CIRCULAR DATED 26 NOVEMBER 2012 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. Singapore Exchange Securities Trading Limited (the “SGX-ST”) assumes no responsibility for the accuracy or correctness of any statements or opinions made, or reports contained, in this circular dated 26 November 2012 (the “Circular”). 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 immediately. If you have sold or transferred all your units in Lippo Malls Indonesia Retail Trust (“LMIR Trust”, and the units in LMIR Trust, “Units”), you should immediately forward this Circular, together with the Notice of Extraordinary General Meeting and the accompanying Proxy Form in this Circular, to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for onward transmission to the purchaser or transferee. This Circular is not for distribution, directly or indirectly, in or into the United States (“U.S.”). It is not an offer of securities for sale into the U.S. There will be no public offer of securities in the U.S. (Constituted in the Republic of Singapore pursuant to a trust deed dated 8 August 2007 (as amended)) MANAGED BY LMIRT MANAGEMENT LTD. CIRCULAR TO UNITHOLDERS IN RELATION TO: (1) THE PROPOSED ACQUISITION OF PEJATEN VILLAGE FROM AN INTERESTED PERSON; (2) THE PROPOSED ACQUISITION OF BINJAI SUPERMALL FROM AN INTERESTED PERSON; AND (3) THE WHITEWASH RESOLUTION. Independent Financial Adviser to the Independent Directors of LMIRT Management Ltd and the Trustee. IMPORTANT DATES AND TIMES FOR UNITHOLDERS Last date and time for lodgement of Proxy Forms : 11 December 2012 at 2.00 p.m. Date and time of Extraordinary General Meeting : 13 December 2012 at 2.00 p.m. Place of Extraordinary General Meeting : 333 Orchard Road Mandarin Orchard Singapore Mandarin Ballroom 1, Level 6, Main Tower Singapore 238867
Transcript
CIRCULAR DATED 26 NOVEMBER 2012
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
Singapore Exchange Securities Trading Limited (the “SGX-ST”) assumes no responsibility for the
accuracy or correctness of any statements or opinions made, or reports contained, in this circular dated
26 November 2012 (the “Circular”). 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
immediately.
If you have sold or transferred all your units in Lippo Malls Indonesia Retail Trust (“LMIR Trust”, and
the units in LMIR Trust, “Units”), you should immediately forward this Circular, together with the Notice
of Extraordinary General Meeting and the accompanying Proxy Form in this Circular, to the purchaser
or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected
for onward transmission to the purchaser or transferee.
This Circular is not for distribution, directly or indirectly, in or into the United States (“U.S.”). It is not
an offer of securities for sale into the U.S. There will be no public offer of securities in the U.S.
(Constituted in the Republic of Singapore
pursuant to a trust deed dated 8 August 2007 (as amended))
MANAGED BY
LMIRT MANAGEMENT LTD.
CIRCULAR TO UNITHOLDERS
IN RELATION TO:
(1) THE PROPOSED ACQUISITION OF PEJATEN VILLAGE FROM AN INTERESTED PERSON;
(2) THE PROPOSED ACQUISITION OF BINJAI SUPERMALL FROM AN INTERESTED PERSON; AND
(3) THE WHITEWASH RESOLUTION.
Independent Financial Adviser to the Independent Directors of LMIRT Management Ltd and the Trustee.
IMPORTANT DATES AND TIMES FOR UNITHOLDERS
Last date and time for lodgement of Proxy Forms : 11 December 2012 at 2.00 p.m.
Date and time of Extraordinary General Meeting : 13 December 2012 at 2.00 p.m.
Place of Extraordinary General Meeting : 333 Orchard Road
Mandarin Orchard Singapore
Mandarin Ballroom 1, Level 6, Main Tower
Singapore 238867
PEJATEN VILLAGE
Pejaten Village is a six-level retail mall (including one basement level) built in 2009, with a gross
floor area of 91,749 sq m and net lettable area of about 41,847 sq m. The retail mall is located
within a strategic area in the heart of South Jakarta and bears the postal address of Jalan Warung
Jati Barat No. 39, Jati Padang Sub District, Pasar Minggu District, South Jakarta Region, DKI
Jakarta Province, Indonesia.
BINJAI SUPERMALL
Built in 2007, Binjai Supermall is the first and only modern retail mall in Binjai City. Binjai
Supermall is a three-level retail mall, and is currently undergoing an expansion and renovation
program which is expected to increase its net lettable area by more than 25% by March 2013.
(See paragraph 3.2 of the Letter to Unitholders for further details.)
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METHOD OF FINANCING
The Manager intends to finance the cash portion of S$129.0 million (Rp.1,014.5 billion) of the Total
Acquisition Cost1 with:
(i) the proceeds raised from the issuance of the S$200,000,000 4.88% Notes due 2015 and
S$50,000,000 5.875% Notes due 2017 (collectively, the “Notes”) pursuant to the
S$750,000,000 Guaranteed Euro Medium Term Note Programme established by LMIRT
Capital Pte. Ltd. (a wholly-owned subsidiary of LMIR Trust) (the “EMTN Programme”) as
announced by the Manager on 26 June 2012;
(ii) the proceeds raised from the issuance of the S$75,000,000 4.48% Notes due 2017 pursuant
to the EMTN Programme as announced by the Manager on 15 November 2012; and
(iii) internal cash reserves and working capital of LMIR Trust.
SUMMARY OF APPROVALS SOUGHT
The Manager seeks the approval of unitholders of LMIR Trust (“Unitholders”) for the resolutions
stated below:
(1) Resolution 1: Proposed acquisition of Pejaten Village from an Interested Person (Ordinary
Resolution) (which is conditional upon the passing of Resolution 3);
(2) Resolution 2: Proposed acquisition of Binjai Supermall from an Interested Person (Ordinary
Resolution) (which is conditional upon the passing of Resolution 3); and
(3) Resolution 3: The Whitewash Resolution (Ordinary Resolution).
RESOLUTION 1: PROPOSED ACQUISITION OF PEJATEN VILLAGE FROM AN INTERESTED
PERSON
Interested Person Transaction and Interested Party Transaction2 in connection with the
Pejaten Village Acquisition
As at the Latest Practicable Date, the Manager has a direct interest in 62,990,115 Units
(comprising 2.88% of the total number of issued Units). The Manager is wholly-owned by
Peninsula Investment Limited (“Peninsula”), a wholly-owned subsidiary of Jesselton Investment
Ltd (“Jesselton”) which is in turn a wholly-owned subsidiary of the Sponsor. The Sponsor, directly
and/or through its subsidiaries and associates and through its interest in the Manager, has (i)
deemed interests of approximately 29.95% in LMIR Trust and (ii) wholly-owns the Manager, and
1 For the avoidance of doubt, the cash component of the Total Acquisition Cost does not include the acquisition fees
for the Proposed Acquisitions of Rp.9.9 billion (or S$1.3 million), which is payable in Units to the Manager pursuant
to Clause 15.2.1 of the trust deed dated 8 August 2007 constituting LMIR Trust (as amended) (the “Trust Deed”).
Clause 15.2.1 of the Trust Deed states that the Manager is entitled to receive an acquisition fee calculated at the
rate of 1.0% of the purchase price paid for any Authorised Investment (as defined in the Trust Deed) acquired from
time to time by the Trustee on behalf of LMIR Trust, and the purchase price shall be the amount after deducting the
interest of any co-owner or co-participant.
2 “Interested Party Transaction” has the meaning ascribed to it in paragraph 5 of the Property Funds Appendix.
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is therefore regarded as a “controlling unitholder”1 of LMIR Trust, and “controlling shareholder”2
of the Manager, under both the Listing Manual of the SGX-ST (the “Listing Manual”) and (where
applicable) the Property Funds Appendix. The Pejaten Village Vendors are indirect wholly-owned
subsidiaries of the Sponsor. For the purposes of Chapter 9 of the Listing Manual, each of the
Pejaten Village Vendors is an Interested Person3 of LMIR Trust, and for the purposes of paragraph
5 of the Property Funds Appendix relating to Interested Party Transactions, each of the Pejaten
Village Vendors is an Interested Party4 of LMIR Trust.
As such, the Pejaten Village Acquisition will constitute an Interested Person Transaction under
Chapter 9 of the Listing Manual. The Pejaten Village Acquisition will also constitute an Interested
Party Transaction under paragraph 5 of the Property Funds Appendix. Further, the value of the
Pejaten Village Acquisition is equal to 8.2% of LMIR Trust’s net asset value (“NAV”) of S$1,153.8
million as at 30 September 2012, and 8.2% of LMIR Trust’s latest unaudited net tangible assets
(“NTA”) of S$1,153.8 million as at 30 September 2012. Therefore, the approval of Unitholders is
required under Rule 906 of the Listing Manual and paragraph 5 of the Property Funds Appendix.
Accordingly, the approval of Unitholders is sought for the Pejaten Village Acquisition (see
paragraph 4.1 of the Letter to Unitholders for further details).
UNITHOLDERS SHOULD NOTE THAT RESOLUTION 1 (ACQUISITION OF PEJATEN VILLAGE
FROM AN INTERESTED PERSON) IS SUBJECT TO AND CONTINGENT UPON THE PASSING
OF RESOLUTION 3 (THE WHITEWASH RESOLUTION).
1 “Controlling Unitholder” means a person who:
(a) holds directly or indirectly 15% or more of the nominal amount of all voting units in the property fund. The MAS
may determine that such a person is not a controlling unitholder; or
(b) in fact exercises control over the property fund.
2 “Controlling Shareholder” means a person who:
(a) holds directly or indirectly 15% or more of the total number of issued shares excluding treasury shares in the
company; or
(b) in fact exercises control over a company.
3 “Interested Person” means:
(a) In the case of a company, “interested person” means:
(i) a director, chief executive officer, or controlling shareholder of the issuer; or
(ii) an associate of any such director, chief executive officer, or controlling shareholder; and
(b) in the case of a REIT, shall have the meaning defined in the Code on Collective Investment Schemes issued
by the MAS.
4 “Interested Party” means:
(a) a director, chief executive officer or controlling shareholder of the manager, or the manager, the trustee or
controlling unitholder of the property fund; or
(b) an associate of any director, chief executive officer or controlling shareholder of the manager, or an associate
of the manager, the trustee or any controlling unitholder of the property fund.
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RESOLUTION 2: PROPOSED ACQUISITION OF BINJAI SUPERMALL FROM AN INTERESTED
PERSON
Interested Person Transaction and Interested Party Transaction in connection with the
Binjai Supermall Acquisition
TMI is an indirect wholly-owned subsidiary of the Sponsor, and MPP and the Sponsor are under
common control by PT Multipolar Corporation Tbk. For the purposes of Chapter 9 of the Listing
Manual, each of TMI and MPP is an Interested Person of LMIR Trust, and for the purposes of
paragraph 5 of the Property Funds Appendix relating to Interested Party Transactions, each of TMI
and MPP is an Interested Party of LMIR Trust.
As such, the Binjai Supermall Acquisition will constitute an Interested Person Transaction under
Chapter 9 of the Listing Manual. The Binjai Supermall Acquisition will also constitute an Interested
Party Transaction under paragraph 5 of the Property Funds Appendix. The value of the Binjai
Supermall Acquisition is equal to 2.6% of LMIR Trust’s NAV of S$1,153.8 million as at 30
September 2012, and 2.6% of LMIR Trust’s latest unaudited NTA of S$1,153.8 million as at 30
September 2012. Although approval of Unitholders is not required for the Binjai Supermall
Acquisition under Rule 906 of the Listing Manual and paragraph 5 of the Property Funds Appendix,
the Manager wishes to seek Unitholders’ approval for the Binjai Supermall Acquisition for (i) good
corporate governance and (ii) due to the fact that Unitholders’ approval is also being sought for
the Pejaten Village Acquisition. Accordingly, the approval of Unitholders is sought for the Binjai
Supermall Acquisition (see paragraph 4.1 of the Letter to Unitholders for further details).
UNITHOLDERS SHOULD NOTE THAT RESOLUTION 2 (ACQUISITION OF BINJAI
SUPERMALL FROM AN INTERESTED PERSON) IS SUBJECT TO AND CONTINGENT UPON
THE PASSING OF RESOLUTION 3 (THE WHITEWASH RESOLUTION).
RESOLUTION 3: THE WHITEWASH RESOLUTION
Waiver of the Singapore Code of Take-overs and Mergers
On 20 October 2011, Unitholders other than the Sponsor, parties acting in concert with the
Sponsor and parties which are not independent of the Sponsor (the “Independent Unitholders”)
had approved a waiver of their right to receive a mandatory offer from the Sponsor and parties
acting in concert with the Sponsor, in the event that they incurred an obligation to make a
mandatory offer (“Mandatory Offer”) pursuant to Rule 14 of the Singapore Code of Take-overs
and Mergers (the “Code”) as a result of, amongst others, the receipt of the acquisition fee in
relation to the acquisition of Pluit Village (“Pluit Village Acquisition”) in Units (“Pluit Village
Acquisition Fee Units”) by the Manager in its own capacity. Pluit Village was acquired on 6
December 2011 and the payment for the final adjustment in relation to the Pluit Village Acquisition
was made in May 2012. As the Pluit Village Acquisition Fee Units were not issued to the Manager
within three months of the extraordinary general meeting held on 20 October 2011, the approval
granted by the Independent Unitholders on 20 October 2011 would have to be refreshed in order
for the Manager to receive the Pluit Village Acquisition Fee Units.
In addition, as the Proposed Acquisitions are Interested Party Transactions under the Property
Funds Appendix, the Manager is required under paragraph 5.6 of the Property Funds Appendix to
receive the acquisition fees for the Proposed Acquisitions (which is equal to 1.0% of the purchase
consideration of the Proposed Acquisitions) (“Acquisition Fees”) in Units. In accordance with
paragraph 5.6 of the Property Funds Appendix which applies to Interested Party Transactions, the
Units to be issued as payment of the Acquisition Fees are not to be sold within one year from their
date of issuance.
Rule 14.1(a) of the Code states that the Sponsor and parties acting in concert with the Sponsor
would be required to make a Mandatory Offer if the Sponsor and parties acting in concert with it,
acquire additional Units which increase their aggregate unitholdings in LMIR Trust to 30.0% or
more. Unless waived by the Securities Industry Council (the “SIC”), pursuant to Rule 14.1(a) of the
Code, the Sponsor and parties acting in concert with the Sponsor would then be required to make
a Mandatory Offer.
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The SIC has, on 9 November 2012,granted a waiver (the “SIC Waiver”) of the requirement by the
Sponsor and parties acting in concert with the Sponsor to make a Mandatory Offer for the
remaining Units not owned or controlled by the Sponsor and parties acting in concert with the
Sponsor, in the event that they incur an obligation to make a Mandatory Offer pursuant to Rule 14
of the Code as a result of the receipt of (i) the acquisition fee which is required to be paid to the
Manager in Units pursuant to paragraph 5.6 of the Property Funds Appendix, in respect of the
Proposed Acquisitions and (ii) the Pluit Village Acquisition Fee Units (collectively, the
“Acquisition Fee Units”), as these are acquisitions from Interested Parties, subject to the
satisfaction of the conditions specified in the SIC Waiver (as set out in paragraph 6.2 of the Letter
to Unitholders) including the approval of the Whitewash Resolution by Independent Unitholders
(as defined herein) at the extraordinary general meeting of Unitholders to be held on 13 December
2012 at 2.00 p.m. (the “EGM”).
The Manager hereby proposes to seek approval from Unitholders other than the Sponsor, parties
acting in concert with the Sponsor and parties which are not independent of the Sponsor (the
“Independent Unitholders”) for a waiver of their right to receive a mandatory offer from the
Sponsor and parties acting in concert with the Sponsor for the remaining issued Units not owned
or controlled by the Sponsor and parties acting in concert with the Sponsor, in the event that they
incur an obligation to make a Mandatory Offer as a result of the receipt of the Acquisition Fee Units
by the Manager in its own capacity.
Rationale for the Whitewash Resolution
The Whitewash Resolution is to enable the Manager to receive the Acquisition Fee Units without
the Sponsor having to make a Mandatory Offer, and the rationale for enabling the Manager to do
so is set out in paragraph 6.3 of the Letter to Unitholders.
(See paragraph 6.3 of the Letter to Unitholders for further details.)
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INDICATIVE TIMETABLE
The timetable for the events which are scheduled to take place after the EGM is indicative only
and is subject to change at the Manager’s absolute discretion. Any changes (including any
determination of the relevant dates) to the timetable below will be announced.
Event Date and Time
Last date and time for lodgement of Proxy
Forms
: 11 December 2012 at 2.00 p.m.
Date and time of the EGM : 13 December 2012 at 2.00 p.m.
The Acquisitions
Target date for the Proposed Completion
(as defined herein) of the Pejaten Village
Acquisition1
: Not later than 31 December 2012 (or such
other date as may be agreed between the
Trustee and the Pejaten Village Vendors)
Target date for the Proposed Completion
of the Binjai Supermall Acquisition
: Not later than 31 December 2012 (or such
other date as may be agreed between the
Trustee and the Binjai Supermall Vendors)
1 Subject to the adjustment for the consolidated net assets or net liabilities of PPP as at the Final Completion of the
Pejaten Village Acquisition.
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LIPPO MALLS INDONESIA RETAIL TRUST(Constituted in the Republic of Singapore
pursuant to a trust deed dated 8 August 2007 (as amended))
Directors of the Manager
Mr Albert Saychuan Cheok (Chairman & Independent
Non-Executive Director)
Ms Viven Gouw Sitiabudi (Executive Director of the Board and
Chief Executive Officer)
Mr Douglas Chew (Non-Executive Director)
Mr Bunjamin J. Mailool (Non-Executive Director)
Mr Lee Soo Hoon, Phillip (Independent Non-Executive Director)
Mr Goh Tiam Lock (Independent Non-Executive Director)
Registered Office
50 Collyer Quay
#06-07 OUE Bayfront
Singapore 049321
26 November 2012
To: Unitholders of Lippo Malls Indonesia Retail Trust
Dear Sir/Madam
1. APPROVALS SOUGHT
The following sets out the resolutions for which approval is sought by the Manager fromUnitholders. Approval by way of an Ordinary Resolution (as defined herein) is required inrespect of Resolutions 1, 2 and 3 set out below:
(1) Resolution 1: Acquisition of Pejaten Village from an Interested Person (OrdinaryResolution) (which is conditional upon the passing of Resolution 3);
(2) Resolution 2: Acquisition of Binjai Supermall from an Interested Person (OrdinaryResolution) (which is conditional upon the passing of Resolution 3); and
(3) Resolution 3: The Whitewash Resolution (Ordinary Resolution).
The Manager will only proceed with the Pejaten Village Acquisition if approval for bothResolutions 1 and 3 is obtained from Unitholders. The Manager will only proceed with theBinjai Supermall Acquisition if approval for both Resolutions 2 and 3 is obtained fromUnitholders. For the avoidance of doubt, completion of the Pejaten Village Acquisition andthe Binjai Supermall Acquisition are not inter-conditional upon each other. However, each ofthe Pejaten Village Acquisition and the Binjai Supermall Acquisition is conditional upon theWhitewash Resolution because these are interested party transactions (as defined in theProperty Funds Appendix) and under paragraph 5.6 of the Property Funds Appendix,acquisitions from Interested Parties are required to be paid in Units.
2. THE PROPOSED TRANSACTIONS
2.1. Rationale for the Proposed Acquisitions
The Manager believes that the Proposed Acquisitions will bring the following keybenefits to Unitholders:
2.1.1. Acquisition of Retail Mall Assets at Discounts to the Average of the
Independent Valuations offering Stable Occupancies and Leasing up
Opportunities
The Proposed Acquisitions represent an opportunity for LMIR Trust to acquire
income producing quality properties below the average of the independent
valuations from the Independent Valuers, namely KJPP RHP and KJPP WR,
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and are in line with the Manager’s acquisition growth strategy of owning retail
and/or retail related properties to optimise Unitholders’ returns, as well as
provide potential capital appreciation and long-term growth.
Property
Purchase
Consideration/
Aggregate
Consideration
Average of
Independent
Valuations
conducted by
KJPP RHP and
KJPP WR
Discount
to the
Average
Valuations
(%)
Pejaten Village Rp.748.0 billion
(S$95.1 million)
Rp.855.6 billion
(S$108.8 million)
12.6%
Binjai Supermall The Binjai
Supermall
Aggregate
Consideration is
Rp.237.5 billion
(S$30.2 million).
Rp.250.5 billion
(S$31.8 million)
5.2%
As at 30 September 2012, the occupancy rates of Pejaten Village and Binjai
Supermall are 96.3% and 91.2% respectively. The high occupancy rates are a
reflection of the strong demand for retail space in Jakarta, where Pejaten Village
is located, as well as the strategic location of Binjai Supermall, which is
currently the only mall in Binjai City which serves as a transit area for people
travelling from Medan to Aceh.
2.1.2. Opportunity to Enhance the Earnings of LMIR Trust
Based on the pro forma financial statements for the year ended 31 December
2011, the pro forma Net Property Income1 contribution from Pejaten Village and
Binjai Supermall was Rp.55.1 billion (S$7.0 million). Based on the pro forma
financial statements for the six months ended 30 June 2012, the pro forma Net
Property Income contribution from Pejaten Village and Binjai Supermall was
Rp.39.4 billion (S$5.0 million), which represents, on a historical pro forma basis,
a 9.0% increase in LMIR Trust’s investment value and a 16.3% increase in LMIR
Trust’s Net Property Income.
2.1.3. Strategic Locations with Sustainable Retail Traffic
The Proposed Properties are strategically located within Jakarta and Binjai (a
transit point between Medan, the largest city in Sumatra, and Aceh), giving
LMIR Trust access to the dense populations located in these cities, thereby
ensuring sustainable retail traffic at these properties.
LMIR Trust’s retail malls are positioned as “Everyday Malls” that provide
necessities (e.g. supermarkets and family shopping) to the community living in
the regions neighbouring its retail malls and target the middle income population
in densely populated cities in Indonesia. The positioning of the Proposed
Properties are in line with LMIR Trust’s targeted market segment comprising
Indonesia’s expanding and prospering urban middle class segment.
1 “Net Property Income” consists of property revenue less property operating expenses.
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2.1.4. Increased Economies of Scale in Operations and Marketing
The Proposed Acquisitions and the Recent Acquisitions will enable LMIR Trust
to enlarge its presence in the retail mall sector in Indonesia and to benefit from
increased economies of scale as the Manager and the property manager(s) of
the Enlarged Portfolio1 can potentially spread certain operating costs (e.g. staff
and personnel costs) over a larger portfolio, and increase their bargaining
power with suppliers and service providers.
The Proposed Acquisitions are similarly expected to deliver economies of scale
and benefit the marketing and leasing activities of LMIR Trust by expanding and
deepening LMIR Trust’s portfolio of key tenant relationships, especially with
tenants of the Proposed Properties who are currently not tenants of LMIR
Trust’s malls.
2.1.5. Diversification of Assets Portfolio to Minimise Concentration Risks
The Proposed Acquisitions will allow LMIR Trust to diversify its portfolio
geographically across Indonesia, thereby reducing asset concentration risks
within LMIR Trust’s Enlarged Portfolio.
Following the Proposed Acquisitions, the maximum contribution to LMIR Trust’s
Net Property Income by any single property within LMIR Trust’s property
portfolio will decrease to approximately 13% based on the relevant figures for
the period ended 30 June 2012. Further income diversification means greater
resilience and stability of income streams for LMIR Trust, thus benefiting its
Unitholders.
3. THE PROPOSED ACQUISITIONS
3.1. The Purchase/Aggregate Consideration and Valuations for the Proposed
Acquisitions
3.1.1 Pejaten Village
On 23 October 2012, the Trustee, through its wholly-owned subsidiaries Requis
and Gaillard, entered into three separate share purchase agreements with the
Pejaten Village Vendors (“Pejaten Village CSPAs”) for the acquisition of
Pejaten Village. The Pejaten Village Purchase Consideration of Rp.748.0 billion
(S$95.1 million) was arrived at on a willing-buyer and willing-seller basis after
taking into account the valuations of Pejaten Village by the Independent
Valuers, and is subject to adjustment for the consolidated net assets or net
liabilities of PPP as at the completion date of the Pejaten Village Acquisition.
The Pejaten Village Purchase Consideration will be paid on completion of the
Pejaten Village Acquisition (the “Proposed Completion”) under the Pejaten
Village CSPAs, which shall be on a date to be determined in accordance with
the provisions of the Pejaten Village CSPAs.
1 “Enlarged Portfolio” means the September 2012 Portfolio, the Proposed Properties and the Recent Properties (as
defined herein).
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KJPP WR and KJPP RHP were appointed by the Trustee and the Manager,
respectively, to value Pejaten Village. In their respective reports, KJPP WR and
KJPP RHP have stated the open market value of Pejaten Village as at 30 June
2012 to be Rp.870.2 billion (S$110.6 million) and Rp.841.0 billion (S$106.9
million), respectively. In arriving at the independent valuations, both KJPP WR
and KJPP RHP used the income valuation method, utilising a discounted cash
flow analysis.
Basis and assumptions in arriving at independent valuations for Pejaten
Village
The basis and assumptions adopted by KJPP WR and KJPP RHP in arriving at
their respective valuations of Binjai Supermall are set out in the table below.
