IMPORTANT NOTICE

THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE OUTSIDE OF THE UNITED STATES

IMPORTANT: You must read the following disclaimer before continuing. The following applies to this Offering Memorandum (the “Offering Memorandum”), and you are therefore advised to read this carefully before reading, accessing or making any other use of this Offering Memorandum. In accessing this Offering Memorandum, you agree to be bound by the following terms and conditions, including any modifications to them, any time you receive any information as a result of such access. You acknowledge that access to this Offering Memorandum is intended for use by you only and you agree that you will not forward or otherwise provide access to any other person.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE OR SOLICITATION IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS.

THIS OFFERING MEMORANDUM MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS OFFERING MEMORANDUM IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAW OF OTHER JURISDICTIONS. ANY INVESTMENT DECISION SHOULD BE MADE ON THE BASIS OF THE FINAL TERMS AND CONDITIONS OF THE SECURITIES. IF YOU HAVE GAINED ACCESS TO THIS TRANSMISSION CONTRARY TO ANY OF THE FOREGOING RESTRICTIONS, YOU ARE NOT AUTHORIZED AND WILL NOT BE ABLE TO PURCHASE ANY OF THE SECURITIES DESCRIBED HEREIN.

Confirmation of Your Representation: In order to be eligible to view this Offering Memorandum or make an investment decision with respect to the securities, investors must be outside of the United States and to the extent you purchase securities described in the attached Offering Memorandum, you will be doing so pursuant to Regulation S under the Securities Act. This Offering Memorandum is being sent at your request and by accepting the e-mail and accessing this Offering Memorandum, you shall be deemed to have represented to us that (1) you and any customers you represent are outside of the United States and (2) you consent to delivery of this Offering Memorandum by electronic transmission.

You are reminded that this Offering Memorandum has been delivered to you on the basis that you are a person into whose possession this Offering Memorandum may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located. If this is not the case, you must return this Offering Memorandum to us immediately. You may not, nor are you authorized to, deliver or disclose the contents of this Offering Memorandum to any other person.

The materials relating to this offering do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that this offering be made by a licensed broker or dealer and the lead managers or any affiliate of the lead managers is a licensed broker or dealer in that jurisdiction, this offering shall be deemed to be made by the lead managers or such affiliate on behalf of the Issuer in such jurisdiction.

This Offering Memorandum has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently none of the Issuer, the Guarantor, BNP Paribas (“BNP Paribas”), CIMB Bank Berhad, acting through its Singapore Branch (“CIMB”), Credit Suisse (Singapore) Limited (“Credit Suisse”), or Deutsche Bank AG, Singapore Branch (“Deutsche Bank”) nor any person who controls any of them nor any director, officer, official, employee nor agent of any of them or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the Offering Memorandum received by you in electronic format and the electronic version initially distributed.

You are responsible for protecting against viruses and other destructive items. Your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature. OFFERING MEMORANDUM CONFIDENTIAL

LMIRT CAPITAL PTE. LTD. (incorporated in Singapore with limited liability) (Company registration number: 201212428M) US$250,000,000 7.25% Guaranteed Senior Notes due 2024 unconditionally and irrevocably guaranteed by Perpetual (Asia) Limited (in its capacity as trustee of Lippo Malls Indonesia Retail Trust) The US$250,000,000 7.25% Senior Notes due 2024 (the “Notes”) to be issued by LMIRT Capital Pte. Ltd. (the “Issuer” or “LMIRT Capital”) will bear interest from and including June 19, 2019 (the “Issue Date”) at the rate of 7.25% per annum payable semi-annually in arrears on June 19 and December 19 of each year (each, an “Interest Payment Date”). The due and punctual payment of all amounts at any time becoming due and payable in respect of the Notes will be unconditionally and irrevocably guaranteed (the “Guarantee”) by Perpetual (Asia) Limited (in its capacity as trustee of Lippo Malls Indonesia Retail Trust) (the “Guarantor” or the “LMIRT Trustee”). Unless previously redeemed or purchased and cancelled, the Notes will be redeemed at their principal amount on June 19, 2024 (the “Maturity Date”). At any time on or after June 19, 2022, the Issuer may redeem the Notes, in whole or in part, at the redemption prices specified under “Description of the Notes — Optional Redemption”, plus accrued and unpaid interest, if any, to the redemption date. At any time prior to June 19, 2022, the Issuer may at its option redeem all or any portion of the Notes at a redemption price equal to 100% of the principal amount of the Notes plus the Applicable Premium (as defined herein) and accrued and unpaid interest, if any, to the redemption date. At any time prior to June 19, 2022, the Issuer may redeem up to 35% of the aggregate principal amount of the Notes with proceeds from certain equity offerings at a redemption price of 107.25% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to the redemption date. Not later than 30 days following a Change of Control Trigger Event (as defined herein), the Issuer or the Guarantor will make an offer to purchase all Notes then outstanding at a purchase price equal to 101% of the principal amount plus accrued and unpaid interest, if any, to the Offer to Purchase Payment Date (as defined herein). The Notes are subject to redemption in whole but not in part, at 100% of their principal amount, together with accrued and unpaid interest to the redemption date, at the option of the Issuer at any time in the event of certain changes affecting taxes of the Republic of Singapore. See “Description of the Notes — Redemption for Taxation Reasons.” Payments on the Notes will be made in US Dollars without deduction for or on account of taxes imposed or levied by Singapore (and certain other jurisdictions) to the extent described under “Description of the Notes — Additional Amounts.” The Notes and the Guarantee will be unsubordinated obligations of the Issuer and the Guarantor, respectively, and will rank at least pari passu in right of payment with all their other unsecured, unsubordinated indebtedness. For a more detailed description of the Notes, see “Description of the Notes” beginning on page 129. The Notes are expected to be rated “Ba3” by Moody’s Investors Service, Inc. (“Moody’s”) and “BB (Expected)” by Fitch Ratings Ltd (“Fitch”). A security rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. Investing in the Notes involves certain risks. See “Risk Factors” beginning on page 15 for a discussion of certain factors to be considered in connection with an investment in the Notes. The Notes and the Guarantee have not been and will not be registered under the US Securities Act of 1933, as amended (the “Securities Act”) and may not be offered or sold within the United States (as defined in Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Notes are being offered and sold by the joint lead managers outside the United States in compliance with Regulation S under the Securities Act. For a description of certain restrictions on resale or transfer, see “Transfer Restrictions” beginning on page 190. This offering does not constitute a public offering in Indonesia under Law Number 8 of 1995 regarding Capital Market. The Notes may not be offered or sold in Indonesia or to Indonesian citizens, wherever they are domiciled, or to Indonesian residents, in a manner which constitutes a public offer under the laws and regulations of Indonesia. This Offering Memorandum has not been and will not be registered as a prospectus with the Monetary Authority of Singapore (“MAS”). Accordingly, this Offering Memorandum and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Notes may not be circulated or distributed, nor may the Notes be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined in Section 4A the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”)) pursuant to Section 274 of the SFA; (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or to any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA and (where applicable) Regulation 3 of the Securities and Futures (Classes of Investors) Regulations 2018; or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provisions of the SFA. Approval in-principle has been received from the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for the listing of and quotation for the Notes on the Official List of the SGX-ST. The SGX-ST takes no responsibility for the correctness of any of the statements made or opinions or reports contained in this Offering Memorandum. Admission of the Notes to the Official List of the SGX-ST is not to be taken as an indication of the merits of either us, this offering or the Notes. The Notes will be traded on the SGX-ST in a minimum board lot size of US$200,000 as long as any of the Notes are listed on the SGX-ST and the rules of the SGX-ST so require. Currently, there is no market for the Notes. Issue Price 98.973% The Notes will initially be represented by a global certificate (“Global Certificate”), in registered form, which will be registered in the name of a common depositary for Clearstream Banking S.A. (“Clearstream”) and Euroclear Bank SA/NV (“Euroclear”) on or about June 19, 2019. Except as described herein, definitive certificates evidencing holdings of Notes will not be issued in exchange for beneficial interests in the Global Certificate. Joint Lead Managers (in alphabetical order)

The date of this Offering Memorandum is June 12, 2019 We accept responsibility for the information contained in this Offering Memorandum. Having made all reasonable enquiries, we confirm that this Offering Memorandum contains all information with respect to us, the Notes and the Guarantee that is material in the context of the issue and the offering of the Notes, that the information in this Offering Memorandum is true and accurate in all material respects, that the opinions and intentions expressed in this Offering Memorandum are honestly held, are not misleading in any material respect and have been reached after considering all relevant circumstances and are based on reasonable assumptions, that we are not aware of any other facts the omission of which in our reasonable opinion might make this document as a whole or any of such information or the expression of any such opinions or intentions materially misleading, that all reasonable inquiries have been made by us to verify the accuracy of such information, and that this Offering Memorandum does not contain an untrue statement of a material fact or omit to state a material fact required to be stated herein or that is necessary in order to make the statements herein, in the light of the circumstances under which they are made, not misleading.

This Offering Memorandum is confidential and has been prepared by us solely for use in connection with the issue and offering of the Notes described herein. BNP Paribas (“BNP Paribas”), CIMB Bank Berhad, acting through its Singapore Branch (“CIMB”), Credit Suisse (Singapore) Limited (“Credit Suisse”) and Deutsche Bank AG, Singapore Branch (“Deutsche Bank”) as joint lead managers (the “Joint Lead Managers”), reserve the right to reject any offer to subscribe for the Notes, in whole or in part, for any reason. This Offering Memorandum is personal to each offeree and does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire the Notes. Any disclosure of any of the contents of this Offering Memorandum, without our prior written consent, is prohibited. Each prospective purchaser, by accepting delivery of this Offering Memorandum, agrees to the foregoing and to make no photocopies of this Offering Memorandum or any documents attached hereto.

The distribution of this Offering Memorandum and the offering, sale or delivery of the Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Offering Memorandum comes are required by us and the Joint Lead Managers to inform themselves about and to observe any such restrictions. See “Plan of Distribution.” No action is being taken to permit a public offering of the Notes or the distribution of this Offering Memorandum in any jurisdiction where action would be required for such purposes. No representation or warranty, express or implied, is made by the Joint Lead Managers as to the accuracy or completeness of the information set forth herein, and nothing contained in this Offering Memorandum is, or shall be relied upon as a promise or representation, whether as to the past or the future. None of the Joint Lead Managers, the Trustee and the Paying Agent (each as defined herein) has independently verified any of such information. None of the Joint Lead Managers, the Trustee and the Paying Agent assumes any responsibility for its accuracy or completeness.

No person has been authorized to give any information or to make any representation other than those contained in this Offering Memorandum in connection with the issue or sale of the Notes and, if given or made, such information or representation must not be relied upon as having been authorized by us or the Joint Lead Managers. Neither the delivery of this Offering Memorandum nor any sale made in connection herewith shall, under any circumstances, create any implication that there has been no change in our affairs since the date hereof or the date upon which this Offering Memorandum has been most recently amended or supplemented or that there has been no adverse change in our financial position since the date hereof or the date upon which this Offering Memorandum has been most recently amended or supplemented or that any other information supplied in connection with the Notes is correct as of any time subsequent to the date on which it is supplied or, if different, the date indicated in the document containing the same.

The Joint Lead Managers, the Trustee and the Paying Agent do not make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this Offering Memorandum. Each person receiving this Offering Memorandum acknowledges that such person has not relied on the Joint Lead Managers, the Trustee, the Paying Agent or any person affiliated with any of them in connection with its investigation of the accuracy of such information or its investment decision. Each person contemplating making an investment in the Notes must make its own investigation and analysis of our creditworthiness and its own determination of the suitability of any such investment, with particular reference to its own investment objectives and experience and any other factors which may be relevant to it in connection with such investment. No person should

i construe the contents of this Offering Memorandum as legal, business or tax advice and each person should be aware that it may be required to bear the financial risks of any investment in the Notes for an indefinite period of time. Each person should consult its own counsel, accountant and other advisers as to legal, tax, business, financial and related aspects of an investment in the Notes.

This Offering Memorandum does not constitute an offer of, or an invitation by or on behalf of us, the Joint Lead Managers or any affiliate or representative of any of us or the Joint Lead Managers to subscribe for or purchase, any Notes in any jurisdiction or in any circumstances in which such offer, invitation or solicitation is not authorized or to any person to whom it is unlawful to make such offer, invitation or solicitation.

Neither we nor the Joint Lead Managers nor any affiliate or representative of us or the Joint Lead Managers is making any representation to any investor regarding the legality of an investment by such investor under applicable laws.

Each purchaser of the Notes must comply with all applicable laws and regulations in force in each jurisdiction in which it purchases, offers or sells such Notes or possesses or distributes this Offering Memorandum and must obtain any consent, approval or permission required by it for the purchase, offer or sale by it of such Notes under the laws and regulations in force in any jurisdictions to which it is subject or in which it makes such purchases, offers or sales and neither we nor the Joint Lead Managers shall have any responsibility therefor. For the avoidance of doubt, any disclosure of the contents of this Offering Memorandum, without our prior written consent, is prohibited.

IN CONNECTION WITH THE ISSUE OF THE NOTES, CREDIT SUISSE (THE “STABILIZING MANAGER”) (OR PERSONS ACTING ON BEHALF OF THE STABILIZING MANAGER), MAY OVER- ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE PRICE OF THE NOTES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILIZING MANAGER (OR PERSONS ACTING ON ITS BEHALF) WILL UNDERTAKE STABILIZATION ACTION. ANY STABILIZATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE NOTES IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE NOTES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE NOTES. ANY STABILIZATION ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE STABILIZING MANAGER (OR PERSONS ACTING ON BEHALF OF THE STABILIZING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.

NOTICE TO PROSPECTIVE INVESTORS IN THE EUROPEAN ECONOMIC AREA

This Offering Memorandum has been prepared on the basis that any offer of Notes in any Member State of the European Economic Area (“EEA”) will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of the Notes. The expression “Prospectus Directive” means Directive 2003/71/EC (as amended), and includes any relevant implementing measure in the Member State concerned. The Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the EEA. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU, as amended (“MiFID II”); (ii) a customer within the meaning of Directive 2002/92/EC, as amended, where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Directive. Consequently, no key information document required by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.

NOTIFICATION UNDER SECTION 309B(1) OF THE SFA

The Notes are “prescribed capital markets products” (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment Products (as defined in the Monetary Authority of Singapore (the “MAS”) Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

ii CURRENCIES

This Offering Memorandum contains conversions of Singapore Dollar amounts to US Dollars at specific rates solely for the convenience of the reader. For convenience, certain US Dollar amounts have been translated into Singapore Dollar amounts, based on the prevailing exchange rate on April 1, 2019 of S$1.36 = US$1.00, as quoted on the website of the MAS for that date. Such translations should not be construed as representations that the Singapore Dollar or US Dollar amounts referred to could have been, or could be, converted into Singapore Dollars or US Dollars, as the case may be, at that or any other rate or at all.

This Offering Memorandum contains conversions of Rupiah amounts to Singapore Dollars at specific rates solely for the convenience of the reader. For convenience, certain Rupiah amounts have been translated into Singapore Dollar amounts, based on the prevailing exchange rate on April 1, 2019 of Rp10,496.8 = S$1.00, as quoted on the website of the MAS for that date. Such translations should not be construed as representations that the Rupiah or Singapore Dollar amounts referred to could have been, or could be, converted into Rupiah or Singapore Dollars, as the case may be, at that or any other rate or at all.

MARKET AND INDUSTRY DATA

This Offering Memorandum contains estimates and projections regarding market and industry data that were obtained from third-party sources, such as market research, consultant surveys, publicly available information as well as industry publications and surveys. We believe the information provided or made available by these third-party sources is generally reliable. However, market and industry data is subject to change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey, interpretation or presentation of market and industry data and management’s estimates and projections. In addition, the outcomes of projections are not guaranteed. As a result, you should be aware that market and industry data set forth herein, and estimates, projections and beliefs (i) based on such data and (ii) relating to certain financial and performance metrics presented herein, may not be reliable. Neither we nor the Joint Lead Managers have independently verified any of the data from third-party sources nor have we or the Joint Lead Managers ascertained the underlying economic assumptions relied upon therein, and neither we nor the Joint Lead Managers can guarantee its accuracy or completeness.

FORWARD-LOOKING STATEMENTS

Certain statements in this Offering Memorandum are not historical facts and constitute “forward-looking statements.” All statements other than statements of historical facts included in this Offering Memorandum, including those regarding our financial position and results, business strategies, plans and objectives of management for future operations (including development plans and dividends), followed by or that include the words “believe,” “expect,” “aim,” “intend,” “will,” “may,” “project,” “estimate,” “anticipate,” “predict,” “seek,” “should” or similar words or expressions, are forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These forward-looking statements are based on numerous assumptions regarding our present and future business strategies and the environment in which we will operate in the future.

Forward-looking statements involve inherent risks and uncertainties. The forward-looking statements included in this Offering Memorandum reflect our current views with respect to future events and are not a guarantee of future performance. A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement. These factors include, but are not limited to, the following:

Š our ability to rent out properties in our developments;

Š the expected growth of the real estate market in Greater Jakarta and Indonesia;

Š the anticipated demand for our properties and related capital expenditures and investments;

iii Š whether we can successfully execute our business strategies and carry out our growth plans;

Š macroeconomic factors, in particular interest rates, unemployment rates, disposable income, availability of adequate credit and affordable financing and consumer confidence in Indonesia;

Š changes in Government laws and regulations and their interpretation, including property laws and tax laws, as well as the level of enforcement of such laws and regulations;

Š significant delays in obtaining or renewing our various permits, proper legal titles or approvals for our properties under development or held or planned to be held for future development;

Š changes in our needs for capital and the availability and cost of financing and capital to fund these needs;

Š competition in the Indonesian real estate industry, including changes in real estate prices and sales activity;

Š fluctuations in exchange rates;

Š our ability to anticipate and respond to consumer preferences;

Š war or acts of international or domestic terrorism;

Š occurrences of catastrophic events, outbreaks of communicable diseases, natural disasters and acts of God that affect our business or properties;

Š changes in our senior management team or loss of key employees;

Š changes relating to and our relations with our unitholders;

Š the impact of environmental damages, construction defects, product liability and warranty claims, including the adequacy of self-insurance accruals, the applicability and sufficiency of our environmental insurance coverage; and

Š the availability and cost of labor and building and construction materials, including the ability to secure materials and subcontractors.

Additional factors that could cause our actual results, performance or achievements to differ materially include, but are not limited to, those discussed under “Risk Factors” and “Business.” When relying on forward-looking statements, you should carefully consider the foregoing factors and other uncertainties and events, especially in light of the political, economic, social and legal environment in which we operate. These forward-looking statements speak only as of the date of this Offering Memorandum. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We do not intend to update any of the forward-looking statements after the date of this Offering Memorandum to conform those statements to actual results, subject to compliance with all applicable laws including the rules of the SGX-ST.

CERTAIN DEFINED TERMS AND CONVENTIONS

In this Offering Memorandum, unless otherwise specified or the context otherwise requires, all references to “we”, “us”, and “our” are references to the Issuer, the Guarantor and the consolidated subsidiaries and joint operations and joint ventures taken as a whole.

In this Offering Memorandum, unless otherwise specified or the context otherwise requires, all references to “Indonesia” are references to the Republic of Indonesia; all references to Singapore are to the Republic of Singapore all references to the “Government” or “Indonesian Government” are references to the central government of Indonesia; all references to the “United States” or “US” are to the United States of America; all references to “Rupiah”, “Rp” or “IDR” are to the lawful currency of Indonesia; all references to “US Dollars” or “US$” are to the lawful currency of the United States of America and all references to “Singapore Dollar” and “S$” are to the lawful currency of Singapore.

iv Figures in this Offering Memorandum have been subject to rounding adjustments. Accordingly, figures shown for the same item of information may vary and figures which are totals may not be an arithmetic aggregate of their components.

PRESENTATION OF FINANCIAL INFORMATION

We have prepared audited consolidated financial statements as of and for the years ended December 31, 2016, 2017 and 2018 and unaudited interim reviewed consolidated financial information as of and for the three-month periods ended March 31, 2018 and March 31, 2019.

Our audited consolidated financial statements as of and for the year ended December 31, 2018 (including comparative data as of and for the year ended December 31, 2017) and the audited consolidated financial statements as of and for the year ended December 31, 2017 (including comparative data as of and for the year ended December 31, 2016) are included in this Offering Memorandum and are prepared in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered Accountants. See “Index to Financial Statements” and “Summary Financial Information”.

The unaudited interim consolidated financial information for the three-month periods ended March 31, 2018 and March 31, 2019 presented in this Offering Memorandum have been reviewed by RSM Chio Lim LLP and prepared in accordance with Financial Reporting Standard 34 Interim Financial Reporting.

v TABLE OF CONTENTS

SUMMARY OF THE GROUP ...... 1 SUMMARY OF THE OFFERING ...... 7 SUMMARY CONSOLIDATED FINANCIAL INFORMATION ...... 10 RISK FACTORS ...... 15 USE OF PROCEEDS ...... 40 EXCHANGE RATES AND EXCHANGE CONTROLS ...... 41 CAPITALIZATION AND INDEBTEDNESS ...... 45 SELECTED CONSOLIDATED FINANCIAL INFORMATION ...... 46 DESCRIPTION OF LMIRT CAPITAL ...... 50 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 51 BUSINESS ...... 68 MANAGEMENT ...... 111 INTERESTS OF UNITHOLDERS AND DIRECTORS OF THE LMIRT MANAGER ...... 114 RELATED PERSON TRANSACTIONS ...... 115 DESCRIPTION OF INDEBTEDNESS ...... 116 REGULATION ...... 119 DESCRIPTION OF THE NOTES ...... 129 TAXATION ...... 181 PLAN OF DISTRIBUTION ...... 185 TRANSFER RESTRICTIONS ...... 190 LEGAL MATTERS ...... 191 INDEPENDENT AUDITORS ...... 192 RATINGS ...... 193 GLOSSARY ...... 194 INDEX TO FINANCIAL STATEMENTS ...... F-1

vi SUMMARY OF THE GROUP

Background We are a Singapore-based REIT constituted by the LMIRT Trust Deed. We are the first and only Indonesian retail REIT and have been listed on the Mainboard of the SGX-ST since November 19, 2007. We were established with the principal investment objective of owning and investing on a long- term basis in a diversified portfolio of income-producing real estate properties in Indonesia that are primarily used for retail and/or retail-related purposes, and real estate related assets in connection with the foregoing purposes.

We seek to produce regular and stable cash flows and to achieve long-term growth in NAV per Unit through growth in rental yields and acquisitions. Our asset portfolio, as of March 31, 2019, comprises 30 Properties in total, comprising 23 retail malls and seven retail spaces, all of which are located in Indonesia. These properties are strategically located in large population catchment areas in Greater Jakarta, Bandung, Yogyakarta, Medan, Palembang, Bali and Sulawesi and mainly cater to the needs of the middle to upper middle income consumers in Indonesia. As of and for the year ended December 31, 2018, we had total assets of S$1,966.2 million and net property income of S$165.0 million. As of and for the three months ended March 31, 2019, we had total assets of S$2,004.3 million and net property income of S$40.5 million. As of May 30, 2019 we had a market capitalization of S$622.4 million.

Competitive strengths We believe our competitive strengths include:

Leading position as one of Indonesia’s largest retail property owners with a GFA of over 1.6 million sq m We are the largest REIT in Asia Pacific providing pure-play exposure to the Indonesia retail sector and one of the largest and most geographically diversified retail property owners in Indonesia, with 23 retail malls and seven retail spaces spanning a total GFA of over 1.6 million sq m and a total NLA of over 0.9 million sq m across 12 key Indonesian cities. Given our extensive coverage, we believe we are one of the only retail platforms that provides nationwide access for both domestic and international tenants looking to expand across Indonesia. This enhances our bargaining power when negotiating with existing and potential future tenants and allows us to reap economies of scale in the form of efficient portfolio and property management.

The LMIRT Manager works closely with the Property Manager to realize operational efficiencies and to enhance the performance of our Properties. The Property Manager, a wholly-owned subsidiary of the Sponsor, has retail mall management experience of over two decades since 1995, and is the largest mall developer and operator in Indonesia. In addition to managing our portfolio, it also manages retail assets owned by the Sponsor and third-parties, bringing its existing network to a total of 72 retail assets under management with a NLA of over 2.7 million sq m of mall area and exposure to 200 major tenants and 13,000 specialty shops located across 42 Indonesian cities.

The successful track record of the Property Manager also enhances the position of our Properties in the Indonesian market, enabling us to attract foreign retailer interest which has been increasing in the recent years. Portfolio exposure to international brand tenants represent 24.4% of the total retail malls’ occupied NLA as of March 31, 2019 and we expect such proportion to increase. International brands such as H&M, The Body Shop and Innisfree, which are also current tenants of the Properties of LMIRT, have announced that they intend to expand their Indonesian footprint in the coming years. Since 2018, each of Uniqlo, Make Up Forever, The Northface, Melissa and Innisfree opened stores at Sun Plaza in the city of Medan as they expanded to the Sumatra region.

We are also able to benefit from economies of scale by leveraging on the Property Manager’s mall management expertise and strong local market knowledge in areas including cost control mechanisms, retailer relationships and strategic leasing / repositioning. Furthermore, by engaging a single property manager, we are able to capitalize on our extensive network of retail assets across Indonesia to provide a unique bundled leasing strategy, where tenants can lease units in various retail malls and retail spaces that we own and market their businesses across our Properties.

1 Key beneficiary of Indonesia’s rising affluence, growing middle class and sound retail industry fundamentals Indonesia is the largest economy in South East Asia and has the world’s fourth largest population with 264.9 million people. In recent years, Indonesia has been South East Asia’s fastest growing economy by Real GDP, fueled mainly by private consumption which contributed 54% to total GDP by expenditure in 2018, coupled with GDP (PPP) per capita growing at a CAGR of 5.8% from 2015 to 2018. The government of Indonesia has estimated that the economic growth will be between 5.3% to 5.6% in 2019 and 2020 respectively. GDP (PPP) per capita is also projected to grow from US$11,184 per annum in 2015 to US$15,824 per annum in 2021, representing a CAGR of 6.0%.

Furthermore, 66.5% of Indonesia’s population of 238.5 million people in 2010 was made up of the working class, aged between 15 and 64 years old, and this group is expected to continue to increase by 27.3% to 201.8 million in 2030. Indonesia has also witnessed a significant growth of the middle income population over the past several years in major urban centers. It is estimated that the middle income group in Indonesia will increase by 76.0% from 91.0 million in 2017 to 160.0 million in 2030, representing approximately 54.0% of the total population in 2030. This particular group is a major target market for modern retail shopping centers and is expected to grow as the Indonesian economy continues to expand and the relatively youthful population drives consumption. Such population dynamics presents an attractive proposition for retailers who seek to capitalize on the growing share and influence of the millennials in the retail landscape.

Well-positioned in good population catchment areas with Properties strategically located at the heart of local and regional cities, districts and town centers The Properties are strategically located in the heart of key populous cities across Indonesia, such as Greater Jakarta, Bali, Bandung, Medan, Palembang, Yogyakarta and Sulawesi, serving a combined population of 35.4 million people, representing 13.4% of the total Indonesian population of 264.9 million people based on regional data from Badan Pusat Statistik. Located in middle to upper middle income demographic regions, each of our Properties operates in its unique environment and caters to the growing demand with a curated and targeted tenant mix. Furthermore, our Properties are well- connected, with access to main arterial roads and public transport infrastructure, including trains and metro lines.

Some of our strategically located retail malls include:

Š Pluit Village — Situated in North Jakarta and easily accessible via Jakarta Highway Ring Road and Transjakarta Public Transportation, the Property is located within the primary catchment area of middle to upper income households residing in the Pluit residential area. The Property recorded 10.5 million shoppers in 2018 and achieved an occupancy rate of 95.4% as of March 31, 2019. The Property is undergoing a reconfiguration to improve the F&B tenancy mix and to introduce F&B concepts such as alfresco, indoor and island dining.

Š Cibubur Junction — Located in the heart of Cibubur, one of the most affluent residential areas, and one of the few malls within its vicinity that offers shoppers a one-stop shopping experience. The Property is easily accessible via a shuttle bus connecting to the Jakarta CBD, and through the Jakarta-Bogor-Ciawi toll road. The Property recorded 6.8 million shoppers in 2018 and achieved an occupancy rate of 98.6% as of March 31, 2019. The Property has recently undergone a shift in tenant mix, with the downsizing of Hypermart and replacement with a new food court and a new tenant, Kidzoona, along with other specialty restaurants in an effort to improve the overall tenancy mix.

Š Sun Plaza — One of the most well-known retail malls in Medan, ranked No. 1 by TripAdvisor as of May 2019 and strategically located in Medan’s commercial district. According to Badan Pusat Statistik Kota Medan, Medan has a population of 2.2 million people and is the fourth most populous city in Indonesia. The Property is easily accessible from all parts of the city and is surrounded by prominent landmarks such as the governor’s office, foreign embassies and major banks. The Property recorded 14.2 million shoppers in 2018 and achieved an occupancy rate of 96.5% as of March 31, 2019. International brands like Uniqlo, Make Up Forever, The Northface, Melissa and Innisfree have set up stores in the Property. The Property is undergoing a revamp

2 of the external facade and reconfiguration of the interior space to create additional atrium space for hosting more lifestyle and seasonal events.

Š Plaza Medan Fair — Strategically located in the shopping and business district of Medan, serving a population of 2.2 million people from the neighboring affluent residential complexes. The Property is easily accessible by public transport. It is also strategically located near the bus terminal for the express bus from Kuala Namu International Airport (KNO), bringing both domestic and international tourist right at its doorstep. The Property recorded 16.9 million shoppers in 2018 and achieved an occupancy rate of 99.0% as of March 31, 2019. It is one of the largest retail malls in Medan, with a host of well-known international and domestic retailers and brand names such as Transmart Carrefour, Matahari Department Store, Cinemaxx, A&W, Levis, Polo Ralph Lauren and Bata. Because of its wide variety of tenants, it is not only the first stop for tourists who arrive via the express bus but also a venue to meet the needs of the local community

Adaptable to the changing demands of consumers by re-positioning our portfolio as lifestyle hubs to grow a sustainable customer base We employ a robust and proactive brand management system to ensure that the product and tenant mix in our Properties continually appeal to our customers. Against the backdrop of growing competition posted by e-commerce and online shopping, our key focus is to re-position our Properties as lifestyle hubs and to capitalize on the physical experience of our shoppers. Our portfolio tenant composition is targeted to shift towards having a higher proportion of F&B / specialty tenants.

According to an internationally recognized property management company, recent consumer surveys reveal that Indonesian consumers are now more into spending on experiences rather than commodity purchases. Therefore, beyond just being an “everyday” shopping destination for shoppers to meet their daily lifestyle needs, the Properties have adapted by hosting more F&B outlets, introducing more alfresco dining options, building amenities that create a sense of community such as children’s play room, prayer rooms, game centers, book stores and gyms and continuously providing supplemental offerings with new brand offerings to build recurring customer base and enhance the shopping experience. See “Strategy” for more details on portfolio reconstitution plans, including asset enhancements.

In Cibubur Junction, for example, we have introduced a new dining concept The Flavour Garden to refresh the shopper’s experiences. Other initiatives also include the recent launch of Styles, a loyalty program for shoppers to earn points and rewards in any of our retail malls, introducing sky dining concepts such as Déjà vu at Plaza Semanggi and Seven Sky at Lippo Jogja and holding promotional events and activities in the malls such as Fashion Week at Palembang Icon, which will position the malls as a lifestyle hub to shoppers.

The strength in our portfolio is underlined by a strong occupancy of approximately 91.5%, compared to an industry average of 80.7%, with 15,088 sq m of new leases secured for the quarter ended March 31, 2019 and a rental reversion of 6.3% in the first quarter of financial year 2019. From financial year 2016 to financial year 2018, annual shopper traffic for the portfolio has grown from approximately 141 million to nearly 170 million, representing a compounded average growth rate of approximately 9.7%, demonstrating our success in staying ahead of ever-changing consumer preferences and trends by maintaining a carefully curated tenant-mix profile.

Resilient portfolio with diversified tenant network and attractively structured leases The Properties benefit from the quality and balanced mix of their tenants across various trade sectors, that includes well-known retailers such as Zara, Uniqlo, The Northface, H&M, Muji, Miniso, Adidas, BreadTalk, Fitness First and Starbucks and lifestyle tenants such as Timezone and Cinemaxx among others. Such specialty tenants help to enhance the appeal of our Properties as one-stop lifestyle destination for both discretionary and non-discretionary consumer spending which has helped to drive shopper traffic.

The Properties have a large and well-diversified combined tenant base of 3,734 tenants (as of March 31, 2019). The top ten tenants in the retail malls constituted approximately 23.4% (with no

3 individual tenant accounting for more than 9.9%) of our gross rental income for the three months ended March 31, 2019. The portfolio has also been successful in attracting non-related party tenants, with gross total income contribution from non-related party tenants increasing from 67.0% in financial year 2017 to 73.7% for the three months ended March 31, 2019. Additionally, no single trade sector accounts for more than 21.2% and 15.2% of NLA and gross rental income, respectively, as of and for the three months ended March 31, 2019.

We generally agree to attractively structured, long-dated lease terms with our tenants, including the following terms:

Š a security deposit of three months’ rent and three months’ service charge that help boost our working capital and provide more financial flexibility and minimize the risk of tenant default;

Š non-terminable by the tenant upon signing, which provides visibility and security on rental revenues;

Š consisting of base rates with a fixed annual escalation of approximately 5% which provides us with a steady growth trajectory;

Š typically structured on a recoverable basis, where tenants pay service charges to be offset against operating expenses, with any increases in property expenses having minimal impact on our bottom line and increasing the resilience of our operating margins.

Experienced board and management team with a strong corporate governance framework The LMIRT Manager’s Board of Directors, which has a majority of independent directors, comprises of respected, successful and experienced individuals with average experience of more than 30 years in the industry across areas such as accounting, management, real estate and risk management. The senior management of the LMIRT Manager is also highly experienced with an average experience of more than 20 years in the industry.

With the expertise and competency of the LMIRT Manager’s board and management team, as well as close partnership with the Property Manager to implement the various business strategies, the portfolio has grown consistently from 14 Properties with total valuation of Rp6.0 trillion since IPO to 30 Properties with total valuation of Rp19.5 trillion as of December 31, 2018. As of March 31, 2019, the portfolio has also achieved a strong operating performance with a healthy weighted average lease expiry (by NLA) of 4.17 years, with over 35% of our leases expiring in and beyond 2023. The management team has also demonstrated a track record of value enhancing initiatives via a combination of reconfiguration of mall layout and tenant mix to drive positive rental reversions in the portfolio.

Being a REIT listed since 2007 on the SGX-ST (recognized as the largest and most mature REIT market in Asia, excluding Japan), we are also subject to a well-developed regulatory regime under the Property Funds Appendix which has in place key attributes that serve to protect unitholders’ interests, such as regulated guideline on maximum gearing, requirement of annual valuation of assets, limits on property development and transparency and corporate governance requirements.

A comprehensive assessment process by both the LMIRT Manager’s management and the board is in place when it comes to asset acquisitions, with additional and stricter requirements applicable to Sponsor’s assets. An internal evaluation process which involves a holistic evaluation of location, tenant mix, brands, rent reversion and long term growth potential, together with financial, legal and technical due diligence will be first conducted. Independent valuer(s) will be appointed for the valuation of the target asset, followed by the required board approvals. For potential acquisition of Sponsor assets, there are additional regulatory requirements of having two independent valuations (of which one will be appointed by the LMIRT Trustee), an independent financial adviser to advise the independent directors and approvals from minority unitholders.

4 Strategies We believe that the following strategies will help us achieve consistent and sustainable growth and expand our revenue base:

Strengthening our asset positioning as lifestyle hubs via a three-pronged portfolio reconstitution approach i) Active property portfolio management to drive organic growth We strive to grow the business organically by capitalizing on improved macroeconomic fundamentals and increasing consumer demand of the growing and affluent urban middle income class in Indonesia. Through active portfolio management and comprehensive strategies for tenant repositioning, we believe we are leading the change in the retail landscape in Indonesia.

We have curated the retail experience by continuously engaging with our retailers and shoppers, reorganizing the layout of our malls, and reconfiguring our tenant mix. For example, we have reallocated space from large stores like Hypermart to specialty tenants such as Kidzoona in Cibubur Junction and Mr DIY in Lippo Plaza Kendari, brought in more food and beverage tenants with new dining concepts and rolled out 22 cinemas at 30 properties to attract higher footfall and shopper traffic. We intend to increase our portfolio mix to cater to more F&B / specialty tenants, with the aim of increasing our exposure to 60% going forward from 47.0% as of March 31, 2019. We also work closely with our Property Manager to introduce new-to-market retailers and brands to meet growing demand for novel and experiential retail concepts. We actively engage our customers using social media platforms such as Facebook and Instagram. We are also encouraging our tenants and customers to use Ovo, one of Indonesia’s leading digital payment platforms.

Building on our strong relationship with our tenants, we have introduced new initiatives including a change of lease structure to variable basis to allow us to manage occupancy costs and benefit from upside sharing. Across our extensive mall portfolio, we have also introduced a middle to long-term bundled leasing strategy, where we are actively encouraging popular tenants currently present in a few of our malls to open more outlets across their brand universes across our geographically extensive mall portfolio.

In early 2019 we launched our Styles loyalty program which is designed to both retain existing customers and attract new customers through offering incentives to repeat shoppers and promotional activities. The program provides us with insight into customers’ purchase behavior which allows us to better present our Properties to tenants. ii) Value-enhancing asset enhancement initiatives To seek new growth and stronger returns through innovative asset enhancement initiatives, we look to unlock additional value from existing assets by optimizing space productivity and boosting revenues.

In addition, in 2018, we began two new initiatives in our malls. Refurbishments to revamp the external facade, interiors and amenities of Gajah Mada Plaza are planned and expected to commence in early 2020. In Sun Plaza, we have commenced revamping of the external facade and reconfiguration of the interior space in 2018 to create additional atrium space to enable us to host a greater number and wider variety of lifestyle and seasonal events, with completion expected in 2021.

Our strategy to engage in active asset enhancement stems from extensive past experience; importantly, we are careful in ensuring that such initiatives will not disrupt the everyday operation of our existing tenant base. With this in mind, we converted anchor space within Cibubur Junction when its lease expired into a new food court while the former food court was converted into specialty restaurants. This has resulted in an overall improvement in the F&B mix and a better Average Rental Rate for the converted areas of Cibubur Junction.

We plan to continue investing in asset enhancement works in order to maintain relevance of our Properties and to provide improved shopping experiences to customers. In order to accomplish this, the LMIRT Manager works closely with the Property Manager to actively refresh and reconfigure the

5 layout of our retail malls and retail spaces and tenant mix in order to maximize the retail offering and drive footfall at each retail mall and retail space. Capital expenditure to conduct regular minor AEI works are funded by internal cash flows and is typically at up to 1.0% of the value of properties. iii) Selective acquisitions and divestments In line with our overall aim to acquire income-producing assets for long-term growth, we undertake active portfolio and asset management strategies, which involve ongoing review of potential strategic acquisitions and selective asset divestments opportunities to constantly rejuvenate the portfolio and augment organic growth. We believe that there exists a healthy pipeline of potential acquisitions with upside potential from both rights of first refusal from the Sponsor and opportunities presented by third parties. The fragmented and diverse nature of the retail property market in Indonesia provides us with further acquisition growth opportunities. In addition, we continue to receive robust inbound purchase enquiries for our assets; these are carefully reviewed in detail on a case-by-case basis when tabled in line with our capital recycling policy.

On March 12, 2019, we announced that we had entered into a conditional sale and purchase agreement with an indirect wholly-owned subsidiary of the Sponsor for the acquisition of the strata title units of Lippo Mall Puri (the “Acquisition of Puri Mall”), a shopping mall located at Kembangan District of West Jakarta, for a purchase consideration of Rp3,700.0 billion.

Lippo Mall Puri is the flagship mall of the Sponsor and is part of St. Moritz, a premium integrated development which is the largest mixed-use development in West Jakarta with a total construction floor area of approximately 850,000 sq m. Lippo Mall Puri boasts of a broad and diversified selection of 324 tenants, comprising of established international and local brands, with key tenants such as Matahari Department Store, SOGO, Food Hall, Zara, Cinema XXI, Timezone, Parkson, Uniqlo and H&M.

We believe that the Acquisition of Puri Mall represents an opportunity for us to acquire a best-in-class retail mall in West Jakarta that is strategically located within a catchment area of 650,000 people that largely comprises of middle upper-class residential housing, a commercial precinct which facilitates close to 400 businesses. On a pro forma basis, the Acquisition of Puri Mall is expected to be NPI yield accretive, and will also increase our portfolio size by 19.0% to Rp.23,214.1 billion and increase the NLA by 12.7% to 1,026,349 sq m by December 2019.

The Acquisition of Puri Mall remains subject to approval by our minority unitholders and the fulfillment of other conditional precedents as per our announcement on March 12, 2019.

Adopting prudent and proactive financial management policies We adopt prudent financial management across all aspects of the business to optimize Unitholder’s returns, provide stable returns to Unitholders, minimize refinancing risks, maintain flexibility for working capital requirements and retain flexibility in the funding of future acquisitions. We ensure that we have ample liquidity for working capital and capex purposes. As of March 31, 2019, we have an unrestricted cash balance of S$68.5 million and a strong last 12 months NPI / Interest Expense coverage of 5.1x. We expect to maintain comfortable leverage going forward, with target gearing maintained at around 35% — 40% in the medium-term, and to achieve greater financing flexibility via 100% unencumbered assets. As of March 31, 2019, excluding revolving credit facilities, we do not have any outstanding debt maturities within financial year 2019. We also adopt prudent hedging practices via entering into derivatives or other similar instruments to minimize interest rate, currency, credit and market risks for all kinds of transaction; this has led to 58.1% of our debt (excluding the perpetuals) hedged with fixed interest rates as of March 31, 2019 and a target of up to 80% of net cash flows from our Indonesian onshore companies into Singapore.

