8f8721e3-f7a9-4bb5-9b6e-c4d9b0abd300.pdf



(Constituted in the Republic of Singapore pursuant to a trust deed dated 8 August 2007 (as amended))


ANNOUNCEMENT PROPOSED ACQUISITION

Unless otherwise indicated in this announcement, all conversions from Rupiah amounts into Singapore Dollar amounts in this announcement are based on an illustrative exchange rate of S$1.00 to Rp.9.800.

  1. INTRODUCTION


    1. Lippo Mall Kuta


      LMIRT Management Ltd., in its capacity as manager of Lippo Malls Indonesia Retail Trust ("LMIR Trust" and as manager of LMIR Trust, the "Manager"), is pleased to announce that LMIR Trust, through Kuta1 Holdings Pte. Ltd. ("Kuta1"), a company incorporated in Singapore and an indirect wholly-owned subsidiary of LMIR Trust, has on 8 January 2016 entered into a conditional sale and purchase agreement (the "Property CSPA") with PT Pamor Paramita Utama ("PT PPU"), a limited liability company incorporated in Indonesia and an indirect wholly-owned subsidiary of PT Lippo Karawaci Tbk, the sponsor of LMIR Trust (the "Sponsor"), for the acquisition of the property known as "Lippo Mall Kuta", a three-storey retail mall which is located in Kuta, Bali with postal address Jalan Kartika Plaza, Lingkungan Segara, Kuta, Bali, Indonesia ("LM Kuta", and the proposed acquisition of LM Kuta, the "LM Kuta Acquisition").

      As Indonesian Agrarian Law does not allow a foreign entity or individual to directly own Indonesian real estate under a "Right to Build" (Hak Guna Bangunan or "HGB") title, the Property CSPA provides that Kuta1 has the right to nominate an Indonesian company to enter into a conditional sale and purchase agreement with PT PPU on the same terms as that of the Property CSPA (the "New Property CSPA"), and upon such entry, Kuta1 and PT PPU will enter into a termination agreement (the "Termination Agreement") to terminate the Property CSPA.

      For the avoidance of doubt, the Indonesian company which Kuta1 intends to nominate to enter into the New Property CSPA will be a new Indonesian foreign investment limited liability company that will be incorporated ("IndoCo") and which will be wholly-owned by Kuta1 and Kuta1's wholly-owned subsidiary, Kuta2 Investments Pte. Ltd. ("Kuta2"), a company incorporated in Singapore. Kuta1 and Kuta2 will respectively own 75.0% and 25.0% of the issued share capital of IndoCo.

      The total cost of the LM Kuta Acquisition, comprising (i) the purchase consideration of LM

      Kuta of Rp.800.0 billion (S$81.6 million)1 (the "LM Kuta Purchase Consideration"), (ii) the value-added tax (Pajak Pertambahan Nilai) for the LM Kuta Acquisition ("VAT") of Rp.76.2 billion (S$7.8 million)2, (iii) the acquisition fee of S$0.8 million in relation to the LM Kuta Acquisition which is payable in units of LMIR Trust ("Units") to the Manager pursuant to Clause 15.2.1 of the trust deed of LMIR Trust dated 8 August 2007 (as amended) (the "Trust Deed") (the "LM Kuta Acquisition Fee")3 as well as (iv) the professional and other fees and expenses of approximately S$2.5 million in connection with the LM Kuta Acquisition, is estimated to be approximately S$92.7 million (the "Total LM Kuta Acquisition Cost").

      The LM Kuta Purchase Consideration will be paid in cash. The Manager proposes to finance the cash portion of the Total LM Kuta Acquisition Cost from the proceeds raised from issuance of bonds and/or debt financing facilities from banks. Further details in respect of the structure of the LM Kuta Acquisition are set out at paragraph 3 below.

