v) Authority bodies and (vi) other legal entities owned by the Indonesian government. HPL is granted
for an indefinite period of time. The application of granting HPL is made to the relevant Minster through
local Land officers where the land is located. HGB and Hak Pakai can be granted over the HPL land based
on local land officers’ recommendations.
Strata Titles. Indonesian law regulates strata titles, as stipulated in Law No. 16 of 1985 and Government
Regulation No. 4 of 1988 and its implementing regulations. Strata title buildings may only be constructed
on plots of land with a right of ownership (Hak Milik), HGB or Hak Pakai on State-owned land. For a plot of
land with HPL, such right must first be converted to a HGB for the construction of multi-storey offices,
residential or retail buildings on it. Under Indonesian law, strata title is a legal title to the building property
and common property, common area and common land of which all constitute an inseparable part to the
strata title ownership
The right of strata title ownership may be owned by an individual, a corporation established under
Indonesian Law and domiciled in Indonesia or foreigners depending on the title of the land where a strata
title building is built. For strata title ownership, a certificate for the right of strata title ownership is issued.
Strata title buildings including the underlying common land and the right of strata title ownership may be put
as encumbrance with (a) Hak Tanggungan, if the title of the land is Hak Milik or, HGB and Hak Pakai of
state-owned land, or (b) fiduciary security, if the title of the land is Hak Pakai on state-owned land. A strata
title building may only be sold after the a regional government grants the occupation permit (Iljin layak
huni).
The term of the strata title, together with its extension, depends on the title of the underlying common land
(i.e. Hak Milik, HGB and Hak Pakai) that has been issued.
The process of obtaining strata title certificates commences with the construction of the strata title building.
Prior to construction, the developer must obtain a building licence from a local government. The
application form must indicate the purpose of the use of the strata title i.e for residential or non
residential or both. Aside from the building licence, the developer must prepare the specification
clearly showing the boundaries of each strata title unit, common area, common land and common
property and their proportional ratio value which must be authorised by the second level of local
government. If the specification provides the necessary details and is authorised by the local
government, the local government will issue the building licence and the developer may begin
construction of the strata title buildings. The specification will be used as the basis for preparing the
separation deed for the strata title.
Upon completion of the construction of the strata title the developer must obtain the occupation permit.
The local government will issue the occupation permit after conducting an inspection of the architecture,
construction, installation and other supporting facilities of the strata titles building. The next step is to
prepare a separation deed which shows a drawing and description of the separation between the units and
common area, the common land and the common property, as well as the vertical and horizontal
boundaries. The separation deed is subject to approval by the second level of local government and
will be used as the basis for issuing the strata titles certificates. After the separation deed is certified and
registered and the local land office issues the land book of the strata title, the strata title certificate for each
unit is issued under the registration name of the developer. The strata titles certificate consists of (a) an
excerpt of the land book of the strata title, (b) an excerpt of the measurement letter/the drawing layout of the
common land and (c) the drawing layout of the strata titles showing their level and location.
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After the issuance of the strata titles certificates, the underlying common land title certificate is retained
and deposited in the local land office with a record that the strata title certificates have been issued. The
strata title can only be transferred to other third party once the strata title certificate is issued.
The transfer of strata title certificate for the first time is carried out between the developer and purchaser by
entering into a sale and purchase deed before the land deed official. The land official deed must be
registered at the local land office, together with, among others, the strata title certificate registered under
the name of the developer and the rules and regulations of the residents’ association. Having examined all
the required supporting documents, the local land office will record the transfer of title and annotate the
name of the developer into the name of the purchaser in the strata title certificate as the new owner of the
strata title.
Build, Operate and Transfer or BOT. BOT is a form of right to utilise a piece of land, wherein a private
entity receives certain rights from the land owner to finance, design, construct and operate a facility on the
land for a specified period, after which the ownership of the building is transferred with the land back to the
land owner.
A BOT Scheme is a common structure in Indonesia for construction of commercial buildings where the
land owner owns the relevant BOT Land. Under the BOT Scheme, the BOT Grantor agrees to grant certain
rights over the BOT Land based on the BOT Agreement to the BOT Grantee. The BOT Grantee can
develop the site subject to the relevant approvals and then operate the buildings constructed on the land
for the certain use, such as retail shopping centre developments, for a particular period of time as
stipulated in the BOT Agreement. For the right to utilise the BOT Land, the BOT Grantee is obliged to pay a
certain compensation to the BOT Grantor as stipulated in the BOT Agreement. The period of BOT
Agreements is subject to the parties’ agreement but commonly ranges from 20 to 30 years and may be
extended upon agreement of both parties. Upon the expiry of the term of the BOT Agreement, the BOT
Grantee must return the BOT Land together with the improvements without either party paying any form of
compensation to the other.
The BOT Scheme and cooperation arrangement is essentially a contractual arrangement and governed by
Indonesian Civil Code Contract Law. Pursuant to Article 1338 of the Indonesian Civil Code the contracting
parties are free to arrange their relationship in the BOT Agreement or Cooperation Agreement (freedom of
contract) subject to, among others, the prevailing laws and regulations, the good faith of the contracting
parties and public policy principles.
During the term of the BOT Agreement, the BOT Grantee has full rights to use the BOT Land and buildings
as agreed between the parties, including to operate the buildings as shopping mall, to receive rent from
tenants occupying the building and to appoint parties to conduct activities on or to the BOT land and
premises such as building managers in the case of retail shopping centre developments.
Lease Agreement. The right to use land and buildings, as is similar in many other jurisdictions can also
be granted through lease-hold arrangements. In general, no limitation on citizenship should apply under
this arrangement pursuant to the principle of freedom of contract as set out above.
Share Ownership. A foreign indirect ownership of land and building through a PMA Company scheme
may also provide the rights of a foreign shareholder, such as LMIR Trust, in the Property Companies to
enjoy the beneficial benefits from the Property Companies owning the Property. Indonesian law deems a
PMA Company as an Indonesian legal person and as such, a PMA Company has all the rights granted to
Indonesian legal persons including to own, manage and operate property developments. The rights of
such foreign shareholders are protected by Law No. 25 Year 2007, regarding Investment and Law No. 1
Year 1995 regarding Company Law. Such relevant protections include the repatriation guarantee on profits
obtained by the Property Companies and acknowledgement as a shareholder of the Property Companies
with the rights and obligation to be represented on the Board of Directors and Board of Commissioners.
The licence of a PMA Company is issued by the Capital Investment Board (BKPM).
REGULATION ON THE DEVELOPMENT AND USE OF LAND
Before a parcel of land can be used for certain purposes, such as housing and its related facilities or
shopping complex, an environmental impact analysis must be carried out for the proposed project.
Thereafter, such person, or the contractor who is responsible for the construction as instructed and
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Overview of relevant laws and regulations in Indonesia
authorised by the land owner, shall obtain a building licence / Izin Mendirikan Bangunan (“IMB”) from the
local regional government.
After that, the person may commence the construction or development of the land including the clearance
and preparation for the construction of infrastructure including drainage system, roads, landscaping,
street lighting, electricity and telephone cables. As the constructions may be conducted in various phases,
an IMB must be obtained for each phase to construct building(s) on top of the land, which is already
outfitted with the infrastructure as referred above.
The development of a housing complex must also comply with the requirement of procurement for public
and social facilities which shall be provided for the public benefit such as schools, sport facilities, places of
worship (e.g. mosques, churches), markets, parks, playgrounds and others.
TRANSFER OF THE PROPERTY
The transfer of property is done through a deed of transfer made before the local land deed officer. There
will be certain taxes payable by both the vendor and the purchaser before a deed of transfer can be
executed. The current rate of tax is 5.0% of the transfer amount or the valuation used for Land and Building
tax purposes, whichever is the higher, and such tax is payable by both the vendor and the purchaser.
Following the signing of such deed of transfer, the Land Deed Official (Pejabat Pembuat Akta Tanah, or
“PPAT”) who is normally a local notary will then submit an application to the national land office where the
property is located, to register the name of the new owner in the Land Book at such National Land Board
(Badan Pertanahan Negara; or “BPN”) as well as on the Land Certificate.
The abovementioned procedures are also applicable for the transfer of Strata Title interests in property.
Under the present regulations, a developer can only transfer or sell units or offices in such a building after
the Strata Title (Hak Milik Atas Satuan Rumah Susun) over the Hak Milik / HGB / Hak Pakai Atas Tanah
Negara and Hak Pengelolaan titles of the land where the building is constructed has been issued. Once
this has been issued, the developer may apply for separation of the common areas. The application must
also include detailed boundaries of each unit or office in the form of sketch plans. A certificate of ownership
rights in a unit or office is issued to each of the transferees upon application. The ownership rights in a unit
or office also include rights over the common areas, which together constitute an inseparable part of the
unit or office concerned.
The property under the BOT Scheme is not allowed to be transferred to a third party since the BOT
Grantee must deliver the property to the BOT Grantor at the expiry of the BOT Agreement without any
compensation. However, the interest of the properties under the BOT Scheme can be transferred by
assignment of rights under the BOT Agreement or by way of transfer of shares of the shareholders of the
BOT Grantee.
In accordance with the Indonesian law, the assignment of rights under the BOT Agreement will require
acknowledgment or consent from the BOT Grantor. The BOT Agreements do not provide provisions
regarding the party who may receive the assignment, except for The Plaza Semanggi BOT Agreement
which specifically states that the assignment may be designated to (i) other third parties or banks or
financial institutions who finance the construction or (ii) other third party appointed by them, provided that
the BOT Agreement will bind the transferee.
With respect to the transfer of shares of the shareholders of the BOT Grantee, except for the Cibubur
Junction BOT Agreement which requires prior consent from the BOT Grantor, the BOT Agreements are
silent on the consent for transfer of shares of the shareholders of the BOT Grantee. In the absence of an
express provision of the transfer of shares in the BOT Agreements, the transfer of shares of the
shareholders of the BOT Grantees is not prohibited.
MORTGAGE OF THE PROPERTY
Subject to the type of land rights and provisions of the relevant agreements, such as the BOT Agreement,
the Properties may be used as a security and therefore encumbered with a Mortgage (Hak Tanggungan).
The Mortgage shall be set out in a deed made before a local land deed officer and registered at the relevant
national land office. As evidence of the mortgage, BPN will make a notation of the Land Book noting the
mortgage and issue a mortgage certificate.
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REGULATION OF THE INDONESIAN ENVIRONMENTAL LAWS AND REGULATIONS
Environmental protection in Indonesia is governed by various laws, regulations and decrees of which the
Properties are subject, Under the Decree of State Minister for Environmental Affairs No. 17/2001 dated
May 22, 2001 concerning Business and/or Action Plans which must be completed with Analysis of
Environmental Impact, an Analysis of Environmental Impacts must be conducted on some of the
Properties to study the major and significant impacts on businesses and/or activities planned in a
particular environment which will be needed for the process of making decisions on the execution of
the businesses and/or activities. Pursuant to Government Regulation No. 27 of 1999 dated May 7, 1999
concerning Analysis of Environmental Impacts, the Analysis of Environmental Impacts constitutes a
requirement which must be fulfilled to obtain a license to conduct a business’ and/or activity from the
competent authority. An Assessment Committee formed by the Indonesian government will evaluate the
Analysis of Environmental Impacts based on the framework of reference, the environmental impact
assessment report, or AMDAL report, an environmental management plan (“RKL”) and an environmental
monitoring plan (“RPL”). A framework of reference is the scope of the analysis of environmental impacts
which will be the result of scope-delineation. AMDAL is a careful and in-depth study of the major and
significant impacts of a business and/or activity plan. RKL is a plan to handle the major and significant
impacts on the environment as the consequence of a business and/or activity plan. RPL is a plan to monitor
the components of the environment exposed to the major and significant impacts as the consequence of a
business and/or activity plan.
For other business plans which do not have to be completed with the AMDAL document, an Environment
Management Efforts (“UKL”) and Environment Monitoring Efforts or UPL would have to be prepared.
Under Law No. 23 of 1997 dated September 19, 1997 concerning Environmental Management, the
Properties are also subject to regulations relating to the management of certain materials and waste and
are required to obtain a licence in order to operate, and to reduce, process and accumulate such waste .
Such licences may be revoked and operations may be required to cease if the regulations relating to such
waste are violated.
REGULATION ON MODERN AND PRIVATE MARKET BUSINESS
Under the Decision of the Minister of Trade and Industry of the Republic of Indonesia No. 107/MPP/Kep/2/
1998, dated 27 February 1998 on the Provisions and Procedures for the Granting of Modern Market
Business Licences (“IUPM”), every company that engages in modern market business activities must be
obligated to obtain a Modern Market Business Licence.
Modern market is defined as markets established by government, private companies, and cooperatives in
the forms of malls, supermarkets, department stores and shopping centres, the management of which
must be carried out in a modern manner that prioritises comfort in shopping with a single management,
having relatively strong capital with use of fixed price labels. The IUPM is granted by the Minister of Trade
and Industry and is valid so long as the company engages in modern market activities. The IUPM is issued
based on the domicile or location of the modern market and the company must obtain a new IUPM if the
domicile or location of the modern market is changed.
The modern market is obliged to cooperate with small and medium scale enterprises and cooperatives and
traditional markets under a partnership pattern. If it fails to do this, a written warning letter will be given by
the Directorate General of Domestic Trade and the IUPM can be frozen for 6 months period as of the
issuance of the warning letter.
A Modern Market company that has obtained an IUPM is obliged to submit a report once every 6 months at
the latest on 15 July and 15 January to the Director General of Domestic Trade though the Minister of Trade
and Industry may from time to time request the company to submit a report on its business activities. A
written warning will be given to a modern market company that has obtained an IUPM if, among other
things, it does not submit the periodical report or carries out business that is not in accordance with its
IUPM. The IUPM can be revoked if it is obtained on the basis of incorrect or forged information, or if on the
lapse of the period of the warning letter the company has not performed its obligations required above the
modern market company or has been found guilty by a final and binding court decision of violation of
Intellectual Property or of committing a criminal offence.
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Overview of relevant laws and regulations in Indonesia
Further, pursuant to Regional Regulation of DKI Jakarta Province No. 2 of 2002, dated 28 June 2002
regarding Private Markets in DKI Jakarta Province, every operation of a private market must obtain written
approval from the Governor of DKI Jakarta. Private markets includes stores, malls, supermalls, plazas and
shopping centres. The private market operational licence is valid as long as the company still engages in
the private market activities, provided that the registration must be conducted once every five years. The
private market activities must include the partnership formation of a cooperation of small scale enterprises
or cooperatives, paying tax and retribution obligations, and informing the DKI Jakarta Governor in writing if
the private market activities are no longer conducted or are transferred to other parties.
Any individual or company that engages in private market activities without obtaining the licence will be
sentenced to imprisonment for a maximum of three months, or will be fined a maximum of Rp. 5,000,000
and or will receive administrative sanctions such as the temporary closing of the private market location.
REGULATION ON TRANSFER OF SHARES
On 16 August 2007, the Indonesian government enacted Law No. 40 of 2007 on Limited Liability Company
(the “New Company Law”). Based on the New Company Law, there are two approaches on the transfer of
shares, i.e., a transfer of shares and acquisition.
Transfer of Shares
A transfer of shares is conducted by way of executing a deed of transfer of shares. A copy of the deed of
transfer of shares must be provided to the company. After the execution of the deed of transfer of shares,
the Board of Directors of the company must register every transfer of shares (including the date of transfer)
in the shareholders’ register and special register, and must notify any changes regarding the shareholders
to the Minister of Law and Human Rights (“MOLHR”) to be recorded in the Company Registry within
30 days after the date of the registration of the transfer of shares.
The New Company Law stipulates that if the Board of Directors does not notify the MOLHR of such transfer
of shares, the MOLHR may reject the subsequent approval or notification which will be submitted to the
MOLHR based on the shareholding composition and the name of the new shareholders. In practice, the
notification on the transfer of shares will be conducted by a notary through an online system. The MOLHR
will issue a receipt of notification once the MOLHR receives such notice.
In addition, transfers of shares in public companies are subject to laws and regulations applicable to public
companies.
Acquisition:
An acquisition is defined as a share acquisition which results in a change of control in the company. The
New Company Law differentiates the acquisition through the Board of Directors of the target company or
directly through the shareholders.
If the acquisition will be conducted through the Board of Directors, the Board of Directors of the target
company and the acquiring company must prepare an acquisition plan, which should contain at least the
following information:
(a)
name and domicile of the target company and the acquiring company;
(b)
reasons and explanations from the Board of Directors of the target company and the acquiring
company;
(c)
financial statements (comprising at least the balance sheet in the preceding financial year
consolidated with the balance sheet in the previous financial year, profit and loss statement from
the relevant financial year, cash flow statement, and equity movement report including notes on the
financial statements) of each the acquiring company and the target company;
(d)
procedures for valuation and conversion of shares of the target company to the shares to be sold in
exchange for the sale of shares, if the payment is made by way of exchange of shares;
(e)
number of shares to be acquired;
(f)
source of funding;
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Overview of relevant laws and regulations in Indonesia
(g)
pro forma balance sheet of the acquiring company prepared in accordance with the prevailing
Indonesian GAAP;
(h)
method for settling the rights of shareholders who disagree with the acquisition plan;
(i)
method for settling the status, rights, and obligations of the members of the Board of Directors, the
Board of Commissioners, and employees of the target company;
(j)
estimated timeline for completing the acquisition, including timeline to give an authorization for the
transfer of shares from the shareholders to the Board of Directors;
(k)
draft amendments to the Articles of Association of the target company as a result of the acquisition (if
these are required).
The requirement to prepare this acquisition plan does not apply to acquisitions that are conducted directly
through the shareholders.
If the acquisition is conducted through the Board of Directors, the Board of Directors of the acquiring
company should do the following not later than 30 days prior to the date of notice of Extraordinary General
Meeting of Shareholders (EGMS):
(a)
announce the summary of the acquisition plan in at least one Indonesian national newspaper; and
(b)
announce the acquisition plan in writing to the employees.
The provision on such announcement also applies to acquisitions conducted directly through the
shareholders.
Following the announcement, creditors may file an objection with the company within 14 days after the
announcement. If there is any objection that cannot be settled until the date of the EGMS, that objection
must be presented to the EGMS for resolution. Further, pursuant to the New Company Law, the acquisition
cannot be completed if the objections of the creditors have not been resolved.
The New Company Law explictly states that the obligation of the announcement above is applied for the
acquiring company. However, some legal practicioners intepret that the announcement requirement also
applies to the target company.
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Taxation
SINGAPORE TAX IMPLICATIONS
The following summary of certain Singapore income tax consequences of the purchase, ownership and
disposition of the Units is based upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (possibly with retroactive effect). The summary does not purport to be a comprehensive
description of all of the tax considerations that may be relevant to a decision to purchase, own or dispose of
the Units and does not purport to apply to all categories of investors, some of which may be subject to
special rules. Investors should consult their own tax advisers concerning the application of Singapore
income tax laws to their particular situations as well as any consequences of the purchase, ownership and
disposition of the Units arising under the laws of any other taxing jurisdiction.
Taxation of LMIR Trust
LMIR Trust is liable to Singapore income tax on:
• income accruing in or derived from Singapore; and
• unless otherwise exempt, income derived from outside Singapore which is received in Singapore or
deemed to have been received in Singapore by the operation of law.
Dividends from the Target Singapore SPCs
LMIR Trust’s income will comprise substantially dividends received from its holding of ordinary shares in
the Target Singapore SPCs. Provided that the Target Singapore SPCs are tax residents of Singapore for
income tax purposes, these dividends will be one-tier (tax-exempt) dividends and hence exempt from tax in
the hands of the Trustee.
Gains on disposal of shares
Singapore does not impose tax on capital gains. In the event that LMIR Trust disposes of its ordinary
shares or redeemable preference shares or both in the Target Singapore SPCs, gains arising from such a
disposal will not be liable to Singapore income tax unless the gains are considered income of a trade or
business. The gains may also be liable to Singapore income tax if the shares were acquired with the
intention or purpose of making a profit by sale and not for long-term investment purposes.
Gains arising from the sale of the ordinary shares or redeemable preference shares or both in the Target
Singapore SPCs, if considered to be trading gains, will be taxable on the Trustee.
Redemption of redeemable preference shares in the Target Singapore SPCs
Any proceeds received by LMIR Trust from the redemption of its redeemable preference shares in the
Target Singapore SPCs at the original cost of the redeemable preference shares are capital receipts and
hence not taxable on the Trustee.
Taxation of the Singapore SPCs
The Singapore SPCs are liable to Singapore income tax on:
• income accruing in or derived from Singapore; and
• unless otherwise exempt, income derived from outside Singapore which is received in Singapore or
deemed to have been received in Singapore by the operation of law.
Dividends from the Indonesian SPCs
Provided that the Singapore SPCs are tax residents of Singapore for income tax purposes, any dividends
received in Singapore by the Singapore SPCs from the Indonesian SPCs will be exempt from Singapore
income tax under Section 13(8) of the Income Tax Act, if the following conditions are met:
• in the year the dividends are received in Singapore, the headline corporate tax rate in Indonesia is at
least 15.0%;
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Taxation
• the dividends have been subject to tax in Indonesia; and
• the Singapore Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to the
Singapore SPCs.
Based on the current tax laws in Indonesia, dividends paid by the Indonesian SPCs out of their income
from the letting of the Properties will meet the aforesaid conditions (see —“Indonesian Tax Implications”).
Interest from the Indonesian SPCs
LMIR Trust has obtained approval of the IRAS to exempt the interest received by the relevant Singapore
SPCs on the loans extended to the Indonesian SPCs from Singapore income tax under Section 13(12) of
the Income Tax Act. This approval is subject to the relevant Singapore SPCs satisfying certain stipulated
conditions, including the condition that the full amount of the remitted interest, less attributable expenses,
must be distributed to LMIR Trust.
Gains on disposals of shares
Singapore does not impose tax on capital gains. In the event that the Singapore SPCs dispose of their
ordinary shares in the Indonesian SPCs, gains arising from such a disposal will not be liable to Singapore
income tax unless the gains are considered income of a trade or business. The gains may also be liable to
Singapore income tax if the shares were acquired with the intention or purpose of making a profit by sale
and not for long-term investment purposes.
Gains arising from the sale of ordinary shares in the Indonesian SPCs, if considered to be trading gains,
will be assessed to tax on the Singapore SPCs.
Repayment of loans by the Indonesian SPCs
Any proceeds received by the Singapore SPCs from repayment of principal on the loans by the Indonesian
SPCs are capital receipts and hence not taxable on the Singapore SPCs.
Taxation of Unitholders
Distributions by LMIR Trust
Subject to LMIR Trust’s distribution policy (see “Distributions”), LMIR Trust’s distributions will mainly be
made out of the following receipts:
• one-tier (tax-exempt) dividends received from the Target Singapore SPCs ( the “tax-exempt
income”); and
• capital receipts from the redemption of redeemable preference shares in the Target Singapore SPCs.
Distributions out of tax-exempt income
Unitholders will be exempt from Singapore income tax on distributions made out of LMIR Trust’s taxexempt income.
For this purpose, the amount of tax-exempt income distributions that LMIR Trust can distribute for a
distribution period will be to the extent of the amount of tax-exempt income that it has received and is
entitled to receive in that distribution period.
Distributions made out of any amount of Distributable Income for a distribution period which LMIR Trust
received or is entitled to receive as its own tax-exempt income after the end of that distribution period will
be treated as capital distributions and the tax treatment set out under “Distributions out of capital receipts”
will apply. The amount of such tax-exempt income may be used to frank tax-exempt income distributions
out of Distributable Income for subsequent distribution periods.
Distributions out of capital receipts
Unitholders will not be subject to Singapore income tax on distributions made by LMIR Trust out of its
capital receipts, i.e. amounts received from the redemption of redeemable preference shares in the Target
Singapore SPCs. Such distributions will be treated as returns of capital for Singapore income tax
purposes. For Unitholders who hold the Units as trading or business assets and are liable to
Singapore income tax on gains arising from disposal of the Units, the amount of such distributions will
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Taxation
be applied to reduce the cost of the Units for the purpose of calculating the amount of taxable trading gain
when the Units are disposed of. If the amount exceeds the cost or the reduced cost of the Units, as the case
may be, the excess will be subject to tax as trading income of such Unitholders.
Distributions out of gains from the disposal of shares in the Target Singapore SPCs
Distributions made out of gains from the disposal of shares in the Target Singapore SPCs, that is if the
Manager exercises its discretion to distribute such gains, will:
• not be assessable to tax on the Unitholders if the gains are determined to be capital gains for Singapore
income tax purposes, unless the distributions are considered gains or profits of a trade or business
carried on by the Unitholder, for example, if the Units are held as trading assets; and
• not be subject to further Singapore income tax in the hands of Unitholders if the gains are determined to
be trading gains for Singapore income tax purposes. Tax on such trading gains will be assessed on the
Trustee.
Disposal of Units
Singapore does not impose tax on capital gains. Any gains on disposal of the Units are not liable to
Singapore income tax provided the Units are held as investment assets. Where the Units are held as
trading assets, any gains on disposal of the Units are liable to Singapore income tax under Section 10(1)(a)
of the Income Tax Act. Where the Units are acquired with the intention or purpose of making a profit by sale
and not with the intention to be held as long-term investments, any gains on disposal of the Units could be
construed as “gains or profits of an income nature” liable to tax under Section 10(1)(g) of the Income Tax
Act.
Stamp duty
Stamp duty will not be imposed on instruments of transfers relating to the Units. In the event of a change of
trustee of LMIR Trust, stamp duty on any document effecting the appointment of a new trustee and the
transfer of the trust assets from the incumbent trustee to the new trustee will be charged at a nominal rate
not exceeding S$10.00 as specified under Article 3(g)(ii) of the First Schedule to the Stamp Duties Act,
Chapter 312 of Singapore.
INDONESIA TAX IMPLICATIONS
Tax implications on the Retail Malls portion of the LMIR Trust Structure:
On the transfer of shares in Indonesian SPCs to Singapore SPCs
Any capital gain from the transfer of shares in Indonesian SPCs to Singapore SPCs is subject to tax
pursuant to Article 17 of Income Tax Law No. 17/2000 with a maximum rate of 30.0% and the liability for
such capital gains tax is the sole obligation of the Vendors.
Tax implication for the Tenants
On the Rental Payments to the Indonesian SPCs
• Article 4(2) Withholding Income Tax
The payment of rental on land and/or buildings leased by the Tenants to the Indonesian SPCs will be
subject to a 10.0% final withholding income tax on the gross value of the land and/or buildings rental.
However, if the tenants of the Retail Malls are not appointed tax withholder (i.e. individuals), then the final
income tax must be paid directly by the Indonesian SPCs (not using the withholding system).
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Taxation
Tax implication for the Indonesian SPCs
On the rental payments received from the Tenants
• Corporate Income Tax
The rental income received from the Tenants will be subject to final income tax (Withholding article 4(2)
Income Tax) at the rate of 10.0%. Because the rental income has already been subjected to the final
income tax, the said income should not be combined with other non-final income in calculating the
corporate income tax due for the corresponding tax year.
The imposition of final income tax to the rental income treated as income for the Indonesian SPCs and
the income tax of 10.0% withheld by the Tenants will be treated as payment for the corporate income tax
due for the respective Indonesian SPCs. The imposition of final income tax does not mean that the
income from the lease of land and/or buildings does not need to be reported in the Annual Corporate
Income Tax Return (SPT Tahunan PPh Badan) of the Indonesian SPCs. The rental income must be
reported in the Indonesian SPC’s returns, however it should not be combined with other non-final
income in calculating the income tax due for the corresponding tax year.
• VAT on the Rental of Land and/or Building
The Indonesian SPCs must charge 10.0% VAT on the rental of land and/or building (taxable service) to
the Tenants.
On the payment of Management Fee to the Property Manager
• Article 23 withholding income tax
The Indonesian SPCs must withhold article 23 income tax at the rate of 4.5% from the payment of
management fees to the Property Manager. This 4.5% withholding tax will be treated as prepaid tax for
the Property Manager.
Please be advised that according to Article 13 of Law No. 16/2000 regarding General Tax Provisions and
Procedures, the Directorate General of Taxation shall have the authority to conduct audit or verification
within a 10 years period after the end of fiscal year or fiscal period.
Tax implications on the Retail Spaces portion of the LMIR Trust Structure
Tax implication for the Master Lessee
On the transfer of title of land and/or buildings
• Capital Gains Tax
Any capital gain received by the Master Lessee from the transfer of title of land and/or buildings (i.e.,
Retail Spaces) to the Indonesian SPCs is subject to tax pursuant to Article 17 of Income Tax Law No. 17/
2000 with a maximum rate of 30.0% and the liability for such capital gains tax is the sole obligation of the
Master Lessee.
• Income Tax on the Transfer of Title of Land and/or Buildings
The transfer of title of Land and/or Buildings by the Master Lessee will be subject to 5.0% income tax as
stipulated by Government Regulation No. 79/1999, which can be treated as tax credit in calculating the
amount of tax due for corporate income tax for the Master Lessee.
• VAT
Considering that the Master Lessee is a Taxable Entrepreneur, the Master Lessee needs to charge
10.0% VAT on the transfer. This VAT will be treated as input tax for the Indonesian SPCs and will be
offset against Indonesian SPCs’ output tax (i.e. VAT charged by the Indonesian SPCs to the Master
Lessee on the rental fee) to arrive at the amount of VAT due to the state treasury.
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Taxation
On the rental payments to the Indonesian SPCs
• Article 4(2) Withholding Income Tax
The payment of rental on land and/or buildings leased by the Master Lessee to the Indonesian SPCs will
be subject to 10.0% final withholding income tax on the gross value of the land and/or buildings rental.
• VAT
Given the fact that the Master Lessee is a Taxable Entrepreneur, then the 10.0% VAT charged by the
Indonesian SPCs on the rental payments should be treated as input tax for the Master Lessee (to be
offset against its output tax to arrive at the amount of VAT due to the state treasury).
Tax implication for the Indonesian SPCs
On the transfer of title of land and/or buildings
• Property Title Acquisition Duty
As stipulated by Law No. 20/2000, the Indonesian SPCs must pay the Property Title Acquisition Duty at
the rate of 5.0% from the amount of the actual selling price or from the sales value of tax object
(predetermined value for tax calculation purposes), whichever is higher.
• VAT
Considering that the Indonesian SPCs are Taxable Entrepreneurs, then the 10.0% VAT charged by the
Master Lessee on the transfer should be treated as input tax for the Indonesian SPCs (to be off set
against the output tax from the rental fee to arrive at the amount of VAT due to the state treasury).
On the rental income received from the Master Lessee
• Corporate Income Tax
The rental income received from the Master Lessee will be subject to final withholding income tax
(Withholding article 4(2) Income Tax) at the rate of 10.0% because the rental income has already
subjected to the final income tax, then the said income should not be combined with other non-final
income in calculating the corporate income tax due for the corresponding tax year.