To minimize the risk of tenant default on rental payment, we have put in place standard operating procedures for debt collection and recovery of debts. These include the collection of an advanced down payment equal to 20% of the total lease contract rental upon signing the letter of intent of the lease, the collection of security deposits of three months of rental and three months of service charge in the form of cash or bankers guarantee and having a monitoring system and a set of procedures on debt collection. We constantly assess for impairment losses and apply a prudent approach towards allowance for doubtful debts.

6 SUMMARY OF THE OFFERING

The following is a general summary of the terms of the Notes and does not purport to be complete. This summary is derived from, is qualified in its entirety by reference to, and should be read in conjunction with the full text of the terms and conditions of the Notes and the Indenture relating to the Notes. The Description of the Notes and the Indenture prevail to the extent of any inconsistency with the terms set out in this section.

Issuer LMIRT Capital Pte. Ltd.

Guarantor Perpetual (Asia) Limited (in its capacity as trustee of Lippo Malls Indonesia Retail Trust).

Issue US$250,000,000 aggregate principal amount 7.25% Guaranteed Senior Notes due 2024 (“the Notes”).

Issue Price 98.973% of the principal amount of the Notes.

Issue Date June 19, 2019.

Maturity Date June 19, 2024.

Rate of Interest 7.25% per annum.

Interest Payment Dates Interest will be payable semi-annually in arrear on June 19 and December 19 of each year, commencing December 19, 2019.

Form and Denomination of Notes The Notes will be issued only in fully registered form, without coupons, in denominations of US$200,000 and integral multiples of US$1,000 in excess thereof and will be initially represented by a Global Certificate registered in the name of a common depositary for Euroclear and Clearstream.

Book-Entry Only The Notes will be issued in book-entry form through the facilities of Euroclear and Clearstream. For a description of certain factors relating to clearance and settlement, see “Description of the Notes — Book-Entry; Delivery and Form.”

Delivery of the Notes The Issuer expects to make delivery of the Notes, against payment in same-day funds, on or about June 19, 2019, which the Issuer expects will be the fifth business day following the date of this offering memorandum, referred to as “T+5.” You should note that initial trading of the Notes may be affected by the T+5 settlement. See “Plan of Distribution.”

Guarantee The Guarantor will unconditionally and irrevocably guarantee (the “Guarantee”) the due and punctual payment of all amounts at any time becoming due and payable in respect of the Notes.

Ranking The Notes will be unsecured and will be the direct, unconditional and unsubordinated obligations of the Issuer. The Guarantee will be the direct, unconditional, unsubordinated and unsecured obligation of the Guarantor. The Notes will rank at least pari passu with all existing and future unsecured obligations of the Issuer. The Guarantee will rank at least pari passu with all existing and future unsubordinated and unsecured obligations of the Guarantor.

7 Taxation; Additional Amounts All payments of principal and interest in respect of the Notes shall be made free and clear of, and without withholding or deduction for or on account of, any taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within Singapore (or certain other jurisdictions) or any authority therein or thereof having power to tax or, unless such withholding or deduction is required by law. In that event, we shall pay such additional amounts as will result in the receipt by the Noteholders of such amounts as would have been received by them had no such withholding or deduction been required, except in circumstances specified in “Description of the Notes — Additional Amounts”.

Redemption for Taxation Reasons Subject to certain exceptions and as more fully described herein, the Issuer may redeem the Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date fixed by the Issuer for redemption, if, as a result of certain changes in tax law, the Issuer or the Guarantor (as the case may be) would be required to pay certain additional amounts.

Redemption at the Option of the The Notes may be redeemed, in whole or in part, at the option Issuer of the Issuer at any time on or after June 19, 2022 at the redemption prices set forth in “Description of the Notes — Optional Redemption” together with accrued interest to the redemption date. At any time prior to June 19, 2022, the Issuer may at its option redeem all or any portion of the Notes at a redemption price equal to 100% of the principal amount of the Notes plus the Applicable Premium (as defined herein) and accrued and unpaid interest, if any, to the redemption date. At any time prior to June 19, 2022, the Issuer may redeem up to 35% of the aggregate principal amount of the Notes with proceeds from certain equity offerings at a redemption price of 107.25% of the principal amount of the Notes, plus accrued and unpaid interest, if any, and Additional Amounts thereon, if any, to (but not including) the redemption date; provided that at least 65% of the aggregate principal amount of the Notes originally issued on the Issue Date remains outstanding after each such redemption and any such redemption takes place within 60 days after the closing of the related equity offering.

Redemption upon a Change of Unless the Notes are previously redeemed, repurchased and Control Triggering Event canceled, the Issuer will, no later than 30 days following a Change of Control Triggering Event (as defined in “Description of the Notes”) make an Offer to Purchase (as defined in “Description of the Notes”) all outstanding Notes at a purchase price equal to 101% of their principal amount together with accrued and unpaid interest, if any, to the Offer to Purchase Payment Date (as defined in “Description of the Notes”).

Certain Covenants The Issuer and the Guarantor have agreed in the Indenture constituting the Notes to observe certain covenants, including, among other things, incurrence of additional debt; grant of security interest; payment of dividends; mergers, acquisitions and disposals; and certain other covenants. These covenants are subject to a number of important qualifications and

8 exceptions described in “Description of the Notes — Certain Covenants”.

Events of Default Certain events will permit acceleration of the principal of the Notes (together with all interest and additional amounts accrued and unpaid thereon). These events include default with respect to the payment of principal of, premium, if any, or interest on, the Notes. See “Description of the Notes — Events of Default”.

Use of Proceeds The gross proceeds of the Notes will be used to (i) refinance existing indebtedness, comprising of S$120.0 million revolving credit facilities and S$175.0 million term loan due in 2020; (ii) for working capital purposes; and (iii) to pay transaction fees and expenses in relation to the Offering.

Selling Restrictions There are restrictions on the offer, sale and transfer of the Notes in, among others, the United States, the United Kingdom, the EEA, Hong Kong, Singapore, Switzerland and Indonesia. For a description of the selling restrictions on offers, sales and deliveries of the Notes, see “Plan of Distribution — Selling Restrictions ”.

Listing and Trading Approval-in-principal has been obtained for the listing and quotation of the Notes on the SGX-ST. The Notes will be traded on the SGX-ST in a minimum board lot size of US$200,000 for so long as the Notes are listed on the SGX-ST.

Identification Numbers ISIN: XS2010198260;

Common Code: 201019826.

Trustee Citicorp International Limited.

Principal Paying Agent and Citibank, N.A., London Branch. Transfer Agent

Registrar Citibank, N.A., London Branch.

Governing Law The Notes, the Indenture and any non-contractual obligations arising out of or in connection therewith will be governed by, and construed in accordance with, the laws of the State of New York.

Ratings The Notes are expected to be rated “Ba3” by Moody’s and “BB (Expected)” by Fitch. The credit ratings accorded the Notes are not a recommendation to purchase, hold or sell the Notes inasmuch as such ratings do not comment as to market price or suitability for a particular investor. There can be no assurance that the ratings will remain in effect for any given period or that the ratings will not be revised by the rating agencies in the future if, in their judgment, circumstances so warrant. See “Risk Factors — Risks Relating to the Notes and the Guarantee — The ratings assigned to the Notes may be lowered or withdrawn”.

Risk Factors Investment in the Notes involves risks which are described in the “Risk Factors” section of this Offering Memorandum.

9 SUMMARY CONSOLIDATED FINANCIAL INFORMATION

You should read the summary financial information presented below in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this Offering Memorandum.

We have derived the summary consolidated statements of total return and cash flows and other financial data for the years ended December 31, 2016, 2017 and 2018 and the summary consolidated statements of financial position as of December 31, 2016, 2017 and 2018 in the tables below from our audited consolidated financial statements as of and for the years ended December 31, 2016, 2017 and 2018. We have derived the summary consolidated statements of total return and cash flows and other financial date for the three month periods ended March 31, 2018 and 2019 and the summary consolidated statement of financial position as of March 31, 2019 from our unaudited interim consolidated financial statements for the three month periods ended March 31, 2018 and 2019.

The audited consolidated financial statements for the years ended December 31, 2016, 2017 and 2018 have been prepared in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered Accountants. RSM Chio Lim LLP has audited and rendered an unqualified audit report on the consolidated financial statement for the year ended 31, December 31, 2016, 2017 and 2018 which are included in this Offering Memorandum. See “Index to Financial Statements”

The unaudited interim consolidated financial information for the three month periods ended March 31, 2018 and March 31, 2019 were reviewed by RSM Chio Lim LLP and prepared in accordance with Financial Reporting Standard 34 Interim Financial Reporting.

The historical results presented below are not necessarily indicative of the results that may be expected for any future period. Further our results for any interim period may not be indicative of our results for the full year or for any period.

10 Statements of Total Return

Year ended December 31 Three months ended March 31 2016 2017 2018 2018 2018 2019 2019 S$ US$ S$ US$ Thousands Thousands Thousands Thousands

Gross Revenue ...... 188,066 197,376 230,299 169,338 49,123 65,912 48,465 Property Operating Expenses ...... (16,206) (13,125) (65,332) (48,038) (5,175) (25,399) (18,676) Net Property Income ...... 171,860 184,251 164,967 121,300 43,948 40,513 29,789 Interest Income ...... 1,678 1,148 150 110 47 - - Other Credits ...... - 312 159 117 21 289 213 Manager’s Management Fees ...... (11,940) (12,518) (11,595) (8,526) (3,001) (2,856) (2,100) Trustee’s Fees ...... (332) (423) (461) (339) (115) (115) (85) Finance Costs ...... (34,963) (31,589) (34,653) (25,480) (8,039) (8,602) (6,325) Other Expenses ...... (1,923) (3,538) (1,803) (1,326) (335) (547) (402) Net Income Before the Undernoted ..... 124,380 137,643 116,764 85,856 32,526 28,682 21,090 Decrease in Fair Values of Investment Properties ...... (48,045) (30,399) (1,495) (1,099) - - - Realised Gains (Losses) on Derivative Financial Instruments ...... 4,010 1,452 (2,956) (2,174) (765) (761) (560) (Decrease) Increase in Fair Values of Derivative Financial Instruments ...... (3,120) (568) (135) (99) 345 980 721 Realised Foreign Exchange Adjustment Losses ...... (6,853) (5,521) (12,253) (9,010) (2,389) (935) (688) Unrealised Foreign Exchange Adjustment (Losses) Gains ...... (5,116) (1,509) 2,288 1,682 385 848 623 Amortisation of intangible assets ...... (11,889) (12,996) (2,613) (1,921) (762) (573) (421) Total Return for the Year Before Income Tax ...... 53,367 88,102 99,600 73,235 29,340 28,241 20,765 Income Tax Expense ...... (24,532) (25,392) (38,668) (28,432) (9,571) (8,941) (6,574) Total Return for the Year After Income Tax ...... 28,835 62,710 60,932 44,803 19,769 19,300 14,191 Other Comprehensive Return (Loss) Exchange Differences on Translating Foreign Operations ...... 82,531 (140,788) (73,260) (53,868) (49,736) 22,221 16,339 Total Comprehensive Return (Loss) ..... 111,366 (78,078) (12,328) (9,065) (29,967) 41,521 30,530 Basic and Diluted Earnings per Unit (cents) ...... 0.94 1.73 1.52 1.12 0.54 0.52 0.38

11 Statements of Distribution

Year ended December 31 Three months ended March 31 2016 2017 2018 2018 2018 2019 2019 S$ US$ S$ US$ Thousands Thousands Thousands Thousands

Total Return for the Year After Income Tax ...... 28,835 62,710 60,932 44,803 19,769 19,300 14,191 Less: Net Adjustments ...... 66,633 34,250 (2,517) (1,851) (751) (3,221) (2,368) Total Distribution to Unitholders ...... 95,468 96,960 58,415 42,952 19,018 16,079 11,823 Distributions Made to Unitholders Distribution of 0.83 cents in 2016, 0.89 cents in 2017, 0.67 cents in 2018 per unit, for the period from January 1 to March 31 ...... 23,178 25,120 19,018 13,984 - - - Distribution of 0.85 cents in 2016, 0.90 cents in 2017, 0.59 cents in 2018 per unit for the period from April 1 to June 30 ...... 23,802 25,403 16,816 12,365 - - - Distribution of 0.86 cents in 2016, 0.86 cents in 2017, 0.49 cents in 2018 per unit for the period from July 1 to September 30 ...... 24,153 24,151 13,896 10,217 - - - Total Interim Distribution Paid in the Year Ended December 31 ...... 71,133 74,674 49,730 36,566 - - - Total Return Available for Distribution to Unitholders for the Quarter Ended December 31 Paid After Year End ...... 24,335 22,286 8,685 6,386 - - - 95,468 96,960 58,415 42,952 - - - Unitholders’ Distribution — As Distribution from Operations ...... 61,549 63,637 29,525 21,710 8,720 7,975 5,864 — As Distribution of Unitholders’ Capital Contribution ...... 33,919 33,323 28,890 21,242 10,298 8,104 5,959 Total ...... 95,468 96,960 58,415 42,952 19,018 16,079 11,823 Distribution Per Unit (cents) ...... 3.41 3.44 2.05 1.51 0.67 0.55 0.40

12 Statements of Financial Position

As of December 31 As of March 31 2016 2017 2018 2018 2019 S$ US$ S$ US$ Thousands Thousands Thousands Thousands

ASSETS Non-Current Assets Plant and Equipment ...... 7,508 9,931 10,595 7,790 10,337 7,601 Investment Properties ...... 1,922,642 1,908,141 1,831,646 1,346,799 1,856,358 1,364,969 Derivative Financial Instruments — Current ...... - 394 - - - - Intangible Assets ...... 19,206 11,906 8,790 6,463 8,331 6,126 Total Non-Current Assets ...... 1,949,356 1,930,372 1,851,031 1,361,052 1,875,026 1,378,696

Current Assets Trade and Other Receivables ...... 17,223 38,989 40,486 29,769 37,311 27,435 Other Assets ...... 20,900 29,613 21,964 16,150 17,331 12,742 Cash and Cash Equivalents ...... 77,754 64,900 52,676 38,732 74,658 54,896 Total Current Assets ...... 115,877 133,502 115,126 84,651 129,300 95,073 Total Assets ...... 2,065,233 2,063,874 1,966,157 1,445,703 2,004,326 1,473,769 UNITHOLDERS’ FUNDS, PERPETUAL SECURITIES AND LIABILITIES Unitholders’ Funds Issued Equity ...... 1,393,642 1,401,380 1,414,763 1,040,267 1,421,321 1,045,089 Retained Earnings ...... 170,027 119,675 90,831 66,788 97,119 71,411 Currency Translation (Adverse) ...... (471,981) (612,769) (686,030) (504,434) (663,810) (488,096) Total Unitholders’ Funds ...... 1,019,688 908,286 819,564 602,621 854,630 628,404 Perpetual Securities Perpetual Securities ...... 140,867 259,647 259,647 190,917 259,156 190,556

Total Perpetual Securities ...... 140,867 259,647 259,647 190,917 259,156 190,556 Non-Current Liabilities Deferred Tax Liabilities ...... 31,662 23,364 23,241 17,089 23,241 17,089 Other Financial Liabilities ...... 517,869 421,090 555,216 408,247 555,992 408,818 Other Liabilities ...... 87,039 94,688 89,499 65,808 89,966 66,151 Derivative Financial Instruments ...... 1,811 1,954 1,885 1,386 1,625 1,195 Total Non-Current Liabilities ...... 638,381 541,096 669,841 492,530 670,824 493,253 Current Liabilities Income Tax Payable ...... 6,154 5,715 3,881 2,853 7,467 5,490 Trade and Other Payables ...... 31,180 45,337 50,192 36,905 48,010 35,301 Other Financial Liabilities ...... 124,291 268,469 120,034 88,260 120,034 88,260 Other Liabilities ...... 32,582 34,415 42,279 31,088 44,205 32,505 Derivative Financial Instruments — Current ...... 90 909 719 529 - - Total Current Liabilities ...... 194,297 354,845 217,105 159,635 219,716 161,556 Total Liabilities ...... 832,678 895,941 886,946 652,165 890,540 654,809 Total Unitholders’ Funds, Perpetual Securities and Liabilities ...... 2,065,233 2,063,874 1,966,157 1,445,703 2,004,326 1,473,769 Net Asset Value per Unit (cents) ...... 38.95 32.16 28.66 21.07 29.52 21.71

13 Financial Metrics, Portfolio Details and Metrics

As of December 31 As of March 31 2016 2017 2018 2018 2019 US$ US$ Thousands Thousands Financial metrics Net Property Income (S$ thousands) ...... 171,860 184,251 164,967 121,300 40,513 29,789 Interest expense (S$ thousands) ...... 29,106 27,041 30,954 22,760 7,799(1) 5,735 Aggregate leverage (%)(2) ...... 31.5% 33.7% 34.6% - 33.9% - NPI / Interest expense (x)(3) ...... 5.9 6.8 5.3 - 5.2 -

Operating metrics Portfolio details Number of malls ...... 20 23 23 - 23 - Number of retail spaces ...... 7 7 7 - 7 - Total GFA (sq m) ...... 1,506,683 1,650,014 1,650,014 - 1,650,014 - Total NLA (sq m) ...... 851,850 910,582 910,749 - 911,020 - Number of tenants ...... 3,429(4) 3,363 3,697 - 3,734 - Portfolio metrics - Total Indebtedness (S$ thousands) ...... 650,710 695,000 680,000 500,000 680,000 500,000 LTV (Net debt /Investment properties) ...... 29.8% 33.0% 34.2% - 32.6% - % of unencumbered assets(5) ...... 75.5% 77.6% 100.0% - 100.0% - Portfolio valuation (IDR billion) ...... 18,124 19,475 19,514 1,348,000 19,514 1,382,000 Portfolio valuation per NLA (IDR million/ sq m) / (USD hundreds/ sq m) ...... 21.3 21.4 21.4 14.8 21.4 15.2 Portfolio occupancy (%)(6) ...... 94.3% 93.7% 92.9% - 91.5% - Rental reversion (%) ...... 7.0% 5.6% 3.6% - 6.3% - Shopper traffic (millions) ...... 141.1 148.2 169.8 - 39.1 - WALE (years) ...... 4.5 4.1 4.2 - 4.2 -

(1) As of March 31, 2018 the Interest expense is S$7,233,000. (2) Calculated as total debt divided by total assets. (3) Calculated as NPI divided by interest expense (excluding amortization of fees and other charges). (4) For retail malls only. (5) Proportion of investment properties that are not pledged as security. (6) Weighted average.

14 RISK FACTORS

An investment in the Notes is subject to significant risks. You should carefully consider all of the information in this Offering Memorandum and, in particular, the risks described below before deciding to invest in the Notes. The following describes some of the significant risks that could affect us and the value of the Notes as well as the Issuer’s ability to pay interest on, and repay the principal of, the Notes. Additionally, some risks may be unknown to us and other risks, currently believed to be immaterial, could turn out to be material. All of these could materially and adversely affect our business, financial condition, results of operations and prospects. The market price of the Notes could decline due to any of these risks and you may lose all or part of your investment. This Offering Memorandum also contains forward-looking statements that involve risks and uncertainties including those described under “Forward-Looking Statements” elsewhere in this Offering Memorandum. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this Offering Memorandum.

RISKS RELATING TO OUR OPERATIONS We are dependent on rental payments from the tenants of Properties in our portfolio The Properties are operated by our Property Manager and, as such, we do not directly operate the properties in our portfolio. Therefore, our revenue and cash flow will depend to a large extent upon the ability of the tenants of Properties in our portfolio to make rental payments. As such, the prospects of the other businesses of the tenants of Properties in our portfolio, aside from those relating to us, could impact on the ability of the tenants of the Properties in the portfolio to make rental payments to us.

Factors that affect shoppers’ volume and, thereby, the ability of the tenants of the Properties in our portfolio to meet their obligations include, but are not limited to:

(i) the financial position of the tenants;

(ii) unemployment levels in Indonesia;

(iii) the national and local economies in Indonesia;

(iv) seasonal retail cycles;

(v) local retail competitors and competition in the retail industry;

(vi) the ability to attract and retain successful tenants;

(vii) unfavorable publicity;

(viii) material losses in excess of insurance proceeds;

(ix) the possibility of social unrest and union activities disrupting the operations of the properties in the portfolio, severely impacting on its reputation and ability to function normally; and

(x) natural disasters.

There can be no assurance that the tenants of the Properties in our portfolio will have sufficient assets, income and access to financing in order to satisfy their obligations under their respective lease agreements. If tenants are unable to satisfy their obligations under their lease agreements, this may have a material adverse effect on our business, financial condition, results of operations and prospects, and on our ability to pay interest on, and repay the principal of, the Notes.

The tenants of the Properties in our portfolio may not renew their respective leases of the Properties in the portfolio A substantial number of the leases for the Properties are for terms of three to five years. As a result, a substantial number of such leases expire each year. No assurance can be given that the tenants of the Properties in our portfolio will exercise any option to renew their leases of the Properties in the

15 portfolio upon the expiry of their respective leases. In such a situation, we may not be able to locate suitable replacement lessees, as a result of which we may lose a significant or our only source of revenue. In addition, replacement of the tenants of the Properties in the portfolio on satisfactory terms may not be possible in a timely manner.

The failure on the part of the tenants of the Properties in our portfolio to renew their leases upon the expiry may have an adverse effect on our business, financial condition, results of operations and prospects. Further, there is a chance the renewal rental rates may not be higher than the existing rental rates, which could also have an adverse effect on our business, financial condition, results of operation and prospects.

If a major tenant or a significant number of tenants do not renew their leases at expiry, our financial condition, results of operations and capital growth may be adversely affected. The amount of rent and the terms on which lease renewals and new leases are agreed may also be less favorable than the current leases and substantial amounts may have to be spent for leasing commissions, free rent incentives, tenant improvements or tenant inducements. Additionally, the demand for retail space may be reduced by tenants seeking to reduce their leased space at renewal or during the term of the lease. If replacement tenants cannot be found in a timely manner or on terms acceptable to us upon a tenant’s non-renewal or reduction in space, the revenue and financial condition of the relevant property will be adversely affected, which could result in a material adverse effect on our revenue, financial condition and results of operations.

A downturn in the retail industry will likely have a direct impact on our revenues and cash flow As a landlord for retail businesses, our financial performance is linked to economic conditions in the Indonesian property market for retail space generally. The demand for Indonesian retail space has historically been, and could be in the future, adversely affected by any of the following:

(i) a weakness in the national, regional and local economies;

(ii) the adverse financial condition of some large retailing companies;

(iii) ongoing consolidation in the retail sector in Indonesia;

(iv) the excess amount of retail space in a number of Indonesian regional markets;

(v) an increase in consumer purchases through catalogues or the Internet and reduction in the demand for tenants to occupy our malls as a result of the Internet and e-commerce;

(vi) the timing and costs associated with property improvements and rentals;

(vii) any changes in taxation and zoning laws; and

(viii) adverse government regulation.

To the extent that any of these factors occur, they are likely to impact market rents for retail space and our financial condition and results of operations.

There are potential conflicts of interest among us, the LMIRT Manager, the Property Manager and the Sponsor The LMIRT Manager is an indirect wholly-owned subsidiary of the Sponsor. The Property Manager of each of the Properties in our portfolio is a wholly-owned subsidiary of the Sponsor. The Property Manager is a full service property management company which is engaged in the business of managing properties in Indonesia. Therefore, the Property Manager may manage retail properties owned by other clients. There can be no assurance that the Property Manager will not favor other properties which it manages or operates over those owned by us.

The Sponsor, its subsidiaries and associates are engaged in, and/or may engage in, among others, portfolio management, investment in, and the development, management and operation of, retail properties in Indonesia and elsewhere in the region. Furthermore, an affiliate of the Sponsor, PT Lippo General Insurance Tbk. provides insurance coverage for certain Properties in our portfolio.

16 As a result, our strategy and activities may be influenced by the overall interests of the Sponsor. Moreover, the Sponsor may in the future sponsor, manage or invest in other real estate investment trusts or other vehicles which may compete directly with us. There can be no assurance that conflicts of interest will not arise between them in the future, or that our interests will not be subordinated to those of the Sponsor whether in relation to the future acquisition of properties or property-related investments or in relation to competition for tenants within the Indonesia market or regionally. Any conflict of interest may result in an adverse effect on our business, financial condition and results of operations.

The LMIRT Manager may not be able to implement its investment strategy Our investment policy is to invest on a long-term basis in a diversified portfolio of income producing real estate and/or real estate-related assets in Indonesia that are primarily used for retail and/or retail- related purposes.

There can be no assurance that the LMIRT Manager will be able to implement its investment strategy successfully or that it will be able to expand our portfolio at all, or at any specified rate or to any specified size. The LMIRT Manager may not be able to make acquisitions or investments on favorable terms or within a desired time frame. We face active competition in acquiring suitable properties, especially in a low interest rate environment where other investment vehicles are highly leveraged. As such, our ability to make new property acquisitions under our acquisition growth strategy may be adversely affected.

We rely on external sources of funding to expand our asset portfolio, which may not be available on favorable terms, or at all. Even if we are able to successfully make additional property acquisitions or investments, there can be no assurance that we will achieve our intended return on such acquisitions or investments. Since the amount of borrowings that we can incur to finance acquisitions is limited by the Property Funds Appendix, such acquisitions may be dependent on our ability to raise capital. Potential vendors may also take a negative view towards the prolonged time frame and lack of certainty generally associated with the raising of equity capital to fund any such purchase and may prefer other potential purchasers. The inability of the LMIRT Manager to implement its investment strategy may result in an adverse effect on our business, financial condition and results of operations.

We may be affected by difficulties faced by our Sponsor Our Sponsor, its subsidiaries and associates are engaged in the development of retail properties in Indonesia and elsewhere in the region. We have acquired, and expect to continue to acquire, a number of our properties from our Sponsor. As a result, our strategy and activities may be influenced by the ability of the Sponsor to develop such properties. If our Sponsor faces difficulties that impact its ability to provide us with such properties as agreed, this may result in an adverse effect on our business, financial condition and results of operations.

In addition, any allegations or future allegations of bribery, corruption or other related matters involving our Sponsor, any of its or our other affiliates, even if unrelated to us or them or even if unconfirmed or later found to be unsubstantiated, could adversely impact our reputation, our ability to obtain financing or the price at which our Units and Notes trade.

The Properties are subject to increasing competition The Indonesian retail malls business is highly competitive. Our Properties face increased competition from both international and local retail operators with respect to factors such as location, facilities and supporting infrastructure, tenant mix, F&B mix, services and pricing. Our Properties are each located in areas with several competing retail malls. Our Properties may also compete with retail malls in Indonesia developed in the future, particularly in the Jakarta area. Our Properties may be affected by their ability to compete against existing and newly developed retail malls in its area, in attracting and retaining tenants. The inability of our Properties to compete with existing retail malls or an increase in the number of retail malls in especially in the Jakarta area, could have an adverse effect on the revenues of our Properties, as such increased competition may have an adverse impact on the ability of the tenants to make rental payments or current tenants may elect to relocate to competing retail malls. There can be no assurance that the retail malls will be able to compete successfully in the future against existing or potential competitors or that increased competition will not have a material adverse effect on our business.

17 E-commerce may change the competitive landscape of conventional retail business and if the Property Manager and the Properties’ tenants are unable to respond quickly to changing consumer preferences, the Properties’ customer base may decrease and our business, financial condition and results of operations may be negatively impacted. E-commerce in Indonesia is predicted to continue to become more competitive due to increasing internet penetration, the low barriers to entry and growing acceptance of online shopping by Indonesian internet users in Indonesia. Accordingly, e-commerce could pose competition to the business of our retail malls which is dependent on retail spending through conventional channels.

Further, the performance of the Properties depends on the Property Manager’s ability to attract an optimal tenant mix and on the retail malls’ tenants’ ability to anticipate changing trends and promptly respond to changing trends, customer demographics and preferences and the increasing pace at which preferences evolve. This is particularly true for fashion trends which change at a rapid pace, and makes it difficult to accurately predict sales and to promptly deliver suitable goods. Customer acceptance of new goods is affected by a number of factors, including prevailing economic conditions, disposable income, global lifestyle trends, price, value, quality, functionality and appearance. A failure by the Properties’ tenants to accurately and quickly identify changing consumer demands may result in their carrying brands or goods to be superseded by more popular goods. Our revenues from car parking may also decline due to the rise of ride-sharing services. In addition, the Property Manager’s failure to offer consumers an optimal tenant mix which effectively responds to consumer preferences may alienate consumers who are unable to locate their desired goods and/or brands in the retail malls.

If any of these risks materialize, retail customer traffic at our Properties may decrease and our business, financial condition and results of operations may be adversely affected.

We are dependent on our significant tenants and any breach by the significant tenants of their obligations under the respective leases or the loss of such significant tenants may have an adverse effect on our business, financial condition and results of operations. The top ten tenants in our portfolio represented approximately 23.4% of our gross rental income as of March 31, 2019. Our largest tenant by gross rental income, Matahari Department Store, currently occupies approximately 130,000 sq m of NLA as of March 31, 2019, representing approximately 9.9% of gross rental income generated by the Properties. Many factors, including the financial position of the tenants, the ability of such significant tenants to compete with its competitors, material losses suffered by such tenants in excess of insurance proceeds and consequences of difficult global economic conditions, may cause our tenants to experience a downturn in their businesses or otherwise experience a lack of liquidity, which may weaken their financial condition and result in them failing to make timely rental payments or them defaulting under their leases. If any tenant defaults or fails to make timely rent payments, we may experience delays in enforcing our rights as landlord, may not succeed in recovering rent at all and may incur substantial costs in protecting our investment.

In addition, our financial condition and results of operations and capital growth may be adversely affected by the decision by one or more of such significant tenants to not renew its lease. If a key customer or a significant number of tenants do not renew their leases at expiry, it may be difficult to secure replacement tenants at short notice. In addition, the amount of rent and the terms on which lease renewals and new leases are agreed may be less favorable than the current leases.

Therefore, the loss of key tenants or a significant number of tenants in any one of the Properties or our future acquisitions could result in periods of vacancy, which could adversely affect our revenue and financial conditions and impact on the relevant subsidiary’s ability to make dividends or distributions to us. The amount of rent and the terms on which lease renewals and new leases are agreed may also be less favorable than the current leases and substantial amounts may have to be spent for leasing commissions, rent free incentives, tenant improvements or tenant inducements. Additionally, the demand for retail space may be reduced by tenants seeking to reduce their leased space at renewal or during the term of the lease. If replacement tenants cannot be found in a timely manner or on terms acceptable to us upon a tenant’s non-renewal or reduction in space, the revenue and financial condition of the relevant property will be adversely affected, which could result in a material adverse effect on our revenue, financial conditions and results of operations.

18 The retail spaces, which are located within and are part of retail malls, are subdivided developments, and there is no assurance that the other owners of strata lots in these retail malls will not vote against the interests of the retail spaces in matters relating to the common area, common land and common property The retail spaces are part of retail malls which are subdivided developments comprising strata lots, common area, common land and common property. The common area, common land and common property are jointly owned or used by owners or residents of the strata lots as tenants-in-common in proportion to the rights to use attributable to their respective strata lots.

Under the Indonesian law on Strata Title Buildings (Undang-Undang Rumah Susun), the ownership of the strata lots is evidenced by strata titles (i.e. certificates of title to each lot or Hak Milik Atas Rumah Susun), which include the right to the common area, common land and common property which constitutes an inseparable part of the ownership of the strata lots. In order to preserve the common interest among the owners and/or residents on the use of the common area, common land and common property, the owners or residents must establish an Owners and Residents Association (Perhimpunan Pemilik dan Penghuni).

Each of the owners of strata lots in a Strata Title Building has a proprietary interest, collectively, in accordance with its undivided proportionate interest, in the common area, common land and common property of the relevant Strata Title Building, however subject to the articles of association of the Owners and Residents Association, certain matters require prior consent of the Owners and Residents Association, including, for example, the use or the service charge payable in respect of the common area, common land and common property. Further, certain matters such as the (i) formation of organizational structure, (ii) preparation of the articles of association and bylaws and (iii) work program of the management of the Owners and Residents Association is made based on the deliberation of the strata lots owners and if such deliberation is not achieved, voting would have to take place. Nomination of the Owners and Residents Association’s management and supervisor is also based on the majority votes of the strata lots owners, whereas based on the recent regulation regarding Owners and Residents Association, one owner is eligible for one vote, despite having ownership over several strata lots. As the aggregate share value (proportional value or Nilai Perbandingan Proporsional) of each of the retail spaces ranges from 25% to 55% of the total rights value of the strata lots comprised in the respective retail malls within which they are located, there is no assurance that the other owners will not take over the common area, common land and common property of the retail malls within which the retail spaces are located, unlike in the case of a development which is wholly-owned by it.

Losses or liabilities from latent building or equipment defects may adversely affect earnings and cash flow Design, construction or other latent property or equipment defects in properties in our portfolio may require additional capital expenditure, special repair or maintenance expenses or the payment of damages or other obligations to third parties. Costs or liabilities arising from such property or equipment defects may involve significant and potentially unpredictable patterns and levels of expenditure which may have a material adverse effect on our earnings and cash flows.

Statutory or contractual representations, warranties and indemnities given by any seller of real estate are unlikely to afford satisfactory protection from costs or liabilities arising from such property or equipment defects. All of these factors may result in an adverse effect on our business, financial condition and results of operations.

If an underlying BOT agreement expires before the right to build land title over the BOT land expires, the BOT grantee will have to return the BOT land along with any rights to operate although the right to build land title over the BOT land has yet to expire Under Indonesian law, the maximum term of a BOT agreement is 30 years, commencing from the date of the BOT agreement, and cannot be extended. On the other hand, the term of a right to build land title is commonly granted for 30 years and may be extended for an additional term of 20 years. Consequently, there is a possibility that a BOT agreement period expires while the right to build over such BOT land is still valid under the name of the BOT grantee. In such case, the BOT grantee will have to deliver the property situated on the BOT land along with any right to operate on such land to the BOT grantor without any compensation from the BOT grantor. This could result in an adverse effect on our business, financial condition and results of operations.

19 Currency fluctuations could materially affect our financial condition and results of operations We expect to have, in the future, an increased exposure to foreign currency risk as a result of the issuance of the Notes, and the subsequent payment of interest on, and principal of, the Notes, which will be in US Dollars. We may also incur additional borrowings in US Dollars, Singapore Dollars or other foreign currencies. Therefore, a decline in the value of the Rupiah against the Singapore Dollar, US Dollar or other foreign currencies would impact our ability to service the financing obligations. A decline in the value of the Singapore Dollar against the US Dollar would impact the value of our US Dollar borrowings on our balance sheet. Adverse movements in foreign exchange rates may adversely affect our business, results of operations, financial condition and prospects.

In addition, our current investments and any future foreign investments and property income are and are expected to be denominated in foreign currencies predominantly in Rupiah. However, we maintain our financial statements in Singapore Dollars. A portion of our expenses and liabilities will also be denominated in Singapore Dollars. We will therefore be exposed to risks associated with exchange rate fluctuations between the Singapore Dollar and the local currency of the other foreign countries, in particular the Rupiah. Furthermore, we may not, as a result of these exchange rate fluctuations, be able to comply with some of the financial covenants in our existing and future borrowings.

We operate substantially through Singapore SPCs and Indonesian SPCs and our liquidity and financial position is dependent on the financial position of the Indonesian SPCs and to a lesser extent, the financial position of the Singapore SPCs We operate substantially through the Singapore SPCs and the Indonesian SPCs and rely on payments and other distributions from the Singapore SPCs and the Indonesian SPCs for its income and cash flows. The ability of the Singapore SPCs to make such payments may be restricted by, among other things, the Indonesian SPCs’ business and financial positions, the availability of distributable profits, applicable laws and regulations or the terms of agreements to which they are, or may become, a party.

There can be no assurance that the Indonesian SPCs will have sufficient distributable or realized profits or surplus in any future period to make dividend payments or make advances to the Singapore SPCs and therefore to us. The level of profit or surplus of each Indonesian SPC available for distribution by way of dividends and payments to each Singapore SPC and therefore to us may be affected by a number of factors including:

(i) operating losses incurred by the Indonesian SPCs in any financial year;

(ii) changes in accounting standards, taxation regulations, corporation laws and regulations relating thereto; and

(iii) insufficient cash flows received by the Singapore SPCs from the Indonesian SPCs.

The occurrence of these or other factors that affect the ability of the Singapore SPCs to pay dividends or other distributions to us may adversely affect our liquidity and financial position.

We may not be able to secure funding to fund future acquisitions or significant capital expenditure which the properties in our portfolio or any future properties may require The properties in our portfolio and properties to be acquired by us may require periodic capital outlay for the purpose of refurbishments, renovation and improvements in order to remain competitive. Acquisitions or enhancement of existing properties by us may require significant capital expenditure. We may not be able to fund future acquisitions, capital improvements or expenditure, solely from cash derived from our operating activities and liquid assets and we may not be able to obtain additional equity or debt financing or be able to obtain such financing on favorable terms or at all.

We may, from time to time, require additional debt financing to fund working capital requirements, to support the future growth of our business and/or to refinance existing debt obligations, including the Notes. In addition, our indebtedness means that a material portion of our expected cash flow may be required to be dedicated to the repayment of principal and payment of interest on our indebtedness, thereby reducing the funds available to us for use in our general business operations. Our indebtedness may also restrict our ability to obtain additional financing for capital expenditure,

20 acquisitions or general corporate purposes and may cause it to be particularly vulnerable in the event of a general economic downturn. The willingness of financial institutions to make capital commitments by way of investing in our debt or equity instruments may, for an indeterminate period, be adversely affected by any financial crisis.

As of the date of this Offering Memorandum, we have in place a S$75.0 million bond maturing in 2020, a loan facility of S$175.0 million maturing in 2020 (to be repaid from the proceeds of the Notes), a loan facility of S$175.0 million maturing in 2021, a loan facility of S$67.5 million maturing in 2022, a loan facility of S$67.5 million maturing in 2023 and two revolving credit facilities of S$80.0 million and S$40.0 million respectively (both to be repaid from the proceeds of the Notes). We will also be subject to the risk that it may not be able to refinance our existing and/or future borrowings or that the terms of such refinancing will not be as favorable as the terms of our existing borrowings, particularly in light of current uncertainty and instability in the global market conditions. In addition, we are subject to restrictive covenants in our existing borrowings and may be subject to certain covenants in connection with any future borrowings that may limit or otherwise adversely affect our operations. Such covenants may also restrict our ability to acquire properties or undertake other capital expenditure or may require it to set aside funds for maintenance or repayment of security deposits. Furthermore, if prevailing interest rates or other factors at the time of refinancing (such as the possible reluctance of lenders to make real estate loans) result in higher interest rates upon refinancing, the interest expense relating to such refinanced indebtedness would increase, which would adversely affect our cash flow.

The amount we may borrow is limited, which may affect our operations and the borrowing limit may be exceeded if there is a downward revaluation of assets The properties in our portfolio and future properties to be acquired by us may require periodic capital expenditures, refurbishments, renovation and improvements in order to remain competitive. Acquisitions of new properties or enhancement of existing properties may require significant capital expenditure in respect of our portfolio. We may not be able to fund future acquisitions, capital improvements or expenditure, solely from cash provided from our operating activities and we may not be able to obtain additional equity or debt financing or be able to obtain such financing on favorable terms or at all.

Under the current restrictions set out in the Property Funds Appendix, the total borrowings and deferred payments of a property fund should not exceed 45% of the fund’s deposited property. A decline in the value of our deposited property may affect our ability to borrow further.

Adverse business consequences of this limitation on borrowings may include:

(i) an inability to fund capital expenditure requirements in relation to our properties;

(ii) an inability to fund acquisitions of properties; and

(iii) cash flow shortages.

A downward revaluation of any of our properties or investments may result in a breach of the borrowing limit under the Property Funds Appendix. In the event of such a breach, we would not be able to incur further indebtedness and may be required to reduce our indebtedness to certain lenders and/or creditors. In such circumstances, while we may not be required to dispose of our assets to reduce our indebtedness, the inability to incur further indebtedness may constrain our operational flexibility. An inability to borrow and invest in future our properties may have an adverse impact on our business, results of operations, financial condition and prospects.

The due diligence exercises conducted prior to any property acquisitions may not identify all material defects, breaches of laws, regulations and contracts and other deficiencies There can be no assurance that any reviews, surveys or inspections (if any) conducted by independent valuers, technical consultants and surveyors in connection with a proposed acquisition of property will reveal all defects or deficiencies in such properties, including latent defects requiring repair or maintenance, thereby adversely affecting our operations and incurring significant capital expenditures, or payment or other obligations to third parties.

21 In addition, acquired properties may be in breach of laws and regulations (including those in relation to real estate and environmental laws) or fail to comply with certain regulatory requirements (including those in relation to the registration of certain deeds and other legal documents with the relevant regulatory authorities in Indonesia), which the LMIRT Manager’s due diligence investigations may not uncover. Further, when property acquisitions involve the acquisition of an operating entity that owns the subject property, it is possible that these acquired operating entities will have entered into agreements with third parties that the LMIRT Manager’s due diligence may not have uncovered or the LMIRT Manager’s due diligence may not uncover all breaches of these agreements by such operating entity. As a result, we may incur additional financial or other obligations in relation to such breaches or non-compliance.

The representations, warranties and any guarantees given to us by vendors in connection with the acquisition of new properties are typically subject to limitations as to the scope of such representations, warranties and guarantees, the aggregate liability of vendors in respect of all claims under such representations, warranties and guarantees, and the period within which such claims can be made. There can be no assurance that we will be able to recover all losses or liabilities suffered or incurred by us as a result of future property acquisitions. Should we not be able to recover such losses or liabilities, this would in turn adversely affect our operating results and our ability to generate revenue and honor our obligations under the Notes.