      In relation to the LM Kuta Acquisition, it is currently intended that upon completion of the LM Kuta Acquisition, IndoCo will enter into the following leases:

      1. a car park lease agreement with PT Trimulia Kencana Abadi (a limited liability company incorporated in Indonesia and a subsidiary of PT PPU) ("Car Park Lease Agreement");

      2. a casual leasing space lease agreement with PT Kencana Agung Pratama (a limited liability company incorporated in Indonesia and a subsidiary of PT PPU) ("Casual Leasing Space Lease Agreement"); and

      3. specialty tenants lease agreements over certain specialty areas and food court area with PT Kridakarya Anugerah Utama (a limited liability company incorporated in Indonesia and a subsidiary of PT PPU) ("Specialty Tenants Lease Agreements"),

        (collectively, the "LM Kuta Master Lease Agreements").


        The leases pursuant to the LM Kuta Master Lease Agreements (the "LM Kuta Master Leases", together with the LM Kuta Acquisition, the "Transactions") are intended to be granted for a lease term of five years each, commencing from the date of completion of the LM Kuta Acquisition.

      4. Hotel Construction


        In addition, there is currently a hotel ("Hotel") which is being constructed on top of LM Kuta by PT PPU and which is currently expected to be completed by 2018 (the "Hotel Construction"). Pursuant to the Property CSPA, PT PPU shall continue the Hotel Construction and upon the completion of the Hotel Construction, IndoCo and PT PPU shall negotiate in good faith in relation to the potential acquisition of the Hotel by IndoCo. Should the Manager decide to purchase the Hotel, the terms and conditions of such acquisition will be announced at the appropriate time and the approval of unitholders of LMIR Trust


        1. For the avoidance of doubt, the LM Kuta Purchase Consideration is inclusive of the applicable land and building acquisition tax (Bea Perolehan Hak Atas Tanah dan Bangunan) ("BPHTB") to be paid to the relevant tax office.

        2. Reimbursement of the VAT will be sought from the relevant tax office post-completion of the LM Kuta Acquisition.

        3. As the LM Kuta Acquisition will constitute an Interested Party Transaction (as defined herein) under Appendix 6 of the Code on Collective Investment Schemes (the "Property Funds Appendix") issued by the Monetary Authority of Singapore (the "MAS"), the LM Kuta Acquisition Fee payable to the Manager will be in the form of Units (the "LM Kuta Acquisition Fee Units"), which shall not be sold within one year from the date of issuance, in accordance with Paragraph

          5.6 of the Property Funds Appendix.

          ("Unitholders") will be sought. In the event that IndoCo decides not to acquire the Hotel, PT PPU and IndoCo shall agree on the terms and conditions upon which the management and operation of the Hotel by PT PPU will be carried and such management and operation shall not affect the rights of IndoCo in relation to LM Kuta.


        4. RATIONALE FOR THE LM KUTA ACQUISITION


          The Manager believes that the LM Kuta Acquisition will bring the following key benefits to Unitholders as set out below:

          1. Strategically Located Mall with Organic Growth Potential


            LM Kuta is a lifestyle mall strategically located in Bali that is proposed to be integrated with a premium 180-room hotel. Bali is a leading tourist destination in Indonesia, famous for its local traditions, culture and nightlife. The island welcomed 3.8 million foreign tourists in 2014, an increase of 14.9% on 2013. Tourist arrivals are projected to increase due to improvements in air and road connectivity to the island, such as the establishment of new air routes to Mainland China and the Middle East.

            LM Kuta provides a wide range of products and services covering daily needs, fashion, entertainment and F&B for families and tourists as it positions itself as a new lifestyle icon in Bali. Its tenants include a variety of international and local brands, such as Nike, Bata, Quiksilver, Planet Sports, Amazing Kuta, Matahari Department Store, Cinemaxx and many more.

            LM Kuta is currently undergoing an asset enhancement initiative ("AEI") whereby the existing Hypermart is reconfigured and will be leased out to specialty stores such as Foodmart, Cinemaxx and F&B Specialty. The AEI is expected to rejuvenate and add variety to the existing trade mix of the shopping destination.