The rental income received from the Master Lessee will be treated as income for the Indonesian SPCs
and the income tax of 10.0% withheld by the Master Lessee will be treated as payment for the corporate
income tax due for the respective Indonesian SPCs. The imposition of final income tax does not mean
that the income from the lease of land and/or buildings does not need to be reported in the Annual
Corporate Income Tax Return (SPT Tahunan PPh Badan) of the Indonesian SPCs. The rental income
must be reported in the annual tax return, however, the income should not be combined with other nonfinal income in calculating the income tax due for the corresponding tax year.
• VAT
The Indonesian SPCs must charge 10.0% VATon the rent of land and/or building (taxable service) to the
Master Lessee. This VATshould be treated as input tax for the Master Lessee and to be offset against its
output tax to arrive at the amount of VAT due to the state treasury.
Payment of Shareholders’ Loans and related interest from Indonesian SPCs to Singapore SPCs
Tax implications for the Indonesian SPCs
• The Repayment of Principal from Shareholders’ Loans
The repayment of principal from the shareholder’s loans will not be subject to any form of Indonesian tax
as there are no thin capitalisation rules in Indonesia.
• The Payment of Interest on Shareholders’ Loan
The Indonesian tax rules generally require a twenty percent (20%) tax to be withheld on the payment of
interest from an Indonesian taxpayer to an offshore tax resident. Under the tax treaty between
Singapore and Indonesia, the rate of withholding tax is reduced to ten percent (10%) on the
payment of interest to Singapore tax resident beneficial owner of the interest. The reduced rate is
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Taxation
available to a Singapore company only if the company submits an original copy of its certificate of
domicile to the Indonesian payor prior to the payment of the interest.
On 7 July 2005, the Directorate General of Taxation in Indonesia issued a circular letter indicating that
the benefits of Indonesia’s tax treaties would not be available to a recipient of Indonesian-sourced
income who was not the beneficial owner of such income. The circular letter further elaborated that a
“special purpose vehicle” which is a “conduit company”, “paper box company”, “pass-through company”
or any similar form of entity would not qualify as the beneficial owner of payments received by it. It
remains uncertain as to how the Indonesian tax authorities will decide whether or not the Singapore
SPCs are the beneficial owners of interest received from the Indonesian SPCs.
In the event that the Singapore SPCs were viewed by the Indonesian tax authorities as conduit
companies or pass-through companies, and therefore not the beneficial owners of interest received
from the Indonesian SPCs, the Unitholders of LMIR Trust should in that case be viewed as the beneficial
owners of the interest. In that case it should still be possible to take the position that the reduced rate of
withholding tax is applicable, to the extent that the Unitholders are tax resident in Singapore or any other
jurisdiction with the same tax rate under their respective tax treaty.
Payment of dividends from Indonesian SPCs to Singapore SPCs
Tax implications for the Indonesian SPCs
• VAT on the Payment of Dividends
There will be no VAT on the payment of dividends.
• Article 26 Withholding Income Tax on the Payment of Dividends
The Indonesian tax rules generally require a 20.0% tax to be withheld on the payment of a dividend from
an Indonesian taxpayer to an offshore tax resident. Under the tax treaty between Singapore and
Indonesia, the rate of withholding tax is reduced to 10.0% on the payment of a dividend to Singapore tax
resident beneficial owner of the dividend. The reduced rate is available to a Singapore company only if
the company submits an original copy of its certificate of domicile to the Indonesian payor prior to the
payment of the dividend.
As stated above, the Directorate General of Taxation in Indonesia issued a circular letter indicating that
the benefits of Indonesia’s tax treaties would not be available to a recipient of Indonesian-sourced
income who was not the beneficial owner of such income. The circular letter further elaborated that a
“special purpose vehicle” which is a “conduit company”, “paper box company”, “pass-through company”
or any similar form of entity would not qualify as the beneficial owner of payments received by it. It
remains uncertain as to how the Indonesian tax authorities will decide whether or not the Singapore
SPCs are the beneficial owners of dividends received from the Indonesian SPCs.
In the event that the Singapore SPCs were viewed by the Indonesian tax authorities as conduit
companies or pass-through companies, and therefore not the beneficial owners of dividends received
from the Indonesian SPCs, the Unitholders of LMIR Trust should in that case be viewed as the beneficial
owners of the dividends. In that case it should still be possible to take the position that the reduced rate
of withholding tax is applicable, to the extent that the Unitholders are tax resident in Singapore or any
other jurisdiction with the same tax rate under their respective tax treaty.
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Plan of distribution
The Manager is making an offering of 645,469,000 Units (representing approximately 60.9 % of the total
number of Units in issue after the Offering) for subscription at the Offering Price under the Placement and
the Public Offer. 625,469,000 Units are being offered under the Placement and 20,000,000 Units are being
offered under the Public Offer. Units may be re-allocated between the Placement and the Public Offer at
the discretion of the Underwriters (subject to the minimum unitholding and distribution requirement of the
SGX-ST), such as in the event of excess applications in one and a deficit of applications in the other.
The Public Offer is open to members of the public in Singapore. Under the Placement, the Manager
intends to offer the Units by way of an international placement through the Underwriters to investors,
including institutional and other investors in Singapore. Subject to the terms and conditions set forth in the
Underwriting Agreement entered into among the Sponsor, the Manager, the Unit Lender and the
Underwriters on 9 November 2007, the Manager has agreed to effect for the account of LMIR Trust
the issue of, and the Underwriters have agreed to severally (and not jointly) subscribe, or procure
subscribers for, the number of Units, set forth opposite their respective names below.
Underwriters
UBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BNP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .
OCBC Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of Units
under the Offering
322,734,500
161,367,250
161,367,250
645,469,000
The Units are being offered at the Offering Price. The Offering Price per Unit under the Placement and the
Public Offer is identical. The Underwriters have agreed to subscribe and pay for, or procure the
subscription and payment for 625,469,000 Units at the Offering Price, less the Underwriting, Selling
and Management Commission to be borne by LMIR Trust. Lippo Strategic, as Unit Lender, will bear the
Underwriting, Selling and Management Commission in respect of any Units that are subsequently sold
pursuant to the exercise of the Over-allotment Option.
The Manager and the Sponsor have agreed in the Underwriting Agreement to indemnify the Underwriters
against certain liabilities.
The Underwriting Agreement also provides that the obligations of the Underwriters to subscribe and pay
for or procure the subscription or payment for the Units in the Offering are subject to the satisfaction of
certain conditions contained in the Underwriting Agreement.
The Underwriting Agreement may be terminated by the Underwriters at any time prior to payment being
made for the Units, upon the occurrence of certain events in accordance with the terms of the Underwriting
Agreement. If the Underwriters are released and discharged from their obligations under the Underwriting
Agreement, this Offering will be cancelled and any moneys received in connection with this Offering will be
returned to prospective investors without interest or any share of the revenue arising therefrom.
Subscribers of the Units may be required to pay brokerage (and if so required, such brokerage will be up to
1.0% of the Offering Price) and applicable stamp duties, taxes and other similar charges (if any) in
accordance with the laws and practices of the country of subscription, in addition to the Offering Price.
The Underwriters and their respective affiliates may engage in transactions with, and perform services for,
the Trustee, the Manager, the Sponsor and LMIR Trust in the ordinary course of business and have
engaged, and may in the future engage, in commercial banking and/or investment banking transactions
with the Trustee, the Manager, the Sponsor and LMIR Trust, for which they have received, or may in the
future receive, customary compensation.
OVER-ALLOTMENT AND STABILISATION
The Unit Lender has granted the Over-allotment Option to the Underwriters for the purchase of up to an
aggregate of 96,820,000 Units at the Offering Price. The number of Units subject to the Over-allotment
Option will not be more than 15.0% of the number of Units under the Placement and the Public Offer. The
Stabilising Manager may exercise the Over-allotment Option in full or in part, on one or more occasions, no
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Plan of distribution
later than the earliest of (i) the date falling 30 days from the commencement of trading of the Units on the
SGX-ST, (ii) the date when the Stabilising Manager has bought on the SGX-ST, an aggregate of
96,820,000 Units, representing not more than 15.0% of the total Units offered, to undertake stabilising
actions or (iii) the date falling 30 days after the date of adequate public disclosure of the final price of the
Units, solely to cover over-allotments of Units (if any) in connection with the Offering, subject to applicable
laws and regulations.
In connection with the Over-allotment Option, the Stabilising Manager and the Unit Lender, have entered
into a unit lending agreement (the “Unit Lending Agreement”) dated 9 November 2007 pursuant to
which the Stabilising Manager may borrow up to an aggregate of 96,820,000 Units from the Unit Lender for
the purpose of facilitating settlement of the over-allotment of Units (if any) in connection with the Offering.
The Stabilising Manager will re-deliver to the Unit Lender such number of Units which have not been
purchased pursuant to the exercise of the Over-allotment Option.
In connection with the Offering, the Stabilising Manager (or persons acting on behalf of the Stabilising
Manager) may, in consultation with the other Underwriters, over-allot or effect transactions which stabilise
or maintain the market price of the Units at levels which might not otherwise prevail in the open market.
Such transactions may be effected on the SGX-ST and in other jurisdictions where it is permissible to do
so, in each case in compliance with all applicable laws and regulations, including the SFA and any
regulations thereunder. However, there is no assurance that the Stabilising Manager (or persons acting on
behalf of the Stabilising Manager) will undertake stabilising action. Such transactions may commence on
or after the date of commencement of trading of the Units on the SGX-ST and, if commenced, may be
discontinued at any time and shall not be effected upon the earliest of (i) the date falling 30 days from the
date of commencement of trading of the Units on the SGX-ST, (ii) the date when the over-allotment of the
Units which are the subject of the Over-allotment Option has been fully covered (through the purchase of
the Units on the SGX-ST and/or the exercise of the Over-allotment Option by the Stabilising Manager, on
behalf of itself and the other Underwriters) or (iii) the date falling 30 days after the date of adequate public
disclosure of the final price of the Units. Any profit after expenses derived, or any loss sustained, as a
consequence of the exercise of the Over-allotment Option or the undertaking of any stabilising activities
shall be for the account of the Underwriters.
None of the Manager, the Sponsor, the Unit Lender or the Stabilising Manager makes any representation
or prediction as to the magnitude of any effect that the transactions described above may have on the price
of the Units. In addition, none of the Manager, the Sponsor, the Unit Lender and the Stabilising Manager
makes any representation that the Stabilising Manager will engage in these transactions or that these
transactions, once commenced, will not be discontinued without notice (unless such notice is required by
law). The Stabilising Manager will be required to make a public announcement via SGXNET in relation to
the total number of Units purchased by the Stabilising Manager, not later than 12 noon on the next trading
day of the SGX-ST after the transactions are effected. The Stabilising Manager will also be required to
make a public announcement through the SGX-ST in relation to the cessation of stabilising action and the
number of Units in respect of which the Over-allotment Option has been exercised not later than 8.30 a.m.
on the next trading day of the SGX-ST after the cessation of stabilising action.
LOCK-UP ARRANGEMENTS
Lippo Strategic (also the Unit Lender)
Lippo Strategic has on 9 November 2007 agreed with the Underwriters that it will not, without the prior
written consent of the Underwriters (such consent not to be unreasonably withheld or delayed), directly or
indirectly, offer, sell or contract to sell, grant any option to purchase, grant any security over, encumber or
otherwise dispose of, or enter into any transaction which is designed to, or might reasonably be expected
to, result in the sale or disposition (whether by actual sale or disposition or effective economic sale or
disposition due to cash settlement or otherwise) of (i) any or all of its direct interest in the Cornerstone Units
(or any securities convertible into or exchangeable for the Cornerstone Units or which carry any rights to
subscribe for or purchase Cornerstone Units) (adjusted for any bonus issue, consolidation or subdivision)
as at Listing Date during the First Lock-Up Period; and (ii) more than 50.0% of its direct interest in the
Cornerstone Units (or any securities convertible into or exchangeable for the Cornerstone Units or which
carry any rights to subscribe for or purchase Cornerstone Units) (adjusted for any bonus issue,
consolidation or subdivision) as at Listing Date during the Second Lock-Up Period.
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Plan of distribution
The restriction described in the preceding paragraph does not apply to:
• the transfer by Lippo Strategic of its direct interest in the Cornerstone Units to and between its whollyowned subsidiaries, provided that each such transferee gives a similar undertaking to the reasonable
satisfaction of the Underwriters for the remainder of the First Lock-Up Period and/or the Second
Lock-Up Period (as the case may be); and
• any securities lending arrangement with the Underwriters or any sale or transfer by Lippo Strategic of its
direct interest in the Cornerstone Units pursuant to exercise of the Over-allotment Option.
The restrictions on Lippo Strategic do not restrict any security granted over or encumbrance created over
the Cornerstone Units pursuant to any lending agreement to which Lippo Strategic is a party, provided that
the terms of any such security or encumbrance state that it may not be enforced and that Lippo Strategic
retains beneficial interest in these Cornerstone Units for the Lock-Up Periods.
Lippo Holdings Inc, Lippo Capital Limited, Lippo Cayman Limited and Lanius Ltd
Lippo Holdings Inc, Lippo Capital Limited, Lippo Cayman Limited and Lanius Ltd, have on 9 November
2007 each agreed with the Underwriters that it will not, without the prior written consent of the Underwriters
(such consent not to be unreasonably withheld or delayed), directly or indirectly, offer, sell or contract to
sell, grant any option to purchase, grant any security over, encumber or otherwise dispose of, or enter into
any transaction which is designed to, or might reasonably be expected to, result in the sale or disposition
(whether by actual sale or disposition or effective economic sale or disposition due to cash settlement or
otherwise) of (i) any or all of its direct or indirect interest in the Cornerstone Units (or any securities
convertible into or exchangeable for the Cornerstone Units or which carry any rights to subscribe for or
purchase Cornerstone Units) (adjusted for any bonus issue, consolidation or subdivision) as at Listing
Date during the First Lock-Up Period; and (ii) more than 50.0% of its direct or indirect interest in the
Cornerstone Units (or any securities convertible into or exchangeable for the Cornerstone Units or which
carry any rights to subscribe for or purchase Cornerstone Units) (adjusted for any bonus issue,
consolidation or subdivision) as at Listing Date during the Second Lock-Up Period.
The restriction described in the preceding paragraph does not apply to:
• the transfer by any one of Lippo Holdings Inc, Lippo Capital, Lippo Cayman Limited and Lanius Ltd of its
direct or indirect interest in the Cornerstone Units to and between its wholly-owned subsidiaries,
provided that each such transferee gives a similar undertaking to the reasonable satisfaction of the
Underwriters for the remainder of the First Lock-Up Period and/or the Second Lock-Up Period (as the
case may be); and
• any securities lending arrangement with the Underwriters or any sale or transfer of the direct interest in
the Cornerstone Units by Lippo Strategic pursuant to exercise of the Over-allotment Option.
MIPL, Mapletree Dextra Pte Ltd and Mapletree LM
MIPL, Mapletree Dextra Pte Ltd and Mapletree LM have on 9 November 2007 each agreed with the
Underwriters that it will not, without the prior written consent of the Underwriters (such consent not to be
unreasonably withheld or delayed), directly or indirectly, offer, sell or contract to sell, grant any option to
purchase, grant any security over, encumber or otherwise dispose of, or enter into any transaction which is
designed to, or might reasonably be expected to, result in the sale or disposition (whether by actual sale or
disposition or effective economic sale or disposition due to cash settlement or otherwise) of (i) any or all of
its direct or indirect interest in the Cornerstone Units (or any securities convertible into or exchangeable for
the Cornerstone Units or which carry any rights to subscribe for or purchase Cornerstone Units) (adjusted
for any bonus issue, consolidation or subdivision) as at Listing Date during the First Lock-Up Period; and
(ii) more than 50.0% of its direct or indirect interest in the Cornerstone Units (or any securities convertible
into or exchangeable for the Cornerstone Units or which carry any rights to subscribe for or purchase
Cornerstone Units) (adjusted for any bonus issue, consolidation or subdivision) as at Listing Date during
the Second Lock-Up Period.
The restriction described in the preceding paragraph does not apply to the transfer by MIPL, Mapletree
Dextra Pte Ltd and Mapletree LM of its direct or indirect interest in the Cornerstone Units to and between its
wholly-owned subsidiaries, provided that each such transferee gives a similar undertaking to the
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Plan of distribution
reasonable satisfaction of the Underwriters for the remainder of the First Lock-Up Period and/or the
Second Lock-Up Period (as the case may be).
The Manager
The Manager has agreed on 9 November 2007 with the Underwriters that it will not (and will not cause or
permit LMIR Trust to), directly or indirectly, without the prior written consent of the Underwriters (such
consent not to be unreasonably withheld or delayed):
• offer, issue, sell, contract to issue or sell, grant any option to purchase, grant security over, encumber or
otherwise dispose of, or enter into any transaction (excluding commitments for the sale and purchase of
additional properties, whether in the form of a sale and purchase agreement or a put and call option)
which is designed to, or might reasonably be expected to, result in the issuance, sale or disposition
(whether by actual issuance, sale or disposition or effective economic issuance, sale or disposition due
to cash settlement or otherwise) of any Units (or any securities convertible into or exchangeable for
Units or which carry rights to subscribe for or purchase Units) (adjusted for any bonus issue,
consolidation or subdivision); or make any announcement with respect to any of the foregoing
transactions other than as required by applicable laws or regulations during the First Lock-Up
Period; and/or
• during the First Lock-up Period deposit any Units (or any securities convertible into or exchangeable for
Units or which carry rights to subscribe for or purchase Units or part thereof) in any depositary receipt
facility.
The restriction described in the preceding paragraph does not apply to any Units to be issued to the
Manager in full or part payment of its fees under the Trust Deed.
SGX-ST LISTING
LMIR Trust has received a letter of eligibility from the SGX-ST for the listing and quotation of the Units on
the Main Board of the SGX-ST. The SGX-ST assumes no responsibility for the correctness of any
statements or opinions made or reports contained in this Prospectus. Admission to the Official List of the
SGX-ST is not to be taken as an indication of the merits of the Offering, LMIR Trust, the Manager or the
Units. It is expected that the Units will commence trading on the SGX-ST on a “ready” basis on or about
19 November 2007.
Prior to this Offering, there has been no trading market for the Units. There can be no assurance that an
active trading market will develop for the Units, or that the Units will trade in the public market subsequent
to this Offering at or above the Offering Price. (See “Risk Factors—Risks Relating to an Investment in the
Units—The Units have never been publicly traded and the listing of the Units on the Main Board of the
SGX-ST may not result in an active or liquid market for the Units”.)
Issue costs
The estimated amount of the costs in relation to the Offering and issuance of the Cornerstone Units of
approximately S$32.8 million based on the Offering Price (subject to the Over-allotment Option) includes
the Underwriting, Selling and Management Commission, professional and other fees and all other
incidental costs in relation to the Offering, which will be borne by LMIR Trust. A breakdown of these
estimated costs is as follows:
Estimated expenses
(S$’000)
(1)
Professional and other fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Underwriting, Selling and Management Commission . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous offering expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total estimated expenses of the Offering and issuance
of the Cornerstone Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
258
10,660
17,773
4,369
32,802
Plan of distribution
Note:
(1)
Includes financial advisory, solicitors’ fees and fees for the Independent Reporting Accountants, the
Independent Singapore Tax Adviser, the Independent Indonesian Tax Adviser, both of the
Independent Valuers and other professionals’ fees.
DISTRIBUTION AND SELLING RESTRICTIONS
No action has been or will be taken in any jurisdiction that would permit a public offering of the Units or the
possession, circulation or distribution of this Prospectus or any other offering or publicity material relating
to LMIR Trust or the Units in any country or jurisdiction (other than Singapore, where action for the purpose
is required). Accordingly, the Units may not be offered or sold, directly or indirectly, and neither this
Prospectus nor any other offering material, circular, form of application or advertisement in connection with
the Units may be distributed or published, in or from any country or jurisdiction except under circumstances
that will result in compliance with all applicable laws and regulations of any such country or jurisdiction.
Australia
This Prospectus does not constitute an offer of, or an invitation to purchase, the Units in or to any resident
of Australia, other than set out below.
Offers of Units under this Prospectus to investors in Australia are only made to those investors who are
“wholesale clients” under section 761G of the Corporations Act 2001 (Cth). If the Units are to be on-sold to
investors in Australia without a product disclosure statement within 12 months of issue of the Units, they
may only be on-sold to investors in Australia who are “wholesale clients” under section 761G of the
Corporations Act 2001 (Cth). This Prospectus does not and is not intended to constitute a prospectus or
product disclosure statement within the meaning of the Corporations Act 2001 (Cth) and neither this
Prospectus nor any other prospectus or product disclosure statement has been lodged or registered with
the Australian Securities and Investments Commission. No action has been taken by LMIR Trust that
would permit a public offering of the Units in Australia.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus
Directive (each, a “Relevant Member State”), with effect from and including the date on which the
Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation
Date”), an offer of any Units to the public may not be made in that Relevant Member State prior to the
publication of a prospectus in relation to the Units which has been approved by the competent authority in
that Relevant Member State or, where appropriate, approved in another Relevant Member State and
notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus
Directive, except that, with effect from and including the Relevant Implementation Date, an offer to the
public in that Relevant Member State of any Units may be made at any time:
• to legal entities which are authorised or regulated to operate in the financial markets or, if not so
authorised or regulated, whose corporate purpose is solely to invest in securities;
• to any legal entity which has two or more of (i) an average of at least 250 employees during the last
financial year, (ii) a total balance sheet of more than e43,000,000 and (iii) an annual net turnover of more
than e50,000,000, as shown in its last annual or consolidated accounts; or
• in any other circumstances which do not require the publication by LMIR Trust of a prospectus pursuant
to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer of Units to the public” in relation to any Units in
any Relevant Member States means the communication in any form and by any means of sufficient
information on the terms of the offer and any Units to be offered so as to enable an investor to decide to
purchase or subscribe for the Units, as the same may be varied in that Member State by any measure
implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive”
means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member
State.
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Plan of distribution
France
This Prospectus does not constitute an offer or invitation for the subscription or purchase of Units in
France. Neither this Prospectus nor anything contained herein shall form the basis of any contract or any
obligation of any kind whatsoever in France. Any person who is in possession of this Prospectus is hereby
notified that no action has or will be taken that would allow the offer and marketing of Units in France.
Accordingly, the Units may not be marketed, offered, sold or delivered in France, and neither the Units nor
any offering material relating to the Units may be distributed or made available in France, except as
permitted by French law and regulation.
Germany
The distribution of the Units has not been and will not be notified to the Bundesanstalt fur
Finanzdienstleistungsaufsicht and no documents or other information relating to the Units have been
and will be filed with, approved by or notified to the Bundesanstalt fur Finanzdienstleistungsaufsicht in
accordance with the German Investment Act (Investmentgesetz), the Securities Prospectus Act
(Wertpapierprospektgesetz) or any other present or future applicable laws in Germany and the Units
shall not be sold, distributed or promoted in Germany other than in compliance with the Investment Act, the
Securities Prospectus Act and any other applicable German laws and regulations.
Hong Kong
This Prospectus has not been registered and will not be registered as a prospectus under the Companies
Ordinance (Cap. 32 of the Laws of Hong Kong). The Units may not be offered or sold in Hong Kong by
means of any documents, other than to “professional investors” within the meaning of section 1 of Part 1 of
Schedule 1 to the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) (“SFO”) and in
accordance with the requirements under the SFO and any rules made under the SFO. No person may
have in its possession for the purposes of issue, or issue (in each case whether in Hong Kong or
elsewhere), any prospectus, notice, circular, brochure, advertisement, invitation or other document relating
to the Units which is directed at, or the contents of which are likely to be accessed or read by, the public in
Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to Units
which are or are intended to be disposed of (i) only to persons outside Hong Kong or (ii) only to
“professional investors” within the meaning of the SFO and in accordance with the requirements under
the SFO and any rules made under the SFO.
Indonesia
This Prospectus may not be distributed directly or indirectly in Indonesia or to any Indonesian entity or
Indonesian citizen (person), and the Underwriters, may not offer or sell, directly or indirectly, any Units in
Indonesia or to any Indonesian entity or Indonesian citizen (person), in a manner constituting a public
offering of the Units under the Indonesian Capital Markets Law and the applicable regulations of the
Capital Market Supervisory Agency.
Ireland
The Units described in this Prospectus are interests in a collective investment scheme which is not
supervised or authorised by the Irish Financial Regulator or approved by the Irish Financial Regulator to
market the Units in Ireland. Therefore, no advertising or marketing of Units may take place in Ireland
without the prior approval in writing of the Irish Financial Regulator. In addition, any sales or marketing of
Units in Ireland must take place in accordance with all applicable provisions of the Irish Investment
Intermediaries Act, 1995 (as amended), the Irish Market Abuse (Directive 2003/6/EEC) Regulations
2006 (as amended) and all other relevant laws, regulations and rules.
Italy
The offering of the Units has not been cleared by CONSOB (the Italian Securities Exchange Commission)
pursuant to Italian securities legislation or the Bank of Italy. Accordingly, no Units may be offered, sold or
delivered, directly or indirectly, nor may copies of this Prospectus nor any other documentation relating to
the Units be distributed or made available in Italy except (i) to professional investors, as defined under
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Plan of distribution
Article 31, second paragraph, of CONSOB Regulation No. 11522 of 1 July 1998, as amended
(“Regulation No. 11522”), in accordance with Article 100 and Article 30, second paragraph, of
Legislative Decree No. 58 of 24 February 1998, as amended (the “Financial Services Act”),
provided that such professional investors act in their capacity and not as depositories or nominees for
other person; or (ii) in circumstances which are exempted from the rules of solicitation of investments
pursuant to Article 100 of the Financial Services Act and Article 33, first paragraph, of CONSOB
Regulation No. 11971 of 14 May 1999, as amended (“Regulation No. 11971”).
In any event, the offering of the Units must be effected in compliance with all relevant Italian securities, tax
and exchange controls and any other applicable laws and regulations.
Accordingly, the Units may not be offered, sold or delivered and copies of this Prospectus or any other
documentation relating to the Units may not be distributed or made available in Italy unless such offer of
the Units or distribution or availability of copies of this Prospectus or any other documentation relating to
the Units in Italy is made: (i) by an investment firm, a bank or a financial intermediary permitted to conduct
such activities in Italy in accordance with Legislative Decree No. 385 of 1 September 1993, as amended
(the “Banking Act”) and the implementing instructions of the Bank of Italy, the Financial Services Act,
Regulation No. 11522, Regulation No. 11971 and any other applicable laws and regulations; (ii) in
compliance with Article 129 of the Banking Act and the implementing instructions of the Bank of Italy,
pursuant to which the issue or offer of securities in Italy is subject to prior notification to the Bank of Italy
unless an exemption, depending, inter alia, on the aggregate value of the securities issued or offered and
the features of the securities, applies; and (iii) in compliance with any other applicable notification,
requirement or limitation which may be imposed by CONSOB or the Bank of Italy. In any case, the Units
should not be placed, offered, sold, re-sold or delivered on a retail basis, either in the primary or the
secondary market, to any persons which are not professional investors and in any case to any individual
residing in Italy. Each person in Italy receiving this Prospectus acknowledges that it (i) is a professional
investor, as defined under Article 31, second paragraph, of CONSOB Regulation No. 11522 of 1 July 1998,
as amended, (ii) is acting in its capacity as a professional investor and not as a depository or nominee for
another person, and (iii) has agreed that it will not resell or deliver the Units purchased in this offering in
Italy to persons which are not professional investors and in any case it will not resell or deliver the Units
purchased in this offering to any individual residing in Italy.
Japan
The Units have not been and will not be registered under the Securities and Exchange Law of Japan (the
“Securities and Exchange Law”) and each of the Underwriters has agreed that it will not offer or sell any
securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as
used herein means any person resident of Japan, including any corporation or other entity organised under
the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of
Japan except pursuant to an exemption which will result on compliance with the Securities and Exchange
Law and any other applicable laws, regulations and guidelines promulgated by the relevant Japanese
governmental and regulatory authorities and which are then in effect.
The Netherlands
The offer of the Units is subject to the provisions of the Prospectus Directive referred to above in
“—European Economic Area”. The Units can only be offered in the Netherlands without the publication,
approval or notification of a prospectus in relation to the Units if an exemption applies. In the case of the
offering of the Units, an exemption applies in view of the fact that the Units are solely offered to professional
market parties within the meaning of the Exemption Regulation to the Act on the Supervision of the
Securities Transactions 1995 (Vrijstellingsregeling Wet toezicht effectenverkeer 1995).
The Manager is exempted from the obligation to obtain a licence within the meaning of the Act on the
Supervision of the Investment Institutions (Wet toezicht beleggingsinstellingen) as the Units may only be
offered, sold, delivered or transferred, directly or indirectly, solely to individuals or legal entitles that trade or
invest in investment products (beleggingsproducten) in the conduct of a profession or trade, including
banks, brokers and institutional investors, within the meaning of the Exemption Regulation to the Act on the
Supervision of the Investment Institutions (Vrijstellingsregeling Wet toezicht beleggingsinstellingen), as
amended from time to time.
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Plan of distribution
United Arab Emirates
The Units have not been and will not, directly or indirectly, be issued, offered, sold, delivered or publicly
promoted or advertised in the United Arab Emirates (the “UAE”) other than in compliance with any laws
applicable in the UAE governing the issue, offering, and/or sale, delivery or public promotion or
advertisement of securities including without limitation those laws applicable in the Dubai International
Financial Centre. This Prospectus is strictly private and confidential and has not been and will not be
reviewed by, deposited or registered with any licensing authority, the Dubai International Financial
Exchange or governmental agencies in the UAE, including without limitation the Emirates Securities
and Commodities Authority or the UAE Central Bank, the Dubai Financial Market, the Abu Dhabi
Securities Market, or any other UAE Exchange. This Prospectus may be issued to a limited number of
institutional and/or sophisticated investors in the UAE upon their request and confirmation that they
understand that LMIR Trust has not been licensed by or registered with the UAE authorities concerned and
that this Prospectus is intended only for the original recipient to whom it is addressed, must not therefore
be provided to any person other than such original recipient and may not be reproduced or used for any
other purpose. Further, the information contained in this Prospectus does not, and is not intended to,
constitute a public offer of securities in any part of the United Arab Emirates in accordance with the
Commercial Companies Law (UAE Federal Law No. 8 of 1984 (as amended)) or otherwise, and is not
intended to be an offer or an invitation to subscribe for or purchase any Units. Furthermore, the information
contained in this Prospectus is not intended to lead to the conclusion of any contract of whatsoever nature
within the territory of the United Arab Emirates.