KJPP WR KJPP RHP
Estimated discount rates
using pre-tax rates that
reflect current market
assessments at the risks
specific to the properties 11.50% 10.36%
Rental Growth rates 5.0% 6.0%
Cash flow forecasts derived
from the most recent
financial budgets and plans
approved by management
Discounted
cash flow analysis
over 6 years
projections
(5 years holding
period)(1)
Discounted
cash flow analysis
over 11 years
projections
(10 years holding
period)(1)
Terminal capitalisation rates 10.0% 11.0%
Note:
(1) The number of projection years for the cashflow forecasts which each valuer deemedappropriate is based on their independent assessment of the numbers of years required forthe properties to reach a high level of income stability, which the valuers had in turndetermined based on their respective professional opinion as to the investment holdingperiods for the properties. The factors which the valuers had taken into account include,among others, the properties’ existing occupancy rates, the time taken for the properties toachieve maximum occupancy levels, the date of commencement of operation of theproperties and potential impact from the on-going asset enhancements activities.
(Please see Appendix D of this Circular for the summary valuation reports of
the Independent Valuers on Pejaten Village.)
3.1.2 Binjai Supermall
On 23 October 2012, the Trustee, through its wholly-owned subsidiary ACU,
entered into a conditional sale and purchase agreement with the Binjai
Supermall Vendors (the “Binjai Supermall CSPA”) for the acquisition of Binjai
Supermall. The Binjai Supermall Aggregate Consideration of Rp.237.5 billion
(S$30.2 million) was arrived at on a willing-buyer and willing-seller basis after
taking into account the valuations of Binjai Supermall by the Independent
Valuers (as defined herein). The Binjai Supermall Aggregate Consideration
comprises a purchase consideration of Rp.154.95 billion (S$19.7 million) for the
Sale of Binjai Supermall and a novation consideration of Rp.82.55 billion
(S$10.5 million) for the Novation of Binjai Units. The Binjai Supermall Aggregate
Consideration will be paid on completion of the Binjai Supermall Acquisition (the
“Proposed Completion”) under the Binjai Supermall CSPA, which shall be on
a date to be determined in accordance with the provisions of the Binjai
Supermall CSPA.
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KJPP WR and KJPP RHP were appointed by the Trustee and the Manager,
respectively, to value Binjai Supermall. In their respective reports, KJPP WR
and KJPP RHP have stated the open market value of Binjai Supermall as at 30
June 2012 to be Rp.253.9 billion (S$32.3 million) and Rp.247.0 billion (S$31.4
million), respectively. In arriving at the valuations, both KJPP WR and KJPP
RHP used the income valuation method, utilising a discounted cash flow
analysis.
The basis and assumptions adopted by KJPP WR and KJPP RHP in arriving at
their respective independent valuations of Binjai Supermall are set out in the
table below.
Basis and assumptions in arriving at independent valuations for Binjai
Supermall
The basis and assumptions adopted by KJPP WR and KJPP RHP in arriving at
their respective valuations of Pejaten Village are set out in the table below.
KJPP WR KJPP RHP
Estimated discount rates
using pre-tax rates that
reflect current market
assessments at the risks
specific to the properties 11.50% 10.36%
Rental Growth rates 5.0% 6.0%
Cash flow forecasts derived
from the most recent
financial budgets and plans
approved by management
Discounted
cash flow analysis
over 6 years
projections
(5 years holding
period)(1)
Discounted
cash flow analysis
over 11 years
projections
(10 years holding
period)(1)
Terminal capitalisation rates 10.5% 11.0%
Note:
(1) The number of projection years for the cashflow forecasts which each valuer deemed
appropriate is based on their independent assessment of the numbers of years required for
the properties to reach a high level of income stability, which the valuers had in turn
determined based on their respective professional opinion as to the investment holding
periods for the properties. The factors which the valuers had taken into account include,
among others, the properties’ existing occupancy rates, the time taken for the properties to
achieve maximum occupancy levels, the date of commencement of operation of the
properties and potential impact from the on-going asset enhancements activities.
(Please see Appendix D of this Circular for the summary valuation reports of
the Independent Valuers on Binjai Supermall.)
3.2. Other Additional Costs of the Proposed Acquisitions
3.2.1 Pejaten Village Acquisition Fee
LMIR Trust is expected to incur the acquisition fee in relation to Pejaten Village
(the “Pejaten Village Acquisition Fee”) of Rp.7.5 billion (or S$1.0 million)
(which is equal to 1.0% of the Pejaten Village Purchase Consideration) in
connection with the Pejaten Village Acquisition, which is payable in Units to the
Manager pursuant to Clause 15.2.1 of the Trust Deed. As the Pejaten Village
14
Acquisition is an Interested Party Transaction under the Property Funds
Appendix, the Manager is required under paragraph 5.6 of the Property Funds
Appendix to receive the Pejaten Village Acquisition Fee in Units. In accordance
with paragraph 5.6 of the Property Funds Appendix which applies to Interested
Party Transactions, the Units to be issued as payment of the Pejaten Village
Acquisition Fee are not to be sold within one year from their date of issuance.
3.2.2 Binjai Supermall Acquisition Fee
LMIR Trust is expected to incur the acquisition fee in relation to Binjai Supermall
(the “Binjai Supermall Acquisition Fee”) of Rp.2.4 billion (or S$0.3 million)
(which is equal to 1.0% of the Binjai Supermall Aggregate Consideration) in
connection with the Binjai Supermall Acquisition, which is payable in Units to the
Manager pursuant to Clause 15.2.1 of the Trust Deed. As the Binjai Supermall
Acquisition is an Interested Party Transaction under the Property Funds
Appendix, the Manager is required under paragraph 5.6 of the Property Funds
Appendix to receive the Binjai Supermall Acquisition Fee in Units. In
accordance with paragraph 5.6 of the Property Funds Appendix which applies to
Interested Party Transactions, the Units to be issued as payment of the Binjai
Supermall Acquisition Fee are not to be sold within one year from their date of
issuance
3.2.3 Other Fees in connection with the Proposed Acquisitions
LMIR Trust is expected to incur estimated professional and other fees and
expenses of approximately S$0.9 million in connection with the Proposed
Acquisitions. LMIR Trust had also incurred underwriting fees, professional and
other fees and expenses of S$2.8 million in connection with the issuance of the
Notes and the establishment of the EMTN Programme.
The Total Acquisition Cost is expected to be Rp.1,024.3 billion (S$130.2
million).
3.3. Structure of the Proposed Acquisitions
3.3.1 Pejaten Village
Pejaten Village is 100.0% owned by PPP, a company incorporated in Indonesia
on 22 June 1994. PPP is in turn 95.0% and 5.0% owned by Sea Pejaten and
GNU, respectively. The Trustee had, on 23 October 2012, entered into a share
purchase agreement to acquire Requis (the “Requis SPA”) for a nominal
consideration of S$1.00. LMIR Trust, through its wholly-owned subsidiaries
Requis and Gaillard, proposes to acquire Pejaten Village through the
acquisition of the entire issued share capital of PPP from Sea Pejaten and GNU,
respectively.
Under Indonesian Company Law, PPP, being an Indonesian limited liability
company, must have at least two shareholders.
Pejaten Village cannot be acquired directly by LMIR Trust as the Indonesian
Agrarian Law does not allow a foreign entity or individual to own Indonesian real
estate. Therefore, Pejaten Village would have to be held by PPP, an Indonesian
company.
15
The Manager wishes to note that certain assets of LMIR Trust which were
obtained at the time of its initial public offering were also acquired via a similar
structure.
The following chart sets out the structure under which Pejaten Village will be
held by LMIR Trust upon the Proposed Completion of the Pejaten Village
Acquisition, as well as the resulting shareholding and ownership interest in the
entities set out below.
PT Panca Permata Pejaten
Pejaten Village
LMIR Trust
100%
75%25%
100%
Requis Investment Pte. Ltd.
(Sing Co)
Gaillard Investment Pte. Ltd. (Sing Co)
3.3.2 Binjai Supermall
Binjai Supermall is owned by TMI, a company incorporated in Indonesia on
31 March 2005. The rights over part of the Binjai Supermall (the “Binjai Units”)
were acquired by MPP pursuant to (i) Perjanjian Pengalihan Pengikatan Jual
Beli Satuan Kios/Kios Binjai Supermall dated 3 October 2005 made by and
between MPP and PT Persada Mandiri Dunia Niaga (“PMDN”)1, (ii) Perjanjian
Pengalihan Hak Kepemilikan Satuan Kios/Kios Binjai Supermall dated
3 October 2005 made by and between MPP, PMDN and TMI, and (iii) Addendum
to the Transfer of Conditional Sale and Purchase Agreement dated 3 October
2005 (Addendum Terhadap Perjanjian Pengalihan Pengikatan Jual Beli Satuan
Kios/Kios Binjai Supermall) dated 20 March 2012 made by and between MPP
and PMDN.
1 PMDN is the previous owner of the rights over the Binjai Units pursuant to (i) Perjanjian Pengikatan Jual Beli Satuan
Kios/Kios No. 015/PPJB-TMI/V/05, (ii) Kontrak Tentang Pelaksanaan Tata Tertib Gedung No. 015-A/PPJB-
TMI/V/05, (iii) Perjanjian Penyerahan Hak Atas Pengaturan Dan Hak Pengelolaan Atas Dinding Bersama Dari
Satuan Kios/Kios Dalam Gedung No. 015-B/PPJB-TMI/V/05; each dated 9 May 2005 (collectively hereinafter
referred to as the “PMDN CSPA”), and (iv) Addendum to the PMDN CSPA dated 7 March 2012.
16
The Trustee had, on 23 October 2012, entered into a share purchase agreement
to acquire Sagacity (the “Sagacity SPA”) for a nominal consideration of S$1.00.
LMIR Trust, through its wholly-owned subsidiaries, Sagacity and Maxi Magna
(both of which are Singapore incorporated companies), proposes to acquire
Binjai Supermall via ACU and since the rights over the Binjai Units are owned
by MPP (as described above), ACU will enter into a conditional sale and
purchase agreement with TMI and MPP for the acquisition of Binjai Supermall,
whereby MPP will novate all of its rights and obligation over the Binjai Units to
ACU and subsequently on the same day TMI will transfer its title over Binjai
Supermall and such transfer of title, together with the novation of rights to the
Binjai Units will constitute the transfer of the entire Binjai Supermall to ACU.
ACU is a special purpose vehicle company incorporated in Indonesia on
19 December 2011, which is 75% and 25% owned by Sagacity and Maxi Magna.
Under Indonesian Company Law, ACU, being an Indonesian limited liability
company, must have at least two shareholders.
Pursuant to the Indonesian Agrarian Law, Binjai Supermall cannot be directly
acquired by LMIR Trust and therefore, Binjai Supermall would have to be held
by ACU, an Indonesian company.
In addition, the Manager wishes to note that certain assets of LMIR Trust which
were obtained at the time of its initial public offering were also acquired via a
similar structure.
The following chart sets out the structure under which Binjai Supermall will be
held by LMIR Trust upon the Proposed Completion of the Binjai Supermall
Acquisition, as well as the resulting shareholding and ownership interests in the
entities set out below.
PT Amanda Cipta Utama
Binjai Supermall
100%
75%
25%
LMIR Trust
100%
Sagacity Investments Pte. Ltd.
(Sing Co)
Maxi Magna Investments Pte. Ltd.
(Sing Co)
17
3.4. Conditions for the Proposed Acquisitions
3.4.1 Conditions precedent for the Pejaten Village Acquisition
The Proposed Completion of the Pejaten Village Acquisition is subject to and
conditional upon, among others, the following conditions precedent:
(i) there being no compulsory acquisition of Pejaten Village or any part of it,
and no notice of an intended compulsory acquisition has been given, or is
anticipated by the government or other competent authority;
(ii) Pejaten Village is not materially damaged;
(iii) the entry into the Pejaten Village Deed of Indemnity (as defined below) by
Bridgewater International Ltd (“Bridgewater”) and the Trustee; and
(iv) the passing at an extraordinary general meeting of Unitholders of a
resolution to approve the Pejaten Village Acquisition1.
3.4.2 Conditions precedent for the Binjai Supermall Acquisition
The Proposed Completion of the Binjai Supermall Acquisition is subject to and
conditional upon, among others, the following conditions precedent:
(i) there being no compulsory acquisition of Binjai Supermall or the Binjai
Units or any part of it, and no notice of an intended compulsory acquisition
has been given, nor is one anticipated by the government or other
competent authority;
(ii) Binjai Supermall or the Binjai Units or any part thereof is not materially
damaged;
(iii) there having been no breach of any of the representations, warranties,
covenants and/or undertakings of TMI and/or MPP provided in the Binjai
Supermall CSPA which, in the reasonable opinion of ACU, will or is likely
to (a) have a material adverse effect on Binjai Supermall or the Binjai
Units, (b) affect the effectiveness and/or validity of the novation or the sale
and transfer of Binjai Supermall and Binjai Units (as applicable) from TMI
to ACU free from any encumbrance in accordance with the Binjai
Supermall CSPA, and/or (c) affect the legal ownership of the Binjai
Supermall and the Binjai Units by ACU upon the Proposed Completion;
(iv) entry into the Binjai Deed of Indemnity (as defined below);
(v) the novation of all contracts, including all tenancy agreements, insurance
policies, management agreements, service contracts and intellectual
property rights and any other documents that may reasonably be required
by ACU, to ACU by way of execution of novation agreements, execution of
new contracts or otherwise, in each case in a form acceptable to ACU have
been executed and are effective and enforceable as of the date of the
Proposed Completion and the Purchaser is reasonably satisfied with the
result of such novation;
1 It is intended that such approval be subject to Unitholders approving the Whitewash Resolution.
18
(vi) the lease agreement made by and between ACU and MPP in connection
with the lease of part of the Binjai Units from ACU to MPP and the lease
agreement made by and between ACU and PT Matahari Department Store
Tbk in connection with the lease of part of the Binjai Units from ACU to PT
Matahari Department Store Tbk has been duly executed and will be
effective and enforceable as of the Proposed Completion; and
(vii) the passing at an extraordinary general meeting of Unitholders of a
resolution to approve the Binjai Supermall Acquisition1.
3.5. Deeds of Indemnity relation to the Proposed Properties
3.5.1 Pejaten Village Deed of Indemnity
On 23 October 2012, the Trustee and Bridgewater entered into a deed of
indemnity pursuant to which Bridgewater will indemnify the Trustee against
certain liabilities or damage suffered by the Trustee arising out of or in
connection with the Pejaten Village CSPAs, subject to certain terms and
conditions (the “Pejaten Village Deed of Indemnity”). The indemnification by
Bridgewater includes the following matters relating to the Pejaten Village
CSPAs:
(i) all and any losses which the Trustee may suffer in connection with a
breach by the Pejaten Village Vendors of any of their warranties and
representations in the Pejaten Village CSPAs;
(ii) all and any losses which the Trustee may suffer, including, but not limited
to, loss of rental, service charges, carpark and other income and claims for
losses from existing or potential tenants, which arises out of or in
connection with cases before any courts, tribunals and governmental
authorities, agencies or bodies in the relevant jurisdictions, including the
Indonesian Business Competition Supervisory Commission, whether
directly or indirectly; and
(iii) all and any losses which the Trustee may suffer which arise out of or in
connection with a failure by the Pejaten Village Vendors to comply with any
of their joint and several obligations in the Pejaten Village CSPAs.
Bridgewater is incorporated in Seychelles, and its main business activities are
investment, trading and services. Its main investment assets are units in LMIR
Trust and units in First REIT. It holds an interest of 591,023,888 units in LMIR
Trust (valued at approximately S$280.7 million as at close of trading based on
the closing price of S$0.475 on the Latest Practicable Date) and an interest of
123,750,000 units in First REIT (valued at approximately S$126.2 million based
on the closing price of S$1.020 on the Latest Practicable Date). As at 30
September 2012, the net equity of Bridgewater is approximately US$159
million, and its paid-up capital is US$5,000. As at 30 September 2012,
Bridgewater has total assets of US$330 million. PT Lippo Karawaci Tbk (directly
and/or through its subsidiaries) wholly-owns Bridgewater. Therefore, the
Pejaten Village Vendors and Bridgewater are under common control by the
Sponsor.
1 It is intended that such approval be subject to Unitholders approving the Whitewash Resolution.
19
3.5.2 Binjai Supermall Deed of Indemnity
On 23 October 2012, the Trustee and Bridgewater entered into a deed of
indemnity pursuant to which Bridgewater will indemnify the Trustee against
certain liabilities or damage suffered by the Trustee arising out of or in
connection with the Binjai Supermall CSPA, subject to certain terms and
conditions (the “Binjai Supermall Deed of Indemnity”). The indemnification by
Bridgewater includes the following matters relating to the Binjai Supermall
CSPA:
(i) all and any losses which the Trustee may suffer in connection with a
breach by the Binjai Supermall Vendor of any of its warranties and
representations in the Binjai Supermall CSPA;
(ii) all and any losses which the Trustee may suffer, including, but not limited
to, loss of rental, service charges, carpark and other income and claims for
losses from existing or potential tenants, which arises out of or in
connection with cases before any courts, tribunals and governmental
authorities, agencies or bodies in the relevant jurisdictions, including the
Indonesian Business Competition Supervisory Commission, whether
directly or indirectly; and
(iii) all and any losses which the Trustee may suffer which arises out of or in
connection with a failure by the Binjai Supermall Vendor to comply with any
of its joint and several obligations in the Binjai Supermall CSPA.
3.6. Related tenancy agreements relating to the Proposed Properties
3.6.1 Pejaten Village Related Tenancies
Upon completion of the Pejaten Village Acquisition, LMIR Trust will, through
PPP, take over all of the tenancy agreements with respect to Pejaten Village,
including various tenancy agreements entered into by certain associates and
subsidiaries of the Sponsor (the “Pejaten Village Related Tenancy
Agreements”). Based on the unaudited financial statement of PPP for the six
month period ended 30 June, 2012, the aggregate rental fees derived or to be
derived from the Pejaten Village Related Tenancy Agreements is approximately
Rp.386.4 billion (S$49.1 million). The amount of space taken up and the value
of each of the Pejaten Village Related Tenancy Agreements are set out in
Appendix F of the Circular. The percentage of NTA/NAV accounted for by the
Pejaten Village Related Tenancy Agreements is also set out in Appendix F of
the Circular.
3.6.2 Binjai Supermall Related Tenancies
Upon completion of the Binjai Supermall Acquisition, LMIR Trust will, through
ACU, take over all of the tenancy agreements with respect to Binjai Supermall,
including various tenancy agreements entered into by certain associates and
subsidiaries of the Sponsor (the “Binjai Supermall Related Tenancy
Agreements”). Based on the unaudited financial statement of PPP for the six
month period ended 30 June 2012, the aggregate rental fees derived or to be
derived from the Binjai Supermall Related Tenancy Agreements is
approximately Rp.151.6 billion (S$19.3 million). The amount of space taken up
and the value of each of the Binjai Supermall Related Tenancy Agreements are
set out in Appendix F of the Circular. The percentage of NTA/NAV accounted
for by the Binjai Supermall Related Tenancy Agreements is also set out in
Appendix F of the Circular.
20
Based on the Manager’s experience in relation to the existing portfolio of LMIR
Trust, the Manager is of the view that the Pejaten Village Related Tenancy
Agreements and the Binjai Supermall Related Tenancy Agreements
(collectively, the “Related Tenancy Agreements”) are made on normal
commercial terms and are not prejudicial to the interests of LMIR Trust and
Unitholders.
(See Appendix F “Related Tenancy Agreements” for further details.)
3.7. Hak Guna Bangunan (“HGB”)/“Right to Build” Land Titles
LMIR Trust holds some of the September 2012 Portfolio via HGB titles. These are (i) Mal
Lippo Cikarang, (ii) Plaza Madiun and (iii) Sun Plaza. Similarly, LMIR Trust will also hold
the Proposed Properties via HGB titles. Under Indonesian Agrarian 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 capital investment (Penanaman Modal Asing, or “PMA”) companies. 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 or prior to 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 whether to grant the
various extensions. If the term of HGB titles could not be extended, after the expiration
date of such HGB titles:
(i) in the event that the HGB title is on state-owned land, such land will become state
owned land;
(ii) in the event that the HGB title is on right to manage land, such land shall be
returned to the holder of the “right to manage” (hak pengelolaan) in accordance
with the agreement for the granting of HGB title entered into between the former
HGB holder and the holder of the right to manage; and
(iii) in the event that the HGB title is on “right to own” (hak milik) land, such land shall
be returned to the holder of the right to own in accordance with the agreement for
the granting of HGB title entered into between the former HGB holder and the
holder of the right to own.
The costs for the extension of HGB title will be determined based on a certain formulas
as stipulated by the National Land Office. The land office has discretion to approve or
reject the application for the extension of HGB title. The National Land Office, however,
tends to grant an extension of HGB titles when the land is still duly used in accordance
with the condition, nature and objective of the granting of such HGB title, all terms and
conditions of the granting of such HGB title have been duly fulfilled by the title holder,
the title holder is still eligible to hold an HGB title and there has been no change in the
zoning policies of the government, abandonment or destruction of land, or revocation of
the HGB title due to public interest considerations.
21
3.8. Directors’ service contracts in relation to the Proposed Acquisitions
No person is proposed to be appointed as a director of the Manager (“Director”) in
relation to the Proposed Acquisitions or any other transactions contemplated in relation
to the Proposed Acquisitions.
3.9. Major Transactions — Chapter 10 of the Listing Manual
(i) Chapter 10 of the Listing Manual governs the acquisition or disposal of assets,
including options to acquire or dispose of assets, by LMIR Trust. Such transactions
are classified into the following categories:
(a) non-discloseable transactions;
(b) discloseable transactions;
(c) major transactions; and
(d) very substantial acquisitions or reverse takeovers.
(ii) A proposed acquisition by LMIR Trust may fall into any of the categories set out in
sub-paragraph 3.9(i) above depending on the size of the relative figures computed
on the following bases of comparison:
(a) the net profits attributable to the assets acquired, compared with LMIR
Trust’s net profits; and
(b) the aggregate value of the consideration given, compared with LMIR Trust’s
market capitalisation.
Where any of the relative figures computed on the bases set out above is 20.0%
or more, the transaction is classified as a “major transaction” under Rule 1014 of
the Listing Manual which would be subject to the approval of Unitholders, unless
such transaction is in the ordinary course of LMIR Trust’s business.
22
(iii) The relative figures for each of the Proposed Acquisitions using the applicable
bases of comparison described in sub-paragraphs 3.9(ii)(a) and 3.9(ii)(b) are set
out in the table below. While the relative figure in relation to each of the Recent
Acquisitions computed on the basis set out in paragraph 3.9(ii)(b) above exceeds
20.0%, each of the Recent Acquisitions is not a major transaction under Chapter
10 of the Listing Manual as it is within LMIR Trust’s ordinary course of business.
Therefore, Unitholders’ approval is not required for each of the Recent
Acquisitions. However, for purposes of illustration to Unitholders, the relative
figures for the Proposed Acquisitions and the Recent Acquisitions using the
applicable bases of comparison described in sub-paragraphs 3.9(ii)(a) and
3.10(ii)(b) are set out in the table below.
Comparison of: The Properties LMIR Trust
Relative
Figure
Net Property
Income(1)(2)(3)
Pejaten Village:
Rp.40.8 billion
(S$5.9 million)
Rp.638.5 billion
(S$92.0 million)
6.4%
Binjai Supermall:
Rp.7.8 billion
(S$1.1 million)
1.2%
Purchase/Aggregate
Consideration against
LMIR Trust’s market
capitalisation
Pejaten Village:
Rp.748.0 billion
(S$95.1 million)(4)
LMIR Trust’s
market
capitalisation:
S$1,037.3
million(5)(6)
9.2%
Binjai Supermall:
Rp.237.5 billion
(S$30.2 million)
2.9%
Notes:
(1) In the case of a real estate investment trust, the net property income is a close proxy to the net
profits attributable to its assets.
(2) Based on the FY2011 Audited Consolidated Financial Statements and the unaudited financial
statements of the target companies for FY2011.
(3) Based on FY2011 average rupiah exchange rate of S$1.00 to Rp.6,939.1.
(4) Based on the Illustrative Rupiah Exchange Rate of S$1.00 to Rp.7,865.2.
(5) Based on the closing price of S$0.475 per Unit on the SGX-ST on the Latest Practicable Date.
(6) Based on Units in issue as at the Latest Practicable Date.
4. REQUIREMENT FOR UNITHOLDERS’ APPROVAL FOR THE PROPOSED ACQUISITIONS
4.1. Interested Person Transaction and Interested Party Transaction in connection
with the Proposed Acquisitions
Under Chapter 9 of the Listing Manual, where LMIR Trust proposes to enter into a
transaction with an Interested Person and the value of the transaction (either in itself or
when aggregated with the value of other transactions, each of a value equal to or
greater than S$100,000 with the same Interested Person during the same financial
year) is equal to or exceeds 5.0% of LMIR Trust’s latest unaudited NTA, Unitholders’
approval is required in respect of the transaction.