We are subject to regulation We, the LMIRT Manager and their directors, officers and/or employees are subject to a wide variety of laws and regulations, including in respect of our and the LMIRT Manager’s operations, our borrowings and the composition and conduct of the LMIRT Manager’s board of directors. See “The amount we may borrow is limited, which may affect our operations and the borrowing limit may be exceeded if there is a downward revaluation of assets”. Regulators may find that we, the LMIRT Manager and/or their directors, officers or employees are not in compliance with applicable laws and regulations, and may take formal or informal actions against the us, the LMIRT Manager and/or their directors, officers and employees. If taken, such formal or informal actions might force us or the LMIRT Manager to adopt new compliance policies, remove personnel or undertake other changes, or may lead to the disqualification of their directors, officers and/or employees from acting in such capacities and/or may hinder the effective performance of their duties. We and the LMIRT Manager could also be affected by changes in laws, regulations and regulatory policies of Singapore. Such changes may include new, revised or more burdensome standards which could also cause increased compliance costs associated with such laws and regulations. Regulatory issues and changes in law may have an adverse impact on our business, financial condition or results of operations.

The LMIRT Manager’s capital market services license for REIT management (“CMS License”) may be cancelled or our authorization as a collective investment scheme under Section 286 of the SFA may be suspended, revoked or withdrawn The CMS License issued to the LMIRT Manager is subject to conditions unless otherwise cancelled. If the CMS License of the LMIRT Manager is cancelled by the MAS, our operations will be adversely affected, as the LMIRT Manager would no longer be able to act as our manager.

We are an authorized collective investment scheme under the SFA and must comply with the requirements under the SFA and the Property Funds Appendix. In the event that our authorization is suspended, revoked or withdrawn, our operations will also be adversely affected.

Our Properties may be subject to increases in operating and other expenses Our financial position could be adversely affected if operating and other expenses increase without a corresponding increase in revenues or tenant reimbursements of operating and other costs. Factors that could increase operating and other expenses include increases or changes in property taxes and other statutory charges; statutory laws, regulations or government policies that increase the cost of compliance with such laws, regulations or policies; sub-contracted service costs; labor costs; repair and maintenance costs; the rate of inflation; insurance premiums; and cost of utilities. Increased expenses may have an adverse impact on our business, financial condition or results of operations.

We may be adversely affected by the illiquidity of real estate investments We invest primarily in income-producing real estate properties that are primarily used for retail and/or retail-related purposes. This involves a higher level of risk as compared to a portfolio which has a

22 diverse range of investments. Real estate investments, particularly investments in high value properties such as those in which we have invested or intend to invest in, are relatively illiquid. Such illiquidity may affect our ability to vary our investment portfolio or liquidate part of our assets in response to changes in economic, real estate market or other conditions. For instance, we may be unable to sell our assets on short notice or may be forced to give a substantial reduction in the price that may otherwise be sought for such assets in order to ensure a quick sale. Moreover, we may face difficulties in securing timely and commercially favorable financing in asset-based lending transactions secured by real estate due to the illiquid nature of real estate assets. These factors may result in an adverse effect on our business, financial condition and results of operations.

The Properties in our portfolio may be revalued downwards There can be no assurance that we will not be required to make downward revaluations of the Properties in our portfolio in the future. Any fall in the gross revenue or net property income earned from our Properties may result in downward revaluations of the Properties held by us.

In addition, we are required under SFRS to measure investment properties at fair value at each balance sheet date, with such fair value determined by an independent valuer annually, and any change in the fair value of the investment properties is recognized in our statements of total return. The changes in fair value may have an adverse effect on our financial results in the financial years where there is a significant decrease in the valuation of our investment properties which will result in revaluation losses that will be charged to our statements of total return.

Renovation works to Properties in our portfolio may impact our operations The Properties in our portfolio may need to undergo renovation works from time to time, including planned AEI and may also require unforeseen ad hoc maintenance or repairs in respect of faults or problems that may develop over structural defects or other parts of the buildings or because of new planning laws or regulations. The costs of maintaining a property and the risk of unforeseen maintenance or repair requirements tend to increase over time as the building ages.

While we try to schedule AEI to have minimal impact, if any leases are due for renewal during AEI, there is a chance that the existing tenants may either choose not to renew the leases upon their expiry or negotiate for lower rentals and this will adversely affect the revenue of the affected property. This may adversely impact our financial condition, results of operations and our ability to pay interest on, and repay the principal of, the Notes.

Our Properties and/or future acquisitions, or a part of them, may be acquired compulsorily In Indonesia, pursuant to Law No. 20 of 1961 concerning Revocation of Rights of Land and the Properties Thereon and in conjunction with Presidential Regulation No. 71 of 2012 (as amended) concerning Implementation Land Procurement for the Development of Public Interest, the Indonesian Government has the right to acquire land and any property thereon owned by any party by providing compensation to the previous owner of such land, in order to fulfill any public needs. Therefore, there is no assurance that the Indonesian government will not compulsorily acquire land on which the Properties in our portfolio are located.

Compensation to be awarded pursuant to any such compulsory acquisition would be based on factors, including the market value of the property at the time of the acquisition. Accordingly, if the market value of a property or part thereof that is compulsorily acquired is greater than the compensation paid in respect of the acquired property this could have an adverse effect on our assets.

RISKS RELATING TO INDONESIA Political and social instability may adversely affect the operations of all the Properties in our portfolio The Properties in our portfolio are located in Indonesia. The LMIRT Manager’s asset acquisition strategy also contemplates future acquisitions of properties located in Indonesia.

Indonesia has held free elections since 2004. The first direct presidential elections in the history of Indonesia were held in Indonesia on July 5, 2004 and September 20, 2004. In the second round, the

23 former coordinating minister for politics and security Susilo Bambang Yudhoyono, defeated then incumbent President Megawati Sukarnoputri. Former President Yudhoyono was inaugurated on October 20, 2004. Upon taking office in October 2004, former President Yudhoyono appointed a new cabinet and announced plans to improve economic conditions. However, past political instability continued to have an adverse effect on investor confidence in the Indonesian economy during the first part of former President Yudhoyono’s term. Former President Yudhoyono’s first term was scheduled to expire in October 2009, and, therefore, a new presidential election took place on July 8, 2009. According to certified final results, former President Yudhoyono and his vice-presidential running mate, Boediono, won approximately 61.0% of the popular vote to win a second term as President. On October 20, 2009, former President Yudhoyono was inaugurated for his second five-year term, which expired in October 2014.

In 2014, a presidential election was conducted to elect a successor to Susilo Bambang Yudhoyono, who had served two terms between 2004 and 2014. The election result was contested by both candidates, Prabowo Subianto and Joko Widodo, and both claimed victory based on separate quick counts. Out of fear that tension could lead to riots, hundreds of police were stationed in central Jakarta. On July 22, 2014, the day that the National Election Commission announced the election result, Prabowo withdrew from the recount process after having insisted on his victory ever since the initial quick counts. The National Election Commission found Joko Widodo to have a lead of 53.15% compared to Prabowo’s 46.85%. Prabowo then appealed against the election result to the Constitutional Court of Indonesia, alleging “structured, systematic and massive” violations and that the votes contained irregularities. On August 21, 2014, the court delivered a unanimous verdict rejecting all aspects of the appeal.

In and shortly after October 2016, thousands of Indonesians marched in a series of demonstrations in Jakarta and other cities either in support of or in opposition to the then Governor of Jakarta, Basuki Tjahja Purnama in connection with blasphemy allegations against him, in the period preceding a Jakarta Gubernatorial election in early 2017. Mr. Purnama was convicted of the blasphemy charges in May 2017. Anies Baswedan (of the same party as the losing candidate of the 2014 Presidential election) had been elected as Governor of Jakarta in April 2017.

Separatist movements and clashes between religious and ethnic groups have resulted in social and civil unrest in parts of Indonesia. In the provinces of Aceh and Papua (formerly Irian Jaya), there have been numerous clashes between supporters of those separatist movements and the Indonesian military. In Papua, continued activity by separatist rebels has led to violent incidents. In the provinces of Maluku and West Kalimantan, clashes between religious groups and ethnic groups have produced thousands of casualties and refugees over the past several years. The Government has attempted to resolve problems in these troubled regions with limited success except in the province of Aceh in which an agreement between the Government and the Aceh separatists was reached in 2005 and peaceful local elections were held with some former separatists as candidates, but there can be no assurance that the terms of any agreement reached between the Government and the separatists will be upheld.

Recently, Indonesia’s Electoral Commission (KPU) formally announced the results of the 2019 presidential election and it was confirmed that the incumbent President Joko Widodo won the presidential polls with 55.5% of the total votes. The result triggered allegations of electoral fraud. Thousands of supporters of the opposing party, Prabowo Subianto, then held a rally in front of the Elections Supervisory Agency’s (Bawaslu) headquarters on Jl. Thamrin in Central Jakarta on May 21, 2019, calling for the disqualification of Joko Widodo from the presidential election. The rally ended with a riot on May 22, 2019 in Central Jakarta. Further, the opposing party is currently challenging the election result to the Constitutional Court with regard to such fraud allegation, resulting in political uncertainty and instability in Indonesia.

Political and social developments in Indonesia have been unpredictable in the past and, as a result, confidence in the Indonesian economy and capital markets has remained low. Any resurgence of political instability, including in relation to the presidential election in 2019, could adversely affect the Indonesian economy, which in turn could have adverse effects on the operations of the properties, consequently impacting on the ability of the tenants of the properties to make rental payments to us. There can be no assurance that social and civil disturbances will not occur in the future or that such social and civil disturbances will not directly or indirectly, materially and adversely affect our business, financial condition, results of operations and prospects, and the Issuer’s ability to meet its payment obligations under the Notes.

24 Fluctuations in the value of the Rupiah may materially and adversely affect the operations of the Properties in our portfolio, thereby materially and adversely affecting the ability of the tenants of the Properties in our portfolio to make rental payments to us One of the most important immediate causes of the economic crisis which began in Indonesia in mid-1997 was the depreciation and volatility of the value of the Rupiah as measured against other currencies, such as the US Dollar. Although the Rupiah has appreciated considerably from the low point of approximately Rp17,000 per one US Dollar in January 1998, the Rupiah continues to experience significant volatility. For example, the Rupiah depreciated from Rp12,189 per US Dollar as of December 31, 2013 to Rp14,215 per US Dollar as of March 31, 2019. There can be no assurance that the Rupiah will not be subject to depreciation and continued volatility, that the current exchange rate policy will remain the same, or that the Government will, or will be able to, act when necessary to stabilize, maintain or increase the value of the Rupiah, and will not act to devalue the Rupiah, or that any such action, if taken, will be successful. Modification of the current floating exchange rate policy could result in significantly higher domestic interest rates, liquidity shortages, capital or exchange controls or the withholding of additional financial assistance by multinational lenders. This could result in a reduction of economic activity, an economic recession, loan defaults and increases in the price of imports. Any of the foregoing consequences could have a material adverse effect on the operations of the Properties in our portfolio, thereby materially and adversely affecting the ability of the tenants of the Properties in our portfolio to make rental payments to us.

We are dependent on the quality of the titles to the properties in our portfolio Due to the nature of Indonesian property law and the lack of a uniform title system in Indonesia, there is potential for disputes over the quality of title acquired from previous landowners. In addition, there is a need to negotiate with the actual owner of the land each time land is acquired under the land title, which may result in purchases of property (and thereby the obtaining of title to the relevant land) being delayed or not proceeding in the event that negotiations are unsuccessful. Such delays in acquiring properties required for development activities may result in an adverse effect on our business, financial condition, results of operations and our level of distributable income.

Terrorist attacks in Indonesia could destabilize the country In Indonesia during the last ten years, there have been numerous bombing incidents directed towards the Government and foreign governments and public and commercial buildings frequented by foreigners, including the Jakarta Stock Exchange Building and Jakarta’s Soekarno-Hatta International Airport. For example, on July 17, 2009, two separate bomb explosions occurred at the JW Marriott Hotel and the Ritz Carlton Hotel in Jakarta, killing at least nine people and injuring 50 others. On January 14, 2016, two suicide bombers and two gunmen exchanged gunfire with police before bombing a police post and cafe in central Jakarta, killing at least four people and injuring more than 20 people. Indonesian, Australian and US government officials have indicated that these bombings may be linked to an international terrorist organization. The Islamic State of Iraq and the Levant claimed responsibility. On May 24, 2017, two explosions occurred at a bus terminal in Eastern Jakarta, resulting in three deaths and injuring 11 people. In May 2018, three churches were bombed in Surabaya, killing at least 28 people and injuring at least 50 others. Indonesian, Australian and US government officials have indicated that these bombings may be linked to an international terrorist organization. While in response to the terrorist attacks, the Government has institutionalized certain security improvements and undertaken certain legal reforms which seek to better implement anti- terrorism measures and some suspected key terrorist figures have been arrested and tried, there can be no assurance that further terrorist acts will not occur in the future.

Following military involvement of the United States and its allies in Iraq, a number of governments have issued warnings to their citizens in relation to a perceived increase in the possibility of terrorist activities in Indonesia, targeting foreign, particularly US interests. Such terrorist activities could destabilize Indonesia and increase internal divisions within the Government as it considers responses to such instability and unrest, thereby adversely affecting investors’ confidence in Indonesia and the Indonesian economy. Violent acts arising from and leading to instability and unrest have had, and could continue to have, a material adverse effect on investment and confidence in, and the performance of, the Indonesian economy, and may have an adverse effect on our business, financial condition, results of operations, our level of distributable income and prospects of the tenants of the properties in our portfolio. This could adversely impact the ability of the tenants of the Properties in our

25 portfolio to make rental payments to us. Our projects may be particularly vulnerable to, and adversely affected by, terrorist attacks because of the large numbers of people they attract and the general public access provided. Political unrest in Indonesia may disrupt the operation of our developments or make them less attractive to buyers. We cannot assure you that our Properties will not be subject to acts of terrorism, violent acts and adverse political developments which may have a material adverse effect on us, our business, financial condition, results of operations and prospects.

Economic changes in Indonesia may adversely affect the business of the tenants of the Properties in our portfolio The economic crisis which affected Southeast Asia, including Indonesia, from mid-1997 was characterized in Indonesia by, among others, currency depreciation, a significant decline in real gross domestic product, high interest rates, social unrest and extraordinary political developments. More recently, the global economic crisis that began in 2008 resulted in a decrease in Indonesia’s rate of growth to 4.4% in 2009 from 6.1% in 2008 and 6.3% in 2007. These conditions had a material adverse effect on Indonesian businesses. The global financial markets have experienced, and may continue to experience, significant turbulence originating from the liquidity shortfalls in the US credit and sub-prime residential mortgage markets since 2008, which have caused liquidity problems resulting in bankruptcy for many institutions, and resulted in major government bailout packages for banks and other institutions. The global economic crisis has also resulted in a shortage in the availability of credit, a reduction in foreign direct investment, the failure of global financial institutions, a drop in the value of global stock markets, a slowdown in global economic growth and a drop in demand for certain commodities. The global financial markets have also recently experienced volatility as a result of the downgrade of US sovereign debt and concerns over the debt crisis in the Eurozone. Uncertainty over the outcome of the Eurozone governments’ financial support programs and worries about sovereign finances generally are ongoing.

As a result of the economic crisis in 1997, the Government has had to rely on the support of international agencies and governments to prevent sovereign debt defaults. The Government continues to have a large fiscal deficit and a high level of sovereign debt, its foreign currency reserves are modest, the Rupiah continues to be volatile and has poor liquidity, and the banking sector is weak and suffers from high levels of non-performing loans. Government funding requirements to areas affected by the Asian tsunami in December 2004 and other natural disasters, as well as increasing oil prices, may increase the Government’s fiscal deficits. The annual inflation rate (measured by the year on year change in the consumer price index) was 3.4%, 3.0% and 3.6% in 2015, 2016 and 2017, respectively. Interest rates in Indonesia have also been volatile in recent years, which has had a material adverse impact on the ability of many Indonesian companies to service their existing indebtedness. The economic difficulties Indonesia faced during the Asian economic crisis that began in 1997 resulted in, among other things, significant volatility in interest rates, which had a material adverse impact on the ability of many Indonesian companies to service their existing indebtedness. Although the policy rate set by Bank Indonesia has decreased significantly to 6.0% as of December 20, 2018 as compared to a peak of 70.8% in late July 1998 for one-month Bank Indonesia certificates, there can be no assurance that the benchmark interest rate will remain at this level or that it will not be subject to any increase in the future. In August 2016, Bank Indonesia announced the adoption of a new benchmark rate, the Bank Indonesia 7-day repo rate, and has subsequently reduced this rate by 100 basis point to 4.25% between August 2016 and September 2017. There can be no assurance that the recent improvement in economic conditions will continue or the previous adverse economic condition in Indonesia and the rest of the Asia Pacific region will not occur in the future. In particular, a loss of investor confidence in the financial systems of emerging and other markets, or other factors, may cause increased volatility in the international and Indonesian financial markets and inhibit or reverse the growth of the global economy and the Indonesian economy.

A continued and significant downturn in the global economy, including the Indonesian economy, could have a material adverse effect on the demand for residential and commercial property, and therefore, on our business, financial condition, results of operations and prospects. In addition, the general lack of available credit and lack of confidence in the financial markets associated with any market downturn could adversely affect our access to capital as well as our suppliers’ and customers’ access to capital, which in turn could adversely affect our ability to fund our working capital requirements and capital expenditures.

26 In particular, slowing global economic growth may adversely affect the operations of the Properties in our portfolio, thereby materially and adversely affecting the ability of the tenants of the Properties in our portfolio to make rental payments to us.

We are exposed to changes in fiscal policies in Indonesia We will be subject to Indonesian real estate laws, securities laws, tax laws, any applicable laws relating to foreign exchange and related policies and any unexpected changes to the same. There may be a negative impact on our investments located in Indonesia as a result of measures and policies adopted by the Indonesian government and regulatory authorities at national, provincial or local levels, including governmental control over property investments or the imposition of foreign exchange restrictions. Legal protection and recourse available to us in Indonesia may be limited.

The Indonesian legal system is subject to considerable discretion and uncertainty Indonesia’s legal system is a civil law system based on written statutes in which judicial and administrative decisions do not constitute binding precedent and are not systematically published. Indonesia’s commercial and civil laws are historically based on Dutch law as in effect prior to Indonesia’s independence in 1945, and some of these laws have not been revised to reflect the complexities of modern financial transactions and instruments. Indonesian courts may be unfamiliar with sophisticated commercial or financial transactions, leading to uncertainty in the interpretation and application of legal principles in Indonesia. The application of legal principles in Indonesia depends upon subjective criteria such as the good faith of the parties to the transaction and principles of public policy, the practical effect of which is difficult or impossible to predict. Indonesian judges have very broad fact-finding powers and a high level of discretion in relation to the manner in which those powers are exercised. As a result, the administration and enforcement of laws and regulations by Indonesian courts and Indonesian governmental agencies may be subject to considerable discretion and uncertainty. For instance, Indonesian laws and regulations may impose certain obligations, such as the registration of deeds with the Company Registry Office, the failure to register may attract fines or imprisonment. However, in practice, certain of these laws and regulations may not be actively enforced, if at all, and this may result in a widespread practice of companies, including companies that we acquire, of not adhering to the strict requirements of the applicable law and regulation. In addition, Indonesian legal principles relating to the rights of debtors and creditors, or their practical implementation by Indonesian courts, may differ materially from those that would apply in other countries. On December 8, 2014, the Supervisory Judge in proceedings before the Commercial Court of the Central Jakarta District Court determined that noteholders were not creditors of Bakrie Tel for purposes of its court-supervised debt restructuring, known as Bakrie Tel PKPU. Bakrie Tel, an Indonesian telecommunications company, is the guarantor of US$380.0 million of senior notes issued in 2010 and 2011 by a Singapore-incorporated special purpose vehicle that is a subsidiary of Bakrie Tel. The proceeds from the offering of the notes were on-lent to Bakrie Tel pursuant to an intercompany loan agreement, which was guaranteed by Bakrie Tel and assigned to the noteholders as collateral. In its decision affirming the composition plan, the Commercial Court accepted the Supervisory Judge’s determination that the relevant creditor of Bakrie Tel in respect of the US$380.0 million notes was the issuer subsidiary, rather than the noteholders or the trustee, and gave no effect to the guarantee. As such, only the intercompany loan was recognized by the Commercial Court as indebtedness on which Bakrie Tel was liable for purposes of the Bakrie Tel PKPU. As a result, only the issuer subsidiary had standing as a Bakrie Tel creditor to vote in the Bakrie Tel PKPU proceedings, which substantially altered the terms of the US Dollar bonds and the guarantee.

Similar with the Bakrie Tel PKPU case, an Indonesian company, PT Trikomsel Oke Tbk (“Trikomsel”), in early 2016 was entered into a suspension of payment obligation (PKPU) under the Indonesia bankruptcy law regime. The PKPU administrators were reported to reject claims that arose from their two Singapore Dollar bonds and have taken the stance that the trustees do not have any standing to make claims on behalf of the bondholders. Further, they asserted that only individual bondholders that had filed claims on their own would be able to participate in the PKPU proceedings and to vote on the restructuring plan. On September 28, 2016, the PKPU process was settled between Trikomsel and its creditors through the establishment of a composition plan (rencana perdamaian) which was approved by certain bondholders, and then ratified by the Jakarta Commercial Court. Based on an announcement from Trikomsel, under the composition plan, the bondholders of the two Singapore Dollar bonds may be required to convert their bonds into new shares to be issued by Trikomsel, thereby extinguishing their bonds.

27 As a result, it may be more difficult for us to pursue a claim against the tenants of the Properties in the portfolio in Indonesia than it would be in other jurisdictions. This may adversely affect or eliminate entirely our ability to obtain and/or enforce a judgment against the tenants of the properties in our portfolio in Indonesia.

Regional autonomy may adversely affect our business through imposition of local restrictions, taxes and levies. Indonesia is a large and diverse nation covering a multitude of ethnicities, languages, traditions and customs. During the administration of former-President Soeharto, the Government controlled and exercised decision-making authorities in respect of almost all aspects of national and regional administration, including the allocation of revenues generated from extraction of national resources in various regions. This control led to a demand for greater regional autonomy, in particular with respect to the management of local economic and financial resources. In response to such demand, the Indonesian Parliament in 1999 passed Law No. 22 of 1999 regarding Regional Autonomy (“Law No. 22/1999”) and Law No. 25 of 1999 regarding Fiscal Balance between the Central and the Regional Governments (“Law No. 25/1999”). Law No. 22/1999 has been revoked by Law No. 23 of 2014, which was further amended by the Law No. 2 of 2015 and Law No. 9 of 2015 of Regional Autonomy. Law No. 25/1999 has been revoked and replaced by Law No. 33 of 2004 regarding the Fiscal Balance between the Central and the Regional Governments, respectively. Under these laws, regional autonomy was expected to give the regional governments greater powers and responsibilities over the use of “national assets” and to create a balanced and equitable financial relationship between central and regional governments. However, under the pretext of regional autonomy, certain regional governments have put in place various restrictions, taxes and levies which may differ from restrictions, taxes and levies put in by other regional governments and/or are in addition to restrictions, taxes and levies stipulated by the central government. Our business and operations are located throughout Indonesia and may be adversely affected by conflicting or additional restrictions, taxes and levies that may be imposed by the applicable regional authorities.

There are several material permits related to the Properties that are still in the process of being obtained or extended, and our business depends on the ability of our Properties to obtain, maintain and renew all necessary licenses and approvals. The obtaining of licenses is also dependent upon the regional government’s discretion. Various permits or approvals from the central or regional government are needed for the operation of our Properties which include general corporate licenses and business licenses, among others Shopping Center Business Licenses (Izin Usaha Pusat Perbelanjaan or “IUPP”), Functional Feasibility Certificate (Sertifikat Laik Fungsi or “SLF”) and Environmental License (Izin Lingkungan). The Property Manager and/or property owner must obtain all the licenses, permits and approvals and extend the licenses, permits and approvals before expiration of the same. Currently, some of our retail malls have not obtained the relevant material licenses. For example: (i) Plaza Medan Fair has not obtained its IUPP and SLF, (ii) Gajah Mada Plaza has not obtained its IUPP and its SLF has expired, (iii) the SLF for Lippo Mall Kemang has expired, (iv) Bandung Indah Plaza has not obtained its SLF, (v) Sun Plaza has not obtained either its IUPP or SLF, (vi) the SLF for Plaza Semanggi has expired and is in the process of extension, (vii) the SLF for Pejaten Village has expired and (viii) Lippo Mall Kuta has not obtained any SLFs for its mall.

Obtaining licenses is highly dependent on the issuing government. Problems may arise with this scheme due to the unsynchronized legislative products by each issuing government. It is common to see some laws that have no implementation regulations or, that the central government, through its regulation, provided authority to a regional government to implement a certain regulation. Sometimes, such implementation, however, is not conducted by the regional government or such regional government is not aware of such regulations. An SLF is an example of one such license. The Minister of Public Works and Public Housing of the Republic of Indonesia provided and delegated authorization to regional governments to issue SLF. There are, however, several local governments in Indonesia that are neither aware of the form of an SLF nor have they ever issued an SLF. Thus, issuing an SLF, or another similar type of license, may take some time.

There is no guarantee that the property owner or Property Manager will be able obtain the licenses, permits or approvals needed to operate the properties in time, or at all. These licenses, permits and approvals are still in the process of being issued, extended or renewed. There are also other licenses

28 or approvals from both the central and local government that may be needed in the future. Furthermore there is no guarantee that the owner or manager of the property will not be sanctioned as a result of failure to obtain, extend or renew such required licenses. Failure to obtain, extend or renew the required license can result in the property owner or Property Manager being liable to sanctions such as temporary closure of the operation of the properties, fines, imprisonment or other administrative sanctions in accordance with applicable regulatory provisions. This could significantly affect our financial condition and performance. If the property owner or Property Manager fail to obtain, maintain, extend or renew any licenses, permits or approvals required by the central government or regional government, the performance of the properties, the value of portfolio and/or our ability to make interest payments to unitholders can also be materially and negatively affected.

Indonesia is located in an earthquake zone and is subject to significant geological risk The Indonesian archipelago is one of the most volcanically active regions in the world. Because it is located in the convergence zone of three major lithospheric plates, it is subject to significant seismic activity that can lead to destructive volcanoes, earthquakes and tsunamis, or tidal waves. In recent years, a number of natural disasters have occurred in Indonesia, including major earthquakes, which resulted in tsunamis and volcanic activity. In addition to these geological events, Indonesia has also been struck by other natural disasters such as heavy rain and flooding. All of the above resulted in loss of life, the displacement of large numbers of people and wide destruction of property. For example, in October 2010, an earthquake off the coast of western Sumatra released a tsunami on the Mentawai Islands. From October 26, 2010 to November 5, 2010, Mount Merapi, a volcano located in the border between Central Java and Yogyakarta, approximately 65 kilometers away from our production facilities, erupted a number of times, killing more than 380 people. In early February 2014, Mount Sinabung located on Sumatra Island, approximately 2,500 kilometers away from our production facilities, erupted, killing 15 people. Also, in February 2014, Mount Kelud located on East Java, approximately 200 kilometers from our production facilities, erupted, killing at least 4 people. Between December 2017 and February 2018, Mount Agung, located in Denpasar, erupted and in addition two earthquakes, each with a magnitude over 6.4, struck off the coast of Indonesia. On August 5, 2018, a 6.9 magnitude earthquake struck the island of Lombok, killing at least 563 people. On September 28, 2018, a 7.5 magnitude earthquake struck Central Sulawesi, causing a tsunami to strike the provincial capital of Palu. The combined effects of the earthquake and tsunami led to the deaths of at least 2,100 people. On December 22, 2018, the partial collapse of Anak Krakatau Volcano in Indonesia caused an undersea landslide, triggering a significant tsunami event which affected two provinces of Banten and Lampung. The tsunami led to extensive damage along the coastal areas, killing at least 430 people. Approximately, 2,000 homes were damaged and 22,000 individuals were displaced. These earthquakes, tsunamis and volcanic eruptions resulted in significant loss of life and injury and widespread destruction of property.

While recent seismic events and meteorological occurrences have not had a significant economic impact on Indonesian capital markets, the Government has had to spend significant amounts on emergency aid and resettlement efforts. Most of these costs have been underwritten by foreign governments and international aid agencies. However, there can be no assurance that such aid will continue to be forthcoming, or that it will be delivered to recipients on a timely basis. If the Government is unable to timely deliver foreign aid to affected communities, political and social unrest could result. Additionally, recovery and relief efforts are likely to continue to impose a strain on the Government’s finances, and may affect its ability to meet its obligations on its sovereign debt. Any such failure on the part of the Government, or declaration by it of a moratorium on its sovereign debt, could trigger an event of default under numerous private-sector borrowings, including ours, thereby materially and adversely affecting our business, financial condition, results of operations and prospects.

There can be no assurance that future geological occurrences will not significantly impact the operations of the properties in our portfolio. A significant earthquake or other geological disturbance in any of Indonesia’s more populated cities and financial centers could severely disrupt the Indonesian economy and the operations of the properties in our portfolio, thereby materially and adversely affecting the ability of the tenants of the properties in our portfolio to make rental payments to us.

Labor activism and unrest may materially and adversely affect the Properties Laws and regulations that facilitate the formation of labor unions, combined with weak economic conditions, have in the past resulted, and may in the future result, in labor unrest and activism in

29 Indonesia. A labor union law passed in 2000 permits employees to form unions without intervention from their employers. The labor law passed in 2003 (the “Labor Law”) increased the amount of mandatory severance, service and compensation payments payable to terminated employees. The Labor Law requires implementation of regulations that may substantially affect labor regulations in Indonesia. Under the Labor Law, employees who voluntarily resign are entitled to payments for unclaimed annual leave, relocation expenses (if any), housing expenses, medical expenses, service payments, severance pay and other expenses as specified by the employment agreements, company policies or collective labor agreements. The Labor Law requires companies to form bilateral forums consisting of both employers and employees, and the participation of more than half of a company’s employees in negotiating collective labor agreements. The law also set up more permissive procedures for staging strikes. Although several labor unions challenged the Labor Law on constitutional grounds, the Indonesian Constitutional Court declared it valid, except for certain provisions, such as the procedures for terminating the employment of an employee who commits a serious mistake and criminal sanctions against an employee who instigates or participates in an illegal labor strike.

Labor unrest and activism in Indonesia could disrupt operations of the Properties in our portfolio, and thus could materially and adversely affect the ability of the tenants of the Properties in the portfolio to make rental payments to us.

Downgrades of credit ratings of the Government or Indonesian companies could adversely affect our business Certain recognized statistical rating organizations, including Moody’s, S&P and Fitch, have previously downgraded Indonesia’s sovereign rating and the credit ratings of various credit instruments of the Government and a large number of Indonesian banks and other companies. Indonesia’s sovereign foreign currency long-term debt now is rated as investment grade by Moody’s, S&P and Fitch but there is no assurance as to future performance and ratings. Any future ratings downgrade could have an adverse impact on liquidity in the Indonesian financial markets, the ability of the Government and Indonesian companies, including us, to raise additional financing and the interest rates and other commercial terms at which such additional financing is available. Interest rates on any floating rate Rupiah-denominated debt that we may have in the future would also likely increase. Such events could have material adverse effects on our business, financial condition, results of operations and prospects.

Risks Relating to the Notes and the Guarantee The Indenture and the other documentation relating to the Notes and the Guarantee will contain covenants limiting our financial and operating flexibility Covenants contained in the Indenture and other documentation relating to the Notes and the Guarantee will restrict the ability of the Issuer, the Guarantor, and any Restricted Subsidiary (as defined in “Description of the Notes”) to, among other things:

Š incur or guarantee additional indebtedness and issue certain Capital Stock (as defined in “Description of the Notes”);

Š create or incur certain liens;

Š make certain payments, including dividends or other distributions, with respect to the shares of the Guarantor, or the Restricted Subsidiaries;

Š prepay or redeem subordinated debt or equity;

Š make certain investments;

Š create encumbrances or restrictions on the payment of dividends or other distributions, loans or advances to and on the transfer of assets to the Guarantor or any of the Restricted Subsidiaries;

Š sell, lease or transfer certain assets, including stock of Restricted Subsidiaries;

Š enter into sale and leaseback transactions;

Š engage in certain transactions with affiliates;

30 Š enter into unrelated businesses; and

Š consolidate or merge with other entities.

All of these covenants are subject to the limitations, exceptions and qualifications described in “Description of the Notes — Certain Covenants.” These covenants could limit our ability to pursue our growth plan, restrict our flexibility in planning for, or reacting to, changes in our business and industry, and increase our vulnerability to general adverse economic and industry conditions. We may also enter into additional financing arrangements in the future, which could further restrict our flexibility.

Any defaults of covenants contained in the Notes may lead to an event of default under the Notes and the Indenture and may lead to cross-defaults under our other indebtedness. Acceleration or certain defaults under our other indebtedness may also result in an event of default under the Indenture and all outstanding obligations under such indebtedness or the Notes may immediately become due and payable. No assurance can be given that the Issuer or the Guarantor will be able to pay any amounts due to the lenders under such indebtedness or to holders of the Notes in the event of such acceleration, and any such acceleration may significantly impair the Issuer’s ability to pay, when due, the interest of and principal on the Notes and the Guarantor’s ability to satisfy its respective obligations under the Guarantee and we could be forced into bankruptcy or liquidation.

Substantial leverage and debt service obligations could adversely affect our business and prevent the Issuer and the Guarantor from fulfilling obligations under the Notes and the Guarantee Although the Indenture governing the Notes contains restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and any indebtedness incurred in compliance with these restrictions could be substantial. For a summary of our existing indebtedness as of the date of this offering, see “Description of Indebtedness.” The degree to which we will be leveraged in the future, on a consolidated basis, could have important consequences for the Noteholders, including, but not limited to:

Š making it more difficult for the Issuer or the Guarantor to satisfy its or their respective obligations with respect to the Notes or the Guarantee, as applicable;

Š increasing vulnerability to, and reducing our flexibility to respond to, general adverse economic and industry conditions;

Š requiring the dedication of a substantial portion of cash flow from operations to the payment of principal of, and interest on, our consolidated indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, acquisitions, joint ventures or other general corporate purposes;

Š limiting flexibility in planning for, or reacting to, changes in our business, the competitive environment and the industries in which we operate;

Š placing us at a competitive disadvantage compared to our competitors that are not as highly leveraged; and

Š limiting our ability to borrow additional funds and increasing the cost of any such borrowing.

Any of these or other consequences or events could materially and adversely affect the Issuer’s or the Guarantor’s ability to satisfy debt obligations, including the Notes and the Guarantee.

Further, if the Issuer or the Guarantor is unable to comply with the restrictions and covenants in such other debt obligations and other agreements (if any), there could be a default under the terms of these agreements. In the event of a default under these agreements, the holders of the debt could terminate their commitments to lend to the Issuer or the Guarantor, accelerate repayment of the debt, declare all amounts borrowed due and payable or terminate the agreements, as the case may be. Furthermore, those debt agreements may contain cross-acceleration or cross-default provisions. As a result, the default by the Issuer or the Guarantor under one debt agreement may cause the acceleration of

31 repayment of debt, including the Notes, or result in a default under its other debt agreements. If any of these events occur, there can be no assurance that there would be sufficient assets and cash flows to repay in full all of the indebtedness of the Issuer or the Guarantor, or that it would be able to find alternative financing. Even if the Issuer or the Guarantor could obtain alternative financing, there can be no assurance that it would be on terms that are favorable or acceptable to the Issuer or the Guarantor.

We may incur additional indebtedness, which could further exacerbate the risks under “The Indenture and the other documentation relating to the Notes and the Guarantee will contain covenants limiting our financial and operating flexibility” As of March 31, 2019, LMIR Trust had consolidated total current and non-current other financial liabilities of S$680.0 million. Subject to restrictions in the Indenture governing the Notes, we may incur additional indebtedness, which could increase the risks associated with our existing indebtedness. If we incur any additional indebtedness that ranks equally with the Notes and the Guarantee, the relevant creditors will be entitled to share ratably with the holders of the Notes in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding-up of the Issuer or a Guarantor. This may have the effect of reducing the amount of proceeds paid to the holders of the Notes. Covenants in agreements governing debt that we may incur in the future may also materially restrict our operations, including our ability to incur debt, pay dividends, make certain investments and payments, and encumber or dispose of assets. In addition, we could be in default of financial covenants contained in agreements relating to our future debt in the event that our results of operations do not meet any of the terms in the covenants, including the financial thresholds or ratios. A default under one debt instrument may also trigger cross-defaults under other debt instruments. An event of default under any debt instrument, if not cured or waived, could have a material adverse effect on us.

We may not be able to generate sufficient cash flows to meet our debt service obligations Our ability to make scheduled payments on, or to refinance our obligations with respect to, our current and future indebtedness, including the Notes, will depend on our financial and operating performance, which in turn will be affected by general economic conditions and by financial, competitive, regulatory and other factors beyond our control. We may not generate sufficient cash flow from our operations and future sources of capital may not be available to us in an amount sufficient to enable us to service our indebtedness, including the Notes, or to fund our other liquidity needs. If we are unable to generate sufficient cash flow and capital resources to satisfy our debt obligations or other liquidity needs, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. In particular, we are not required to maintain a sinking fund or otherwise accumulate cash for the purpose of repaying the Notes and we anticipate that we will be required to incur additional indebtedness to repay the Notes due at maturity. There is no assurance that any refinancing would be possible, that any assets could be sold or, if sold, of the timing of the sales and the amount of proceeds that may be realized from those sales, or that additional financing could be obtained on acceptable terms, if at all. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets to meet our debt service and other obligations. Other credit facilities and the Indenture governing the Notes will restrict our ability to dispose of assets and use the proceeds from the disposition. We may not be able to consummate those dispositions or to obtain the proceeds which we could realize from them and these proceeds may not be adequate to meet any debt service obligations then due. Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms and in a timely manner, would materially and adversely affect our financial condition and results of operations and the Issuer’s ability to satisfy its obligations under the Notes. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” and “Description of the Notes.”

The Issuer and the Guarantor may not have the ability to raise the funds necessary to finance an offer to repurchase the Notes upon the occurrence of certain events constituting a Change of Control Triggering Event as required by the Indenture governing the Notes Upon the occurrence of a Change of Control Triggering Event (as defined in “Description of the Notes”), the Issuer or the Guarantor must make an offer to repurchase all outstanding Notes. Pursuant to this offer, the Issuer or the Guarantor must repurchase the outstanding Notes at 101% of their principal amount plus accrued and unpaid interest, if any, and Additional Amounts (as defined in

32 “Description of the Notes”), if any, to (but not including) the Offer to Purchase Payment Date (as defined in “Description of the Notes”). See “Description of the Notes — Repurchase of Notes Upon a Change of Control Triggering Event.” However, the Issuer and the Guarantor may not have enough available funds at the time of the occurrence of the Change of Control Triggering Event to pay the purchase price of the tendered outstanding Notes. The Issuer’s and the Guarantor’s failure to make the offer to repurchase or repurchase tendered Notes would constitute an Event of Default (as defined in the Indenture). This Event of Default may, in turn, constitute an event of default under other indebtedness, any of which could cause such other indebtedness to be accelerated after any applicable notice or grace periods. If such other debt were accelerated, we may not have sufficient funds to repurchase the Notes and repay the debt.

In addition, the definition of Change of Control Triggering Event for purposes of the Indenture governing the Notes does not necessarily afford protection for the holders of the Notes in the event of the Issuer or the Guarantor entering into certain highly leveraged transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control Triggering Event under the Indenture but that could increase the amount of debt outstanding at such time or otherwise affect our capital structure or credit ratings. The definition of Change of Control Triggering Event for purposes of the Indenture also includes a phrase relating to the sale of “all or substantially all” of our properties or assets and our Restricted Subsidiaries (as defined in “Description of the Notes”) taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all”, there is no precise established definition under applicable law. Accordingly, the Issuer’s and the Guarantor’s obligation to make an offer to repurchase the Notes, and the ability of a holder of Notes to require us to repurchase the Notes pursuant to the offer as a result of a transaction that could increase our indebtedness and/or affect our capital structure or credit ratings or a sale of less than all of our assets, may be uncertain.

The ratings assigned to the Notes may be lowered or withdrawn The ratings assigned to the Notes may be lowered or withdrawn entirely in the future. The Notes are expected to be rated “Ba3” by Moody’s and “BB (Expected)” by Fitch. The ratings represent the opinions of the rating agencies and their assessment of the ability of each of the Issuer and the Guarantor to perform their respective obligations under the terms of the Notes and the Guarantee and credit risks in determining the likelihood that payments will be made when due under the Notes. The ratings may not reflect the potential impact of all risks relating to structure, market and other factors that may affect the value of the Notes. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time. No assurances can be given that a rating will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by the relevant rating agency if in its judgment circumstances in the future so warrant. We have no obligation to inform holders of the Notes of any such revision, downgrade or withdrawal. In addition, we cannot assure you that rating agencies other than Moody’s and Fitch would not rate the Notes differently. A suspension, reduction or withdrawal at any time of the rating assigned to the Notes or the assignment by a rating agency other than Moody’s and Fitch of a rating of the Notes lower than those provided may adversely affect the market price of the Notes.

The Notes may not be a suitable investment for all investors Each potential investor in the Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:

Š have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and risks of investing in the Notes and the information contained or incorporated by reference in this Offering Memorandum;

Š have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Notes and the impact such investment will have on its overall investment portfolio;

Š have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes, or where the currency for principal or interest payments is different from the potential investor’s currency;

33 Š understand thoroughly the terms of the Notes and be familiar with the behavior of any relevant indices and financial markets; and

Š be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

Additionally, the investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its own legal adviser to determine whether and to what extent: (1) the Notes are legal instruments for it, (2) the Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase of the Notes.