United Kingdom
The Units are interests in a collective investment scheme (as defined in the Financial Services and Markets
Act 2000 (the “FSMA”)) which has not been authorised or reviewed by the Financial Services Authority or
any other regulatory authority of the United Kingdom. Accordingly, this Prospectus is not being distributed
to, and must not be passed on to, or relied or acted upon by, the general public in the United Kingdom.
This Prospectus is for distribution in the United Kingdom only to persons (i) who have professional
experience of participating in unregulated collective investment schemes and of markets relating to
investments falling within both Article 14(5) of the Financial Services and Markets Act 2000 (Promotion of
Collective Investment Schemes) (Exemptions) Order 2002 (the “CIS Order”) and Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “FP Order”), or (ii) who
fall within both Article 22(2)(a) to (d) of the CIS Order and Article 49(2)(a) to (d) of the FP Order, or (iii) to
whom communications relating to unregulated collective investment schemes may otherwise lawfully be
made (such persons together “Relevant Eligible Persons”).
By way of explanation, the following persons fall within Article 49(2)(a) to (d) of the FP Order and
Article 22(2)(a) to (d) of the CIS Order:
• a body corporate which has more than 20 members or which is a subsidiary undertaking of a parent
undertaking which has more than 20 members and which has a called up share capital or net assets of
not less than £500,000;
• any other body corporate, unincorporated association or partnership which has a called up capital or net
assets of not less than £5 million;
• the trustee of a high value trust (being a trust where the aggregate value of the cash and investments
which form part of the trust’s assets (before deducting the amount of its liabilities) is (a) £10 million or
more, or (b) has been £10 million or more at any time during the year immediately preceding the date on
which this communication was first directed); or
• any person acting in the capacity of a director, officer or employer of one of the previous three categories
of persons and whose responsibilities include him or her engaging in investment activity.
Any investment or investment activity to which this Prospectus relates is only available to Relevant Eligible
Persons or will be engaged in only with Relevant Eligible Persons and this financial promotion must not be
relied or acted upon by persons who are not Relevant Eligible Persons. Expressions of interest resulting
from this Prospectus will only be responded to if received from persons falling within those Articles.
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Plan of distribution
United States of America
The Units have not been and will not be registered under the Securities Act, or any state securities laws,
and may not be offered, sold, pledged or transferred within the United States, except in certain
transactions exempt from the registration requirements of the Securities Act. The Units are being
offered and sold only outside the United States in accordance with Regulation S under the Securities
Act. Terms used but not defined in this section shall bear the meanings given to them under Regulation S.
In addition, each subscriber of or purchaser of Units or any interest therein, including in the secondary
market, who is a U.S. person for US federal income tax purposes will be deemed to have made the
following representations:
• We understand and acknowledge that LMIR Trust may be classified as a “passive foreign investment
company” (“PFIC”) for the current taxable year and for future taxable years due to the nature of its
income and activities and operations. A non-U.S. corporation will be considered a PFIC for any taxable
year if either (i) at least 75% of its gross income is passive income, or (ii) at least 50% of the value of its
assets is attributable to assets that produce or are held for the production of passive income. In this
regard, rental income, which constitutes LMIR Trust’s main income, is generally considered passive
unless it meets certain criteria to be considered active rents. We understand that a portion of LMIR
Trust’s rental income would likely not be considered active rents, and thus, LMIR Trust may be
considered a PFIC. A separate determination must be made as to the PFIC status each year;
• We understand that, if LMIR Trust is a PFIC either currently or in any future taxable year during which we
hold Units, we will be subject to special tax rules with respect to any “excess distribution” that we receive
and any gain we realize from a sale or other disposition of the Units, unless we make a “mark-to-market”
election or a “qualified electing fund” election described below. Distributions we receive in a taxable year
that are greater than 125% of the average annual distributions we received during the shorter of the
three preceding taxable years or our holding period for the Units will be treated as an excess distribution.
We are aware that under these special tax rules:
1.
The excess distribution or gain will be allocated rateably over our holding period for the Units;
2.
The amount allocated to the current taxable year and any taxable year prior to the first taxable year
in which LMIR Trust became a PFIC will be treated as ordinary income;
3.
The amount allocated to each other year will be subject to the highest tax rate in effect for that year
and the interest charge generally applicable to underpayments of tax will be imposed on the
resulting tax attributable to each such year; and
4.
The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution”
cannot be offset by any net operating losses for such years, and gains (but not losses) realised on
the sale of the Units cannot be treated as capital, even if we hold the Units as capital assets;
• We understand that if we are a U.S. holder of “marketable stock” (as defined below) in a PFIC, we may
make a mark-to-market election for such stock to elect out of the tax treatment discussed above. If we
make a mark-to-market election for the Units, we will include in income each year an amount equal to the
excess, if any, of the fair market value of the Units as of the close of our taxable year over our adjusted
basis in such Units. We further understand that we are allowed a deduction for the excess, if any, of the
adjusted basis of the Units over their fair market value as of the close of the taxable year. However,
deductions are allowed only to the extent of any net mark-to-market gains on the Units included in our
income for prior taxable years. We are aware that amounts included in our income under a
mark-to-market election, as well as gain on the actual sale or other disposition of the Units, are
treated as ordinary income. Ordinary loss treatment also applies to the deductible portion of any
mark-to-market loss on the Units, as well as to any loss realised on the actual sale or disposition of the
Units, to the extent that the amount of such loss does not exceed the net mark-to-market gains
previously included for such Units. Accordingly, we understand that our basis in the Units will be adjusted
to reflect any such income or loss amounts. We further understand that if we make a valid
mark-to-market election with respect to the Units, the tax rules that apply to distributions by
corporations which are not PFICs would apply to distributions by LMIR Trust;
263
Plan of distribution
• We understand that the mark-to-market election is available only for “marketable stock,” which is stock
that is traded in other than de minimis quantities on at least 15 days during each calendar quarter on a
qualified exchange or other market, as defined in applicable U.S. Treasury regulations. Although not free
from doubt, we understand that the SGX-ST should be considered as a qualified exchange or other
market for this purpose;
• We understand that, in general, if a non-U.S. corporation is a PFIC, a holder of shares in that corporation
may avoid taxation under the rules described above by making a “qualified electing fund” election to
include its share of the corporation’s income on a current basis, or a “deemed sale” election once the
corporation no longer qualifies as a PFIC. We understand and acknowledge however that we may make
a qualified electing fund election with respect to our Units only if LMIR Trust agrees to furnish us annually
with certain tax information, and LMIR Trust does not intend to prepare and provide such information;
and
• We understand that if we hold Units in any year in which LMIR Trust is a PFIC, we will be required to file
Internal Revenue Service Form 8621 regarding distributions received on the Units and any gain realised
on the disposition of the Units. We acknowledge that we have been advised to consult our tax adviser
regarding the application of the PFIC rules to our investment in the Units.
In addition, each subscriber or purchaser of Units or any interest therein, including in the secondary
market, will be deemed to have represented that no portion of the funds used by it to acquire the Units
constitute (a) the assets of any “plan” (as such term is defined in Section 4975 of the U.S. Internal Revenue
Code of 1986, as amended (the “IRC”)) that is subject to Section 4975 of the IRC or (b) the “plan assets” of
any “employee benefit plan” that is subject to Title I of the U.S. Employee Retirement Income Security Act
of 1974, as amended (“ERISA”), pursuant to U.S. Department of Labor Regulation
Section 2510.3-101(b)(i) as modified by Section 3(42) of ERISA or Section 401(c) of the ERISA.
264
Clearance and settlement
INTRODUCTION
A letter of eligibility has been obtained from the SGX-ST for the listing and quotation of the Units. For the
purpose of trading on the SGX-ST, a board lot for the Units will comprise 1,000 Units.
Upon listing and quotation on the SGX-ST, the Units will be traded under the electronic book-entry
clearance and settlement system of CDP. All dealings in and transactions of the Units through the SGX-ST
will be effected in accordance with the terms and conditions for the operation of Securities Accounts, as
amended from time to time.
CDP, a wholly-owned subsidiary of Singapore Exchange Limited, is incorporated under the laws of
Singapore and acts as a depository and clearing organisation. CDP holds securities for its account-holders
and facilitates the clearance and settlement of securities transactions between account-holders through
electronic book-entry changes in the Securities Accounts maintained by such account-holders with CDP.
It is expected that the Units will be credited into the Securities Accounts of applicants for the Units within
four Market Days after the closing date for applications for the Units.
CLEARANCE AND SETTLEMENT UNDER THE DEPOSITORY SYSTEM
The Units will be registered in the name of CDP or its nominee and held by CDP for and on behalf of
persons who maintain, either directly or through depository agents, Securities Accounts with CDP. Persons
named as direct Securities Account holders and depository agents in the depository register maintained by
CDP will be treated as Unitholders in respect of the number of Units credited to their respective Securities
Accounts.
Transactions in the Units under the book-entry settlement system will be reflected by the seller’s Securities
Account being debited with the number of Units sold and the buyer’s Securities Account being credited with
the number of Units acquired and no transfer stamp duty is currently payable for the transfer of Units that
are settled on a book-entry basis.
Units credited to a Securities Account may be traded on the SGX-ST on the basis of a price between a
willing buyer and a willing seller. Units credited into a Securities Account may be transferred to any other
Securities Account with CDP, subject to the terms and conditions for the operation of Securities Accounts
and a S$10.00 transfer fee payable to CDP. All persons trading in the Units through the SGX-ST should
ensure that the relevant Units have been credited into their Securities Account, prior to trading in such
Units, since no assurance can be given that the Units can be credited into the Securities Account in time for
settlement following a dealing. If the Units have not been credited into the Securities Account by the due
date for the settlement of the trade, the buy-in procedures of the SGX-ST will be implemented.
Clearing fees
A clearing fee for the trading of Units on the SGX-ST is payable at the rate of 0.04% of the transaction
value, subject to a maximum of S$600.00 per transaction. The clearing fee, deposit fee and unit withdrawal
fee may be subject to GST (currently 7.0%).
Dealings in the Units will be carried out in Singapore dollars and will be effected for settlement in CDP on a
scripless basis. Settlement of trades on a normal “ready” basis on the SGX-ST generally takes place on the
third Market Day following the transaction date. CDP holds securities on behalf of investors in Securities
Accounts. An investor may open a direct account with CDP or a sub-account with any CDP depository
agent. A CDP depository agent may be a member company of the SGX-ST, bank, merchant bank or trust
company.
265
Experts
RSM Chio Lim, the Independent Reporting Accountants, were responsible for preparing the “Independent
Accountants’ Report on the Profit Forecast and Profit Projection” and the “Independent Accountants’
Report on the Unaudited Pro Forma Consolidated Balance Sheet as at Listing Date” found in Appendix A
and Appendix B of this Prospectus, respectively.
Ernst & Young, the Independent Singapore Tax Adviser, was responsible for preparing the “Independent
Singapore Taxation Report” found in Appendix C of this Prospectus.
PB & Co, the Independent Indonesian Tax Adviser, was responsible for preparing the “Independent
Indonesian Taxation Report” found in Appendix D of this Prospectus.
Knight Frank / PT. Willson Properti Advisindo and Colliers International / PT Penilai, the Independent
Valuers, were responsible for preparing the “Independent Property Valuation Summary Reports” found in
Appendix E of this Prospectus,
PT Jones Lang LaSalle, the Independent Indonesian Retail Property Consultant, was responsible for
preparing the section of this Prospectus entitled “Independent Report on the Indonesian Retail Property
Market” found in Appendix F of this Prospectus.
The Independent Reporting Accountants, the Independent Singapore Tax Adviser, the Independent
Indonesian Tax Adviser, the Independent Valuers and the Independent Retail Consultant have each
given and have not withdrawn their written consents to the issue of this Prospectus with the inclusion herein
of their names and their respective write-ups and reports and all references thereto in the form and context
in which they respectively appear in this Prospectus, and to act in such capacity in relation to this
Prospectus.
None of Allen & Gledhill LLP, Stamford Law Corporation, Latham & Watkins LLP, Makes & Partners,
Hadiputranto Hadinoto & Partners, Ery Yunasri & Partners and Shook Lin & Bok LLP makes, or purports to
make, any statement in this Prospectus and none of them is aware of any statement in this Prospectus
which purports to be based on a statement made by it and it makes no representation, express or implied,
regarding, and takes no responsibility for, any statement in or omission from this Prospectus.
266
General information
(1) The profit forecast and profit projection contained in “Profit Forecast and Profit Projection” have been
stated by the Directors after due and careful enquiry.
(2) There are no legal or arbitration proceedings pending or, so far as the Directors are aware,
threatened against the Manager the outcome of which, in the opinion of the Directors, may have
or have had during the 12 months prior to the date of this Prospectus, a material adverse effect on the
financial position of the Manager.
(3) There are no legal or arbitration proceedings pending or, so far as the Directors are aware,
threatened against LMIR Trust the outcome of which, in the opinion of the Directors, may have
or have had during the 12 months prior to the date of this Prospectus, a material adverse effect on the
financial position (on a pro forma consolidated basis) of LMIR Trust.
(4) The name, age and address of each of the Directors are set out in “The Manager and Corporate
Governance—The Manager of LMIR Trust—Directors of the Manager”. A list of the present and past
directorships of each Director and Executive Officer of the Manager over the last five years preceding
the Latest Practicable Date is set out in “Appendix H—List of Present and Past Principal
Directorships of Directors and Executive Officers”.
(5) There is no family relationship among the Directors and executive officers of the Manager.
(6) None of the Directors or executive officers of the Manager is or was involved in any of the following
events:
• at any time during the last 10 years, an application or a petition under any bankruptcy laws of any
jurisdiction filed against him or against a partnership of which he was a partner at the time when he
was a partner or at any time within two years from the date he ceased to be a partner;
• at any time during the last 10 years, an application or a petition under any law of any jurisdiction
filed against an entity (not being a partnership) of which he was a director or an equivalent person
or a key executive, at the time when he was a director or an equivalent person or a key executive of
that entity or at any time within two years from the date he ceased to be a director or an equivalent
person or a key executive of that entity, for the winding up or dissolution of that entity or, where that
entity is the trustee of a business trust, that business trust, on the ground of insolvency;
• any unsatisfied judgment against him;
• a conviction of any offence, in Singapore or elsewhere, involving fraud or dishonesty which is
punishable with imprisonment, or has been the subject of any criminal proceedings (including any
pending criminal proceedings of which he is aware) for such purpose;
• a conviction of any offence, in Singapore or elsewhere, involving a breach of any law or regulatory
requirement that relates to the securities or futures industry in Singapore or elsewhere, or has
been the subject of any criminal proceedings (including any pending criminal proceedings of which
he is aware) for such breach;
• at any time during the last 10 years, judgment been entered against him in any civil proceedings in
Singapore or elsewhere involving a breach of any law or regulatory requirement that relates to the
securities or futures industry in Singapore or elsewhere, or a finding of fraud, misrepresentation or
dishonesty on his part, or any civil proceedings (including any pending civil proceedings of which
he is aware) involving an allegation of fraud, misrepresentation or dishonesty on his part;
• a conviction in Singapore or elsewhere of any offence in connection with the formation or
management of any entity or business trust;
• disqualification from acting as a director or an equivalent person of any entity (including the trustee
of a business trust), or from taking part directly or indirectly in the management of any entity or
business trust;
• any order, judgment or ruling of any court, tribunal or governmental body permanently or
temporarily enjoining him from engaging in any type of business practice or activity;
267
General information
• to his knowledge, been concerned with the management or conduct, in Singapore or elsewhere, of
the affairs of:
(i)
any corporation which has been investigated for a breach of any law or regulatory
requirement governing corporations in Singapore or elsewhere;
(ii)
any entity (not being a corporation) which has been investigated for a breach of any law or
regulatory requirement governing such entities in Singapore or elsewhere;
(iii)
any business trust which has been investigated for a breach of any law or regulatory
requirement governing business trusts in Singapore or elsewhere;
(iv)
any entity or business trust which has been investigated for a breach of any law or regulatory
requirement that relates to the securities or futures industry in Singapore or elsewhere in
connection with any matter occurring or arising during the period when he was so concerned
with the entity or business trust; or
• has been reprimanded or issued any warning, by the MAS or any other regulatory authority,
exchange, professional body or government agency, whether in Singapore or elsewhere.
(7) The financial year-end of LMIR Trust is 31 December. The annual audited financial statements of
LMIR Trust will be prepared and sent to Unitholders within three months of the financial year-end.
(8) A full valuation of each of the real estate assets held by LMIR Trust will be carried out at least once a
year in accordance with the Property Funds Guidelines. The Manager or the Trustee may at any
other time arrange for the valuation of any of the real properties held by LMIR Trust if it is of the
opinion that it is in the best interest of Unitholders to do so.
(9) While LMIR Trust is listed on the SGX-ST, investors may check the SGX-ST website
http://www.sgx.com for the prices at which Units are being traded on the SGX-ST. Investors may
also check one or more major Singapore newspapers such as The Straits Times, The Business
Times and Lianhe Zaobao, for the price range within which Units were traded on the SGX-ST on the
preceding day.
(10) The Manager does not intend to receive soft dollars (as defined in the CIS Code) in respect of LMIR
Trust. Save as disclosed in this Prospectus, unless otherwise permitted under the Listing Manual,
neither the Manager nor any of its Associates will be entitled to receive any part of any brokerage
charged to LMIR Trust, or any part of any fees, allowances or benefits received on purchases
charged to LMIR Trust.
(11) The SGX-ST has granted waivers to LMIR Trust from compliance with the following:
268
(a)
Rule 404(3) of the Listing Manual, which would otherwise require an investment fund which is
denominated in Singapore Dollars (other than a venture capital fund or a hedge fund) to: (i) limit
its investment in companies which are related to the investment fund’s substantial
shareholders, investment managers or management companies to a maximum of 10.0% of
gross assets; (ii) abide by the same investment and borrowing restrictions that govern
“investments companies” prescribed by the Companies Act; and (iii) restrict investments in
unlisted securities to 30.0% of gross assets;
(b)
Rules 404(5) and 407(4) of the Listing Manual, which would otherwise require the Manager to
be reputable and have a track record in managing investments, as the Manager has only been
recently incorporated;
(c)
Rule 409(3) of the Listing Manual, which would otherwise require the submission with the
application for the listing of LMIR Trust on the SGX-ST the annual accounts of LMIR Trust for
each of the last five financial years;
(d)
Rule 705(2), which would otherwise require the Manager to announce LMIR Trust’s financial
results for the period from the Listing Date to 31 December 2007;
(e)
Rule 707(2), which would otherwise require LMIR Trust to issue an annual report for the
financial period from 8 August 2007 to 31 December 2007;
General information
(f)
Rule 748(1) of the Listing Manual, which would otherwise require LMIR Trust to announce via
SGXNET its net tangible assets per Unit at the end of each week; and
(g)
Rule 748(3), which would otherwise require LMIR Trust to disclose certain information in its
annual report subject to compliance with the Property Funds Guidelines; and
(h)
the requirement of holding annual general meetings of LMIR Trust.
(12) The dates of, parties to, and general nature of every material contract which the trustee of LMIR Trust
has entered into within the two years preceding the date of this Prospectus (not being contracts
entered into in the ordinary course of the business of LMIR Trust) are as follows:
(a)
the Trust Deed;
(b)
the Singapore SPC Share Purchase Agreements; and
(c)
the Right of First Refusal Agreement.
(See “Certain Agreements relating to LMIR Trust and the Properties—Description of the Right of
First Refusal Agreement”.)
(13) Copies of the following documents are available for inspection at the registered office of the Manager
at 78 Shenton Way, #05-01 Lippo Centre, Singapore 079120, for a period of six months from the date
of this Prospectus:
(a)
the material contracts referred to in paragraph 12 above, save for the Trust Deed (which will be
available for inspection for so long as LMIR Trust is in existence);
(b)
the Underwriting Agreement;
(c)
the Unit Lending Agreement;
(d)
the Cornerstone Subscription Agreements;
(e)
the Property Purchase Agreements;
(f)
the Retail Space Indonesian SPC Share Purchase Agreements;
(g)
the Retail Mall Indonesian SPC Share Purchase Agreements;
(h)
the Master Lease Agreements;
(i)
the Operating Costs Agreements;
(j)
the Rental Guarantee Deeds;
(k)
the Right of First Refusal Agreement;
(l)
the Existing Property Management Agreements;
(m)
the Master Property Management Agreement;
(n)
the Independent Accountants’ Report on the Profit Forecast and Profit Projection as set out in
Appendix A of this Prospectus;
(o)
the Independent Accountants’ Report on the Unaudited Pro Forma Consolidated Balance
Sheet as at the Listing Date as set out in Appendix B of this Prospectus;
(p)
the Independent Singapore Taxation Report as set out in Appendix C of this Prospectus;
(q)
the Independent Indonesian Taxation Report as set out in Appendix D of this Prospectus;
(r)
the Independent Property Valuation Summary Reports as set out in Appendix E of this
Prospectus as well as the full valuation reports referred to therein for each of the Properties;
(s)
the Independent Report on the Retail Property Industry in Indonesia as set out in Appendix F of
this Prospectus;
269
General information
(t)
the written consents of the Independent Reporting Accountants, the Independent Singapore
Tax Adviser, the Independent Indonesian Tax Adviser, the Independent Valuers and the
Independent Indonesian Retail Property Consultant (see “Experts”);
(u)
the undertaking of the Manager to the MAS covenanting, among other things, not to deal in the
Units during certain stipulated periods (see “The Manager and Corporate Governance—
Corporate Governance of the Manager—Dealings in Units”);
(v)
the undertaking of the Manager to the SGX-ST that it will conduct a valuation of LMIR Trust’s
real estate and real estate-related assets annually and announce the NAV per Unit on a
quarterly basis (see “The Manager and Corporate Governance—Annual Reports”); and
(w)
the Depository Services Agreement.
(14) UBS, named as Financial Adviser to the Offering and Joint Lead Manager, Issue Managers and
Underwriter, has given and has not withdrawn its written consent to the issue of this Prospectus with
the inclusion herein of, and all references to, its name and all references thereto in the form and
context in which they appear in this Prospectus, and to act in such capacity in relation to this
Prospectus.
(15) BNP and OCBC Bank, named as Joint Lead Managers, Issue Managers and Underwriters, have
each given and have not withdrawn their written consent to the issue of this Prospectus with the
inclusion herein of, and all references to, their names and all references thereto in the form and
context in which they appear in this Prospectus, and to act in such capacity in relation to this
Prospectus.
270
Glossary
%
Per centum or percentage
Aggregate Leverage
Total borrowings and deferred payments (including deferred
payments for assets whether to be settled in cash or in units
of the relevant property fund)
Agrarian Law
Law No. 5 Year 1960, which governs Indonesian real property
rights
AMDAL Report
The Analysis of Environmental Impacts based on the framework
of reference, the environmental impact assessment report
Application Forms
The printed application forms to be used for the purpose of the
Offering and which form part of this Prospectus
Application List
The list of applicants subscribing for Units which are the subject
of the Public Offer
Appraised Value
In relation to a Property, the value for that Property (i) as at
30 June 2007 as appraised by Knight Frank, and (ii) as at 30 June
2007 as appraised by Colliers
Associate
Has the meaning ascribed to it in the Listing Manual
ATMs
Automated teller machines, and each, an “ATM”
AUB
Ahli United Bank
Authorised Investment
Refers to, in general, (i) real estate, whether freehold or
leasehold, in or outside Singapore or Indonesia, held singly or
jointly, and/or by way of direct ownership or by a shareholding in a
SPV; (ii) any improvement or extension of or addition to or
reconstruction or renovation or other development of any real
estate or any building thereon; (iii) real estate related assets,
wherever the issuers, assets or securities are incorporated,
located, issued or traded; (iv) listed or unlisted debt securities
and listed shares or stock and (if permitted by the MAS) unlisted
shares or stock of or issued by local or foreign non-property
companies or corporations; (v) government securities (issued on
behalf of the Singapore Government or governments of other
countries) and securities issued by a supra-national agency or a
Singapore statutory board; (vi) cash and cash equivalent items;
(vii) financial derivatives only for the purposes of (a) hedging
existing positions in the portfolio of LMIR Trust where there is a
strong correlation to the underlying investments or (b) efficient
portfolio management, provide that such derivatives are not
used to gear the overall portfolio of LMIR Trust or intended to
be borrowings of LMIR Trust; and (viii) other investment not
covered by sub-paragraph (i) to (vii) of this definition but
specified as a permissible investment in the Property Funds
Guidelines and selected by the Manager for investment by LMIR
Trust and approved by the Trustee in writing (see the Trust Deed
for details)
Authorised Investment
Management Fee
0.50% of the value of Authorised Investments which are not real
estate (whether held directly by LMIR Trust or indirectly via one
or more SPVs) subject to certain conditions
Bandung Indah Plaza
Cooperation Agreement
The cooperation agreement on the renovation, development and
management of Hotel Pakunegara, Bandung (Perjanjian
271
Glossary
Kerjasama Pemugaran Pembangunan dan Pengelolaan Hotel
Pakunegara) between Perusahaan Daerah Jasa Dan
Kepariwisataan Propinsi Jawa Barat, and formerly known as
Perusahaan Daerah Kerta Wisata Jawa Barat) and PT
Bhuwanatala Indah Permai Tbk (formerly known as PT
Bandung Indah Plaza Permai)
Base Amount
The minimum purchase consideration payable to the respective
Vendor in respect of each Property
Base Fee
0.25% per annum of the value of the Deposited Property payable
to the Manager under the Trust Deed
Base Rent
Rental income derived from the Retail Spaces and Retail Malls
pursuant to tenant leases
Basic Agrarian Law
The Basic Agrarian Law (Law No. 5 of 1960) of Indonesia
BNP
BNP Paribas Capital (Singapore) Ltd.
Board
Board of directors of the Manager
BOT
Build, Operate and Transfer
BOT Agreement or Cooperation
Agreement
An agreement entered into by the BOT Grantor and the BOT
Grantee in relation to the construction of a structure of some of
the Retail Malls, i.e. a building and fixtures
BOT Grantee
The party which owns the land property and grants a right by the
BOT Grantor to build and operate a building on the BOT
Grantor’s land for a particular period of time, at the BOT
Grantee’s cost, pursuant to a BOT Scheme
BOT Grantor
The land owner or the party that is appointed by the land owner,
who grants a BOT Grantee a right to build and operate a building
on the BOT Land for a particular period of time, at the BOT
Grantee’s cost, pursuant to a BOT Scheme; and at the end of the
BOT period for the BOT Grantee to transfer the building to the
BOT Grantor
BOT Land
The land owned by the land owner, that is granted to the BOT
Grantee based on a BOT Agreement
BOT Schemes
Build, Operate and Transfer schemes where the BOT Grantor
agrees to grant the BOT Grantee a right to build and operate a
building on the BOT Grantor’s land for a particular period of time,
at the BOT Grantee’s cost
BPN
Badan Pertanahan Negara, or National Land Board of Indonesia
BSD City
Bumi Serpong Damai City
Business Day
Any day (other than a Saturday, Sunday or gazetted public
holiday) on which commercial banks are open for business in
Singapore and the SGX-ST is open for trading
CBD
Central business district
CDP
The Central Depository (Pte) Limited
CGI
Consultative Group on Indonesia
CIS Code
The Code on Collective Investment Schemes (including the
Property Funds Guidelines) of Singapore issued by the MAS
CMREF 1
CIMB-Mapletree Real Estate Fund 1
272
Glossary
Colliers
Colliers International / PT Penilai, as Independent Valuer to the
Trustee
Committed Leases
All current leases in respect of the Properties as at 30 June 2007
and each, a “Committed Lease”
Companies Act
Companies Act, Chapter 50 of Singapore
Cornerstone Investors
Lippo Strategic and Mapletree LM
Cornerstone Subscription
Agreements
Each of the subscription agreements (a) dated 18 October 2007
entered into between Lippo Strategic and the Manager, pursuant
to which Lippo Strategic subscribed for 287,695,000
Cornerstone Units, and (b) dated 18 October 2007 entered
into between Mapletree LM and the Manager, pursuant to
which Mapletree LM subscribed for 127,250,000 Cornerstone
Units
Cornerstone Units
The aggregate of 414,945,000 Units subscribed by all the
Cornerstone Investors pursuant to the Cornerstone
Subscription Agreements
CPF
Central Provident Fund of Singapore
CPIHG
CP Inlandsimmobilien Holding Gmbh
Deeds of Indemnity
The 14 Deeds of Indemnity dated 18 October 2007 entered into
by the Trustee and Lippo Capital Limited, pursuant to which
Lippo Capital Limited will indemnify the Trustee against liabilities
or damage suffered by the Trustee arising from any of the 14
Singapore SPC Share Purchase Agreements, subject to certain
conditions
Depok Town Square Units
Four strata units in Depok Town Square located at Jalan
Margonda Raya No. 1, Pondok Cina Beji, Depok, Greater
Jakarta (See “Business and Properties—Depok Town Square
Units—Relevant information relating to the Depok Town Square
Units”)
Deposited Property
All the assets of LMIR Trust, including the Properties and all the
Authorised Investments of LMIR Trust for the time being held or
deemed to be held upon the trusts under the Trust Deed
Depository Services Agreement
The depository services agreement dated 10 August 2007
entered into between CDP, the Manager and the Trustee
relating to the deposit of the Units in CDP
Director
Director of the Manager
Distributable Income
Income of LMIR Trust distributable to Unitholders, as defined in
“Profit Forecast and Profit Projection—Assumptions—(IX)
Distributable Income”
Electronic Applications
The application for the Units offered in the Offering by way of
ATMs of the Participating Banks
ERISA
The U.S. Employee Retirement Income Security Act of 1974, as
amended
Existing Property Management
Agreements
The property management agreements entered into between
each of the Retail Mall Indonesian SPCs and the Property
Manager in respect of the Retail Malls and “Existing
Property Management Agreement” means any one of them
273
Glossary
Extraordinary Resolution
A resolution proposed and passed as such by a majority
consisting of 75.0% or more of the total number of votes cast
for and against such resolution at a meeting of Unitholders duly
convened and held in accordance with the provisions of the
Trust Deed
F&B
Food and beverage
Financial Adviser
UBS AG, acting through its business group, UBS Investment
Bank, as sole financial adviser to the Offering
First Lock-Up Period
The period commencing from the Listing Date until the date
falling six months after the Listing Date
Forecast Period 2007
The period from 1 July 2007 to 31 December 2007
FRS
Singapore Financial Reporting Standards
FY
Financial year ended or, as the case may be, ending
31 December
GDP
Gross domestic product
GFA
Gross floor area
Grand Palladium Medan Units
Four strata units in Grand Palladium Medan located at Jalan
Kapt. Maulana Lubis, Medan, North Sumatra (See “Business
and Properties—Grand Palladium Medan Units—Relevant
information relating to the Grand Palladium Medan Units”)
GRDP
Gross regional domestic product
Greater Jakarta
Comprises Jakarta, Bogor, Depok, Tangerang and Bekasi
Gross Rent
Base rent and services charges
Gross Revenue
The aggregate of Gross Rent, carpark income and other income
earned primarily from the Properties
GST
Goods and services tax of Singapore
ha
Hectares
HGB
Hak Guna Bangunan (Right to Build)
HP
Hak Pakai, the right to use and/or collect the products of land
directly administered by the State, or of land owned by other
persons (based on Hak Milik).