23
Based on LMIR Trust’s consolidated financial statements for the nine-month period
ended 30 September 2012, the NTA of LMIR Trust was S$1,153.8 million as at
30 September 2012. Accordingly, if the value of a transaction which is proposed to be
entered into in the current financial year by LMIR Trust with an Interested Person is,
either in itself or in aggregation with all other earlier transactions (each of a value equal
to or greater than S$100,000) entered into with the same Interested Person during the
current financial year, equal to or is in excess of S$57.7 million, such a transaction
would be subject to Unitholders’ approval. Given the Pejaten Village Purchase
Consideration and the Binjai Supermall Aggregate Consideration of Rp.748.0 billion (or
S$95.1 million) and Rp.237.5 billion (or S$30.2 million) which is 8.2% and 2.6% of the
NTA of LMIR Trust as at 30 September 2012, respectively1, the value of each of the
Pejaten Village Acquisition and the Binjai Supermall Acquisition will in aggregate
exceed the said threshold2.
Paragraph 5 of the Property Funds Appendix also imposes a requirement for
Unitholders’ approval for an Interested Party Transaction by LMIR Trust which value
exceeds 5.0% of LMIR Trust’s latest audited NAV. Based on LMIR Trust’s consolidated
financial statements for the six-month period ended 30 September 2012, the NAV of
LMIR Trust was S$1,153.8 million as at 30 September 2012. Accordingly, if the value of
a transaction which is proposed to be entered into by LMIR Trust with an Interested
Party3 is equal to or greater than S$57.7 million, such a transaction would be subject
to Unitholders’ approval. Given the Pejaten Village Purchase Consideration of Rp.748.0
billion (or S$95.1 million), the value of the Pejaten Village Acquisition exceeds the said
threshold.
As at the Latest Practicable Date, the Manager has a direct interest in 62,990,115 Units
(comprising 2.88% of the total number of issued Units). The Manager is wholly-owned
by Peninsula, a wholly-owned subsidiary of Jesselton which is in turn a wholly-owned
subsidiary of the Sponsor. The Sponsor, directly and/or through its subsidiaries and
associates and through its interest in the Manager, has (i) deemed interests of
approximately 29.95% in LMIR Trust and (ii) wholly-owns the Manager, and is therefore
regarded as a “controlling unitholder” of LMIR Trust, and “controlling shareholder” of the
Manager, under both the Listing Manual and (where applicable) the Property Funds
Appendix. The Pejaten Village Vendors are indirect wholly-owned subsidiaries of the
Sponsor. For the purposes of Chapter 9 of the Listing Manual, each of the Pejaten
Village Vendors is an Interested Person of LMIR Trust, and for the purposes of
paragraph 5 of the Property Funds Appendix relating to Interested Party Transactions,
each of the Pejaten Village Vendors is an Interested Party of LMIR Trust. Similarly, TMI
is an indirect wholly-owned subsidiary of the Sponsor. MPP and the Sponsor are under
common control by PT Multipolar Corporation Tbk. For the purposes of Chapter 9 of the
Listing Manual, each of TMI and MPP is an Interested Person of LMIR Trust, and for the
purposes of paragraph 5 of the Property Funds Appendix relating to Interested Party
Transactions, each of TMI and MPP is an Interested Party of LMIR Trust.
1 Based on LMIR Trust’s consolidated financial statements for the nine-month period ended 30 September 2012.
2 Based on LMIR Trust’s audited consolidated financial statements for the financial year ended 31 December 2011,
(“FY 2011” and the audited consolidated financial statements for FY2011, the “FY2011 Audited Consolidated
Financial Statements”), the NTA/NAV of LMIR Trust was S$1,299.9 million as at 31 December 2011. Given the
Pejaten Village Purchase Consideration of Rp.748.0 billion (or S$95.1 million) which is 7.3% of the NTA/NAV of
LMIR Trust as at 31 December 2011, the value of the Pejaten Village Acquisition will in aggregate also exceed the
said thresholds based on the FY2011 Audited Consolidated Financial Statements. The relevant threshold for Pejaten
Village is 7.3% and the relevant threshold for Binjai Supermall is 2.3%.
3 “Interested Party” means:
(i) a director, chief executive officer or controlling shareholder of the Manager, the Trustee or controlling
unitholder of LMIR Trust; or
(ii) an associate of any director, chief executive officer or controlling shareholder of the Manager, or an associate
of the Manager, the Trustee or any controlling unitholder of LMIR Trust.
24
Therefore, each of the Pejaten Village Acquisition and the Binjai Supermall Acquisition
will constitute an Interested Person Transaction under Chapter 9 of the Listing Manual.
The Pejaten Village Acquisition and the Binjai Supermall Acquisition will also constitute
an Interested Party Transaction under paragraph 5 of the Property Funds Appendix. The
value of the Pejaten Village Acquisition is equal to 8.2% of LMIR Trust’s NTA/NAV of
S$1,153.8 million as at 30 September 2012. Therefore, the approval of Unitholders is
required for the Pejaten Village Acquisition under Rule 906 of the Listing Manual and
paragraph 5 of the Property Funds Appendix. Although approval of Unitholders is not
required for the Binjai Supermall Acquisition under Rule 906 of the Listing Manual and
paragraph 5 of the Property Funds Appendix, the Manager wishes to seek Unitholders’
approval for the Binjai Supermall Acquisition for (i) good corporate governance and (ii)
due to the fact that Unitholders’ approval is also being sought for the Pejaten Village
Acquisition. Accordingly, the approval of Unitholders is sought for each of the Pejaten
Village Acquisition and the Binjai Supermall Acquisition.
4.2. Existing Interested Person Transactions
Prior to the Latest Practicable Date, LMIR Trust had entered into several interested
person transactions with associates of the Sponsor during the course of the current
financial year (the “Existing Interested Person Transactions”). The aggregate value
of the Existing Interested Person Transactions amounts to Rp.223.7 million
(approximately S$28,400), which comprises 0.0025% of the unaudited net tangible
assets of LMIR Trust as at 30 September 2012.
Details of the Existing Interested Person Transactions may be found in Appendix E of
this Circular.
4.3. Fees payable to the Manager for the Proposed Acquisition
Upon the final completion of the Proposed Acquisitions, the Manager will be entitled
under the Trust Deed to receive the Pejaten Village Acquisition Fee and the Binjai
Supermall Acquisition Fee of Rp.7.5 billion (or S$1.0 million) and Rp.2.4 billion (or
S$0.3 million), which is equal to 1.0% of the Pejaten Village Purchase Consideration
and the Binjai Supermall Aggregate Consideration, respectively.
The Pejaten Village Acquisition Fee and the Binjai Supermall Acquisition Fee shall be
payable to the Manager in Units to be issued at an issue price based on the volume
weighted average price (“VWAP”) for a Unit for all trades on the SGX-ST for the period
of 10 business days immediately preceding the Proposed Completion (the “10-day
VWAP”). Purely for illustrative purposes only and based on the VWAP for a Unit for all
trades on the SGX-ST for the period of 10 business days immediately preceding
19 November 2012, the Pejaten Village Acquisition Fee and the Binjai Supermall
Acquisition Fee payable to the Manager in Units would be issued at an issue price of
S$0.4795 per Unit and 2,613,117 Units will be issued to the Manager. It should,
however, be noted that the exact number of Units to be issued to the Manager will be
announced later. In accordance with paragraph 5.6 of the Property Funds Appendix
which applies to Interested Party Transactions, the Units to be issued as payment of the
Pejaten Village Acquisition Fee and the Binjai Supermall Acquisition Fee are not to be
sold within one year from their date of issuance.
After the Proposed Completion of the Proposed Acquisitions, the Manager will also be
entitled under the Trust Deed to receive from LMIR Trust, as in the case of any of the
existing and future properties, management fees attributable to the Proposed
Properties comprising a base fee of 0.25% per annum of the value of the Proposed
Properties and a performance fee of 4.0% per annum of the Net Property Income of the
Proposed Properties. The Manager will be entitled to the management fees attributable
to Proposed Properties in the future for so long as each of Pejaten Village and Binjai
Supermall continues to form part of the investment portfolio of LMIR Trust, respectively.
25
4.4. Approval by Unitholders
In approving the Proposed Acquisitions, Unitholders are deemed to have approved all
documents which are required to be executed by the parties in order to give effect to the
Proposed Acquisitions including the Related Tenancy Agreements in relation to the
Proposed Properties. These agreements are therefore not subject to Rules 905 and 906
of the Listing Manual (which require LMIR Trust to make an announcement or obtain the
approval of Unitholders depending on the materiality of the Interested Person
Transactions) insofar as there are no subsequent changes to the rental, rates and/or
basis of the fees charged thereunder which will adversely affect LMIR Trust. Future
renewal or extension of these agreements will be subject to Rules 905 and 906 of the
Listing Manual.
Details of the Related Tenancy Agreements are set out in Appendix F of the Circular.
The Manager believes that the terms of the Related Tenancy Agreements are on normal
commercial terms.
The Manager is of the view that the Proposed Acquisitions are in the ordinary course of
LMIR Trust’s business and are therefore not subject to Chapter 10 of the Listing Manual.
4.5. Advice of the Independent Financial Adviser
The Manager and the Trustee have appointed KPMG Corporate Finance Pte Ltd (the
“IFA”) to advise the independent Directors of the Manager comprising Mr Albert
Saychuan Cheok, Mr Lee Soo Hoon, Phillip and Mr Goh Tiam Lock (the “Independent
Directors”) and the Trustee in the transaction as to whether the Proposed Acquisitions
are (a) on normal commercial terms and (b) prejudicial to the interests of LMIR Trust
and the Unitholders.
Having considered the factors and made the assumptions set out in its letter, and
subject to the qualifications set out therein, the IFA is of the opinion that:
4.5.1. in accordance with Chapter 9 of the Listing Manual, the Pejaten Village
Acquisition is on normal commercial terms and not prejudicial to LMIR Trust and
the Unitholders;
4.5.2. in accordance with Chapter 9 of the Listing Manual, the Binjai Supermall
Acquisition is on normal commercial terms and not prejudicial to LMIR Trust and
the Unitholders;
4.5.3. in accordance with Paragraph 5 of the Property Funds Appendix, the Pejaten
Village Acquisition is on normal commercial terms and is not prejudicial to the
Unitholders; and
4.5.4. in accordance with Paragraph 5 of the Property Funds Appendix, the Binjai
Supermall Acquisition is on normal commercial terms and is not prejudicial to
the Unitholders.
A copy of the letter from the IFA to the Independent Directors and the Trustee (the “IFA
Letter”), containing its advice in full, is set out in Appendix A of this Circular.
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4.6. Interests of Directors and Substantial Unitholders1
4.6.1 Interests of Directors of the Manager
Details of the unitholdings of the Directors are as follows:
Unitholder
Direct
Interest
Deemed
Interest
Total
Interest
%
Interest(1)
Mr Albert Saychuan Cheok. . . 400,000 — 400,000 0.018
Ms Viven Gouw Sitiabudi . . . . — — — —
Mr Douglas Chew . . . . . . . . . — — — —
Mr Bunjamin J. Mailool . . . . . — — — —
Mr Lee Soo Hoon, Phillip . . . . — — — —
Mr Goh Tiam Lock. . . . . . . . . — — — —
Note:
(1) The percentage interest is based on total issued Units of 2,183,818,115 as at the Latest
Practicable Date.
Save as disclosed above and based on information available to the Manager,
none of the Directors has an interest, direct or indirect, in the Proposed
Acquisitions.
4.6.2 Interests of Substantial Unitholders
The details of the unitholdings of the Substantial Unitholders who are interested
(1) Based on the 6M2012 Unaudited Financial Statements.
6. THE WHITEWASH RESOLUTION
6.1. Rule 14 of the Code
The Manager proposes to seek approval from Independent Unitholders for a waiver of
their right to receive a Mandatory Offer from the Sponsor and parties acting in concert
with it for the remaining issued Units not owned or controlled by the Sponsor and parties
acting in concert with it pursuant to Rule 14 of the Code, in the event that the Manager
acquires a sufficient number of Units through the receipt of the Acquisition Fee Units by
the Manager in its own capacity.
Upon the occurrence of the events set out in the preceding paragraph above, the
Manager may possibly end up acquiring additional Units which exceeds the threshold
pursuant to Rule 14.1(a) of the Code. Rule 14.1(a) of the Code states that the Sponsor
and parties acting in concert with it would be required to make a Mandatory Offer if the
Sponsor and parties acting in concert with it, acquire additional Units which increase
their aggregate unitholding in LMIR Trust to 30.0% or more.
Unless waived by the SIC, pursuant to Rule 14.1(a) of the Code, the Sponsor and
parties acting in concert with it would then be required to make a Mandatory Offer. The
SIC has granted this waiver subject to, inter alia, the Whitewash Resolution being
approved by Independent Unitholders at an EGM.
To the best of the knowledge of the Manager and the Sponsor, the Sponsor and parties
acting in concert with it hold, in aggregate, 654,414,003 Units representing 29.97% of
the voting rights of LMIR Trust as at the Latest Practicable Date.
32
The maximum possible increase in the unitholdings of the Manager would occur in the
scenario where the Manager elects to receive its full entitlement to the acquisition fees
in relation to the Pluit Village Acquisition and the Proposed Acquisitions in Units, without
breaching the “public” float requirement set out in Rule 723 of the Listing Manual, being
an aggregate of 8,620,760 Units, the aggregated unitholding of the Sponsor and parties
acting in concert with it immediately after the issue of the Pluit Village Acquisition Fee
Units1, the Pejaten Village Acquisition Fee Units and the Binjai Supermall Acquisition
Fee Units to the Manager will be 30.23%.
The following table sets out the respective unitholdings of the Sponsor and parties
acting in concert with it if the Manager receives the Acquisition Fee Units.
Unitholdings of the Sponsor and parties acting in concert with it
Before the
issue of the
Acquisition Fee
Units(1)
Immediately
after the
issue of the
Acquisition Fee
Units
Issued Units 2,183,818,115 2,191,938,875
Number of Units held by the Sponsor and
parties acting in concert with it
654,414,003 662,534,763
Number of Units held by Unitholders,
other than the Sponsor and parties acting
in concert with it
1,529,404,112 1,529,404,112
% of issued Units held by the Sponsor
and parties acting in concert with it
29.97% 30.23%
% of Issued Units held by Unitholders,
other than the Sponsor and parties acting
in concert with it
70.03% 69.77%
Note:
(1) The number of Acquisition Fee Units is calculated based on the assumption that (i) the Pejaten Village
Acquisition Fee and the Binjai Supermall Acquisition Fee payable to the Manager in Units would be
issued at an issue price of S$0.4795 per Unit and (ii) the Pluit Village Acquisition Fee payable to the
Manager in Units would be issued at an issue price of S$0.425 per Unit. Please see paragraph 4.3 for
further details.
Under paragraph 2(d)(ii) of Appendix 1 of the Code (Whitewash Guidance Note), awaiver in relation to Rule 14 of the Code will only be granted subject to certainconditions, including the condition that the Sponsor and parties acting in concert with itdid not acquire or are not to acquire any Units or instruments convertible into andoptions in respect of Units (other than subscriptions for, rights to subscribe for,instruments convertible into or options in respect of new Units which have beendisclosed in this Circular) in the six months prior to the announcement of the WhitewashResolution. In this respect, the acquisitions of Units by the Sponsor and parties actingin concert with it (as defined in the Code) (including the Manager) in the past six monthspreceding the date of this Letter are set out below:
(i) on 27 February 2012, the Manager was issued 2,902,315 new Units as paymentof the performance fee component of the management fee that the Manager is
1 As disclosed in the circular to Unitholders dated 3 October 2011, while Clause 15.2.1(i) of the Trust Deed allows the
Manager to receive the Pluit Village Acquisition Fee Units at an issue price of S$0.31 per Unit, the Manager has
elected to receive the Pluit Village Acquisition Fee Units at the issue price of S$0.425 per Unit instead. As the Pluit
Village Acquisition Fee Units were not issued to the Manager within three months of the extraordinary general
meeting held on 20 October 2011, the approval granted by the Independent Unitholders on 20 October 2011 would
have to be refreshed in order for the Manager to receive the Pluit Village Acquisition Fee Units.
33
entitled to for the three-month period ended 31 December 2011 (the “2011 Q4Management Fee Payment”) under the Trust Deed. After the 2011 Q4Management Fee Payment, the Manager held 56,756,323 Units;
(ii) on 16 May 2012, the Manager was issued 3,078,830 new Units as payment of theperformance fee component of the management fee that the Manager is entitled tofor the three-month period ended 31 March 2012 (the “2012 Q1 Management FeePayment”) under the Trust Deed. After the 2012 Q1 Management Fee Payment,the Manager held 59,835,153 Units; and
(iii) on 15 August 2012, the Manager was issued 3,154,962 new Units as payment ofthe performance fee component of the management fee that the Manager isentitled to for the three-month period ended 30 June 2012 (the “2012 Q2Management Fee Payment”) under the Trust Deed. After the 2012 Q2Management Fee Payment, the Manager held 62,990,115 Units, and the Sponsorand parties acting in concert with it held 654,014,003 Units.
Save for the above, the Sponsor and parties acting in concert with it have not acquiredUnits in the past six months preceding the date of this Circular. Further to the above, theManager intends to elect to receive the performance fee component of the managementfee that the Manager is entitled to for the three-month period ended 30 September 2012(the “2012 Q3 Management Fee Payment”) under the Trust Deed, in Units, byend-December 2012.
6.2. Application for waiver from Rule 14 of the Code
On 20 October 2011, the Independent Unitholders had approved a waiver of their rightto receive a mandatory offer from the Sponsor and parties acting in concert with theSponsor, in the event that they incurred an obligation to make a Mandatory Offerpursuant to Rule 14 of the Code as a result of, amongst others, the receipt of the PluitVillage Acquisition Fee Units by the Manager in its own capacity. Pluit Village acquiredon 6 December 2011 and the payment for the final adjustment in relation to the PluitVillage Acquisition was made in May 2012.
An application was made to the SIC on 23 October 2012 for the waiver of the obligationof the Sponsor and parties acting in concert with it to make a Mandatory Offer underRule 14 of the Code should the obligation to do so arise as a result of the Managerreceiving the Acquisition Fee Units. The SIC granted the waiver on 9 November 2012,subject to, inter alia, the satisfaction of the following conditions:
(i) a majority of Unitholders present and voting at a general meeting, held before theissue of the Acquisition Fee Units to the Manager, approve by way of a poll, theWhitewash Resolution to waive their rights to receive a general offer from theSponsor and parties acting in concert with it;
(ii) the Whitewash Resolution is separate from other resolutions;
(iii) the Sponsor, parties acting in concert with it and parties not independent of themabstain from voting on the Whitewash Resolution;
(iv) the Sponsor and parties acting in concert with it did not acquire or are not toacquire any Units or instruments convertible into and options in respect of Units(other than subscriptions for, rights to subscribe for, instruments convertible into oroptions in respect of new Units which have been disclosed in this Circular):
(a) during the period between the announcement of the Pluit Village Acquisitionand the Proposed Acquisitions (together, the “Relevant Acquisitions”) andthe date Unitholders’ approval is obtained for the Whitewash Resolution; and
(b) in the six months prior to the announcement of the Relevant Acquisitions, butsubsequent to negotiations, discussions or the reaching of understandings oragreements with the Manager in relation to the Relevant Acquisitions;
34
(v) LMIR Trust appoints an independent financial adviser to advise the Independent
Unitholders on the Whitewash Resolution;
(vi) LMIR Trust sets out clearly in this Circular:
(a) details of the Relevant Acquisitions;
(b) the dilution effect to existing Unitholders of voting rights in LMIR Trust of the
acquisition of the Acquisition Fee Units by the Manager;
(c) the number and percentage of Units as well as the number of instruments
convertible into, rights to subscribe for and options in respect of Units held by
the Sponsor and parties acting in concert with it as at the Latest Practicable
Date;
(d) the number and percentage of Units to be issued to the Manager as a result
of the Relevant Acquisitions; and
(e) that Unitholders, by voting for the Whitewash Resolution, are waiving their
rights to a general offer from the Sponsor and parties acting in concert with
it at the highest price paid by the Sponsor and parties acting in concert with
it in the past six months preceding the commencement of the offer;
(vii) this Circular states that the waiver granted by SIC to the Sponsor and parties
acting in concert with it from the requirement to make a general offer under Rule
14 of the Code is subject to the conditions set out in sub-paragraphs 6.2(i) to
6.2(vi) above;
(viii) the Sponsor and parties acting in concert with it obtains SIC’s approval in advance
for the paragraphs of this Circular that refer to the Whitewash Resolution; and
(ix) to rely on the Whitewash Resolution, the acquisitions of the Acquisition Fee Units
must be completed within three months of the date of approval of the Whitewash
Resolution.
Independent Unitholders should note that by voting for the Whitewash Resolution, they
are waiving their rights to receive a Mandatory Offer from the Sponsor and parties
acting in concert with it at the highest price paid or agreed to be paid by the Sponsor
and parties acting in concert with it for Units in the six months preceding the receipt of
the Acquisition Fee Units by the Manager in its own capacity.
Independent Unitholders should further note that in the event that the Manager elects
to receive the Acquisition Fee Units, without breaching the “public” float requirement set
out in Rule 723 of the Listing Manual, being an aggregate of 8,120,760 Units, the
aggregated unitholding of the Sponsor and parties acting in concert with it immediately
after the issue of the Acquisition Fee Units to the Manager will be 30.23%.
By voting in favour of the Whitewash Resolution, Independent Unitholders could also be
forgoing the opportunity to receive a general offer from another person who may be
discouraged from making a general offer in view of the potential dilutive effect resulting
from the receipt of the Acquisition Fee Units by the Manager in its own capacity.
6.3. Rationale for the Whitewash Resolution
The Whitewash Resolution is to enable the Manager to receive the Acquisition Fee
Units in its own capacity, and the rationale for allowing the Manager to do so is set out
as follows.
Pursuant to Clause 15.2.1 of the Trust Deed, the Acquisition Fees are payable to the
Manager in the form of cash and/or Units (as the Manager may elect). However, the
Manager is required under paragraph 5.6 of the Property Funds Appendix to receive the
Acquisition Fee in Units. Accordingly, without the Whitewash Resolution, and in view of
Rule 14.1(a) of the Code, the Manager will not be able to receive the Acquisition Fees
35
that it is entitled to as it will neither be able to receive the Acquisition Fees in cash nor
in Units. In that case, this may disincentivise the Manager from actively sourcing for and
pursuing acquisition opportunities from Interested Parties, even if such acquisitions
may be beneficial to Unitholders.
The Manager is also of the view that allowing it to receive the Acquisition Fees in Units
will demonstrate the long-term commitment of the Manager and of the Sponsor to LMIR
Trust. It will also further align the interests of the Manager with Unitholders,
incentivising the Manager to raise the performance of LMIR Trust to the benefit of
Unitholders.
The Manager also wishes to note that pursuant to paragraph 5.6 of the Property Funds
Appendix, the Acquisition Fee Units cannot be sold within one year from the date of their
issuance and so there is sufficient safeguard in place to prevent the Manager from
immediately selling down the Acquisition Fee Units.
6.4. Advice of the Independent Financial Adviser
The Manager has appointed KPMG Corporate Finance Pte Ltd as the independent
financial adviser to advise the Independent Directors and the Trustee in relation to the
Whitewash Resolution. A copy of the IFA Letter is set out in Appendix A of this Circular
and Unitholders are advised to read the IFA Letter carefully.
Having considered the factors and made the assumptions set out in its letter, and
subject to the qualifications set out therein, the IFA is of the view that the Whitewash
Resolution is on normal commercial terms and is not prejudicial to the interests of LMIR
Trust and the Unitholders.
7. RECOMMENDATIONS
7.1. On the Pejaten Village Acquisition
After taking into consideration the due diligence reports relating to the Proposed
Acquisitions and the factors likely to affect the economics of the transactions, including
the opinion of the IFA (as set out in the IFA Letter in Appendix A of this Circular), the
Independent Directors and the Audit Committee believe that the Pejaten Village
Acquisition is based on normal commercial terms and would not be prejudicial to the
interests of LMIR Trust or its Unitholders.
(See paragraph 2.1 for details of the rationale for the Transactions and paragraph 4.5
for the advice of the IFA.)
Accordingly, both the Independent Directors and the Audit Committee recommend that
Unitholders vote at the EGM in favour of the resolution to approve the Pejaten Village
Acquisition.
7.2. On the Binjai Supermall Acquisition
After taking into consideration the due diligence reports relating to the Proposed
Acquisitions and the factors likely to affect the economics of the transactions, including
the opinion of the IFA (as set out in the IFA Letter in Appendix A of this Circular), the
Independent Directors and the Audit Committee believe that the Binjai Supermall
Acquisition is based on normal commercial terms and would not be prejudicial to the
interests of LMIR Trust or its Unitholders.
(See paragraph 2.1 for details of the rationale for the Transactions and paragraph 4.5
for the advice of the IFA.)
Accordingly, both the Independent Directors and the Audit Committee recommend that
Unitholders vote at the EGM in favour of the resolution to approve the Binjai Supermall
Acquisition.
36
7.3. On the Whitewash Resolution
The Independent Directors have considered the rationale of the IFA and concurred with
the advice of the IFA in relation to the Whitewash Resolution. The Independent
Directors believe that the Whitewash Resolution would be beneficial to, and is in the
interests of, LMIR Trust.
(See paragraph 6.3 for details of the rationale for the Whitewash Resolution and
paragraph 6.4 for the advice of the IFA.)
Accordingly, the Independent Directors recommend that Independent Unitholders vote
in favour of the Whitewash Resolution.