          2. Opportunity to Increase the Size and Enhance the Earnings of LMIR Trust


            Based on the pro forma financial statements for the financial year ended 31 December 2014, the Net Property Income4 contribution from LM Kuta was S$7.3 million, which represents, on a historical pro forma basis, a 5.8% increase in LMIR Trust's Net Property Income for the financial year ended 31 December 2014, thereby enhancing the earnings of LMIR Trust, and returns to Unitholders. Further, upon the completion of the LM Kuta Acquisition, the size of LMIR Trust's portfolio is expected to increase by approximately 4.5%, from S$1,796.9 million5 (as at 30 September 2015) to S$1,878.5 million.

          3. Increased Economies of Scale in Operations, Marketing and Financing


            The LM Kuta Acquisition 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 Portfolio6 can potentially spread certain operating costs


            1. "Net Property Income" consists of property revenue less property operating expenses.


            2. Includes intangible asset of S$23.5 million.


            3. "Enlarged Portfolio" consists of LM Kuta and LMIR Trust's existing portfolio.

              4. (for example, staff and personnel costs) over a larger portfolio, and increase their bargaining power with suppliers and service providers.

              The LM Kuta Acquisition is also 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 LM Kuta which are currently not tenants of LMIR Trust's existing malls. Given the LM Kuta Acquisition will enlarge LMIR Trust's asset value and capital base, LMIR Trust can expect to benefit from increased economies of scale in obtaining debt and equity financing.

            4. Diversification of Asset Portfolio to Minimise Concentration Risk


              The LM Kuta Acquisition will allow LMIR Trust to diversify its portfolio geographically across Indonesia, thereby reducing asset concentration risks within LMIR Trust's Enlarged Portfolio. The Manager believes that further income diversification potentially results in greater resilience and stability of income streams for LMIR Trust, thus benefiting its Unitholders.


            5. THE LM KUTA ACQUISITION


              1. Description of LM Kuta


                LM Kuta is part of a six-storey mixed-use development comprising a retail mall component and a hotel that is being constructed. LM Kuta is a three-level retail mall (including a basement level) with a net lettable area of 21,132 sq m located in Kuta, Bali bearing the postal address Jalan Kartika Plaza, Lingkungan Segara, Kuta, Bali, Indonesia. LM Kuta was completed in 2013 and commenced operations in the same year. It is a lifestyle mall strategically located in Bali, which provides a range of products and services covering daily needs, fashion, entertainment and F&B for families and tourists as it positions itself as a lifestyle icon in Bali. Its tenants include a variety of international and local brands, such as Nike, Bata, Quiksilver, Planet Sports, Amazing Kuta, Matahari Department Store and Cinemaxx.

              2. Structure of the LM Kuta Acquisition


                3. The Manager is seeking to acquire LM Kuta from PT PPU for the LM Kuta Purchase Consideration of Rp.800.0 billion (S$81.6 million).

                As Indonesian Agrarian Law does not allow a foreign entity or individual to directly own Indonesian real estate under a HGB title, the Property CSPA provides that Kuta1 has the right to nominate an Indonesian company to enter into the New Property CSPA, and upon such entry, Kuta1 and PT PPU will enter into the Termination Agreement to terminate the Property CSPA.

                For the avoidance of doubt, the Indonesian company which Kuta1 intends to nominate to enter into the New Property CSPA will be IndoCo, a new Indonesian foreign investment limited liability company that will be incorporated and which will be wholly-owned by Kuta1 and Kuta2. Kuta1 and Kuta2 will respectively own 75.0% and 25.0% of the issued share capital of IndoCo.

                Pursuant to the Property CSPA, for three years commencing from the completion of the LM Kuta Acquisition, PT PPU shall collect all service charges and utilities recoveries and other

              LMIR - Lippo-Mapletree Indonesia Retail Trust issued this content on 2016-01-08 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 2016-01-08 13:22:08 UTC

              Original Document: http://lmir.listedcompany.com/newsroom/20160108_205948_D5IU_NHF4XCCASG1RIP1I.1.pdf