HPL
Hak Pengelolaan, the right to (i) plan the purpose and the use of
the land, (ii) use the land for the need of the business of the
holder and (iii) surrender plots of land to third parties in
accordance with the terms and conditions set up by the holder
of the HPL title.
IMB
Izin Mendirikan Bangunan
IMF
International Monetary Fund
Income Tax Act
The Income Tax Act, Chapter 134 of Singapore
Independent Indonesian Retail
Property Consultant
PT Jones Lang LaSalle
Independent Indonesian Tax
Adviser
PB & Co
Independent Valuers
Knight Frank and Colliers
274
Glossary
Indonesian SPCs
The Retail Mall Indonesian SPCs and the Retail Space
Indonesian SPCs
Interested Person
Has the meaning ascribed to it in the Listing Manual and the
Property Funds Guidelines
Interested Person Transaction
Has the meaning ascribed to it in the Listing Manual and the
Property Funds Guidelines
Investible Savings
The balance in a CPF Ordinary Account plus the net amounts (if
any) withdrawn for education and investment
IPB
Institut Pertanian Bogor
IRAS
Inland Revenue Authority of Singapore
IRC
U.S. Internal Revenue Code of 1986, as amended
Issue Price
Issue price of each Unit
Istana Plaza BOT Agreement
The Istana Plaza Cooperation Agreement and its amendments
Istana Plaza Cooperation
Agreement
The cooperation agreement, dated 9 May 1997 between, Gereja
Kristen Pasundan, Ginawan Chondro, Edi Sukamto Josana,
Chandra Tambayong, Wirawan Chondro, Heryanto Gunawan,
and Subagya Putra Prawira (as investors), and TK Gunawan
Prihatna, Stepanus Tedjasentosa, Tatang Budiarto, and
Abrijanto Effendi (as consultants)
IUPM
The Decision of the Minister of Trade and Industry of the
Republic of Indonesia No. 107/MPP/Kep/2/1998, dated
27 February 1998 on the Provisions and Procedures for the
Granting of Modern Market Business Licences
Java Supermall Units
Four strata units in Java Supermall located at Jalan MT Haryono
No. 992-994, Jomblang, Semarang, Central Java (See
“Business and Properties—Java Supermall Units—Relevant
information relating to the Java Supermall Units”)
JSX
Jakarta Stock Exchange
Kiosks Sale and Purchase Binding
Agreement
Kiosks Sale and Purchase Binding Agreements are evidence of
the parties’ intention to effect the sale and purchase of Strata
Units, but do not have the effect of transferring ownership
km
Kilometre
Knight Frank
Knight Frank / PT. Willson Properti Advisindo, as independent
valuer to the Manager
Labour Law
Law No. 13/2003, enacted by the Indonesian government
Latest Practicable Date
15 October 2007, being the latest practicable date prior to the
lodgement of this Prospectus with the MAS
Lippo Strategic
Lippo Strategic Holdings Inc, a limited liability company
incorporated in the British Virgin Islands on 2 March 2007,
and one of the Cornerstone Investors
Listing Date
The date of admission of LMIR Trust to the Official List of the
SGX-ST
Listing Manual
Listing Manual of the SGX-ST
LLD
PT. Lippo Land Development Tbk
LMIR Trust
Lippo-Mapletree Indonesia Retail Trust, a REIT established in
Singapore and constituted by the Trust Deed
275
Glossary
LQ 45 Index
A capitalisation-weighted index of the 45 most heavily traded
stocks on the JSX
Malang Town Square Units
Three strata units in Malang Town Square located at Jalan
Veteran No. 2, Malang, East Java (See “Business and
Properties—Malang
Town
Square
Units—Relevant
information relating to the Malang Town Square Units”)
Mall WTC Matahari Units
Four strata units in Mall WTC Matahari located at Jalan Raya
Serpong, Pondok Jagung, Serpong, Tangerang, Banten,
Greater Jakarta (See “Business and Properties—Mall WTC
Matahari Units—Relevant information relating to the Mall
WTC Matahari Units”)
Manager
Lippo-Mapletree Indonesia Retail Trust Management Ltd., as
manager of LMIR Trust
Mapletree Capital
Mapletree Capital Management Pte. Ltd.
Mapletree Group
MIPL and its subsidiaries, including Mapletree Capital
Mapletree LM
Mapletree LM Pte. Ltd.
MapletreeLog
Mapletree Logistics Trust
Market Day
A day on which the SGX-ST is open for trading in securities
MAS
The Monetary Authority of Singapore
Master Lease Agreements
The seven lease agreements dated 18 October 2007 entered
between the Master Lessee and the Retail Space Indonesian
SPCs in relation to the Retail Spaces, and “Master Lease
Agreement” means any one of them
Master Property Management
Agreement
The property management agreement entered into between the
Trustee, the Manager and the Property Manager on 18 October
2007
Matahari or Master Lessee
PT. Matahari Putra Prima Tbk, an Indonesian company listed on
the JSX and SSX, in which the Lippo Group has a controlling
interest through PT Multipolar Corporation Tbk.
Metropolis Town Square Units
Three strata units in Metropolis Town Square located at Jalan
Hartono Raya, Modernland Cikokol, Tangerang, Banten,
Greater Jakarta (See “Business and Properties—Metropolis
Town Square Units—Relevant information relating to the
Metropolis Town Square Units”)
MIF
Mapletree Industrial Fund
MIFM
Mapletree Industrial Fund Management Pte. Ltd.
MIPL
Mapletree Investments Pte Ltd
Moody’s
Moody’s Investors Services, Inc.
MREM 1
Mapletree Real Estate Mezzanine Fund 1
MYR
Malaysian Ringgit, the lawful currency of Malaysia
NAV
Net asset value
New Investment Law
The Indonesian investment law which amends Law No. 1 of 1967
(as amended) regarding Foreign Capital Investment Law and
Law No. 6 of 1968 (as amended) regarding Domestic Capital
Investment Law
NLA
Net lettable area
276
Glossary
NPI
Net property income consisting of property revenue less
property operating expenses
OCBC Bank
Oversea-Chinese Banking Corporation Limited
Offering
The offering of 645,469,000 Units by the Manager for
subscription at the Offering Price under the Placement and
the Public Offer, subject to the Over-allotment Option
Offering Price
The subscription price of S$0.80 for each Unit under the Offering
Operating Companies
PT Multi Nusantara Karya, PT Selaras Maju, PT Sarana Karya
Megah, PT Antara Nusa Permai, PT Primatama Kreasi Bersama
and PT Kharisma Abadi Selaras, and each an “Operating
Company”
Operating Costs Agreement
The operating costs agreement entered into between the
relevant Retail Mall Indonesian SPC and Operating Company
Ordinary Resolution
A resolution proposed and passed as such by a majority being
50.0% of the total number of votes cast for and against such
resolution at a meeting of Unitholders duly convened and held in
accordance with the provisions of the Trust Deed
Over-allotment Option
An option granted by the Unit Lender to the Underwriters to
purchase from the Unit Lender up to an aggregate of 96,820,000
Units at the Offering Price, solely to cover the over-allotment of
Units (if any)
Participating Banks
OCBC Bank, DBS Bank Ltd (including POSB) (“DBS Bank”) and
United Overseas Bank (“UOB Bank”) including its subsidiary, Far
Eastern Bank Limited (the “UOB Group”)
Performance Fee
4.0% per annum of the NPI of LMIR Trust in the relevant financial
year (calculated before accounting for this additional fee in that
financial year)
Placement
625,469,000 Units offered by way of an international placement
to investors, including institutional and other investors in
Singapore, pursuant to the Offering
Plaza Madiun
Two HGB titles in Plaza Madiun located at Jalan Pahlawan (See
“Business
and
Properties—Plaza
Madiun—Relevant
information relating to Plaza Madiun”)
PMA
Penanaman Modal Asing, or foreign capital investment
companies established and organised under and by virtue of
the laws of the Republic of Indonesia and located in Indonesia
PPAT
Pejabat Pembuat Akta Tanah, or Land Deed Official who is
normally a local notary in Indonesia
PRC
The People’s Republic of China
Projection Year 2008
The period from 1 January 2008 to 31 December 2008
Projection Year 2009
The period from 1 January 2009 to 31 December 2009
Properties
The properties comprising LMIR Trust’s initial asset portfolio as
at the Listing Date, namely, the Retail Malls and Retail Spaces
and “Property” means any one of them
Property Funds Guidelines
The guidelines to Real Estate Investment Trusts issued by the
MAS as Appendix 2 of the CIS Code
277
Glossary
Property Manager
PT. Consulting & Management Services Division, as property
manager of the Retail Malls and any property located in
Indonesia acquired by LMIR Trust after the Listing Date.
Property Purchase Agreements
The sale and purchase agreements, each entered into by the
relevant Indonesian SPC, to acquire the relevant Property
PT IPB
PT Indah Pesona Bogor
Public Offer
The offering of 20,000,000 Units to the public in Singapore
Recognised Stock Exchange
Any stock exchange of repute in any part of the world
REIT
Real estate investment trust
Regulation S
Regulation S under the Securities Act
Related Party
Refers to an interested person and/or, as the case may be, an
interested party
Related Party Transactions
Refers to an Interested Person Transaction and/or, as the case
may be, an Interested Party Transaction
Relevant Asset
A retail property located in Indonesia which is subject to the
ROFR, as described in “Certain Agreements Relating to LMIR
Trust and the Properties—Description of the Right of First
Refusal Agreement”
Rent
Consists of rent paid by tenants under their lease agreements for
space in the Retail Spaces
Rental Guarantee Deeds
The seven rental guarantee deeds entered into by Lippo
Strategic with the relevant Retail Mall Singapore SPC
pursuant to which Lippo Strategic will (i) provide a rental
guarantee over the relevant Retail Mall and (ii) undertake to
pay to the relevant Retail Mall Singapore SPC any shortfall in the
maintenance and operation costs which the relevant Operating
Company has undertaken to bear under the respective
Operating Costs Agreement
Retail Mall Indonesian SPC Share
Purchase Agreements
The seven share purchase agreements, each entered into
between two relevant Singapore SPCs and the vendor of the
relevant Retail Mall Indonesian SPC, pursuant which the two
relevant Singapore SPCs acquire all the ordinary shares in that
Retail Mall Indonesian SPC
Retail Mall Indonesian SPCs
The Indonesian SPCs which collectively own the Retail Malls as
at the Listing Date and each a “Retail Mall Indonesian SPC”
Retail Mall Singapore SPCs
The Tier 1 Retail Mall Singapore SPCs and the Tier 2 Retail Mall
Singapore SPCs
Retail Malls
Gajah Mada Plaza, Cibubur Junction, The Plaza Semanggi, Mal
Lippo Cikarang, Ekalokasari Plaza, Bandung Indah Plaza and
Istana Plaza
Retail Space Indonesian SPC Share The seven share purchase agreements, each entered into
Purchase Agreements
between two relevant Singapore SPCs and the vendor of the
relevant Retail Space Indonesian SPC, pursuant which the two
relevant Singapore SPCs acquire all the ordinary shares in that
Retail Space Indonesian SPC
Retail Space Indonesian SPCs
278
The Indonesian SPCs which collectively own the Retail Spaces
as at the Listing Date, and each a “Retail Space Indonesian
SPC”
Glossary
Retail Space Singapore SPCs
Java Properties Pte. Ltd., Serpong Properties Pte. Ltd.,
Metropolis Properties Pte. Ltd., Matos Properties Pte. Ltd.,
Detos Properties Pte. Ltd., Palladium Properties Pte. Ltd. and
Madiun Properties Pte. Ltd., and each a “Retail Space
Singapore SPC”
Retail Spaces
The Mall WTC Matahari Units; the Metropolis Town Square
Units; the Depok Town Square Units; the Java Supermall
Units; the Malang Town Square Units; Plaza Madiun; and the
Grand Palladium Medan Units
RKL
An environmental management plan
ROFR or Right of First Refusal
A right that an offer be made to LMIR Trust over a sale or transfer
of a Relevant Asset, as described in “Certain Agreements
Relating to LMIR Trust and the Properties—Description of the
Right of First Refusal Agreement”
ROFR Properties
Binjai Supermall, Pejaten Mall, Kuta Beach Mall, Kemang City
Mall and Puri “Paragon City”
Rp. or Indonesian Rupiah
The lawful currency of the Republic of Indonesia
RPL
An environmental monitoring plan
S$ or Singapore dollars and cents
Singapore dollars and cents, the lawful currency of the Republic
of Singapore
SARS
Severe Acute Respiratory Syndrome
Second Lock-Up Period
The period commencing from the day immediately following the
First Lock-up Period until the date falling 12 months after the
Listing Date
Securities Account
Securities account or sub-account maintained by a Depositor (as
defined in Section 130A of the Companies Act) with CDP
Securities Act
U.S. Securities Act of 1933, as amended
Service Date
The date of service of the put option notice
Settlement Date
The date and time on which the Units are issued as settlement
under the Offering
SFA or Securities and Futures Act
Securities and Futures Act, Chapter 289 of Singapore
SFO
Securities and Futures Ordinance (Cap. 571 of the Laws of Hong
Kong)
SGX-ST
Singapore Exchange Securities Trading Limited
Singapore SPC Share Purchase
Agreements
The agreements dated 18 October 2007 entered into between
each of the Vendors and the Trustee, pursuant to which the
Trustee will acquire all of the ordinary shares and redeemable
preference shares in each of the Target Singapore SPCs at
completion
Singapore SPCs
The Retail Mall Singapore SPCs and the Retail Space Singapore
SPCs
SPCs
Special Purpose Companies, and each, a “SPC”
Specialty Base Rent
Monthly rental rate per sq m chargeable to specialty store
tenants
Sponsor
PT. Lippo Karawaci Tbk
Sponsor Entity
The Sponsor or any of its subsidiaries
279
Glossary
SPV
Special Purpose Vehicle
sq ft
Square feet
sq m
Square metres
SSX
Surabaya Stock Exchange
Stabilising Manager
UBS
Standard & Poor’s
Standard & Poor’s Ratings Group, a division of the McGraw-Hill
Companies, Inc.
Substantial Unitholder
Any Unitholder with an interest in one or more Units constituting
not less than 5.0% of all Units in issue
Take-over Code
The Singapore Code on Take-overs and Mergers issued by the
MAS
Target Singapore SPCs
The Tier 1 Retail Mall Singapore SPCs and the Retail Space
Singapore SPCs
Tax-Exempt Income
The one-tier (tax-exempt) dividends received from the Target
Singapore SPCs
Tier 1 Retail Mall Singapore SPCs
Belilios International Pte. Ltd., Dominion Capital Pte. Ltd.,
Greenlot Investments Pte. Ltd., Tangent Investments Pte. Ltd.,
Magnus Investments Pte. Ltd., Thornton Investments Pte. Ltd.
and Pierbridge Investments Pte. Ltd.
Tier 2 Retail Mall Singapore SPCs
Prism Investments Pte. Ltd., Silver Dory Holdings Pte. Ltd.,
Vernon Investments Pte. Ltd., Maxia Investments Pte. Ltd.,
Fenton Investments Pte. Ltd., Langston Investments Pte. Ltd.
and Bowland Investments Pte. Ltd.
Tristar
Tristar Capital Ltd.
Trust Deed
The trust deed dated 8 August 2007 (as amended by a first
supplemental deed dated 18 October 2007) entered into
between the Trustee and the Manager constituting LMIR Trust.
Trustee
HSBC Institutional Trust Services (Singapore) Limited, as
trustee of LMIR Trust
U.S.
United States of America
UBS
UBS AG, acting through its business group, UBS Investment
Bank
Unaudited Pro Forma Consolidated
Balance Sheet
Unaudited Pro Forma Consolidated Balance Sheet of LMIR Trust
as at the Listing Date
Underwriters
BNP, OCBC Bank and UBS
Underwriting Agreement
The underwriting agreement dated 9 November 2007 entered
into between the Sponsor, the Manager, the Unit Lender and the
Underwriters
Underwriting, Selling and
Management Commission
The underwriting, selling and management commission payable
to the Underwriters for their services in connection with the
Offering
Unit
An undivided interest in LMIR Trust as provided for in the
Trust Deed
Unit Lender
Lippo Strategic
280
Glossary
Unit Lending Agreement
The unit lending agreement dated 9 November 2007 entered into
between the Stabilising Manager and the Unit Lender in
connection with the Over-allotment Option
Unit Registrar or Share Registrar
Boardroom Corporate & Advisory Services Pte. Ltd.
Unitholder
The registered holder for the time being of a Unit including
persons so registered as joint holders, except that where the
registered holder is CDP, the term “Unitholder” shall, in relation
to Units registered in the name of CDP, mean, where the context
requires, the depositor whose Securities Account with CDP is
credited with Units
VAT
Value-added tax
Vendors
Golden Acres Investment Ltd., Market Holdings Ltd., Millennium
Capital Ltd., Superior Asset Investment Ltd., Victoria Investment
Ltd., Dellmore Investment Ltd. and Tristar, companies
incorporated in the Federal Territory of Labuan, Malaysia.
Tristar is a wholly-owned subsidiary of Matahari. The Vendors,
with the exception of Tristar, are not owned, whether wholly or
partially, directly or indirectly, by the Sponsor
Volume Weighted Average Traded
Price
The ratio of the value traded to the total volume traded over a
particular time horizon
weighted average occupancy
In respect of each Retail Mall, this is derived by dividing the
occupied area of the Retail Mall by the total NLA of the Retail
Mall.
Words importing the singular shall, where applicable, include the plural and vice versa. Words importing
the masculine gender shall, where applicable, include the feminine and neuter genders. References to
persons shall include corporations.
Any reference in this Prospectus to any enactment is a reference to that enactment for the time being
amended or re-acted.
Any reference to a time of day in this Prospectus is made by reference to Singapore time unless otherwise
stated.
281
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Appendix A
INDEPENDENT ACCOUNTANTS’ REPORT ON THE PROFIT FORECAST AND PROFIT PROJECTION
9 November 2007
The Board of Directors
Lippo-Mapletree Indonesia Retail Trust Management Ltd
(As manager of Lippo-Mapletree Indonesia Retail Trust)
78 Shenton Way
#05-01 Lippo Centre
Singapore 079120
The Board of Directors
HSBC Institutional Trust Services (Singapore) Limited
(As trustee of Lippo-Mapletree Indonesia Retail Trust)
21 Collyer Quay, #14-01 HSBC Building
Singapore 049320
Dear Sirs
LETTER FROM THE REPORTING ACCOUNTANTS ON THE PROFIT FORECAST FOR THE
FINANCIAL PERIOD ENDING 31 DECEMBER 2007 AND THE PROFIT PROJECTION FOR THE
FINANCIAL YEARS ENDING 31 DECEMBER 2008 AND 2009
This letter has been prepared for inclusion in the prospectus (the “Prospectus”) issued in connection with
the offering of certain Units in Lippo-Mapletree Indonesia Retail Trust (“LMIR Trust”) (the “Offering”).
We have examined the Profit Forecast of LMIR Trust for the financial period ending 31 December 2007
and the Profit Projection for the financial years ending 31 December 2008 and 2009 as set out on pages 98
to 100 of the Prospectus in accordance with Singapore Standards on Assurance Engagements 3400 “The
Examination of Prospective Financial Information”.
The Directors of Lippo-Mapletree Indonesia Retail Trust Management Ltd (the “Directors”) are responsible
for the preparation and presentation of the forecast and projected Consolidated Statements of Total
Return for the financial period ending 31 December 2007 (the “Profit Forecast”) and the financial years
ending 31 December 2008 and 2009 (the “Profit Projections”) in each case with respect to LMIR Trust as
set out on pages 98 to 100 of the Prospectus, including their assumptions as set out on pages 100 to 108 of
the Prospectus.
Profit forecast
Based on our examination of the evidence supporting the assumptions, nothing has come to our attention
which causes us to believe that these assumptions do not provide a reasonable basis for the Profit
Forecast. Further, in our opinion the Profit Forecast, so far as the accounting policies and calculations are
concerned, is properly prepared on the basis of the assumptions, is consistent with the accounting policies
set out on pages B-10 to B-15 of Appendix B of the Prospectus, and is presented in accordance with the
applicable presentation principles of Recommended Accounting Practice 7 “Reporting Framework for Unit
Trusts” (but not all the required disclosures for the purpose of this letter) issued by the Institute of Certified
Public Accountants of Singapore which is the framework adopted by LMIR Trust in the preparation of its
financial statements.
Profit projections
The Profit Projections have been prepared to show a possible outcome based on the stated assumptions.
As LMIR Trust is newly established without any history of activities and because the length of the period
covered by the Profit Projections extend beyond the period covered by the Profit Forecast, the assumptions
used in the Profit Projections (which include hypothetical assumptions about future events and
A-1
Appendix A
management’s actions that are not necessarily expected to occur) are more subjective than would be
appropriate for a profit forecast. The Profit Projections do not therefore constitute a profit forecast.
Based on our examination of the evidence supporting the relevant assumptions, nothing has come to our
attention which causes us to believe that these assumptions do not provide a reasonable basis for the
Profit Projections. Further, in our opinion the Profit Projections, so far as the accounting policies and
calculations are concerned, are properly prepared on the basis of the assumptions, are consistent with the
accounting policies set out on pages B-10 to B-15 of Appendix B of the Prospectus, and are presented in
accordance with the applicable presentation principles of Recommended Accounting Practice 7
“Reporting Framework for Unit Trusts” (but not all the required disclosures for the purposes of this
letter) issued by the Institute of Certified Public Accountants of Singapore which is the framework adopted
by LMIR Trust in the preparation of its financial statements.
Events and circumstances frequently do not occur as expected. Even if the events anticipated under the
hypothetical assumptions occur, actual results are still likely to be different from the Profit Forecast and
Profit Projections since other anticipated events frequently do not occur as expected and the variation may
be material. The actual results may therefore differ materially from those forecast and projected. For the
reasons set out above, we do not express any opinion as to the possibility of achievement of the Profit
Forecast and Profit Projections.
Attention is drawn, in particular to the risk factors set out on pages 65 to 87 of the Prospectus which
describe the principal risks associated with the Offering, to which the Profit Forecast and Profit Projections
relate and sensitivity analysis of the Directors’ Profit Forecast and Profit Projections set out on page 108 to
111 of the Prospectus.
Yours faithfully
RSM Chio Lim
Certified Public Accountants
Singapore
Partner in charge: Paul Lee Seng Meng
A member of the Institute of Certified Public Accountants of Singapore
A-2
Appendix B
INDEPENDENT ACCOUNTANTS’ REPORT ON THE UNAUDITED PRO FORMA CONSOLIDATED
BALANCE SHEET AS AT THE LISTING DATE
9 November 2007
The Board of Directors
Lippo-Mapletree Indonesia Retail Trust Management Ltd
(As manager of Lippo-Mapletree Indonesia Retail Trust)
78 Shenton Way
#05-01 Lippo Centre
Singapore 079120
The Board of Directors
HSBC Institutional Trust Services (Singapore) Limited
(As trustee of Lippo-Mapletree Indonesia Retail Trust)
21 Collyer Quay, #14-01 HSBC Building
Singapore 049320
Dear Sirs
INDEPENDENT ACCOUNTANTS’ REPORT ON THE UNAUDITED PRO FORMA CONSOLIDATED
BALANCE SHEET AS AT THE LISTING DATE
We report on the Unaudited Pro Forma Consolidated Balance Sheet of Lippo-Mapletree Indonesia Retail
Trust (“LMIR Trust”) and its subsidiaries (the “Pro Forma Group”) as at the Listing Date (the “Pro Forma
Consolidated Balance Sheet”) set out on pages B3 to B26 of Appendix B of the prospectus (the
“Prospectus”) issued in connection with the offering of certain units in LMIR Trust, which has been
prepared for illustrative purposes only and based on certain assumptions after making certain
adjustments.
The Pro Forma Consolidated Balance Sheet as at the Listing Date has been prepared on the basis of the
assumptions set out in section C on pages B-5 to B-6 to provide information on the financial position of the
Pro Forma Group, had the purchase of the seven retail malls comprising Gajah Mada Plaza; Cibubur
Junction; The Plaza Semanggi; Mal Lippo Cikarang; Ekalokasari Plaza; Bandung Indah Plaza and Istana
Plaza (collectively known as “Retail Malls”) and the purchase of the seven retail spaces comprising Mall
WTC Matahari Units; Metropolis Town Square Units; Depok Town Square Units; Java Supermall Units;
Malang Town Square Units; Plaza Madiun and Grand Palladium Medan Units (collectively known as
“Retail Spaces”) been undertaken by LMIR Trust under the same terms set out in the Prospectus on the
Listing Date.
The Pro Forma Consolidated Balance Sheet has been prepared for illustrative purposes only and,
because of its nature, may not give a true picture of the Pro Forma Group’s actual financial position.
The Pro Forma Consolidated Balance Sheet is the responsibility of the directors of Lippo-Mapletree
Indonesia Retail Trust Management Ltd (the “Directors”). Our responsibility is to express an opinion on the
Pro Forma Consolidated Balance Sheet based on our work.
We carried out procedures in accordance with Singapore Statement of Auditing Practice 24 “Auditors and
Public Offering Documents”. Our work, which involved no independent examination of the underlying
financial information, consisted primarily of:
(i)
comparing the Pro Forma Consolidated Balance Sheet to the combined audited balance sheets of
the seven Retail Malls property companies as at 31 December 2006, audited balance sheets of the
seven Retail Spaces property companies and its seven investment holding companies as at
15 February 2007 and 10 February 2007 respectively, the unaudited balance sheets of the
relevant Retail Malls’ ten investment holding companies as at incorporation date and four of the
relevant Retail Malls’ investment holding companies as at 31 December 2006 and the unaudited
financial statements of LMIR Trust at its constitution; and
B-1
Appendix B
(ii)
considering the evidence supporting the pro forma adjustments and discussing the Pro Forma
Consolidated Balance Sheet with the Directors.
In our opinion:
(a)
the Pro Forma Consolidated Balance Sheet has been properly prepared from the combined financial
statements of LMIR Trust and its subsidiaries (which are prepared in accordance with Singapore
Financial Reporting Standards (“FRS”) and is presented in accordance with the relevant
presentation principles of Recommended Accounting Practice 7 “Reporting Framework for Unit
Trusts” issued by the Institute of Certified Public Accountants of Singapore;
(b)
the Pro Forma Consolidated Balance Sheet has been properly prepared in a manner consistent with
both the format of the balance sheet and the relevant accounting policies of LMIR Trust;
(c)
each material adjustment to the information used in the computation of a financial effect relating to
the Pro Forma Consolidated Balance Sheet is appropriate for the purpose of preparing such a Pro
Forma Consolidated Balance Sheet and is in accordance with FRS; and
(d)
the Pro Forma Consolidated Balance Sheet has been properly prepared on the basis of the
assumptions and after making the adjustments as described in section C on pages B-5 to B-6.
Yours faithfully
RSM Chio Lim
Certified Public Accountants
Singapore
Partner in charge: Paul Lee Seng Meng
A member of the Institute of Certified Public Accountants of Singapore
B-2
Appendix B
LIPPO-MAPLETREE INDONESIA RETAIL TRUST UNAUDITED PROFORMA CONSOLIDATED BALANCE
SHEET AS AT LISTING DATE
(A)
Introduction
The Unaudited Pro Forma Consolidated Balance Sheet of Lippo-Mapletree Indonesia Retail Trust (“LMIR
Trust”) and its subsidiaries (“the Pro Forma Group”) as at the Listing Date (the “Pro Forma Consolidated
Balance Sheet”) is for the purposes of the prospectus (the “Prospectus”) issued in connection with the
offering of certain units in LMIR Trust, which has been prepared for illustrative purposes only and based on
certain assumptions after making certain adjustments.
LMIR Trust is a Singapore-based real estate investment trust constituted by a trust deed entered into
between HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”) and Lippo-Mapletree
Indonesia Retail Trust Management Ltd (the “Manager”). LMIR Trust is established with the principal
investment objective of owning and investing on a long-term basis in a diversified portfolio of incomeproducing real estate in Indonesia that are primarily used for retail and/or retail-related purposes, and real
estate related assets in connection with the foregoing purposes.
The sponsor for LMIR Trust is PT. Lippo Karawaci Tbk (“Sponsor”).
Its initial property portfolio comprises the following seven retail malls and seven retail spaces
(“Properties”):
(1)
(2)
Retail Malls
(a)
Gajah Mada Plaza;
(b)
Cibubur Junction;
(c)
The Plaza Semanggi;
(d)
Mal Lippo Cikarang;
(e)
Ekalokasari Plaza;
(f)
Bandung Indah Plaza; and
(g)
Istana Plaza
Retail Spaces
(a)
Mall WTC Matahari Units;
(b)
Metropolis Town Square Units;
(c)
Depok Town Square Units;
(d)
Java Supermall Units;
(e)
Malang Town Square Units;
(f)
Plaza Madiun; and
(g)
Grand Palladium Medan Units
The subsidiaries held by the LMIR Trust are listed below:
(i)
Special purpose investment holding companies incorporated in Singapore (“Investment Holding
Companies”) comprising Belilios International Pte Ltd, Dominion Capital Pte Ltd, Greenlot
Investments Pte Ltd, Magnus Investments Pte Ltd, Pierbridge Investments Pte Ltd, Thornton
Investments Pte Ltd, Tangent Investments Pte Ltd, Prism Investments Pte Ltd, Silver Dory
Holdings Pte Ltd, Vernon Investments Pte Ltd, Maxia Investments Pte Ltd, Fenton Investments
Pte Ltd, Langston Investments Pte Ltd, Bowland Investments Pte Ltd, Serpong Properties Pte Ltd,
Metropolis Properties Pte Ltd, Matos Properties Pte Ltd, Detos Properties Pte Ltd, Palladium
Properties Pte Ltd, Madiun Properties Pte Ltd and Java Properties Pte Ltd.