8. EXTRAORDINARY GENERAL MEETING
The EGM will be held on 13 December 2012 at 2.00 p.m. at Mandarin Orchard Singapore,
Mandarin Ballroom 1, Level 6, Main Tower, Singapore 238867, for the purpose of considering
and, if thought fit, passing with or without modification, the resolutions set out in the Notice
of EGM, which is set out on pages G-1 and G-2 of this Circular. The purpose of this Circular
is to provide Unitholders with relevant information about each of these resolutions. Approval
by way of an Ordinary Resolution is required in respect of Resolutions 1 (in respect of the
acquisition of Pejaten Village from an Interested Person), 2 (in respect of the acquisition of
Binjai Supermall from an Interested Person) and 3 (in respect of the Whitewash Resolution).
A Depositor shall not be regarded as a Unitholder entitled to attend the EGM and to speak
and vote thereat unless he is shown to have Units entered against his name in the Depository
Register, as certified by CDP as at 48 hours before the EGM.
9. ABSTENTIONS FROM VOTING
Rule 919 of the Listing Manual prohibits interested persons and their associates (as defined
in the Listing Manual) from voting on a resolution in relation to a matter in respect of which
such persons are interested in the EGM. The relevant associates of the Sponsor are
Bridgewater, PT. Sentra Dwimandiri and the Manager.
Given that the Sponsor is interested in the Proposed Acquisitions, the Sponsor has
undertaken that (i) it will abstain, and will procure that its subsidiaries will abstain, from voting
at the EGM on the resolutions in relation to the Proposed Acquisitions, and (ii) will not accept
appointments as proxies in relation to the resolutions on the Proposed Acquisitions unless
specific instructions as to voting are given.
Pursuant to the SIC Waiver granted in relation to the Whitewash Resolution, the Sponsor,
parties acting in concert with it and parties not independent of the Sponsor are required to
abstain from voting on the Whitewash Resolution.
10. ACTION TO BE TAKEN BY UNITHOLDERS
Unitholders will find enclosed in this Circular the Notice of EGM and a Proxy Form.
If a Unitholder is unable to attend the EGM and wishes to appoint a proxy to attend and vote
on his behalf, he should complete, sign and return the enclosed Proxy Form in accordance
with the instructions printed thereon as soon as possible and, in any event, so as to reach
the Unit Registrar and Unit Transfer Office at Boardroom Corporate & Advisory Services Pte.
Ltd. at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623 not later than 2:00
p.m. on 11 December 2012, being 48 hours before the time fixed for the EGM. The
completion and return of the Proxy Form by a Unitholder will not prevent him from attending
and voting in person at the EGM if he so wishes.
Persons who have an interest in the approval of one or more of the resolutions must decline
to accept appointment as proxies unless the Unitholder concerned has specific instructions
in his Proxy Form as to the manner in which his votes are to be cast in respect of such
resolutions.
37
11. DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors collectively and individually accept full responsibility for the accuracy of theinformation given in this Circular and confirm after making all reasonable enquiries that, tothe best of their knowledge and belief, this Circular constitutes full and true disclosure of allmaterial facts about the Transactions, LMIR Trust and its subsidiaries, and the Directors arenot aware of any facts the omission of which would make any statement in this Circularmisleading. Where information in the Circular has been extracted from published orotherwise publicly available sources or obtained from a named source, the sole responsibilityof the Directors has been to ensure that such information has been accurately and correctlyextracted from such sources and/or reproduced in this Circular in its proper form and context.
12. CONSENTS
Each of the IFA (being KPMG Corporate Finance Pte Ltd) and the Independent Valuers(being KJPP WR and KJPP RHP) has given and has not withdrawn its written consent to theissue of this Circular with the inclusion of its name and, respectively, the IFA Letter, theSummary Valuation Report from KJPP WR and the Summary Valuation Report from KJPPRHP, and all references thereto, in the form and context in which they are included in thisCircular.
13. DOCUMENTS FOR INSPECTION
Copies of the following documents are available for inspection during normal business hoursat the registered office of the Manager at 50 Collyer Quay, #06-07 OUE Bayfront, Singapore0493211 from the date of this Circular up to and including the date falling three months afterthe date of this Circular:
(i) the Requis SPA (which contains the form of the Pejaten Village Deed of Indemnity);
(ii) the Sagacity SPA (which contains the form of the Binjai Supermall Deed of Indemnity);
(iii) the Pejaten Village CSPAs;
(iv) the Binjai Supermall CSPA;
(v) the full valuation report on Pejaten Village by KJPP WR;
(vi) the full valuation report on Pejaten Village by KJPP RHP;
(vii) the full valuation report on Binjai Supermall by KJPP WR;
(viii) the full valuation report on Binjai Supermall by KJPP RHP;
(ix) the 6M2012 Unaudited Financial Statements; and
(x) the IFA Letter.
The Trust Deed will also be available for inspection at the registered office of the Managerfor so long as LMIR Trust is in existence.
Yours faithfully
LMIRT MANAGEMENT LTD.(as manager of Lippo Malls Indonesia Retail Trust)Company Registration No. 200707703M
Mr Albert Saychuan CheokChairman & Independent Non-Executive Director
1 Prior appointment with the Manager will be appreciated.
38
IMPORTANT NOTICE
The value of Units and the income derived from them may fall as well as rise. Units are not
obligations of, deposits in, or guaranteed by, the Manager or any of its affiliates. An investment in
Units is subject to investment risks, including the possible loss of the principal amount invested.
Investors 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 Units through trading on the SGX-ST. Listing
of the Units on the SGX-ST does not guarantee a liquid market for the Units.
The past performance of LMIR Trust is not necessarily indicative of the future performance of
LMIR Trust.
This Circular may contain forward-looking statements that involve risks and uncertainties. Actual
future performance, outcomes and results may differ materially from those expressed in
forward-looking statements as a result of a number of risks, uncertainties and assumptions.
Representative examples of these factors include (without limitation) general industry and
economic conditions, interest rate trends, cost of capital and capital availability, competition from
similar developments, shifts in expected levels of property rental income, changes in operating
expenses (including employee wages, benefits and training costs), property expenses and
governmental and public policy changes. You are cautioned not to place undue reliance on these
forward-looking statements, which are based on the Manager’s current view of future events.
If you have sold or transferred all your Units, you should immediately forward this Circular,
together with the Notice of EGM and the accompanying Proxy Form, to the purchaser or
transferee or to the bank, stockbroker or other agent through whom the sale or transfer was
effected for onward transmission to the purchaser or transferee.
This Circular is not for distribution, directly or indirectly, in or into the U.S. It is not an offer of
securities for sale into the U.S.
39
GLOSSARY
In this Circular, the following definitions apply throughout unless otherwise stated:
3Q2012 : The period from 1 July 2012 to 30 September 2012
6M2012 : The six month period ended 30 June 2012
6M2012 Unaudited
Financial Statements
: The unaudited consolidated financial statements of LMIR
Trust and the target companies for the six months ended
30 June 2012
ACU : PT Amanda Cipta Utama
Acquisition Fee Units : The acquisition fee which is required to be paid to the
Manager in Units pursuant to paragraph 5.6 of the Property
Funds Appendix, in respect of the Proposed Acquisitions and
the Pluit Village Acquisition Fee Units
Authorised Investments : 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 special
purpose vehicle;
(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
40
(viii) other investments not covered by sub-paragraph (i) to
(vii) of this definition but specified as a permissible
investment in the Property Funds Appendix and selected
by the Manager for investment by LMIR Trust and
approved by the Trustee in writing (see the Trust Deed
for details)
Binjai Supermall : A three-level retail mall located in Binjai, North Sumatra,
Indonesia at Jalan Soekarno Hatta No.14, Timbang Langkat
Sub District, East Binjai District, Binjai City, North Sumatra
Province, Indonesia
Binjai Supermall
Acquisition
: The proposed acquisition of Binjai Supermall for which
Unitholders’ approval is sought in this Circular
Binjai Supermall
Acquisition Fee
: The acquisition fee in relation to the Binjai Supermall
Acquisition payable to the Manager pursuant to the Trust
Deed
Binjai Supermall
Acquisition Fee Units
: The Units which will be issued to the Manager as part
payment for the Binjai Supermall Acquisition Fee
Binjai Supermall
Aggregate Consideration
: The aggregate purchase consideration of Rp.237.5 billion
(S$30.2 million) for the acquisition of Binjai Supermall by ACU
from TMI and MPP
Binjai Supermall CSPA : The conditional sale and purchase agreement entered into
between ACU and the Binjai Supermall Vendor for the
acquisition of Binjai Supermall
Binjai Supermall Deed of
Indemnity
: The deed of indemnity entered into by Bridgewater and the
Trustee for the indemnification of certain matters by
Bridgewater in relation to the Binjai Supermall Acquisition
Binjai Supermall Related
Tenancy Agreements
: The tenancy agreements with respect to Binjai Supermall
entered into by certain associates and subsidiaries of the
Sponsor
Binjai Supermall Vendors : TMI and MPP
Board : The board of directors of the Manager
BOT : Build, operate and transfer as described in paragraph 3.8 of
this Circular
BOT Agreement : An agreement entered into by the BOT Grantor and the BOT
Grantee in relation to the construction and operation of the
Properties pursuant to a BOT Scheme
BOT Grantee : The party which has been granted a right by the BOT Grantor
to construct and operate a building on the BOT Land for a
particular period of time, pursuant to a BOT Agreement
41
BOT Grantor : The owner of the BOT Land, who grants a BOT Grantee a right
to construct and operate a building on the BOT Land for a
particular period of time, pursuant to a BOT Agreement, and at
the end of the BOT period for the BOT Grantee to transfer the
BOT Land and building to the BOT Grantor
BOT Land : Land owned by the BOT Grantor under certain title of land
such as the Right to Manage (Hak Pengelolaan)
BOT Scheme : Build, operate and transfer scheme
Bridgewater : Bridgewater International Ltd.
CDP : The Central Depository (Pte) Limited
Circular : This circular to Unitholders dated 26 November 2012
Closing Price : The closing price of S$0.475 per Unit on the SGX-ST on the
Latest Practicable Date
Code : The Singapore Code on Take-overs and Mergers, as
amended or modified from time to time
Controlling Shareholder : Means a person who:
(a) holds directly or indirectly 15% or more of the total
number of issued shares excluding treasury shares in
the company; or
(b) in fact exercises control over a company
Controlling Unitholder : Means a person who:
(a) holds directly or indirectly 15% or more of the nominal
amount of all voting units in the property fund. The MAS
may determine that such a person is not a controlling
unitholder; or
(b) in fact exercises control over the property fund
Current Leases : All current leases in respect of the September 2012 Portfolio
and the Recent Properties as at 30 September 2012
Deposited Property : All the assets of LMIR Trust, including the September 2012
Portfolio, the Recent 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
Directors : The directors of the Manager
DPU : Distribution per Unit
42
EGM : The extraordinary general meeting of Unitholders to be held
on 13 December 2012 at 2.00 p.m. at Mandarin Orchard
Singapore, Mandarin Ballroom 1, Level 6, Main Tower,
Singapore 238867, to approve the matters set out in the
Notice of Extraordinary General Meeting on pages G-1 and
G-2 of this Circular
EMTN Programme : The S$750,000,000 Guaranteed Euro Medium Term Note
Programme established by LMIRT Capital Pte. Ltd. (a wholly-
owned subsidiary of LMIR Trust) as announced by the
Manager on 26 June 2012
Enlarged Portfolio : The September 2012 Portfolio, the Recent Properties and the
Proposed Properties
Existing Interested
Person Transactions
: Interested person transactions with the Sponsor and
associates of the Sponsor during the course of LMIR Trust’s
current financial year
Final Completion : The date on which the adjustment sum for the consolidated
net assets or net liabilities of PPP is paid for the Pejaten
Village Acquisition
FY : Financial year
FY2011 : LMIR Trust’s financial year ending 31 December 2011
FY2011 Audited
Consolidated Financial
Statements
: LMIR Trust’s audited consolidated financial statements for the
financial year ended 31 December 2011
Gaillard : Gaillard Investment Pte. Ltd.
GNU : Gading Nusa Utama
HGB : Hak Guna Bangunan / “Right to Build” land title
IFA : KPMG Corporate Finance Pte Ltd.
IFA Letter : The letter from the IFA to the Independent Directors and the
Trustee containing its advice in relation to the Pejaten Village
Acquisition, the Binjai Supermall Acquisition and the
Whitewash Resolution
Illustrative Rupiah
Exchange Rate
: The illustrative rupiah exchange rate of S$1.00 to Rp.7,865.2
on the Latest Practicable Date
Independent Directors : The independent directors of the Manager, being Mr Albert
Saychuan Cheok, Mr Lee Soo Hoon, Phillip and Mr Goh Tiam
Lock
Independent Unitholders : Unitholders other than the Sponsor, parties acting in concert
with the Sponsor and parties which are not independent of the
Sponsor
Independent Valuers : KJPP WR and KJPP RHP
43
Interested Party : Means:
(i) a director, chief executive officer or controlling
shareholder of the Manager, the Trustee or controlling
unitholder of LMIR Trust; or
(ii) an associate of any director, chief executive officer or
controlling shareholder of the Manager, or an associate
of the Manager, the Trustee or any controlling unitholder
of LMIR Trust
Interested Party
Transaction
: Has the meaning ascribed to it in paragraph 5 of the Property
Funds Appendix
Interested Person : (a) In the case of a company, “interested person” means:
(i) a director, chief executive officer, or controlling
shareholder of the issuer; or
(ii) an associate of any such director, chief executive
officer, or controlling shareholder; and
(b) in the case of a REIT, shall have the meaning defined in
the Code on Collective Investment Schemes issued by
the MAS
Interested Person
Transaction
: Means a transaction between an entity at risk and an
Interested Person
Java Supermall Units : Four strata units in Java Supermall located at Jalan MT
Haryono No. 992-994, Jomblang, Semarang, Central Java
Jesselton : Jesselton Investment Ltd.
KJPP RHP : KJPP Rengganis, Hamid & Rekan, in strategic alliance with
CB Richard Ellis
KJPP WR : KJPP Willson & Rekan, in affiliation with Knight Frank
Latest Practicable Date : 19 November 2012, being the latest practicable date prior to
the printing of this Circular
Listing Manual : The Listing Manual of the SGX-ST
LMIR Trust : Lippo Malls Indonesia Retail Trust
Malang Town Square
Units
: Three strata units in Malang Town Square located at Jalan
Veteran No. 2, Malang, East Java
Mall WTC Matahari Units : Four strata units in Mall WTC Matahari located at Jalan Raya
Serpong, Pondok Jagung, Serpong, Tangerang, Banten,
Greater Jakarta
Manager : LMIRT Management Ltd., in its capacity as manager of LMIR
Trust
44
Mandatory Offer : A general offer made pursuant to Rule 14 of the Code
MAS : Monetary Authority of Singapore
Maxi Magna : Maxi Magna Investments Pte. Ltd.
Metropolis Town Square
Units
: Three strata units in Metropolis Town Square located at Jalan
Hartono Raya, Modernland Cikokol, Tangerang, Banten,
Greater Jakarta
NAV : Net asset value
Net Property Income or
NPI
: Property revenue less property operating expenses
NLA : Net lettable area
Notes : The S$200,000,000 4.88% Notes due 2015 and
S$50,000,000 5.875% Notes due 2017 pursuant to the EMTN
Programme
NTA : Net tangible assets
Ordinary Resolution : A resolution proposed and passed as such by a majority being
greater than 50.0% of the total number of votes cast for and
against such resolution at a meeting of Unitholders convened
in accordance with the provisions of the Trust Deed
Pejaten Village : A six-level (including one basement level) retail mall located in
the city of Jakarta, Indonesia at Jalan Warung Jati Barat No.
39, Jati Padang Sub District, Pasar Minggu District, South
Jakarta Region, DKI Jakarta Province, Indonesia
Pejaten Village
Acquisition
: The proposed acquisition of Pejaten Village for which
Unitholders’ approval is sought in this Circular
Pejaten Village
Acquisition Fee
: The acquisition fee in relation to the Pejaten Village
Acquisition payable to the Manager pursuant to the Trust
Deed
Pejaten Village
Acquisition Fee Units
: The Units which will be issued to the Manager as part
payment for the Pejaten Village Acquisition Fee
Pejaten Village CSPAs : The conditional share purchase agreements entered into
between the Trustee, through its wholly-owned subsidiaries
Requis Investment Pte. Ltd. and Gaillard Investment Pte. Ltd.,
and the Pejaten Village Vendors for the acquisition of the
entire issued capital of PPP
Pejaten Village Deed of
Indemnity
: The deed of indemnity entered into by Bridgewater and the
Trustee for the indemnification of certain matters by
Bridgewater in relation to the Pejaten Village Acquisition
Pejaten Village Purchase
Consideration
: The purchase consideration of Rp.748.0 billion (S$95.1
million) for the acquisition of PPP by Requis and Gaillard from
Sea Pejaten and GNU
45
Pejaten Village Related
Tenancy Agreements
: The tenancy agreements with respect to Pejaten Village
entered into by certain associates and subsidiaries of the
Sponsor
Pejaten Village Vendors : Sea Pejaten and GNU
Peninsula : Peninsula Investment Limited
Plaza Madiun : Two HGB titles in Plaza Madiun located at Jalan Pahlawan
Pluit Village Acquisition : The acquisition of Pluit Village
Pluit Village Acquisition
Fee Units
: The acquisition fee in relation to the Pluit Village Acquisition
payable to the Manager in Units
PPP : PT Panca Permata Pejaten
Property Funds Appendix : Appendix 6 of the Code on Collective Investment Schemes
issued by the MAS in relation to real estate investment trusts
Proposed Acquisitions : The proposed acquisitions of Pejaten Village and Binjai
Supermall by LMIR Trust
Proposed Completion : The date on which the Pejaten Village Purchase
Consideration and the Binjai Supermall Aggregate
Consideration are to be paid as determined in accordance
with the Pejaten Village CSPAs and the Binjai Supermall
CSPA, respectively
Proposed Properties : Pejaten Village and Binjai Supermall
Recent Acquisitions : The acquisitions of Palembang Square, Palembang Square
Extension, Tamini Square and Kramat Jati Indah Plaza by
SHGB : HGB Certificate issued by the relevant National Land Office in
accordance with applicable laws of the Republic of Indonesia
SIC : Securities Industry Council
SIC Waiver : The waiver granted by the SIC dated 9 November 2012
Specialty Space : The aggregate leasable area attributable to retail units of less
than 400 sq m each and where the term of the lease is
generally for more than 12 months
Sponsor : PT. Lippo Karawaci Tbk, the sponsor of LMIR Trust
Substantial Unitholders : A Unitholder with an interest in more than 5.0% of all Units in
issue
TMI : PT Trias Mitra Investama
Total Acquisition Cost : The aggregate of the Pejaten Village Purchase Consideration,
the Pejaten Village Acquisition Fee, the Binjai Supermall
Aggregate Consideration and the Binjai Supermall Acquisition
Fee, and the professional and other fees and expenses in
connection with the Proposed Acquisitions
Transactions : The Pejaten Village Acquisition and the Binjai Supermall
Acquisition
Trust Deed : The trust deed dated 8 August 2007 constituting LMIR Trust,
as supplemented by the first supplemental deed dated
18 October 2007 and the second supplemental deed dated
21 July 2010 entered into between the Trustee and the
Manager, as amended, varied, or supplemented from time to
time
Trustee : HSBC Institutional Trust Services (Singapore) Limited, in its
capacity as trustee of LMIR Trust
Unit : A unit representing an undivided interest in LMIR Trust
Unitholders : Unitholders of LMIR Trust
47
U.S. : United States
Whitewash Resolution : The proposed whitewash resolution for the waiver of the rights
of Independent Unitholders to receive a Mandatory Offer from
the Sponsor and parties acting in concert with it for all the
remaining Units not owned or controlled by the Sponsor and
parties acting in concert with it
S$ and cents : Singapore dollars and cents
% : Per centum or percentage
The terms “Depositor” and “Depository Register” shall have the meanings ascribed to them
respectively in Section 130A of the Companies Act, Chapter 50 of Singapore.
Words importing the singular shall, where applicable, include the plural and vice versa and words
importing the masculine gender shall, where applicable, include the feminine and neuter genders.
References to persons shall include corporations.
Any reference in this Circular to any enactment is a reference to that enactment for the time being
amended or re-enacted.
Any reference to a time of day in this Circular shall be a reference to Singapore time unless
otherwise stated.
Any discrepancies in the tables, graphs and charts between the listed amounts and totals thereof
are due to rounding. Where applicable, figures and percentages are rounded to one decimal
place.
48
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APPENDIX A
INDEPENDENT FINANCIAL ADVISER’S LETTER
For the purpose of this letter, capitalised terms not otherwise defined herein shall have the same meaning given as in the circular to the unitholders of Lippo Malls Indonesia Retail Trust (the “Unitholders”)(“LMIR Trust”) in relation to the Pejaten Village Acquisition, the Binjai Supermall Acquisition and the Whitewash Resolution (as defined below) (the “Circular”).
1. INTRODUCTION
1.1 Transactions
On 23 October 2012 (the “Announcement Date”), LMIRT Management Ltd in its capacity as manager of LMIR Trust (the “Manager”) announced that HSBC Institutional Trust Services (Singapore) Limited in its capacity as trustee of LMIR Trust (the “Trustee”) had entered into:
- conditional share purchase agreements (the “Pejaten Village SPAs”) to acquire Pejaten Village (“Pejaten Village”) from Sea Pejaten Pte Ltd (“Sea Pejaten”) and Gading Nusa Utama (“GNU”) (collectively the “Pejaten Village Vendors”) (the “Pejaten Village Acquisition”).
- a conditional sale and purchase agreement (the “Binjai Supermall SPA”) to acquire Binjai Supermall (“Binjai Supermall”, and together with Pejaten Village, the “Proposed Properties”) from PT Trias Mitra Investama (“TMI”) and PT Matahari Putra Prima Tbk (“MPP”) (the “Binjai Supermall Vendors”) (the “Binjai Supermall Acquisition”, and together with the Pejaten Village Acquisition, the “Proposed Acquisitions”).
The Independent Directors LMIRT Management Ltd (manager of Lippo Malls Indonesia Retail Trust) 50 Collyer Quay, #06-07 OUE Bayfront Singapore 049321 HSBC Institutional Trust Services (Singapore) Limited (trustee of Lippo Malls Indonesia Retail Trust) 21 Collyer Quay, #10-02 HSBC Building Singapore 049320
26 November 2012
Dear Sirs INDEPENDENT FINANCIAL ADVISER'S ADVICE IN RESPECT OF: (1) THE PEJATEN VILLAGE ACQUISITION;
(2) THE BINJAI SUPERMALL ACQUISITION; AND (3) THE WHITEWASH RESOLUTION.
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The Pejaten Village Acquisition
Pejaten Village comprises a six-level shopping centre with a total leasable retail floor area of about 41,847 square metres in the South Jakarta Region of Indonesia.
Pejaten Village will be acquired by LMIR Trust through its wholly-owned subsidiary, Requis Investment Pte Ltd (“Requis”). Requis will enter into a sale and purchase agreement with Sea Pejaten for the acquisition of a 75.0% interest in PT Panca Permata Pejaten (“PPP”), which directly holds Pejaten Village, and Gaillard Investment Pte Ltd (“Gaillard”), which is a wholly-owned subsidiary of Requis, will enter into a sale and purchase agreement with Sea Pejaten and GNU for the remaining 20.0% and 5.0% interest in PPP, respectively.
The purchase consideration for Pejaten Village is Rp. 748.0 billion (S$95.1 million) (the “Pejaten Village Purchase Consideration”), which was arrived at on a willing-buyer and willing-seller basis after taking into account the valuations of Pejaten Village by: (a) KJPP Willson & Rekan in affiliation with Knight Frank (“KJPP Willson & Rekan”); and (b) KJPP Rengganis, Hamid & Rekan in strategic alliance with CB Richard Ellis (“KJPP RHP”) (KJPP Willson & Rekan and KJPP RHP are referred to as the “Independent Valuers”).
LMIR Trust is expected to incur an acquisition fee in relation to Pejaten Village (the “Pejaten Village Acquisition Fee”) of Rp. 7.5 billion (or S$1.0 million) (which is equal to 1.0% of the Pejaten Village Purchase Consideration) in connection with the Pejaten Village Acquisition, which is payable in Units to the Manager pursuant to Clause 15.2.1 of the Trust Deed.
The Binjai Supermall Acquisition
Binjai Supermall comprises a 3-level shopping centre with a total leasable retail floor area of about 17,787 square metres in the North Sumatera Province of Indonesia.
Binjai Supermall will be acquired by LMIR Trust through its wholly-owned subsidiary, Sagacity Investments Pte Ltd (“Sagacity”). Sagacity holds a 75.0% interest in PT Amanda Cipta Utama (“ACU”), and Maxi Magna Investments Pte Ltd (“Maxi Magna”), which is a wholly-owned subsidiary of Sagacity, holds a 25.0% interest in ACU. ACU will in turn enter into a conditional sale and purchase agreement with the Binjai Supermall Vendors for the acquisition of Binjai Supermall.
The purchase consideration for Binjai Supermall is Rp. 237.5 billion (S$30.2 million) (the “Binjai Supermall Purchase Consideration”), which was arrived at on a willing-buyer and willing-seller basis after taking into account the valuations of Binjai Supermall by the Independent Valuers.