Claims of the secured creditors of the Issuer and the Guarantor will have priority with respect to their security over the claims of unsecured creditors, such as the holders of the Notes, to the extent of the value of the assets securing such indebtedness Claims of the secured creditors of the Issuer and the Guarantor will have priority with respect to the assets securing their indebtedness over the claims of holders of the Notes. Therefore, the Notes and the Guarantee will be effectively subordinated to any secured indebtedness and other secured obligations of the Issuer and the Guarantor to the extent of the value of the assets securing such indebtedness or other obligations. In the event of any foreclosure, dissolution, winding up, liquidation, reorganization, administration or other bankruptcy or insolvency proceeding of the Issuer or the Guarantor, to the extent at such time it has secured obligations, holders of secured indebtedness will have prior claims to the assets of the Issuer and the Guarantor that constitute their collateral. The holders of the Notes will participate ratably with all holders of the unsecured indebtedness of the Issuer and the Guarantor, and potentially with all of their other general creditors, based upon the respective amounts owed to each holder or creditor, in the remaining assets of the Issuer and Guarantor. In the event that any of the secured indebtedness of the Issuer or the Guarantor becomes due or the creditors thereunder proceed against the assets that secure such indebtedness, the Issuer’s and Guarantor’s assets remaining after repayment of that secured indebtedness may not be sufficient to repay all amounts owing in respect of the Notes and the Guarantee. As a result, holders of the Notes may receive less than holders of secured indebtedness of the Issuer or the Guarantor.

Payments in respect of the Notes and the Guarantee will be structurally subordinated to all existing and future indebtedness and other liabilities of the Guarantor’s existing and future subsidiaries, and effectively subordinated to the Guarantor’s secured debt to the extent of the value of the collateral securing such indebtedness The Guarantee and obligations under the Notes will be structurally subordinated to any debt and other liabilities and commitments of the Guarantor’s existing and future subsidiaries, whether or not secured. The Guarantor’s obligations under the Guarantee will not be guaranteed by any of the Guarantor’s subsidiaries, and the Guarantor’s ability to make payments under the Guarantee depends partly on the receipt of dividends, distributions, interest or advances from its subsidiaries. See “Risk Factors — Risks Relating to the Notes and the Guarantee — Our ability to make payments under the Notes and the Guarantee partly depends on distributions from the subsidiaries, which may be subject to restrictions on the payment of dividends and repayment of advances to us.” As a result, our payment obligations under the Notes and the Guarantee will be effectively subordinated to all existing and future obligations of our subsidiaries and all claims of creditors of our non-guarantor subsidiaries will have priority as to the assets of such entities over our claims and those of our creditors, including holders of the Notes.

Our ability to make payments under the Notes and the Guarantee partly depends on distributions from the subsidiaries, which may be subject to restrictions on the payment of dividends and repayment of advances to us Our ability to make payments under the Notes and the Guarantor’s ability to satisfy its obligations under the Guarantee partly depend on our receipt of dividends, distributions, interest or advances from our subsidiaries. The ability of our subsidiaries to pay dividends to us may be subject to their respective articles of association, applicable laws and regulations restricting such distribution. The outstanding indebtedness of our subsidiaries may also contain covenants restricting their ability to pay dividends in certain circumstances.

34 As a result of the foregoing, we may not have sufficient cash flow from dividends or advances from our subsidiaries to satisfy our obligations under the Notes.

An active trading market for the Notes may not develop, particularly if the Notes are allocated to a limited group of investors The Notes are a new issue of securities for which there is currently no trading market. There can be no assurance as to the liquidity of the Notes or that an active trading market will develop or as to liquidity or sustainability of any such market, the ability of holders to sell their Notes or the price at which holders will be able to sell their Notes. If the Notes are allocated to a limited group of investors, and a limited number of investors hold a material or significant proportion of the Notes, liquidity will be restricted and the development of a liquid trading market for the Notes will be affected. If a market does develop, it may not be liquid and the Notes could trade at prices that may be higher or lower than the initial issue price depending on many factors, including prevailing interest rates, our operations and the market for similar securities. The Joint Lead Managers are not obligated to make a market in the Notes and any such market making, if commenced, may be discontinued at any time at the sole discretion of the Joint Lead Managers. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. Although approval-in principle has been obtained for the listing and quotation of the Notes on the SGX-ST, no assurance can be given as to the liquidity of, or trading market for, the Notes. A lack of liquidity may result in investors suffering losses on the Notes in secondary resales even if there is no decline in the performance of our assets. It is not possible to predict which of these circumstances will change and whether, if and when they do change, there will be a more liquid market for the Notes and instruments similar to the Notes at that time. In addition, the Notes are being offered pursuant to exemptions from registration under the Securities Act and, as a result, investors will only be able to resell their Notes in transactions that have been registered under the Securities Act or in transactions not subject to or exempt from registration under the Securities Act.

The liquidity and price of the Notes following this offering may be volatile If an active trading market for the Notes were to develop, the price and trading volume of the Notes may be highly volatile. Factors such as variations in the revenues, earnings and cash flows of LMIR Trust, proposals of new investments, strategic joint operations and/or acquisitions, interest rates, changes in the industry that we operate and competition and general economic conditions could cause the price of the Notes to change. Any such developments may result in large and sudden changes in the volume and price at which the Notes will trade. There can be no assurance that these developments will not occur in the future.

Investors in the Notes may be subject to foreign exchange risks The Notes are denominated and payable in US Dollars. An investor who measures investment returns by reference to a currency other than the US Dollar would be subject to foreign exchange risks by virtue of an investment in the Notes, due to, among other things, economic, political and other factors over which neither the Issuer nor the Guarantor has any control. Depreciation of the US Dollar against such currency could cause a decrease in the effective yield of the Notes below their stated coupon rate and could result in a loss when the return on the Notes is translated into such currency. In addition, there may be tax consequences for investors as a result of any foreign currency gains resulting from any investment in the Notes.

Changes in interest rates may have an adverse effect on the price of the Notes Investment in the Notes involves the risk that subsequent changes in market interest rates may adversely affect the value of the Notes and Noteholders may suffer unforeseen losses due to fluctuations in interest rates. Generally, a rise in interest rates may cause a fall in the prices of the Notes, resulting in a capital loss for the Noteholders. However, the Noteholders may reinvest the interest payments at higher prevailing interest rates. Conversely, when interest rates fall, the prices of the Notes may rise. The Noteholders may enjoy a capital gain but interest payments received may be reinvested at lower prevailing interest rates.

Developments in other markets may adversely affect the market price of the Notes The market price of the Notes may be adversely affected by declines in the international financial markets and world economic conditions. The market for the Notes is, to varying degrees, influenced by

35 economic and market conditions in other markets, especially those in Asia. Although economic conditions are different in each country, investors’ reactions to developments in one country can affect the securities markets and the securities of issuers in other countries. Since the subprime mortgage crisis in 2008, the international financial markets have experienced significant volatility. If similar developments occur in the international financial markets in the future, the market price of the Notes could be adversely affected.

The Notes are subject to optional redemption by the Issuer and may have a lower market value than notes that cannot be redeemed The Issuer has the option to redeem the Notes, in whole but not in part, at the price as described under “Description of the Notes — Optional Redemption” at any time. While such optional redemption will be at a make-whole price as described under “Description of the Notes — Optional Redemption”, it may still have an effect of limiting the market value of the Notes, and the market value of those Notes generally will not rise substantially above the price at which they can be redeemed. The Issuer may be expected to redeem the Notes when its cost of borrowing (taking into account costs of exercising such optional redemption) is lower than its costs under the Notes. At those times, the investors may not be able to reinvest the redemption proceeds at an effective interest rate to achieve the returns the investors would have been able to achieve had there been no redemption. The investors should consider reinvestment risk in light of other investments available at that time.

Limited recourse to the Guarantor Noteholders should note that under the terms of the Guarantee and the Notes, Noteholders shall only have recourse in respect of the Guarantee and/or the Notes, as the case may be, to the assets comprised in LMIR Trust which the Guarantor has recourse to under the LMIRT Trust Deed and not to the Guarantor personally nor any other properties held by the Guarantor as trustee of any trust (other than LMIR Trust). Further, Noteholders do not have direct access to the assets comprised in LMIR Trust but can only gain access to such assets through the Guarantor and, if necessary, seek to subrogate to the Guarantor’s right to indemnity out of such assets and, accordingly, any claim of the Noteholders to the assets comprised in LMIR Trust is derivative in nature. A Noteholder’s right of subrogation, therefore, could be limited by the Guarantor’s right of indemnity under the LMIRT Trust Deed. Noteholders should also note that such right of indemnity of the Guarantor may be limited or lost through fraud, gross negligence, willful default, breach of trust or breach of the LMIRT Trust Deed.

The Issuer may not be able to redeem the Notes upon the due date for redemption thereof The Issuer may, and at maturity will, be required to redeem all of the Notes. If such an event were to occur, the Issuer may not have sufficient cash in hand and may not be able to arrange financing to redeem the Notes in time, or on acceptable terms, or at all. The ability to redeem such Notes in such event may also be limited by the terms of other debt instruments. The Issuer’s failure to repay, repurchase or redeem the Notes could constitute an event of default under the Notes, which may also constitute a default under the terms of the Issuer’s other indebtedness (if any).

We may issue additional notes in the future We may, from time to time, and without prior consultation with the Noteholders create and issue further notes or otherwise raise additional capital through such means and in such manner as we may consider necessary. There can be no assurance that such future issuance or capital raising activity will not adversely affect the market price of the Notes.

The Notes will be represented by a Global Certificate and holders of a beneficial interest in the Global Certificate must rely on the procedures of the relevant Clearing System(s) The Notes will be represented by a Global Certificate which will be deposited with a common depositary for Euroclear and Clearstream, Luxembourg (each a ‘‘Clearing System’’). Except in the limited circumstances described in the Global Certificate, investors will not be entitled to receive definitive certificates representing the Notes. The Clearing System(s) will maintain records of the beneficial interests in the Global Certificate. While the Notes are represented by the Global Certificate, investors will be able to trade their beneficial interests only through the Clearing Systems.

While the Notes are represented by the Global Certificate, the Issuer, or failing which, the Guarantor will discharge its payment obligations under the Notes by making payments to the Clearing System for

36 distribution to their account holders. A holder of a beneficial interest in the Global Certificate must rely on the procedures of the Clearing System(s) to receive payments under the Notes. Neither the Issuer nor the Guarantor has any responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Certificate.

Holders of beneficial interests in the Global Certificate will not have a direct right to vote in respect of the Notes. Instead, such holders will be permitted to act only to the extent that they are enabled by the Clearing System(s) to appoint appropriate proxies. Similarly, holders of beneficial interests in the Global Certificate will not have a direct right under the Global Certificate to take enforcement action against the Issuer or the Guarantor in the event of a default under the Notes but will have to rely upon their rights under the Indenture.

The Trustee may request the Noteholders to provide an indemnity and/or security and/or prefunding to its satisfaction In certain circumstances, including, without limitation, the giving of notice to the Issuer and taking enforcement steps as prescribed under “Description of the Notes — Events of Default”, the Trustee may, at its sole discretion, request the Noteholders to provide an indemnity and/or security and/or prefunding to its satisfaction before it takes actions on behalf of the Noteholders. The Trustee shall not be obliged to take any such actions if not indemnified and/or secured and/or prefunded to its satisfaction.

Negotiating and agreeing to an indemnity and/or security and/or prefunding can be a lengthy process and may impact on when such actions can be taken. The Trustee may not be able to take actions, notwithstanding the provision of an indemnity or security or prefunding to it, in breach of the terms of the Indenture or the covenants under “Description of the Notes” and in such circumstances, or where there is uncertainty or dispute as to the applicable laws or regulations, to the extent permitted by the agreements and the applicable law, it will be for the holders of the Notes to take such actions directly.

Enforcing your rights under the Notes across multiple jurisdictions may prove difficult The Issuer is incorporated under the laws of Singapore. The Notes and the Indenture will be governed by the laws of the State of New York. In the event of a bankruptcy, insolvency or similar event, proceedings could be initiated in Singapore and the United States. Such multi-jurisdictional proceedings are complex, may be costly for creditors and otherwise may result in greater uncertainty and delay regarding the enforcement of your rights.

Your rights under the Notes will be subject to the insolvency and administrative laws of several jurisdictions and there can be no assurance that you will be able to effectively enforce your rights in such complex multiple bankruptcy, insolvency or similar proceedings. In addition, the bankruptcy, insolvency, administrative and other laws of Singapore and the United States may be materially different from, or be in conflict with, each other and those with which you may be familiar, including in the areas of rights of creditors, priority of governmental and other creditors, ability to obtain post- petition interest and duration of the proceeding. The application of these laws, or any conflict among them, could call into question whether any particular jurisdiction’s laws should apply and could adversely affect your ability to enforce your rights under the Notes in the relevant jurisdictions or limit any amounts that you may receive.

Many of the covenants in the Indenture will be suspended if the Notes are rated investment grade by both Moody’s and Fitch and, if one of Moody’s or Fitch does not make a rating of the Notes publicly available, an internationally recognized rating agency selected by the Guarantor which is substituted for either Moody’s or Fitch, as the case may be Many of the covenants in the Indenture will be suspended if the Notes are rated investment grade with a stable outlook by both Moody’s and Fitch and, if one of Moody’s or Fitch does not make a rating of the Notes publicly available, an internationally recognized rating agency selected by the Guarantor which is substituted for either Moody’s or Fitch, as the case may be, provided at such time no Default under the Indenture has occurred and is continuing. There can be no assurance that the Notes will ever be rated investment grade, or if they are rated investment grade, that the Notes will maintain such ratings. If on any date following the Issue Date the Notes are assigned an investment grade rating from both Moody’s and Fitch and, if one of Moody’s or Fitch does not make a rating of the Notes publicly

37 available, an internationally recognized rating agency selected by the Guarantor which is substituted for either Moody’s or Fitch, as the case may be, and no Default shall have occurred and be continuing, then the following provisions of the Indenture will not apply to the Notes: “Description of the Notes — Certain Covenants — Limitation on Indebtedness and Preferred Stock”; “— Limitation on Restricted Payments”; “— Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries”; “—Limitation on Sales and Issuances of Capital Stock of Restricted Subsidiaries”; “— Limitation on Sale and Leaseback Transactions”; “— Limitation on Issuances of Guarantees by Restricted Subsidiaries”; “— Limitation on Asset Sales”; “— Limitation on Transactions with Affiliates”; and clause (d) summarized under “— Consolidation, Merger and Sale of Assets”.

If and while the Guarantor and the Restricted Subsidiaries are not subject to these suspended covenants, the Notes will be entitled to substantially less covenant protection. In the event that the Guarantor and the Restricted Subsidiaries are not subject to these suspended covenants under the Indenture for any period of time as a result of the foregoing, and on any subsequent date one or both of the rating agencies withdraw their investment grade rating or downgrade the rating assigned to the Notes below an investment grade rating, then the Guarantor and the Restricted Subsidiaries will thereafter again be subject to these suspended covenants under the Indenture with respect to future events.

Notwithstanding the foregoing, in the event of any such reinstatement, reinstated covenants will not be of any effect with regard to actions of the Guarantor or any Restricted Subsidiary properly taken in compliance with the provisions of the Indenture during the continuance of the Suspension Period, and following reinstatement (1) the calculations under the covenant summarized under “— Certain Covenants — Limitation on Restricted Payments” will be made as if such covenant had been in effect since the date of the Indenture except that no Default will be deemed to have occurred solely by reason of a Restricted Payment made while that covenant was suspended and (2) all Indebtedness incurred, or Disqualified Stock or preferred stock issued, during the Suspension Period will be classified to have been incurred or issued pursuant to clause (2)(b) of the covenant summarized under “Description of the Notes — Certain Covenants — Limitation on Indebtedness and Preferred Stock” Upon the occurrence of a Suspension Period, the amount of Excess Proceeds shall be reset at to the amount in effect at the beginning of the Suspension Period. Capitalized terms used in this risk factor have the meanings given to them under “Description of the Notes”. See “Description of the Notes — Certain Covenants — Suspension of Certain Covenants when Notes are Rated Investment Grade”.

We will follow the applicable corporate disclosure standards for debt securities listed on the SGX-ST, and as such, standards may be different from those applicable to debt securities listed in certain other countries We will be subject to reporting obligations in respect of the Notes to be listed on the SGX-ST. The disclosure standards imposed by the SGX-ST may be different than those imposed by securities exchanges in other countries or regions. As a result, the level of information that is available in these countries may not correspond to what investors in the Notes are accustomed to.

Singapore taxation risk The Notes to be issued are intended to be “qualifying debt securities” for the purposes of the ITA, subject to the fulfilment of certain conditions more particularly described in the section “Taxation — Singapore Taxation”.

However, there is no assurance that the Notes will continue to enjoy the tax concessions in connection therewith should the relevant tax laws be amended or revoked at any time.

Commencement of proceeding under applicable Singapore insolvency or related laws may result in a material and adverse effect on the Noteholders There can be no assurance that the Issuer and/or the Guarantor will not become bankrupt or insolvent, or the subject of judicial management, schemes of arrangement, winding-up or liquidation orders or other insolvency related proceedings or procedures. If the Issuer and/or the Guarantor or any creditor were to commence such proceedings under any applicable Singapore insolvency or related laws, this could result in a material and adverse effect on the Noteholders. Without being exhaustive, below are some matters that could have a material and adverse effect on the Noteholders.

38 Where the Issuer and/or the Guarantor is insolvent or close to insolvent and the Issuer and/or the Guarantor undergoes certain insolvency procedures, there may be a moratorium against actions and proceedings which may apply in the case of judicial management, schemes of arrangement and/or winding-up in relation to the Issuer and/or the Guarantor. It may also be possible that if a company related to the Issuer and/or the Guarantor proposes a creditor scheme of arrangement and obtains an order for a moratorium, the Issuer and/or the Guarantor may also seek a moratorium even if the Issuer and/or the Guarantor is not in itself proposing a scheme of arrangement. These moratoriums can be lifted with court permission and in the case of judicial management, additionally with the permission of the judicial manager. Accordingly, if for instance there is any need for the Trustee to bring an action against the Issuer and/or the Guarantor, the need to obtain court permission may result in delays in being able to bring or continue legal proceedings that may be necessary in the process of recovery.

Further, Noteholders may be made subject to a binding scheme of arrangement where the majority in number representing 75.0% in value of creditors and the court approve such scheme. In respect of company-initiated creditor schemes of arrangement, recent amendments to the Companies Act, Chapter 50 of Singapore (the “Companies Act”) in 2017 have introduced cram-down provisions for where there is a dissenting class of creditors. The court may notwithstanding a single class of dissenting creditors approve a scheme provided an overall majority in number representing 75.0% in value of the creditors meant to be bound by the scheme have agreed to it and provided that the scheme does not unfairly discriminate and is fair and equitable to each dissenting class and the court is of the view that it is appropriate to approve the scheme. In such scenarios, Noteholders may be bound by a scheme of arrangement to which they may have dissented.

Further to the amendments that took effect on May 23, 2017 (some of which have been highlighted above), the Insolvency, Restructuring and Dissolution Bill (the “IRD Bill” or as passed, the “IRD Act”) was passed in Parliament on October 1, 2018, but is not yet in force. The IRD Act includes a prohibition against terminating, amending or claiming an accelerated payment or forfeiture of the term under, any agreement (including a security agreement) with a company that commences certain insolvency or rescue proceedings, by reason only that the proceedings are commenced or that the company is insolvent. The extent to which the provisions in the IRD Act will impact this transaction (if at all) will depend on the extent to which such transactions will be exempted from the application of such provisions. There is no certainty as to whether the transactions contemplated in this Offering Memorandum will fall within such exemptions.

39 USE OF PROCEEDS

The gross proceeds from this offering will be US$247,432,500. We intend to use the gross proceeds from the offering of the Notes (i) to refinance existing indebtedness, comprising of S$120.0 million revolving credit facilities and S$175.0 million term loan due in 2020; (ii) for working capital purposes; and (iii) to pay transaction fees and expenses in relation to the Offering. See “Description of Indebtedness.”

40 EXCHANGE RATES AND EXCHANGE CONTROLS

The majority of our revenues are denominated in Rupiah. Our expenses are primarily denominated in Rupiah and we do have some expenses in Singapore Dollars. Our financial results are reported in Singapore Dollars. Any appreciation or depreciation of the Rupiah against the Singapore Dollar will likely affect our financial condition and results of operations. In addition, the Notes are denominated in U.S. Dollars and any depreciation of the Singapore Dollar against the U.S. Dollar will affect our results of operations as a result of the payment of interest and principal. See “Risk Factors — Fluctuations in the value of the Rupiah may materially and adversely affect the operations of the Properties in our portfolio, thereby materially and adversely affecting the ability of the tenants of the Properties in our portfolio to make rental payments to us.”

Rupiah to Singapore Dollar Exchange Rate Information Bank Indonesia is the sole issuer of Rupiah and is responsible for maintaining the stability of the Rupiah. Since 1970, Indonesia has implemented three exchange rate systems: (i) a fixed rate between 1970 and 1978, (ii) a managed floating exchange rate system between 1978 and 1997, and (iii) a free floating exchange rate system since August 14, 1997. Under the second system, Bank Indonesia maintained stability of the Rupiah through a trading band policy, pursuant to which Bank Indonesia would enter the foreign currency market and buy or sell Rupiah, as required, when trading in the Rupiah exceeded bid and offer prices announced by Bank Indonesia on a daily basis. On August 14, 1997, Bank Indonesia terminated the trading band policy and permitted the exchange rate of the Rupiah to float without an announced level at which it would intervene, which resulted in a substantial subsequent decrease in the value of the Rupiah relative to the Singapore Dollar. Under the current system, the exchange rate of the Rupiah is determined solely by the market, reflecting the interaction of supply and demand in the market. Bank Indonesia may take measures, however, to maintain a stable exchange rate.

The following table sets forth information on the exchange rates between the Rupiah and Singapore Dollars based on the middle exchange rate on the last day of each month during the year indicated. The Rupiah middle exchange rate is calculated based on Bank Indonesia’s buying and selling rates.

Middle Exchange Rates High Low Average At Period End (Rp per S$) 2013 ...... 9,672.62 7,714.59 8,693.60 9,627.99 2014 ...... 9,838.32 8,908.21 9,373.27 9,422.11 2015 ...... 10,346.26 9,244.77 9,795.51 9,751.19 2016 ...... 9,957.11 9,246.12 9,601.62 9,298.92 2017 ...... 10,133.53 9,276.77 9,705.15 10,133.53 2018 ...... 11,061.05 10,060.62 10,560.84 10,602.97 2019 January ...... 10,591.26 10,343.15 10,467.21 10,446.15 February ...... 10,424.80 10,307.13 10,365.96 10,424.80 March ...... 10,555.06 10,414.64 10,484.85 10,507.15 April ...... 10,515.80 10,356.15 10,435.97 10,437.25 May (through May 24, 2019) ...... 10,563.71 10,469.66 10,516.68 10,469.85

Source: Internet website of Bank Indonesia (as of May 27, 2019).

The middle exchange rate between the Rupiah and the Singapore Dollar on March 31, 2019 was Rp10,505.0 = S$1.00.

Exchange Controls Indonesia has limited foreign exchange controls. The Rupiah has been, and in general is, freely convertible within or from Indonesia. However, to maintain the stability of the Rupiah and to prevent the utilization of the Rupiah for speculative purposes by non-residents, Bank Indonesia has introduced regulations to restrict the movement of Rupiah from banks within Indonesia to offshore banks, an offshore branch of an Indonesian bank, or any investment denominated in Rupiah by foreign parties and/or Indonesian parties domiciled or permanently residing outside Indonesia, thereby limiting

41 offshore trading to existing sources of liquidity. In addition, Bank Indonesia has the authority to request information and data concerning the foreign exchange activities of all people and legal entities that are domiciled, or who plan to be domiciled, in Indonesia for at least one year.

Indonesian Law on Currency On June 28, 2011, the Indonesian House of Representatives (the Indonesian parliament) passed Law No. 7 of 2011 (the “Currency Law”) concerning the use of Rupiah. The Currency Law requires the use of and prohibits the rejection of Rupiah in certain transactions.

Article 21 of the Currency Law requires the use of Rupiah in payment transactions, monetary settlement of obligations and other financial transactions (among others, the deposit of money) within Indonesia. However, there are a number of exceptions to this rule, including certain transactions related to the state budget, income and grants from and to foreign countries, international trade transactions, foreign currency savings in a bank or international financing transactions.

Article 23 of the Currency Law prohibits the rejection of Rupiah offered as a means of payment, or to settle obligations and/or in other financial transactions within Indonesia unless there is uncertainty regarding the authenticity of the Rupiah bills offered. The prohibition does not apply to transactions in which the payment or settlement of obligations in a foreign currency has been agreed in writing.

Non-compliance with the Currency Law is punishable by criminal and/or monetary sanctions.

As the implementation of the Currency Law, on March 31, 2015, Bank Indonesia issued Regulation No. 17/3/PBI/2015 (“PBI 17/2015”) and further enacted Circular Letter of Bank Indonesia No. 17/11/ DKSP on June 1, 2015 (“CL 17/2015”), which requires any party to use Rupiah for any transaction conducted within Indonesia.

PBI 17/2015 and CL 17/2015 require the use of Rupiah for cash or non-cash transactions conducted in Indonesia. The non-cash transaction is defined as a transaction involving the use of payment device or non-cash payment mechanism, including cheque, bilyet, giro, credit card, debit card, automated teller machine card (ATM), electronic money, or fund transfer.

Transactions which are exempted from the mandatory use of Rupiah are:

(a) transactions related to the implementation of the State budget;

(b) receipt or grant of offshore grants;

(c) international trade transactions (such as export-import of goods and services);

(d) bank deposits in foreign currency;

(e) international financing transactions; and

(f) transactions denominated in foreign currency conducted based on prevailing laws and regulations (such as any business denominated in foreign currency conducted by banks and transactions in the primary and secondary market on securities issued by the government denominated in foreign currency).

However, any additional activities related to export or import of goods (including activities using vessels, airplanes, or other transportation means such as berthing of ships at ports, loading and unloading of containers, temporary storage containers at ports, and parking of airplanes at airports) are not categorized as “international commercial transactions” and, therefore, are subject to the mandatory use of Rupiah.

According to CL 17/2015, businesses in Indonesia must only quote prices of goods and/or services in Rupiah and are prohibited from quoting prices of such goods and/or services if such prices are listed both in Rupiah and foreign currency elsewhere. This restriction applies to, among others, (i) price tags, (ii) service fees, such as agent fees in property sale and purchase, tourism services fees or consultancy services fees, (iii) leasing fees, (iv) tariffs, such as loading/unloading tariff for cargos at the

42 seaport or airplane ticket tariff, (v) price lists, such as restaurant menus, (vi) contracts, such as for the clauses on pricing or fee, (vii) documents of offer, order, invoice, such as the price clause in an invoice, purchase order or delivery order, and/or (viii) payment evidence, such as the price listed in a receipt.

PBI 17/2015 sets forth that a recipient is prohibited from refusing to receive Rupiah as a means of payment or for the settlement of Rupiah obligations or other financial transactions within Indonesia, unless there is doubt as to the authenticity of the Rupiah paid in a cash transaction or an obligation to settle in a foreign currency is agreed in writing by the parties. Article 10(3) of PBI 17/2015 further clarifies that the exemption applies only for:

(a) agreements relating to transactions exempted from the mandatory use of Rupiah as referred to in PBI 17/2015; or

(b) agreements for “Strategic Infrastructure Projects” which have been approved by Bank Indonesia. “Strategic Infrastructure Projects” include transportation infrastructure (including airport services, port services, and railways facilities and infrastructure), roads, irrigation, drinking water infrastructure, sanitation infrastructure, telecommunication and information infrastructure, power infrastructure, and oil and gas infrastructure, funded by offshore borrowings from bilateral and multilateral agencies (such as IFC, JBIC, JICA, ADB, IDB) (or if the borrowing is in the form of a syndicated loan, if the contribution of these agencies exceeds 50%). In this case, statement letters from the relevant ministries or government agencies must be obtained for these projects (stating that the projects are indeed strategic infrastructure projects).

Purchasing of Foreign Currencies against Rupiah through Banks On September 5, 2016, Bank Indonesia issued Regulation No. 18/18/PBI/2016 on Foreign Exchange Transaction to Rupiah between Banks and Domestic Parties (“PBI 18/18/2016”) and further enacted Governor of Bank Indonesia Regulation No. 20/16/PADG/2018 on August 15, 2018 (“PADG 20/2018”). Under PBI 18/18/2016 and PADG 20/2018, any conversion of Rupiah into foreign currency for spot and standard derivative (plain vanilla) transactions that exceeds a specific threshold is required to have an underlying transaction and supported by underlying transaction documents. Such underlying transaction and its supporting underlying transaction documents also required for transactions of foreign exchange structured product in the form of a Call Spread Option, in any amount. Further, the maximum amount of such foreign exchange conversion cannot exceed the value of the underlying transaction.

The underlying transaction may consist of: (a) domestic and international trade of goods and services; (b) investment in the form of direct investment, portfolio investment, loans, capital and other investment inside and outside Indonesia; and/or (c) the granting of facility or financing from Bank in foreign currencies and/or Rupiah for trade and investment activities. Furthermore, PADG 20/2018 extends the scope of the underlying transaction in (c) above to include sharing principle facilities or financing. The underlying transaction may not include (a) a placement of funds in banks in the form of, among others, saving account, demand deposit account, time deposit, or Negotiable Certificate Deposit (“NCD”); (b) money transfers by a remittance company; (c) undrawn credit facilities, including standby loans and undisbursed loans; and (d) usage of Bank Indonesia securities in foreign currencies.

Indonesian companies purchasing foreign currencies from Banks by way of (i) spot transactions and (ii) standard derivative (plain vanilla) transactions in excess of US$25,000 and US$100,000, respectively, will be required to submit certain supporting documents to the selling bank, including, among others, a duly stamped or authenticated written statement by the Company confirming that the underlying transaction document is valid and correct, and the amount of foreign currency purchased is or will not exceed the amount stated in the underlying transaction document. For the purchase of foreign currencies not exceeding such thresholds, the company must declare in a duly stamped or authenticated written statement by the Company letter that its aggregate foreign currency purchases do not exceed the thresholds in the Indonesian banking system.

Bank Indonesia also issued Bank Indonesia Regulation No. 18/19/PBI/2016 dated September 5, 2016 on Foreign Exchange Transaction to Rupiah between Banks and Foreign Parties (“PBI 18/19/2016”). Similar to PBI 18/18/2016, PBI 18/19/2016 is intended to comprehensively govern foreign exchange transactions against Rupiah in Indonesia. However, unlike PBI 18/18/2016, which targets Indonesian bank customers, PBI 18/19/2016 governs foreign exchange transactions by banks and foreign parties.

43 PBI 18/19/2016 also requires an underlying transaction if a foreign exchange transaction exceeds certain threshold amounts. The thresholds set forth by PBI 18/19/2016, which are similar to the threshold amounts under PBI 18/18/2016, are: (i) for spot transactions, a purchase of foreign exchange against the Rupiah equivalent of US$25,000 per month per foreign party, or its equivalent; and (ii) for derivative transactions, the sale and purchase of foreign exchange against the Rupiah equivalent of US$1 million per transaction per foreign party or per outstanding amount of each of the derivative transaction per bank, or its equivalent.

The underlying transaction under PBI 18/19/2016 may consist of: (a) domestic and international trade of goods and services; and/or (b) investment in the form of direct investment, portfolio investment, loans, capital and other investment inside and outside Indonesia.

The following transactions are not considered as underlying transactions: (i) Bank Indonesia Certificates for derivative transactions, (ii) a placement of funds in banks (vostro account) in the form of saving account, demand deposit account, time deposit, or NCD; (iii) the granting of facility which has not been withdrawn, such as standby loan and disbursed loan; and (iv) the usage of Bank Indonesia securities in foreign currencies.

Singapore Dollar to U.S. Dollar Exchange Rate Information The following table sets forth, for the periods indicated, information concerning the exchange rates between Singapore Dollars and U.S. Dollars based on the average closing rate appearing on Reuters on the last business day of each month during the relevant period.

Middle Exchange Rates At Period High Low Average End (S$ per US$) 2013 ...... 1.28 1.22 1.25 1.26 2014 ...... 1.33 1.24 1.28 1.33 2015 ...... 1.43 1.32 1.3 1.42 2016 ...... 1.45 1.34 1.39 1.45 2017 ...... 1.45 1.34 1.39 1.34 2018 ...... 1.39 1.31 1.35 1.36 2019 January ...... 1.37 1.35 1.36 1.36 February ...... 1.36 1.35 1.35 1.35 March ...... 1.36 1.35 1.35 1.36 April ...... 1.36 1.35 1.36 1.36 May (through May 24, 2019) ...... 1.38 1.36 1.37 1.38

Source: Bloomberg (as of May 27, 2019).

Exchange Controls Currently, there are no exchange control restrictions in Singapore.

44 CAPITALIZATION AND INDEBTEDNESS

The following table sets forth our unaudited consolidated capitalization and indebtedness as of March 31, 2019.

As of March 31, 2019 As of March 31, 2019 (S$ thousands) (US$ thousands) Actual As Adjusted(1),(2) Actual As Adjusted(1),(2)

Short-term borrowings ...... 120,000 - 88,235 - Long-term borrowings ...... 560,000 725,000 411,765 533,088 Total indebtedness ...... 680,000 725,000 500,000 533,088 Perpetual securities ...... 260,000 260,000 191,176 191,176 Unitholders’ funds ...... 854,630 854,630 628,404 628,404 Total capitalization ...... 1,114,630 1,114,630 819,580 819,580 Total capitalization and indebtedness ...... 1,794,630 1,839,630 1,319,580 1,352,668

(1) The “As Adjusted” column reflects the issuance of the Notes and the application of the net proceeds of the offering of the Notes to repay existing indebtedness comprising of S$120.0 million revolving credit facilities and S$175.0 million term loan due in 2020. (2) This amount excludes the Joint Lead Managers’ discounts, commissions and fees and estimates of other expenses payable by us in connection with this offering.

As of March 31, 2019, we did not have any material contingent liabilities.

There has been no material change in our capitalization and liabilities since March 31, 2019.

45 SELECTED CONSOLIDATED FINANCIAL INFORMATION

You should read the selected financial information presented below in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this Offering Memorandum.

We have derived the selected consolidated statements of total return and cash flows and other financial data for the years ended December 31, 2016, 2017 and 2018 and the selected consolidated statements of financial position as of December 31, 2016, 2017 and 2018 in the tables below from our audited consolidated financial statements as of and for the years ended December 31, 2016, 2017 and 2018. We have derived the selected consolidated statements of total return and cash flows and other financial date for the three month periods ended March 31, 2018 and 2019 and the selected consolidated statement of financial position as of March 31, 2019 from our unaudited interim consolidated financial information for the three month periods ended March 31, 2018 and 2019.

The audited consolidated financial statements for the years ended December 31, 2016, 2017 and 2018 have been prepared in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered Accountants. RSM Chio Lim LLP has audited and rendered an unqualified audit report on the consolidated financial statement for the year ended 31, December 31, 2016, 2017 and 2018 which are included in this Offering Memorandum. See “Index to Financial Statements”

The unaudited interim consolidated financial information for the three month periods ended March 31, 2018 and March 31, 2019 were reviewed by RSM Chio Lim LLP and prepared in accordance with Financial Reporting Standard 34 Interim Financial Reporting.

The historical results presented below are not necessarily indicative of the results that may be expected for any future period. Further our results for any interim period may not be indicative of our results for the full year or for any period.

46 Statements of Total Return

Year ended December 31 Three months ended March 31 2016 2017 2018 2018 2018 2019 2019 S$ US$ S$ US$ Thousands Thousands Thousands Thousands

Gross Revenue ...... 188,066 197,376 230,299 169,338 49,123 65,912 48,465 Property Operating Expenses ...... (16,206) (13,125) (65,332) (48,038) (5,175) (25,399) (18,676) Net Property Income ...... 171,860 184,251 164,967 121,300 43,948 40,513 29,789 Interest Income ...... 1,678 1,148 150 110 47 - - Other Credits ...... - 312 159 117 21 289 213 Manager’s Management Fees ...... (11,940) (12,518) (11,595) (8,526) (3,001) (2,856) (2,100) Trustee’s Fees ...... (332) (423) (461) (339) (115) (115) (85) Finance Costs ...... (34,963) (31,589) (34,653) (25,480) (8,039) (8,602) (6,325) Other Expenses ...... (1,923) (3,538) (1,803) (1,326) (335) (547) (402) Net Income Before the Undernoted ..... 124,380 137,643 116,764 85,856 32,526 28,682 21,090 Decrease in Fair Values of Investment Properties ...... (48,045) (30,399) (1,495) (1,099) - - - Realised Gains (Losses) on Derivative Financial Instruments ...... 4,010 1,452 (2,956) (2,174) (765) (761) (560) (Decrease) Increase in Fair Values of Derivative Financial Instruments ...... (3,120) (568) (135) (99) 345 980 721 Realised Foreign Exchange Adjustment Losses ...... (6,853) (5,521) (12,253) (9,010) (2,389) (935) (688) Unrealised Foreign Exchange Adjustment (Losses) Gains ...... (5,116) (1,509) 2,288 1,682 385 848 623 Amortisation of intangible assets ...... (11,889) (12,996) (2,613) (1,921) (762) (573) (421) Total Return for the Year Before Income Tax ...... 53,367 88,102 99,600 73,235 29,340 28,241 20,765 Income Tax Expense ...... (24,532) (25,392) (38,668) (28,432) 9,571 (8,941) (6,574) Total Return for the Year After Income Tax ...... 28,835 62,710 60,932 44,803 19,769 19,300 14,191 Other Comprehensive Return (Loss) Exchange Differences on Translating Foreign Operations ...... 82,531 (140,788) (73,260) (53,868) (49,736) 22,221 16,339 Total Comprehensive Return (Loss) ..... 111,366 (78,078) (12,328) (9,065) (29,967) 41,521 30,530 Basic and Diluted Earnings per Unit (cents) ...... 0.94 1.73 1.52 1.12 0.54 0.52 0.38

47 Statements of Distribution

Year ended December 31 Three months ended March 31 2016 2017 2018 2018 2018 2019 2019 S$ US$ S$ US$ Thousands Thousands Thousands Thousands Total Return for the Year After Income Tax . . . 28,835 62,710 60,932 44,803 19,769 19,300 14,191 Less: Net Adjustments ...... 66,633 34,250 (2,517) (1,851) (751) (3,221) (2,368) Total Distribution to Unitholders ...... 95,468 96,960 58,415 42,952 19,018 16,079 11,823 Distributions Made to Unitholders Distribution of 0.83 cents in 2016, 0.89 cents in 2017, 0.67 cents in 2018 per unit, for the period from January 1 to March 31 ...... 23,178 25,120 19,018 13,984 - - - Distribution of 0.85 cents in 2016, 0.90 cents in 2017, 0.59 cents in 2018 per unit for the period from April 1 to June 30 ...... 23,802 25,403 16,816 12,365 - - - Distribution of 0.86 cents in 2016, 0.86 cents in 2017, 0.49 cents in 2018 per unit for the period from July 1 to September 30 ...... 24,153 24,151 13,896 10,217 - - - Total Interim Distribution Paid in the Year Ended December 31 ...... 71,133 74,674 49,730 36,566 - - - Total Return Available for Distribution to Unitholders for the Quarter Ended December 31 Paid After Year End ...... 24,335 22,286 8,685 6,386 - - - 95,468 96,960 58,415 42,952 - - - Unitholders’ Distribution — As Distribution from Operations ...... 61,549 63,637 29,525 21,710 8,720 7,975 5,864 — As Distribution of Unitholders’ Capital Contribution ...... 33,919 33,323 28,890 21,242 10,298 8,104 5,959 Total ...... 95,468 96,960 58,415 42,952 19,018 16,079 11,823 Distribution Per Unit (cents) ...... 3.41 3.44 2.05 1.51 0.67 0.55 0.40

48 Statements of Financial Position

As of December 31 As of March 31 2016 2017 2018 2018 2019 S$ US$ S$ US$ Thousands Thousands Thousands Thousands

ASSETS Non-Current Assets Plant and Equipment ...... 7,508 9,931 10,595 7,790 10,337 7,601 Investment Properties ...... 1,922,642 1,908,141 1,831,646 1,346,799 1,856,358 1,364,969 Derivatives Financial Instruments — Current ...... - 394 - - - - Intangible Assets ...... 19,206 11,906 8,790 6,463 8,331 6,126 Total Non-Current Assets ...... 1,949,356 1,930,372 1,851,031 1,361,052 1,875,026 1,378,696 Current Assets Trade and Other Receivables ...... 17,223 38,989 40,486 29,769 37,311 27,435 Other Assets ...... 20,900 29,613 21,964 16,150 17,331 12,742 Cash and Cash Equivalents ...... 77,754 64,900 52,676 38,732 74,658 54,896 Total Current Assets ...... 115,877 133,502 115,126 84,651 129,300 95,073 Total Assets ...... 2,065,233 2,063,874 1,966,157 1,445,703 2,004,326 1,473,769 UNITHOLDERS’ FUNDS, PERPETUAL SECURITIES AND LIABILITIES , Unitholders’ Funds Issued Equity ...... 1,393,642 1,401,380 1,414,763 1,040,267 1,421,321 1,045,089 Retained Earnings ...... 170,027 119,675 90,831 66,788 97,119 71,411 Currency Translation (Adverse) ...... (471,981) (612,769) (686,030) (504,434) (663,810) (488,096) Total Unitholders’ Funds ...... 1,019,688 908,286 819,564 602,621 854,630 628,404 Perpetual Securities Perpetual Securities ...... 140,867 259,647 259,647 190,917 259,156 190,556

Total Perpetual Securities ...... 140,867 259,647 259,647 190,917 259,156 190,556 Non-Current Liabilities Deferred Tax Liabilities ...... 31,662 23,364 23,241 17,089 23,241 17,089 Other Financial Liabilities ...... 517,869 421,090 555,216 408,247 555,992 408,818 Other Liabilities ...... 87,039 94,688 89,499 65,808 89,966 66,151 Derivative Financial Instruments ...... 1,811 1,954 1,885 1,386 1,625 1,195 Total Non-Current Liabilities ...... 638,381 541,096 669,841 492,530 670,824 493,253 Current Liabilities Income Tax Payable ...... 6,154 5,715 3,881 2,853 7,467 5,490 Trade and Other Payables ...... 31,180 45,337 50,192 36,905 48,010 35,301 Other Financial Liabilities ...... 124,291 268,469 120,034 88,260 120,034 88,260 Other Liabilities ...... 32,582 34,415 42,279 31,088 44,205 32,505 Derivative Financial Instruments — Current ...... 90 909 719 529 - - Total Current Liabilities ...... 194,297 354,845 217,105 159,635 219,716 161,556 Total Liabilities ...... 832,678 895,941 886,946 652,165 890,540 654,809 Total Unitholders’ Funds, Perpetual Securities and Liabilities ...... 2,065,233 2,063,874 1,966,157 1,445,703 2,004,326 1,473,769 Net Asset Value per Unit (cents) ...... 38.95 32.16 28.66 21.07 29.52 21.71

49 DESCRIPTION OF LMIRT CAPITAL

GENERAL LMIRT Capital was incorporated on May 18, 2012 as a Singapore private company with limited liability and its registration number is 201212428M. The registered office of the LMIRT Capital is located at 50 Collyer Quay #06-07, OUE Bayfront, Singapore 049321. LMIRT Capital is our wholly owned finance subsidiary.