(ii)
Special purpose property companies incorporated in Indonesia (“Property Companies”) comprising
PT Graha Baru Raya (Owner of Gajah Mada Plaza), PT Graha Nusa Raya (Owner of Mal Lippo
B-3
Appendix B
Cikarang), PT Cibubur Utama (Owner of Cibubur Junction), PT Megah Semesta Abadi (Owner of
Bandung Indah Plaza), PT Suryana Istana Pasundan (Owner of Istana Plaza), PT Indah Pesona
Bogor (Owner of Ekalokasari Plaza), PT Primatama Nusa Indah (Owner of The Plaza Semanggi),
PT Dinamika Serpong (Owner of Mall WTC Matahari Units), PT Gema Metropolis Modern (Owner of
Metropolis Town Square Units), PT Matos Surya Perkasa (Owner of Malang Town Square Units), PT
Megah Detos Utama (Owner of Depok Town Square Units), PT Palladium Megah Lestari (Owner of
Grand Palladium Medan Units), PT Madiun Ritelindo (Owner of Plaza Madiun) and PT Java Mega
Jaya (Owner of Java Supermall Units).
As at the Listing Date, the auditors of the Singapore incorporated subsidiaries are RSM Chio Lim,
Singapore and the auditors of the Indonesian incorporated subsidiaries are RSM AAJ Associates,
Indonesia a member firm of RSM International of which RSM Chio Lim is a member.
All the Singapore subsidiaries and the Retail Spaces Property Companies were inactive before the date of
the acquisition of the Properties mentioned above.
All the above subsidiaries are effectively wholly-owned by LMIR Trust.
(B)
Pro Forma historical financial information
The pro forma consolidated statements of total return, consolidated cash flow statement and consolidated
balance sheet have not been prepared to show the pro forma historical financial performance and position
of LMIR Trust (“Pro Forma Historical Financial Statements”) for the following reasons:
• Gajah Mada Plaza and Mal Lippo Cikarang were recently acquired by the respective Retail Mall
Property Companies, namely PT Graha Baru Raya and PT Graha Nusa Raya, in March 2006. Historical
financial information for these two Retail Malls prior to their acquisition dates is not available from the
previous vendors and, there is no comparable historical financial information for the full years ended
31 December 2004 and 31 December 2005;
• Bandung Indah Plaza, Ekalokasari Plaza and Mal Lippo Cikarang have recently undergone major
refurbishments and other repositioning initiatives. Given the repositioning initiatives, the Manager is of
the view that any attempt to present the historical pro forma financial performance based on the actual
results of these three Retail Malls prior to their repositioning initiatives may not be comparable to the
expected results of these Retail Malls after the repositioning initiatives;
• Cibubur Junction commenced its retail space leasing operations in September 2005. Given that there
were no activities for Cibubur Junction prior to September 2005, the historical financial information on
Cibubur Junction’s performance would not be available for the full financial years ended 31 December
2004 and 31 December 2005. Accordingly, any historical pro forma financial information presented in
respect of Cibubur Junction’s short period of operations is unlikely to be meaningful or accurately reflect
its financial performance;
• Each of the Retail Spaces was wholly-owned by PT Matahari Putra Prima Tbk (“Matahari” or “Master
Lessee”) up to the Listing Date and was held for the use of Matahari’s retail businesses. As the activities
relating to the Retail Spaces form an intrinsic part of Matahari’s core business operations, Matahari
does not keep separate financial records on these Retail Spaces. Accordingly, historical financial data is
unavailable for each Retail Space; and
• If historical pro forma financial information is prepared based on the terms of the Master Lease
Agreements to be entered into between the Master Lessee and the relevant Retail Space Property
Companies, such information will be in nature of a forecast and will not reflect the historical financial
results and position of LMIR Trust with respect to the Retail Spaces. Assumptions and bases which are
prospective in nature would need to be made if LMIR Trust is to assume that such arrangements were in
place throughout the period covered by the historical pro forma financial information. As such, the
Manager believes that such historical pro forma financial information will be of little value to investors in
deciding whether to acquire the units but a profit forecast and profit projection based on, among other
things, the terms of the Master Lease Agreements would be more meaningful to investors.
For the reasons stated above, the SGX-ST has granted LMIR Trust a waiver from the requirement to
prepare Pro Forma Historical Financial Statements. In lieu of Pro Forma Historical Financial Statements, a
B-4
Appendix B
Pro Forma Consolidated Balance Sheet of LMIR Trust, upon completion of the offering and the acquisition
of the Properties, has been prepared by the Manager as set out in section D below and a profit forecast for
the period from 1 July 2007 to 31 December 2007 and profit projections for the financial years ending
31 December 2008 and 2009 have been included in the Prospectus.
(C)
Bases of preparation of Pro Forma Consolidated Balance Sheet as at the listing date
The Pro Forma Consolidated Balance Sheet as at the listing date is prepared for illustrative purposes only
and based on certain assumptions after making certain adjustments. The Manager has assumed that the
listing date is 1 July 2007 (“Listing Date”).
The Pro Forma Consolidated Balance Sheet is prepared:
• based on the audited balance sheets of the seven Retail Malls Property Companies as at 31 December
2006 and audited balance sheets of the seven Retail Spaces Property Companies as at 15 February
2007;
• based on the audited balance sheets of the seven Retail Spaces’ Investment Holding Companies as at
10 February 2007;
• based on the unaudited balance sheets of the relevant ten Investment Holding Companies as at
incorporation date and four of the relevant Investment Holding Companies as at 31 December 2006;
• based on the unaudited balance sheet of LMIR Trust as at its constitution; and
• incorporating adjustments necessary to reflect the financial position of the Pro Forma Group, pursuant
to the terms set out in the Prospectus and bases set out below.
The Pro Forma Consolidated Balance Sheet of LMIR Trust as at the Listing Date reflects the financial
position of LMIR Trust as if it had purchased the Property Companies on the Listing Date under the same
terms set out in the Prospectus.
The Pro Forma Consolidated Balance Sheet has been prepared on the basis of the accounting policies set
out in section F below.
The objective of the Pro Forma Consolidated Balance Sheet of the Pro Forma Group is to show what the
financial position might have been at the Listing Date, on the basis as described above. However, the Pro
Forma Consolidated Balance Sheet is not necessarily indicative of the financial position that would have
been actually attained by LMIR Trust on the Listing Date. The Pro Forma Consolidated Balance Sheet,
because of its nature, may not give a true picture of the Pro Forma Group’s financial position.
The Pro Forma Consolidated Balance Sheet has been prepared after incorporating the following key
adjustments:
• Adjustments to reflect the transfer of assets and liabilities from the Retail Malls Property Companies to
the Operating Companies (namely cash and cash equivalents, trade and other receivables, other
investments, certain plant and equipment, trade and other payables and borrowings). The Retail Mall
Property Companies have entered into the Operating Costs Agreements with the Operating
Companies. These agreements are more particularly described in “Certain Agreements Relating to
LMIR Trust and the Properties—Description of Operating Costs Agreements” of the Prospectus.
The financial statements of seven Retail Malls Property Companies have been restated from
Indonesian GAAP to Singapore Financial Reporting Standards (“FRS”) (“Restated FRS financial
statements”) to be in line with the accounting policies of LMIR Trust. RSM AAJ Associates were the
auditors for this purpose. The Restated FRS financial statements have been qualified by RSM AAJ
Associates to the extent that certain financial assets and financial liabilities of these Retail Malls
Property Companies have not been fair valued, accounted and presented in accordance with the
requirements of FRS 32 and 39. The Manager is of the view that there is no practical benefit in restating
these financial assets and financial liabilities to FRS as these financial assets and financial liabilities will
be transferred to the Operating Companies (see Note F15) at their carrying values as stated in
accordance with Indonesian GAAP. As such, the Manager believes that restating the financial assets
and financial liabilities to FRS will have no value to investors. The audited financial statements of these
entities prepared in accordance with Indonesian GAAP were not qualified.
B-5
Appendix B
• Adjustments to record the capital expenditure incurred for the period between 1 January 2007 and the
Listing Date amounting of approximately Rp. 51.9 billion (S$8,805,000) and the related depreciation
thereof;
• Adjustment to accrue the Build, Operate and Transfer (“BOT”) liabilities, discounted at 14% which is
approximate to the discount rate used by the property valuer in the valuation of the Properties;
• Adjustment to state the Properties at a total valuation of approximately Rp. 5.9 trillion (approximately
S$1,004,679,000) and the deferred tax attributable to the revaluation of the Properties of approximately
S$62,366,000. The valuation is based on an independent valuation dated 30 June 2007 carried out by
Knight Frank / PT. Willson Properti Advisindo as at 30 June 2007;
• Adjustment to reflect LMIR Trust’s issuance of 1,060,414,000 units at S$0.80 per unit, comprising
645,469,000 units under the Offering and 414,945,000 units allocated to Cornerstone investors for cash
of approximately S$848,331,200 before issue costs;
• Adjustment to incorporate the incurrence of issue costs relating to the offering which is estimated at
S$32,801,920; and
• Adjustment to incorporate the relevant estimated revenue, expense and deferred income and related
taxes earned and incurred between 1 January 2007 and the Listing Date.
In addition, the Manager has assumed the following:
• The valuations of the Properties adopted at the Listing Date remain unchanged from those as at 30 June
2007 based on the independent valuation report by Knight Frank / PT. Willson Properti Advisindo dated
30 June 2007;
• The issue price of the units under offering is S$0.80 per unit;
• The total acquisition cost of the Investment Holding Companies and the Property Companies is
approximately S$815,529,280;
• The derivative financial instruments that will be contracted at the Listing Date will have no significant
impact to the financial position of LMIR Trust;
• All agreements are enforceable and will be performed in accordance with their respective terms and
conditions;
• Prior to the Listing Date, there will be no significant transactions in the seven Retail Spaces Property
Companies and their respective Investment Holding Companies and, the Investment Holding
Companies of the Retail Malls Property Companies; and
• Interest is earned based on the estimated monthly net cash inflow at an interest rate of 2% per year
calculated on monthly basis. The Manager has assumed that the interest income earned will be
subjected to Indonesia withholding tax of 20% and the funds will be kept in Indonesian Rupiah and
Singapore dollars.
B-6
Appendix B
(D)
Pro Forma Consolidated Balance Sheet as at the Listing Date
The Pro Forma Consolidated Balance Sheet as at the Listing Date has been prepared for inclusion in
the Prospectus and is presented below. The assumptions used to prepare the Pro Forma
Consolidated Balance Sheet are consistent with those described in Bases of Preparation of the
Pro Forma Consolidated Balance Sheet in section C. The following combined balance sheet
comprises the relevant audited and unaudited balance sheets of LMIR Trust and its subsidiaries.
Notes
F3
F4
9,270
19,938
77,651
(6,355)
86,921
13,583
.
29,208
71,296
100,504
.
.
.
.
.
10,997
27,934
247,106
—
286,037
(10,997)
(27,934)
(247,106)
1,004,679
718,642
—
—
—
1,004,679
1,004,679
315,245
789,938
1,105,183
8,807
4,709
22,444
—
(7,020)
(246)
(22,444)
148
1,787
4,463
—
148
35,960
(29,562)
6,398
F5
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . .
LIABILITIES
Current liabilities
Trade and other payables . . . . . . . . . . . . . . . .
Current tax payable . . . . . . . . . . . . . . . . . . . .
Borrowings from financial institutions . . . . . . .
Current portion of finance leases . . . . . . . . . .
.
.
.
.
F6
F7
Total current liabilities . . . . . . . . . . . . . . . . . .
Non-current liabilities
Deferred tax liabilities . . . . . . . . . . . . . . . . . . .
Deferred income . . . . . . . . . . . . . . . . . . . . . . .
Other payables . . . . . . . . . . . . . . . . . . . . . . . .
Long-term borrowings from financial
institutions . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance leases . . . . . . . . . . . . . . . . . . . . . . . .
Total non-current liabilities . . . . . . . . . . . . .
Pro forma
consolidated
balance sheet
as at listing date
S$’000
Combined
balance sheet
S$’000
ASSETS
Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . .
Trade and other receivables . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . .
Non-current assets
Other receivables . . . . . . . . . . . . . . . . . . . . . .
Other investment . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . .
Investment properties . . . . . . . . . . . . . . . . . . .
Total non-current assets . . . . . . . . . . . . . . .
Pro forma
adjustments
(see section E
below)
S$’000
.
.
.
F8
F6
F6
—
91,681
124,837
62,366
(24,832)
(119,624)
62,366
66,849
5,213
.
.
.
F7
26,345
—
242,863
(26,345)
1,041
(107,394)
—
1,041
135,469
278,823
(136,956)
141,867
36,422
926,894
963,316
315,245
789,938
1,105,183
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . .
Unitholders funds
Net assets attributable to Unitholders . . . . . . . .
Total liabilities and Unitholders funds. . . . . . . . .
F9
See accompanying notes to the Pro Forma Consolidated Balance Sheet.
B-7
Appendix B
(E)
Pro Forma adjustments
In arriving at the Pro Forma Consolidated Balance Sheet of the Pro Forma Group at the Listing Date, the
following pro forma adjustments were made:
S$’000
(i)
(ii)
(iii)
(iv)
(v)
Cash and cash equivalents
Rental deposits received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer of cash to the Operating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of Investment Holding and Property Companies . . . . . . . . . . . . . . . . .
Proceeds from issuance of units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash injection by Operating Companies and Vendors . . . . . . . . . . . . . . . . . .
Capital expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Refund arising from rearrangement of leases. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash arising from rentals collected in advance (net of tax) and other operating
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other receivables
Transfer of assets to the Operating Companies . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid tax for rents collected in advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortisation of prepaid tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid tax written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables for the period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
.
.
.
.
.
.
.
3,754
(9,270)
(815,529)
815,529
94,870
(8,805)
(29,623)
.
.
26,725
77,651
.
.
.
.
.
(5,702)
2,597
(2,572)
(2,956)
2,278
(6,355)
Other receivables (Non-current)
Transfer of assets to the Operating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10,997)
Other investments
Transfer of assets to the Operating Companies . . . . . . . . . . . . . . . . . . . . . . . . . . .
(27,934)
Property, Plant and Equipment
Transfer of assets to the Operating Companies . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification to investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,061)
8,805
(4,620)
(250,230)
.
.
.
.
Total
(vi)
(vii)
(viii)
(ix)
B-8
(247,106)
Investment properties
Investment properties acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revaluation surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
796,792
207,887
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,004,679
Trade and other payables
Transfer of liabilities to the Operating Companies. . . . . . . . . . . . . . . . . . . . . . . . . .
Rental received in advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other payables for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
(5,914)
1,167
(2,273)
(7,020)
Taxes payable
Net tax paid during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(246)
Borrowings from financial institutions
Short term: Transfer of liabilities to the Operating Companies . . . . . . . . . . . . . . . .
Long-term: Transfer of liabilities to the Operating Companies. . . . . . . . . . . . . . . . .
(22,444)
(26,345)
Appendix B
S$’000
(x)
(xi)
(xii)
Finance leases
Accrual of BOT Fees (see Note F15)
—Short term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—Long-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
148
1,041
Deferred tax
Deferred tax arising from the revaluation of investment properties . . . . . . . . . . . . .
62,366
Deferred income
Net increase during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Refund arising from rearrangement of leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,791
(29,623)
Total
(24,832)
(xiii) Other payables (Non-current)
Transfer of liabilities to the Operating Companies. . . . . . . . . . . . . . . . . . . . . . . . .
Interest accrued on certain financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rental deposits net of fair value adjustment at the Listing Date . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(xiv)
Net assets attributable to Unitholders
Issuance of units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value adjustment on rental deposits at the Listing Date . . . . . . . . . . . . . . . . .
Total net return for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Elimination of pre-acquisition reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revaluation surplus net of deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
.
.
.
(121,493)
49
1,820
(119,624)
.
.
.
.
.
.
815,529
2,266
16,066
(52,488)
145,521
926,894
B-9
Appendix B
(F)
Notes to the Pro Forma Consolidated Balance Sheet
1.
Summary of significant accounting policies
The following is a summary of the significant accounting policies of the Pro Forma Group which has been
consistently applied in preparing the Pro Forma Consolidated Balance Sheet set out in this report.
Accounting convention—
The financial statements are prepared under the historical cost convention except where Singapore
Financial Reporting Standards (“FRS”) require an alternative treatment (such as fair values) as disclosed
where appropriate in these financial statements.
Basis of preparation—
The Pro Forma Consolidated Balance Sheet is prepared in accordance with the bases set out in section C
and applied to financial information prepared in accordance with the Statement of Recommended
Accounting Practice (“RAP”) 7 “Reporting Framework for Unit Trusts” issued by the Institute of
Certified Public Accountants of Singapore, FRS and the applicable requirements of the Code on
Collective Investment Schemes issued by the Monetary Authority of Singapore (“MAS”) and the
provisions of the Trust Deed.
The Pro Forma Consolidated Balance Sheet is presented in Singapore dollar and rounded to the nearest
thousand, unless otherwise stated.
The preparation of financial statements in conformity with generally accepted accounting principles
requires the management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates. The estimates and assumptions are reviewed on an ongoing
basis. Apart from those involving estimations, management has made judgments in the process of
applying the entity’s accounting policies. The areas requiring management’s most difficult, subjective or
complex judgments, or areas where assumptions and estimates are significant to the financial statements,
are disclosed at the end of this footnote, where applicable.
Basis of presentation—
The consolidation accounting method is used for the consolidated financial statements which include the
financial statements made up to the balance sheet date of the Trust and of those companies in which it
holds, directly or indirectly through subsidiaries, over 50 percent of the shares and voting rights (its
subsidiaries including special purpose entities). Consolidated financial statements are the financial
statements of the group presented as those of a single economic entity. The consolidated financial
statements are prepared using uniform accounting policies for like transactions and other events in similar
circumstances. All significant intragroup balances and transactions, including income, expenses and
dividends, are eliminated in full on consolidation. The results of the investees acquired or disposed of
during the financial year are consolidated from the respective dates of acquisition or up to the dates of
disposal. On disposal the attributable amount of goodwill is included in the determination of the gain or loss
on disposal.
Subsidiaries—
A subsidiary is an entity including unincorporated and special purpose entity that is controlled by the group.
Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from
its activities accompanying a shareholding of more than one half of the voting rights or the ability to appoint
or remove the majority of the members of the board of directors or to cast the majority of votes at meetings
of the board of directors. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the group controls another entity. In the Trust’s own
separate financial statements, the investments in subsidiaries are stated at cost less any provision for
impairment in value. Impairment loss recognised in profit or loss for a subsidiary is reversed only if there
has been a change in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. The net book values of the subsidiaries are not necessarily indicative of
the amounts that would be realised in a current market exchange.
B-10
Appendix B
Cash and cash equivalents—
Cash and cash equivalents include bank and cash balances and any highly liquid debt instruments
purchased with an original maturity of three months or less.
Trade receivables—
After initial recognition at fair value, trade receivables are measured at amortised cost using the effective
interest method except that short-duration receivables with no stated interest rate are normally measured
at original invoice amount unless the effect of imputing interest would be significant. Trade receivables are
stated after provision for impairment. The amount of the provision for impairment is recognized in the
statement of total return. A trade receivable amount is regarded as impaired if there is objective evidence
of impairment as a result of one or more events that occurred after the initial recognition and that loss event
has an impact on the estimated future cash flows of the financial asset that can be reliably estimated. The
carrying amounts of trade receivables are assumed to approximate their fair value. Normally no interest is
charged on trade receivables.
Loans and other receivables—
Loans and other receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market, other than: (a) those that the entity intends to sell immediately or in the
near term and are classified as held for trading, and those that the entity upon initial recognition designates
as at fair value through profit or loss; (b) those that the entity upon initial recognition designates as
available for sale; or (c) those for which the holder may not recover substantially all of its initial investment,
other than because of credit deterioration and are classified as available for sale. Items with a short
duration are not discounted. After initial recognition such financial assets, including derivatives that are
assets, are measured at their fair values, without any deduction for transaction costs that may be incurred
on sale or other disposal, except for the non-current financial assets that are loans and receivables which
are measured at amortised cost using the effective interest method less provision for impairment. These
items are included in the balance sheet in loans and receivables as current assets or as non-current assets
where the maturities are greater than 12 months after the balance sheet date.
Investment properties—
Investment property is property owned or held under a finance lease to earn rentals or for capital
appreciation or both, rather than for use in the production or supply of goods or services or for
administrative purposes or sale in the ordinary course of business. After initial recognition at cost
including transaction costs the fair value model is used to measure the investment property at fair
value on the existing use basis to reflect the actual market state and circumstances as of the balance sheet
date, not as of either a past or future date. A gain or loss arising from a change in the fair value of
investment property is included in the statement of total return for the period in which it arises. The
revaluations are made periodically on a systematic basis at least once yearly by external independent
valuers having an appropriate recognised professional qualification and recent experience in the location
and category of property being valued.
Net assets attributable to Unitholders—
Net assets attributable to Unitholders represents the Unitholders’ residual interest in LMIR Trust’s net
assets upon termination.
Expenses incurred in connection with the initial public offering of LMIR Trust are deducted directly from net
assets attributable to Unitholders.
Impairment of non-financial assets—
At each full year balance sheet date an assessment is made whether there is any indication that a
depreciable or amortisable asset may be impaired. If any such indication exists, an estimate is made of the
recoverable amount of the asset. Irrespective of whether there is any indication of impairment, an annual
impairment test is performed at the same time every year on an intangible asset with an indefinite useful
life or an intangible asset not yet available for use. The impairment loss is the excess of the carrying
amount over the recoverable amount and is recognised in the statement of total return unless the relevant
asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation
decrease. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less
B-11
Appendix B
costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
At each reporting date non-financial assets other than goodwill with impairment loss recognised in prior
periods are assessed for possible reversal of the impairment. An impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Impairment of financial assets—
All financial assets except those measured at fair value through profit or loss are subject to review for
impairment. A financial asset or a group of financial assets is impaired and impairment losses are incurred
if there is objective evidence of impairment as a result of one or more events that occurred after the initial
recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated
future cash flows of the financial asset or group of financial assets that can be reliably estimated. Losses
expected as a result of future events, no matter how likely, are not recognised.
Financial liabilities—
Financial liabilities at fair value through profit or loss when recognised initially are measured at fair value.
Financial liabilities not at fair value through profit or loss are measured at fair value plus transaction costs
that are directly attributable to the acquisition or issue of the financial liability. After initial recognition
financial liabilities at fair value through profit or loss, including derivatives that are financial liabilities, are
measured at fair value. Other financial liabilities not at fair value through profit or loss are measured at
amortised cost and any difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the statement of total return over the period of the borrowings using the effective
interest method. Financial liabilities including bank and other borrowings are classified as current liabilities
unless there is an unconditional right to defer settlement of the liability for at least 12 months after the
balance sheet date. Items classified within trade and other payables are not usually re-measured, as the
obligation is usually known with a high degree of certainty and settlement is short-term.
Liabilities and provisions—
A liability or provision is recognised when there is a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation and a reliable estimate can be made of the amount of the obligation. These include
trade and other payables and where the effect of the time value of money is material, the amount
recognised is the present value of the expenditures expected to be required to settle the obligation using a
pre-tax rate that reflects current market assessments of the time value of money and the risks specific to
the obligation. The increase in the provision due to passage of time is recognised as interest expense.
Leases as a lessee—
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an
asset. At the commencement of the lease term, a finance lease is recognised as an asset and as liability in
the balance sheet at amounts equal to the fair value of the leased asset or, if lower, the present value of the
minimum lease payments, each determined at the inception of the lease. The discount rate used in
calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this
is practicable to determine; if not, the lessee’s incremental borrowing rate is used. Any initial direct costs of
the lessee are added to the amount recognised as an asset. The excess of the lease payments over the
recorded lease liability are treated as finance charges which are allocated to each period during the lease
term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
Contingent rents are charged as expenses in the periods in which they are incurred. The assets are
depreciated as owned depreciable assets. Leases where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased assets are classified as operating leases. For operating
leases, lease payments are recognised as an expense in the statement of total return on a straight-line
basis over the term of the relevant lease unless another systematic basis is representative of the time
pattern of the user’s benefit, even if the payments are not on that basis. Lease incentives received are
recognised in the statement of total return as an integral part of the total lease expense.
B-12
Appendix B
Leased assets—
Leases in terms of which the entity assumes substantially all the risks and rewards of ownership are
classified as finance leases. The owner-occupied property acquired by way of finance lease is stated at an
amount equal to the lower of its fair value and the present value of the minimum lease payments at
inception of the lease, less accumulated depreciation and impairment losses. A property held under a
finance lease and leased out under operating lease is classified as investment property and stated at the
fair value. Lease payments are accounted for as described in these accounting policies. Property held
under operating leases that would otherwise meet the definition of investment property is classified as
investment property.
Liabilities and equity financial instruments—
A financial instrument is classified as a liability or as equity in accordance with the substance of the
contractual arrangement on initial recognition. Where the financial instrument does not give rise to a
contractual obligation on the part of the issuer to make payment in cash or kind under conditions that are
potentially unfavourable, it is classified as an equity instrument. The equity and the liability elements of
compound instruments are classified separately as equity and as a liability. Equity instruments are
recorded at the proceeds, net of direct issue costs.
Fair value of financial instruments—
The carrying values of current financial assets and financial liabilities including cash, accounts receivable,
short-term borrowings, accounts payable approximate their fair values due to the short-term maturity of
these instruments. The fair values of non-current financial instruments are not disclosed unless there are
significant items at the end of the year and in the event the fair values are disclosed in the relevant notes.
Disclosures of fair value are not made when the carrying amount is a reasonable approximation of fair
value. The maximum exposure to credit risk is the fair value of the financial instruments at the balance
sheet date.
Cash flow hedge—
Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a
recognised asset or liability, or a highly probable forecast transaction, the effective part of any gain or loss
on re-measurement of the derivative financial instrument to fair value is recognised directly in hedging
reserve. The ineffective part of any gain or loss is recognised immediately in the statement of total return.
When the forecast transaction subsequently results in the recognition of a non-financial asset or nonfinancial liability, or the forecast transaction for a non-financial asset or non-financial liability becomes a
firm commitment for which fair value hedge accounting is applied, the associated cumulative gain or loss is
removed from hedging reserve and included in the initial cost or other carrying amount of the non-financial
asset or liability. If a hedge of a forecast transaction subsequently results in the recognition of a financial
asset or financial liability, the associated gains and losses that were recognised directly in hedging reserve
are reclassified into the statement of total return in the same period or periods during which the asset
acquired or liability assumed affects the statement of total return (i.e. when interest income or expense is
recognised). For other cash flow hedges, the associated cumulative gain or loss is removed from hedging
reserve and recognised in the statement of total return in the same period or periods during which the
hedged forecast transaction affects the statement of total return.
When a hedging instrument expires or is sold, terminated or exercised, or the designation of the hedge
relationship is revoked but the hedged forecast transaction is still expected to occur, the cumulative gain or
loss at that point remains in hedging reserve and is recognised in accordance with the above policy when
the transaction occurs. If the hedged forecast transaction is no longer expected to take place, the
cumulative unrealised gain or loss recognised in hedging reserve is recognised immediately in the
statement of total return.
Foreign currency transactions—
The functional currency is the Singapore dollar as it reflects the primary economic environment in which
the Trust operates. Transactions in foreign currencies are recorded in the functional currency at the rates
ruling at the dates of the transactions. At each balance sheet date, recorded monetary balances and
balances measured at fair value that are denominated in foreign currencies are reported at the rates ruling
B-13
Appendix B
at the balance sheet and fair value dates respectively. All realised and unrealised exchange adjustment
gains and losses are dealt with in the statement of total return. The presentation is in the functional
currency.
Foreign currency financial statements—
The foreign entities determine the appropriate functional currency as it reflects the primary economic
environment in which the entities operate. In translating the financial statements of a foreign entity for
incorporation in the consolidated financial statements the assets and liabilities denominated in currencies
other than the functional currency of the entity are translated at rate of Rp. 1 to S$0.000169 (or S$1 to
Rp. 5,900) as at 31 December 2006. The same rate has been used in translating the pro forma
adjustments set out section E of this report. The resulting translation adjustments (if any) are
accumulated in a separate component of equity until the disposal of the foreign entity.
Revenue recognition—
The revenue amount is the fair value of the consideration received or receivable from the gross inflow of
economic benefits during the year arising from the course of the ordinary activities of the entity and it is
shown net of related tax and discounts, if any. Revenue from rendering of services that are of short duration
is recognised when the services are completed. Rental revenue is recognised on a time-proportion basis
that takes into account the effective yield on the asset. Rental received in advance is amortised on timeproportion basis. Interest revenue is recognised on a time-proportion basis using the effective interest rate
that takes into account the effective yield on the asset.
A fair value gain or loss on a financial asset or financial liability classified as at fair value through profit or
loss that is not part of a hedging relationship is recognised in profit or loss. A fair value gain or loss on an
available-for-sale financial asset is recognised directly in equity, except for impairment losses and foreign
exchange gains and losses until the financial asset is derecognised, at which time the cumulative gain or
loss previously recognised in equity is recognised in profit or loss. However, interest calculated using the
effective interest method is recognised in profit or loss. Dividends on equity instrument are recognised in
profit or loss when the entity’s right to receive payment is established. For financial assets and financial
liabilities carried at amortised cost, a gain or loss is recognised in profit or loss when the financial asset or
financial liability is derecognised or impaired, and through the amortisation process. However, hedged
items are taken to equity.
Borrowing costs—
All borrowing costs that are interest and other costs incurred in connection with the borrowing of funds are
recognised as an expense in the period in which they are incurred except for borrowing costs that are
directly attributable to the acquisition, construction or production of a qualifying asset that necessarily take
a substantial period of time to get ready for their intended use or sale are capitalised as part of the cost of
that asset until substantially all the activities necessary to prepare the qualifying asset for its intended use
or sale are complete. The interest expense is calculated using the effective interest rate method.
Income tax—
The income taxes are accounted using the asset and liability method that requires the recognition of taxes
payable or refundable for the current year and deferred tax liabilities and assets for the future tax
consequence of events that have been recognised in the financial statements or tax returns. The
measurements of current and deferred tax liabilities and assets are based on provisions of the
enacted or substantially enacted tax laws; the effects of future changes in tax laws or rates are not
anticipated. Income tax expense represents the sum of the tax currently payable and deferred tax.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same income
tax authority. The carrying amount of deferred tax assets is reviewed at each balance sheet date and is
reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not
expected to be realised. A deferred tax amount is recognised for all temporary differences, unless the
deferred tax amount arises from (a) goodwill for which amortisation is not deductible for tax purposes; or
(b) the initial recognition of an asset or liability in a transaction which (i) is not a business combination; and
(ii) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). A deferred tax
liability is not recognised for all taxable temporary differences associated with investments in subsidiaries,
and interests in joint ventures because (a) the company is able to control the timing of the reversal of the
B-14
Appendix B
temporary difference; and (b) it is probable that the temporary difference will not reverse in the foreseeable
future. Taxes relating to items directly related to Unitholders’ funds, in which case it is recognised in
Unitholders’ Funds.