LMIR Trust is expected to incur the acquisition fee in relation to Binjai Supermall (the “Binjai Supermall Acquisition Fee”) of Rp.2.4 billion (or S$0.30 million) (which is equal to 1.0% of the Binjai Supermall Purchase Consideration) in connection with the Binjai Supermall Acquisition, which is payable in Units to the Manager pursuant to Clause 15.2.1 of the Trust Deed.
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The Manager intends to finance the cash portion of S$129.0 million of the Total Acquisition Cost with:
the proceeds raised from the issuance of the S$200,000,000 4.88% Notes due 2015 and S$50,000,000 5.875% Notes due 2017 (collectively, the “Notes”) pursuant to the S$750,000,000 Guaranteed Euro Medium Term Note Programme established by LMIRT Capital Pte. Ltd. (a wholly-owned subsidiary of LMIR Trust) (the “EMTN Programme”) as announced by the Manager on 26 June 2012;
the proceeds raised from the issuance of the S$75,000,000 4.48% Notes due 2017 pursuant to the EMTN Programme as announced by the Manager on 15 November 2012; and
internal cash reserves and working capital of LMIR Trust.
1.2 Regulatory Regime
Requirement for Unitholders’ approval of the Proposed Acquisitions
The following is extracted from section 4.1 of the Circular and provides an overview of why the Proposed Acquisitions will constitute:
Interested Person Transactions under Chapter 9 of the Listing Manual of the SGX ST (the “Listing Manual”); and
Interested Party Transactions under paragraph 5 of the Property Funds Appendix,
and, accordingly, will require the approval of Unitholders.
“4.1. Interested Person Transaction and Interested Party Transaction in connection with the Proposed Acquisitions
Under Chapter 9 of the Listing Manual, where LMIR Trust proposes to enter into a transaction with an Interested Person and the value of the transaction (either in itself or when aggregated with the value of other transactions, each of a value equal to or greater than S$100,000 with the same Interested Person during the same financial year) is equal to or exceeds 5.0% of LMIR Trust’s latest unaudited NTA, Unitholders’ approval is required in respect of the transaction.
Based on LMIR Trust’s consolidated financial statements for the nine-month period ended 30 September 2012, the NTA of LMIR Trust was S$1,153.8 million as at 30 September 2012. Accordingly, if the value of a transaction which is proposed to be entered into in the current financial year by LMIR Trust with an Interested Person is, either in itself or in aggregation with all other earlier transactions (each of a value equal to or greater than S$100,000) entered into with the same Interested Person during the current financial year, equal to or is in excess of S$57.7 million, such a transaction would be subject to Unitholders’ approval. Given the Pejaten Village Purchase Consideration and the Binjai Supermall Aggregate Consideration of Rp.748.0 billion (or S$95.1 million) and Rp.237.5 billion (or S$30.2 million) which is 8.2% and 2.6% of the NTA of LMIR Trust as at 30 September 2012, respectively1, the value of each of the Pejaten Village Acquisition and the Binjai Supermall Acquisition will in aggregate exceed the said threshold.
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Paragraph 5 of the Property Funds Appendix also imposes a requirement for Unitholders’ approval for an Interested Party Transaction by LMIR Trust which value exceeds 5.0% of LMIR Trust’s latest audited NAV. Based on LMIR Trust’s consolidated financial statements for the six-month period ended 30 September 2012, the NAV of LMIR Trust was S$1,153.8 million as at 30 September 2012. Accordingly, if the value of a transaction which is proposed to be entered into by LMIR Trust with an Interested Party3 is equal to or greater than S$57.7 million, such a transaction would be subject to Unitholders’ approval. Given the Pejaten Village Purchase Consideration of Rp.748.0 billion (or S$95.1 million), the value of the Pejaten Village Acquisition exceeds the said threshold.
As at the Latest Practicable Date, the Manager has a direct interest in 62,990,115 Units (comprising 2.88% of the total number of issued Units). The Manager is wholly-owned by Peninsula, a wholly-owned subsidiary of Jesselton which is in turn a wholly-owned subsidiary of the Sponsor. The Sponsor, directly and/or through its subsidiaries and associates and through its interest in the Manager, has (i) deemed interests of approximately 29.95% in LMIR Trust and (ii) wholly-owns the Manager, and is therefore regarded as a “controlling unitholder” of LMIR Trust, and “controlling shareholder” of the Manager, under both the Listing Manual and (where applicable) the Property Funds Appendix. The Pejaten Village Vendors are indirect wholly-owned subsidiaries of the Sponsor. For the purposes of Chapter 9 of the Listing Manual, each of the Pejaten Village Vendors is an Interested Person of LMIR Trust, and for the purposes of paragraph 5 of the Property Funds Appendix relating to Interested Party Transactions, each of the Pejaten Village Vendors is an Interested Party of LMIR Trust. Similarly, TMI is an indirect wholly-owned subsidiary of the Sponsor. MPP and the Sponsor are under common control by PT Multipolar Corporation Tbk. For the purposes of Chapter 9 of the Listing Manual, each of TMI and MPP is an Interested Person of LMIR Trust, and for the purposes of paragraph 5 of the Property Funds Appendix relating to Interested Party Transactions, each of TMI and MPP is an Interested Party of LMIR Trust.
Therefore, each of the Pejaten Village Acquisition and the Binjai Supermall Acquisition will constitute an Interested Person Transaction under Chapter 9 of the Listing Manual. The Pejaten Village Acquisition and the Binjai Supermall Acquisition will also constitute an Interested Party Transaction under paragraph 5 of the Property Funds Appendix. The value of the Pejaten Village Acquisition is equal to 8.2% of LMIR Trust’s NTA/NAV of S$1,153.8 million as at 30 September 2012. Therefore, the approval of Unitholders is required for the Pejaten Village Acquisition under Rule 906 of the Listing Manual and paragraph 5 of the Property Funds Appendix. Although approval of Unitholders is not required for the Binjai Supermall Acquisition under Rule 906 of the Listing Manual and paragraph 5 of the Property Funds Appendix, the Manager wishes to seek Unitholders’ approval for the Binjai Supermall Acquisition for (i) good corporate governance and (ii) due to the fact that Unitholders’ approval is also being sought for the Pejaten Village Acquisition. Accordingly, the approval of Unitholders is sought for each of the Pejaten Village Acquisition and the Binjai Supermall Acquisition.”
Requirement for Unitholders’ approval of the Whitewash Resolution
The following is extracted from section 6.3 of the Circular and provides an overview of why the issuance of units to the Manager in connection with the Pejaten Village Acquisition, the Binjai Supermall Acquisition, and the Pluit Village Acquisition is being sought.
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“6.3. Rationale for the Whitewash Resolution The Whitewash Resolution is to enable the Manager to receive the Acquisition Fee Units in its own capacity, and the rationale for allowing the Manager to do so is set out as follows. Pursuant to Clause 15.2.1 of the Trust Deed, the Acquisition Fees are payable to the Manager in the form of cash and/or Units (as the Manager may elect). However, the Manager is required under paragraph 5.6 of the Property Funds Appendix to receive the Acquisition Fee in Units. Accordingly, without the Whitewash Resolution, and in view of Rule 14.1(a) of the Code, the Manager will not be able to receive the Acquisition Fees that it is entitled to as it will neither be able to receive the Acquisition Fees in cash nor in Units. In that case, this may disincentivise the Manager from actively sourcing for and pursuing acquisition opportunities from Interested Parties, even if such acquisitions may be beneficial to Unitholders. The Manager is also of the view that allowing it to receive the Acquisition Fees in Units will demonstrate the long-term commitment of the Manager and of the Sponsor to LMIR Trust. It will also further align the interests of the Manager with Unitholders, incentivising the Manager to raise the performance of LMIR Trust to the benefit of Unitholders. The Manager also wishes to note that pursuant to paragraph 5.6 of the Property Funds Appendix, the Acquisition Fee Units cannot be sold within one year from the date of their issuance and so there is sufficient safeguard in place to prevent the Manager from immediately selling down the Acquisition Fee Units.”
In accordance with the abovementioned requirements, which are more particularly described in the Circular, KPMG Corporate Finance Pte Ltd (“KPMG Corporate Finance”) has been appointed as the independent financial adviser (“IFA”) to advise:
the Independent Directors of the Manager and the Trustee as to whether the Pejaten Village Acquisition is (a) on normal commercial terms and (b) prejudicial to the interests of LMIR Trust and the minority Unitholders;
the Independent Directors of the Manager and the Trustee as to whether the The Binjai Supermall Acquisition is (a) on normal commercial terms and (b) prejudicial to the interests of LMIR Trust and the minority Unitholders; and
the Independent Directors of the Manager as to whether the Whitewash Resolution is (a) on normal commercial terms and (b) prejudicial to the interests of LMIR Trust and the minority Unitholders,
(collectively, the “Opinions”).
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2. TERMS OF REFERENCE
Our responsibility is to provide the Opinions in respect of the Proposed Acquisitions and the Whitewash Resolution.
Our Opinions are delivered solely for the use and benefit of the addressees of this letter (as appropriate) (the “Addressees”) for their deliberations on the Proposed Acquisitions and the Whitewash Resolution, before arriving at a decision on the merits or demerits thereof, and in making any recommendations. We were not involved in any aspect of the negotiations pertaining to the Proposed Acquisitions and/or the Whitewash Resolution, nor were we involved in the deliberations leading up to the decisions of and recommendations by the Addressees (as appropriate) to proceed with the Proposed Acquisitions and/or the Whitewash Resolution. The decisions of and recommendations made by the Addressees (as appropriate) shall remain their sole responsibility.
Our Opinions should not be relied on as recommendations to any Unitholders as to how such Unitholders should vote in relation to the Proposed Acquisitions and/or the Whitewash Resolution or any matters related thereto.
We have not conducted a comprehensive review of the business, operations or financial condition of LMIR Trust. Our terms of reference also do not require us to evaluate or comment on the merits and/or risk, whether strategic, commercial, financial or otherwise, of the Proposed Acquisitions and/or the Whitewash Resolution or on the future prospects of LMIR Trust and as such, we do not express an opinion thereon. Such evaluation or comments remain the sole responsibility of the Addressees (as appropriate).
It is also not within our terms of reference to compare the relative merits of the Proposed Acquisitions and/or the Whitewash Resolution to any alternative transactions previously considered by, or that may have been available to, LMIR Trust or any alternative transactions that may be available in the future. Such evaluations or comments remain the sole responsibility of the Addressees (as appropriate), although we may draw upon their views or make such comments in respect thereof (to the extent deemed necessary or appropriate by us) in arriving at our opinion.
In addition, we have not made any independent evaluation or appraisal of the existing or proposed assets or liabilities (including without limitation, real property) of LMIR Trust.
In formulating our Opinions, we have held discussions with the directors of the Manager (the “Directors”) and its management team. We have considered the information contained in the Circular, publicly available information collated by us as well as information, both written and verbal, provided by the Manager and its professional advisers, which may include solicitors, auditors, tax advisers and valuers. We have not independently verified such information, whether written or verbal, and accordingly cannot and do not make any representation or warranty, express or implied, in respect of and do not accept any responsibility for the accuracy, completeness or adequacy of all such information, provided or otherwise made available to us or relied on by us. We have nevertheless made reasonable enquiries and used our judgment in assessing such information and have found no reason to doubt the accuracy or the reliability of such information.
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We have relied upon the representation of the Directors (including those who may have delegated detailed supervision of the Circular, the Proposed Acquisitions and the Whitewash Resolution) that they have taken all reasonable care to ensure that all information and facts stated in the Circular are fair and accurate in all material respects and all material information and facts in relation to the Proposed Acquisitions and the Whitewash Resolution have been disclosed to us, and that no material information and facts have been omitted, the omission of which would render any statement in the Circular, information and facts disclosed to us or our Opinions in this letter to be inaccurate, incomplete or misleading in any material respect. The Directors (including those who may have delegated detailed supervision of the Circular, the Proposed Acquisitions and the Whitewash Resolution) have jointly and severally accepted responsibility in the “Directors’ Responsibility Statement” of the Circular. Accordingly, no representation or warranty, express or implied, is made and no responsibility is accepted by us concerning the accuracy, completeness or adequacy of all such information and facts.
Our Opinions are based upon market, economic, industry, monetary and other conditions (where applicable) in effect on the latest practicable date prior to the printing of the Circular, being 19 November 2012 (the “Latest Practicable Date”). Such conditions and information can change significantly over a relatively short period of time. We assume no responsibility to update, revise or reaffirm our Opinions in the light of any subsequent changes or developments after the Latest Practicable Date even if it may affect our Opinions contained herein.
In rendering our Opinions, we did not have regard to the general or specific investment objectives, financial situation, risk profiles, tax position or particular needs and constraints of any Unitholder. As different Unitholders would have different investment objectives and profiles, we would advise the the Addressees (as appropriate) to recommend that any Unitholder who may require specific advice in relation to his investment portfolio(s) to consult his or their stockbroker, bank manager, accountant or other professional advisers.
The Addressees (as appropriate) have been separately advised by their own professional advisers in the preparation of the Circular (other than this letter). We have no role or involvement and have not and will not provide any advice, financial or otherwise, whatsoever in the preparation, review and verification of the Circular (other than this letter). Accordingly, we take no responsibility for and express no views, expressed or implied, on the contents of the Circular (other than this letter).
Our Opinions in relation to the Proposed Acquisitions and the Whitewash Resolution should be considered in the context of the entirety of this letter and the Circular.
3. DETAILS CONCERNING THE PEJATEN VILLAGE ACQUISITION
Detailed information in relation to Pejaten Village is contained within Appendix B of the Circular, while information in relation to the Pejaten Village Acquisition specifically is contained in section 3 of the Circular.
4. DETAILS CONCERNING THE BINJAI SUPERMALL ACQUISITION
Detailed information in relation to Binjai Supermall is contained within Appendix B of the Circular, while information in relation to the Binjai Supermall Acquisition specifically is contained in section 3 of the Circular.
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5. WHITEWASH RESOLUTION
Detailed information in relation to the Unit issuance to the Manager and the related Whitewash Resolution is contained within section 6 of the Circular.
6. EVALUATION OF THE PROPOSED ACQUISITIONS
In arriving at our opinions in relation to the Proposed Acquisitions, we have taken into account the following key factors:
6.1 Rationale for the Proposed Acquisitions The Manager has provided its assessment of the key benefits of the Proposed Acquisitions, the following rationale extracted from section 2.1 of the Circular:
“2.1. Rationale for the Proposed Acquisitions
The Manager believes that the Proposed Acquisitions will bring the following key benefits to Unitholders:
2.1.1. Acquisition of Retail Mall Assets at Discounts to the Average of the Independent
Valuations offering Stable Occupancies and Leasing up Opportunities
The Proposed Acquisitions represent an opportunity for LMIR Trust to acquire income producing quality properties below the average of the independent valuations from the Independent Valuers, namely KJPP RHP and KJPP WR, and are in line with the Manager’s acquisition growth strategy of owning retail and/or retail related properties to optimise Unitholders’ returns, as well as provide potential capital appreciation and long-term growth.
Property
Purchase Consideration/Aggregate Consideration
Average of Independent Valuations conducted by KJPP RHP and KJPP WR
Discount to the Average Valuations (%)
Pejaten Village Rp.748.0 billion(S$95.1 million)
Rp.855.6 billion(S$108.8 million)
12.6%
Binjai Supermall
The Binjai Supermall Aggregate Consideration isRp.237.5 billion (S$30.2 million)
Rp.250.5 billion(S$31.8 million) 5.2%
As at 30 September 2012, the occupancy rates of Pejaten Village and Binjai Supermall are 96.3% and 91.2% respectively. The high occupancy rates are a reflection of the strong demand for retail space in Jakarta, where Pejaten Village is located, as well as the strategic location of Binjai Supermall, which is currently the only mall in Binjai City which serves as a transit area for people travelling from Medan to Aceh.
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2.1.2. Opportunity to Enhance the Earnings of LMIR Trust
Based on the pro forma financial statements for the year ended 31 December 2011, the pro forma Net Property Income1 contribution from Pejaten Village and Binjai Supermall was Rp.55.1 billion (S$7.0 million). Based on the pro forma financial statements for the six months ended 30 June 2012, the pro forma Net Property Income contribution from Pejaten Village and Binjai Supermall was Rp.39.4 billion (S$5.0 million), which represents, on a historical pro forma basis, a 9.0% increase in LMIR Trust’s investment value and a 16.3% increase in LMIR Trust’s Net Property Income.
2.1.3. Strategic Locations with Sustainable Retail Traffic
The Proposed Properties are strategically located within Jakarta and Binjai (a transit point between Medan, the largest city in Sumatra, and Aceh), giving LMIR Trust access to the dense populations located in these cities, thereby ensuring sustainable retail traffic at these properties. LMIR Trust’s retail malls are positioned as “Everyday Malls” that provide necessities (e.g. supermarkets and family shopping) to the community living in the regions neighbouring its retail malls and target the middle income population in densely populated cities in Indonesia. The positioning of the Proposed Properties are in line with LMIR Trust’s targeted market segment comprising Indonesia’s expanding and prospering urban middle class segment.
2.1.4. Increased Economies of Scale in Operations and Marketing
The Proposed Acquisitions and the Recent Acquisitions will enable LMIR Trust to enlarge its presence in the retail mall sector in Indonesia and to benefit from increased economies of scale as the Manager and the property manager(s) of the Enlarged Portfolio1 can potentially spread certain operating costs (e.g. staff and personnel costs) over a larger portfolio, and increase their bargaining power with suppliers and service providers. The Proposed Acquisitions are similarly expected to deliver economies of scale and benefit the marketing and leasing activities of LMIR Trust by expanding and deepening LMIR Trust’s portfolio of key tenant relationships, especially with tenants of the Proposed Properties who are currently not tenants of LMIR Trust’s malls.
2.1.5. Diversification of Assets Portfolio to Minimise Concentration Risks
The Proposed Acquisitions will allow LMIR Trust to diversify its portfolio geographically across Indonesia, thereby reducing asset concentration risks within LMIR Trust’s Enlarged Portfolio. Following the Proposed Acquisitions, the maximum contribution to LMIR Trust’s Net Property Income by any single property within LMIR Trust’s property portfolio will decrease to approximately 13% based on the relevant figures for the period ended 30 June 2012. Further income diversification means greater resilience and
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stability of income streams for LMIR Trust, thus benefiting its Unitholders.”
6.2 Financial assessment of the Proposed Acquisitions
In evaluating the reasonableness of the:
Pejaten Village Purchase Consideration for the Pejaten Village Acquisition; and
Binjai Supermall Purchase Consideration for the Binjai Supermall Acquisition,
we have considered the following factors which have a bearing on our assessment:
Basis for arriving at the Pejaten Village Purchase Consideration and Binjai Supermall Purchase Consideration
The:
Pejaten Village Purchase Consideration of Rp. 748.0 billion (S$95.1 million); and
Binjai Supermall Purchase Consideration of Rp. 237.5 billion (S$30.2 million),
were both arrived at on a willing-buyer and willing-seller basis after taking into account the valuations of Pejaten Village and Binjai Supermall by the Independent Valuers.
The Independent Valuers were appointed for the purposes of:
determining the market value of Pejaten Village as at 30 June 2012; and
determining the market value of Binjai Supermall as at 30 June 2012,
with the following determinations made:
Valuation of Pejaten Village by the Independent Valuers
Appraised Value by KJPP Willson & Rekan Appraised Value by KJPP RHP
Rp. 870.15 billion Rp. 841.00 billion
Valuation of Binjai Supermall by the Independent Valuers
Appraised Value by KJPP Willson & Rekan Appraised Value by KJPP RHP
Rp. 253.90 billion Rp. 247.00 billion
Summarised versions of the valuation reports (the “Valuation Reports”) are contained in Appendix D of the Circular.
Our observations in relation to the Valuation Reports are as follows:
The Valuation Reports were undertaken in compliance with the Indonesian Valuation Standards (Standard Penilaian Indonesia / SPI) 2007.
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The Valuation Reports assess:
the market value as at 30 June 2012 for Pejaten Village, which is close to the date of the Pejaten Village SPA, as well as the intended settlement date of the Pejaten Village Acquisition; and
the market value as at 30 June 2012 for Binjai Supermall, which is close to the date of the Binjai Supermall SPA, as well as the intended settlement date of the Binjai Supermall Acquisition.
The market value, as defined in the respective Valuation Reports, is 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 transacting parties had each acted knowledgeably, prudently and without compulsion.
In arriving at its opinion on market value for Pejaten Village:
KJPP Willson & Rekan, on the basis that Pejaten Village is an income producing property, adopted the income valuation method, utilising a discounted cash flow analysis, with projections made over a five year investment horizon, taking into account existing leases, the relevant operating agreements, the tenure expiry.
In determining a capitalised value, KJPP Willson & Rekan capitalised the sixth year of net operating income using a single capitalization rate to arrive at the property’s terminal disposal value.
KJPP RHP, on the basis that Pejaten Village is an income producing property, adopted the income valuation method, utilising a discounted cash flow analysis, with projections made over a ten year investment horizon.
In determining a capitalised value, KJPP RHP capitalised the eleventh year of net operating income using a single capitalization rate to arrive at the property’s terminal disposal value.
In arriving at its opinion on market value for Binjai Supermall:
KJPP Willson & Rekan, on the basis that Binjai Supermall is an income producing property, adopted the income valuation method, utilising a discounted cash flow analysis, with projections made over a five year investment horizon, taking into account existing leases, the relevant operating agreements, the tenure expiry.
In determining a capitalised value, KJPP Willson & Rekan capitalised the sixth year of net operating income using a single capitalization rate to arrive at the property’s terminal disposal value.
KJPP RHP, on the basis that Binjai Supermall is an income producing property, adopted the income valuation method, utilising a discounted cash flow analysis, with projections made over a ten year investment horizon.
In determining a capitalised value, KJPP RHP capitalised the eleventh year of net operating income using a single capitalization rate to arrive at the property’s terminal disposal value.
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We observe that:
the assessed market value for Pejaten Village as at 30 June 2012 was between Rp. 841 billion (S$106.9 million) and Rp. 870.15 billion (S$110.6 million). The agreed Pejaten Village Purchase Consideration, assuming no adjustment, is Rp. 748.0 billion (S$95.1 million). We note that the Pejaten Village Purchase Consideration of Rp.748.0 billion (S$95.1 represents a 12.6% discount to the average of the two independent valuations conducted by the Independent Valuers; and
the assessed market value for Binjai Supermall as at 30 June 2012 was between Rp. 247 billion (S$31.4 million) and Rp. 253.9 billion (S$32.3 million). The agreed Binjai Supermall Purchase Consideration is Rp. 237.5 billion (S$30.2 million). We note that the Binjai Supermall Purchase Consideration of Rp. 237.5 billion (S$30.2 million) represents a 5.2% discount to the average of the two independent valuations conducted by the Independent Valuers.
6.3 Financial effects
The pro forma financial effects of the Proposed Acquisitions and the acquisitions of the Recent Properties (“Recent Acquisitions”) presented below are strictly for illustrative purposes only and were prepared based on:
(i) LMIR Trust’s audited consolidated financial statements for FY2011 (the “FY2011 Audited Consolidated Financial Statements”) and the unaudited financial statements of the target companies for FY2011; and
(ii) the unaudited consolidated financial statements of LMIR Trust and the target companies for the six months ended 30 June 2012 (the “6M 2012 Unaudited Financial Statements”),
and assuming:
(a) the cash portion of S$129.0 million of the Total Acquisition Cost will be paid in full in cash;
(b) the cash component is funded by the proceeds from the Notes at an assumed weighted average interest rate of 5.079% per annum;
(c) a rental guarantee in respect of KJI amounting to Rp.10.75 billion (S$1.4 million) per quarter will be provided by the KJI vendor; and
(d) (in relation to the pro forma financial effects of the Recent Acquisitions and the Proposed Acquisitions on the Distributable Income for LMIR Trust for FY2011) that:
(I) LMIR Trust had purchased the relevant properties on 1 January 2011 and had incurred expenditures for the acquisition of these properties on 1 January 2011; and
(II) such expenditures are based on the purchase consideration for 100% of the revenue generating spaces within the malls that are to be acquired.