BUSINESS ACTIVITY The principal objects of LMIRT Capital are set out in Clause 3 of its Constitution and are, inter alia, to carry on or undertake any business activity, do any act or enter into any transactions. LMIRT Capital has not engaged, since its incorporation, in any business activities other than the issue of medium term notes under its existing S$750,000,000 Guaranteed Medium Term Note Programme established on June 25, 2012 (and authorizations and agreements related thereto), its existing S$1,000,000,000 Euro Medium Term Securities Programme established on April 13, 2018 (and authorizations and agreements related thereto) and the issue of Notes (and the authorization of documents and agreements referred to in this Offering Memorandum) to which it is or will be a party.

MANAGEMENT The directors of LMIRT Capital are Liew Chee Seng James and Wong Han Siang, each of whose address for the purpose of their directorships of LMIRT Capital is 50 Collyer Quay #06-07, OUE Bayfront, Singapore 049321.

CAPITALIZATION LMIRT Capital has an issued and paid-up share capital of S$100 comprising 100 ordinary shares. As of the date of this Offering Memorandum, LMIRT Capital has no borrowings or indebtedness in the nature of borrowings (including loan capital issued, or created but unused), term loans, liabilities under acceptances or acceptance credits, mortgages, charges or guarantees or other contingent liabilities, except as otherwise described in this Offering Memorandum.

50 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our selected consolidated financial and operating data and our financial statements and notes thereto included elsewhere in this Offering Memorandum. Our financial statements have been prepared in accordance with Singapore Financial Reporting Standards and the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” (“RAP 7”) issued by the Institute of Singapore Chartered Accountants. Unless otherwise specified herein, all financial information included in this section are the financial statements of Lippo Malls Indonesia Retail Trust and its subsidiaries on a consolidated basis.

Overview We are a Singapore-based real estate investment trust constituted by the LMIRT Trust Deed and the first and only Indonesian retail REIT listed on the mainboard of the SGX-ST since November 19, 2007. We were established with the principal investment objective of owning and investing on a long-term basis in a diversified portfolio of income-producing real estate properties in Indonesia that are primarily used for retail and/or retail-related purposes, and real estate related assets in connection with the foregoing purposes. As of May 30, 2019, our market capitalization was S$622.4 million.

We seek to produce regular and stable cash flows and to achieve long-term growth in NAV per unit through growth in rental yields and acquisitions. As of March 31, 2019, we owned 30 Properties consisting of 23 retail malls and seven retail spaces, all of which are located in Indonesia. For the year ended December 31, 2018, we had net property income of S$165.0 million and income available for distribution to unitholders of S$58.4 million. For the three months ended March 31, 2019, we had net property income of S$40.5 million and income available for distribution to unitholders of S$16.1 million. As of December 31, 2018, we had total assets of S$1,966.2 million. As of March 31, 2019, we had total assets of S$2,004.3 million.

Factors Affecting our Business and Results of Operations Our business and results of operations are affected by the following important factors:

Š the size of our portfolio;

Š leases, occupancy and rental rates;

Š changes in taxation and other regulations in Indonesia;

Š general economic conditions in Indonesia, sustainable middle income group and consumer trends;

Š levels and changing environment of retail spending in Indonesia;

Š impact of exchange rate movements; and

Š availability and cost of funding.

The Size of our Portfolio We derive substantially all of our income from rent received from tenants in the properties that we own and, as the number of properties in our portfolio and total NLA increases through the acquisition of additional properties, we expect that our overall income will increase. Conversely, should we decide to sell an asset from our portfolio and not replace such asset with additional properties, our overall level of rental income will drop relative to our rental income prior to such asset sale.

From the time of our initial public offering in 2007, when we owned 14 properties, we have consistently increased our portfolio and total NLA. As of March 31, 2019, we owned a total portfolio of 30 properties consisting of 23 retail malls and seven retail spaces with a total NLA of 911,020 sq m. In the most

51 recent three years, we have acquired four malls: Lippo Mall Kuta in December 2016, Lippo Plaza Kendari in June 2017, Lippo Plaza Jogja in December 2017 and Kediri Town Square in December 2017. In March 2019, we entered into a conditional sale and purchase agreement with PT Mandiri Cipta Gemilang, an affiliate of our Sponsor, to acquire Lippo Mall Puri. See “Business — Acquisition of Puri Mall” and “Business — Strategies — Strengthening our asset positioning as lifestyle hubs via a three-pronged portfolio reconstitution approach”. The following table sets forth information regarding our properties, gross floor area and NLA for the periods presented: As of As of December 31 March 31 2016(1) 2017(2) 2018 2019 Number of malls(3) ...... 20 23 23 23 Number of retail spaces ...... 7777 Total GFA (sq m) ...... 1,506,683 1,650,014 1,650,014 1,650,014 Total NLA (sq m) ...... 851,850 910,582 910,749 911,020

(1) We acquired one retail mall, Lippo Mall Kuta, in 2016. (2) We acquired three retail malls, Lippo Plaza Kendari, Lippo Plaza Jogja and Kediri Town Square, in 2017. (3) Does not include Lippo Mall Puri.

Leases, Occupancy and Rental Rates Our rental revenue is driven by the leases we enter into, occupancy rates and tenant mix as well as the rental terms we agree with our tenants. The following table sets forth certain information about our rental operations: As of and for the three months ended As of and for the year ended December 31 March 31 2016 2017 2018 2019 Number of tenants ...... 3,429(1) 3,363 3,697 3,734 Occupancy (%)(2) ...... 94.3% 93.7% 92.9% 91.5% Rental reversion(3) (%) ...... 7.0% 5.6% 3.6% 6.3% WALE (years) ...... 4.5 4.1 4.2 4.2

(1) For retail malls only. (2) Weighted average. (3) Calculated as the renewed area’s first year rent versus the last payable rent.

Master Leases In connection with our acquisition strategy, we may enter into master leases with the vendors of the properties we acquire. Master leases are intended to provide a stable rental income during the initial period of operations of a retail property. We typically enter into master leases for periods of three to five years where such leases cover certain areas of the properties such as specialty and anchor areas, casual leasing and parking space.

As of March 31, 2019, five of our properties are under master leases with vendors, Lippo Mall Kemang (expiring December 2019), Lippo Mall Kuta (expiring December 2021), Lippo Plaza Kendari (expiring June 2022), Lippo Plaza Jogja (expiring December 2022), and Palembang Icon (Sports Centre) (expiring April 2040). The master leases for Lippo Plaza Batu and Palembang Icon expired in 2018. The master leases for our seven retail spaces expired in November 2017 after their 10-year term. For additional information about our master leases, see “Business — Master Leases” and note 32 to our audited financial statements.

For the year ended December 31, 2018, the master leases representing 13.9% of total revenue was S$32.0 million whereas the underlying performance was S$7.4 million accounting for 23.2% of the master lease revenue. For the year ended December 31, 2017, the master leases representing 16.0% of total revenue was approximately S$31.5 million whereas the underlying performance was approximately S$5.2 million which was 16.4% of the master lease revenue. For the year ended December 31, 2016, rental received under the master leases was approximately S$26.3 million, whereas the corresponding underlying rental was approximately S$3.9 million. The master leases represented 14.0% of the total revenue for 2016.

52 Lease Profile and Strategy We continue to enjoy a long lease profile with WALE above four years. WALE by NLA stood at 4.17 years as of March 31, 2019.

Consistently long WALE (by NLA)

(years)

4.91 4.51 4.13 4.22 4.17 3.40

FY2014A FY2015A FY2016A FY2017A FY2018A 1Q2019A

Long lease profile (1Q2019A) (%)

35.3%

18.9% 12.2% 10.1% 7.2%

FY2019E FY2020E FY2021E FY2022E > FY2023E

We actively manage our tenant mix and focus our strategy on retaining quality tenants. In 2018, we renewed 29,097 sq m of space, accounting for 3.2% of our total NLA, at an average rental reversion of 3.6%. In 2017, we renewed a total of 36,784 sq m of space, accounting for 4.0% of our total NLA, at an average rental reversion of 5.6% despite downward pressure on retail rents during the year.

Supported by our Property Manager, we secured a total of 61,576 sq m of new leases in 2018, a 60.9% increase from 2017. The WALE (based on lease commencement date) for these new leases was 3.2 years and these new leases contributed to 3.7% of the gross rental income in 2018.

Occupancy Rates We enjoy stable occupancy rates, which are consistently higher than the industry average as shown in the graph below. As of March 31, 2019, our occupancy rate was 91.5%.

Portfolio Occupancy and Rental Reversions

5.3% 4.2% 6.3% 2.9% 3.6%

94.0% 93.6% 92.6% 92.9% 91.5%

84.8% 84.2% 83.8% 83.2% 80.7%

1Q2018A 2Q2018A 3Q2018A 4Q2018A 1Q2019A Portfolio Average Occ. Rate Industry Average Occ. Rate Average Rental Reversions

Source: Cushman & Wakefield and Colliers Jakarta Retail Reports

Changes in Fair Values of Investment Properties We are required to revalue each of the properties in our portfolio annually, taking into account cash flow forecasts as well as general economic conditions in Indonesia and the regional locations of our properties. Our properties are also impacted by land title and leases and, in recent years, valuations for the properties with HGB titles have enjoyed an increase in valuation due to higher cash flow forecasts. On the other hand, properties with BOT land titles have been under pressure due to the shortening of remaining lease periods over time. We engage independent valuers to assist with the valuation exercise.

The fair value of our properties are increased for capitalized expenditures relating to our asset enhancement initiatives which we have undertaken to boost our asset values and attract greater footfall to our properties. See “Business — Asset Enhancement”.

53 The fair value of our property is also impacted by changes in the exchange rate between the Singapore Dollar and the Indonesian Rupiah. While our Rupiah denominated valuations have remained stable over the recent periods, in Singapore Dollar terms the portfolio value has declined as the Rupiah has depreciated against the Singapore Dollar. See “— Impact of Exchange Rate Movements”.

The following table sets out changes in the fair value of our properties over the referenced periods: Three months ended Year ended December 31 March 31 2016 2017 2018 2019 S$ million Fair value at the beginning of year ...... 1,804.93 1,922.64 1,908.14 1,831.65 Acquisitions of investment properties ...... 82.98 126.64 - - Enhancement expenditure capitalized ...... 11.22 45.64 7.70 1.56 Total ...... 1,899.13 2,094.92 1,915.85 1,833.21 Decrease in fair value included in profit or loss ...... (48.05) (30.40) (1.5) - Translation Differences ...... 71.56 (156.38) (82.70) 23.15 Fair value at end of year ...... 1,922.64 1,908.14 1,831.65 1,856.36

Changes in Taxation Regulations in Indonesia Pursuant to Government Regulation Number 34 of 2017, which came into effect on January 2, 2018, all income received or earned from land and/or building leases in Indonesia are subject to income tax at 10% of the gross amount of the value of the land and/or building lease which comprises the total amount that is paid or acknowledged as debt by a tenant in any form whatsoever, including service charges and utilities recovery charges. Previously, property owners were not liable to pay income tax on such charges paid by tenants to a third-party operator appointed by the property owner to manage and maintain the property. However, following the implementation of Government Regulation Number 34 of 2017, tenants are now required to withhold income tax on service charges and utilities recovery charges as well, notwithstanding that these are not paid to the property owner. As such, we incurred higher tax expenses in 2018 resulting from this change.

Since May 2012, certain maintenance services for our retail malls, such as cleaning and maintenance of utilities, were outsourced to a third party service provider. Pursuant to the outsourced agreements, the third party service provider had the right to collect service charges and utilities recovery charges from the tenants of the retail malls, and was responsible for all costs directly related to the maintenance and operation of the retail malls, as well as to pay for the rental for use of electrical, mechanical and mall operating equipment of the retail malls. The latter forms part of the other rental income and is subject to Indonesian Corporate Tax of 25%. Following the implementation of Government Regulation Number 34 of 2017, we terminated all outsourced agreements with the third party service provider over two phases: phase one was for five retail malls and went into effect at the end of April 2018 and phase two was for the rest of the retail malls and went into effect at the end of June 2018. After the termination of such agreements, all malls collect service charges and utilities recovery charges from the tenants and pay for all costs for the maintenance and operation of the malls directly. As a result, we incurred a higher consolidated tax expense in 2018 and expect this to be a continuing expense going forward.

General Economic Conditions in Indonesia, Sustainable Middle Income Group and Consumer Trends Our results of operations are subject to general economic conditions in Indonesia, including standards of living, levels of disposable income, demographic changes, interest rates, the availability of consumer financing and increases in utility and fuel costs. Each of these factors affects sales of consumer products and ultimately the demand for retail spaces. Our businesses are generally targeted at middle and upper-middle income consumers in Indonesia, which generally have a higher proportion of disposable income. Indonesia has a largely consumer driven economy, and as this demographic grows, we expect that there will be more demand for retail goods in Indonesia. This increase is expected to generate a consequent increase in demand for retail sales.

We actively re-position our Properties according to the changing consumer demands to ensure they stay relevant. Against the backdrop of growing competition posted by e-commerce and online shopping

54 and additional retail malls opening in our operating areas, our key focus is to re-position our Properties as lifestyle hubs and to capitalize on the physical experience of our shoppers. We also target to shift our portfolio tenant base towards having a higher proportion of F&B / specialty tenants.

In addition, changes in transportation innovations, including ride-sharing platforms, have reduced the number of passenger vehicles accessing our car parks and we expect to see a reduction in the number of car park entries per period going forward.

Impact of Exchange Rate Movements The majority of our revenue is in Rupiah while our accounting currency is the Singapore Dollar, which gives rise to exchange gains and losses related to the translation of Rupiah-denominated revenue and assets into Singapore Dollars. Transactions in foreign currencies are recorded in the functional currency at the relevant rate at the date of the transaction.

At the end of each reporting period, recorded monetary balances and balances measured at fair value that are denominated in non-functional currencies, including our Properties, are reported at the relevant rate at the end of such period and fair value measurement date, respectively. Although the translation differences are non-cash items, such differences may have a material impact on our operations and our ability to incur debt under our leverage ratios.

Additionally, following the issuance of the Notes, we will be exposed to exchange rate fluctuations between the US Dollar and the Singapore Dollar in connection with the payment of interest and principal on the Notes.

Availability and Cost of Funding A significant portion of our strategy to grow our rental revenue focuses on asset acquisition and asset enhancement projects. The success of this strategy is contingent on our ability to obtain adequate funding, whether through the capital markets, bank loans or otherwise, and on commercially reasonable terms. The lack of available funding could significantly impact the growth of our future rental revenue and cash flows, as well as our asset portfolio.

Additionally, the general economic conditions in Indonesia may affect our ability to fund our operations and any planned asset enhancement initiatives.

As of March 31, 2019, our total financial liabilities, which includes current and non-current financial liabilities, was S$680.0 million. Because most of our bank loans incur interest at floating rates, any increase in such lending rates will increase our funding costs. We enter into hedging transactions in connection with certain of our floating rate debt to minimize the impact of interest rate fluctuations. The cost of these hedges are also reflected in our financing costs.

Significant Accounting Policies — critical judgements, assumptions and estimation uncertainties We have prepared our financial statements in accordance with the recommendation of the Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” (RAP 7) issued by the Institute of Singapore Chartered Accountants and the applicable requirement of the Code of Collective Investment Schemes issued by the Monetary Authority of Singapore and the provisions of the Trust Deed. RAP 7 requires that the accounting policies should generally comply with the principles relating to the recognition and measurement of the Singapore Financial Reporting Standards (“FRS”). Preparation of our financial statements requires our management to make critical judgements, assumptions and estimates under the critical accounting policies described below.

The critical judgements made in the process of applying the accounting policies that have the most significant effect on the amounts recognized in the financial statements and the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting year, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting year are discussed below. These estimates and assumptions are periodically monitored to make sure they incorporate all relevant information available at the date when financial statements are prepared. However, this does not prevent actual figures differing from estimates.

55 Fair values of investment properties: Certain judgements and assumptions are made in the valuation of the investment properties based on calculations and these calculations require the use of estimates in relation to future cash flows, growth rates, discount rates and market capitalization, as disclosed in Note 14 to our financial statements.

Income Tax Amounts: The entity recognizes tax liabilities and tax assets based on an estimation of the likely taxes due, which requires significant judgement as to the ultimate tax determination of certain items. Where the actual amount arising from these issues differs from these estimates, such differences will have an impact on income tax and deferred tax amounts in the period when such determination is made. In addition, management judgement is required in determining the amount of current and deferred tax recognized and the extent to which amounts should or can be recognized. A deferred tax asset is recognized if it is probable that the entity will earn sufficient taxable profit in future periods to benefit from a reduction in tax payments. This involves the management making assumptions within its overall tax planning activities and periodically reassessing them in order to reflect changed circumstances as well as tax regulations. Moreover, the measurement of a deferred tax asset or liability reflects the manner in which the entity expects to recover the asset’s carrying value or settle the liability. As a result, due to their inherent nature assessments of likelihood are judgmental and not susceptible to precise determination.

Deferred tax; Recovery of underlying assets: The deferred tax relating to an asset is dependent on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in FRS 40 Investment Property or when fair value is required or permitted by a FRS for a non-financial asset. Management has taken the view that there is clear evidence that it will consume the relevant asset’s economic benefits throughout its economic life.

Determination of functional currency: Judgement is required to determine the functional currency of the reporting entity. Management considers economic environment in which the reporting entity operates and factors such as the currency that mainly influences sales prices for goods and services; the currency of the country whose competitive forces and regulations mainly determine the sales prices of its goods and services; and the currency that mainly influences labor, material and other costs of providing goods or services. It also considers other relevant factors that may also provide evidence of an entity’s functional currency.

Allowance for trade receivables: The trade receivables are subject to the expected credit loss model under the financial reporting standard on financial instruments. The expected lifetime losses are recognized from initial recognition of these assets. These assets are grouped based on shared credit risk characteristics and the days past due for measuring the expected credit losses. The allowance matrix is based on its historical observed default rates (over a period of certain months) over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date the historical observed default rates are updated and changes in the forward-looking estimates are analyzed. The loss allowance was determined accordingly. The carrying amounts might change materially within the next reporting year but these changes may not arise from assumptions or other sources of estimation uncertainty at the end of the reporting year. The carrying amount is disclosed in the Note 18 on trade and other receivables in our financial statements.

Fair value of derivative financial instruments: Some of the financial instruments stated at fair values are not based on quoted prices in active markets, and therefore there is significant measurement uncertainty involved in this valuation. Management makes any adjustments where necessary to reflect the assumptions that marketplace participants would use in similar circumstances. The assumptions and the fair values are disclosed in Note 28 on derivative financial instruments in our financial statements.

Classification of joint arrangements: The joint venture agreements in relation to the PT Yogya Central Terpadu partnership require unanimous consent from all parties for all relevant activities. The two partners have direct rights to the

56 assets of the partnership and are jointly and severally liable for the liabilities incurred by the partnership. This entity is therefore classified as a joint operation and the Group recognizes its direct right to the jointly held assets, liabilities, revenues and expenses.

A joint arrangement (that is, either a joint operation or a joint venture, depending on the rights and obligations of the jointly controlling parties to the arrangement), is one in which the reporting entity is party to an arrangement of which two or more parties have joint control, which is the contractually agreed sharing of control of the arrangement; it exists only when decisions about the relevant activities (that is, activities that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control. In a joint operation, the parties with joint control have rights to the assets, and obligations for the liabilities, relating to the arrangement. The reporting entity recognizes its share of the operation’s assets, liabilities, income and expenses that are combined line by line with similar items in the reporting entity’s financial statements and accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the SFRSs applicable to the particular assets, liabilities, revenues and expenses. When the reporting entity enters into a transaction with a joint operation, such as a sale or contribution of assets, the reporting entity recognizes gains and losses resulting from such a transaction only to the extent of the other parties’ interests in the joint operation.

Description of Certain Line Items Gross Revenue Gross revenue consists of rental revenue, car park revenue, service charge and utilities recovery and other rental income as set forth in the following table.

Three months ended Year ended December 31 March 31 2016 2017 2018 2018 2019 S$ S$ Thousands Thousands Rental revenue ...... 152,878 164,203 155,215 40,279 37,427 Car park revenue ...... 26,439 20,908 19,141 5,137 4,610 Service charge and utilities recovery ...... - - 51,623 722 23,195 Income from rental of mechanical, electrical and mall operating equipment ...... 6,789 10,290 1,707 2,596 - Other rental income ...... 1,960 1,975 2,613 389 680 Total Gross Revenue ...... 188,066 197,376 230,299 49,123 65,912

Rental revenue. Rental revenue represents the rent we earn under the leases with our tenants and under the master leases we have entered into with certain vendors. Rental revenue is recognized on a time-proportion basis that takes into account the effective yield on the asset on a straight-line basis over the lease term.

Car park revenue. Car park revenue is recognized based on point in time. The customers are visitors of the Properties. Car park operations are outsourced to a related party service provider through a profit sharing arrangement.

Service charge and utilities recovery. Prior to 2018, certain maintenance services for our retail malls, such as cleaning and maintenance of utilities, were outsourced to a third party service provider (the “Outsource Agreements”). Pursuant to the Outsource Agreements, the third party service provider had the right to collect service charges and utilities recovery charges from the tenants of the retail malls, and was responsible for all costs directly related to the maintenance and operation of the retail malls, as well as to pay for the rental for use of electrical, mechanical and mall operating equipment of the retail malls. We terminated all Outsource Agreements with the third party service provider over two phases — phase one is for five retail malls by end April 2018 and phase two is for the rest of the retail malls by end June 2018. After the termination of such agreements, all the malls collect service charges and utilities recovery charges from the tenants and pay for all costs for the maintenance and operation of the malls directly.

57 Income from rental of mechanical, electrical and mall operating equipment. This line item includes income from rental of operating equipment collected from an external service provider under the Outsource Agreements, which terminated in two phases in 2018.

Other Rental Income. Our other rental income includes income from rental of signage, billboard, antenna and other miscellaneous income.

Property Operating Expenses Our property operating expenses consist of land rental expense, property management fees, legal and professional fees, depreciation of plant and equipment and other property operating expenses.

Year ended Three months December 31 ended March 31 2016 2017 2018 2018 2019 S$ S$ Thousands Thousands Land rental expense ...... 2,054 1,974 1,614 416 380 Property management fees ...... 4,393 6,691 7,714 2,050 1,879 Legal and professional fees ...... 1,266 1,584 1,806 372 468 Depreciation of plant and equipment ...... 1,728 2,457 3,015 585 783 Net allowance/(reversal) for impairment loss on trade receivables ...... 549 (2,029) 4,775 738 1,636 Property operating and maintenance expenses ...... - - 45,303 751 19,910 Other property operating expenses ...... 6,216 2,448 1,105 263 343 Property Operating Expenses ...... 16,206 13,125 65,332 5,175 25,399

Land rental expense. Land rental expense relates to payments under our BOT arrangements.

Property Management Fees. Under the property management agreements in respect of each retail mall and retail space, the Property Manager is entitled to fees based on the gross revenue and net property income of the relevant property. See “Related Persons Transactions”.

Change in allowances for impairment loss on trade receivables. The trade receivables are subject to the expected credit loss model under the financial reporting standard on financial instruments. We update allowances on trade receivables based on the accounting standard at each reporting date.

Property Operating and maintenance expenses. These expenses relate to costs incurred for maintenance and operation of the retail malls following the termination of the Outsource Agreements.

Other property operating expenses. These expenses include car park expenses and other miscellaneous expenses.

Manager’s Management Fees Under the LMIRT Trust Deed, the LMIRT Manager is entitled to management fees including a base fee and a performance fee. See “Related Persons Transactions”. The Manager can elect to receive certain of the fees in the form of units.

Finance Costs Finance costs consist of interest expense under our various loan facilities and debt instruments as well as a component of amortization of borrowing costs.

Increase/Decrease in fair values of investment properties Investment property is property owned or held under a finance lease to earn rentals or for capital appreciation or both. We initially recognize our investment at cost, including transaction costs. We measure fair values periodically on a systematic basis at least once yearly through independent professional valuers. A gain or loss arising from a change in the fair value of the investment property is included in profit or loss for the reporting year in which it arises. The fair values of our investment properties is also adjusted for foreign currency fluctuations.

58 Realized (losses)/gains on derivative financial instruments We realize gains and losses on currency hedging contracts due to fluctuations in the exchange rate between the Rupiah and the Singapore Dollar.

Realized foreign exchange adjustment losses We realize foreign exchange adjustments upon the repatriation of cash from Indonesia to Singapore at exchange rates that differ from the historical exchange rates at the time of the initial investment.

Amortization of intangible assets Intangible assets represent the unamortized aggregate rental guarantee amounts receivable under the outstanding master leases.

Total Return before Income Tax Reflects net income plus the net changes in fair value of investment properties, realized gains and losses on derivative financial instruments, changes in fair values of derivative financial instruments, realized foreign exchange gains and losses, unrealized foreign exchange gains and losses and amortization of intangible assets.

Income Tax Reflects current income tax expense and deferred income tax expense.

Results of Operations The following table sets forth our statement of total return for the periods indicated:

Three months Year ended December 31 ended March 31 2016 2017 2018 2018 2019 S$ S$ Thousands Thousands Gross Revenue ...... 188,066 197,376 230,299 49,123 65,912 Property Operating Expenses ...... (16,206) (13,125) (65,332) (5,175) (25,399) Net Property Income ...... 171,860 184,251 164,967 43,948 40,513 Interest Income ...... 1,678 1,148 150 47 - Other Credits ...... - 312 159 21 289 Manager’s Management Fees ...... (11,940) (12,518) (11,595) (3,001) (2,856) Trustee’s Fees ...... (332) (423) (461) (115) (115) Finance Costs ...... (34,963) (31,589) (34,653) (8,039) (8,602) Other Expenses ...... (1,923) (3,538) (1,803) (335) (547) Net Income Before the Undernoted ...... 124,380 137,643 116,764 32,526 28,682 Decrease in Fair Values of Investment Properties ...... (48,045) (30,399) (1,495) - - Realised Gains (Losses) on Derivative Financial Instruments ..... 4,010 1,452 (2,956) (765) (761) (Decrease) Increase in Fair Values of Derivative Financial Instruments ...... (3,120) (568) (135) 345 980 Realised Foreign Exchange Adjustment Losses ...... (6,853) (5,521) (12,253) (2,389) (935) Unrealised Foreign Exchange Adjustment (Losses) Gains ...... (5,116) (1,509) 2,288 385 848 Amortisation of intangible assets ...... (11,889) (12,996) (2,613) (762) (573) Total Return for the Year Before Income Tax ...... 53,367 88,102 99,600 29,340 28,241 Income Tax Expense ...... (24,532) (25,392) (38,668) (9,571) (8,941) Total Return for the Year After Income Tax ...... 28,835 62,710 60,932 19,769 19,300

Results of Operations for the three months ended March 31, 2019 as compared to the three months ended March 31, 2018 Gross Revenue. Our gross revenue increased by 34.2% to S$65.9 million for the three months ended March 31, 2019 from S$49.1 million for the three months ended March 31, 2018. This increase was primarily due to the introduction of service charge and utility recovery as a result of the change in the manner that we provide cleaning and maintenance services in the operation of our Properties from April 2018. This increase was partially offset by decreases in rental revenue and income from rental of mechanical, electrical and mall operating equipment.

59 Rental revenue. Our rental revenue decreased by 7.1% to S$37.4 million for the three months ended March 31, 2019 from S$40.3 million for the three months ended March 31, 2018. This decrease was primarily due to the weakening of the Rupiah against the Singapore Dollar, in addition to lower rental income generated from Lippo Plaza Batu and Palembang Icon due to the expiry of the master leases relating to such properties in July 2018 and lower casual leasing income which were partially offset by annual rental increases under our continuing leases.

Car park revenue. Our car park revenue decreased by 10.3% to S$4.6 million for the three months ended March 31, 2019 from S$5.1 million for the three months ended March 31, 2018, primarily due to the expiry of the two master leases in July 2018, as well as promotion events in the first three months of 2018 which drew higher shopper traffic that were not repeated in 2019.

Service charge and utilities recovery. Our service charge and utility recovery increased to S$23.2 million for the three months ended March 31, 2019 from S$0.7 million for the three months ended March 31, 2018. This increase was due to the termination of our Outsource Agreements with a third party maintenance provider at our Properties in April 2018 and June 2018 when we started collecting these charges from our tenants directly.

Income from rental of mechanical, electrical and mall operating equipment. Our income from rental of mechanical, electrical and mall operating equipment decreased to nil for the three months ended March 31, 2019 from S$2.6 million for the three months ended March 31, 2018, primarily due to the termination of our outsourcing arrangement with a third party maintenance provider in 2018.

Other rental income. Our other rental income increased to S$0.7 million for the three months ended March 31, 2019 from S$0.4 million primarily due to an increase in income from the rental of signage, billboards, antennae and other miscellaneous income.

Property Operating Expenses. Our total property operating expenses increased by 390.8% to S$25.4 million for the three months ended March 31, 2019 from S$5.2 million for the three months ended March 31, 2018. This is primarily due to costs incurred of S$19.9 million for the three months ended March 31, 2019, compared to S$0.8 million for the three months ended March 31, 2018 for maintenance and operations of the Properties following the termination of our outsourcing arrangements with third party maintenance provider in 2018.

Net Property Income. As a result of the foregoing, our net property income decreased by 7.8% to S$40.5 million for the three months ended March 31, 2019 from S$43.9 million for the three months ended March 31, 2018.

Manager’s Management Fees. Our manager’s management fees decreased by 4.8% to S$2.9 million for the three months ended March 31, 2019 from S$3.0 million for the three months ended March 31, 2018. This was primarily due to lower net property income and deposited property.

Finance Costs. Our finance costs increased by 7.0% to S$8.6 million for the three months ended March 31, 2019 from S$8.0 million for the three months ended March 31, 2018, primarily due to overall increase in the weighted average rates from loan facilities.

Realized foreign exchange adjustment losses. For the three months ended March 31, 2019, we realized foreign exchange adjustment losses of S$0.9 million as compared to S$2.4 million for the three months ended March 31, 2018.

Total Return before Tax. As a result of the foregoing, for the three months ended March 31, 2019, we had total return for the period before tax of S$28.2 million, a decrease of 3.7% from S$29.3 million for the three months ended March 31, 2018.

Income Tax Expense. Our income tax expense was S$8.9 million for the three months ended March 31, 2019, a decrease of 6.6% compared to S$9.6 million for the three months ended March 31, 2018, primarily due to the impact of Government Regulation Number 34 of 2017, which came into effect on January 2, 2018.

60 Total return after income tax. As a result of the foregoing, total return after income tax decreased by 2.4% to S$19.3 million for the three months ended March 31, 2019 from S$19.8 million for the three months ended March 31, 2018.

Results of Operations for the year ended December 31, 2018 as compared to the year ended December 31, 2017 Gross revenue. Our gross revenue increased by 16.7% to S$230.3 million for the year ended December 31, 2018 from S$197.4 million for the year ended December 31, 2017. This increase was primarily due to the introduction of a S$51.6 million service charge and utility recovery as a result of the change in the manner that we provide cleaning and maintenance services in the operation of our Properties. This increase was partially offset by decreases in rental revenue and income from rental of mechanical, electrical and mall operating equipment.

Rental revenue. Our rental revenue decreased by 5.5% to S$155.2 million for the year ended December 31, 2018 from S$164.2 million for the year ended December 31, 2017. This decrease was primarily due to a 9.5% depreciation of the Rupiah against the Singapore Dollar, coupled with lower rental income for retail spaces due to the expiry of the master leases in our seven retail spaces. This decrease was partially offset by the full year of rental income earned in 2018 following the acquisitions of Lippo Plaza Kendari in June 2017, Lippo Plaza Jogja and Kediri Town Square in December 2017.

Car park revenue. Our car park revenue decreased by 8.5% to S$19.1 million for the year ended December 31, 2018 from S$20.9 million for the year ended December 31, 2017, primarily due to a 9.5% depreciation of the Rupiah against the Singapore Dollar.

Service charge and utility recovery. We recorded a S$51.6 million service charge and utility recovery for the year ended December 31, 2018 following the termination of our outsourcing arrangement with a third party maintenance provider at our Properties from April 2018 when we started collecting these charges from our tenants directly.

Income from rental of mechanical, electrical and mall operating equipment. Our income from rental of mechanical, electrical and mall operating equipment decreased by 83.4% to S$1.7 million for the year ended December 31, 2018 from S$10.3 million for the year ended December 31, 2017, primarily due to the termination of our outsourcing arrangement with a third party maintenance provider in 2018.

Other rental income. Our other rental income increased by 32.3% to S$2.6 million for the year ended December 31, 2018 from S$2.0 million for the year ended December 31, 2017, primarily due to increase in rental of signage, billboard, antenna and other miscellaneous income.

Property Operating Expenses. Our total property operating expenses increased by 397.8% to S$65.3 million for the year ended December 31, 2018 from S$13.1 million for the year ended December 31, 2017. This was primarily due to costs incurred of S$45.3 million for maintenance and operations of our Properties following the termination of our outsourcing arrangements with third party maintenance provider in 2018. We also recorded a S$4.8 million net allowance for doubtful debts made for the year ended December 31, 2018 as compared to a net reversal allowance of S$ 2.0 million for doubtful debts made for the year ended December 31, 2017.

Net Property Income. As a result of the foregoing, our net property income decreased by 10.5% to S$165.0 million for the year ended December 31, 2018 from S$184.3 million for the year ended December 31, 2017.

Manager’s Management Fees. Our manager’s management fees decreased by 7.4% to S$11.6 million for the year ended December 31, 2018 from S$12.5 million for the year ended December 31, 2017. This was primarily due to the lower value of deposited property and net property income.

Finance Costs. Our finance costs increased by 9.7% to S$34.7 million for the year ended December 31, 2018 from S$31.6 million for the year ended December 31, 2017, primarily due to the increase in aggregate borrowings for the acquisition of Lippo Plaza Jogja and Kediri Town Square in December 2017. The increase was partially offset by the partial repayment of S$100.0 million bonds in November 2018 and a S$90.0 million term loan in December 2018 using internal cash resources.

61 Decrease in fair values of investment properties. For the year ended December 31, 2018, we realized a decrease in fair values of investment properties for the period of S$1.5 million mainly due to the depreciation of our Rupiah-denominated properties as compared to a decrease of S$30.4 million for the year ended December 31, 2017.

Realized (losses)/gains on derivative financial instruments. We realized a net loss on hedging contracts of S$3.0 million in the year ended December 31, 2018 as opposed to a net gain on hedging contracts of S$1.5 million in the year ended December 31, 2017, due to the depreciation of Rupiah against the Singapore Dollar in 2018.

Realized foreign exchange adjustment losses. For the year ended December 31, 2018, we realized foreign exchange adjustment losses for the period of S$12.3 million as compared to S$5.5 million for the year ended December 31, 2017 mainly due to the negative foreign exchange impact on the repatriation of cash at an exchange rate less favourable than at the time of the initial investment.

Amortization of intangible assets. Amortization of intangible assets decreased 79.9% to S$2.6 million in the year ended December 31, 2018 from S$13.0 million in the year ended December 31, 2017, following the expiration of certain master lease agreements relating to Palembang Icon and all of the master lease agreements in Lippo Plaza Batu in July 2018 and the full amortization of the master lease agreements relating to Lippo Mall Kemang in 2017 upon the expiration of such lease agreements.

Total Return before Tax. As a result of the foregoing, for the year ended December 31, 2018, we had total return for the period before tax of S$99.6 million, an increase of 13.1% from S$88.1 million for the year ended December 31, 2017.

Income Tax Expense. Our income tax expense was S$38.7 million for the year ended December 31, 2018, an increase of 52.3% compared to S$25.4 million for the year ended December 31, 2017. This increase in income tax expense for the year ended December 31, 2018 was primarily due to the impact of Government Regulation Number 34 of 2017 which came into effect in January 2018 relating to service charges and recovery of utilities.

Total return after income tax. As a result of the foregoing, total return after income tax decreased by 2.8% to S$60.9 million for the year ended December 31, 2018 from S$62.7 million for the year ended December 31, 2017.

Results of Operations for the year ended December 31, 2017 as compared to the year ended December 31, 2016 Gross revenue. Our gross revenue increased by 5.0% to S$197.4 million for the year ended December 31, 2017 from S$188.0 million for the year ended December 31, 2016. This increase was primarily due to an increase in rental revenue and was partially offset by a decrease in car park revenue.

Rental revenue. Our rental revenue increased by 7.4% to S$164.2 million for the year ended December 31, 2017 from S$152.9 million for the year ended December 31, 2016. This increase was primarily due to the acquisitions of Lippo Mall Kuta and Lippo Plaza Kendari and positive rental reversions.

Car park revenue. Our car park revenue decreased by 20.9% to S$20.9 million for the year ended December 31, 2017 from S$26.4 million for the year ended December 31, 2016. This is primarily due to the addition of a new carpark manager engaged to operate certain of our Properties, with effect from January 1, 2017. Under the new contractual arrangements, the carpark operator absorbs all the carpark operating costs and is entitled to a portion of the parking revenue.

Income from rental of mechanical, electrical and mall operating equipment. Our income from rental of mechanical, electrical and mall operating equipment increased by 51.6% to S$10.3 for the year ended December 31, 2017 from S$6.8 million for the year ended December 31, 2016, primarily due to higher profit achieved in the maintenance and operations of the Properties.

62 Property Operating Expenses. Our total property operating expenses decreased by 19.0% to S$13.1 million for the year ended December 31, 2017 from S$16.2 million for the year ended December 31, 2016. This is primarily due to a decrease in the property operating and maintenance expenses, which included a decrease in the car park expenses from S$5.0 million for the year ended December 31, 2016 to S$0.5 million for the year ended December 31, 2017, in connection with the addition of a new carpark manager engaged to operate certain of our Properties for one year, with effect from January 1, 2017. We also recorded a S$2.0 million net reversal allowance for doubtful debts made for the year ended December 31, 2017 as compared to a net allowance of S$0.5 million for doubtful debts made for the year ended December 31, 2016. The decreases were partially offset by an increase in property management fees as a result of higher revenue and net property income.

Net Property Income. As a result of the foregoing, our net property income increased by 7.2% to S$184.3 million for the year ended December 31, 2017 from S$171.9 million for the year ended December 31, 2016.

Manager’s Management Fees. Our manager’s management fees increased by 4.8% to S$12.5 million for the year ended December 31, 2017 from S$11.9 million for the year ended December 31, 2016 due to the increase in portfolio value as a result of the acquisitions of Lippo Mall Kuta in December 2016 and Lippo Plaza Kendari, Lippo Plaza Jogja and Kediri Town Square in 2017.

Finance Costs. Our finance costs decreased by 9.7% to S$31.6 million for the year ended December 31, 2017 from S$35.0 million for the year ended December 31, 2016, primarily due to the reduction in our pending indebtedness upon the repayment of our S$150 million 4.25% notes in 2016, S$50 million 5.875% notes in July 2017 and S$75 million 4.48% notes in November 2017, which were in part refinanced through the issuance of perpetual securities.

Decrease in fair values of investment properties. For the year ended, December 31, 2017, we realized a decrease in fair values of investment properties for the period of S$30.4 million mainly due to the depreciation of the Rupiah which was partially offset by the acquisitions of three new properties in 2017, as compared to a decrease of S$48.0 million for the year ended December 31, 2016.

Realized (losses)/gains on derivative financial instruments. We realized a net gain on hedging contracts of S$1.5 million in the year ended December 31, 2017 as compared to a net gain on hedging contracts of S$4.0 million in the year ended December 31, 2016, due to the depreciation of Rupiah against the Singapore Dollar in 2017.

Realized foreign exchange adjustment losses. For the year ended December 31, 2017, we realized foreign exchange adjustment losses for the period of S$5.5 million as compared to S$6.9 million for the year ended December 31, 2016.