Segment reporting—
A business segment is a distinguishable component of an enterprise that is engaged in providing an
individual product or service or a group of related products or services and that is subject to risks and
returns that are different from those of other business segments. A geographical segment is a
distinguishable component that is engaged in providing products or services within a particular
economic environment and that is subject to risks and returns that are different from those of
components operating in other economic environments. Segment information has not been presented
as all of the Pro Forma Group’s investment properties are used primarily for retail purposes and are all
located in Indonesia.
Critical judgements, assumptions and estimation uncertainties
Other than as disclosed in section C of this report, there were no critical judgments made in the process of
applying the entity’s accounting policies that have the most significant effect on the amounts recognised in
the financial statements. There were no key assumptions concerning the future, and other key sources of
estimation uncertainty at the balance sheet date, that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year.
Risk management policies for financial instruments
GENERAL RISK MANAGEMENT PRINCIPLES—The financial instruments comprise borrowings, some
cash and liquid resources, and various items, such as trade and other receivables, trade and other
payables. The main purpose of these financial instruments is to raise finance for the entity’s operations.
The main risks arising from the entity’s financial instruments are credit risk, interest risk, liquidity risk,
foreign currency risk and market price risk comprising interest rate and currency risk exposures. The
management reviews and monitors policies for managing each of these risks and they are summarised
below.
CREDIT RISK ON FINANCIAL ASSETS—Financial assets that are potentially subject to concentrations of
credit risk and failures by counterparties to discharge their obligations consist principally of cash, cash
equivalents and trade and other accounts receivable. Credit risk on cash balances and derivative financial
instruments is limited because the counter-parties are banks with high credit ratings. An ongoing credit
evaluation is performed of the debtors’ financial condition and a loss from impairment is recognised in the
statement of total return. There is no significant concentration of credit risk, as the exposure is spread over
a large number of counter-parties and customers unless otherwise disclosed in the notes to the financial
statements.
OTHER RISKS ON FINANCIAL INSTRUMENTS—The main risks arising from the entity’s financial
instruments are interest risk, liquidity risk and foreign currency risk. The operations will be financed
through a mixture of retained earnings and borrowings. Borrowings are in the desired currencies at both
fixed and floating rates of interest. The policy is to retain flexibility in selecting borrowings at both fixed and
floating interest rates. There is exposure to interest rate price risk for financial instruments with a fixed
interest rate and to interest rate or cash flow risk for financial instruments with a floating interest rate that is
reset as market rates change. Interest rate swaps may be used to generate the desired interest profit and
to manage the exposure to interest rate fluctuations. There is also exposure to liquidity. As regards to
liquidity, the policy has been to ensure continuity of funding and where necessary a certain percentage of
the borrowings should mature in two to five years. Short-term flexibility is achieved by overdraft facilities.
There is also exposure to changes in foreign exchange rates arising from foreign currency transactions
and balances and changes in fair values. The Pro Forma Group has planned to utilise currency derivatives
to eliminate or reduce the exposure of its foreign currency and to hedge future transactions and cash flows.
As a matter of principle, the Pro Forma Group does not enter into derivative contracts for speculative
purposes.
B-15
Appendix B
2.
Related party transactions
A related party is an entity or person that directly or indirectly through one or more intermediaries controls,
is controlled by, or is under common or joint control with, the entity in governing the financial and operating
policies, or that has an interest in the entity that gives it significant influence over the entity in financial and
operating decisions. It also includes members of the key management personnel or close members of the
family of any individual referred to herein and others who have the ability to control, jointly control or
significantly influence by or for which significant voting power in such entity resides with, directly or
indirectly, any such individual. This includes the Sponsor, the Manager, parents, subsidiaries, fellow
subsidiaries, associates, joint ventures and post-employment benefit plans, if any.
2.1
Related parties transactions
Transactions with related parties mainly consists of trade receivables, intercompany advances and
charges, and loans. The related party transactions are made on terms equivalent to those that prevail
in market rated transactions unless otherwise disclosed. The current intercompany balances are
unsecured without fixed repayment terms and interest unless stated otherwise. For non-current
balances an interest is imputed based on the cost of borrowing less the interest rate if any provided in
the agreement for the balance.
Intragroup transactions and balances that have been eliminated in the Pro Forma Consolidated Balance
Sheet are not disclosed as related party transactions and balances below.
The trade transactions and the trade receivables and payables balances arising from lease of spaces and
services rendered are disclosed elsewhere in the notes to the Pro Forma Consolidated Balance Sheet.
In addition to the transactions and balances disclosed elsewhere in the notes to the Pro Forma
Consolidated Balance Sheet, the Trustee, on behalf of LMIR Trust, has entered into a number of
transactions with the Manager and certain related parties of the Manager in connection with the
setting up of LMIR Trust and the Offering as follows:
• The Trustee has entered into the Trust Deed with the Manager. The terms of the Trust Deed are
generally described in “The Formation and Structure of LMIR Trust” of the Prospectus.
• The Retail Space Property Companies, which will be indirectly owned by the Trustee as at the Listing
Date, have entered into the Master Lease Agreements with the Master Lessee for the operation,
maintenance, management and marketing of the Retail Spaces. These agreements are more
particularly described in “Certain Agreements Relating to LMIR Trust and the Properties—
Description of the Master Lease Agreements” of the Prospectus.
• The Retail Mall Property Companies, which will be indirectly owned by the Trustee as at the Listing Date,
have entered into the Operating Costs Agreements with the Operating Companies. These agreements
are more particularly described in “Certain Agreements Relating to LMIR Trust and the Properties—
Description of the Operating Costs Agreements” of the Prospectus.
• The Trustee has entered into the Singapore SPC Share Purchase Agreements with the Vendors for the
acquisition of all the ordinary shares and redeemable preference shares in each of the Target Singapore
Investment Holding Companies. These agreements are more particularly described in “Certain
Agreements Relating to LMIR Trust and the Properties—Description of the Singapore SPC Share
Purchase Agreements” of the Prospectus. The Trustee has also entered into the Deeds of Indemnity
with Lippo Capital Limited pursuant to which Lippo Capital Limited will, subject to certain conditions,
indemnify the Trustee against liabilities or damage suffered by the Trustee arising from any of the
Singapore SPC Share Purchase Agreements. These agreements are more particularly described in
“Certain Agreements Relating to LMIR Trust and the Properties—Description of the Deeds of
Indemnity” of the Prospectus.
• The Retail Mall Property Companies, which will be indirectly owned by the Trustee as at the Listing Date,
have entered into the Existing Property Management Agreements with the Property Manager for the
operation, management, maintenance and marketing of the Retail Malls. These agreements are more
particularly described in “Certain Agreements Relating to LMIR Trust and the Properties—Description
of the Existing Property Management Agreements” of the Prospectus.
B-16
Appendix B
• The Trustee, the Manager and the Property Manager have entered into the Master Property
Management Agreement pursuant to which the Property Manager was appointed to operate,
maintain, manage and market all the properties of LMIR Trust located in Indonesia acquired after
the Listing Date, subject to the overall management of the Manager. This agreement is more particularly
described in “Certain Agreements Relating to LMIR Trust and the Properties—Description of the Master
Property Management Agreement” of the Prospectus.
3.
Cash and cash equivalents
S$’000
Not restricted in use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86,921
Analysis of above amount denominated in foreign currency:
Indonesian Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,072
The effective rate of interest for interest earning balances is 2% per year.
4.
Trade and other receivables
S$’000
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
VAT receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,277
6,023
5,283
Total
13,583
Analysis of above amount denominated in foreign currency:
Indonesian Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,583
Prepaid taxes refer to tax paid on the rents received in advance. The amount is expensed to statement of
total return when the rent is recognised as income.
5.
Investment properties
S$’000
At valuation:
Additions at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revaluation surplus included in the statement of total return . . . . . . . . . . . . . . . . . . . . . . .
Fair value at the Listing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
796,792
207,887
1,004,679
All the Properties are located in Indonesia. Investment properties comprise Retail Malls and Retail Spaces
that are leased to customers. Details of the investment properties are as follows:
Description of property
Location
Retail Malls
Gajah Mada Plaza(c)
Cibubur Junction(b)
The Plaza Semanggi(b)
Mal Lippo Cikarang(a)
Ekalokasari Plaza(b)
Bandung Indah Plaza(b)
Istana Plaza(b)
Sub total
Jakarta . . . . . . . . . . . . . . .
Jakarta . . . . . . . . . . . . . . .
Jakarta . . . . . . . . . . . . . . .
Cikarang, Greater Jakarta
Bogor, Greater Jakarta . . .
Bandung, West Java . . . .
Bandung, West Java . . . .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
At valuation
as at
listing date
S$’000
Percentage of total
net assets
attributable to
Unitholders
%
103,780
94,186
214,847
80,186
66,017
124,458
125,729
809,203
10.8
9.8
22.3
8.3
6.9
12.9
13.1
84.0
B-17
Appendix B
Description of property
Location
Retail Spaces
Mall WTC Matahari Units(c)
Metropolis Town Square Units(d)
Depok Town Square Units(d)
Java Supermall Units(c)
Malang Town Square Units(d)
Plaza Madiun(a)
Grand Palladium Medan Units(d)
Tangerang, Greater Jakarta .
Tangerang, Greater Jakarta .
Depok, Greater Jakarta . . . .
Semarang, Central Java . . . .
Malang, East Java . . . . . . . .
Madiun, Central Java . . . . . .
Medan, North Sumatra . . . . .
Sub total
Total investment properties, at valuation
(a)
(b)
..
..
..
..
..
..
..
..
..
..
..
..
..
..
At valuation
as at
listing date
S$’000
Percentage of total
net assets
attributable to
Unitholders
%
25,170
33,542
25,661
25,983
25,543
33,424
26,153
2.6
3.5
2.7
2.7
2.7
3.5
2.7
195,476
1,004,679
20.3
The title/right held by LMIR Trust is Hak Guna Bangunan (“HGB”). A holder of HGB title has the right
to erect, occupy and use buildings on that particular parcel of land, and also has the right to
encumber and sell all or part of the parcel.
These properties are under build operate and transfer arrangements (“BOT”) (see Note F15 ). This
right is granted by the land owner to the Retail Malls Property Companies, who are given the right to
build and operate the Retail Malls for a particular period of time in exchange for payment of certain
compensation as stipulated in the BOT agreements. Specific terms and conditions apply for each
BOT agreement and its addendums.
(c)
The title/right held by LMIR Trust is strata title. For strata titles, under the Indonesian land law, a
building developer must divide the multi-storey building into (i) rights of ownership (strata title) on
each unit, (ii) rights on common properties and (iii) rights to common land in the form of a sketch plan,
which must be approved by the relevant authority. Such sketch plan must also provide an explanation
on (i) unit separation that can be used by individuals, (ii) the limitation and separation of the strata title
right over common properties and (iii) the strata title right over the common land.
(d)
These retail spaces are each bound by Kiosks Sale and Purchase Binding Agreements because
their strata titles are in the process of being issued by the Indonesian government. See also
Note F15.
Other details on the Properties are disclosed in the Prospectus. Please also refer to the revaluation
selected by the Manager as disclosed in the Prospectus.
The carrying amounts of the investment properties as at the Listing Date are based on an independent
valuation dated 30 June 2007 undertaken by Knight Frank / PT. Willson Properti Advisindo as of 30 June
2007. The valuations were based on the Income Method of valuation utilising a Discounted Cashflow
Analysis and Income Capitalisation Method.
6.
Trade and other payables / deferred income
S$’000
Rental deposits from tenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income—Retail Spaces . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total trade and other payables (Current) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
394
1,166
227
1,787
Other payables (Non-current)—Rental deposits from tenants . . . . . . . . . . . . . . . . . . . . . . . . .
5,213
Deferred income (Non-current)—Retail Malls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66,849
Analysis of above amount denominated in foreign currency:
Indonesian Rupiah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
73,849
B-18
Appendix B
Deferred income represents rent received in advance. The amount is recognised to statement of total
return over the period of the relevant leases.
Long-term other payables represent rental deposits from tenants. The amount includes rental deposits of
Rp. 20.6 billion (S$3,500,000) from a related party of the Sponsor. In addition, the related party has
provided bankers guarantee equivalent to three months deposit of approximately Rp. 20.6 billion
(S$3,500,000).
Long-term rental deposits is stated at amortised cost which is approximate to fair value.
7.
Finance lease liabilities
Finance lease represents BOT fees payable (see Note F15 for further details). The amount carries a
notional interest rate of 14% per year.
8.
Deferred tax liabilities
This refers to deferred tax arising from the revaluation of the investment properties.
9.
Net assets attributable to Unitholders
S$’000
Unitholders’ contribution
From creation of units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unit issue costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value adjustments of rental deposit as at the Listing Date . . . . . . . . . . . . . . . . . . . . .
Surplus on revaluation of investment properties, net of deferred tax . . . . . . . . . . . . . . . . .
Total increase in net assets attributable to Unitholders . . . . . . . . . . . . . . . . . . . . . . . . . . .
.
.
.
.
.
.
848,331
(32,802)
815,529
2,266
145,521
963,316
Units in issue (’000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,060,414
Net assets attributable to Unitholders per unit (S$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.91
10.
Units in issue
‘000
Creation of new units arising from:
—the Cornerstone Units (subject to the over-allotment option) . . . . . . . . . . . . . . . . . . . . . .
—the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
414,945
645,469
1,060,414
The Cornerstone Units will vary as is more fully described in the Prospectus.
Each unit in LMIR Trust represents an undivided interest in LMIR Trust. The key rights of Unitholders are
contained in the Trust Deed and include the rights to:
• receive income and other distributions attributable to the Units held;
• receive audited financial statements and the annual reports of LMIR Trust; and
• participate in the termination of LMIR Trust by receiving a share of all net cash proceeds derived from the
realisation of the assets of LMIR Trust less any liabilities, in accordance with their proportionate interests
in LMIR Trust.
No Unitholder has a right to require that any assets of LMIR Trust be transferred to him.
B-19
Appendix B
Further, Unitholders cannot give directions to the Trustee or the Manager (whether at a meeting of
Unitholders duly convened and held in accordance with the provisions of the Trust Deed or otherwise) if it
would require the Trustee or the Manager to do or omit doing anything which may result in:
• LMIR Trust ceasing to comply with applicable laws and regulations; or
• The exercise of any discretion expressly conferred on the Trustee or the Manager by the Trust Deed or
the determination of any matter which, under the Trust Deed, requires the agreement of either or both of
the Trustee and the Manager.
The Trust Deed contains provisions that are designed to limit the liability of a Unitholder to the amount paid
or payable for any Unit. The provisions seek to ensure that if the Issue Price of the Units held by a
Unitholder has been fully paid, no such Unitholder, by reason alone of being a Unitholder, will be personally
liable to indemnify the Trustee or any creditor of LMIR Trust in the event that the liabilities of LMIR Trust
exceeds its assets.
Under the Trust Deed, every Unit carries the same voting rights.
11.
Unit issue costs
S$‘000
Unit issue costs comprise the following:
Professional and other fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Underwriting, selling and management commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous issue expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,660
17,773
4,369
32,802
12.
Operating lease income commitments
S$’000
Not later than one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Later than one year and not later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Later than five years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69,132
258,092
143,234
Operating lease income commitments are for committed rentals receivable for the Retail Malls and Retail
Spaces. The lease term varies from less than 1 year to 27 years. Certain lease rental terms are subject to
an escalation clause but the amount of the rent increase is not to exceed a certain percentage. Other than
those disclose below, such increases are not included in the above amounts.
On 18 October 2007, each of the Retail Space Property Companies (as landlord) and the Master Lessee
(as tenant) entered into a Master Lease Agreement, pursuant to which the Retail Spaces were leased to
the Master Lessee in accordance with the terms and conditions of the Master Lease Agreements. The
term of each of the Master Lease Agreements is for 10 years with an option for the Master Lessee to renew
for a further term of 10 years based on substantially the same terms and conditions, except for renewal
rent. The renewal rent for the further term shall be at the then prevailing market rent, as may be agreed by
the relevant landlord and the Master Lessee in good faith. If there is no agreement by the relevant landlord
and the Master Lessee on such prevailing market rent, the relevant landlord and the Master Lessee may
refer the determination of the prevailing market rent to an independent property valuer or valuers.
The renewal lease must be made by written request to the relevant landlord 12 months before the expiry of
the lease term.
Under each of the Master Lease Agreements, the relevant Retail Space Property Companies will be
entitled to receive from the Master Lessee rental payments comprising a fixed base rent from Listing Date
to 31 December 2007, an annual increment of 8.0% over the lease rental payable for the immediately
preceding financial year for each of the financial years ending on 31 December 2008 to 31 December 2011
and, for each of the financial years ending on 31 December 2012 to 2016, an amount equivalent to the
lease rental payable in respect of financial year ending 31 December 2011 and 4.25% of the amount by
which the net revenue of the Master Lessee derived from the retail spaces for the immediately preceding
B-20
Appendix B
financial year exceeds the net revenue of the Master Lessee derived from the retail spaces for the financial
year ending 31 December 2010.
Operating lease income commitments attributable to the Master Lessee’s net sales turnover are not
included in the above amounts.
13.
Capital commitments
Estimated amounts committed at the balance sheet date for future capital expenditure on the
Properties but not recognised in Pro Forma Consolidated Balance Sheet are as follows:
S$’000
Authorised but not contracted for . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14.
Manager’s Management Fee, Property Manager’s Fee and Trustee Fee
(a)
Manager’s Management Fee
2,257
Under the trust deed, the Manager is entitled to the following management fees:
(i)
(in respect of authorised investments which are in the form of real estate whether held directly by
LMIR Trust or indirectly through one or more special purpose vehicles) a base fee of 0.25% per
annum of the value of the deposited property and a Performance Fee of 4.0% per annum of the Net
Property Income (“NPI”) in the relevant financial year (calculated before accounting for Performance
Fee in that financial year); and
(ii)
(in respect of authorised investments which are not in the form of real estate whether held directly by
LMIR Trust or indirectly through one or more special purpose vehicles) an authorised investment
management fee of 0.5% per annum of the value of such authorised investments which, unless such
authorised investment is an interest in a property fund (either a real estate investment trust or private
property fund), wholly managed by a wholly-owned subsidiary of the Sponsor in which case no
authorised investment management fee shall be payable in relation to such authorised investment.
The Manager is also entitled to:
(i)
(for any authorised investment acquired directly or indirectly from time to time by the Trustee on
behalf of LMIR Trust) an acquisition fee of 1.0% of the purchase price in the case of any authorised
investment acquired by LMIR Trust.
No acquisition fee is payable for the acquisition of the initial property portfolio of LMIR Trust.
(ii)
a divestment fee of 0.5% of the sale price (after deducting the interest of any co-owners or coparticipants) of any authorised investment sold directly or indirectly or divested from time to time by
the Trustee on behalf of LMIR Trust.
The Manager is 40.0% owned by Mapletree Capital Management Pte Ltd and 60.0% owned by Peninsula
Investment Ltd. Peninsula Investment Ltd is in turn 100.0% owned by Jesselton Investment Ltd, a whollyowned subsidiary of the Sponsor.
(b)
Trustee’s Fee
Under the trust deed, the maximum fee payable to the Trustee is 0.03% per annum of the value of the
deposited property, subject to a minimum of S$15,000 per month, excluding out of pocket expenses and
GST. The Trustee’s fee will be subject to review three years from the Listing Date. In addition, LMIR Trust
will also pay the Trustee a one-time inception fee of S$25,000.
(c)
Property Manager’s fee
Under each existing property management agreement, the property manager is entitled to the following
fees in respect of each Retail Mall under its management:
• 2.0% per annum of the gross revenue for the relevant Retail Mall;
B-21
Appendix B
• 2.0% per annum of the net property income for the relevant Retail Mall (after accounting for the fee of
2.0% per annum of the gross revenue for the relevant Retail Mall); and
• 0.5% per annum of the net property income for the relevant Retail Mall in lieu of leasing commissions
otherwise payable to the Property Manager and / or third party agents.
Under each existing property management agreement, each of the Retail Mall Property Companies
agrees to reimburse the property manager, upon request made from time to time, for its expenses incurred
in connection with the provision of property management services and with the performance of its duties
which are in compliance with the approved annual business plan and budget as stated in the existing
property management agreement. Such expenses include but are not limited to rent, service charge and
VAT payable by the property manager for its lease of its office premises; advertising and promotion costs;
and salaries of the property manager’s employees who are approved by the relevant Retail Mall Property
Companies.
The Property Manager is a wholly-owned subsidiary of the Sponsor.
15.
Other matters
(a)
Right of First Refusal (“ROFR”)
On 14 August 2007, an agreement was entered into between the Trustee and the Sponsor pursuant to
which the Sponsor granted LMIR Trust, for so long as (a) Lippo-Mapletree Indonesia Retail Trust
Management Ltd remains the manager of LMIR Trust; and (b) the Sponsor and/or any of its related
corporations, alone or in aggregate, remains a controlling shareholder of the Manager; a right of first
refusal (the “ROFR”) over any retail properties located in Indonesia (each such property to be known as a
“Relevant Asset”): (i) which the Sponsor or any of its subsidiaries (each a “Sponsor Entity”) proposes to sell
or transfer (whether such Relevant Asset is wholly-owned or partly-owned by the Sponsor Entity and
excluding any sale of Relevant Asset 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 a proposed offer for sale or transfer of such Relevant Asset has been made to a
Sponsor Entity.
As at the Listing Date, the scope of the ROFR encompasses five properties currently under development
by the Sponsor and / or its subsidiaries as set out below:
ROFR Properties under development
Binjai Supermall . . . .
Pejaten Mall . . . . . . .
Kuta Beach Mall . . . .
Kemang City Mall . . .
Puri “Paragon City” . .
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North Sumatra
South Jakarta
Kuta, Bali
South Jakarta
West Jakarta
Memorandum of Understanding for Potential Acquisitions
On 21 May 2007, the Manager entered into a non-binding memorandum of understanding with PT Multi
Pratama Gemilang Perkasa (Pikko Group) with regard to the potential acquisition by LMIR Trust of
Cosmopolitan Mall Pluit, a retail mall located in North Jakarta. The Manager understands that
Cosmopolitan Mall Pluit is currently undergoing asset enhancement works, with such works scheduled
for completion in the second half of 2008.
On 22 June 2007, the Manager entered into a non-binding memorandum of understanding with Zellwager
Enterprise Limited with regard to the potential acquisition by LMIR Trust of Sun Plaza, a retail mall located
in Medan, North Sumatra. The estimated acquisition price is to be negotiated and agreed in good faith
between the parties, provided that such acquisition price shall not be more than the appraised value of Sun
Plaza as determined by an independent property valuer to be appointed by the Trustee before the signing
of the conditional sale and purchase agreement.
On 26 June 2007, the Manager entered into a non-binding memorandum of understanding with
PT. Pakuwon Permai in respect of the potential acquisition by LMIR Trust of Supermal Pakuwon Indah
and Pakuwon Trade Center, a retail mall located in West Surabaya, East Java. The estimated acquisition
B-22
Appendix B
price is to be negotiated and agreed in good faith between the parties, provided that such acquisition price
shall not be more than the appraised value of Supermal Pakuwon Indah and Pakuwon Trade Center as
determined by an independent property valuer to be appointed by the Trustee and the appraised value is
agreed by the Vendor before the signing of the conditional sale and purchase agreement.
(c)
Rental Guarantee Deeds
On 10 August 2007, Lippo Strategic Holdings Inc (“Lippo Strategic”) entered into a Rental Guarantee Deed
with each of the Retail Mall Investment Holding Companies pursuant to which Lippo Strategic will provide a
rental guarantee to the relevant Retail Mall Investment Holding Companies in respect of existing and new
units in the respective retail malls which are untenanted and undertake to pay to the relevant Retail Mall
Investment Holding Companies any shortfall in the maintenance and operation costs which the relevant
Operating Company has undertaken to bear under the respective Operating Costs Agreement.
The Rental Guarantee Deeds cover the period commencing from the Listing Date up to 31 December
2009. Pursuant to the Rental Guarantee Deeds, Lippo Strategic is obliged to pay to the Retail Mall
Investment Holding Companies a specified sum in respect of each Retail Mall for every year during the said
period. The first of such payment will be paid on or before 31 January 2008, and subsequent payments will
be made on a quarterly basis thereafter. In the event any of the specified units in the relevant Retail Mall
becomes tenanted during such period, the amount of the specified sum payable by Lippo Strategic in
respect of such Retail Mall will be reduced by the amount of the rental payable under the relevant tenancy,
regardless of whether such rental is received by the owner of the relevant Retail Mall and notwithstanding
that such tenancy may be or is terminated prior to the expiry of such period.
To secure Lippo Strategic’s performance under each of the Rental Guarantee Deeds, Lippo Strategic is
required to furnish to the Retail Mall Investment Holding Companies bank guarantees. The aggregate
amount of all the bank guarantees to be furnished under the Rental Guarantee Deeds is S$10.0 million.
(d)
Retail Malls Operating Costs Agreements
Pursuant to each of the Operating Costs Agreements to be entered into between the relevant Retail Mall
Property Companies and Operating Company, the relevant Operating Company will agree to
unconditionally bear, for a period of three years commencing 1 January 2007, all costs directly related
to the maintenance and operation of the relevant Retail Mall.
In consideration of its agreements under the relevant Operating Costs Agreement, the relevant Operating
Company has the right to collect, through the property manager, a service charge and statutory income
from the tenants of that Retail Mall. This service charge is intended to cover the costs directly related to the
maintenance and operation of the Retail Mall. The amount of the service charge will be recommended by
the property manager as a result of its review of the prevailing market rates. The statutory income is
intended to cover the costs directly related to the provision of utilities to the retail mall.
The right to collect the service charge and statutory income shall be in accordance with the lease
agreements entered into by and between the Retail Malls Property Companies and the respective tenants
of the Retail Mall and such collection shall be coordinated by the property manager.
The operating costs agreements will lapse on 31 December 2009 and LMIR Trust will bear all costs directly
related to the maintenance and operation of the Retail Malls thereafter.
(e)
Build Operate and Transfer (“BOT”) Agreements
The Pro Forma Group has the following BOT agreements for the following Retail Malls:
1.
Cibubur Junction
PT Cibubur Utama (“PT Cibubur”) entered into a BOT agreement with Perusahaan Daerah Pembangunan
Sarana Jaya DKI Jakarta (“Sarana”). PT Cibubur has the right to build operate and transfer the property for
a period of 20 years commencing July 2005 and the first priority to extend the agreement. To obtain the
extension, PT Cibubur must give at least 3 months prior written notice to Sarana and that PT Cibubur has
met all obligations under the BOT agreement.
B-23
Appendix B
PT Cibubur has the following payment obligations to Sarana:
(a)
Rp. 9,500,000,000 (S$1,610,200) including VAT in 8 installments from 9 June 2003 to 15 December
2003.
(b)
US$2,260,000 (S$3,473,600) including VAT, that is to be paid by installments from the year 2004 until
2024 as follows:
(i)
US$ 75,500 (S$116,000) per year for the first 5 years.
(ii) US$100,500 (S$154,500) per year for the second 5 years.
(iii) US$125,500 (S$192,900) per year for the third 5 years.
(iv) US$150,500 (S$231,300) per year for fourth 5 years.
The pegged rate of payment shall be US$1 equal to Rp. 8,500.
(c)
Goodwill cooperation of Rp. 100,000,000 (S$17,000) (including VAT) on 20 December 2004.
(d)
Goodwill compensation of Rp. 1,500,000,000 (S$254,000) that is to be paid
(i)
Rp. 500,000,000 (S$84,700) shall be paid on 20 December 2004 and
(ii) Rp. 1,000,000,000 (S$169,500) shall be paid from 2005 until 2009 in 5 installments of
Rp. 200,000,000 (S$33,900) per year with the first installment commencing 1 February 2005.
(e)
Monitoring fee of Rp. 5,000,000 (S$847) per month including VAT that is to be paid quarterly on
15 January, 15 April, 15 July and 15 October commencing 2004.
2.
Plaza Semanggi
PT Primatama Nusa Indah (“PT Primatama”) entered into a BOTagreement with Yayasan Gedung Veteran
Republik Indonesia (“Yayasan Veteran”). PT Primatama has the right to build operate and transfer the
property for a period of 30 years commencing July 2004. The BOT Agreement can be extended
automatically for another 20 years under the same terms and conditions of the current lease with at
least 6 months prior written notice, and to such notice, Yayasan Veteran automatically grants its approval
for the extension.
PT Primatama shall pay to Yayasan Veteran annually 5% of its gross income from the lease of premises
and parking spaces (excluding taxes) of each year, commencing from the date of commencement of
operations to the 15th year.
From the 16th year, PT Primatama shall pay Yayasan Veteran 10% of its gross income from the lease of
premises and parking spaces (excluding taxes) for each year.
3.
Ekalokasari Plaza
PT Indah Pesona Bogor (“PT Indah”) entered into a BOT amendment agreement with PT Bogor Life
Science and Technology (“BLST”) representing Institute Pertanian Bogor (“Institute Pertanian”). PT Indah
has the right to build operate and transfer the property for a period of 31 years up to 2032.
PT Indah shall pay BLST Rp. 12,000,000,000 (S$2,034,000) (excluding tax) comprising:
(i)
Rp. 4,000,000,000 (S$678,000) (excluding tax) for the utilisation of land;
(ii) Rp. 500,000,000 (S$84,700) (excluding tax) for the additional compensation for the utilisation of
land;
(iii) Rp. 960,000,000 (S$162,700) (excluding tax) that will be paid for the extension of the validity of the
BOT agreement;
(iv) Rp. 6,290,000,000 (S$1,066,100) (excluding tax) for early payment of kiosk / tenancy rental income
profit sharing which was previously of 15% of PT Indah’s kiosk / tenancy rental income;
(v) Rp. 250,000,000 (S$42,400) (excluding tax) for early payment of shopping centre operational net
income profit sharing, which previously as 50% of PT Indah’s shopping centre net income.
PT Indah has paid Rp. 4,000,000,000 (S$678,000) for the utilisation of land and has the remaining amount
of Rp. 8,000,000,000 (S$1,356,000) which is to be paid in 4 installments from June 2007 to September
2007.
PT Indah can extend the term of the agreement with 6 months prior written application.
B-24
Appendix B
4.
Bandung Indah Plaza
PT Megah Semesta Abadi (“PT Megah”) entered into a BOT agreement with Perusahaan Daerah (PD)
Jasa dan Kepariwisataan Jawa Barat (previously known as PD Kerta Wisata Jawa Barat) (“PDJK”).