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Based on the financial year ended 31 December 2011
Pro-forma DPU and distribution yield
The pro forma financial effects of (i) the Recent Acquisitions, (ii) the Recent Acquisitions and the Pejaten Village Acquisition, (iii) the Recent Acquisitions and the Binjai Supermall Acquisition, and (iv) the Recent Acquisitions and the Proposed Acquisitions on the DPU and distribution yield for LMIR Trust for FY2011, as if LMIR Trust had purchased the relevant properties on 1 January 2011, and held and operated the relevant properties through to 31 December 2011, respectively, are as follows:
December 2011 Portfolio(1)
December 2011 Portfolio with
Recent Acquisitions
December 2011 Portfolio with
Recent Acquisitions and Pejaten Village
December 2011 Portfolio with
Recent Acquisitions and Binjai Supermall
December 2011 Portfolio with
Recent Acquisitions and
Proposed Acquisitions
Distributable income (S$'000)(2) 47,446 46,508 45,186 45,151 43,829
Units in issue and to be issued 2,174,682,008 2,175,947,722(3) 2,176,619,151(3) 2,176,076,294(3) 2,176,747,722(3)
DPU (Cents)(4) 2.18 2.14 2.08 2.07 2.01
Distribution yield(5) 6.23% 6.11% 5.93% 5.93% 5.75%
Notes: (1) Based on the FY2011 Audited Consolidated Financial Statements. (2) Distributable income includes Unitholders' distribution from operations and return of capital. (3) The number of Units is arrived at after taking into account the new Units to be issued in payment of the
performance fee as a result of additional Net Property Income after the relevant acquisitions. (4) The DPU is derived at by taking into account the distributable income for FY2011, divided by the total number of
Units in issue and to be issued as at 31 December 2011. (5) The distribution yield is derived at by taking into account the DPU for FY2011, divided by the closing price as at
31 December 2011 of S$0.35.
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Pro forma NAV per Unit
The pro forma financial effects of (i) the Recent Acquisitions, (ii) the Recent Acquisitions and the Pejaten Village Acquisition, (iii) the Recent Acquisitions and the Binjai Supermall Acquisition, and (iv) the Recent Acquisitions and the Proposed Acquisitions on the NAV per Unit as at 31 December 2011, as if LMIR Trust had purchased the relevant properties on 31 December 2011, respectively, are as follows:
December 2011 Portfolio(1)
December 2011 Portfolio with
Recent Acquisitions
December 2011 Portfolio with
Recent Acquisitions and Pejaten Village
December 2011 Portfolio with
Recent Acquisitions and Binjai Supermall
December 2011 Portfolio with
Recent Acquisitions and
Proposed Acquisitions
NAV (S$'000) 1,299,869 1,299,869 1,299,869 1,299,869 1,299,869
Units in issue and to be issued 2,174,682,008 2,174,682,008 2,174,682,008 2,174,682,008 2,174,682,008
NAV per Unit (cents) 59.77 59.77 59.77 59.77 59.77
Note: (1) Based on the FY2011 Audited Consolidated Financial Statements.
Pro forma capitalisation
The following table sets forth the pro forma capitalisation of LMIR Trust as at 31 December 2011, as if LMIR Trust had purchased (i) the Recent Properties, (ii) the Recent Properties and Pejaten Village, (iii) the Recent Properties and Binjai Supermall, and (iv) the Recent Properties and the Proposed Properties on 31 December 2011.
Long term debt:Unsecured - 177,000 287,000 215,000 325,000 Secured 147,500 147,500 147,500 147,500 147,500
Total long term debt 147,500 324,500 434,500 362,500 472,500 Total debt 147,500 324,500 434,500 362,500 472,500 Unitholders funds 1,299,869 1,299,869 1,299,869 1,299,869 1,299,869
Total Capitalisation 1,447,369 1,624,369 1,734,369 1,662,369 1,772,369
Notes:
(1) Based on the FY2011 Audited Consolidated Financial Statements.
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Six months ended 30 June 2012
Pro-forma DPU and Distribution yield
The pro forma financial effects of (i) the Recent Acquisitions, (ii) the Recent Acquisitions and the Pejaten Village Acquisition, (iii) the Recent Acquisitions and the Binjai Supermall Acquisition, and (iv) the Recent Acquisitions and the Proposed Acquisitions on the DPU and distribution yield for LMIR Trust for the 6 months ended 30 June 2012 (“6M2012”), as if LMIR Trust had purchased the relevant properties on 1 January 2012, and held and operated the relevant properties through to 30 June 2012, respectively, are as follows:
June 2012 Portfolio(1)
June 2012 Portfolio with
Recent Acquisitions
June 2012 Portfolio with
Recent Acquisitions and Pejaten Village
June 2012 Portfolio with
Recent Acquisitions and Binjai Supermall
June 2012 Portfolio with
Recent Acquisitions and
Proposed Acquisitions
Distributable income (S$'000)(2) 32,130 30,857 31,297 30,131 30,571
Units in issue and to be issued 2,180,663,153(3) 2,181,276,311(3) 2,181,747,364(3) 2,181,334,206(3) 2,181,805,258(3)
DPU (Cents)(4) 1.47 1.41 1.43 1.38 1.40
Distribution yield(5) 7.75% 7.45% 7.55% 7.27% 7.37% Notes: (1) Based on the 6M2012 Unaudited Financial Statements. (2) Distributable income includes Unitholders' distribution from operations and return of capital. (3) The number of Units is arrived at after taking into account the new Units to be issued in payment of the
performance fee as a result of additional Net Property Income after the relevant acquisitions. (4) The DPU is derived at by taking into account the distributable income for 6M2012, divided by the total number of
Units in issue and to be issued as at 30 June 2012. (5) The distribution yield is derived at by taking into account the annualised DPU for 6M2012, divided by the closing
price as at 30 June 2012 of S$0.38.
Pro forma NAV per Unit
The pro forma financial effects of (i) the Recent Acquisitions, (ii) the Recent Acquisitions and the Pejaten Village Acquisition, (iii) the Recent Acquisitions and the Binjai Supermall Acquisition, and (iv) the Recent Acquisitions and the Proposed Acquisitions on the NAV per Unit as at 30 June 2012, as if LMIR Trust had purchased the relevant properties on 30 June 2012, respectively, are as follows:
June 2012 Portfolio(1)
June 2012 Portfolio with
Recent Acquisitions
June 2012 Portfolio with
Recent Acquisitions and Pejaten Village
June 2012 Portfolio with
Recent Acquisitions and Binjai Supermall
June 2012 Portfolio with
Recent Acquisitions and
Proposed Acquisitions
NAV (S$'000) 1,215,527 1,215,527 1,215,527 1,215,527 1,215,527
Units in issue and to be issued 2,180,663,153 2,180,663,153 2,180,663,153 2,180,663,153 2,180,663,153
NAV per Unit (cents) 55.74 55.74 55.74 55.74 55.74 Note: (1) Based on the 6M2012 Unaudited Financial Statements.
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Pro forma capitalisation
The following table sets forth the pro forma capitalisation of LMIR Trust as at 30 June 2012, as if LMIR Trust had purchased (i) the Recent Properties, (ii) the Recent Properties and Pejaten Village, (iii) the Recent Properties and Binjai Supermall, and (iv) the Recent Properties and the Proposed Properties on 30 June 2012.
Long term debt:Unsecured - 194,000 296,000 231,000 333,000 Secured 147,500 147,500 147,500 147,500 147,500
Total long term debt 147,500 341,500 443,500 378,500 480,500 Total debt 147,500 341,500 443,500 378,500 480,500 Unitholders funds 1,215,527 1,215,527 1,215,527 1,215,527 1,215,527
Total Capitalisation 1,363,027 1,557,027 1,659,027 1,594,027 1,696,027
Note: (1) Based on the 6M2012 Unaudited Financial Statements.
We make the following comments in relation to the various pro-forma financial effects displayed above:
(1) The pro forma NAV per Unit, in each instance analyzed, has not been impacted assuming completion of the Proposed Acquisitions.
(2) The pro forma distribution yields generated by LMIR Trust fall assuming completion of the Proposed Acquisitions. However, we note that the pro-forma distribution yields are within the range of distribution yield figures exhibited by a selection of comparable companies in South East Asia:
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Selected comparable companies in South East Asia
Comparable companiesDividend yield
(%)(1)
Hektar Real Estate Investment Trust 7.22%
Suntec REIT 6.12%
Fortune REIT 4.93%
CapitaRetail China Trust 8.20%
CapitaMalls Malaysia Trust 4.83%
Frasers Centrepoint Trust 5.11%
CapitaMall Trust 4.65%
Link Real Estate Investment Trust 3.42%
Min 3.42%
Max 8.20%
Dividend yield
- Based on the financial year ended 31 December 2011 5.75%
- Based on the financial year ended 30 June 2012 7.37%
Note:
(1) Dividend yields as at the 19 November 2012
Source: Capital IQ
In addition to the above, we note that:
(i) the reduction in the distribution yield for the financial year ended 31 December 2011, arising from the Proposed Acquisitions, may have been lessened had the pro forma financial effects incorporated the full impact of upward rental revision by Matahari Department Store and Hypermart in respect of their Pejaten Village spaces, at the beginning of 2012.
(ii) the Binjai Supermall Purchase Consideration is payable based on the expansion and renovation program (which is expected to increase the net lettable area by more than 25% by March 2013).
(iii) the pro forma financial effects for Binjai Supermall have been calculated based on the historical financial statements of TMI, of which it does not account for space previously owned and occupied by Matahari Department Store and Hypermart. The lease from Matahari Department Store and Hypermart will only be entered into after the Binjai Supermall Acquisition has taken place.
(3) The pro forma capitalisation will increase assuming completion of the Proposed Acquisitions.
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6.4 Other relevant factors
Pejaten Village Purchase Consideration adjustment
The Pejaten Village Purchase Consideration is subject to adjustment for the consolidated net assets or net liabilities of PPP as at the completion date of the Pejaten Village Acquisition. The adjustment for the consolidated net assets or net liabilities needs to be made because LMIR Trust will be acquiring Pejaten Village indirectly by acquiring the special purpose company which indirectly hold Pejaten Village. In an acquisition of a company, it is common and fair for an adjustment mechanism to be provided so that what the purchaser is paying to the vendor takes into account the exact assets and liabilities of the company at the point when the company is transferred to the purchaser.
Deeds of Indemnity in relation to the Proposed Acquisitions
Pejaten Village Deed of Indemnity
On 23 October 2012, the Trustee and Bridgewater entered into a deed of indemnity pursuant to which Bridgewater will indemnify the Trustee against certain liabilities or damage suffered by the Trustee arising out of or in connection with the Pejaten Village SPAs, subject to certain terms and conditions (the “Pejaten Village Deed of Indemnity”). The indemnification by Bridgewater includes the following matters relating to the Pejaten Village SPAs:
(i) all and any losses which the Trustee may suffer in connection with a breach by the Pejaten Village Vendors of any of their warranties and representations in the Pejaten Village SPAs;
(ii) all and any losses which the Trustee may suffer, including, but not limited to, loss of rental, service charges, carpark and other income and claims for losses from existing or potential tenants, which arises out of or in connection with cases before any courts, tribunals and governmental authorities, agencies or bodies in the relevant jurisdictions, including the Indonesian Business Competition Supervisory Commission, whether directly or indirectly; and
(iii) all and any losses which the Trustee may suffer which arise out of or in connection with a failure by the Pejaten Village Vendors to comply with any of their joint and several obligations in the Pejaten Village SPAs.
Binjai Supermall Deed of Indemnity
On 23 October 2012, the Trustee and Bridgewater entered into a deed of indemnity pursuant to which Bridgewater will indemnify the Trustee against certain liabilities or damage suffered by the Trustee arising out of or in connection with the Binjai Supermall SPA, subject to certain terms and conditions (the “Binjai Supermall Deed of Indemnity”). The indemnification by Bridgewater includes the following matters relating to the Binjai Supermall SPA:
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(i) all and any losses which the Trustee may suffer in connection with a breach by the Binjai Supermall Vendor of any of its warranties and representations in the Binjai Supermall SPA;
(ii) all and any losses which the Trustee may suffer, including, but not limited to, loss of rental, service charges, carpark and other income and claims for losses from existing or potential tenants, which arises out of or in connection with cases before any courts, tribunals and governmental authorities, agencies or bodies in the relevant jurisdictions, including the Indonesian Business Competition Supervisory Commission, whether directly or indirectly; and
(iii) all and any losses which the Trustee may suffer which arises out of or in connection with a failure by the Binjai Supermall Vendor to comply with any of its joint and several obligations in the Binjai Supermall SPA.
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7. EVALUATION OF THE WHITEWASH RESOLUTION
In arriving at our opinion in relation to the Whitewash Resolution, we have taken into account the following key factors:
7.1 Rationale for the Whitewash Resolution
The Manager has provided the reasons for the Whitewash Resolution, the following rationale extracted from section 6.3 of the Circular:
“6.3. Rationale for the Whitewash Resolution The Whitewash Resolution is to enable the Manager to receive the Acquisition Fee Units in its own capacity, and the rationale for allowing the Manager to do so is set out as follows. Pursuant to Clause 15.2.1 of the Trust Deed, the Acquisition Fees are payable to the Manager in the form of cash and/or Units (as the Manager may elect). However, the Manager is required under paragraph 5.6 of the Property Funds Appendix to receive the Acquisition Fee in Units. Accordingly, without the Whitewash Resolution, and in view of Rule 14.1(a) of the Code, the Manager will not be able to receive the Acquisition Fees that it is entitled to as it will neither be able to receive the Acquisition Fees in cash nor in Units. In that case, this may disincentivise the Manager from actively sourcing for and pursuing acquisition opportunities from Interested Parties, even if such acquisitions may be beneficial to Unitholders. The Manager is also of the view that allowing it to receive the Acquisition Fees in Units will demonstrate the long-term commitment of the Manager and of the Sponsor to LMIR Trust. It will also further align the interests of the Manager with Unitholders, incentivising the Manager to raise the performance of LMIR Trust to the benefit of Unitholders. The Manager also wishes to note that pursuant to paragraph 5.6 of the Property Funds Appendix, the Acquisition Fee Units cannot be sold within one year from the date of their issuance and so there is sufficient safeguard in place to prevent the Manager from immediately selling down the Acquisition Fee Units.”
7.2 Pricing of the Units
The Pejaten Village Acquisition Fee and the Binjai Supermall Acquisition Fee shall be payable to the Manager in Units to be issued at an issue price based on the volume weighted average price (“VWAP”) for a Unit for all trades on the SGX-ST for the period of 10 business days immediately preceding the Proposed Completion (the “10-day VWAP”).
We have reviewed and selected completed precedent acquisition fee unit issuances announced by other real estate investment trusts listed on SGX ST from 24 Aug 2009 until the Latest Practicable Date:
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Announcement Date
Completion Date REIT Property Basis of acquisition
feeDetermination of the issue price of Units as payment of the Acquisition Fee
Acquisition fee (S$m)
Number of units issued
Issue price (S$)
28 Dec 2011 17 Feb 2012 Fortune REIT Belvedere Garden Property and Provident Centre Property, Hong
1% Based on the prevailing market price on the SGX-ST, being 17 Feb 2012
HK$19.0m 4,809,152 HK$3.9508
17 Oct 2011 14 Dec 2011 K-REIT Asia 87.51% in Ocean Financial Centre, Singapore
1% Based on 10-business days VWAP preceding the completion date, being 14 Dec 2011
20.1 23,534,019 0.86
29 Jul 2011 23 Sep 2011 Frasers CentrePoint Trust
Bedok Point, Singapore 1% Based on the issue price per unit pursuant to the private placement carried out to fund the acquisition as announced on 15 Sept 2011
1.3 913,669 1.39
06 May 2011 30 Jun 2011 CapitaRetail China Trust New Min Zhong Le Yuan Mall, China Up to 1.5% of the purchase price of the asset acquired for less than S$200.0 mil
Based on 10-business days VWAP preceding the relevant issue date, being 18 Jul 2011
1.1 922,377 1.24
26 Oct 2010 09 Dec 2010 Suntec REIT 33.33% interest in Marina Bay Financial Centre Towers 1 & 2 and Marina Bay Link Mall, Singapore
1% Based on 10-business days VWAP preceding the relevant issue date, being 10 Dec 2010
15.0 10,266,300 1.46
11 Oct 2010 15 Dec 2010 K-REIT Asia 33.33% interest in Marina Bay Financial Centre Towers 1 & 2 and Marina Bay Link Mall, Singapore
1% Based on 10-business days VWAP preceding the completion date, being 15 Dec 2010
14.3 10,088,383(1) 1.41
18 Nov 2009 28 Jun 2010 Starhill Global REIT Starhill Gallery and Lot 10, Malaysia 1% Based on 10-business days VWAP preceding the relevant issue date, being 12 July 2010
4.4 7,909,654 0.56
09 Feb 2010 01 Jul 2010 CapitaMall Trust Clarke Quay, Singapore 1% Not available 2.7 1,432,312 1.87
22 Oct 2007 and 7 Jan 2010
05 Feb 2010 Frasers CentrePoint Trust
Northpoint 2 and Yew Tee Point, Singapore
1% Based on the issue price per unit pursuant to the private placement carried out to fund the acquisition as announced on 27 Jan 2010
2.9 2,181,954 1.33
24 Aug 2009 15 Oct 2009 Fortune REIT Metro Town, Caribbean Bazaar and Hampton Loft, Hong Kong
1% Based on the higher of (i) theoretical ex-rights price of $3.20 (ii) rights issue price of HK$2.29
HK$20.4 m 6,371,875 HK$3.20
23 O ct 2012 Lippo Malls Indonesia Retail Trust
Pejaten Village and Binjai Supermall, Indonesia 1% Based on the 10-business day VWAP
preceding the Proposed Completion 1.3 TBD(2) TBD(2)
Notes: (1) Concurrent with the acquisition of 33.33% interest in Marina Bay Financial Centre Towers 1 & 2 and Marina Bay
Link Mall (“MBFC”), K-REIT Asia simultaneously divested Keppel Towers and GE Towers. The total number of units issued for the aforementioned transaction was 12,114,120 units. The number of units issued for the payment of acquisition fee for MBFC, being 10,088,383, was calculated based on 1% of the purchase consideration of S$1,426.8 million divided by the issue price of S$1.4143 per unit.
(2) As at the Latest Practicable Date the number of Units issued and the issue price is still to be determined (“TBD”) as the computation of the issue price is based on the 10-business days VWAP preceding the Proposed Completion.
Source: Respective REITS’ announcements and transaction circulars obtained from SGX website
The Independent Directors should note that certain circumstances and terms relating to the selected completed precedent acquisition fee unit issuances are unique and might not be identical to the issuances made in respect of the Pejaten Village Acquisition Fee and the Binjai Supermall Acquisition Fee, and may be dependent on the market sentiments prevailing at the time of such issuances.
The selected companies which had carried out the selected completed precedent acquisition fee unit issuances might be different from LMIR Trust in terms of composition of business activities, scale of operations, risk profile, geographical spread of activities, track record, future prospects and other relevant criteria. In addition, the list of selected completed precedent acquisition fee unit issuances is by no means exhaustive and information relating to the selected companies was compiled from publicly available information.
The Independent Directors should note that the above comparison merely is for illustrative purposes and serves as a general guide only.
We observe from the above that the selected completed precedent issues were undertaken pursuant to an identical, or at least like, pricing formula.
In addition to the above, we note Listing Rule 811(1) of the Listing Manual, which allows companies to issue shares at up to a 10% discount to the weighted average price for trades done on the Exchange for the full market day on which the placement or subscription agreement is signed.
A-22
We note that the pricing of the Pluit Village Acquisition Fee Units will be at S$0.425 per Unit, this being in accordance with the approval given by Unitholders at the time of the acquisition of Pluit Village. We note that, as disclosed in the circular to Unitholders dated 3 October 2011, Clause 15.2.1(i) of the Trust Deed permitted the Manager to receive the Pluit Village Acquisition Fee Units at a lower price of S$0.31 per Unit.
7.3 Potential dilution arising from the Acquisition Fee Units issuance
The maximum possible increase in the unitholdings of the Manager would occur in the scenario where the Manager elects to receive its full entitlement to the acquisition fees in relation to the Pluit Village Acquisition and the Proposed Acquisitions in Units, without breaching the “public” float requirement set out in Rule 723 of the Listing Manual, being an aggregate of 8,620,760 Units, the aggregated unitholding of the Sponsor and parties acting in concert with it immediately after the issue of the Pluit Village Acquisition Fee Units, the Pejaten Village Acquisition Fee Units and the Binjai Supermall Acquisition Fee Units to the Manager will be 30.23%.
The following table sets out the respective unitholdings of the Sponsor and parties acting in concert with it if the Manager receives the Acquisition Fee Units.
Unitholdings of the Sponsor and parties acting in concert with it
Before the issue of the Acquisition Fee Units
Immediately after the issue of the Acquisition Fee Units
Issued Units 2,183,818,115 2,191,938,875
Number of Units held by the Sponsor and parties acting in concert with it
654,414,003 662,534,763
Number of Units held by Unitholders, other than the Sponsor and parties acting in concert with it
1,529,404,112 1,529,404,112
% of issued Units held by the Sponsor and parties acting in concert with it
29.97% 30.23%
% of Issued Units held by Unitholders, other than the Sponsor and parties acting in concert with it
70.03% 69.77%
Notes: (1) As disclosed in the circular to Unitholders dated 3 October 2011, while clause 15.2.1(i) of the Trust Deed allows
the Manager to receive the Pluit Village Acquisition Fee Units at an issue price of S$0.31 per Unit, the Manager has elected to receive the Pluit Village Acquisitio Fee Units at the issue price of S$0.425 per Unit instead. As the Pluit Village Acquisition Fee Units were not issued to the Manager within three months of the extraordinary general meeting held on 20 October 2010, the approval granted by the Independent Unitholders on 20 October 2011 would have to be refreshed in order for the Manager to receive the Pluit Village Acquisition Fee Units.
(2) The number of Acquisition Fee Units is calculated based on the assumption that (i) the Pejaten Village Acquisition Fee and the Binjai Supermall Acquisition Fee payable to the Manager in Units would be issued at an issue price of S$0.4795 per Unit and (ii) the Pluit Village Acquisition Fee payable to the Manager in Units would be issued at an issue price of S$0.425 per Unit. Please see paragraph 4.3 in the Circular for further details.
A-23
The Independent Directors should note that in the event that the Whitewash Resolution is passed, the Sponsor and parties acting in concert with it may increase their unitholdings in LMIR Trust in accordance with the table shown.
7.4 Nature of the Acquisition Fee Units
We note that pursuant to Clause 15.2.1 of the trust deed constituting the LMIR Trust (as amended), the Manager has an entitlement to the Acquisition Fee.
Whilst the Manager may typically elect to receive the Acquisition Fee in the form of cash and/or Units, the Manager is required under paragraph 5.6 of the Property Funds Appendix to receive the Acquisition Fee in Units, as a result of it being payable in respect of acquisitions from interested parties.
We note that without the Whitewash Resolution, the Manager will not be able to receive the Acquisition Fees that it is entitled to. A failure to pass the Whitewash Resolution may disincentivise the Manager from actively sourcing for and pursuing acquisition opportunities from Interested Parties, even if such acquisitions may be beneficial to Unitholders.
7.5 Moratorium on sale of Acquisition Fee Units
In accordance with paragraph 5.6 of the Property Funds Appendix which applies to Interested Party Transactions, the Units to be issued as payment of the Pejaten Village Acquisition Fee and the Binjai Supermall Acquisition Fee are not to be sold within one year from their date of issuance.
8. OUR OPINIONS
Having carefully considered the information available to us and our analysis set out above, and based upon the monetary, industry, market, economic and other relevant conditions subsisting on the Latest Practicable Date, we are of the opinion that:
In accordance with Chapter 9 of the Listing Manual, the Pejaten Village Acquisition is on normal commercial terms and is not prejudicial to LMIR Trust and the minority Unitholders.
In accordance with Paragraph 5 of the Property Funds Appendix, the Pejaten Village Acquisition is on normal commercial terms and is not prejudicial to the minority Unitholders.
In accordance with Chapter 9 of the Listing Manual, the Binjai Supermall Acquisition is on normal commercial terms and is not prejudicial to LMIR Trust and the minority Unitholders.
In accordance with Paragraph 5 of the Property Funds Appendix, the Binjai Supermall Acquisition is on normal commercial terms and is not prejudicial to the minority Unitholders.
The Whitewash Resolution is on normal commercial terms and is not prejudicial to LMIR Trust and the minority Unitholders.
A-24
This opinion is addressed to:
The Independent Directors and the Trustee for their use and benefit, in connection with and for the purpose of their consideration of the Pejaten Village Acquisition.
The Independent Directors and the Trustee for their use and benefit, in connection with and for the purpose of their consideration of the Binjai Supermall Acquisition.
The Independent Directors for their use and benefit, in connection with and for the purpose of their consideration of the Whitewash Resolution.
The recommendations to be made by the Independent Directors to the Unitholders shall remain their responsibility.
A copy of this letter may be reproduced in the Circular.
This opinion is governed by, and construed in accordance with, the laws of Singapore, and is strictly limited to the matters stated herein and does not apply by implication to any other matter.
Your faithfully
for and on behalf of
KPMG Corporate Finance Pte Ltd
Vishal Sharma
Executive Director
Jeremy Bogue
Associate Director
APPENDIX B
INFORMATION ABOUT THE ENLARGED PORTFOLIO
1. PROPOSED ACQUISITIONS
1.1 Pejaten Village
1.1.1 Description of Pejaten Village
Pejaten Village is a six-level retail mall (including one basement level) built in 2009,
with a gross floor area (“GFA”) of 91,749 sq m and NLA of about 41,847 square m. The
retail mall is located within a strategic area in the heart of South Jakarta and bears the
postal address of Jalan Warung Jati Barat No. 39, Jati Padang Sub District, Pasar
Minggu District, South Jakarta Region, DKI Jakarta Province, Indonesia.
Pejaten Village is surrounded by commercial developments such as medium-rise
office buildings, shop houses and hotels. This location is within proximity to the
Kemang area, which is a popular residential area for the expatriates in Jakarta.
Anchored by Matahari Department Store and Hypermart, the 146 tenants provide
shoppers with a diverse and comprehensive tenant mix. Pejaten Village offers both
destination and convenience shopping, and is supported by its central location, which
is easily accessible by cars and public transport. The specialty tenants of Pejaten
Village include well known international and domestic retailers and brand names such
as J.CO Donuts & Coffee, Fitness First, Body Shop, Domino’s Pizza and many others.