Amortization of intangible assets. Amortization of intangible assets increased 9.3% to S$13.0 million in the year ended December 31, 2017 from S$11.9 million in the year ended December 31, 2016, due to an increase in rental income received under master lease agreements entered into in connection with the property acquisitions in 2017.

Total Return before Tax. As a result of the foregoing, for the year ended December 31, 2017, we had a total return for the period before tax of S$88.1 million, an increase of 65.1% from S$53.4 million for the year ended December 31, 2016.

Income Tax Expense. For the year ended December 31, 2017, our income tax expense was S$25.4 million, an increase of 3.5% from S$24.5 million for the year ended December 31, 2016.

Total return after income tax. As a result of the foregoing, total return after income tax increased by 117.5% to S$62.7 million for the year ended December 31, 2017 from S$28.8 million for the year ended December 31, 2016.

Liquidity and Capital Resources We have historically financed our capital requirements through funds generated from operations, bank and bond financings, the issuance of perpetual securities and the issuance of units in LMIRT. Our

63 primary capital requirements have been to finance purchases of Properties, to finance asset enhancement initiatives and to fund general working capital requirements. Subject to obtaining funding for the Acquisition of Puri Mall, we believe that we will have sufficient capital resources from our operations and other financings and capital raisings to meet our capital requirements for at least the next 12 months. See “Business — Acquisition of Puri Mall”. Subject to restrictions in our existing indebtedness instruments and The Property Funds Appendix governing LMIRT, in connection with the operation of our business, it may incur further indebtedness, which may result in an increase in our finance costs.

We strive to maintain cash and cash equivalents sufficient to cover operating expenses on an on-going basis. As of March 31, 2019, we had a balance of cash and cash equivalents of S$74.7 million consisting of an unrestricted cash balance of S$68.5 million and cash pledged for bank facilities of S$6.2 million. It is our current distribution policy to distribute at least 90% of our tax-exempt income (after deduction of applicable expenses).

Cash Flows The following table sets forth information regarding our cash flows for the periods indicated and our cash and cash equivalent at the end of each period:

Three months Year ended December 31 ended March 31 2016 2017 2018 2018 2019 S$ S$ Thousands Thousands Cash flows from operating activities ...... 131,903 140,962 141,575 49,209 45,520 Cash flows used in investing activities ...... (100,654) (182,606) (11,666) (5,394) (1,953) Cash flows (used in)/from financing activities ...... (38,933) 31,368 (142,809) (29,166) (20,811) Net (decrease)/increase in cash and cash equivalents ..... (7,684) (10,276) (12,900) 14,649 22,756 Cash and cash equivalents at beginning of the year/period ...... 79,090 74,271 59,787 59,787 45,299 Effect of exchange rate changes on cash and cash equivalents ...... 2,865 (4,208) (1,588) (1,579) 442 Cash and cash equivalents at end of the year/period ...... 74,271 59,787 45,299 72,857 68,497 Cash and cash equivalents in Statement of Cash Flows: Cash and cash equivalents in Statement of Financial Position ...... 77,754 64,900 52,676 78,286 74,658

Net cash flows provided by operating activities amounted to S$45.5 million for the three months ended March 31, 2019, compared to net cash flows provided by operating activities of S$49.2 million for the three months ended March 31, 2018. This shift in net cash flows provided by operating activities for the three months ended March 31, 2019 to net cash flows provided by operating activities for the three months ended March 31, 2018 is primarily due to changes in working capital including trade and other payables. Net cash flows provided by operating activities amounted to S$141.6 million for the year ended December 31, 2018, compared to net cash flows provided by operating activities of S$141.0 million for the year ended December 31, 2017. This shift in net cash flows provided by operating activities in the year ended December 31, 2018 to net cash flows provided by operating activities for the year ended December 31, 2017 was primarily due to a decrease in amortization of intangible assets as well as trade and other working receivables. Net cash flows provided by operating activities amounted to S$141.0 million for the year ended December 31, 2017, compared to net cash flows provided by operating activities of S$131.9 million for the year ended December 31, 2016. The shift in net cash flows provided by operating activities for the year ended December 31, 2017 to net cash flows provided by operating activities for the year ended December 31, 2017 was primarily due to a decrease in trade and other receivables as well as net cash from operating activities before income tax.

Net cash flows used in investing activities amounted to S$2.0 million for the three months ended March 31, 2019, compared to net cash used in investing activities of S$5.4 million for the three months ended March 31, 2018. This shift in net cash flows used in investing activities for the three months ended March 31, 2019 to net cash flows used in investing activities for the three months ended March 31, 2018 was primarily due to capital expenditures on investment properties. Net cash flows

64 used in investing activities amounted to S$11.7 million for the year ended December 31, 2018, compared to net cash flows used in investing activities of S$182.6 million for the year ended December 31, 2017. This shift in net cash flows used in investing activities in the year ended December 31, 2018 to net cash flows used in investing activities in the year ended December 31, 2017 was primarily due to the acquisition of Lippo Plaza Kendari in June 2017, Jogja and Kediri Town Square in December 2017, respectively. Net cash flows used in investing activities amounted to S$182.6 million for the year ended December 31, 2017, compared to net cash flows used in investing activities of S$100.7 million for the year ended December 31, 2016. The shift in net cash flows used in investing activities for the year ended December 31, 2017 to net cash flow used in investing activities for the year ended December 31, 2017 was primarily due to the acquisition of Lippo Plaza Kendari in June 2017, Jogja and Kediri Town Square in December 2017, respectively.

Net cash flows used in financing activities was S$20.8 million for the three months ended March 31, 2019, compared to net cash flows used in financing activities for the three months ended March 31, 2018 of S$29.2 million. This shift to net cash flows used in financing activities for the three months ended March 31, 2019 to net cash flows used in financing activities for the three months ended March 31, 2018 was primarily due to a distribution to unitholders. Net cash flows used in financing activities was S$142.8 million for the year ended December 31, 2018, compared to net cash flows from financing activities for the year ended December 31, 2017 of S$31.4 million. This shift to net cash flows used in financing activities for the year ended December 31, 2018 to net cash flows used in financing activities for the year ended December 31, 2017 was primarily due to a shift in trade and other receivables as well as trade and other payables. Net cash flows from financing activities amounted to S$31.4 million for the year ended December 31, 2017, compared to net cash flows used in financing activities of S$38.9 million for the year ended December 31, 2016. The shift in net cash flow used in financing activities in the year ended December 31, 2017 to net cash flows provided by financing activities for the year ended December 31, 2017 was primarily due to a higher repayment of bank borrowings in the year ended December 31, 2016 than in the year ended December 31, 2017.

Contractual Obligations and Commitments The following table sets forth our total debt and finance lease obligations as of March 31, 2019.

Maturity Period Less than After Total 1 year 1-3 years 3-5 years 5 years (S$ millions) (S$ millions) Medium term notes ...... 75.0 - - 75.0 - - Bank term loan ...... 485.0 - - 417.5 67.5 - Revolving credit facility ...... 120.0 - 120.0 - - - Total debt ...... 680.0 - 120.0 492.5 67.5 - Finance lease obligations ...... 1.5 - - 0.4 1.1 - Total contractual obligations ...... 681.5 - 120.0 492.9 68.6 -

For a description of our indebtedness, see “Description of Indebtedness”.

As of December 31, 2018, we have contractual commitments of S$3.1 million relating to the purchase of plant and equipment and asset enhancement. The contractual obligations described above do not include our proposed investment in Lippo Mall Puri or our planned AEI in Sun Plaza. See “Business — Acquisition of Puri Mall” and “Summary of the Group — Strategies — Selective acquisitions and divestments”.

Perpetual Securities Pursuant to our S$1 billion Guaranteed Euro Medium Term Securities Program, we have issued perpetual securities, comprising 1) S$140.0 million 7.0% subordinated perpetual securities issued by HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of Lippo Malls Indonesia Retail Trust) in September 2016 and subsequently substituted by Perpetual (Asia) Limited (in its capacity as trustee of Lippo Malls Indonesia Retail Trust) in January 2018 (the “2016 Perpetuals”), and 2) S$120.0 million 6.6% subordinated perpetual securities issued by HSBC

65 Institutional Trust Services (Singapore) Limited (in its capacity as trustee of Lippo Malls Indonesia Retail Trust) in June 2017 and subsequently substituted by Perpetual (Asia) Limited (in its capacity as trustee of Lippo Malls Indonesia Retail Trust) in January 2018 (the “2017 Perpetuals”).

Distributions on the 2016 Perpetuals are payable semi-annually on a discretionary basis and are non- cumulative. The first reset distribution date for the 2016 Perpetuals is September 27, 2021 and subsequent reset dates occurring every five years thereafter. The 2016 Perpetuals do not have a fixed redemption date, but may be redeemed, at the option of the Guarantor, in whole, but not in part, on September 27, 2021 or later.

Distributions on the 2017 Perpetuals are payable semi-annually on a discretionary basis and are non- cumulative. The first reset distribution date for the 2017 Perpetuals is December 19, 2022 and subsequent reset dates occurring every five years thereafter. The 2017 Perpetuals do not have a fixed redemption date, but may be redeemed, at the option of the Guarantor, in whole, but not in part, on December 19, 2022 or later.

The 2016 and 2017 Perpetual Securities are classified as equity instruments and recorded as equity in the consolidated statement of financial position. See Note 23 to the audited consolidated financial statements as of and for the year ended December 31, 2018 for further details.

Capital Expenditure Our capital expenditures consist of enhancement expenditures with respect to investment properties as well as acquisitions of investment properties. The following table sets forth information regarding our capital expenditures for the periods indicated.

Three months Year ended December 31 ended March 31 2016 2017 2018 2018 2019 S$ Thousands S$ Thousands Acquisitions of investment properties ...... 87,485 132,486 - - - Enhancement expenditure capitalized ...... 11,218 45,638 7,704 4,539 1,562 Total investments in investment properties ...... 98,703 178,278 7,704 4,539 1,562

We have acquired four malls in the last three years: Lippo Mall Kuta in December 2016, Lippo Plaza Kendari in June 2017, Lippo Plaza Jogja in December 2017 and Kediri Town Square in December 2017. In March 2019, we entered into a conditional sale and purchase agreement with PT Mandiri Cipta Gemilang, an affiliate of our Sponsor, to acquire Lippo Mall Puri. See “Business — Puri Mall” and “Business — Strategies — Strengthening our asset positioning as lifestyle hubs via a three-pronged portfolio reconstitution approach”.

We commenced AEI works at three malls in the last two years: Cibubur Junction in November 2018, Pluit Village in February 2019 and Sun Plaza in November 2018. We also intend to commence AEI works at Gajah Mada Plaza in early 2020. See “Business — Asset Enhancement”.

Quantitative and Qualitative Disclosures about Market Risks Our business exposes us to a variety of financial risks, including changes to foreign exchange rates, inflation and fluctuations in interest rates. The following discussion summarizes our exposure to foreign exchange rates, inflation and interest rate movements and our policies to address these risks. The following discussion contains forward-looking statements that are subject to risks, uncertainties and assumptions. These statements are based upon current expectations and projections about future events. There are important factors that could cause the actual results and performance to differ materially from such forward-looking statements, including those risks discussed under “Risk Factors”.

Foreign Currency Exchange Risk We are subject to foreign exchange exposure due to changes in foreign exchange rates arising from foreign currency transactions and balances as well as changes in the fair values from our investments in Indonesia. The value of the Rupiah has been subject to fluctuations in the past and may be subjected to fluctuation in the future. We will require US Dollars to service the Notes.

66 We enter into currency option contracts to mitigate the fluctuation of income denominated in Rupiah arising from (i) dividends received or receivable by the Singapore subsidiaries and (ii) capital receipts from repayment of shareholders loans to the Singapore subsidiaries. We do not enter into derivative contracts for speculative purposes.

Inflation Risk According to the International Monetary Fund, Indonesia’s annual inflation rate, as measured by changes in Indonesia’s consumer price index, was 3.5%, 3.8% and 3.2% in 2016, 2017 and 2018, respectively. Inflation affects our results of operations primarily by increasing operating expenses, which we generally seek to address by raising service charges on an annual basis. However, in competitive markets, including Jakarta, our ability to pass on cost increases is constrained.

Interest Rate Risk We are exposed to risks as a result of interest rate fluctuations. Our bank facilities provide for a floating interest rates, which are reset at regular intervals. We have entered into interest rate swaps to convert these floating rate obligations into fixed rate exposure.

Off-Balance Sheet Items As of March 31, 2019, except as disclosed above, we had no off-balance sheet liabilities.

Recent Accounting Pronouncements FRS 116 Leases Effective for annual periods beginning on or after January 1, 2019: It supersedes the previous reporting standard and the related interpretations on leases. For the lessor, the accounting remains largely unchanged. As for the finance leases of a lessee, as the financial statements have already recognised an asset and a related finance lease liability for the lease arrangement, the application of the new reporting standard on leases is not expected to have a material impact on the amounts recognised in the financial statements. For the lessee almost all leases will be brought onto the statements of financial position under a single model (except leases of less than 12 months and leases of low-value assets), eliminating the distinction between operating and finance leases.

The adoption of this new FRS did not result in substantial changes to the accounting policies of the Group and had no material effect on the amounts reported for the current three month period ended March 31, 2019.

67 BUSINESS

OVERVIEW We are a Singapore-based REIT constituted by the LMIRT Trust Deed. We are the first and only Indonesian retail REIT and have been listed on the Mainboard of the SGX-ST since November 19, 2007. We were established with the principal investment objective of owning and investing on a long- term basis in a diversified portfolio of income-producing real estate properties in Indonesia that are primarily used for retail and/or retail-related purposes, and real estate related assets in connection with the foregoing purposes.

We seek to produce regular and stable cash flows and to achieve long-term growth in NAV per Unit through growth in rental yields and acquisitions. Our asset portfolio, as of March 31, 2019, comprises 30 Properties in total comprising 23 retail malls and seven retail spaces, all of which are located in Indonesia. These properties are strategically located in large population catchment areas in Greater Jakarta, Bandung, Yogyakarta, Medan, Palembang, Bali and Sulawesi and mainly cater to the needs of the middle to upper middle income consumers in Indonesia. As of and for the year ended December 31, 2018, we had total assets of S$1,966.2 million and net property income of S$165.0 million. As of March 31, 2019, we had total assets of S$2,004.3 million. As of May 30, 2019 we had a market capitalization of S$622.4 million.

Corporate Structure We own the retail malls through 23 Indonesian SPCs, 22 of which are owned by two Singapore SPCs each and one of which is owned by three Singapore SPCs. We own the retail spaces through seven Indonesian SPCs and seven Singapore SPCs.

68 LMIRT TRUST

RETAIL MALLS

100% 100% 100% 100%00% 100% 100% 100% 100% 100%100% 100% 100% 100%

PS PV Tier 1 Gaja Mada Cibubur Tangent Magnus Elok Great Realty Pluit Village Mal Lippo Investments International International PMF Holdings LMIRT Capital Investments Holdings Investments Investments Holdings Properties Overseas Investments Retail Mall Pte Ltd Holdings Holdings Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd } Singapore SPCs 5% 100%5% 100% 95% 100% 95%% 100% 95% 100%95% 100%95% 100% 51.3% 48.7% 85.3% 14.7% 100%

GMP EP Plaza Tier 2 MLC Maxia Fenton Plaza Medan International CJ Retail International Semanggi Grace Capital Holdings 5% Investments Investments5% 17.86% Investments Retail Mall Holdings Pte Investments Investments Investments Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd Ltd Pte Ltd Pte Ltd Pte Ltd } Singapore SPCs 95% 95% 5%5% 5% 5% 5% 82.14% 95% 5%

PT Suryana PT Indah PT Retail Mall PT Graha PT Graha PT Cibubur PT Megah PT Manunggal PT Duta PT Anugrah Prima Isatana Pesona Primatama Indonesian Baru Raya Nusa Raya Utama Semesta Abadi Wiratama Wisata Loka } Pasundan Bogor Nusa Indah SPCs

100% 100% 100%100 100%% 100% 100% 100% 100% 100% 100%

Gajah Mal Lippo Cibubur Bandung Istana Ekalokasari The Plaza Sun Plaza Mada Pluit Village } Retail Plaza Medan Fair Cikarang Junction Indah Plaza Plaza Plaza Semanggi Medan Plaza Malls 69

100% 100% 100%1 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

100%100% } Palembang Pejaten Pejatenmall Kramati Taminis Picon2 Palladium Kuta1 Icon2 Tier 1 Binjaimall Holdings Super Binjai Square PSX Holdings KMT1 Picon1 Holdings Investment Holdings Holdings Investment Properties Holdings Investments Pte Ltd Investment Pte Ltd Holdings Pte Ltd Holdings Pte Holdings Pte Retail Mall Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd } Singapore SPCs 100% 100% 100% 100% 100%1 100% 100% Tier 2 Kramat Jati Tamini Square Palem Square PSEXT KMT2 Detos Kuta2 Investment Investment Investment Properties Investments Investment Investment 68.30% Retail Mall Pte Ltd Ptd Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd Pte Ltd } Singapore SPCs 75% 25%75% 25% 75% 25%75% 25%75%% 25% 75% 25% 55% 95% 75%% 25% 75% 25% 75% 25%2 75% 25%2

PT Panca PT Cahaya PT Palembang PT Cahaya Retail Mall PT Amanda PT Puri Bintang PT Benteng PT Jaya PT Kemang PT Griya Inti PT Mitra Anda PT Palladium PT Rekreasi PT Yogya Permata Megah Paragon Mall Bimasakti Cipta Utama Terang Teguh Perkasa Integritas Mall Terpadu Sejahtera Insani Sukses Bersama Megah Lestari Pantai Terpadu Central Terpadu Indonesian Pejaten Nusantara (BOT Grantee) Nusantara } SPCs 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

Lippo Plaza Kramat To hold Lippo Kediri Grand Pejaten Jati (formerly, Tamini Palembang Palembang Lippo Palembang Lippo Plaza Lippo Lippo Lippo Retail Binjai Supermall Mall Puri (not Town Palladium Village Kramat Jati Square Square Square Extension Mall Kemang Icon Kendari Plaza Batu Mall Kuta Plaza Jogya yet acquired_ Square Medan Units Malls Indah Plaza

Note: Functional currencies in all entities included in the structure are IDR apart from Great Properties (Red highlight) which is in SGD. Functional currency for the holding company - LMIR Trust is in SGD LMIR TRUST RETAIL SPACES

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Retail Space Serpong Metropolis Java Properties Matos Properties Detos Properties Palladium Madiun Java Properties Singapore Properties Properties Pte Ltd Pte Ltd Pte Ltd Properties Properties Pte Ltd SPCs Pte Ltd Pte Ltd Pte Ltd Pte Ltd } 5.0% 5.0% 5.0% 5.0% 25.0% 5.0% 5.0%

95.0% 95.0% 95.0% 95.0% 75.0% 95.0% 95.0% Retail Space PT Dinamika PT Gema PT Matos PT Megah PT Palladium Pt Madiun PT Java Indonesian Serpong Metropolis Surya Perkasa Detos Utama Megah Lestari Ritelindo Mega Jaya SPCs 70 Modern }

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Mall WTC Metropolis Town Malang Town Depok Town Grand Palladium Java Supermall Retail Plaza Madiun Matahari Units Square Units Square Units Square Units Medan Units Units } Spaces Competitive strengths We believe our competitive strengths include:

Leading position as one of Indonesia’s largest retail property owners with a GFA of over 1.6 million sq m We are the largest REIT in Asia Pacific providing pure-play exposure to the Indonesia retail sector and one of the largest and most geographically diversified retail property owners in Indonesia, with 23 retail malls and seven retail spaces spanning a total GFA of over 1.6 million sq m and a total NLA of over 0.9 million sq m across 12 key Indonesian cities. Given our extensive coverage, we believe we are one of the only retail platforms that provides nationwide access for both domestic and international tenants looking to expand across Indonesia. This enhances our bargaining power when negotiating with existing and potential future tenants and allows us to reap economies of scale in the form of efficient portfolio and property management.

The LMIRT Manager works closely with the Property Manager to realize operational efficiencies and to enhance the performance of our Properties. The Property Manager, a wholly-owned subsidiary of the Sponsor, has retail mall management experience of over two decades since 1995, and is the largest mall developer and operator in Indonesia. In addition to managing our portfolio, it also manages retail assets owned by the Sponsor and third-parties, bringing its existing network to a total of 72 retail assets under management with a NLA of over 2.7 million sq m of mall area and exposure to 200 major tenants and 13,000 specialty shops located across 42 Indonesian cities.

The successful track record of the Property Manager also enhances the position of our Properties in the Indonesian market, enabling us to attract foreign retailer interest which has been increasing in the recent years. Portfolio exposure to international brand tenants represent 24.4% of the total retail malls’ occupied NLA as of March 31, 2019 and we expect such proportion to increase. International brands such as H&M, The Body Shop and Innisfree, which are also current tenants of the Properties of LMIRT, have announced that they intend to expand their Indonesian footprint in the coming years. Since 2018, each of Uniqlo, Make Up Forever, The Northface, Melissa and Innisfree opened stores at Sun Plaza in the city of Medan as they expanded to the Sumatra region.

We are also able to benefit from economies of scale by leveraging on the Property Manager’s mall management expertise and strong local market knowledge in areas including cost control mechanisms, retailer relationships and strategic leasing / repositioning. Furthermore, by engaging a single property manager, we are able to capitalize on our extensive network of retail assets across Indonesia to provide a unique bundled leasing strategy, where tenants can lease units in various retail malls and retail spaces that we own and market their businesses across our Properties.

Key beneficiary of Indonesia’s rising affluence, growing middle class and sound retail industry fundamentals Indonesia is the largest economy in South East Asia and has the world’s fourth largest population with 264.9 million people. In recent years, Indonesia has been South East Asia’s fastest growing economy by Real GDP, fueled mainly by private consumption which contributed 54% to total GDP by expenditure in 2018, coupled with GDP (PPP) per capita growing at a CAGR of 5.8% from 2015 to 2018. The government of Indonesia has estimated that the economic growth will be between 5.3% to 5.6% in 2019 and 2020 respectively. GDP (PPP) per capita is also projected to grow from US$11,184 per annum in 2015 to US$15,824 per annum in 2021, representing a CAGR of 6.0%.

Furthermore, 66.5% of Indonesia’s population of 238.5 million people in 2010 was made up of the working class, aged between 15 and 64 years old, and this group is expected to continue to increase by 27.3% to 201.8 million in 2030. Indonesia has also witnessed a significant growth of the middle income population over the past several years in major urban centers. It is estimated that the middle income group in Indonesia will increase by 76.0% from 91.0 million in 2017 to 160.0 million in 2030, representing approximately 54.0% of the total population in 2030. This particular group is a major target market for modern retail shopping centers and is expected to grow as the Indonesian economy continues to expand and the relatively youthful population drives consumption. Such population dynamics presents an attractive proposition for retailers who seek to capitalize on the growing share and influence of the millennials in the retail landscape.

71 Well-positioned in good population catchment areas with Properties strategically located at the heart of local and regional cities, districts and town centers The Properties are strategically located in the heart of key populous cities across Indonesia, such as Greater Jakarta, Bali, Bandung, Medan, Palembang, Yogyakarta and Sulawesi serving a combined population of 35.4 million people, representing 13.4% of the total Indonesian population of 264.9 million people based on regional data from Badan Pusat Statistik. Located in middle to upper middle income demographic regions, each of our Properties operates in its unique environment and caters to the growing demand with a curated and targeted tenant mix. Furthermore, our Properties are well- connected, with access to main arterial roads and public transport infrastructure, including trains and metro lines.

Some of our strategically located retail malls include:

Š Pluit Village — Situated in North Jakarta and easily accessible via Jakarta Highway Ring Road and Transjakarta Public Transportation, the Property is located within the primary catchment area of middle to upper income households residing in the Pluit residential area. The Property recorded 10.5 million shoppers in 2018 and achieved an occupancy rate of 95.4% as of March 31, 2019. The Property is undergoing a reconfiguration to improve the F&B tenancy mix and to introduce F&B concepts such as alfresco, indoor and island dining.

Š Cibubur Junction — Located in the heart of Cibubur, one of the most affluent residential areas, and one of the few malls within its vicinity that offers shoppers a one-stop shopping experience. The Property is easily accessible via a shuttle bus connecting to the Jakarta CBD, and through the Jakarta-Bogor-Ciawi toll road. The Property recorded 6.8 million shoppers in 2018 and achieved an occupancy rate of 98.6% as of March 31, 2019. The Property has recently undergone a shift in tenant mix, with the downsizing of Hypermart and replacement with a new food court and a new tenant, Kidzoona, along with other specialty restaurants in an effort to improve the overall tenancy mix.

Š Sun Plaza — One of the most well-known retail malls in Medan, ranked No. 1 by TripAdvisor as of May 2019 and strategically located in Medan’s commercial district. According to Badan Pusat Statistik Kota Medan, Medan has a population of 2.2 million people and is the fourth most populous city in Indonesia. The Property is easily accessible from all parts of the city and is surrounded by prominent landmarks such as the governor’s office, foreign embassies and major banks. The Property recorded 14.2 million shoppers in 2018 and achieved an occupancy rate of 96.5% as of March 31, 2019. International brands like Uniqlo, Make Up Forever, The Northface, Melissa and Innisfree have set up stores in the Property. The Property is undergoing a revamp of the external facade and reconfiguration of the interior space to create additional atrium space for hosting more lifestyle and seasonal events.

Š Plaza Medan Fair — Strategically located in the shopping and business district of Medan, serving a population of 2.2 million people from the neighboring affluent residential complexes. The Property is easily accessible by public transport. It is also strategically located near the bus terminal for the express bus from Kuala Namu International Airport (KNO), bringing both domestic and international tourist right at its doorstep. The Property recorded 16.9 million shoppers in 2018 and achieved an occupancy rate of 99.0% as of March 31, 2019. It is one of the largest retail malls in Medan, with a host of well-known international and domestic retailers and brand names such as Transmart Carrefour, Matahari Department Store, Cinemaxx, A&W, Levis, Polo Ralph Lauren and Bata. Because of its wide variety of tenants, it is not only the first stop for tourists who arrive via the express bus but also a venue to meet the needs of the local community.

Adaptable to the changing demands of consumers by re-positioning our portfolio as lifestyle hubs to grow a sustainable customer base We employ a robust and proactive brand management system to ensure that the product and tenant mix in our Properties continually appeal to our customers. Against the backdrop of growing competition posted by e-commerce and online shopping, our key focus is to re-position our Properties as lifestyle hubs and to capitalize on the physical experience of our shoppers. Our portfolio tenant composition is targeted to shift towards having a higher proportion of F&B / specialty tenants.

72 According to an internationally recognized property management company, recent consumer surveys reveal that Indonesian consumers are now more into spending on experiences rather than commodity purchases. Therefore, beyond just being an “everyday” shopping destination for shoppers to meet their daily lifestyle needs, the Properties have adapted by hosting more F&B outlets, introducing more alfresco dining options, building amenities that create a sense of community such as children’s play room, prayer rooms, game centers, book stores and gyms and continuously providing supplemental offerings with new brand offerings to build recurring customer base and enhance the shopping experience. See “Strategy” for more details on portfolio reconstitution plans, including asset enhancements.

In Cibubur Junction, for example, we have introduced a new dining concept The Flavour Garden to refresh the shopper’s experiences. Other initiatives also include the recent launch of Styles, a loyalty program for shoppers to earn points and rewards in any of our retail malls, introducing sky dining concepts such as Déjà vu at Plaza Semanggi and Seven Sky at Lippo Jogja and holding promotional events and activities in the malls such as Fashion Week at Palembang Icon, which will position the malls as a lifestyle hub to shoppers.

The strength in our portfolio is underlined by a strong occupancy of approximately 91.5%, compared to an industry average of 80.7%, with 15,088 sq m of new leases secured for the quarter ended March 31, 2019 and a rental reversion of 6.3% in the first quarter of financial year 2019. From financial year 2016 to financial year 2018, annual shopper traffic for the portfolio has grown from approximately 141 million to nearly 170 million, representing a compounded average growth rate of approximately 9.7%, demonstrating our success in staying ahead of ever-changing consumer preferences and trends by maintaining a carefully curated tenant-mix profile.

Resilient portfolio with diversified tenant network and attractively structured leases The Properties benefit from the quality and balanced mix of their tenants across various trade sectors, that includes well-known retailers such as Zara, Uniqlo, The Northface, H&M, Muji, Miniso, Adidas, BreadTalk, Fitness First and Starbucks and lifestyle tenants such as Timezone and Cinemaxx among others. Such specialty tenants help to enhance the appeal of our Properties as one-stop lifestyle destination for both discretionary and non-discretionary consumer spending which has helped to drive shopper traffic.

The Properties have a large and well-diversified combined tenant base of 3,734 tenants (as of March 31, 2019). The top ten tenants in the retail malls constituted approximately 23.4% (with no individual tenant accounting for more than 9.9%) of our gross rental income for the three months ended March 31, 2019. The portfolio has also been successful in attracting non-related party tenants, with gross total income contribution from non-related party tenants increasing from 67.0% in financial year 2017 to 73.7% for the three months ended March 31, 2019. Additionally, no single trade sector accounts for more than 21.2% and 15.2% of NLA and gross rental income, respectively, as of and for the three months ended March 31, 2019.

We generally agree to attractively structured, long-dated lease terms with our tenants, including the following terms:

Š a security deposit of three months’ rent and three months’ service charge that help boost our working capital and provide more financial flexibility and minimize the risk of tenant default;

Š non-terminable by the tenant upon signing, which provides visibility and security on rental revenues;

Š consisting of base rates with a fixed annual escalation of approximately 5% which provides us with a steady growth trajectory;

Š typically structured on a recoverable basis, where tenants pay service charges to be offset against operating expenses, with any increases in property expenses having minimal impact on our bottom line and increasing the resilience of our operating margins.

73 Experienced board and management team with a strong corporate governance framework The LMIRT Manager’s Board of Directors, which has a majority of independent directors, comprises of respected, successful and experienced individuals with average experience of more than 30 years in the industry across areas such as accounting, management, real estate and risk management. The senior management of the LMIRT Manager is also highly experienced with an average experience of more than 20 years in the industry.

With the expertise and competency of the LMIRT Manager’s board and management team, as well as close partnership with the Property Manager to implement the various business strategies, the portfolio has grown consistently from 14 Properties with total valuation of Rp6.0 trillion since IPO to 30 Properties with total valuation of Rp19.5 trillion as of December 31, 2018. As of March 31, 2019, the portfolio has also achieved a strong operating performance with a healthy weighted average lease expiry (by NLA) of 4.17 years, with over 35% of our leases expiring in and beyond 2023. The management team has also demonstrated a track record of value enhancing initiatives via a combination of reconfiguration of mall layout and tenant mix to drive positive rental reversions in the portfolio.

Being a REIT listed since 2007 on the SGX-ST (recognized as the largest and most mature REIT market in Asia, excluding Japan), we are also subject to a well-developed regulatory regime under the Property Funds Appendix which has in place key attributes that serve to protect unitholders interests, such as regulated guideline on maximum gearing, requirement of annual valuation of assets, limits on property development and transparency and corporate governance requirements.

A comprehensive assessment process by both the LMIRT Manager’s management and the board is in place when it comes to asset acquisitions, with additional and stricter requirements applicable to Sponsor’s assets. An internal evaluation process which involves a holistic evaluation of location, tenant mix, brands, rent reversion and long term growth potential, together with financial, legal and technical due diligence will be first conducted. Independent valuer(s) will be appointed for the valuation of the target asset, followed by the required board approvals. For potential acquisition of Sponsor assets, there are additional regulatory requirements of having two independent valuations (of which one will be appointed by the LMIRT Trustee), an independent financial adviser to advise the independent directors and approvals from minority unitholders.

Strategies We believe that the following strategies will help us achieve consistent and sustainable growth and expand our revenue base:

Strengthening our asset positioning as lifestyle hubs via a three-pronged portfolio reconstitution approach i) Active property portfolio management to drive organic growth We strive to grow the business organically by capitalizing on improved macroeconomic fundamentals and increasing consumer demand of the growing and affluent urban middle income class in Indonesia. Through active portfolio management and comprehensive strategies for tenant repositioning, we believe we are leading the change in the retail landscape in Indonesia.

We have curated the retail experience by continuously engaging with our retailers and shoppers, reorganizing the layout of our malls, and reconfiguring our tenant mix. For example, we have reallocated space from large stores like Hypermart to specialty tenants such as Kidzoona in Cibubur Junction and Mr DIY in Lippo Plaza Kendari, brought in more food and beverage tenants with new dining concepts and rolled out 22 cinemas at 30 properties to attract higher footfall and shopper traffic. We intend to increase our portfolio mix to cater to more F&B / specialty tenants, with the aim of increasing our exposure to 60% going forward from 47.0% as of March 31, 2019. We also work closely with our Property Manager to introduce new-to-market retailers and brands to meet growing demand for novel and experiential retail concepts. We actively engage our customers using social media platforms such as Facebook and Instagram. We are also encouraging our tenants and customers to use Ovo, one of Indonesia’s leading digital payment platforms.

Building on our strong relationship with our tenants, we have introduced new initiatives including a change of lease structure to variable basis to allow us to manage occupancy costs and benefit from upside sharing. Across our extensive mall portfolio, we have also introduced a middle to long-term

74 bundled leasing strategy, where we are actively encouraging popular tenants currently present in a few of our malls to open more outlets across their brand universes across our geographically extensive mall portfolio.

In early 2019 we launched our Styles loyalty program which is designed to both retain existing customers and attract new customers through offering incentives to repeat shoppers and promotional activities. The program provides us with insight into customers’ purchase behavior which allows us to better present our Properties to tenants. ii) Value-enhancing asset enhancement initiatives To seek new growth and stronger returns through innovative asset enhancement initiatives, we look to unlock additional value from existing assets by optimizing space productivity and boosting revenues.

In addition, in 2018, we began two new initiatives in our malls. Refurbishments to revamp the external facade, interiors and amenities of Gajah Mada Plaza are planned and expected to commence in early 2020. In Sun Plaza, we have commenced revamping of the external facade and reconfiguration of the interior space in 2018 to create additional atrium space to enable us to host a greater number and wider variety of lifestyle and seasonal events, with completion expected in 2021.

Our strategy to engage in active asset enhancement stems from extensive past experience; importantly, we are careful in ensuring that such initiatives will not disrupt the everyday operation of our existing tenant base. With this in mind, we converted anchor space within Cibubur Junction when its lease expired into a new food court while the former food court was converted into specialty restaurants. This has resulted in an overall improvement in the F&B mix and a better Average Rental Rate for the converted areas of Cibubur Junction.

We plan to continue investing in asset enhancement works in order to maintain relevance of our Properties and to provide improved shopping experiences to customers. In order to accomplish this, the LMIRT Manager works closely with the Property Manager to actively refresh and reconfigure the layout of our retail malls and retail spaces and tenant mix in order to maximize the retail offering and drive footfall at each retail mall and retail space. Capital expenditure to conduct regular minor AEI works are funded by internal cash flows and is typically at up to 1.0% of the value of properties. iii) Selective acquisitions and divestments In line with our overall aim to acquire income-producing assets for long-term growth, we undertake active portfolio and asset management strategies, which involve ongoing review of potential strategic acquisitions and selective asset divestments opportunities to constantly rejuvenate the portfolio and augment organic growth. We believe that there exists a healthy pipeline of potential acquisitions with upside potential from both rights of first refusal from the Sponsor and opportunities presented by third parties. The fragmented and diverse nature of the retail property market in Indonesia provides us with further acquisition growth opportunities. In addition, we continue to receive robust inbound purchase enquiries for our assets; these are carefully reviewed in detail on a case-by-case basis when tabled in line with our capital recycling policy.

On March 12, 2019, we announced that we had entered into a conditional sale and purchase agreement with an indirect wholly-owned subsidiary of the Sponsor for the acquisition of the strata title units of Lippo Mall Puri (the “Acquisition of Puri Mall”), a shopping mall located at Kembangan District of West Jakarta, for a purchase consideration of Rp3,700.0 billion.

Lippo Mall Puri is the flagship mall of the Sponsor and is part of St. Moritz, a premium integrated development which is the largest mixed-use development in West Jakarta with a total construction floor area of approximately 850,000 sq m. Lippo Mall Puri boasts of a broad and diversified selection of 324 tenants, comprising of established international and local brands, with key tenants such as Matahari Department Store, SOGO, Food Hall, Zara, Cinema XXI, Timezone, Parkson, Uniqlo and H&M.

We believe that the Acquisition of Puri Mall represents an opportunity for us to acquire a best-in-class retail mall in West Jakarta that is strategically located within a catchment area of 650,000 people that largely comprises of middle upper-class residential housing, a commercial precinct which facilitates

75 close to 400 businesses. On a pro forma basis, the Acquisition of Puri Mall is expected to be NPI yield accretive, and will also increase our portfolio size by 19.0% to Rp.23,214.1 billion and increase the NLA by 12.7% to 1,026,349 sq m by December 2019.

The Acquisition of Puri Mall remains subject to approval by our minority unitholders and the fulfillment of other conditional precedents as per our announcement on March 12, 2019.

Adopting prudent and proactive financial management policies We adopt prudent financial management across all aspects of the business to optimize Unitholder’s returns, provide stable returns to Unitholders, minimize refinancing risks, maintain flexibility for working capital requirements and retain flexibility in the funding of future acquisitions. We ensure that we have ample liquidity for working capital and capex purposes. As of March 31, 2019, we have an unrestricted cash balance of S$68.5 million and a strong last 12 months NPI / Interest Expense coverage of 5.1x. We expect to maintain comfortable leverage going forward, with target gearing maintained at around 35% — 40% in the medium-term, and to achieve greater financing flexibility via 100% unencumbered assets. As of March 31, 2019, excluding revolving credit facilities, we do not have any outstanding debt maturities within financial year 2019. We also adopt prudent hedging practices via entering into derivatives or other similar instruments to minimize interest rate, currency, credit and market risks for all kinds of transaction; this has led to 58.1% of our debt (excluding the perpetuals) hedged with fixed interest rates as of March 31, 2019 and a target of up to 80% of net cash flows from our Indonesian onshore companies into Singapore.

To minimize the risk of tenant default on rental payment, we have put in place standard operating procedures for debt collection and recovery of debts. These include the collection of an advanced down payment equal to 20% of the total lease contract rental and three months of service charge upon signing the letter of intent of the lease, the collection of security deposits of three months of rental in the form of cash or bankers guarantee and having a monitoring system and a set of procedures on debt collection. We constantly assess for impairment losses and apply a prudent approach towards allowance for doubtful debts.

PORTFOLIO Since our listing in November 2007, we have grown our initial portfolio of 14 properties to its current size of 30 properties, comprising 23 retail malls and seven retail spaces located in other retail malls. With a total GFA of 1,650,014 square meters and NLA of 911,020 square meters with an asset value of Rp19,514.1 billion as of March 31, 2019. The retail malls and retail spaces had an average portfolio occupancy rate of 91.5% as of March 31, 2019. The graphs below show the historic growth in our portfolio valuation, number of Properties and overall occupancy rate for the periods indicated. Portfolio valuation

(Rp billion)

23,214 CAGR: 13.7% 19,475 19,514 17,257 17,764 18,124 9,722 13,769 13,574 9,521 9,722 10,667 6,348 7,353 8,145 7,077 7,636 6,219 6,219 6,403 4,913 13,492 3,094 3,323 3,577 10,909 10,412 9,980 9,955 9,792 7,550 7,354 3,309 3,754 4,059 5,753 FY2008A FY2009A FY2010A FY2011A FY2012A FY2013A FY2014A FY2015A FY2016A FY2017A FY2018A PF2018A(1) In Jakarta Outside Jakarta

Number of properties (Units) 95.7% 96.9% 98.3% 98.2% 98.3% 95.0% 94.7% 94.0% 94.3% 93.7% 92.9% 92.8%

31 >2.0x 30 30 26 27 23 23 24 17 17 17 17 13 14 15 15 15 11 11 11 7 7 7 8 12 12 13 13 13 13 13 14 8 8 8 9

FY2008A FY2009A FY2010A FY2011A FY2012A FY2013A FY2014A FY2015A FY2016A FY2017A FY2018A PF2018A(1) In Jakarta Outside Jakarta Overall occupancy %

(1) Pro-forma financial year 2018, giving effect to the acquisition of Lippo Mall Puri at Rp3.7 trillion as if it had occurred in 2018.

76 The retail malls are strategically located in large population catchment areas in Greater Jakarta, Bandung, Yogyakarta, Medan, Palembang, Bali and Sulawesi and cater mainly to the needs of middle to upper-middle income domestic consumers.

The retail malls and retail spaces have a diversified tenant base of 3,734 tenants that includes well- known retailers such as Carrefour, Hypermart, Matahari Department Store and Sogo, as well as popular consumer brands including Zara, Uniqlo, H&M, Muji, Miniso, Giordano, Ace Hardware, Adidas, and lifestyle brands, including Timezone, Cinemaxx, Fitness First, Kidzoona, among others.

The portfolio has a staggered lease expiry profile with a weighted average lease expiry of 4.17 years (by NLA) as of March 31, 2019 to ensure a steady earnings base. We also have a pipeline of retail malls for acquisition from our Sponsor.