PT Megah has been granted the right to build operate and transfer the property up to 31 December 2030. If
PDJK does not intend to manage the building and facilities, PDJK will give first option to PT Megah to
become a partner of PDJK under a new agreement. PDJK must notify the PT Megah on whether or not it
has the intention to operate the building and facilities. This notification must be provided at least 6 months
prior to expiration of the BOT Agreement. BOT agreement cannot be assigned without prior approval.
PT Megah has the following obligations to PDJK:
a.
Revenue sharing for Shopping Centre I for the period from 19 August 1992 to 31 December 2030 will
be at 2% of the rental income of shops and retail per year and shall increase 0.25% every 4 years.
The increase will commence as of May 2008;
b.
Revenue sharing for Shopping Centre II for the period from 1 May 1994 to 31 December 2030 will be
at 2 % of rental income of shops and retails per year and shall increase 0.25% every 4 years. The
increase will commence on May 2008;
c.
5% of net operational profits, commencing August 1995;
d.
5% of net income from rental of open areas, promotional spaces and corridors commencing August
2005;
e.
Profit sharing with respect to parking spaces from August 2005 at 40% of parking net income after
deducting contribution to Parking Management Institution (Badan Pengelola Perparkiran—“BPP”)
and other expenses, VAT of 10%, interest expense, depreciation of parking facility, with maximum
threshold of the expenses is 76% of rental income, provided that if the VAT no longer prevails or the
government changes the figure of the VAT then the percentage of expenses will be mutually agreed
by both parties;
f.
Both PT Megah and PDJK will share the net rental revenue of the cinema up to August 2020 based
on 50% ratio each. Profit share after 2020 will be determined later;
g.
The revenue sharing for commercial space will be in the amount of 2% of the rental income of
commercial space per year and shall increase 0.25% every 4 years. The increase will commence on
May 2008.
5.
Istana Plaza
PT Suryana Istana Plaza (“PT Suryana”) entered into a BOT agreement with Pasundan Church.
PT Suryana has the right to build operate and transfer the property for a period of 32 years from
January 2002. During the BOT period, PT Suryana is prohibited from assigning the ownership or
encumbering the property to another party, except to use the property as security for the repayment
of loan to finance the construction of the building. No extension provision is provided in the BOT
Agreement.
(f)
Put Option
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 bound
by Kiosks Sale and Purchase Binding Agreements because their strata titles are in the process of being
issued by the Indonesian government.
In relation to each of the Metropolis Town Square Units, Depok Town Square Units, Malang Town Square
Units and Grand Palladium Medan Units, a put option agreement has been entered into between, inter alia,
the Trustee and the Master Lessee, pursuant to which, in the event that the strata titles to these four retail
spaces are not issued within 24 months from the Listing Date, a meeting 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 LMIR Trust for a further six months from the
date of the ordinary resolution. In the event that an ordinary resolution is passed in favour of retaining these
four retail spaces in the portfolio of LMIR Trust and the strata titles are still not issued upon expiry of six
B-25
Appendix B
months from the date of the ordinary resolution, the Trustee shall exercise the put option. In the event that
an ordinary resolution is not passed in favour of retaining these four retail spaces, the Trustee shall be
entitled to exercise the put option within three months of the date of the meeting of the Unitholders.
Upon the Trustee’s exercise of the put option in relation to one of these four Retail Spaces, the Master
Lessee will be required to purchase the relevant Retail Spaces at the consideration as described in
“Certain Agreements Relating to LMIR Trust and the Properties—Description of the Put Option
Agreements” of the Prospectus.
(g)
Letter of Undertaking
On 9 August 2007, the Trustee, the Manager and the Sponsor entered into a letter of undertaking, pursuant
to which the Sponsor will use its best endeavours to procure that the relevant Retail Space Property
Companies obtain the strata titles to the Metropolis Town Square Units, Depok Town Square Units, Malang
Town Square Units and Grand Palladium Medan Units.
16. Future changes in accounting standards
The following new or revised FRS that have been issued will be effective in future and may be relevant to
the entity.
FRS No.
Title
FRS 108
Operating Segments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INT FRS 112 Service Concessions Arrangements. . . . . . . . . . . . . . . . . . . . . . . . .
B-26
Effective date for
periods beginning
on or after
1.1.2009
1.1.2008
Appendix C
INDEPENDENT SINGAPORE TAXATION REPORT
The Board of Directors
Lippo-Mapletree Indonesia Retail Trust Management Ltd.
as Manager of Lippo-Mapletree Indonesia Retail Trust
78 Shenton Way
#05-01 Lippo Centre
Singapore 079120
HSBC Institutional Trust Services (Singapore) Limited
as Trustee of Lippo-Mapletree Indonesia Retail Trust
21 Collyer Quay
#14-01 HSBC Building
Singapore 049320
19 October 2007
Dear Sirs
SINGAPORE TAXATION REPORT
This letter has been prepared at the request of Lippo-Mapletree Indonesia Retail Trust Management Ltd.
(the “Manager”) for inclusion in the Prospectus for Lippo-Mapletree Indonesia Retail Trust (“LMIR Trust”)
dated 19 October 2007 in connection with the listing of LMIR Trust on the Singapore Exchange Securities
Trading Limited.
The purpose of this letter is to provide prospective purchasers of the units in LMIR Trust (“Units”) with an
overview of the Singapore income tax consequences of the purchase, ownership and disposition of the
Units. This letter principally addresses Unitholders who hold the Units as investment assets. Unitholders
who hold or have acquired the Units for dealing purposes should consult their own tax advisers concerning
the tax consequences of their particular situations.
This letter is not a tax advice and does not attempt to describe comprehensively all of the tax
considerations that may be relevant to a decision to purchase, own or dispose of the Units.
Unitholders should consult their own tax advisers concerning the tax consequences of their particular
situations. In particular, Unitholders who are not Singapore tax residents are advised to consult their own
tax advisers to take into account the tax laws of their respective countries of residence and the existence of
any tax treaty which their countries of residence may have with Singapore.
This letter is based on the Singapore income tax law and the relevant interpretation thereof current at the
date of this letter, all of which are subject to change, possibly with retroactive effect.
Words and expressions in this letter have the same meaning as defined in the Prospectus. In addition,
unless the context requires otherwise, words in the singular include the plural and the other way around
and words of one gender include any gender.
SINGAPORE TAXATION OF REAL ESTATE INVESTMENT TRUSTS IN GENERAL
Under current Singapore income tax law, the taxable income of a trust comprises:
(a)
income accruing in or derived from Singapore; and
(b)
unless otherwise exempt, income derived from outside Singapore which is received in Singapore or
deemed to have been received in Singapore by the operation of law.
The taxable income of a trust is ascertained in accordance with the provisions of the Singapore income tax
law, after deduction of all allowable expenses and any other allowances permitted under the law.
C-1
Appendix C
The taxable income of a trust, or part thereof, is taxed at the prevailing corporate rate of income tax and the
tax is assessed on the trustee in the following circumstances:
• where the income is derived from any trade or business carried on by the trustee, in its capacity as the
trustee of the trust;
• where the beneficiaries of the trust are not resident in Singapore; or
• where the beneficiaries are not entitled to the income of the trust.
Any distribution made out of such income which has been assessed to tax on the trustee is not taxable in
the hands of the beneficiaries. The tax paid by the trustee on such income is not imputed as a credit to the
beneficiaries for Singapore income tax purposes.
Where the taxable income of a trust is income other than that derived from any trade or business carried on
by the trustee, such income may be assessed to tax directly on the beneficiaries of the trust where the
beneficiaries are resident in Singapore and are entitled to the income of the trust.
In a real estate investment trust, which is defined in the Income Tax Act to mean a trust constituted as a
collective investment scheme authorised under section 286 of the Securities and Futures Act (Cap.
289) and listed on the Singapore Exchange, that invests or proposes to invest in immovable property and
immovable property-related assets, (referred hereinafter as a “REIT”), the trustee may be charged at a
lower rate or not charged with any tax, as the Comptroller of Income Tax (“Comptroller”) shall determine
and subject to the satisfaction of the Comptroller. This treatment, if granted, will apply to only certain
income of a REIT, including rental income or income from the management or holding of immovable
property but not including gains from the disposal of immovable property (“tax-transparent income”).
Beneficiaries of the REIT are instead assessed to tax on the share of such tax-transparent income to which
each of them is beneficially entitled. The tax may be assessed directly on the beneficiaries or deducted by
the trustee from the amount of distribution made to the beneficiaries, depending on their own particular
circumstances.
The income of a REIT that is taxable in the hands of its beneficiaries does not include income from any
trade or business carried on by the trustee that is not tax-transparent income. Tax on such non taxtransparent income would have been assessed on the trustee of the REIT. Beneficiaries of the REITare not
taxed on distributions made out of such non tax-transparent income. The tax paid by the trustee on such
non tax-transparent income is not imputed as a credit to the beneficiaries for Singapore income tax
purposes.
Where the REIT derives any tax-exempt income, such income is exempt from tax in the hands of the
trustee. Beneficiaries of the REIT will also be exempt from tax on the share of such tax-exempt income to
which each of them is beneficially entitled.
SINGAPORE TAXATION OF LMIR TRUST
LMIR Trust is liable to Singapore income tax on:
(a)
income accruing in or derived from Singapore; and
(b)
unless otherwise exempt, income derived from outside Singapore which is received in Singapore or
deemed to have been received in Singapore by the operation of law.
The Singapore taxation of LMIR Trust in respect of the income and gains which it may derive from the
Properties is described below.
Dividends from the Target Singapore SPCs
LMIR Trust’s income will comprise substantially dividends received from its holding of ordinary shares in
the Target Singapore SPCs. Provided that the Target Singapore SPCs are tax residents of Singapore for
income tax purposes, these dividends will be one-tier (tax-exempt) dividends and hence exempt from tax in
the hands of the Trustee.
A company is a tax resident of Singapore if the management and control of its business is exercised in
Singapore.
C-2
Appendix C
Gains on disposal of shares
Singapore does not impose tax on capital gains. In the event that LMIR Trust disposes of its ordinary
shares or redeemable preference shares or both in the Target Singapore SPCs, gains arising from such a
disposal will not be liable to Singapore income tax unless the gains are considered income of a trade or
business. The gains may also be liable to Singapore income tax if the shares were acquired with the
intention or purpose of making a profit by sale and not for long-term investment purposes.
Gains arising from the sale of the ordinary shares or redeemable preference shares or both in the Target
Singapore SPCs, if considered to be trading gains, will be taxable on the Trustee.
Redemption of redeemable preference shares in the Target Singapore SPCs
Any proceeds received by LMIR Trust from the redemption of its redeemable preference shares in the
Target Singapore SPCs at the original cost of the redeemable preference shares are capital receipts and
hence not taxable on the Trustee.
Other income
In the event that LMIR Trust derives other income that is liable to Singapore income tax, for example
interest from the deposit of surplus cash with banks, the tax on such income will be assessed on the
Trustee at the prevailing corporate tax rate.
Taxation of the Singapore SPCs
The Singapore SPCs are liable to Singapore income tax on:
(a)
income accruing in or derived from Singapore; and
(b)
unless otherwise exempt, income derived from outside Singapore which is received in Singapore or
deemed to have been received in Singapore by the operation of law.
The income of the Singapore SPCs will comprise substantially dividends derived from their holdings of
ordinary shares in the relevant Indonesian SPCs or interest derived from shareholder’s loans extended to
the relevant Indonesian SPCs or both.
Dividends from the Indonesian SPCs
Provided that the Singapore SPCs are tax residents of Singapore for income tax purposes, any dividends
received in Singapore by the Singapore SPCs from the Indonesian SPCs will be exempt from Singapore
income tax under Section 13(8) of the Income Tax Act, if the following conditions are met:
(a)
in the year the dividends are received in Singapore, the headline corporate tax rate in Indonesia is at
least 15.0%;
(b)
the dividends have been subject to tax in Indonesia; and
(c)
the Comptroller is satisfied that the tax exemption would be beneficial to the Singapore SPCs.
Based on the current tax laws in Indonesia, dividends paid by the Indonesian SPCs out of their income
from the letting of the Properties will meet the aforesaid conditions (see “Indonesian Tax Implications”).
Interest from the Indonesian SPCs
LMIR Trust has obtained approval of the IRAS to exempt the interest received by the relevant Singapore
SPCs on the loans extended to the Indonesian SPCs from Singapore income tax under Section 13(12) of
the Income Tax Act. This approval is subject to the relevant Singapore SPCs satisfying certain stipulated
conditions, including the condition that the full amount of the remitted interest, less attributable expenses,
must be distributed to LMIR Trust.
Gains on disposals of shares
Singapore does not impose tax on capital gains. In the event that the Singapore SPCs dispose of their
ordinary shares in the Indonesian SPCs, gains arising from such a disposal will not be liable to Singapore
income tax unless the gains are considered income of a trade or business. The gains may also be liable to
Singapore income tax if the shares were acquired with the intention or purpose of making a profit by sale
and not for long-term investment purposes.
C-3
Appendix C
Gains arising from the sale of ordinary shares in the Indonesian SPCs, if considered to be trading gains,
will be assessed to tax on the Singapore SPCs.
Repayment of loans by the Indonesian SPCs
Any proceeds received by the Singapore SPCs from repayment of principal on the loans by the Indonesian
SPCs are capital receipts and hence not taxable on the Singapore SPCs.
SINGAPORE TAXATION OF UNITHOLDERS
Distributions by LMIR Trust
Subject to LMIR Trust’s distribution policy (see “Distributions”), LMIR Trust’s distributions will mainly be
made out of the following receipts:
(a)
one-tier (tax-exempt) dividends received from the Target Singapore SPCs (the “tax-exempt
income”); and
(b)
capital receipts from the redemption of redeemable preference shares in the Target Singapore
SPCs.
Distributions out of tax-exempt income
Unitholders will be exempt from Singapore income tax on distributions made out of LMIR Trust’s taxexempt income.
For this purpose, the amount of tax-exempt income distributions that LMIR Trust can distribute for a
distribution period will be to the extent of the amount of tax-exempt income that it has received and is
entitled to receive in that distribution period.
Distributions made out of any amount of Distributable Income for a distribution period which LMIR Trust
received or is entitled to receive as its own tax-exempt income after the end of that distribution period will
be treated as capital distributions and the tax treatment set out under “Distributions out of capital receipts”
will apply. The amount of such tax-exempt income may be used to frank tax-exempt income distributions
out of Distributable Income for subsequent distribution periods.
Distributions out of capital receipts
Unitholders will not be subject to Singapore income tax on distributions made by LMIR Trust out of its
capital receipts, i.e. amounts received from the redemption of redeemable preference shares in the Target
Singapore SPCs. Such distributions will be treated as returns of capital for Singapore income tax
purposes. For Unitholders who hold the Units as trading or business assets and are liable to
Singapore income tax on gains arising from disposal of the Units, the amount of such distributions will
be applied to reduce the cost of the Units for the purpose of calculating the amount of taxable trading gain
when the Units are disposed of. If the amount exceeds the cost or the reduced cost of the Units, as the case
may be, the excess will be subject to tax as trading income of such Unitholders.
Distributions out of taxable trading gains or taxable income
Unitholders are not subject to further Singapore income tax on distributions made by LMIR Trust out of its
taxable trading gains, for example, gains arising from the disposal of shares in the Target Singapore SPCs
which are determined to be trading gains, or other taxable income. The tax on such gains or income will be
assessed on the Trustee at the prevailing corporate tax rate and any distribution made out of such gains or
income is not taxed in the hands of Unitholders. The tax paid by the Trustee on such gains or income is not
imputed as a credit to Unitholders for Singapore income tax purposes.
Distributions out of capital gains
Unitholders are not subject to Singapore income tax on distributions made by LMIR Trust out of capital
gains, for example, gains arising from the disposal of shares in the Target Singapore SPCs which are
determined to be capital in nature, unless the distributions are considered gains or profits of a trade or
business carried on by the Unitholder, for example, if the Units are held as trading assets.
C-4
Appendix C
Disposal of Units
Singapore does not impose tax on capital gains. Therefore, gains on disposal of the Units that are capital in
nature will not be subject to tax. However, such gains may be considered income in nature and subject to
Singapore income tax if they arise from or are otherwise connected with the activities of a trade or business
carried on in Singapore. Such gains may also be considered income in nature, even if they do not arise
from an activity in the ordinary course of trade or business or an ordinary incident of some other business
activity, if the Units were purchased with the intention or purpose of making a profit by sale and not with the
intention to be held for long-term investment purposes.
If a Unitholder has held the Units for long-term investment purposes, any gains arising from sale of the
Units should be considered capital gains and hence not subject to Singapore income tax. However, if the
Units have been held as trading assets of a trade or business carried on in Singapore, the gains arising
from the sale will be taxed as income. The precise tax status of one Unitholder will vary from another.
Because of this, Unitholders are advised to consult their own professional advisers on the Singapore tax
consequences that may apply to their individual circumstances.
Yours faithfully
Ernst & Young
Singapore
Lim Gek Khim
Tax Partner
C-5
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Appendix D
INDEPENDENT INDONESIAN TAXATION REPORT
Jakarta, 19 October 2007
78 Shenton Way #05-01 Lippo Centre
Singapore 079120
D-1
Appendix D
D-2
Appendix D
D-3
Appendix D
D-4
Appendix D
D-5
Appendix D
D-6
Appendix D
D-7
Appendix D
D-8
Appendix E
INDEPENDENT PROPERTY VALUATION SUMMARY REPORTS
E-1
Appendix E
Report No.017/WPA-Report/2007
30 June 2007
PT. Willson Properti Advisindo
Wisma Nugra Santana #17-03
Jl. Jend. Sudirman Kav. 7-8
Jakarta 10220, Indonesia
+62 (21) 570 7170
+62 (21) 570 7177 fax
www.knightfrank.com
To:
Lippo-Mapletree Indonesia Retail Trust Management
(as Manager of Lippo-Mapletree Indonesia Retail Trust)
One Phillip Street #15-00
Singapore 048692
and
HSBC Institutional Trust Services (Singapore) Limited
(as Trustee of Lippo-Mapletree Indonesia Retail Trust)
21 Collyer Quay
#14-01 HSBC Building
Singapore 049320
Dear Sirs,
RE:
VALUATION OF SHOPPING CENTERS:
1. THE PLAZA SEMANGGI, JAKARTA—INDONESIA.
2. GAJAH MADA PLAZA, JAKARTA—INDONESIA.
3. CIBUBUR JUNCTION, JAKARTA—INDONESIA.
4. BANDUNG INDAH PLAZA, BANDUNG—INDONESIA.
5. ISTANA PLAZA, BANDUNG—INDONESIA.
6. EKALOKASARI PLAZA, BOGOR—INDONESIA.
7. MAL LIPPO CIKARANG, BEKASI—INDONESIA.
VALUATION OF RETAIL SPACES TENANTED AND OPERATED BY MATAHARI
GROUP AT:
1. DEPOK TOWN SQUARE, DEPOK—INDONESIA.
2. MALL WTC MATAHARI, TANGERANG—INDONESIA.
3. METROPOLIS TOWN SQUARE, TANGERANG—INDONESIA.
4. JAVA SUPERMALL, SEMARANG—INDONESIA.
5. PLAZA MADIUN, MADIUN—INDONESIA.
6. MALANG TOWN SQUARE, MALANG—INDONESIA.
7. GRAND PALLADIUM, MEDAN—INDONESIA.
Instructions
This valuation summary report has been prepared for the purposes of inclusion in the prospectus to be
issued in relation to the initial public offering of units in the Lippo-Mapletree Indonesia Retail Trust, which
will be listed on the Singapore Exchange Securities Trading Limited.
Continue to page 2.
E-2
Appendix E
Report No.017/WPA-Report/2007
Page 2.
In accordance with your instructions for Knight Frank/PT. Willson Properti Advisindo to conduct formal
fixed asset valuation of the above-captioned properties (the “Properties”) in providing our opinion of
Market Value of the Properties as at 30 June 2007; subject to the existing and proposed leases, occupancy
and operational arrangements of the shopping centers, and subject to the proposed lease arrangements
of the retail outlet stores with PT. Matahari Putra Prima Tbk as stipulated in the proposed Lease
Agreements (the “Valuation”).
We are pleased to confirm that we have completed our site inspection, due diligence, and Valuation of the
Properties; and have prepared fourteen formal comprehensive valuation reports for each of the Properties
(the “Reports”). No structural survey has been made, but in the course of our inspection, we did not note
any serious defect. We are not, however, able to report that the Properties are free from rot, infestation or
any other structural defect. No tests were carried out to any of the services.
Our Valuation expresses our opinion of Market Value, which is defined in the International Valuation
Standards (IVS) 2003 and the Indonesian Valuation Standards (Standar Penilaian Indonesia/SPI) 2002 to
mean “the estimated amount for which an asset should exchange on the date of valuation between a willing
buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had
each acted knowledgeably, prudently and without compulsion”.
We have prepared and provided this summary of the Reports outlining key factors that have been
considered in arriving at our opinion of Market Value, which reflects all information known by us and based
on current market conditions.
RELIANCE ON THIS LETTER
This valuation summary report does not contain all the necessary data and support information included in
our Reports. For further information to that contained herein, reference should be made to the Reports,
copies of which are held by the Manager and which we understand will be available for inspection for a
period of six months from the date of the Prospectus.
The Valuation and market information contained in the Reports are not guarantees or predictions and must
be read in consideration of the followings:
• Each report is several pages in length and the conclusion as to the value assessment is based upon the
factual information set forth in that Report. Whilst Knight Frank/PT. Willson Properti Advisindo has
endeavored to assure the accuracy of the factual information, it has not independently verified all
information provided by the Manager (primarily the existing leases and the Master Lease Agreements
and other information relating to the Properties) or the Government of the Republic of Indonesia
(primarily statistical information relating to market conditions). Knight Frank/PT. Willson Properti
Advisindo believes that every investor, before making an investment in Lippo-Mapletree Indonesia
Retail Trust, should review the Reports to understand the complexity of the methodology and the many
variables involved.
Continue to page 3.
E-3
Appendix E
Report No.017/WPA-Report/2007
Page 3.
• The methodologies used by Knight Frank/PT. Willson Properti Advisindo in valuing the Properties—the
Income Method utilizing Discounted Cash Flow Analysis and Income Capitalization—are based upon
assessment of future results and are not predictions. These valuation methodologies are summarized in
the Valuation Rationale section of this summary report. Each methodology is based on a set of
assumptions as to income and expenses of the relevant Property and future economic conditions in the
local market. The income and expenses figures are mathematically extended with the adjustments for
anticipated changes in economic conditions. The resultant value is considered the best practice
assessment but is not to be construed as a prediction or guarantee and is fully dependent upon the
accuracy of the assumptions as to income, expenses and market conditions.
• The Reports were undertaken based upon information available as at 30 June 2007. Knight Frank/
PT. Willson Properti Advisindo accepts no responsibility for subsequent changes in information as to
income, expenses or market conditions.
We have also relied on the information provided by the owning companies of the Properties on matters
such as the ownership title particulars, the terms and conditions of BOT (Build, Operate, and Transfer)
arrangements and leasehold tenure, details, land areas, building floor areas, building facilities and
services, tenancy list, renovation and/or expansion plans, etc. All information provided to us is treated
as correct and we accept no responsibility for subsequent changes in information and reserve the right to
change our opinion of value if any other information provided were to materially change.
Continue to page 4.
E-4
Appendix E
Report No.017/WPA-Report/2007
Page 4.
SUMMARY OF THE PROPERTIES
Shopping Centers:
1.
The Plaza Semanggi
Brief Description
The Plaza Semanggi is a shopping-cum-office complex, which comprises ‘The Plaza Semanggi’—
7-storey and 2-basement level shopping center, and ‘Gedung Veteran’—a 13-storey office building.
The Plaza Semanggi is built adjacent to and on the same site with Balai Sarbini, a convention hall,
which is excluded in this Valuation.
The Plaza Semanggi has a total existing lettable retail floor area of about 46,724 square meters. In
addition, a proposed 3,000-square meter dining-cum-entertainment facility, designated as “Plangi on
the Sky”, will be built above the parking floor and is scheduled for completion and operation by the
middle of 2007.
The Plaza Semanggi offers a wide range of shopping, dining, and leisure activities. The building
accommodates a supermarket, a department store, retail units, restaurants, cafes, food outlets, food
court, home furnishing stores, a fitness center, a karaoke lounge, a book store, an electronic mega
store, hand phone and computer stores, a Cineplex, and a billiard. The building is built with 2 basement
levels and 7 parking floors on 5th to 9th levels to accommodate a total of 1,100 car parking capacity.
Major tenants include Centro Department Store, Giant Superstore, Electronic Solution, Fitness First,
Gramedia Book Store, and 21 Cineplex.
Gedung Veteran is a B-grade office building with a total lettable office floor area of about
11,961 square meters (including a 970-square meter rent-free office space entitled to the land
owner). Major tenants include MAA Insurance and X Lounge.
Particulars
Address
:
Jalan Jenderal Sudirman Kav. 50,
Sub-District of Karet Semanggi, District of Setiabudi,
Regency of South Jakarta,
Jakarta—Indonesia.
Land Area
:
19,000 square meters.
Land Owner
:
Yayasan Gedung Veteran Republik Indonesia CQ the Secretary
General of the Republic of Indonesia.
Land Title
:
Hak Pakai (Right to Use) No. 133/Karet Semanggi dated
21 October 1997.
BOT Agreement
:
- Perjanjian Pengikatan Revitalisasi, Pengelolaan dan Pengalihan
(Introductory Agreement of Revitalization, Management and
Transfer) dated 5 January 2000.
- Perjanjian Revitalisasi, Pembangunan, Pengolahan dan
Pengalihan (Deed of Revitalization, Development, Management
and Transfer) No. 56 dated 29 March 2000.
Continue to page 5.
E-5
Appendix E
Report No.017/WPA-Report/2007
Page 5.
- Addendum Perjanjian Revitalisasi, Pembangunan, Pengolahan
dan Pengalihan (Deed of Addendum for the Deed of
Revitalization, Development, Management and Transfer) Nos. 25
and 26 dated 26 May 2000.
- Addendum Perjanjian Revitalisasi, Pembangunan, Pengolahan
dan Pengalihan (Deed of Addendum for the Deed of
Revitalization, Development, Management and Transfer) dated
29 January 2002.
BOT Right Holder
:
PT. Primatama Nusa Indah.
BOT Term
:
- Initial term of 30 (thirty) years from 8 July 2004 to 8 July 2034.
- Extension term of 20 (twenty) years from 8 July 2034 to 8 July
2054.
In total, a remaining BOT term of 47.05 years from the date of
valuation.
Land Zoning
:
Commercial use.
Type of Development
:
Shopping center and office building.
No. of Building Block
:
2 blocks.
Building Level
:
- Shopping center (7 floors and 2 basement levels).
- Office Building (13 floors, including Level 11, the rent-free office
floor entitled to the land owner)
- Parking (7 floors starting from level 5)
Initial Opening Year
:
2004.
Gross Floor Area
:
91,232 square meters.
Lettable Floor Area
:
- Retail spaces of The Plaza Semanggi
: 46,724 square meters.
- Office spaces of Gedung Veteran
(including Level 11, a 970-square
meter rent-free office floor entitled to
the land owner).
: 11,961 square meters
Current Total
: 58,685 square meters.
- “Plangi on the Sky”, a proposed
dining-cum-entertainment facility
scheduled for completion and
operation by middle of 2007).
: 3,000 square meters.
Future Total
: 61,685 square meters.
Occupancy Level
:
96.4%, based on current total lettable
floor area of 58,685 square meters.
Continue to page 6.
E-6
Appendix E
Report No.017/WPA-Report/2007
Page 6.
Tenancy Details
:
As at 30 June 2007, anchor and major tenants occupied about
53.6% of the total occupied retail space within the shopping center.
Centro Department Store is the largest tenant which constituted
about 17.2% of the total occupied retail space, Giant Superstore is
the second largest tenant by 13.7%, Electronic Solution is the third
largest tenant by 9.3%, Fitness First is the fourth largest tenant by
4.6%, Gramedia is the fifth largest tenant by 3.5%, 21 Cineplex is
the sixth largest by 3.1%, and the remaining 2.2% goes to Gillians
Billiard.
Centro Department Store has a 10-year lease term expiring in
4 November 2013, Giant has a 12-year lease term expiring in
14 February 2019, Electronic Solution and 21 Cineplex have 5-year
lease term expiring in 2011 and 2014, Fitness First has a 15-year
lease term expiring in 2020, whilst Gillian’s Billiard, and Gramedia
have 5-year lease terms expiring in 2009, 2010 respectively. About
44.4% of the specialty shops including food outlets have a 5-year
lease term, about 22.3% have a 30-year lease term, about 10.8%
have a 3-year lease term, about 15.9.2% have a 10-year lease
term, and the remaining 6.6% have variable lease terms.
The shopping center has an overall average base rental rate of
about Rp. 92,598/square meter/month. The average base rental
rate for the anchor and major tenants, Ground Floor, Upper
Ground Floor, 1st Floor, 2nd Floor, 3rd Floor, 3A Floor (food court
and restaurant level) respectively are about Rp. 58,402,
Rp. 174,200, Rp. 256,176, Rp. 220,151, Rp. 101,055, Rp. 79,896,
Rp. 425,581/square meter/month.
As at 30 June 2007, MAA Assurance was the largest tenant in the
office building occupying about 17.18% of the total occupied
spaces, and X Lounge was the second largest tenant by about
17.22%.
About 46% of the existing tenants in the office building have a
5-year lease term expiring in 2009 and 2010, about 24.2% have a
3-year lease term expiring in 2008, about 18.2% have a 2-year
lease term expiring in 2007, and the remaining 11.6% are under a
30-year lease term expiring in 2034.
The office building has an average base rental rate of about
Rp. 42,388/square meter/month. The base rental rate for its typical
floor is about Rp. 34,120/square meter/month, and for its ground
floor is about Rp. 206,459/square meter/month.
Continue to page 7.
E-7
Appendix E
Report No.017/WPA-Report/2007
Page 7.
2.
Gajah Mada Plaza
Brief Description
Gajah Mada Plaza is a 7-storey with 1 basement level shopping center with a total lettable floor area of
about 34,278 square meters. It offers a wide range of shopping, dining, and leisure activities. The
building accommodates a hypermarket, a department store, retail units, restaurants, food outlets,
food court, pet shops, a book store, computer stores, a Cineplex, convention/wedding halls, fitness
center, karaoke lounge, and a night club. Major tenants include Hypermart, Rimo Department Store,
Inul Fiesta, Millenium Executive Club, Eva Bun, and GM 21 Cineplex.
Gajah Mada Plaza is built adjacent to and on the same site with the 28-storey Gajah Mada Office
Building.
Particulars
Address
:
Strata Title Floor Area
Strata Title Owner
Strata Title
:
:
:
Jalan Gajah Mada No. 19-26,
Sub-District of Petojo Utara, District of Gambir,
Regency of Central Jakarta,
Jakarta—Indonesia.