The table below sets out a summary of selected information on Pejaten Village (as at
30 June 2012 unless otherwise stated).
Address/Location Jalan Warung Jati Barat No. 39, Jati Padang Sub
District, Pasar Minggu District, South Jakarta
Region, DKI Jakarta Province, Indonesia
Title details 1. SHGB No. 742/Pejaten for a parcel of land
with an area of 15,234 sq m;
2. SHGB No. 1223/Pejaten for a parcel of land
with an area of 708 sq m; and
3. SHGB No. 1224/Pejaten for a parcel of land
with an area of 2,720 sq m.
Description/Existing Use A six-level retail mall including one basement level
Parking bays 851 car lots, 550 motorcycle lots
Validity period of land titles SHGB No. 742/Pejaten: until 3 November 2027
SHGB No. 1223/Pejaten: until 10 March 2022
SHGB No. 1224/Pejaten: until 10 March 2022
Each HGB title may be extendable for 20 years
Year of completion
of building
2009
B-1
Occupancy rate (as at
30 September 2012)
96.3%
Average gross rent(1) Rp.151,000 psm per month
Number of tenants (as at 30
September 2012)
147
GFA (sq m) 91,749
NLA (sq m) 41,847 as at 30 June 2012
Gross revenue for 6M2012 Rp.47.3 billion(2)
Net property income for
6M2012
Rp.35.0 billion(3)
Encumbrances Nil
Valuation by KJPP WR(4) Rp.870.15 billion
Valuation by KJPP RHP(5) Rp.841.00 billion
Restriction in interest(6) Nil
Notes:
(1) This is computed by taking the average of the gross rent (excluding service charge) for 6M2012.
(2) Comprises gross rental income, car park income and other income pertaining to Pejaten Village
including service charge.
(3) Excludes depreciation of investment property for Pejaten Village.
(4) Based on KJPP WR’s valuation report dated 30 June 2012.
(5) Based on KJPP RHP’s valuation report dated 30 June 2012.
(6) Restriction in interest is a limitation imposed by any state authority in Indonesia on the powers and
rights of a registered proprietor to deal with the land including restriction on the right to transfer,
charge and/or encumber the land and/or the building.
1.2 Binjai Supermall
1.2.1 Description of Binjai Supermall
Built in 2007, Binjai Supermall is the first and only modern retail mall in Binjai City.
Binjai Supermall is a three-level retail mall, and is currently undergoing an expansion
and renovation program which is expected to increase its NLA by more than 25% by
end 2012.
Binjai Supermall is prominently located along the main road which connects the Binjai
and Medan city, and bears the postal address Jalan Soekarno Hatta No. 14, Timbang
langkat Sub District, East Binjai District, Binjai City, North Sumatra, Indonesia. The
retail mall is 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 professionals as well as teenagers.
The tenants of Binjai Supermall include well known domestic and International
retailers and brand names such as Matahari Department Store, Gramedia, Hypermart,
Texas Chicken and Dunkin Donuts.
B-2
The table below sets out a summary of selected information on Binjai Supermall (as
at 30 June 2012 unless otherwise stated).
Address/Location Jalan Soekarno Hatta No.14, Timbang Langkat
Sub District, East Binjai District, Binjai City, North
Sumatra Province, Indonesia
Title details SHGB No. 93 with an area of 13,267 sq m
Description/Existing Use A three-level retail mall
Parking bays 591 car lots and 850 motorcycle lots
Validity period of land titles Until 2 September 2016, and may be extendable
for 20 years
Year of completion
of building
2007
Occupancy rate (as at 30
September 2012)
91.2%
Average gross rent(1) Rp.83,000 psm per month
Number of tenants (as at 30
September 2012)
83
GFA (sq m) 37,332
NLA (sq m) (as at 30 June
2012)
17,787
Gross revenue for the
6M2012
Rp.12.6 billion(2)
Net property income for
6M2012
Rp.4.4 billion(3)
Encumbrances Nil
Valuation by KJPP WR(4) Rp.253.90 billion
Valuation by KJPP RHP(5) Rp.247.00 billion
Restriction in interest(6) Nil
Notes:
(1) This is computed by taking the average of the gross rent (excluding service charge) for 6M2012.
(2) Comprises gross rental income, car park income and other income pertaining to Binjai Supermall
including service charge.
(3) Excludes depreciation of investment property for Binjai Supermall.
(4) Based on KJPP WR’s valuation report dated 30 June 2012.
(5) Based on KJPP RHP’s valuation report dated 30 June 2012.
(6) Restriction in interest is a limitation imposed by any state authority in Indonesia on the powers and
rights of a registered proprietor to deal with the land including restriction on the right to transfer,
charge and/or encumber the land and/or building.
B-3
2. RECENT ACQUISITIONS
LMIR Trust had recently completed the Recent Acquisitions, being the acquisitions of
Palembang Square, Palembang Square Extension, Tamini Square and KJI. For the
avoidance of doubt, the Recent Acquisitions do not constitute Interested Person
Transactions under Chapter 9 of the Listing Manual, and the Manager is of the view that
these acquisitions are made in the ordinary course of LMIR Trust’s business.
2.1 Palembang Square
2.1.1 Description of Palembang Square
Palembang Square is a four-level retail mall located in Palembang, South Sumatra,
Indonesia, bearing the postal address Jalan Angkatan 45/POM IX, Lorok Pakjo Sub
District, Ilir Barat 1 District, Palembang City, South Sumatera Province.
Palembang Square is part of a mixed-use development consisting of a hotel, a
proposed hospital and Palembang Square Extension and has an NLA (after the
completion of a refurbishment and repositioning exercise) of 31,448 sq m.
Its anchor tenants is well complemented by international and local specialty tenants
which include restaurants, fashion labels, a cinema, bookstores, a video game centre
and home furnishing store.
The mall is currently undergoing an expansion and renovation program which is
expected to increase its NLA by more than 30%. The new expanded area will house
a cinema and is also intended to include a karaoke and a game centre.
The table below sets out a summary of selected information on Palembang Square (as
at 30 June 2012 unless otherwise stated).
Address/Location Jalan Angkatan 45/POM IX, Lorok Pakjo Sub
District, Ilir Barat 1 District, Palembang City,
South Sumatera Province, Indonesia
Title details Consist of 389 strata title certificates
Description/Existing Use A four-level retail mall
Parking bays 573 car lots and 1,488 motorcycle lots
Validity period of HGB title Until 2 September 2039
Year of completion
of building
2004
Occupancy rate
(as at 30 September 2012)
96.2%
Average gross rent(1) Rp.88,000 psm per month
Number of tenants
(as at 30 September 2012)
115
GFA (sq m) 44,850
NLA (sq m) 23,665
B-4
Gross revenue for 6M2012 Rp.23.6 billion(2)
Net property income for
6M2012
Rp.16.4 billion(3)
Encumbrances Nil
Valuation by KJPP RHP(4) Rp.583.00 billion
Restriction in interest(5) Nil
Notes:
(1) This is computed by taking the average of the gross rent (excluding service charge) for 6M2012.
(2) Comprises gross rental income, car park income and other income pertaining to Palembang Square
including service charge.
(3) Excludes depreciation of investment property for Palembang Square.
(4) Based on KJPP RHP’s valuation report dated 30 June 2012.
(5) Restriction in interest is a limitation imposed by any state authority in Indonesia on the powers and
rights of a registered proprietor to deal with the land including restriction on the right to transfer,
charge and/or encumber the land and/or building.
2.2 Palembang Square Extension
2.2.1 Description of Palembang Square Extension
Palembang Square Extension is a two-level retail mall (including one underground
level) with a bridge, and with a parking area with 250 car lots and 800 motorcycles lots.
The mall is located in Palembang, South Sumatra, Indonesia, bearing the postal
address Jalan Angkatan 45/POM IX, Lorok Pakjo Sub District, Ilir Barat 1 District,
Palembang City, South Sumatera Province. Palembang Square Extension is part of a
mixed-use development consisting of a hotel, a proposed hospital and an existing mall
with an NLA of 17,326 sq m. Palembang Square Extension is directly connected to
Palembang Square and the proposed hospital via a bridge.
The underlying BOT Land, on which Palembang Square Extension is constructed, is
represented by Right to Use (Hak Pakai) No. 419/Lorok Pakjo, registered under the
name of Government of South Sumatera Province (which currently is in the process of
being converted into Right to Manage). The BOT Grantor is currently in the process of
applying for the Right to Manage (Hak Pengelolaan) in relation to an additional area
of 7,055 sq m.
B-5
The table below sets out a summary of selected information on Palembang Square
Extension (as at 30 June 2012 unless otherwise stated).
Address/Location Jalan Angkatan 45/POM IX, Lorok Pakjo Sub
District, Ilir Barat 1 District, Palembang City,
South Sumatera Province, Indonesia
Title details Right to Use (Hak Pakai) No. 419/Lorok Pakjo
under the name of Provincial Government of
South Sumatera (which currently is in the process
of being converted into Right to Manage (Hak
Pengelolaan)1
Description/Existing Use A two-level retail mall (including one underground
level) with a bridge
Parking bays 250 car lots and 800 motorcycle lots
Validity period of the BOT
Agreement
Until 25 January 2041
Year of completion
of building
2012
Occupancy rate (as at 30
September 2012)
90.6%
Average gross rent(1) Rp.188,000 psm per month
Number of tenants (as at 30
September 2012)
35
GFA (sq m) 45,886
NLA (sq m) 17,326
Gross revenue for the
6M2012
Rp.5.7 billion(2)
Net property income for
6M2012
Rp.2.5 billion(3)
Encumbrances Nil
Valuation by KJPP RHP (4) Rp.232 billion
Restriction in interest(5) Approval from the Government of South Sumatera
Province
Notes:
(1) This is computed by taking the average of the gross rent (excluding service charge) for 6M2012.
(2) Comprises gross rental income, car park income and other income pertaining to Palembang Square
Extension including service charge.
(3) Excludes depreciation of investment property for Palembang Square Extension.
(4) Based on KJPP RHP’s valuation report dated 30 June 2012.
(5) Restriction in interest is a limitation imposed by any state authority in Indonesia on the powers and
rights of a registered proprietor to deal with the land including restriction on the right to transfer,
charge and/or encumber the land and/or building.
1 Based on the BOT Agreement, the BOT Grantor has granted the BOT Grantee a right to develop and manage land
with an area over 23,285 sq m. The total area of the Right to Use (Hak Pakai) No. 419/Lorok Pakjo which is currently
in the process of being converted into Right to Manage (Hak Pengelolaan) in the name of the BOT Grantor is 16,256
sq m. In addition, based on information from the BOT Grantee, the BOT Grantor is currently in the process of
applying for the Right to Manage (Hak Pengelolaan) in relation to an additional area of 7,055 sq m. In such
occurrence, the total area for the Right to Manage (Hak Pengelolaan) that will be owned by the BOT Grantor is
23,311 sq m.
B-6
2.3 Tamini Square
2.3.1 Description of Tamini Square
Tamini Square is a seven-level (including two basement levels) strata titled retail mall
located in the city of Jakarta, Indonesia, bearing the postal address Jalan Raya Taman
Mini Pintu 1 No. 15, Pinang Ranti Sub District, Makasar District, East Jakarta Region,
DKI Jakarta Province).
The retail mall is located within close proximity to one of Jakarta’s popular tourist
destinations Taman Mini Indonesia Indah, which is a culture-based recreational
attraction in east Jakarta and draws large shopping and dining traffic daily.
LMIR Trust has acquired 37 strata title units (Hak Milik Atas Satuan Rumah Susun) in
Tamini Square aggregating a total NLA of 17,475 sq m (representing 44% of the total
NLA of Tamini Square). The units are currently fully occupied by anchor tenant such
as Carrefour, Pizza Hut and other well known specialty tenants in the F&B sector.
The strata title units are built on a plot of land with a HGB title with an expiry date of
28 April 2025.
The table below sets out a summary of selected information on Tamini Square (as at
30 June 2012 unless otherwise stated).
Address/Location Jalan Raya Taman Mini Pintu 1 No. 15, Pinang
Ranti Sub District, Makasar District, East Jakarta
Region, DKI Jakarta Province, Indonesia
Title details Consist of 37 strata title certificates
Description/Existing Use A seven-level retail mall including two basement
levels
Parking bays 902 car lots and 992 motorcycle lots
Validity period of HGB titles Until 26 September 2015, and may be extendable
for 20 years
Year of completion
of building
2006
Occupancy rate
(as at 30 September 2012)
100%
Average gross rent(1) Rp.72,500 psm per month
Number of tenants
(as at 30 September 2012)
13
GFA (sq m) 18,963
NLA (sq m) 17,475
Gross revenue for the
6M2012
Rp.10.5 billion(2)
Net property income for
6M2012
Rp.8.8 billion(3)
Encumbrances Nil
Valuation by KJPP RHP(4) Rp.235.00 billion
Restriction in interest(5) Nil
B-7
Notes:
(1) This is computed by taking the average of the gross rent (excluding service charge) for 6M2012.
(2) Comprises gross rental income, car park income and other income pertaining to Tamini Square
including service charge.
(3) Excludes depreciation of investment property for Tamini Square.
(4) Based on KJPP RHP’s valuation report dated 30 June 2012.
(5) Restriction in interest is a limitation imposed by any state authority in Indonesia on the powers and
rights of a registered proprietor to deal with the land including restriction on the right to transfer,
charge and/or encumber the land and/or building.
2.4 KJI
2.4.1 Description of KJI
KJI is a five-level (including one basement level) retail mall located in the city of
Jakarta, Indonesia, bearing the postal address Jalan Raya Bogor Km 19, Kramat Jati
Sub District, Kramat Jati District, East Jakarta Region, DKI Jakarta Province. KJI has
an NLA of 32,540 sq m, and a favourite destination for shopping and dining for the
local population in East Jakarta.
KJI is situated 2.5 km south of Jakarta’s Jagorawi toll road and is easily accessible
from the main road. Hence, the mall has good accessibility to passing traffic. KJI’s
notable developments in the close vicinity includes Taman Mini Indonesia Indah which
is a culture-based recreational area in East Jakarta and Halim Perdanakusuma
Airport.
Completed in 1996, KJI had undergone refurbishment works in 2004 and as well as
recently this year in 2012.
The table below sets out a summary of selected information on KJI (as at 30 June 2012
unless otherwise stated).
Address/Location Jalan Raya Bogor Km 19, Kramat Jati Sub District,
Kramat Jati District, East Jakarta Region, DKI
Jakarta Province, Indonesia
Title details 1. SHGB No. 15/Kramat Jati;
2. SHGB No. 24/Kramat Jati; and
3. SHGB No. 42/Kramat Jati.
Description/Existing Use A five-level retail mall including one basement level
Parking bays 716 car lots and 718 motorcycle lots
Validity period of land
titles
SHGB No. 15//Kramat Jati: until 24 October 2024
SHGB No. 24/Kramat Jati: until 17 May 2027
SHGB No. 42/Kramat Jati: until 2 November 2031
Each HGB title may be extendable for 20 years
Year of completion
of building
1996
B-8
Occupancy rate (as at 30
September 2012)
50.3%
Average gross rent(1) Rp.33,000 psm per month
Number of tenants (as at
30 September 2012)
38
GFA (sq m) 65,511
NLA (sq m) 32,540
Gross revenue for the
6M2012
Rp.28.2 billion(2)
Net property income for
6M2012
Rp.18.9 billion(3)
Encumbrances Nil
Valuation by KJPP RHP(4) Rp.552 billion
Restriction in interest(5) Nil
Notes:
(1) This is computed by taking the average of the gross rent (excluding service charge) for 6M2012.
(2) Comprises gross rental income, car park income and other income pertaining to KJI including service
charge.
(3) Excludes depreciation of investment property for KJI.
(4) Based on KJPP RHP’s valuation report dated 30 June 2012.
(5) Restriction in interest is a limitation imposed by any state authority in Indonesia on the powers and
rights of a registered proprietor to deal with the land including restriction on the right to transfer,
charge and/or encumber the land and/or building.
2.4.2 Rental Guarantee in respect of KJI
KJI had undergone an asset enhancement initiative (“AEI”), with a substantial part of
the works having been completed in 3Q2012.
As at June 2012, the occupancy rate at KJI was approximately 51%. As a large part
of the AEI has now been completed, the mall operations are expected to improve and
occupancy is projected to increase upon stabilisation of the mall. In the interim, the KJI
Vendor has provided a rental guarantee to LMIR Trust in respect of KJI pursuant to a
deed of rental guarantee (the “KJI Deed of Rental Guarantee”), which is for the
amount of Rp.10.75 billion (S$1.4 million) per quarter (“Guaranteed Sum”) for FY2013
and FY2014 (which will be partially backed by a banker’s guarantee for the amount of
Rp.15.00 billion (S$1.9 million).
The KJI Deed of Rental Guarantee is a rental revenue guarantee and is intended to
insulate LMIR Trust due to the recently completed AEI, as well as to insulate LMIR
Trust from unforeseen changes or disruptions in the business conditions of KJI or the
Indonesia retail market. Under the terms of the KJI Deed of Rental Guarantee, the KJI
Vendor, being the guarantor, will make good any shortfall between the actual rent
achieved by KJI and the agreed rental guarantee amount for each of the respective
quarters during FY2013 and FY2014.
The board of directors of the Manager is of the view that the KJI Deed of Rental
Guarantee is in the interest of LMIR Trust as it offers protection to LMIR Trust in the
event that the gross rental revenue in respect of KJI for the relevant quarter falls below
the guaranteed amount for the term of the KJI Deed of Rental Guarantee.
B-9
3. THE SEPTEMBER 2012 PORTFOLIO
The September 2012 Portfolio comprises Gajah Mada Plaza, Cibubur Junction, Plaza
Semanggi, Mal Lippo Cikarang, Ekalokasari Plaza, Bandung Indah Plaza, Istana Plaza, Sun
Plaza, Pluit Village and Plaza Medan Fair (collectively, the “Retail Malls”), as well as 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, the “Retail Spaces”).
3.1 Description of the September 2012 Portfolio
The table below sets out the lease expiry profile by NLA in the September 2012 Portfolio as
at 30 September 2012.
Lease Expiry Profile(1) by NLA as at 30 September 2012
2012 2013 2014 2015 2016 and beyond
The Retail Malls 3% 12% 14% 15% 30%
The Retail Spaces 0% 0% 0% 0% 17%
Note:
(1) The lease expiry profile is based on the percentage of actual running leases (which exclude the vacant
spaces, temporary leases and the letters of intent signed) expiring per year out of the total leasable area
which amount to 546,776 sq m as at 30 September 2012.
Descriptions of each of the properties in the September 2012 Portfolio are set out below:
RETAIL MALLS
(1) Gajah Mada Plaza
Gajah Mada Plaza, aggregating a total NLA of 35,193 sq m as at 30 September 2012,
is a seven storey with one basement level shopping centre and parking lots comprising
885 car lots and 900 motorcycle 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 197 tenancies in the mall provide a diverse and complementary tenant mix
anchored by Hypermart. 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, all of which adds to the overall
attractiveness of Gajah Mada Plaza.
Gajah Mada Plaza has 202 retail tenants, based on all current leases in respect of the
Properties as at 30 September 2012 (“Current Leases”). The tenant profile of the mall
comprises a diverse set of tenants from a wide variety of trade sectors. The mall is
anchored by Hypermart, which occupies 14.9% of the mall’s NLA as at 30 September
2012. The other prominent tenants include Millenium International Executive Club,
which operates as a restaurant during the day and as a discotheque late at night, J-Co
Donuts, Kentucky Fried Chicken, Pizza Hut and Inul Vista Karaoke.
B-10
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’
shops, jewellery, information technology products, dining and entertainment.
Occupancy in this mall remained strong at 98.6% as at 30 September 2012.
(2) Mal Lippo Cikarang
Mal Lippo Cikarang, aggregating a total NLA of 30,204 sq m as at 30 September 2012,
is a two-level retail mall with parking lots comprising 477 car lots and 935 motorcycle
lots located within the Lippo Cikarang estate. The estate is approximately 40 km east
of Jakarta and is connected to Jakarta via the Jakarta-Cikampek 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 and Hypermart, and complemented by mini anchors such as a
cinema, a bookshop, a video game centre, restaurants and dining outlets.
As at 30 September 2012, Mal Lippo Cikarang has 155 retail tenants based on Current
Leases. The mall is anchored by Matahari Department Store, Hypermart, which
collectively occupy 48.1% of the mall’s NLA as at 30 September 2012, and is well
complemented by a diverse set of specialty tenants from a wide variety of trade sectors.
The prominent specialty tenants include Timezone, Kentucky Fried Chicken, Wendy’s
Restaurant, Pizza Hut, The Executive, Dunkin Donuts and Johnny Andrean Salon.
The mall has achieved an occupancy rate of 100.0% as at 30 September 2012.
(3) Cibubur Junction
Cibubur Junction, aggregating a total NLA of 34,078 sq m as at 30 September 2012, is
a five storey retail mall with one basement level and partial roof top level with 636 car
lots and 500 motorcycle 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.
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.
As at 30 September 2012, Cibubur Junction has 210 retail tenants based on Current
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 25.9% of the NLA
as at 30 September 2012. 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 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 16.2% of the NLA as at 30 September 2012. The upper ground and first floor
B-11
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).
An AEI was undertaken at the second level of Cibubur Junction in 2009.
Reconfiguration was carried out to create 1,376 sq m of lettable space from the existing
1,035 sq m, thus offering a single corridor layout. The reconfiguration cost was Rp.1.8
billion but the annual rental was projected at Rp.1.6 billion.
(4) Plaza Semanggi
The Plaza Semanggi, aggregating a total NLA of 63,652 sq m as at 30 September 2012,
is a modern shopping centre comprising seven storey and two basement levels
shopping centre and 13 levels of office floors, with parking lots comprising 1,090 car lots
and 800 motorcycle lots. The Plaza Semanggi is strategically located in the heart of
Jakarta’s central business district (“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 429 tenants 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.
As at 30 September 2012, The Plaza Semanggi had 429 retail tenants based on Current
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 floor,
level one and level two, with Fitness First also occupying space across levels one and
two.
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 include Planet Surf, Giordano,
and 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.
An AEI was undertaken in 2009 to create 975 sq m of specialty space from space
previously occupied by an anchor tenant who had downsized its tenancy area. The
former rental rate was about Rp.65,000 per sq m per month and the new rents are
Rp.128,000 per sq m per month. As at 30 September 2012, 96.6% of the space is
occupied by tenants.
B-12
(5) Ekalokasari Plaza
Ekalokasari Plaza, aggregating a total NLA of 25,469 sq m as at 30 September 2012,
is a six storey with three basement levels retail mall and has parking lots comprising 357
car lots and 283 motorcycle 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. 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.
As at 30 September 2012, Ekalokasari Plaza has 142 retail tenants based on Current
Leases. The tenant profile of the mall comprises a diverse set of tenants. There are 133
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 39.3% of NLA. The anchor tenants, together with the
Timezone amusement centre, occupy the lower ground to the second floor. The other
prominent tenants include Breadtalk, Gramedia bookstore, J-Co Donut, Giordano,
Botanical Food Court, Kentucky Fried Chicken and Popeye restaurant.
As at 30 September 2012, the occupancy rate of the mall was 92.7% of the total existing
NLA of 25,469 sq m.
(6) Bandung Indah Plaza
Bandung Indah Plaza, aggregating a total NLA of 30,158 sq m as at 30 September
2012, is a four storey with three basement levels retail mall with parking lots comprising
653 car lots and 750 motorcycle 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, a bookstore, a cinema and supported by a list of international and local
tenants.
As at 30 September 2012, Bandung Indah Plaza has 232 retail tenants based on
Current 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 14.9% of
total NLA. This level also includes F&B outlets such as McDonald’s and Starbucks, and
fashion and accessories retailers such as Quicksilver and Giordano.
The first level of the mall is anchored by Matahari Department Store, which accounts for
19.2% of total NLA. Youth fashion retailers such as City Surf and Levis are also well
represented. 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. The third level of the mall comprises Studio 21 Cinema (which has six screens),
Timezone and a new food court.
Rp.2.2 billion was invested during 2009 to convert the former Yogya Supermarket that
occupied 1,600 sq m into specialty units. Rentals were raised from Rp.71,500 to
Rp.162,000 per sq m per month after the space was reconfigured. The return on
investment for this AEI was above 40% after accounting for loss of rental income during
construction. All of the new space is fully occupied.
B-13
Another AEI was undertaken at the ex-management office space together with fourspecialty units that were converted into 794 sq m of lettable space and leased to afitness centre operator in October 2009. The rental secured was Rp.80,000 per sq m permonth for a term of three years. The annual rental income is Rp.585.0 million.
As at 30 September 2012, the average monthly rental rate of specialty stores isRp.304,000 per sq m per month.
(7) Istana Plaza
Istana Plaza, aggregating a total NLA of 26,893 sq m as at 30 September 2012, is a fourstorey with two basement levels retail mall with parking lots comprising 400 car lots and500 motorcycle 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 Hero
Supermarket, the 198 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.
As at 30 September 2012, Istana Plaza has 220 retail tenants based on Current Leases.
The tenant profile of the mall comprises a diverse set of tenants from a wide variety of
industries. The mall is anchored by Matahari Department Store, which occupies 17.6%
of the mall’s total NLA. In addition, it is the only mall in its catchment area with a Nokia
Professional Centre and a Hewlett-Packard Centre.