Below is a map illustrating the geographic distribution of the portfolio:

77 CERTAIN SUMMARY INFORMATION ON THE PROPERTIES

Percentage contribution to our gross Year of revenue for NLA as GFA as Occupancy as building three months ended of March 31, of March 31, of March 31, Name of property City completion March 31, 2019 2019 2019 2019 (%) (sq m) (sq m) (%) Retail Malls Lippo Mall Kemang ..... Jakarta 2012 14.3 58,497 150,932 90.3 Sun Plaza ...... Medan 2004 10.1 69,346 107,373 96.5 Plaza Medan Fair ...... Medan 2004 9.2 67,412 138,767 99.0 Pluit Village ...... Jakarta 1996 7.2 86,591 134,576 95.4 Pejaten Village ...... Jakarta 2008 5.5 42,184 89,157 99.9 Bandung Indah Plaza . . . Bandung 1990 5.1 30,288 75,868 95.1 Palembang Icon ...... Palembang 2013 4.5 36,348 42,361 96.3 The Plaza Semanggi .... Jakarta 2003 4.5 60,084 155,122 72.3 Cibubur Junction ...... Jakarta 2005 4.4 34,007 66,071 98.6 Mal Lippo Cikarang ..... Jakarta 1995 3.6 29,926 39,293 95.2 Lippo Mall Kuta ...... Bali 2013 3.3 20,350 36,312 90.7 Istana Plaza ...... Bandung 2003 3.1 27,471 46,809 92.0 Gajah Mada Plaza ...... Jakarta 1982 3.1 36,535 66,160 65.9 Lippo Plaza Kramat Jati (Kramat Jati Indah Plaza) ...... Jakarta 1989 2.8 32,908 67,285 96.1 Lippo Plaza Jogja ...... Yogyakarta 2005 2.7 21,452 66,098 97.1 Palembang Square ..... Palembang 2003 2.5 30,513 46,546 96.5 Lippo Plaza Ekalokasari Bogor (formerly Ekalokasari Plaza) .... Jakarta 2003 2.3 28,213 58,859 91.9 Binjai Supermall ...... Binjai 2007 1.9 23,431 28,760 98.4 Lippo Plaza Kendari ..... Kendari 2012 1.9 20,184 34,831 99.7 Palembang Square Extension ...... Palembang 2011 1.8 18,093 22,527 96.4 Kediri Town Square ..... Kediri 2011 1.5 16,848 28,688 95.6 Lippo Plaza Batu ...... Malang 2009 0.9 18,538 34,586 92.3 Tamini Square ...... Jakarta 2005 0.8 17,475 18,963 97.8 Total for Retail Malls . . . 97.0 826,694 1,555,944 92.8(1)

(1) Weighted average occupancy as of March 31, 2019.

78 Percentage of contribution to our Year of gross revenue for NLA as GFA as Occupancy as building three months ended of March 31, of March 31, of March 31, Name of Property completion March 31, 2019 2019 2019 2019(1) (%) (sq m) (sq m) (%) Retail Spaces Plaza Madiun Units ...... 2000 1.1 11,436 19,029 97.8 Malang Town Square Units .... 2005 0.5 11,065 11,605 100.0 Depok Town Square Units ..... 2005 0.5 12,824 13,045 99.9 Java Supermall Units ...... 2000 0.3 11,082 11,082 100.0 Metropolis Town Square Units ...... 2004 0.3 14,861 15,248 66.2 Grand Palladium Medan Units ...... 2005 0.0 12,305 13,417 0.0(2) Mall WTC Matahari Units ...... 2003 0.3 10,753 11,184 100.0 Total for Retail Spaces ...... 3.0 84,326 94,070 79.1 Total for Properties ...... 100.0 911,020 1,650,014 91.5

(1) Weighted average occupancy as of March 31, 2019. (2) The business association of the mall is in the midst of consolidating all the strata title holders in order to refurbish the mall. We have vacated our tenants as part of this exercise.

79 Valuation

Value of Value of Percentage Properties as Properties as of aggregate of December 31, of December 31, value of the Property 2018(1)(2) 2018(1)(2) Properties (Rp billions) (S$ millions) (%) Retail Malls Lippo Mall Kemang ...... 3,143.1 296.4 16.1 Sun Plaza ...... 2,156.6 203.4 11.1 Pejaten Village ...... 1,157.0 109.1 5.9 The Plaza Semanggi ...... 1,069.0 100.8 5.5 Plaza Medan Fair ...... 1,008.2 95.1 5.2 Pluit Village ...... 846.2 79.8 4.3 Lippo Mall Kuta ...... 836.1 78.9 4.3 Gajah Mada Plaza ...... 798.9 75.3 4.1 Bandung Indah Plaza ...... 764.7 72.1 3.9 Palembang Icon ...... 770.0 72.6 3.9 Palembang Square ...... 719.0 67.8 3.7 Mal Lippo Cikarang ...... 689.1 65.0 3.5 Istana Plaza ...... 644.2 60.7 3.3 Lippo Plaza Kramat Jati (Kramat Jati Indah Plaza) . . . 647.0 61.0 3.3 Lippo Plaza Jogja ...... 601.3 56.7 3.1 Ekalokasari Plaza (previously Lippo Plaza Kramat Jati) ...... 381.7 36.0 2.0 Kediri Town Square ...... 396.2 37.4 2.0 Cibubur Junction ...... 375.0 35.4 1.9 Lippo Plaza Kendari ...... 354.8 33.5 1.8 Binjai Supermall ...... 302.0 28.5 1.5 Palembang Square Extension ...... 288.0 27.2 1.5 Tamini Square ...... 276.0 26.0 1.4 Lippo Plaza Batu ...... 251.0 23.7 1.3 Sub-total ...... 18,475.1 1,742.4 94.6 Retail Spaces Plaza Madiun Units ...... 211.5 19.9 1.1 Malang Town Square Units ...... 170.0 16.0 0.9 Depok Town Square Units ...... 155.5 14.7 0.8 Java Supermall Units ...... 148.4 14.0 0.8 Metropolis Town Square Units ...... 140.8 13.3 0.7 Mall WTC Matahari Units ...... 113.0 10.7 0.6 Grand Palladium Medan Units ...... 99.8 9.4 0.5 Sub-total ...... 1,039.0 98.0 5.4 Grand Total ...... 19,514.1 1,840.4 100.0

(1) As recorded in our statement of financial position as of December 31, 2018. (2) The value of Properties as of December 31, 2018 set forth in the table above includes the value of investment properties (S$1,831.6 million) and the value of intangible assets (S$8.8 million) as of that date.

80 Tenant profile

The table below sets out information on the 10 largest tenants of the Properties (in terms of Gross Rental Income for the three months ended March 31, 2019).(1)

Percentage of Gross Rental total Gross Rental Income for the Income for the three months three months Average Remaining ended March 31, ended March 31, Lease Terms as of Tenant Trade sub-sector 2019 2019 March 31, 2019 (S$ thousands) (%)

Matahari ...... Department Store 3,706 9.9 5.6 Hypermart ...... Hypermart 2,158 5.8 5.6 Carrefour ...... Hypermart 1,088 2.9 8.8 Cinemaxx ...... Leisure & Entertainment 337 0.9 2.1 Sport Station ...... Sport & Fitness 256 0.7 2.8 Solaria ...... Food & Beverage 252 0.7 3.2 Timezone ...... Leisure & Entertainment 244 0.7 2.1 Uniqlo ...... Fashion 237 0.6 6.0 Miniso ...... Fashion 233 0.6 3.3 Ace Hardware ...... Home Furnishing 231 0.6 3.5 Top 10 tenants ...... 8,742 23.4 5.7 Other tenants ...... 28,685 76.6 2.8 Total ...... 37,427 100.0 4.2

(1) Includes the gross rental income from the retail spaces.

Trade Sectors The following table sets out trade sectors represented at the retail malls and retail spaces as of March 31, 2019:

Percentage of gross rental Trade Sectors income NLA (%) (%)

F&B / food court ...... 15.2 10.6 Fashion ...... 14.6 9.2 Casual leasing ...... 11.3 - Department store ...... 9.3 17.5 Supermarket / hypermarket ...... 8.5 21.2 Parking ...... 8.2 - Leisure & entertainment ...... 4.1 10.2 All other sectors ...... 28.7 31.3 Total ...... 100.0 100.0

81 Lease Expiry Profile The weighted average lease expiry (by NLA) as of March 31, 2019 is 4.17 years. The following table sets out the expiry profile of the tenancies of the Properties as of March 31, 2019:

Expiring leases as a percentage of NLA of Expiring NLA as of Period leases March 31, 2019 (sq m) (%)

2019 ...... 91,979 10.1 2020 ...... 172,485 18.9 2021 ...... 65,768 7.2 2022 ...... 111,055 12.2 Beyond 2022 ...... 321,990 35.3

Lease Renewals Lease renewals are usually negotiated three to six months before lease expiry depending on the area leased by the tenants. Renewed terms will generally be a three to five year lease term with average positive reversion of 3 to 5 percent (depending on lease term, area and negotiations). As part of our team’s efforts to refresh the tenant-mix of our malls, certain tenants may not be renewed. They may either be relocated or exit the mall entirely.

Lease Structure Master lease structure The master lease may be structured as (i) base rent plus annual rent escalation; or (ii) pre-agreed amounts payable over the tenure of the relevant master lease. Rental will also typically include service charges and utilities recovery charges to cover property maintenance expenses. Key master lease terms include:

Š Lease tenure: typically three to five years

Š Security deposit: None

Š No break clause

Š Lessees shall have the right to sub-let space to sub-lessees of good repute and sound financial standing

Fixed plus annual step-up lease structure The fixed plus annual step-ups may be structured as the base rent plus an annual rent escalation of ~5% per annum. Rental will also typically include service charges and utilities recovery charges to cover property maintenance expenses. Key lease terms include:

Š Lease tenure: typically three to five years

Š Security deposit: typically three-months’ rent, and three months service charge, either via cash or bankers guarantee

Š No break clause

Š Lessees have subletting and assignment rights

Š Fit-out period of three months

82 Variable rents lease structure The variable rents may be structured as either (i) a percentage of tenant sales turnover; or (ii) a higher base rent with rental step-up or a percentage of tenant sales turnover. Rental will also typically include service charges and utilities recovery charges to cover property maintenance expenses. Key lease terms include:

Š Lease tenure: typically three to five years

Š Security deposit: typically three-months’ rent, and three months service charge, either via cash or bankers guarantee

Š No break clause

Š Lessees have subletting and assignment rights

Š Fit-out period of three months

THE PROPERTIES As of March 31, 2019 we had 17 properties outside Jakarta and 13 properties within Jakarta.

Breakdown by valuation Breakdown by NLA

Outside Jakarta In Jakarta Outside S$926m S$919m Jakarta In Jakarta 49.8% 50.2% 442,337 sqm 468,412 sqm 48.6% 51.4% 17 properties 13 properties

83 As of March 31, 2019 Gross Net Purchase Floor Lettable Land No. of Property Acquisition Date Price Valuation Valuation Area Area Occupancy Title Land Lease Expiry Tenants (Rp (Rp (S$ billions) billions) millions)(2) (sq m) (sq m) (%) Bandung Indah Plaza ...... November 19, 2007 611.6 764.7 73.0 75,868 30,288 95.1% BOT December 31, 2030 242 Cibubur Junction . . . November 19, 2007 464.2 375.0 35.8 66,071 34,007 98.6% BOT July 28, 2025 205 Lippo Plaza Ekalokasari Bogor ...... November 19, 2007 333.0 381.7 36.5 58,859 28,213 91.9% BOT June 27, 2032 98 Gajah Mada Plaza ...... November 19, 2007 483.3 798.9 76.3 66,160 36,535 65.9% Strata January 24, 2020 161 Istana Plaza ...... November 19, 2007 585.3 644.2 61.5 46,809 27,471 92.0% BOT January 17, 2034 173 Mal Lippo Cikarang ...... November 19, 2007 367.2 689.1 65.8 39,293 29,926 95.2% HGB May 5, 2023 124 The Plaza Semanggi ...... November 19, 2007 1,013.8 1,069.0 102.1 155,122 60,084 72.3% BOT July 8, 2054 407 Sun Plaza ...... March 31, 2008 967.2 2,156.6 206.0 107,373 69,346 96.5% HGB November 24, 2032 370 Plaza Medan Fair . . December 6,2011 1,042.1 1,008.2 96.3 138,767 67,412 99.0% BOT July 23, 2027 462 Pluit Village ...... December 6, 2011 1,593.6 846.2 80.8 134,576 86,591 95.4% BOT June 9, 2027 296 Lippo Plaza Kramat Jati ...... October 15, 2012 539.6 647.0 61.8 67,285 32,908 96.1% HGB October 24, 2024 108 Palembang Square Extension ...... October 15, 2012 221.5 288.0 27.5 22,527 18,093 96.4% BOT January 25, 2041 33 Tamini Square ..... November 14, 2012 180.0 276.0 26.4 18,963 17,475 97.8% Strata September 26, 2035 12 Palembang Square ...... November 14, 2012 467.0 719.0 68.7 46,546 30,513 96.5% Strata September 1, 2039 130 Pejaten Village .... December 20, 2012 748.0 1,157.0 110.5 89,157 42,184 99.9% HGB November 3, 2027 153 Binjai Supermall . . . December 28, 2012 237.5 302.0 28.8 28,760 23,431 98.4% HGB September 2, 2036 113 Lippo Mall Kemang ...... December 17, 2014 3,540.4 3,143.1 300.2 150,932 58,497 90.3% Strata June 28, 2035 186 Lippo Plaza Batu . . . July 7, 2015 265.0 251.0 24.0 34,586 18,538 92.3% HGB June 8, 2031 50 Palembang Icon(1) ...... July 10, 2015 790.0 770.0 73.5 42,361 36,348 96.3% BOT April 30, 2040 177 Lippo Mall Kuta(1) . . December 29, 2016 800.0 836.1 79.9 36,312 20,350 90.7% HGB March 22, 2037 65 Lippo Plaza Kendari(1) ...... June 21, 2017 310.0 354.8 33.9 34,831 20,184 99.7% BOT July 7, 2041 42 Lippo Plaza Jogja(1) ...... December 22, 2017 570.0 601.3 57.4 66,098 21,452 97.1% HGB December 27, 2043 30 Kediri Town Square ...... December 22, 2017 345.0 396.2 37.8 28,688 16,848 95.6% HGB August 12, 2024 64 16,475.3 18,475.1 1,764.5 1,555,944 826,694 92.8% 3,701 RETAIL MALLS Depok Town Square Units ...... November 19, 2007 131.5 155.5 14.9 13,045 12,824 99.9% Strata February 27, 2035 4 Grand Palladium Units ...... November 19, 2007 134.0 99.8 9.5 13,417 12,305 0.0% Strata November 9, 2028 0 Java Supermall Units ...... November 19, 2007 133.1 148.4 14.2 11,082 11,082 100.0% Strata September 24, 2037 2 Malang Town Square Units .... November 19, 2007 130.8 170.0 16.2 11,065 11,065 100.0% Strata April 21, 2033 3 Mall WTC Matahari Units ...... November 19, 2007 128.9 113.0 10.8 11,184 10,753 100.0% Strata April 8, 2038 2 Metropolis Town Square Units .... November 19, 2007 171.8 140.8 13.4 15,248 14,861 66.2% Strata December 27, 2029 3 Plaza Madiun Units ...... November 19, 2007 171.2 211.5 20.2 19,029 11,436 97.8% Strata February 9, 2032 19 RETAIL SPACES ...... 1,001.3 1,039.0 99.2 94,070 84,326 79.1% 33 TOTAL ...... 17,476.6 19,514.1 1,863.7 1,650,014 911,020 91.5% 3,734

(1) The Business Association of the mall is in the midst of consolidating all the strata title holders to refurbish the mall. (2) As recorded in our statement of financial position as of March 31, 2019. The valuation of Properties as of March 31, 2019 set forth in the table above includes the value of investment properties (S$1,856.4 million) and the value of intangible assets (S$8.3 million) as of that date.

ACQUISITION OF PURI MALL On March 12, 2019, we announced that we had entered into a conditional sale and purchase agreement with an indirect wholly-owned subsidiary of the Sponsor for the acquisition of the strata title units of Lippo Mall Puri (the “Acquisition of Puri Mall”), a shopping mall located at Kembangan District of West Jakarta, for a purchase consideration of Rp3,700.0 billion.

Lippo Mall Puri is the flagship mall of the Sponsor and is part of St. Moritz, a premium integrated development which is the largest mixed-use development in West Jakarta with a total construction floor area of approximately 850,000 sq m. Lippo Mall Puri boasts of a broad and diversified selection of 324 tenants, comprising of established international and local brands, with key tenants including Matahari Department Store, SOGO, Food Hall, Zara, Cinema XXI, Timezone, Parkson, Uniqlo and H&M.

84 We believe that the Acquisition of Puri Mall represents an opportunity for us to acquire a best-in-class retail mall in West Jakarta that is strategically located within a catchment area of 650,000 people that largely comprises of middle upper-class residential housing, a commercial precinct which facilitates close to 400 businesses. On a pro forma basis, the Acquisition of Puri Mall is expected to be NPI yield accretive, and will also increase our portfolio size by 19.0% to Rp.23,214.1 billion and increase the NLA by 12.7% to 1,026,349 sq m by December 2019.

The Acquisition of Puri Mall remains subject to approval by our minority unitholders and the fulfillment of other conditional precedents as per our announcement date of March 12, 2019.

JAKARTA PROPERTIES As of March 31, 2019, we had ten retail malls in the greater Jakarta area: Gajah Mada Plaza, Cibubur Junction, The Plaza Semanggi, Mal Lippo Cikarang, Pluit Village, Lippo Plaza Ekalokasari Bogor (formerly Ekalokasari Plaza), Tamini Square, Lippo Plaza Kramat Jati (formerly Kramat Jati Indah Plaza), Pejaten Village and Lippo Mall Kemang.

Jakarta profile The province of Jakarta is the capital of Indonesia. It consists of five municipalities — North Jakarta, East Jakarta, South Jakarta, West Jakarta and Central Jakarta.

As the administrative center of Indonesia, Jakarta’s economy is based on finance and commerce and attracts a high level of foreign investment compared to other parts of Indonesia. Income per capita is also higher, driven partly by the number of expatriates living in the city, as well as the types of employment available in the area.

As the largest city in Indonesia, Jakarta’s population was 9.6 million as reported in the 2010 Census. Jakarta’s GRDP at (at 2010 constant prices) increased every year with an average growth rate of approximately 5.89% per annum from 2013 to 2016. The GRDP (based on 2010 constant prices) was Rp1,539,378 million, while its per capita GRDP was Rp147.1 million in 2016. The next census is expected to be completed in 2020.

As the largest city in Indonesia, Jakarta has the highest GDP (current prices) per capita with an average growth rate of approximately 8.7% per annum from 2016 to 2018. Private consumption expenditure in Jakarta grew at an average rate of 9.4% for the period from 2016 to 2018, from Rp.1,313 trillion in 2016 to Rp1,573 trillion in 2018.

Apart from increases in income driving retail spending growth, spending has also been boosted by a lifestyle shift towards a higher level of consumerism.

GAJAH MADA PLAZA Jalan Gajah Mada 19-26, Central Jakarta Description Gajah Mada Plaza is a seven-story shopping center (including one basement level and a carpark). The mall is located 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 mall has a strong leisure and entertainment component, which includes a cinema, restaurants, family karaoke outlets, a fitness center and a swimming pool. The GFA and NLA of Gajah Mada Plaza are 66,160 sq m and 36,535 sq m, respectively.

Tenant profile Gajah Mada Plaza had 161 retail tenants as of March 31, 2019. The tenant profile of the mall comprises a diverse set of tenants from a wide variety of industries. The mall is anchored by Hypermart and Matahari Department Store. Other prominent tenants include Gold’s Gym, J.Co Donuts & Coffee, Kentucky Fried Chicken and Inul Vista Karaoke.

85 The mall is also well known for its specialty stores providing products and services such as pets, jewelery, information technology products, dining and entertainment.

Competition Gajah Mada Plaza currently faces competition from four retail malls with an aggregate GFA in excess of 161,120 sq m and located within a six kilometer radius. Many of these retail malls compete for the same target segment as Gajah Mada Plaza and may potentially impact the sales growth that can be achieved at Gajah Mada Plaza.

The largest competing retail malls are:

Š Mangga Dua contains a number of retail facilities, predominantly strata malls, and is located three kilometers north of Gajah Mada Plaza. The main malls include Mangga Dua Square (60,000 sq m of NLA), WTC Mangga Dua (45,000 sq m of NLA), ITC Mangga Dua (44,000 sq m of NLA) and Mal Mangga Dua (35,000 sq m of NLA). These retail malls target lower to middle income segment households;

Š Hayam Wuruk Plaza is located on Jalan Hayam Wuruk, Central Jakarta. The mall is a five-story shopping center with total GFA of approximately 14,320 sq m and developed by PT Duta Anggada Realty;

Š Grand Paragon opened in 2010 is located on Jalan Gajah Mada, Central Jakarta and it is a five- story shopping center connected to Grand Paragon Hotel. Total GFA is approximately 16,800 sq m with major tenants including KFC and J.Co Donuts & Coffee; and

Š Seasons City, a strata mall with a GFA of 40,000 sq m located three kilometers from Gajah Mada Plaza and anchored by Carrefour hypermarket, Food Hall and XXI Cinema. It is a seven- story shopping center and developed by Agung Podomoro Group.

CIBUBUR JUNCTION Jalan Jambore Raya 1, Cibubur, East Jakarta Description Cibubur Junction is a five-story shopping center (including one basement level, a partial roof top level, and a carpark). The mall is strategically located in the middle of Cibubur which is one of the most affluent and upmarket residential areas in Jakarta. The mall is situated five kilometers south of Jakarta’s Jagorawi toll road and is easily accessible and visible from the main road. In November 2018, following AEI at Cibubur Junction, we introduced a new dining concept “The Flavour Garden” as part of our efforts to generate greater footfall.

Cibubur Junction is the only mall within its locality that offers shoppers a one-stop shopping experience. Its anchor tenants, Hypermart and Matahari Department Store, are complemented by international and local specialty tenants which include restaurants, fashion labels, a cinema, bookstores, arcade and a fitness center. The GFA and NLA of Cibubur Junction are 66,071 sq m and 34,007 sq m, respectively.

Tenant profile As of March 31, 2019, Cibubur Junction had 205 retail tenants. 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, Starbucks Coffee and Pizza Hut.

The lower ground floor is anchored by Hypermart. The ground floor predominantly comprises retailers selling branded fashion and accessories, and quality F&B retailers. An asset enhancement to revamp a part of the ground floor into a new food court with specialty F&B outlets and outdoor seating was completed in the three months ended March 31, 2019.

The upper ground and first floor are anchored by the Matahari Department Store, which also occupies part of the second floor. The upper ground and first floor comprise a mix of specialty retailers in trade sectors such as fashion, children’s wear, accessories and beauty.

86 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 smaller sized tenants such as electronics and handphone retailers. The top level comprises Fitness First and Studio 21 Cinema (which has four screens).

Competition Cibubur Junction currently faces competition from the following smaller retail malls.

Š Plaza Cibubur, located three kilometers from Cibubur Junction, which has a GFA of about 17,000 sq m, anchored by Superindo Supermarket and Karisma Bookstore;

Š Mal Citra Grand, which commenced operations in 2001 and is located five kilometers from Cibubur Junction, has a GFA of 16,800 sq m and is anchored by Hero Supermarket and Edison Multi Product; and

Š Mal Cijantung which is a four-story shopping center and has a GFA of approximately 34,000 sq m, with major tenants including Ramayana, Gramedia, Cinema 21 and Texas Chicken. The shopping center opened in 1998.

THE PLAZA SEMANGGI Jalan Jend. Sudirman Kav. 50, South Jakarta Description The Plaza Semanggi is a modern shopping center comprising seven levels and two basement levels and 13 levels of office space, with a carpark. The Plaza Semanggi is strategically located in the heart of Jakarta’s CBD within the city’s Golden Triangle at the Semanggi interchange, which is a junction channeling north-south and east-west traffic across central Jakarta. The center is situated among many commercial buildings and adjacent to Atmajaya University, one of Jakarta’s most prominent universities. 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. The GFA and NLA of The Plaza Semanggi are 155,122 sq m and 60,084 sq m, respectively.

Tenant profile As of March 31, 2019, The Plaza Semanggi had 407 retail tenants.

The lower ground floor has undergone an AEI in 2016 to reconfigure the space vacated by Giant Hypermarket to accommodate Foodmart and some F&B specialties. The ground floor includes a number of retailers selling F&B, retail services, gifts, and health and beauty products.

The mall has a diverse tenant mix which comprises international and local brand names. The mall is anchored by Fitness First, Cinemaxx, Gramedia and Speedy Karty. The mall has a sky garden with an alfresco dining concept known as Dejavu Sky Dining.

Competition The Plaza Semanggi faces competition from a number of retail malls in the immediate trade area.

The key competing retail malls are:

Š Mal Ambassador, which is a four-story retail mall integrated with ITC Kuningan and Ambassador Apartment. Its anchor tenants include Carrefour and Trimedia Bookstore. The mall was developed by PT Duta Pertiwi Tbk and has a lettable area of approximately 16,800 sq m;

Š Blok M Plaza, which is a seven-story retail mall with major tenants such as Giant and Matahari Department Store. The total lettable area is approximately 31,000 sq m and it was developed by Pakuwon Group; and

Š Ciputra Mall, which is a five-story mall with major tenants such as Hero and Matahari Department Store. Developed by Ciputra Group, the mall has approximately 43,000 sq m of lettable area.

87 MAL LIPPO CIKARANG Jalan MH Thamrin, Lippo Cikarang, Greater Jakarta Description Mal Lippo Cikarang is a two-story retail mall located within the Lippo Cikarang estate. The estate is approximately 40 kilometers 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 center in the estate. The GFA and NLA of Mal Lippo Cikarang are 39,293 sq m and 29,926 sq m, respectively.

Tenant profile As of March 31, 2019, Mal Lippo Cikarang had 124 retail tenants based on committed leases. The mall is anchored by Matahari Department Store, Hypermart, Calisto and Ace Hardware and is well complemented by a diverse set of specialty tenants from a wide variety of industries. The prominent specialty tenants include Timezone, Kentucky Fried Chicken, Pizza Hut, J.Co Donut & Coffee, The Body Shop, The Executive and Johnny Andrean Salon.

Competition Mal Lippo Cikarang is an established shopping center serving the Lippo Cikarang Township. Competing retail malls within the vicinity and each comprising an estimated NLA of at least 8,000 sq m include:

Š Metropolitan Mal, which is a four-story shopping center with several major tenants such as Matahari Department Store, Index Furnishing and Gramedia. The mall was developed by PT Metropolitan Land and has approximately 85,500 sq m of GFA;

Š Mal Jababeka, which is a single-story shopping center with a GFA of approximately 8,000 sq m and its major tenants include Alfa Supermarket, Pojok Busana, Solaria and CFC;

Š Bekasi Trade Centre, which is a five-story shopping center of approximately 12,000 sq m of GFA. Developed by PT Gapura Prima Group, its major tenants include Cinema 21, Hari-Hari Swalayan, Family Billiard and Fit For Two Fitness Centre; and

Š Lippo Cikarang Walk, which is a two-story shopping center with total GFA of approximately 18,000 sq m. The center opened in 2010 and has major tenants such as Farmers Market, Domino’s Pizza, J.Co Donuts & Coffee, Solaria, Bakmi Naga and Optik Tunggal.

PLUIT VILLAGE Jalan Pluit Indah Raya Penjaringan, Jakarta Utara Description Pluit Village is a five-story retail mall located in North Jakarta, in close proximity to and surrounded by residential estates and apartments. Anchored by Matahari Department Store and Carrefour, the mall has a diverse tenant mix including a list of international and local brand names such as Gramedia Bookstore, Delifrance, J.Co Donuts & Coffee, Body Shop, Starbucks, Best Denki and FJ Square. Pluit Village plans to introduce a new dining hall “The Elevation”, with AEI works commencing in the three months ended March 31, 2019. The AEI is expected to be completed in the three month period ended September 30, 2019.

As part of our active asset enhancement strategy, we re-located an anchor tenant on the ground floor to first floor and convert the existing space into a new F&B district that consists of three lifestyle dining concepts, alfresco, Indoor and Island. Work commenced in January 2019 and is expected to be completed by September 2019. This new F&B district of approximately 2,855 sq m will be known as ‘The Elevation’, improving the F&B mix and Average Rental Rate as compared to the previous anchor tenants Average Rental Rate. The GFA and NLA of Pluit Village are 134,576 sq m and 86,591 sq m, respectively.

88 Tenant profile As of March 31, 2019, there were 296 tenants at the mall and the ground floor space comprises mostly restaurants and cafés, fashion stores, optical stores, bakery & confectionery units and Matahari Department Store. Most of the specialty units are local and international brand names such as Gramedia Bookstore, Delifrance, J-CO Donuts, Frank & Co., Hush Puppies, Timezone, The Body Shop and Starbucks Coffee. The diverse tenancy mix aims at attracting families, young shoppers, office workers and residents from the neighborhood.

Competition Pluit Village faces competition from the following two retail malls:

Š Emporium Pluit Mall is a mixed development comprising a hotel, an office building, a residential complex and a mall complex. The total lettable area of the mall is 75,000 sq m and the anchor tenants include Carrefour, Sogo Department Store, Gramedia, XXI Cinema and Electronic Solution.

Š Pluit Junction is located across Emporium Pluit Mall and there are plans to connect the two malls via a bridge. Opened in 2007, the mall has an entertainment theme with over 100 retail outlets. With a total lettable area of 21,000 sq m, its anchor tenants include Celebrity Fitness, XXI Cinema and Amazon Playground.

LIPPO PLAZA EKALOKASARI BOGOR (FORMERLY EKALOKASARI PLAZA) Jalan Siliwangi 123, Bogor, Greater Jakarta Bogor profile Bogor, a city in West Java, has a total population of approximately of 950,334 according to the 2010 Census. The city is on the main road from Jakarta to Bandung, over the Puncak pass. It is also a popular weekend getaway for families from Jakarta.

Description Lippo Plaza Ekalokasari Bogor (formerly Ekalokasari Plaza) is a six-story retail mall with three basement levels as well as a carpark. It is located approximately 2.0 kilometers south east of the Bogor City Centre on a major road, Jalan Siliwangi, and approximately 3.5 kilometers south or five minutes’ drive from the Bogor exit of the Jagorawi toll road which connects Jakarta to Bogor. Bogor is approximately 50.0 kilometers south of Jakarta. The GFA and NLA of Lippo Plaza Ekalokasari Bogor (formerly Ekalokasari Plaza) are 58,859 sq m and 28,213 sq m, respectively.

Tenant profile As of March 31, 2019, Lippo Plaza Ekalokasari Bogor (formerly Ekalokasari Plaza) had 98 retail tenants. The tenant profile of the mall comprises a diverse set of tenants that cater to families, with products and services ranging from fashion to music. The mall’s anchor tenants are Matahari Department Store and Hypermart. The other prominent tenants include Kentucky Fried Chicken, Maxx Coffee, BreadTalk, The Body Shop and Cinemaxx.

Competition Lippo Plaza Ekalokasari Bogor (formerly Ekalokasari Plaza) currently faces competition from four retail malls including:

Š Botani Square, which commenced operations in late 2006, is located two kilometers northwest of Lippo Plaza Ekalokasari Bogor (formerly Ekalokasari Plaza). It has an NLA of approximately 30,000 sq m and is anchored by Giant Hypermarket and Rimo Department Store;

Š Bogor Trade Mall, a strata mall located four kilometers west of Lippo Plaza Ekalokasari Bogor (formerly Ekalokasari Plaza), with an NLA of 45,000 sq m, is anchored by Ramayana Department Store;

Š Plaza Jambu Dua, located seven kilometers north of Lippo Plaza Ekalokasari Bogor (formerly Ekalokasari Plaza), is a seven-story shopping center with an NLA of 20,800 sq m and anchored by Ramayana Department Store; and

89 Š Bellanova Country Mall, a single-story mall with a GFA of approximately 46,599 sq m. Its major tenants include Hypermart, Timezone and Cinema 21.

TAMINI SQUARE Jalan Raya Taman Mini, East Jakarta Taman Mini profile Taman Mini is a culture-based recreational area located in East Jakarta, Indonesia. It has an area of approximately 250 acres (1.0 sq. km). The park is a synopsis of Indonesian culture, with virtually all aspects of daily life in Indonesia’s 26 provinces encapsulated in separate pavilions with the collections of Indonesian architecture, clothing, dances and traditions are all depicted impeccably. In addition, there is a lake with a miniature of the Indonesian archipelago in the middle of it, cable cars, museums, Keong Emas Imax cinema, a theatre called the Theatre of My Homeland and other recreational facilities which make TMII one of the most popular tourist destinations in the city.

Description Tamini Square is a strata-titled retail mall with four levels and two basement levels, located in the city of Jakarta, within close proximity of one of Jakarta’s most popular tourist destinations, Taman Mini Indonesia Indah. Tamini Square is located within a strategic area in East Jakarta and is surrounded by recreational areas. It has good accessibility due to proximity to the toll road gate and is supported by public transportation including the Trans Jakarta Busway. The GFA and NLA of Tamini Square are 18,963 sq m and 17,475 sq m, respectively.

Tenant Profile As of March 31, 2019, Tamini Square had 12 tenants. The tenant profile consists of tenants raging from hypermarket, leisure and entertainment to a bookstore and food and beverage outlets. The anchor tenant is Carrefour, which occupies the lower ground floor. Other tenants include Yoshinoya, McDonalds, Pizza Hut and Solaria.

Competition Tamini Square has several competitors located within the area.

Š Cibubur Plaza is a four-story shopping center with tenants such as Pojok Busana, Kharisma, KFC and Superindo Supermarket. It was developed by PT Mandiri Dipta Cipta and has a gross floor area of approximately 17,000 sq m.

Š Citra Grand Mall which opened in 2001 is a two-story shopping center and part of Citra Grand Estate development. Having a gross floor area of 16,800 sq m, it has as major tenants, Hero Supermarket, Edison Multi Product, Popeye and KFC.

Š Cijantung Mall was built in 1998 with a total gross area of 34,000 sq m. It is a four-story shopping center with major tenants include Ramayana, Gramedia, Cinema 21 and Texas.Itis located at Jalan Pendidikan I, East Jakarta.

Š Cibubur Junction is located in Jalan Jambore, East Jakarta, a five-story building with one basement level with a total gross area (including parking area) of approximately 66,071 sq m. Major tenants include Matahari Department Store, Studio 21 and Fitness First.

KRAMAT JATI INDAH PLAZA (now known as “Lippo Plaza Kramat Jati”) Jalan Raya Bogor Km 19, Kramat Jati, East Jakarta Kramat Jati profile The Kramat Jati area is a strategic position located on the Jalan Raya Bogor and close to the Jagorawi toll road. The name Kramat Jati usually refers to Pasar Induk (main wholesale market) Kramat Jati, which opens 24 hours a day and is typically crowded during the day. The surrounding area has been developed into commercial and residential.

Description Kramat Jati Indah Plaza (now known as “Lippo Plaza Kramat Jati”) is a five-level (including one basement level) retail mall. The mall is sited 2.5 km south of Jakarta’s Jagorawi toll road and is easily

90 accessible from the main road with good accessibility to passing traffic. Kramat Jati Indah Plaza’s notable development in the close vicinity includes Taman Mini Indonesia Indah, which is one of the most popular tourist destination in Jakarta, as well as a culture-based recreational area. The GFA and NLA of Kramat Jati Indah Plaza are 67,285 sq m and 32,908 sq m, respectively.

Tenant Profile As of March 31, 2019, Kramat Jati Indah Plaza (now known as “Lippo Plaza Kramat Jati”) had 108 tenants. Tenancy profile varies from leisure and entertainment, to food and beverages and electronic gadgets. Anchored by Carrefour and Matahari Department Store, the 108 tenants in the mall provide a diverse and complementary tenant mix including a list of international and local brand names. Other tenants include Electronic City, Solaria, Bata, Batik Keris and Time Zone.

Competition The competitors of Kramat Jati Indah Plaza (now known as “Lippo Plaza Kramat Jati”) based on its geographic location are:

Š Plaza Kalibata also known as Mall Kalibata which was developed by PT Tribandhawa Binasarana with a total NLA of approximately 24,100 sq m. This mall has major tenants such as Giant Hypermart, Matahari Department Store, Innovation Store, XXI and Solaria.

Š Cijantung mall is a five-story shopping center with a land area of 15,000 sq m. Its total gross floor area is approximately 33,618 sq m with major tenants including Ramayana, Gramedia, Cinema 21 and McDonald’s. Cibubur Junction is located in Jalan Jambore, East Jakarta, a four- story building with one basement level with total gross area including parking area of approximately 65,155 sq m. Major tenants include Matahari Department Store, Studio 21 and Fitness First.

PEJATEN VILLAGE Jalan Warung Jati Barat, South Jakarta Pejaten profile Pejaten is a strategic area in South Jakarta and surrounded by middle to upper middle class residential estate. It has a good accessibility to the CBD area and supported by public transportation including Trans Jakarta. Along Jahan Warung Jati Barat and Jalan Mampang Prapatan, there are many commercial developments such as low-medium rise office building, shop house and hotel. The landed residential area is not located directly on the main road. The location is also close to Kemang area, which is a popular residential area for expatriates. Notable developments in the vicinity include Gardenia Boulevard, Pondok Pejaten Indah Apartment, Republic Jakarta Office Tower and Graha Nokia Tower.

Description Pejaten Village is a six-level retail mall (including one basement level). The mall is located within a strategic area in the heart of South Jakarta, surrounded by commercial developments such as medium-rise office buildings, shop houses and hotels within proximity to the Kemang, which is a popular residential area for the expatriates in Jakarta. Pejaten Village offers both destination and convenience shopping and supported by its central location which is easily accessible by cars and public transport. The GFA and NLA of Pejaten Village are 89,157 sq m and 42,184 sq m, respectively.

Tenant Profile As of March 31, 2019, Pejaten Village had 153 tenants. The mall’s anchor tenants are Hypermart and Matahari Department Store and comprise a list of well-known retailers and brand names such as J.Co Donut & Coffee, Fitness First, The Body Shop and Domino’s Pizza providing shoppers with a diverse tenant mix.

Competition Pejaten Village’s competitors are as follows:

Š Lippo Mall Kemang is located within a superblock, which consists of apartment, retail mall, hospital, a proposed five-star hotel and a school. It is located at Jalan Pangeran Antasari No. 36,

91 Jakarta Selatan. It opened in early 2012 and caters to upper-middle class shoppers. Tenants include Kidz Station, Cinema XXI, Fitness First, Planet Sports, TGIF and Kitchenette.

Š Pondok Indah Mall (PIM) is located in Jalan Metro Pondok Indah, Jakarta Selatan. PIM I has operated since 1995 and PIM II was in 2005. Several tenants are Metro Department Store, 21 Cineplex, ACE Hardware, Gramedia, Hero Supermarket, Timezone and Planet Sport for PIM I and SOGO Department Store, Celebrity Fitnes and Cinema XXI for PIM II.

Š Cilandak Town Square is a lifestyle mall located at Jalan T.B. Simatupang Kav. 17, Jakarta Selatan. It has operated since 2002 with semi gross area of 25,000 sq m. Several tenants are Matahari Department Store, Time Zone, and Cinema 21.

Š Gandaria City is located within a superblock consisting of retail, office, condominium, and five- star hotel. It is located on Jalan Kyai Haji Mohammad Shafii Hadzani, Jakarta Selatan. It has operated since 2010 with semi gross area of 85,000 sq m. Tenants include Metro Department Store, ACE Home Centre, LOTTE Mart, XXI The Premiere, and Gramedia.

LIPPO MALL KEMANG Jalan Kemang VI, South Jakarta Description Lippo Mall Kemang, a five-story shopping center (with two basement floors and three mezzanine levels) which is located in South Jakarta, Indonesia, commenced operations in 2012 and is a fashion and lifestyle mall. Lippo Mall Kemang is part of the Kemang Village Integrated Development which consists of Lippo Mall Kemang, seven towers of residential apartments, a proposed hotel and a school. The GFA and NLA of Lippo Mall Kemang are 150,932 sq m and 58,497 sq m, respectively.

Tenant profile As of March 31, 2019, Lippo Mall Kemang had 186 retail tenants. The malls anchor tenants are Matahari Department Store, Ace hardware and Hypermart. The mall houses international and local brands such as Uniqlo, Muji and Solaria.

Lippo Mall Kemang also serves as the podium of a proposed hotel, Pelita Harapan school campus, and three condominium towers. Being part of the Kemang Village Integrated Development, Lippo Mall Kemang is expected to capture shoppers not only from the residential apartments, school, and proposed hotel within the integrated development but also from residential areas located in close proximity to the mall.

Competition Lippo Mall Kemang currently faces competition from the following three retail malls located in South Jakarta.

Š Pondok Indah Mall, completed in 1991 with a combined NLA of 107,000 sq m, is anchored by Metro Department Store, Sogo Department Store and Foodhall.

Š Gandaria City, completed in 2010, with an NLA of 94,000 sq m, is anchored by Metro Department Store, Lotte Mart and Cinema 21.

Š Senayan City, completed in 2006, with an NLA of 94,000 sq m, houses luxury brands such as Gucci, Chanel and Burberry and also well-known highstreet fashion brands like Uniqlo and Zara.

BANDUNG PROPERTIES We currently have two properties in Bandung, Bandung Indah Plaza and Istana Plaza.

Bandung profile Bandung, the capital of West Java, is the third largest city in Indonesia. From data on Statistics Indonesia, the population of Bandung in 2016 was 2,490,622, a 0.4% increase from 2015. Bandung has experiences steady economic growth over the last four years. In 2016, GDP growth (at current prices) was 7.8%.

92 Bandung also serves as a favorite weekend-escape destination for Jakarta residents and a shopping destination of choice favored for its good value textile and fashion products among Malaysians and Singaporeans.

Since the completion of the new Bandung-Jakarta highway in 2004, Bandung’s retail industry has been developing rapidly and new retail concepts have been introduced. This includes specialized shopping centers (Bandung Electronic Centre and Be-Mall for computers and electronics, Istana Bandung Commodities Centre for home appliances and construction), stand-alone department stores (Yogya and Riau Junction) and Carrefour hypermarket, and lifestyle shopping centers specializing in F&B and entertainment (Cihampelas Walk and Paris Van Java).