37,501 square meters.
PT. Graha Baru Raya.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 325/-I/S/Petojo Utara dated 26 July 1999.
• Unit No. SSG-01, Level SG, Block S.
• Unit Area: 5,228 square meters.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 326/-I/S/Petojo Utara dated 26 July 1999.
• Unit No. SSG-02, Level SG, Block S.
• Unit Area: 135 square meters.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 328/I/S/Petojo Utara dated 26 July 1999.
• Unit No. SG-02, Level G, Block S.
• Unit Area: 18 square meters.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 330/II/S/Petojo Utara dated 26 July 1999.
• Unit No. S01-02, Level 1, Block S.
• Unit Area: 17 square meters.
Continue to page 8.
E-8
Appendix E
Report No.017/WPA-Report/2007
Page 8.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 332/III/S/Petojo Utara dated 26 July 1999.
• Unit No. S02-02, Level 2, Block S.
• Unit Area: 43 square meters.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 333/IV/S/Petojo Utara dated 26 July 1999.
• Unit No. S03-02, Level 3, Block S.
• Unit Area: 4,618 square meters.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 334/V/S/Petojo Utara dated 26 July 1999.
• Unit No. S04-01, Level 4, Block S.
• Unit Area: 2,645 square meters.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 335/V-VI-VII/S/Petojo Utara dated 26 July 1999.
• Unit No. S04-02, Level 4-5-6, Block S.
• Unit Area: 3,205 square meters.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 336/VI-VII/S/Petojo Utara dated 26 July 1999.
• Unit No. S05-02, Level 5-6, Block S.
• Unit Area: 4,534 square meters.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 337/VII/S/Petojo Utara dated 26 July 1999.
• Unit No. S06A-01, Level 6A, Block S.
• Unit Area: 1,607 square meters.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 338/VIII/S/Petojo Utara dated 26 July 1999.
• Unit No. S07-01, Level 7, Block S.
• Unit Area: 591 square meters.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 438/I/S/Petojo Utara dated 3 June 2002.
• Unit No. SG-01A, Level 1, Block S.
• Unit Area: 5,186.1 square meters.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 440/II/S/Petojo Utara dated 3 June 2002.
• Unit No. SO1-O1A, Level 2, Block S.
• Unit Area: 4,755.6 square meters.
Continue to page 9.
E-9
Appendix E
Report No.017/WPA-Report/2007
Page 9.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 442/III/S/Petojo Utara dated 3 June 2002.
• Unit No. SO2-O1A, Level 2, Block S.
• Unit Area: 4,918.6 square meters.
Land Zoning
:
Commercial use.
Type of Development
:
Shopping center.
No. of Building Block
:
1 block of shopping center and annexed multi-storey parking building.
Building Level
:
- Shopping center (7 floors and 1 basement level).
- Parking building (8 floors).
Initial Opening Year
:
1982.
Gross Floor Area
:
66,160 square meters.
Lettable Floor Area
:
34,278 square meters.
Occupancy Level
:
89.1%.
Tenancy Details
:
As at 30 June 2007, anchor and major tenants occupied about 55.9%
of the total occupied retail space. Millenium Executive Club is the
largest tenant which constituted about 18.3% of the total occupied
retail spaces, Hypermart is the second largest tenant by 16.4%, Rimo
Dept. Store is the third largest tenant by 9.1%, Eva Bun is the fourth
largest tenant by 6.6%, and GM 21 Cineplex is the fifth largest by
5.5%.
Millenium Executive Club has a 15-year lease term expiring in
29 October 2014, Hypermart has a 10-year lease term expiring in
2 February 2015, Rimo Dept. Store has a 2-year lease term expiring in
30 June 2008, Eva Bun has a 10-year lease term expiring in 2015, and
GM 21 Cineplex has a 10-year lease term expiring in 2013. About
27.6% of the specialty shops including food outlets have a 5-year
lease term, about 21% have a 2-year lease term, about 20.6% have
3-year lease term, about 14% have a 1-year or less lease term, about
11.6% have a 11.4-year lease term, and the remaining 5.2% have a
4-year or 20-year lease terms.
The overall average base rental rate is about Rp. 71,523/square
meter/month. The average base rental rate for the anchor tenants,
Semi Ground Floor, Ground Floor, 1st Floor, 2nd Floor, 3rd Floor,
3rd Floor (computer shops), 3A Floor (food court and restaurant
level), and 7 Floor respectively are about Rp. 35,166, Rp. 150,000,
Rp. 202,317, Rp. 181,980, Rp. 150,670, Rp. 147,775, Rp. 68,449,
Rp. 249,707, Rp. 24,767/square meter/month.
Continue to page 10.
E-10
Appendix E
Report No.017/WPA-Report/2007
Page 10.
3. Cibubur Junction
Brief Description
Cibubur Junction is a 5-storey with 1 basement level and partial roof top level shopping center with a
total lettable retail floor area of about 34,139 square meters. It offers a wide range of shopping, dining,
and leisure activities. The building accommodates a hypermarket, a department store, retail units,
restaurants, food outlets, a book store, a fitness center, and a cineplex. Major tenants include
Hypermart, Matahari Department Store, Timezone Amusement Center, Karisma Book Store, Sport
Warehouse, Fitness First, and 21 Cineplex.
Particulars
Address
:
Jalan Jambore No. 1
Sub-District of Cibubur, District of Ciracas,
Regency of East Jakarta,
Jakarta—Indonesia.
Land Area
:
31,987 square meters.
Land Owner
:
Perusahaan Daerah Pembangunan Sarana Jaya DKI Jakarta.
Land Title
:
Hak Guna Bangunan No. 01210/Cibubur dated 24 December 2001.
BOT Agreement
:
- Perjanjian Kerjasama Tentang Pendayagunaan Lahan Untuk
Pembangunan dan Pengembangan Gedung Pusat Perbelanjaan
di Areal Lahan Terletak di Cibubur—Jakarta Timur (Deed of
Cooperation Agreement on Land Utilization for Construction and
Development of a Shopping Centre Located at Cibubur—East
Jakarta) No. 68 dated 28 July 2003.
- Addendum I dated 25 November 2004.
- Addendum II dated 26 November 2004.
BOT Right Holder
:
PT. Cibubur Utama.
BOT Term
:
20 (twenty) years from 28 July 2005 up to 28 July 2025.
Or a remaining BOT term of 13.09 years from the date of valuation.
Land Zoning
:
Commercial use.
Type of Development
:
Shopping center.
No. of Building Block
:
1 block.
Building Level
:
5 floors with 1 basement level.
Initial Opening Year
:
2005.
Continue to page 11.
E-11
Appendix E
Report No.017/WPA-Report/2007
Page 11.
Gross Floor Area
:
49,341 square meters.
Lettable Floor Area
:
34,139 square meters.
Occupancy Level
:
86.4%.
Tenancy Details
:
As at 30 June 2007, anchor and major tenants occupied about 67.9%
of the total occupied retail space. Hypermart is the largest tenant
which constituted about 29.9% of the total occupied retail spaces,
Matahari Group (Dept. Store and Timezone) is the second largest
tenant by 22%, Fitness First is the third largest tenant by 5.7%, 21
Cineplex is the fourth largest tenant by 5.5%, and the remaining 4.9%
is shared between Sports Warehouse and Karisma Book Store.
Hypermart has a 10-year lease term expiring in 27 July 2015,
Matahari Dept. Store has a 9.5-year lease term expiring in
30 August 2015, Timezone has a 9.75-year lease term expiring in
30 October 2015, Fitness First has a 15-year lease term expiring in
2021, and 21 Cineplex has a 10-year lease term expiring in 23 March
2016, whilst both Sports Warehouse and Karisma Book Store have a
5-year lease term expiring in 2010. About 65.7% of the specialty
shops including food outlets have a 5-year lease term, about 27.1%
have a 7-year lease term, and the remaining 7.2% have variable lease
term of 1, 2, 3, or 10 years.
The overall average base rental rate is about Rp. 86,584/square
meter/month. The average base rental rate for the anchor tenants,
Lower Ground Floor, Ground Floor, Upper Ground Floor, 1st Floor,
2nd Floor (food court and restaurant level) respectively are about
Rp. 49,232, Rp. 215,732, Rp. 160,580, Rp. 180,522, Rp. 184,822,
Rp. 169,850/square meter/month.
Continue to page 12.
E-12
Appendix E
Report No.017/WPA-Report/2007
Page 12.
4.
Bandung Indah Plaza
Brief Description
Bandung Indah Plaza is the first major shopping center to be built in Bandung, the capital city of West
Java Province. It is a 4-storey with 3 basement levels shopping center with a total lettable retail floor
area of about 26,472 square meters. It offers a wide range of shopping, dining, and leisure activities.
The building accommodates a supermarket, 2 department stores, retail units, restaurants, cafes, food
outlets, food court, a book store, and a Cineplex. Major tenants include Hypermart, Matahari
Department Store, Yogya Department Store, Timezone amusement center, 21 Cineplex, and
Gunung Agung Book Store.
Recently, Bandung Indah Plaza undergone renovations to its exterior and interior elements, and is
currently undergoing tenancy mix repositioning exercise. The building reserves a total retail and
temporary leasing areas of about 2,700 square meters, of which about 24% of the areas will start to be
tenanted by middle of 2007, about 7% by 2008, and the remaining 69% by 2009. The building also has
about 1,142 square meters space for casual leasing.
Particulars
Address
:
Jalan Merdeka No. 56
Sub-District of Citarum, District of Bandung Wetan,
Regency of Bandung,
West Java—Indonesia.
Land Area
:
15,779 square meters.
Land Owner
:
Perusahaan Daerah Jasa dan Kepariwisataan Pemerintah Propinsi
Jawa Barat (The State Company for Tourism Service of the
Government of West Java Province).
Land Title
:
- Hak Guna Bangunan (Right to Build) No. 26/Citarum
Land Area
:
1,066 square meters.
Registered Proprietor
:
PT Megah Semesta Abadi
Expiry Date
:
14 August 2010
- 7 (seven) HGB titles registered under the name of PT. Megah
Semesta Abadi, which are issued over Hak Pengelolaan (Right to
Operate titles Nos. 1/Cihapit, 1/Citarum, 1/Merdeka, and 2/Citarum
registered under the name of Perusahaan Daerah Jasa dan
Kepariwisataan Pemerintah Propinsi Jawa Barat.
(i)
(ii)
HGB Title No. 130/Citarum
Land Area
:
Registered Proprietor
:
Expiry Date
:
160 square meters.
PT Megah Semesta Abadi.
20 October 2017.
HGB Title No. 131/Citarum
Land Area
:
Registered Proprietor
:
Expiry Date
:
1,121 square meters.
PT Megah Semesta Abadi.
20 October 2017.
Continue to page 13.
E-13
Appendix E
Report No.017/WPA-Report/2007
Page 13.
(iii)
HGB Title No. 64/Citarum
Land Area
:
Registered Proprietor
:
Expiry Date
:
5,015 square meters.
PT Megah Semesta Abadi.
8 September 2019.
HGB Title No. 65/Citarum
Land Area
:
Registered Proprietor
:
Expiry Date
:
1,355 square meters.
PT Megah Semesta Abadi.
8 September 2019.
HGB Title No. 69/Citarum
Land Area
:
Registered Proprietor
:
Expiry Date
:
527 square meters.
PT Megah Semesta Abadi.
8 September 2019.
HGB Title No. 89/Merdeka
Land Area
:
Registered Proprietor
:
Expiry Date
:
3,665 square meters.
PT Megah Semesta Abadi.
30 January 2021.
(vii) HGB Title No. 90/Merdeka
Land Area
:
Registered Proprietor
:
Expiry Date
:
2,870 square meters.
PT Megah Semesta Abadi.
30 January 2021.
(iv)
(v)
(vi)
BOT Agreement
:
- Perjanjian Kerjasama Pemugaran, Pembangunan dan Pengelolaan
Hotel Pakunegara—Bandung (Cooperation Agreement on the
Renovation, Development and Management of Hotel
Pakunegara, Bandung) No. 18 dated 30 August 1986.
- Novasi Perjanjian Kerjasama Pemugaran, Pembangunan dan
Pengelolaan Hotel Pakunegara—Bandung) (Deed of Novation for
the Cooperation Agreement on the Renovation, Development and
Management of Hotel Pakunegara, Bandung) No. 125 dated
29 December 2003, which novated the BOT right holder from
PT. Bhuwanatala Indah Permai to PT Megah Semesta Abadi.
- Amended several times, amongst others with:
• Pernyataan Kembali dan Perubahan Perjanjian Kerjasama
Pemugaran,
Pembangunan
dan
Pengelolaan
Hotel
Pakunegara Bandung (Kerjasama, Perluasan dan/atau
Renovasi Mall) (Restatement and Amendment Deed to the
Cooperation Agreement on the Renovation, Development and
Management of Hotel Pakunegara, Bandung (Cooperation,
Expansion and/or Renovation of the Mall) No. 50, dated 19 July
2005; and
• Akta Kesepakatan Bersama (Cooperation Agreement) No. 34,
dated 22 December 2005
Continue to page 14.
E-14
Appendix E
Report No.017/WPA-Report/2007
Page 14.
BOT Right Holder
:
PT. Megah Semesta Abadi.
BOT Term
:
From 19 August 1990 (for BIP 1) and 1 May 1994 (for BIP 2) up to
31 December 2030.
Or a remaining BOT term of 23.52 years from the date of valuation.
Land Zoning
:
Commercial use.
Type of Development
:
Shopping center.
No. of Building Block
:
1 block.
Building Level
:
4 floors with 3 basement levels.
Initial Opening Year
:
1990 (BIP 1) and 1994 (BIP 2).
Gross Floor Area
:
55,196 square meters.
Lettable Floor Area
:
26.472 square meters.
Occupancy Level
:
83.2%, based on the condition that currently about 2,701 square
meters of retail and temporary leasing spaces are currently still vacant
and will only be tenanted in stages starting from the middle of 2007 up
to 2009.
Tenancy Details
:
As at 30 June 2007, anchor and major tenants occupied about 60.6%
of the total occupied retail space. Matahari Group (Dept. Store and
Timezone) is the largest tenant which constituted about 28.9% of the
total occupied retail spaces, Hypermart is the second largest tenant
by 19.7%, 21 Cineplex is the third largest tenant by 7.9%, and Gunung
Agung Book Store is the fourth largest tenant by 4.1%.
Matahari Group Dept. Store, Timezone and Hypermart have a
9.5-year lease term expiring in 31 May 2015, 21 Cineplex has a
10-year lease term expiring in 31 December 2015, and Gunung
Agung Book Store has a 5-year lease term expiring in 23 May
2011. About 81.2% of the specialty shops including food outlets
have a 5-year lease term, about 14.4% have a 10-year lease term,
and the remaining 4.4% have variable lease term of 1 to 4 years.
The overall average base rental rate is about Rp. 141,230/square
meter/month. The average base rental rate for the anchor tenants,
Ground Floor, 1st Floor, 2nd Floor, 3rd Floor, and 3rd Floor (food court)
respectively are about Rp. 45,000, Rp. 290,288, Rp. 262,956,
Rp. 260,261, Rp. 213,056, Rp. 500,398/square meter/month.
Continue to page 15.
E-15
Appendix E
Report No.017/WPA-Report/2007
Page 15.
5.
Istana Plaza
Brief Description
Istana Plaza is a 4-storey with 2 basement levels shopping center with a total lettable retail floor area
of about 27,247 square meters. It offers a wide range of shopping, dining, and leisure activities. The
building accommodates a supermarket, a department store, retail units, restaurants, cafes, food
outlets, food court, a book store, a hardware store, and an ice skating facility. Major tenants include
Hero Supermarket, Rimo Department Store, Game Master Amusement Center, Gramedia Book
Store, Ace Hardware, Agis Electronic, a “stand-alone” McDonalds outlet, and an ice skating ring.
Particulars
Address
:
Jalan Pasir Kaliki No. 121-123
Sub-District of Pamayonan, District of Cicendo,
Regency of Bandung,
West Java—Indonesia.
Land Area
:
13,082 square meters.
Land Owner
:
Gereja Kristen Pasundan.
Land Title
:
- Hak Guna Bangunan (Right to Build) No. 43/Pamayonan
Land Area
:
12,350 square meters.
Registered Proprietor
:
Gereja Kristen Pasundan
Expiry Date
:
24 September 2032.
- Hak Guna Bangunan (Right to Build) No. 177/Pajajaran
Land Area
:
40 square meters.
Registered Proprietor
:
Gereja Kristen Pasundan
Expiry Date
:
24 September 2032.
- Hak Guna Bangunan (Right to Build) No. 58/Pamayonan
Land Area
:
86 square meters.
Registered Proprietor
:
Gereja Kristen Pasundan
Expiry Date
:
24 September 2032.
- Hak Guna Bangunan (Right to Build) No. 59/Pamayonan
Land Area
:
361 square meters.
Registered Proprietor
:
Gereja Kristen Pasundan
Expiry Date
:
24 September 2032.
- Hak Guna Bangunan (Right to Build) No. 60/Pamayonan
Land Area
:
245 square meters.
Registered Proprietor
:
Gereja Kristen Pasundan
Expiry Date
:
24 September 2032.
Continue to page 16.
E-16
Appendix E
Report No.017/WPA-Report/2007
Page 16.
BOT Agreement
:
- Perjanjian Kerjasama (Cooperation Agreement), dated 9 May
1997.
- Amendment Agreement dated 28 June 2001.
- Amendment Agreement dated 10 June 2004.
BOT Right Holder
:
PT. Suryana Istana Pasundan.
BOT Term
:
32 (thirty two) years from 17 January 2002
Or a remaining BOT term of 26.57 years from the date of valuation.
Land Zoning
:
Commercial use.
Type of Development
:
Shopping center.
No. of Building Block
:
1 block.
Building Level
:
4 floors with 2 basement levels.
Initial Opening Year
:
2003.
Gross Floor Area
:
37,434 square meters.
Lettable Floor Area
:
27,247 square meters.
Occupancy Level
:
98.9%.
Tenancy Details
:
As at 30 June 2007, anchor and major tenants occupied about
51.1% of the total occupied retail space. Rimo Dept. Store is the
largest tenant which constituted about 17.2% of the total occupied
retail spaces, McDonald’s is the second largest tenant by 8.7%,
Ace Hardware is the third largest tenant by 5.5%, Hero
Supermarket is the fourth largest tenant by 5.0%, Gramedia Book
Store is the fifth largest tenant by 4.6%, and the remaining 10.1%
is shared between Agis Electronic, Ice Skating Ring, and Game
Master.
Rimo Dept. Store, Ace Hardware, Gramedia Book Store have a
10-year lease term expiring in 28 February 2012, Agis Electronic
have a 5-year lease term expiring in 2007 (but have confirmed to
extend the lease until 2012), Game Master and Ice Skating Ring
have a 5-year lease term expiring in 2011 and 2012 respectively,
whilst Hero Supermarket and McDonald’s have a 20-year lease
term expiring in 2020. About 75.1% of the specialty shops
including food outlets have a 5-year lease term, about 18.6% have
a 3-year lease term, and the remaining 6.3% have variable lease
term of 1, 2, 4 or 10 years.
The overall average base rental rate is about Rp. 88,458/square
meter/month. The average base rental rate for the anchor tenants,
Lower Ground Floor, Ground Floor, 1st Floor, 2nd Floor, 3rd Floor,
and 3rd Floor (food court) respectively are about Rp. 43,678,
Rp. 161,443, Rp. 232,124, Rp. 113,071, Rp. 121,089, Rp. 127,576,
Rp. 235,747/square meter/month.
Continue to page 17.
E-17
Appendix E
Report No.017/WPA-Report/2007
Page 17.
6.
Ekalokasari Plaza
Brief Description
Ekalokasari Plaza is a 6-storey with 3 basement levels shopping center with a total lettable retail floor
area of about 20,587 square meters. It offers a wide range of shopping, dining, and leisure activities.
The building accommodates a supermarket, a department store, retail units, restaurants, food outlets,
and 2 book stores. Major tenants include Market Place Supermarket, Matahari Department Store,
Gramedia Book Store, and Karisma Book Store.
The building reserves a total retail space of about 5,013 square meters for a proposed Cineplex, a
proposed amusement center, food court and restaurant areas, including temporary leasing areas on
Level 4, and a proposed fitness center on the mezzanine floor of Level 4; which will start tenanting by
middle to end of 2007.
Particulars
Address
:
Jalan Siliwangi No. 123
Sub-District of Sukasari, District of Kota Bogor Timur,
Administrative City of Bogor,
West Java—Indonesia.
Land Area
:
10,500 square meters.
Land Owner
:
PT. Bogor Life Science and Technology CQ Institut Pertanian Bogor
(Bogor Institute of Agriculture).
Land Title
:
Hak Pakai (Right to Use) No. 1/Sukasari dated 22 December 1995.
BOT Agreement
:
- Perjanjian Kerjasama (Cooperation Agreement) No. 133 dated
27 June 2001.
- Addendum dated 9 February 2004.
BOT Right Holder
:
PT. Indah Pesona Bogor.
BOT Term
:
25 (twenty five) years from 27 June 2001 up to 27 June 2026.
Or a remaining BOT term of 19.01 years from the date of valuation.
Land Zoning
:
Commercial use.
Type of Development
:
Shopping center.
No. of Building Block
:
1 block.
Building Level
:
6 floors with 3 basement levels.
Initial Opening Year
:
2003.
Continue to page 18.
E-18
Appendix E
Report No.017/WPA-Report/2007
Page 18.
Gross Floor Area
:
39,895 square meters.
Lettable Floor Area
:
20,587 square meters.
Occupancy Level
:
87.3%, based on the condition that currently about 5,013-square
meter retail and temporary leasing spaces on Level 4 and the
mezzanine floor of Level 4 are still vacant and will only be tenanted
by 3 major tenants i.e. Cinema 21, Fit By Beat, and Timezone by May
and September 2007.
Tenancy Details
:
As at 30 June 2007, anchor and major tenants occupied about 67.1%
of the total occupied retail space. Matahari Group (Dept. Store and
Market Place) is the largest tenant which constituted about 55.1% of
the total occupied retail spaces, Gramedia Book Store is the second
largest tenant by 6.7%, and Karisma Book Store is the third largest
tenant by 5.3%.
Matahari Group (Dept. Store and Market Place) has a 10-year lease
term expiring in 23 March 2015, Gramedia has a 10-year lease term
expiring in 22 May 2014, whilst Karisma Book Store has a 20-year
lease term expiring on 29 February 2024. About 59.3% of the
specialty shops including food outlets have a 5-year lease term,
about 26.6% have a 20-year lease term, 8.1% have a 3-year lease
term, and the remaining 6% have a 10-year lease term.
The overall average base rental rate is about Rp. 73,669/square
meter/month. The average base rental rate for the anchor tenants,
Lower Ground Floor, Ground Floor, 1st Floor, 2nd Floor, and 3rd Floor
respectively are about Rp. 34,164, Rp. 205,877, Rp. 158,995,
Rp. 191,151, Rp. 128,176, Rp. 103,778/square meter/month.
Continue to page 19.
E-19
Appendix E
Report No.017/WPA-Report/2007
Page 19.
7.
Mal Lippo Cikarang
Brief Description
Mal Lippo Cikarang is a 2-storey shopping center with an existing total lettable retail floor area of about
17,974 square meters.
Mal Lippo Cikarang offers a wide range of shopping, dining, and leisure activities. The building
accommodates a supermarket, a department store, retail units, restaurants, food outlets, food court,
a book store, and a Cineplex. Major tenants include Hypermart, Hero Supermarket, Matahari
Department Store, Utama Book Store, Timezone Amusement Center and 21 Cineplex.
Particulars
Address
:
Jalan M.H. Thamrin, Lippo Cikarang
Sub-District of Cibatu, District of Lemah Abang,
Regency of Bekasi,
West Java—Indonesia.
Land Area
:
49,250 square meters.
Land Owner
:
PT. Graha Nusa Raya
:
Hak Guna Bangunan/HGB (Right to Build) No. 627/Cibatu dated
9 December 1999.
Land Title
- Land Area
:
49,250 square meters.
- Registered Proprietor
:
PT. Graha Nusa Raya
- Expiry Date
:
5 May 2023 (extendable upon
expiry).
Land Zoning
:
Commercial use.
Type of Development
:
Shopping center.
No. of Building Block
:
1 block.
Building Level
:
2 floors.
Initial Opening Year
:
1995.
Gross Floor Area
:
25,767 square meters.
Continue to page 20.
E-20
Appendix E
Report No.017/WPA-Report/2007
Page 20.
Lettable Floor Area
:
- Existing retail spaces
:
17,884 square meters.
- Under construction
proposed retail Extension
building scheduled for
completion and operation
by July 2007)
:
10,694 square meters.
Future Total
:
28,668 square meters.
Occupancy Level
:
96.3%, based on current total lettable floor area of 17,884 square
meters.
Tenancy Details
:
As at 30 June 2007, existing anchor and major tenants occupied
about 64.8% of the total occupied retail space. 79.8% of the additional
NLA created from asset enhancement has been pre-committed to
Hypermart. Matahari Group (Dept. Store and Timezone) is currently
the largest tenant by about 38.6% of the total occupied retail spaces,
Hero Supermarket is the second largest tenant by 13.0%, 21 Cineplex
is the third largest tenant by 9.7%, and Utama Book Store is the fourt
largest tenant by 3.6%.
Hypermart has a 20-year lease term expiring in 30 June 2027,
Matahari Group Dept. Store has a 20-year lease term expiring on
9 December 2026, Timezone has a 6-year lease term expiring in
30 September 2011, Hero Supermarket and Utama Book Store have
a 2-year lease term expiring in 2007, and 21 Cineplex has a 10-year
lease term expiring in 2015. About 27.2% of the specialty shops
including food outlets have a 2-year lease term, 23.8% have a
1-year or less lease term, about 27.1% have a 3-year lease term,
about 15.2% have a 5-year lease term, and the remaining 6.7% have
variable lease term of 4 or 10 years.
The overall average base rental rate is about Rp. 58,038/square
meter/month. The average base rental rate for the anchor tenants,
Ground Floor, and 1st Floor respectively are about Rp. 45,859,
Rp. 128,089, Rp. 92,202/square meter/month.
Continue to page 21.
E-21
Appendix E
Report No.017/WPA-Report/2007
Page 21.
Retail Spaces tenanted and operated by Matahari Group at:
1.
Depok Town Square
Brief Description
Strata-titled retail space with a total floor area of about 13,045 square meters within Depok Town
Square—a strata-titled shopping center—which are tenanted and operated by Hypermart, Matahari
Department Store, and Timezone Amusement Center.
Particulars
Address
:
Depok Town Square
Jalan Margonda Raya No. 1,
Sub-District of Pondok Cina Beji, District of Depok,
Regency of Depok,
West Java—Indonesia.
Object of Valuation
:
Selected strata-titled retail spaces on the Lower Ground Floor, First
Floor and Second Floor.
Owner/Lessor
:
PT. Megah Detos Utama.
Strata Title
:
- Perjanjian Pengikatan Jual Beli Satuan Kios/Kios
(Binding Agreement for Sales and Purchase of Kiosk Unit/Kiosk)
No. 031/AGR/DM/MPP/XII/02 dated 19 December 2002.
- Perjanjian Pengikatan Jual Beli Satuan Kios/Kios
(Binding Agreement for Sales and Purchase of Kiosk Unit/Kiosk)
No. 012/JPN-PPJB/II/04 dated 11 February 2004.
Lettable Floor Area
:
13,045 square meters.
Lessee
:
PT. Matahari Putra Prima Tbk.
Initial Occupation Year
:
2005.
Occupancy Level
:
100%.
Lease Term
:
10 (ten) years with an option to renew for another ten (10) years after
the expiry of the initial lease Term.
Rental Rate
:
- The lease rental rate for the year 2007 shall be a fixed amount of
Rp. 70,000 per square meter per month.
- The lease rental rate for each of the subsequent four calendar years
after year 2007 shall increase by 8% from the preceding lease rental
rate per square meter.
Continue to page 22.
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Appendix E
Report No.017/WPA-Report/2007
Page 22.
- The lease rental lump-sum for each of the year, starting from the
beginning of year 2012 to the end of year 2016, shall be computed
as follows:
(A) The lease rental rate per square meter paid in the Calendar
Year 2009 multiplied by the lettable floor area of the space and
by the number of months in that calendar year, added with
(B) 4.25% of the Lessee’s excess revenue for the period between
the immediately preceding calendar year and of the Base Year,
which is fixed as Calendar Year 2010.
2.
Mal WTC Matahari
Brief Description
Strata-titled retail space with a total floor area of about 11,184 square meters within Mal WTC
Matahari—a strata-titled shopping center—which are tenanted and operated by Hypermart, Matahari
Department Store, and Timezone Amusement Center.
Particulars
Address
:
Mal WTC Matahari
Jalan Raya Serpong,
Sub-District of Pondok Jagung, District of Serpong,
Regency of Tangerang,
Banten—Indonesia.
Object of Valuation
:
Selected strata-titled retail spaces on the Ground Floor, Upper
Ground Floor, Mezzanine and Second Floor.
Owner/Lessor
:
PT. Dinamika Serpong.
Strata Title
:
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 00153/Pondok Jagung dated 17 December 2004.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 00197/Pondok Jagung dated 17 December 2004.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 00372/Pondok Jagung dated 17 December 2004.
- Sertifikat Hak Milik Atas Satuan Rumah Susun
(Freehold Unit Title in a Multi-Storey Building)
No. 00428/Pondok Jagung dated 17 December 2004.
Lettable Floor Area
:
11,184 square meters.
Continue to page 23.
E-23
Appendix E
Report No.017/WPA-Report/2007
Page 23.
Lessee
:
PT. Matahari Putra Prima Tbk.
Initial Occupation Year
:
2004.
Occupancy Level
:
100%.
Lease Term
:
10 (ten) years with an option to renew for another ten (10) years after
the expiry of the initial lease Term.
Rental Rate
:
- The lease rental rate for the year 2007 shall be a fixed amount of
Rp. 80,000 per square meter per month.
- The lease rental rate for each of the subsequent four calendar years
after year 2007 shall increase by 8% from the preceding lease rental
rate per square meter.
- The lease rental lump-sum for each of the year, starting from the
beginning of year 2012 to the end of year 2016, shall be computed
as follows:
(A) The lease rental rate per square meter paid in the Calendar
Year 2009 multiplied by the lettable floor area of the space and
by the number of months in that calendar year, added with
(B) 4.25% of the Lessee’s excess revenue for the period between
the immediately preceding calendar year and of the Base Year,
which is fixed as Calendar Year 2010.
3.
Metropolis Town Square
Brief Description
Strata-titled retail space wit