The old ice skating rink was removed to make way for 684 sq m of retail space. The
existing food court was also extended to house more operators and seating capacity.
The new rentals were Rp.215,000 per sq m per month compared to Rp.61,000 per sq
m per month for the old ice skating rink.
As at 30 September 2012, the mall enjoys an occupancy rate of 99.7%.
(8) Sun Plaza
Sun Plaza, aggregating a total NLA of 63,817 sq m as at 30 September 2012, is the
biggest up-market shopping centre in Medan, the capital of North Sumatra Province and
the third most populous city in Indonesia. The mall is located amidst Medan commercial
district with prominent landmarks such as the governor’s office, foreign embassies and
major banks are located within the vicinity. Anchored by Sogo Department Store and
Hypermart, it is also home to 411 exclusive tenants including international brands such
as Breadtalk, Starbucks, Pizza Hut, Sushi Tei, Mango and Body Shop. The Property has
a committed occupancy of 99.6% as at 30 September 2012. Sun Plaza provides all
classes of shoppers in Medan with a one-stop shopping, dining and entertainment
destination.
(9) Pluit Village
Pluit Village, aggregating a total NLA of 87,213 sq m as at 30 September 2012, is a
five-level retail mall located in North Jakarta with parking lots comprising 1,581 car lots
and 1,860 motorcycle lots. It is located in close proximity and surrounded by affluent
residential estates and apartments with a Chinese ethnic majority. As at 30 September
2012, there are 225 tenants in Pluit Village, including well known international and
domestic retailers and brand names such as Matahari Department Store, Gramedia
Bookstore, J.Co Donut, Body Shop, Best Denki and FJ Square. Completed in 1996,
Pluit Village had undergone refurbishment works which was completed in September
2009.
B-14
(10) Plaza Medan Fair
Plaza Medan Fair is a four-level retail mall with one basement level located in Medan,
North Sumatra, which is the third most populous city in Indonesia after Jakarta and
Surabaya. As at 30 September 2012, Plaza Medan Fair has an NLA of 56,029 sq m, with
parking lots comprising 1,055 car lots and 1,300 motorcycle lots and 466 tenants.
Completed in 2004, Plaza Medan Fair’s 442 tenants include well known international
and domestic retailers and brand names such as Carrefour, Matahari Department Store,
Electronic City, Timezone and Karisma Bookstore. Plaza Medan Fair is strategically
located in the shopping and business district of Medan, surrounded by residences and
within walking distance to famous hotels in town.
RETAIL SPACES
(1) Mall WTC Matahari Units
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 over 1,700 hectares.
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 hectares with currently 1,500 hectares 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 25.4% of the total NLA of Mall WTC Matahari as at 30
September 2012. The Mall WTC Matahari Units are currently utilised as a department
store, hypermarket and entertainment and game centre.
(2) Metropolis Town Square Units
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.
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.
B-15
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 32.9% of the total NLA of Metropolis Town Square as at 30
September 2012. The Metropolis Town Square Units are currently utilised as a
department store, hypermarket and entertainment and games centre.
(3) Depok Town Square Units
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 1.8 million in 2010 and has shown strong population
growth, averaging 5% per annum since 2003. 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 35.3% of the total NLA of Depok Town Square as of 30 September
2012. The Depok Town Square Units are currently utilised as a department store,
hypermarket and entertainment and games centre.
(4) Java Supermall Units
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 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 48.3% of the total NLA
of Java Supermall as of 30 September 2012. The Java Supermall Units are currently
utilised as a department store and supermarket.
(5) Malang Town Square Units
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).
B-16
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 48.3% of the total NLA of Malang Town Square as of
30 September 2012. The Malang Town Square Units are currently utilised as a
department store, hypermarket and entertainment and games centre.
(6) Plaza Madiun
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.
Plaza Madiun, aggregating a total NLA of 19,029 sq m as at 30 September 2012, is
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.
(7) Grand Palladium Medan Units
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
B-17
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 54.9% of the total NLA of Grand
Palladium Medan as at 30 September 2012. The Grand Palladium Medan Units are
currently utilised as a department store, hypermarket and entertainment and games
centre.
The table below sets out selected information about the September 2012 Retail Malls.
VALUATION OF RETAIL MALL PEJATEN VILLAGE JALAN WARUNG JATI BARAT NO. 39 JATI PADANG SUB DISTRICT, PASAR MINGGU DISTRICT, SOUTH JAKARTA REGION, DKI JAKARTA PROVINCE, INDONESIA
Dear Sir/Madam, Following instruction of HSBC Institutional Trust Service (Singapore) Ltd ("HSBC") as trustee of Lippo
Malls Indonesia Retail Trust (“LMIRT”) under contract No. RHP-Ct/1-P/IV/2012-038 dated 17 April
2012 to advise on the Market Value of Pejaten Village located at Jalan Warung Jati Barat No. 39,
Jati Padang Sub District, Pasar Minggu District, South Jakarta Region, DKI Jakarta Province,
Indonesia; we hereby declare that we have completed our inspection and analysis, and submit the
attached valuation certificate for your consideration.
This assignment has been carried out by KJPP Rengganis, Hamid & Partner-KJPP RHP (previously PT
Heburinas Nusantara) an independent valuation firm registered in Indonesian Society of Appraisers
(Masyarakat Profesi Penilai Indonesia). Effective on 1 March 2011, KJPP-RHP has established a
strategic alliance with CB Richard Ellis, a global property services company. KJPP-RHP is provided
with a business permit from the Ministry of Finance and registered in Bapepam (Securities Exchange
Commission “SEC”). Partners of KJPP-RHP have been registered in the Ministry of Finance and SEC.
We understand that the purpose of this valuation is to give an independent opinion on Market Value
of the subject property for potential REITs acquisition.
D-4
VALUATION & ADVISORY SERVICES ii
Basis of Valuation
The International and Indonesian Valuation Standard (Standar Penilaian Indonesia) defined Market
Value as follows :
“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 “. (SPI.1.3.1)
We understand that the market of the property is transacted in Rupiah currency; therefore, we have
valued the property on Rupiah currency. We advise that the use of currency other than stated in this
report is not applicable. However, for your information only, the exchange rate at the date of
valuation is US $1= Rp9,480/- (middle rate).
We advise that the market value opinion is without regard to costs of sale or purchase and without
offset of any associated taxes.
Assumption of Valuation
1. The value that stated in this report is restricted to the purpose of this valuation. The value that
stated in this valuation report cannot be used for other valuation purpose which can be
mistakenly quoted.
2. The title of the subject property is assumed to be good marketable title and free and clear from
all liens and encumbrances, easements, restriction, or limitation. We did not make any space
measurement and we assumed that the situation drawing contained in the certificates and/or
provided by the Client is true and accurate.
3. The subject property is managed professionally and competently.
4. This valuation certificate depends on the terms, conditions, comments and details as stated in
the full report.
Approach of Valuation
Market Value
Ideally the Market Value should be based on market evidence using normal arm’s length
transaction of similar property. However, we have found no direct comparable evidence of the
subject property in similar vicinity within close period of time that can be used as comparable in the
market comparison approach. In this valuation, we have used income approach to replicate an
investor’s point of view in acquiring an income producing property where earning capability is the
critical element affecting property value. In the income approach, we analyses the subject property’s
capacity to generate future benefits and capitalizes the net income into an indication of present
value.
Income Approach – DCF method
We have utilized the DCF analysis in this income approach valuation by making consideration of
probable income and expenses over the designation projection period (holding period), which is
different between BOT properties and non-BOT properties. In this DCF analysis, we have set forth
D-5
VALUATION & ADVISORY SERVICES iii
forecasts of income, expenses and changes in occupancy rate and capital expenditure over the
projection period, and the terminal value is also be estimated. Therefore, we have made several
assumptions including market rental rate, rental annual growth for each tenancy, occupancy rate,
related operating expenses, replacement allowance, and CAPEX established on analysis of historical
data and prospective market conditions.
Shopping malls under BOT agreement is classified as leasehold interest and will expire in
accordance with the BOT tenure, therefore the holding period is determined by the remaining BOT
period, with no terminal value. We also have calculated the annual sinking fund which will
recapture the capital outlay at the end of BOT period.
The discount rate used in converting the projection of NOI will be slightly higher than the rate used
in the non-BOT shopping malls to reflect its leasehold nature.
Source of Information
We have been provided by the Client with copy of land title certificates, summary of tenancy
schedule, copy of several lease agreements, copy of building permit letter, copy of property tax, and
others related documents. We have assumed these are true and correct.
Confidentially and Disclaimers
In accordance with our normal practice we confirm that this report is confidential to the parties for
the specific purpose to which it refers. No responsibility is accepted regarding any third party, and
neither the whole of the report nor any part or reference there to may be published in any
document, statement or circular, nor in any communication with third parties without our prior
written approval of the form and context in which it will appear.
VALUATION OF RETAIL MALL BINJAI SUPER MALL JALAN SOEKARNO HATTA NO. 14 TIMBANG LANGKAT SUB DISTRICT, EAST BINJAI DISTRICT, BINJAI CITY, NORTH SUMATRA PROVINCE, INDONESIA
Dear Sir/Madam, Following instruction of HSBC Institutional Trust Service (Singapore) Ltd ("HSBC") as trustee of Lippo
Malls Indonesia Retail Trust (“LMIRT”) under contract No. RHP-Ct/1-P/IV/2012-038 dated 17 April
2012 to advise on the Market Value of Binjai Super Mall located at Jalan Soekarno Hatta No. 14,
Timbang langkat Sub District, East Binjai District, Binjai City, North Sumatera Province, Indonesia;
we hereby declare that we have completed our inspection and analysis, and submit the attached
valuation certificate for your consideration.
This assignment has been carried out by KJPP Rengganis, Hamid & Partner-KJPP RHP (previously PT
Heburinas Nusantara) an independent valuation firm registered in Indonesian Society of Appraisers
(Masyarakat Profesi Penilai Indonesia). Effective on 1 March 2011, KJPP-RHP has established a
strategic alliance with CB Richard Ellis, a global property services company. KJPP-RHP is provided
with a business permit from the Ministry of Finance and registered in Bapepam (Securities Exchange
Commission “SEC”). Partners of KJPP-RHP have been registered in the Ministry of Finance and SEC.
We understand that the purpose of this valuation is to give an independent opinion on Market Value
of the subject property for potential REITs acquisition.
D-10
VALUATION & ADVISORY SERVICES ii
Basis of Valuation
The International and Indonesian Valuation Standard (Standar Penilaian Indonesia) defined Market
Value as follows :
“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 “. (SPI.1.3.1)
We understand that the market of the property is transacted in Rupiah currency; therefore, we have
valued the property on Rupiah currency. We advise that the use of currency other than stated in this
report is not applicable. However, for your information only, the exchange rate at the date of
valuation is US $1= Rp9,480/- (middle rate).
We advise that the market value opinion is without regard to costs of sale or purchase and without
offset of any associated taxes.
Assumption of Valuation
1. The value that stated in this report is restricted to the purpose of this valuation. The value that
stated in this valuation report cannot be used for other valuation purpose which can be
mistakenly quoted.
2. The title of the subject property is assumed to be good marketable title and free and clear from
all liens and encumbrances, easements, restriction, or limitation. We did not make any space
measurement and we assumed that the situation drawing contained in the certificates and/or
provided by the Client is true and accurate.
3. The subject property is managed professionally and competently.
4. This valuation certificate depends on the terms, conditions, comments and details as stated in
the full report.
Approach of Valuation
Market Value
Ideally the Market Value should be based on market evidence using normal arm’s length
transaction of similar property. However, we have found no direct comparable evidence of the
subject property in similar vicinity within close period of time that can be used as comparable in the
market comparison approach. In this valuation, we have used income approach to replicate an
investor’s point of view in acquiring an income producing property where earning capability is the
critical element affecting property value. In the income approach, we analyses the subject property’s
capacity to generate future benefits and capitalizes the net income into an indication of present
value.
Income Approach – DCF method
We have utilized the DCF analysis in this income approach valuation by making consideration of
probable income and expenses over the designation projection period (holding period), which is
different between BOT properties and non-BOT properties. In this DCF analysis, we have set forth
D-11
VALUATION & ADVISORY SERVICES iii
forecasts of income, expenses and changes in occupancy rate and capital expenditure over the
projection period, and the terminal value is also be estimated. Therefore, we have made several
assumptions including market rental rate, rental annual growth for each tenancy, occupancy rate,
related operating expenses, replacement allowance, and CAPEX established on analysis of historical
data and prospective market conditions.
Shopping malls under BOT agreement is classified as leasehold interest and will expire in
accordance with the BOT tenure, therefore the holding period is determined by the remaining BOT
period, with no terminal value. We also have calculated the annual sinking fund which will
recapture the capital outlay at the end of BOT period.
The discount rate used in converting the projection of NOI will be slightly higher than the rate used
in the non-BOT shopping malls to reflect its leasehold nature.
Source of Information
We have been provided by the Client with copy of land title certificates, summary of tenancy
schedule, copy of several lease agreements, copy of building permit letter, copy of property tax, and
others related documents. We have assumed these are true and correct.
Confidentially and Disclaimers
In accordance with our normal practice we confirm that this report is confidential to the parties for
the specific purpose to which it refers. No responsibility is accepted regarding any third party, and
neither the whole of the report nor any part or reference there to may be published in any
document, statement or circular, nor in any communication with third parties without our prior
written approval of the form and context in which it will appear.
as at 30 June 2012 Property Brief The subject property is Binjai
Super Mall (BSM) with total net
leasable area of 23,022 square
meters (excluding casual leasing
area of about 654 square
meters).
Location BSM is located at Jalan Soekarno
Hatta No. 14, Timbang langkat
Sub District, East Binjai District,
Binjai City, North Sumatera
Province, Indonesia. It is on the
south side of Jalan Soekarno Hatta
and north side of Jalan Soekarno
Hatta and or within radius of:
About 800 meters to west
from Binjai City Rail Station;
About 1 kilometer to the
southwest from downtown of
Binjai City;
About 1.7 kilometers to the
southwest from Mayor Office
of Binjai City;
Site Detail and Tenure
The site is like rectangular in shape with land
area of about 13,267 square meters. It is
generally flat and is higher than the fronting
road.
Based on the photocopy of the land title
document provided by BSM, we understand that
the BSM is covered under 1 (one) Leasehold
Certificate (Hak Guna Bangunan Certificate –
“SHGB”) No. 93, registered under the name of PT
Trias Mitra Investama. It was issued in Binjai on
17 September 2012 and will be expired on 2
September 2016. The land area is about 13,267
square meters as stated by Gambar Situasi No.
03/Timbang Langkat/2012 dated 17 September
2012.
Building Description
BSM is a 3-storey shopping center. The gross
floor area is about 37,271 square meters with
net leasable area of about 23,022 square
meters (excluding casual leasing area of about
654 square meters). The parking capacity is 591
lots for car and 850 for motor cycle.
IDR247,000,000,000/-
(TWO HUNDRED FORTY
SEVEN BILLION RUPIAHS)
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F-2
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that an EXTRAORDINARY GENERAL MEETING of Lippo Malls
Indonesia Retail Trust (“LMIR Trust”) will be held on 13 December 2012 at 2.00 p.m. at Mandarin
Orchard Singapore, Mandarin Ballroom 1, Level 6, Main Tower, Singapore 238867, for the
purpose of considering and, if thought fit, passing, with or without modifications, the following
resolutions:
ORDINARY RESOLUTIONS
1. ACQUISITION OF PEJATEN VILLAGE FROM AN INTERESTED PERSON
That subject to and contingent upon the passing of Resolution 3:
(i) approval be and is hereby given for the acquisition of Pejaten Village by LMIR Trust
through the acquisition of the entire issued share capital of PT Panca Permata Pejaten
(“PPP”), at the purchase consideration and other terms and conditions described in the
circular dated 26 November 2012 issued by LMIRT Management Ltd. (in its capacity as
manager of LMIR Trust) (the “Manager”) to holders of units in LMIR Trust
(“Unitholders” and the circular issued to Unitholders, the “Circular”) (the “Pejaten
Village Acquisition”), and for payment of all fees and expenses relating to the Pejaten
Village Acquisition (as described in the Circular), such acquisition being an “interested
person transaction” (as defined in the Listing Manual of Singapore Exchange Securities
Trading Limited, the “Listing Manual”) as well as an “interested party transaction” (as
defined in Appendix 2 of the Code on Collective Investment Schemes issued by the
Monetary Authority of Singapore in relation to real estate investment trusts);
(ii) approval be and is hereby given for LMIR Trust to take over the Related Tenancy
Agreements (as defined in the Circular) in relation to Pejaten Village upon the
completion of the Pejaten Village Acquisition; and
(iii) the Manager, any director of the Manager and HSBC Institutional Trust Services
(Singapore) Limited (in its capacity as trustee of LMIR Trust) (the “Trustee”) be and are
hereby severally authorised to complete and do all such acts and things (including
executing all such documents as may be required) as the Manager, such director of the
Manager or, as the case may be, the Trustee may consider expedient or necessary or
in the interests of LMIR Trust to give effect to the Pejaten Village Acquisition.
2. ACQUISITION OF BINJAI SUPERMALL FROM AN INTERESTED PERSON
That subject to and contingent upon the passing of Resolution 3:
(i) approval be and is hereby given for the acquisition of Binjai Supermall by LMIR Trust,
at the purchase consideration and other terms and conditions described in the Circular
issued by the Manager to Unitholders (the “Binjai Supermall Acquisition”), and for
payment of all fees and expenses relating to the Binjai Supermall Acquisition (as
described in the Circular), such acquisition being an “interested person transaction” (as
defined in the Listing Manual as well as an “interested party transaction” (as defined in
Appendix 2 of the Code on Collective Investment Schemes issued by the Monetary
Authority of Singapore in relation to real estate investment trusts);
(ii) approval be and is hereby given for LMIR Trust to take over the Related Tenancy
Agreements (as defined in the Circular) in relation to Binjai Supermall upon the
completion of the Binjai Supermall Acquisition; and
G-1
(iii) the Manager, any director of the Manager and the Trustee be and are hereby severally
authorised to complete and do all such acts and things (including executing all such
documents as may be required) as the Manager, such director of the Manager or, as the
case may be, the Trustee may consider expedient or necessary or in the interests of
LMIR Trust to give effect to the Binjai Supermall Acquisition.
3. THE WHITEWASH RESOLUTION
That subject to the conditions in the letter from the Securities Industry Council dated 9
November 2012 being fulfilled, the Unitholders, other than PT. Lippo Karawaci Tbk, the
sponsor of LMIR Trust (the “Sponsor”), parties acting in concert with the Sponsor and parties
which are not independent of the Sponsor, hereby (on a poll taken) waive their rights to
receive a mandatory offer from the Sponsor and parties acting in concert with the Sponsor,
which includes any of the associates (including LMIRT Management Ltd.), for all the Units not
already owned by the Sponsor and parties acting in concert with the Sponsor, in the event
that they incur a mandatory bid obligation pursuant to Rule 14 of The Singapore Code on
Take-overs and Mergers as a result of the receipt of the acquisition fee which is required to
be paid to the Manager in Units pursuant to paragraph 5.6 of the Property Funds Appendix
(“Acquisition Fee Units”), in respect of (i) the acquisition of Pluit Village (the “Pluit Village
Acquisition”), and (ii) the Pejaten Village Acquisition and the Binjai Supermall Acquisition,
as these are acquisitions from interested parties (as defined in the Property Funds
Appendix).
BY ORDER OF THE BOARD
LMIRT Management Ltd.
(Company Registration No. 200707703M)
(as manager of Lippo Malls Indonesia Retail Trust)
Tan San-Ju
Elizabeth Krishnan
Company Secretaries
Singapore
26 November 2012
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IMPORTANT: PLEASE READ THE NOTES TO PROXY FORM BELOW
Notes to Proxy Form
1. A unitholder of Lippo Malls Indonesia Retail Trust (“LMIR Trust” and a unitholder of LMIR Trust, “Unitholder”)
entitled to attend and vote at the Extraordinary General Meeting is entitled to appoint one or two proxies to attend
and vote in his stead.
2. Where a Unitholder appoints more than one proxy, the appointments shall be invalid unless he specifies the
proportion of his holding (expressed as a percentage of the whole) to be represented by each proxy.
3. A proxy need not be a Unitholder.
4. A Unitholder should insert the total number of units in LMIR Trust (“Units”) held. If the Unitholder has Units entered
against his name in the Depository Register maintained by The Central Depository (Pte) Limited (“CDP”), he should
insert that number of Units. If the Unitholder has Units registered in his name in the Register of Unitholders of LMIR
Trust, he should insert that number of Units. If the Unitholder has Units entered against his name in the said
Depository Register and registered in his name in the Register of Unitholders, he should insert the aggregate
number of Units. If no number is inserted, this form of proxy will be deemed to relate to all the Units held by the
Unitholder.
5. The instrument appointing a proxy or proxies (the “Proxy Form”) must be deposited at the Unit Registrar’s
registered office at 50 Raffles Place, #32-01 Singapore Land Tower, Singapore 048623, not less than 48 hours
before the time set for the Extraordinary General Meeting.
6. The Proxy Form must be executed under the hand of the appointor or of his attorney duly authorised in writing.
Where the Proxy Form is executed by a corporation, it must be executed either under its common seal or under the
hand of its attorney or a duly authorised officer.
7. Where the Proxy Form is signed on behalf of the appointor by an attorney or a duly authorised officer, the power
of attorney or a duly certified copy thereof must (failing previous registration with LMIRT Management Ltd., as
manager of LMIR Trust (the “Manager”)) be lodged with the Proxy Form, failing which the Proxy Form may be
treated as invalid.
8. The Manager and/or the Unite Registrar shall be entitled to reject a Proxy Form which is incomplete, improperly
completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the
appointor specified on the Proxy Form. In addition, in the case of Units entered in the Depository Register, the
Manager and/or the Unit Registrar may reject a Proxy Form if the Unitholder, being the appointor, is not shown to
have Units entered against his name in the Depository Register as at 48 hours before the time appointed for holding
the Extraordinary General Meeting, as certified by CDP to the Manager.
9. All Unitholders will be bound by the outcome of the Extraordinary General Meeting regardless of whether they have
attended or voted at the Extraordinary General Meeting.
10. At any meeting, a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is
(before or on the declaration of the result of the show of hands) demanded by the Chairman or by five or more
Unitholders present in person or by proxy, or holding or representing one-tenth in value of the Units represented at
the meeting. Unless a poll is so demanded, a declaration by the Chairman that such a resolution has been carried
or carried unanimously or by a particular majority or lost shall be conclusive evidence of the fact without proof of the
number or proportion of the votes recorded in favour of or against such resolution.
11. On a show of hands, every Unitholder who (being an individual) is present in person or by proxy or (being a
corporation) is present by one of its officers as its proxy shall have one vote. On a poll, every Unitholder who is
present in person or by proxy shall have one vote for every Unit of which he is the Unitholder. A person entitled to
more than one vote need not use all his votes or cast them the same way.
LIPPO MALLS INDONESIA RETAIL TRUST(Constituted in the Republic of Singapore pursuant
to a trust deed dated 8 August 2007 (as amended))
PROXY FORM
EXTRAORDINARY GENERAL MEETING
IMPORTANT
1. For investors who have used their CPF money to
buy units in Lippo Malls Indonesia Retail Trust,
this Circular is forwarded to them at the request
of their CPF Approved Nominees and is sent
FOR INFORMATION ONLY.
2. This Proxy Form is not valid for use by CPF
Investors and shall be ineffective for all intents
and purposes if used or is purported to be used
by them.
3. PLEASE READ THE NOTES TO THE PROXY
FORM.
I/We (Name)
of (Address)
being a unitholder/unitholders of Lippo Malls Indonesia Retail Trust (“LMIR Trust”), hereby appoint:
Name Address
NRIC/Passport
Number
Proportion of
Unitholdings
No. of Units %
and/or (delete as appropriate)
Name Address
NRIC/Passport
Number
Proportion of
Unitholdings
No. of Units %
or, both of whom failing, the Chairman of the Extraordinary General Meeting as my/our proxy/proxies toattend and to vote for me/us on my/our behalf and if necessary, to demand a poll, at the ExtraordinaryGeneral Meeting of LMIR Trust to be held on 13 December 2012 at 2.00 p.m. at Mandarin Orchard Singapore,Mandarin Ballroom 1, Level 6, Main Tower, Singapore 238867 and any adjournment thereof. I/We directmy/our proxy/proxies to vote for or against the resolutions to be proposed at the Extraordinary GeneralMeeting as indicated hereunder. If no specific direction as to voting is given, the proxy/proxies will vote orabstain from voting at his/their discretion, as he/they will on any other matter arising at the ExtraordinaryGeneral Meeting.
Resolutions
To be used ona show of hands
To be used inthe event of a poll
For * Against *No. of Votes
For **No. of Votes
Against **
1 To approve the acquisition ofPejaten Village from an InterestedPerson (Ordinary Resolution)(Conditional upon Resolution 3being passed)
2 To approve the acquisition of BinjaiSupermall from an InterestedPerson (Ordinary Resolution)(Conditional upon Resolution 3being passed)
3 To approve the WhitewashResolution (Ordinary Resolution)
* If you wish to exercise all your votes “For” or “Against”, please tick (�) within the box provided.
** If you wish to exercise all your votes “For” or “Against”, please tick (�) within the box provided. Alternatively, pleaseindicate the number of votes as appropriate.