BANDUNG INDAH PLAZA Jalan Merdeka No. 56, Bandung, West Java Description Bandung Indah Plaza is a four-story shopping center (including three basement levels and a carpark). It is located strategically in the heart of the CBD of Bandung. The shopping center 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 the Aryaduta Hotel, a five-star hotel in Bandung. The GFA and NLA of Bandung Indah Plaza are 75,848 sq m and 30,288 sq m, respectively.

Tenant profile As of March 31, 2019, Bandung Indah Plaza had 242 retail tenants. 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.

Bandung Indah Plaza is anchored by Matahari Department Store, Hypermart, a bookstore, a cinema and supported by a list of international and local tenants. The mall also has a wide variety of specialty tenants including Burger King, Pizza Hut, Puma, The Body Shop, Polo Ralph Lauren and Sports Station.

Competition Bandung Indah Plaza currently faces competition within its trade area from four competing retail malls which are Bandung Supermalls, each located within a five kilometer radius from Bandung Indah Plaza. Among these competing retail malls, Bandung Supermall has undergone a major facelift in late-2011.

Š Istana Plaza, which is located two kilometers from Bandung Indah Plaza, and is one of the retail malls in our portfolio;

Š Bandung Supermall, located four kilometers southeast of Bandung Indah Plaza, with an NLA of 48,800 sq m, is anchored by Metro Department Store and Giant Hypermarket. The mall targets the upper income retail segment in Bandung and has a strong entertainment offering, including a cinema, a bowling center and a video games center;

Š Paris Van Java, located four kilometers northwest of Bandung Indah Plaza, with an NLA of 38,000 sq m, is anchored by Sogo Department Store, Carrefour hypermarket and Blitz Megaplex. The mall commenced operations in 2006, and is still in process of leasing its retail space; and

Š Festival City Link, formerly known as Carrefour Molis, is managed by a local retailer and the mall was taken over by Agung Podomoro in 2009. It has about 68,000 sq m of NLA and its major tenants include Lotte Mart, Matahari Department Store and Gramedia bookstore.

93 ISTANA PLAZA Jalan Pasirkaliki No. 121-123, Bandung, West Java Description Istana Plaza is a four-story shopping center (including two basement levels with a carpark. It is located strategically in the heart of the CBD of Bandung. Situated at the junction between two busy roads of Jalan Pasir Kaliki and Jalan Pajajaran, it is easily accessible by car and public transport. Istana Plaza’s many popular international fashion labels have also helped to attract the young and trendy shopper base. AEI was conducted in December 2017 to construct a multi-story motorcycle carpark. The GFA and NLA of Istana Plaza are 44,809 sq m and 27,471 sq m, respectively.

Tenant profile As of March 31, 2019, Istana Plaza had 173 retail tenants. 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 the first and second floors. Other prominent tenants include Mr D.I.Y. and Giant Supermarket. Other major tenants include McDonald’s, Gramedia, and Time Master.

Competition Istana Plaza, located two kilometers from Bandung Indah Plaza, shares the same competitive landscape as Bandung Indah Plaza. (See “— Bandung Indah Plaza — Competition”.)

MEDAN PROPERTIES We have three properties in Medan: Plaza Medan Fair, Sun Plaza and Binjai Supermall.

Medan profile Medan, the provincial capital of North Sumatra, is the largest city in Sumatra and the fifth largest city in Indonesia, after Jakarta, Surabaya, Bandung and Bekasi. It is a city with a population of approximately 2.2 million in 2016.

Medan is a growing commercial center in the region, with a key focus on agriculture and industry businesses.

In terms of economic activity, Medan relies on 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.

PLAZA MEDAN FAIR Jalan Jend. Gatot Subroto No. 30, Medan Petisah, Medan Description Plaza Medan Fair is a four-story retail mall with one basement level, strategically located in the shopping and business district of Medan, North Sumatra. It is the second largest retail mall in Medan, with a list of tenants including well-known international and domestic retailers and brand names such as Carrefour, Matahari Department Store, Electronic City, Timezone and Bata. It is also surrounded by residences and is within walking distance of a number of hotels. The GFA and NLA of Plaza Medan Fair are 138,767 sq m and 67,412 sq m, respectively.

We, through our wholly-owned subsidiary, PT Anugrah Prima (“PT AP”) conducted a transfer pursuant to a conditional transfer agreement on October 9, 2017 with PT Pilar Utama Sukses in relation to the proposed transfer of the retail wing adjoining Plaza Medan Fair (the “Medan Fair Extension”) to PT AP (the “Medan Fair Transfer”). The construction of the Medan Fair Extension was completed in September 2013 and the Medan Fair Transfer was completed on October 17, 2017.

Tenant profile Both Carrefour and Matahari Department Store are anchor tenants in Plaza Medan Fair. The mall has a wide range of tenants, including fashion retailers, gift and specialty retailers, food and beverage

94 retailers and electronics retailers. Local and international brand names that are found in Plaza Medan Fair include Timezone, Bata, A&W and Solaria. As of March 31, 2019, there were 462 tenants at the mall.

Competition Plaza Medan Fair currently faces competition from three malls:

Š Cambridge City Square, which is an integrated development comprised of a hotel, condominium units and a shopping center. Its major tenants include Brastagi Supermarket, My Life Gym & Spa and Duck King Restaurant. Its NLA is 15,000 sq m;

Š Medan Plaza, which opened in the 1980s and is located within the vicinity of Plaza Medan Fair and its anchor tenants include Macan Yaohan, Cinema 21 & Suzuya. With an NLA of 16,000 sq m, Medan Plaza targets the middle to upper middle-segment; and

Š Medan Mall, which opened in 1995 and is located next to a traditional market. Its anchor tenants are Matahari Department Store and Macan Yaohan. The mall has an NLA of 20,700 sq m.

SUN PLAZA Jalan Haji Zainul Arifin No. 7, Madras Hulu, Medan Polonia, Medan, Sumatra Description Sun Plaza is a six-story shopping center strategically located in Medan’s commercial district. The property is easily accessible from all parts of the city and is surrounded by prominent landmarks such as the governor’s office, foreign embassies and major banks. The property provides all classes of shoppers in Medan with a one-stop shopping, dining and entertainment destination. AEI involving a major refurbishment of Sun Plaza is currently taking place and is expected to be completed in 2021. The GFA and NLA of Sun Plaza are 107,373 sq m and 69,344 sq m, respectively.

Tenant profile The property is anchored by Sogo Department Store, Hypermart, Ace Hardware, Uniqlo and H&M, and also houses specialty tenants such as Bread Talk, Starbucks, Pizza Hut, Sushi Tei, Mango and Body Shop. As of March 31, 2019, Sun Plaza had 370 retail tenants.

Competition Sun Plaza currently faces competition from the same three malls as Plaza Fair Medan:

Š Cambridge City Square, which is an integrated development comprised of a hotel, condominium units and a shopping center. Its major tenants include Brastagi Supermarket, My Life Gym & Spa and Duck King Restaurant. Its NLA is 15,000 sq m;

Š Medan Plaza, which opened in the 1980s and is located within the vicinity of Plaza Medan Fair and its anchor tenants include Macan Yaohan, Cinema 21 & Suzuya. With an NLA of 16,000 sq m, Medan Plaza targets the middle to upper middle-segment; and

Š Medan Mall, which opened in 1995 and is located next to a traditional market. Its anchor tenants are Matahari Department Store and Macan Yaohan. The mall has an NLA of 20,700 sq m.

BINJAI SUPERMALL Jalan Soekamo, Hatta No. 14 Binjai, North Sumatera Binjai profile Binjai Supermall is on the main road known as Jalan Soekarno Hatta which is connecting Binjai and Medan City. It is surrounded by public facilities such as school, mosque, and bus station and the surrounding area has been developed into commercial and residential areas. Binjai Supermall is easily accessible and is supported by good infrastructure.

95 Description Binjai Supermall is a three-level retail mall. Strategically located along the main road connecting the Binjai City and Medan City, Binjai Supermall is the first and only modern retail mall in Binjai City. It is positioned as a lifestyle mall for the middle to upper middle income segments of the retail market and targets as wide range of customers, including families, business professionals as well as teenagers. The GFA and NLA of Binjai Supermall are 28,760 sq m and 23,431 sq m, respectively.

Tenant profile As of March 31, 2019, the 113 tenants in the mall provide a diverse tenants mix including a list of well- known international and local brand names such as Matahari Department Store, Hypermart, Texas Chicken and Dunkin Donuts.

Competition As the only modern mall in Binjai City, Binjai currently has no competitors.

PALEMBANG PROPERTIES We currently have three properties in Palembang: Palembang Square, Palembang Square Extension and Palembang Icon.

Palembang profile Palembang’s main road has been developed a center of government offices such as the South Sumatera Parliament Office and the Governor’s Office. Located also in Palembang City are the Aryaduta Hotel and Arista Hotel as well as the Bumi Sriwijaya Stadium with a capacity of approximately 15,000 people and the Palembang Sport and Convention Centre. Adequate mass transportation modes are also available such as the Trans Musi and city transport.

PALEMBANG SQUARE Jalan Angkatan 45/POM IX, Palembang, South Sumatera Description Palembang Square is a four-level retail mall located in Palembang, South Sumatra. The mall is part of a mixed-use development consisting of a hotel, a hospital and Palembang Square Extension. Anchored by Carrefour, the mall is well complemented by a list of international and local specialty tenants which include restaurant, fashion labels, a cinema, Gramedia Bookstore, a video game center and home furnishing store. The GFA and NLA of Palembang Square are 46,546 sq m and 30,513 sq m, respectively.

Tenant profile As of March 31, 2019, Palembang Square had 130 tenants. The diverse tenants mix includes Carrefour, Gramedia, Amazone and Cinema XXI.

Competition The competitors of Palembang Square retail mall are as follows:

Š Palembang Indah Mall (PIM) is the only fully leased shopping center in Palembang. It is located on Jalan Letnan Kolonel Iskandar, Palembang. PIM was established in 2005 as a four-story building, leased by major tenants such as Hypermart and ACE Hardware. This mall has leasable area of approximately 28,000 sq m.

Š Palembang Trade Centre (PTC) is located on Jalan Soekamto, Kemuning. It is a strata titled retail mall. Developed as a 3-story building by PT Pandawalima Halim Bersama, this mall is occupied with major tenants such as Diamond Department Store. It provides leasable area of approximately 42,000 sq m.

Š International Plaza (IP) is the first shopping center in Palembang which is located at Jalan Jend Sudirman No. 147. This mall was constructed as a 5-story building in 1996 by PT Indah Plaza International. The major tenants in IP are Matahari Department Store, Superindo and Studio 21. Total leasable area is approximately 21,000 sq m.

96 PALEMBANG SQUARE EXTENSION Jalan Angkatan 45/POM IX, Palembang, South Sumatera Description Palembang Square Extension is a two-level retail mall (including one underground level) located in Palembang, South Sumatra. It is part of a mixed-use development consisting of a hotel, a hospital and an existing mall. It is directly connected with Palembang Square and is within a walking distance to the hospital. The GFA and NLA of Palembang Square Extension are 22,527 sq m and 18,093 sq m, respectively.

Tenant profile As of March 31, 2019, Palembang Square Extension had 33 tenants. The mall is anchored by Matahari Department Store and Hypermart, complemented by a list of international and local fashion labels such as Giordano, Batik Keris and Levi’s.

Competition Palembang Square Extension, being located within the same vicinity, shares the same competitive landscape as Palembang Square. (See “— Palembang Square — Competition”.)

PALEMBANG ICON Jalan POM No. 1 IX, Palembang, South Sumatra Description Palembang Icon is a five-level (including one basement level) retail mall and sports center located in the city of Palembang, South Sumatera, Indonesia. It is a lifestyle mall strategically located in a premium location that will be integrated with a convention center. It provides a complete range of products and services covering daily needs, fashion, entertainment and F&B for families as it positions itself as a new lifestyle icon in South Sumatera. The GFA and NLA of Palembang Icon are 42,361 sq m and 36,348 sq m, respectively.

Tenant profile As of March 31, 2019, Palembang Icon had 177 tenants. The mall is anchored by Cinemaxx, Foodmart Gourmet and Celebrity Fitness and has seen the opening of many first-to-market outlets from international and local brands in Palembang including Charles & Keith, Donini, Holika, L’Occitane, Starbucks Coffee and Electronic City.

Competition Palembang Icon, which is located within the same vicinity, shares the same competitive landscape as Palembang Square and Palembang Square Extension. (See “— Palembang Square — Competition”.)

LIPPO PLAZA BATU Jl. Diponegoro No.1 RT 07/05, Batu City Description Lippo Plaza Batu is a three-level (including one basement level) retail mall located in Batu City, Indonesia

Lippo Plaza Batu is located at Batu City, which is located approximately 20 kilometers northwest of Malang, the second largest city in East Java. Batu City is mainly known for agricultural and eco-tourism. Apart from apple orchards and strawberry plantations, it also has several natural sights such as caves, waterfalls and nature reserves. The cool temperature and pristine nature makes the city popular for recreational retreats since the Dutch colonial days. In 2013, based on tourist statistical data, a total of 1.9 million tourists have visited Batu City and the number of tourists is likely to continue to grow with the local government’s plan to promote tourism. The GFA and NLA of Lippo Plaza Batu are 34,586 sq m and 18,538 sq m, respectively.

97 Tenant profile As of March 31, 2019, Lippo Plaza Batu had 50 tenants. The mall is anchored by Matahari Department Store and Hypermart. The diverse tenants mix includes a list of well-known international and local brand names such as Sports Station, Game Fantasia and Guardian.

Competition As the first modern mall in Batu City, Lippo Plaza Batu currently has no competitors.

LIPPO MALL KUTA Lippo Mall Kuta is a three-story (including one basement level) retail mall located in Bali, Indonesia. Lippo Kuta Mall is connected to Aryaduta Bali, a five-star hotel. The mall has an outdoor space known as the Avenue of the Stars, which holds live band performances every day. Lippo Mall Kuta provides a wide range of products and services covering daily needs, fashion, entertainment and F&B outlets for families and tourists. The GFA and NLA of Lippo Mall Kuta are 36,312 sq m and 20,350 sq m, respectively.

Tenant profile As of March 31, 2019, Lippo Mall Kuta had 65 tenants. The tenant mix includes a variety of international and local brands, such as Adidas, Bata, Billabong, Amazing Kuta, Matahari Department Store and Cinemaxx.

Competition Lippo Mall Kuta faces competition from Discovery Shopping Mall, BeachWalk Mall and Mall Bali Galleria.

Š Discovery Shopping Mall is a shopping center located on Jalan Kartika Plaza, Kuta area, Bali. The 2-story mixed-development property consists of a shopping center, commercial offices and apartments. The gross floor area is approximately 48,000 sq m. Discovery Mall opened in 2004.

Š BeachWalk, located on Jalan Pantai Kuta, is a four-story shopping center. The NLA of the mall is approximately 130,500 sq m. Anchor tenants include H&M, Cinema XXI and Zara.

Š Mall Bali Galeria is located at Dewaruci Statue roundabout in Kuta. It was opened in 2000, with a NLA of approximately 45,500 sq m. Tenants include H&M, Matahari Department Store, Ace Hardware and Cinema XXI.

LIPPO PLAZA KENDARI Lippo Plaza Kendari is a four-story family mall with a carpark and it provides a range of products and services for all family needs in one location. It is strategically located in the heart of Kendari, the capital of Southeast Sulawesi. Economic development is growing at a rapid pace in Kendari; among the dominant economic activity in Kendari are construction, agriculture and wholesale and retail trade. The government of Sulawesi has introduced a series of major infrastructure projects to improve connectivity and spur economic development in Southeast Sulawesi, including a railway network which will connect all major cities in Sulawesi. The GFA and NLA of Lippo Plaza Kendari are 34,831 sq m and 20,184 sq m, respectively.

Tenant profile As of March 31, 2019, Lippo Plaza Kendari had 42 tenants. The tenant mix includes Matahari Department Store, Hypermart, Pizza Hut, Solaria, Cinemaxx and Timezone.

Competition Lippo Plaza Kendari has no direct competitors within the vicinity. Nonetheless, there are competing malls in Makassar and Bau.

Š Lippo Plaza Buton is located at Jl. Sultan Hassanudin No. 58, Buton, Southeast Sulawesi. Lippo Plaza Buton is the only shopping center in Buton, with a gross floor area of approximately 17,500 sq m. The mall was opened in 2014.

98 Š Makassar Town Square is located on Jl Perintis Kemerdekaan KM 8, Tamalanrea Jaya, Makassar, south Sulawesi and was opened in 2007. Tenants include Ramayana, Dunkin Donuts and KFC.

Š Brylian Plaza Kendari is located on Jalan Sao, Bende, Kendari Southeast Sulawesi. Brylian Plaza Kendari was built in 2004. Tenants include Matahari, Urban Surf, Texas and Green Mart.

LIPPO PLAZA JOGJA We entered into a joint operation with First Real Estate Investment Trust (“First REIT”) to acquire an integrated development. We enjoy the benefit of ownership of and operate Lippo Plaza Jogja while First REIT enjoys the benefit of ownership of and operates the adjoining hospital, Siloam Hospitals Yogyakarta. Lippo Plaza Jogja comprises a 10-story building including one basement and one mezzanine level. We also share the multi-story parking area and rooftop helipad. Lippo Plaza Jogja is one of the newest malls in Yogyakarta and its diverse tenant mix is well-placed to serve the people of Yogyakarta and those from surrounding areas. It has also undergone major refurbishment between 2013 and 2015. The GFA and NLA of Lippo Plaza Jogja are 66,098 sq m and 21,452 sq m, respectively.

Tenant profile As of March 31, 2019, Lippo Plaza Jogja had 30 tenants. The mall’s tenants include a Matahari Department Store, Hypermart, Cinemaxx, Celebrity Fitness, BreadTalk and Sports Station.

Competition Neighboring competitor malls are Ambarukmo Plaza, Galeria Mall and Jogja City Mall.

Š Ambarukmo Plaza opened in 2006. It is a six-story mall with NLA of 45,000 sq m. Tenants include Centro Lifestyle, Carrefour, Cinemax 21 and The Premiere.

Š Galeria Mall is located on Jalan Sudirman, Terban, Gandokusuman, Yogyakarta and opened in 1995. Galeria is a five-story mall with NLA of 12,000 sq m. The mall is anchored by Matahari Department Store, Timezone and Game Fantasia.

Š Jogja City Mall is located on Jalan Magelang KM 6 No. 18, Sinduadi, Malti, Sleman. The eight- story mall has a NLA of 42,000 sq m. Their anchor tenants include Hypermart, Matahari Department Store, Cinema 21 and The Premiere.

KEDIRI TOWN SQUARE Kediri Town Square is a two-story retail mall strategically located in Kediri city, East Java. It is well- connected to other parts of East Java and has direct trains to major cities such as Surabaya, Yogyakarta or Bandung Completed in 2011, it provides a range of products and services covering daily needs, fashion, entertainment and F&B for families and tourists. The GFA and NLA of Kediri Town Square are 28,688 sq m and 16,848 sq m, respectively.

Tenant profile As of March 31, 2019, Kediri Town Square had 64 tenants. The mall’s tenants include Matahari Department Store, Hypermart, Game Fantasia, Sports Station and Miniso.

Competition Kediri Town Square competitors are the following:

Š Kediri Mall is located on Jalan Hayam Wurk, Kediri. Its NLA is approximately 5,800 sq m. Tenants include Transmart, Sri Ratu and Game Fantasia.

Š Ponorogo City Center is located on Jalan Ir. H Juanda No 19-21, Ponorogo with NLA of approximately 15,600 sq m. It is anchored by Hypermart, Lotus and Cinemaxx.

99 MALL WTC MATAHARI UNITS Jalan Raya Serpong, Pondok Jagung, Serpong, Tangerang, Banten, Greater Jakarta Description Mall WTC Matahari is located along Jalan Serpong Raya, Serpong within the administrative area of Tangerang Regency, Banten province. It is situated approximately 18 kilometers west of Jakarta’s CBD.

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 own facilities have been developed in Tangerang.

Mall WTC Matahari is strategically located along the main road connecting BSD City. 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 10,753 sq m, representing 22.3% of the total NLA of Mall WTC Matahari. The Mall WTC Matahari Units are currently utilized as a department store, hypermarket and entertainment and game center.

Relevant information relating to the Mall WTC Matahari Units The following table sets out other relevant information relating to the Mall WTC Matahari Units.

NLA in respect of the retail space as of December 31, 2018 ...... 10,753 sq m NLA as a percentage of the NLA of Mall WTC Matahari as of December 31, 2018 . . . 22.3% Percentage of contribution to our Gross Revenue for the year ended December 31, 2018 ...... 0.4% Value as recorded in statement of financial position as of December 31, 2018 ...... S$10.7 million

Relevant information relating to Mall WTC Matahari The following table sets out other relevant information relating to Mall WTC Matahari.

Year of building completion ...... 2003 Land Area ...... 35,886 sq m NLA...... 44,285 sq m Carpark Lots ...... 1,101 Motorcycle Parking Lots ...... 500

METROPOLIS TOWN SQUARE UNITS Jalan Hartono Raya, Modernland Cikokol, Tangerang, Banten, Greater Jakarta Description Metropolis Town Square is located in Tangerang city, Banten province, approximately 20 kilometers west of Jakarta’s CBD. The CBD’s strategic location near the main road connecting the toll road to Tangerang City provides easy access to the Jakarta — Merak toll gate and surrounding residential areas in Tangerang.

Tangerang is an industrial and manufacturing city in Greater Jakarta, home to seven industrial estates with a total area of approximately 1,700 ha. Due to its proximity to Jakarta, Tangerang is a popular residential location for commuters who work in Jakarta. In recent years, residential estates and satellite cities (for example, Lippo Karawaci, Bumi Serpong Damai, Kota Modern, Alam Sutera, Summarecon Serpong and Bintaro Jaya) have been developed in Tangerang.

Metropolis Town Square is located along Jalan Hartono Raya within the Kota Modern residential estate, about 2.6 kilometers south of the city center 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.

100 Metropolis Town Square is a one-stop shopping mall located along one of the main roads in Tangerang. Hence, the mall has good accessibility to passing traffic. In addition, the mall is the only major retail development in the Tangerang Municipality. The mall is designed in an art deco style and is located within the Modernland development, a large middle to upper income housing complex.

The Metropolis Town Square Units comprise three strata units on part of the ground floor, first floor and second floor of the building, aggregating a total NLA of 14,861 sq m and representing 33.4% of the total NLA of Metropolis Town Square. The Metropolis Town Square Units are currently utilized as a department store, hypermarket and entertainment and games center.

Relevant information relating to the Metropolis Town Square Units The following table sets out other relevant information relating to the Metropolis Town Square Units.

NLA in respect of the retail space as of December 31, 2018 ...... 14,861 sq m NLA as a percentage of the NLA of Metropolis Town Square as of December 31, 2018 ...... 33.4% Percentage of contribution to our Gross Revenue for the year ended December 31, 2018 ...... 0.3% Value as recorded in statement of financial position as of December 31, 2018 ...... S$13.3 million

Relevant information relating to Metropolis Town Square The following table sets out other relevant information relating to Metropolis Town Square.

Year of building completion ...... 2004 Land Area ...... 38,905 sq m NLA...... 46,395 sq m Carpark Lots ...... 800 Motorcycle Parking Lots ...... 1,200

DEPOK TOWN SQUARE UNITS Jalan Margonda Raya No. 1, Pondok Cina Beji, Depok, Greater Jakarta Description Depok Town Square is located on Jalan Margonda Raya, adjacent to the south eastern side of University of Indonesia. The center has direct access to Pondok Cina Railway Station, which is connected to Jalan Margonda Raya. Approximately 16 kilometers south of Jakarta’s central business district, Depok is also home to four large universities. Over the last few years, the commercial area of Depok has been growing rapidly with the emergence of many modern shopping center developments and commercial buildings.

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 12,490 sq m and representing 30.4% of the total NLA of Depok Town Square. The Depok Town Square Units are currently utilized as a department store, hypermarket and entertainment and games center.

Relevant information relating to the Depok Town Square Units The following table sets out other relevant information relating to the Depok Town Square Units.

NLA in respect of the retail space as of December 31, 2018 ...... 12,490 sq m NLA as a percentage of the NLA of Depok Town Square as of December 31, 2018 ...... 30.4% Percentage of contribution to our Gross Revenue for the year ended December 31, 2018 ...... 0.5% Value as recorded in statement of financial position as of December 31, 2018 ...... S$14.7 million

101 Relevant information relating to Depok Town Square The following table sets out other relevant information relating to Depok Town Square.

Year of building completion ...... 2005 Land Area ...... 24,858 sq m NLA...... 41,151 sq m Carpark Lots ...... 870 Motorcycle Parking Lots ...... 1,200

JAVA SUPERMALL UNITS Jalan MT Haryono No. 992-994, Jomblang, Semarang, Central Java Description Semarang is the capital city of the Central Java province and the eighth 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.

Java Supermall is located within the vicinity of a middle to upper class residential area which is easily accessible from most areas in Semarang. The Java Supermall Units comprise four strata units on the semi-basement, first floor and second floor of the building, aggregating a total NLA of 11,082 sq m. The Java Supermall Units are currently utilized as a department store and a supermarket.

Relevant information relating to the Java Supermall Units The following table sets out other relevant information relating to the Java Supermall Units.

NLA in respect of the retail space as of December 31, 2018 ...... 11,082 sq m NLA as a percentage of the NLA of Java Supermall as of December 31, 2018 ...... 56.0% Percentage of contribution to our Gross Revenue for the year ended December 31, 2018 ...... 0.4% Value as recorded in statement of financial position as of December 31, 2018 ...... S$14.0 million

Relevant information relating to Java Supermall The following table sets out other relevant information relating to Java Supermall.

Year of building completion ...... 2000 Land Area ...... 10,800 sq m NLA...... 19,789 sq m Carpark Lots ...... 700 Motorcycle Parking Lots ...... 2,000

MALANG TOWN SQUARE UNITS Jalan Veteran No. 2, Malang, East Java Description Malang is the second largest city in the East Java province with a population of approximately 0.8 million and a regency population of approximately 2.4 million.

The region is a popular tourist destination due to its natural attractions (for example, Mount Bromo, one of Java’s largest volcanoes), cool climate and colonial history. Malang also has a large student population, being home to five universities (Brawijaya, State, Muhammadiyah, Widya Gama and Merdeka Universities).

Malang Town Square, in which Malang Town Square Units are located, is a mall conceptualized as an international lifestyle mall as well as the biggest and most comprehensive mall in Malang. The center has easy access to public transportation and is surrounded by exclusive residential communities and several universities which have more than 50,000 students.

102 The Malang Town Square Units comprise three strata units on part of the ground floor, upper ground floor, first floor and second floor of the building, aggregating a total NLA of 11,065 sq m, representing 44.7% of the total NLA of Malang Town Square. The Malang Town Square Units are currently utilized as a department store, hypermarket and entertainment and games center.

Relevant information relating to the Malang Town Square Units The following table sets out other relevant information relating to the Malang Town Square Units.

NLA in respect of the retail space as of December 31, 2018 ...... 11,065 sq m NLA as a percentage of the NLA of Malang Town Square as of December 31, 2018 ...... 44.7% Percentage of contribution to our Gross Revenue for the year ended December 31, 2018 ...... 0.6% Value as recorded in statement of financial position as of December 31, 2018 ...... S$16.0 million

Relevant information relating to the Malang Town Square Units The following table sets out other relevant information relating to the Malang Town Square Units.

Year of building completion ...... 2005 Land Area ...... 18,608 sq m NLA...... 24,754 sq m Carpark Lots ...... 544 Motorcycle Parking Lots ...... 720

PLAZA MADIUN UNITS Jalan Pahlawan, Madiun, East Java Description The city of Madiun, with a total population of 0.2 million (based on a 2010 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 2010 census).

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 center of the commercial and administrative zone, at the crossroad of three existing sub-districts of Madiun. Most of the prominent buildings in Madiun are included in this precinct, including the City Hall, Merdeka Hotel, Tentara Hospital and Pasaraya Shopping Centre. Jalan Pahlawan is accessible from Jalan Sudirman, another major thoroughfare in the city.

Plaza Madiun enjoys high pedestrian traffic from Jalan Pahlawan and is in close proximity to various forms of public transportation options.

Plaza Madiun, aggregating a total NLA of 19,029 sq m situated on two HGB titles, comprises the basement, first floor, second floor and third floor and are currently occupied by a supermarket and a department store.

Relevant information relating to the Plaza Madiun Units The following table sets out other relevant information relating to the Plaza Madiun Units.

NLA in respect of the retail space as of December 31, 2018 ...... 11,436 sq m NLA as a percentage of the NLA of Plaza Madiun as of December 31, 2018 ...... 60.1% Percentage of contribution to our Gross Revenue for the year ended December 31, 2018 ...... 1.2% Value as recorded in statement of financial position as of December 31, 2018 ...... S$19.9 million

103 Relevant information relating to Plaza Madiun The following table sets out other relevant information relating to Plaza Madiun.

Year of building completion ...... 2000 Land Area ...... 5,583 sq m NLA...... 19,029 sq m Carpark Lots ...... 80 Motorcycle Parking Lots ...... 400

GRAND PALLADIUM MEDAN UNITS Jalan Kapt. Maulana Lubis, Medan, North Sumatra Description Grand Palladium Medan is conveniently located within the Medan CBD and is only 2.5 kilometers from Polonia International Airport. The mall is located in the center of Medan, hence drawing shoppers from all around the city. It is surrounded by government and business offices and the town hall, and therefore benefits from regular crowds of government and business visitors.

The 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 29,295 sq m, representing 42.0% of the total NLA of Grand Palladium Medan. The Grand Palladium Medan Units are currently utilized as a department store, hypermarket and entertainment and games center.

Relevant information relating to the Grand Palladium Medan Units The following table sets out other relevant information relating to the Grand Palladium Medan Units.

NLA in respect of the retail space as of December 31, 2018 ...... 12,305 sq m NLA as a percentage of the NLA of Grand Palladium Medan as of December 31, 2018 ...... 42.0% Percentage of contribution to our Gross Revenue for the year ended December 31, 2018 ...... 0.0% Value as recorded in statement of financial position as of December 31, 2018 ...... S$9.4 million

Relevant information relating to Grand Palladium Medan The following table sets out other relevant information relating to Grand Palladium Medan.

Year of building completion ...... 2005 Land Area ...... 10,769 sq m NLA...... 29,295 sq m Carpark Lots ...... 1,200 Motorcycle Parking Lots ...... 700

104 ASSET ENHANCEMENT The LMIRT Manager will continually review and investigate asset enhancement works for each property. The aim of this is to create further income streams and maximize retail offering at each mall. To do this, the LMIRT Manager intends to work with relevant Indonesian authorities to gain the necessary approvals. The table below gives a summary of potential and completed asset enhancement works.

Property Key asset enhancement plans

Sun Plaza The AEI involves major refurbishment of the existing mall including a complete revamp of the external façade and interiors, reconfiguration of the mall’s layout to maximize space and the creation of additional atrium space. The refurbishment is expected to be completed in 2021.

Gajah Mada Plaza Identified as our next major AEI. The mall is more than 30 years old and requires a major refurbishment to revamp both its external façade and interiors. The AEI is in the planning process and is expected to commence in early 2020.

Istana Plaza The AEI involved construction of an extension to increase NLA and motorcycle parking lots. The increased NLA was leased to a Cinema, various new specialty tenants and a new food court. The AEI was completed in late 2017.

Cibubur Junction The AEI involved conversion of anchor space into new food court and space for a large tenant as well as a conversion of former food court into specialty restaurants. The AEI was completed in the first quarter of 2019.

Pluit Village The AEI involves replacement of anchor tenant space and improving the F&B tenancy mix and the annual recurring revenue as compared to previous anchor tenant rate. As of commencement, we have already secured 50% of the total leases. This is expected to be completed in the third quarter of 2019.

AEI are conducted section by section in each relevant mall in order to ensure that any disruption is minimal. We do not believe that the AEI will have a negative impact on the mall’s occupancy and/or revenues.

105 MASTER LEASES As part of our acquisition strategy, we may enter into master leases with the vendors of the properties. These master leases, with tenors of three to five years, are usually over certain areas of the properties which include specialty and anchor areas, casual leasing and parking space, and are structured to provide a stable rental income while the properties continue to mature.

Currently, five of our Properties have master leases with the vendors, which are Palembang Icon Sports & Convention Centre, Lippo Mall Kuta, Lippo Plaza Kendari, Lippo Plaza Jogja and Lippo Mall Kemang.

Mall Terms

Master leases with LPKR subsidiaries Expiry: 16 December 2019

Lippo Mall Master Iease amount: S$19.7m Kemang Vendor support in the form of 5 year master lease agreements for car park, casual leasing and Avenue of Stars spaces, as well as the maintenance and operating expenses incurred form these spaces

Expiry: 28 December 2021

Master Iease amount: S$4.1m Lippo Mall Kuta Vendor support in the form of 5-year master leases for the car park, casual leasing and specialty tenants (including food court) spaces as well as service charge (including costs of operations and maintenance of the malls) for three years from the completion of the acquisition

Expiry: 21 December 2022

Lippo Plaza Master Iease amount: S$4.0m Jogja Vendor support in the form of 5 year master lease agreements for casual leasing and specialty tenant spaces as well as related service charges and maintenance/ operating expenses

Master leases with PT Metropolis Propertindo Utama

Expiry: 20 June 2022 Lippo Plaza Master lease amount: S$1.4m Kendari Vendor support in the from of 5 year master lease agreements for casual leasing and specialty tenant spaces as well as related service charges and maintenance/ operating expenses

Expiry: 30 Apr 2040 for the Sports Centre

Palembang Master lease amount: S$0.7m Icon (Sports Centre)

At the point of acquisition, it was assessed that upon expiry of the master leases such rental rates could be attained and hence the underlying rental performance will continue to create a sustainable income for us.

In July 2018, the master leases at Palembang Icon (except for the Palembang Icon Sports & Convention Centre master lease) and at Lippo Plaza Batu expired, and we have entered into leases with the underlying tenants of the master lease areas.

As of December 31, 2018, the master leases representing 13.9% of total revenue was S$32.0 million whereas the underlying performance was S$7.4 million accounting for 23.2% of the master lease revenue. The master leases for Lippo Mall Kemang, Lippo Mall Kuta, Lippo Plaza Kendari and Lippo Plaza Jogja will expire in December 2019, December 2021, June 2022 and December 2022 respectively, while the Palembang Sports & Convention Centre’s master lease will expire in April 2040.

INSURANCE We believe that the Properties are insured consistent with industry practice in Indonesia. This includes all risks to property, machinery breakdown, public liability insurance (including bodily injury), earthquakes, terrorism and sabotage policies. These policies cover the replacement cost of each Property. There are, however, certain types of risks that are not covered by such insurance policies, including acts of war, outbreaks of contagious diseases and contamination or other environmental law breaches.

LEGAL PROCEEDINGS Except as disclosed in this Offering Memorandum, we are not currently involved in any material litigation nor, to the best of the LMIRT Manager’s knowledge, is any material litigation currently contemplated or threatened against us or the LMIRT Manager.

106 Additionally, except as disclosed in this Offering Memorandum, the LMIRT Trustee is not currently involved in any material litigation that may have a material adverse effect on our financial position, taken as a whole, and, to the best of the LMIRT Trustee’s knowledge, there is no such material litigation currently contemplated or threatened against it.

INFORMATION REGARDING THE TITLE OF THE PROPERTIES THE RETAIL MALLS Each of the retail malls is wholly-owned by an Indonesian SPC which is, in turn, owned by two Singapore SPCs, other than Sun Plaza, which is owned by three Singapore SPCs. We, via our direct or indirect ownership of 100% of the shares of each of the Singapore SPCs, indirectly holds the retail malls.

The table below sets out the types of titles held by us and their respective years of expiry:

Title held by the Title/right held by Year of Retail Mall land owner(1) us(2) expiry

Gajah Mada Plaza ...... HGBTitle Strata Title 2020 Cibubur Junction ...... HGBTitle BOT Scheme 2025 The Plaza Semanggi ...... HPTitle BOT Scheme 2054 Mal Lippo Cikarang ...... HGBTitle HGB Title 2023 Lippo Plaza Ekalokasari Bogor ...... HPTitle BOT Scheme 2032 Bandung Indah Plaza(3) ...... HPLTitle BOT Scheme and 2030 HGB Titles on top of HPL Titles Istana Plaza ...... HGBTitle BOT Scheme 2034 Sun Plaza ...... HGBTitle HGB Title 2032 Pluit Village ...... HGBTitle BOT Scheme 2027 Plaza Medan Fair ...... HGBTitle BOT Scheme 2027 Tamini Square ...... HGBTitle Strata Title 2035 Lippo Plaza Kramat Jati (Kramat Jati Indah Plaza) . . . HGB Title HGB Title 2024 Palembang Square ...... HGBTitle Strata Title 2039 Palembang Square Extension ...... BOTScheme BOT Scheme 2041 Pejaten Village ...... HGBTitle HGB Title 2027 Binjai Supermall ...... HGBTitle HGB Title 2036 Lippo Mall Kemang ...... HGBTitle Strata Title 2035 Lippo Plaza Batu ...... HGBTitle Strata Title 2031 Palembang Icon ...... BOTScheme BOT Scheme 2040 Lippo Mall Kuta ...... HGBTitle HGB Title 2037 Lippo Plaza Kendari ...... BOTScheme BOT Scheme 2041 Lippo Plaza Jogja ...... HGBTitle HGB Title 2043 Kediri Town Square ...... HGBTitle HGB Title 2024

(1) The title held by the owner of the land on which the retail mall is situated.

(2) The title/right held by us via our ownership of shares in the respective retail mall Singapore SPCs.

(3) The BOT Grantor has granted the BOT Grantee, the owner of Bandung Indah Plaza, the right to apply for HGB titles on top of its HPL titles. (See “— Hak Pengelolaan (“HPL”) titles”.)

Build, operate and transfer schemes (“BOT Schemes”) The relevant retail mall Indonesian SPCs own ten of the retail malls, namely, Cibubur Junction, The Plaza Semanggi, Lippo Plaza Ekalokasari Bogor (formerly Ekalokasari Plaza), Bandung Indah Plaza, Istana Plaza, Pluit Village, Plaza Medan Fair, Palembang Square Extension, Palembang Icon and Lippo Plaza Kendari, via BOT Schemes. The relevant retail mall Indonesian SPCs are in turn owned by two retail mall Singapore SPCs. A BOT Scheme is not registrable with any Indonesian authority. Rights under a BOT Scheme do not amount to a legal title and represent only contractual interests.

Pursuant to BOT Schemes, the BOT Grantor has granted the BOT Grantee, a right to build and operate the retail mall for a particular period of time as stipulated in the BOT Agreement.

107 The respective BOT Grantor for the relevant retail malls are not related or affiliated with the respective vendors or the Sponsor. The relevant BOT Grantors are regional Indonesian Government enterprises, Indonesian Government agencies and a church foundation.

In exchange for the right to build and operate a retail mall on the land owned by the BOT Grantor, the BOT Grantee is obliged to pay a certain compensation (as stipulated in the BOT Agreement) to the BOT Grantor. The relevant retail mall Indonesian SPC, as the BOT Grantee, financed the construction of the relevant retail mall and on an on-going basis, pays for the asset enhancement works of the retail mall (if any). Depending on the terms of the relevant BOT agreement, the payment by the BOT Grantee may be made in the form of a lump sum or staggered payments.

We indirectly own the retail malls for the period stipulated in the respective BOT Agreement. The terms of the BOT Agreements ranges from 20 years to 30 years. During the term of the BOT Agreement, the respective BOT Grantor is not allowed to sell or transfer the land on which the relevant retail mall is situated. Upon the expiry of the term of the BOT Agreement, the BOT Grantee must return the land, together with any buildings and fixtures on top of the land, without either party providing any form of compensation to the other.

The BOT Grantee may assign its rights under the BOT Agreement with prior consent of the BOT Grantor. The BOT Agreements are silent on the circumstances under which the respective BOT Grantor may withhold its consent to such an assignment. Under Indonesian law, a transfer of rights under an agreement must be approved or acknowledged by the opposite party. Therefore, if a BOT Grantee assigns its rights under the BOT Agreement without the consent of the BOT Grantor, the assignment will not be effective and the BOT Grantee shall be deemed to have caused a breach of contract. Instead of a transfer of a BOT Grantee’s right through an assignment of the BOT Agreement, which requires consent from the BOT Grantor, the transfer of the BOT interest may also be made through a transfer of shares in the BOT Grantee by the shareholders of the BOT Grantee. Except for the BOT Agreement relating to Cibubur Junction, the transfer of shares in the BOT Grantee does not require consent from the BOT Grantor.

We own 10 of the retail malls, via our 100% ownership interests of shares in the retail mall Singapore SPCs, under BOT Schemes because:

Š Freehold land in Indonesia may not be owned by companies (whether Indonesian or foreign- owned) or by foreign individuals. Under Indonesian land law, the closest form of land title to an internationally recognized concept of “freehold” title is Hak Milik (“HM”) or “Right of Ownership”. A Hak Milik title is available only to Indonesian individuals and certain Indonesian religious and social organizations and government bodies. In the Indonesian property market, it is common for properties to be held under agreements or schemes without the legal title being transferred;

Š Instead of transferring the ownership of the land, a land owner may prefer to use the BOT Scheme for commercial reasons. A land owner may not intend to transfer the ownership of the land because the land is located at commercially strategic locations or has historical value. Alternatively, the land owner may have limited financial capability to develop the land. Under such circumstances, the land owner may prefer to enter into a BOT Agreement with a BOT Grantee who are property developers with strong financial support and proven track records; or

Š A BOT Grantee may prefer to use the BOT Scheme because the compensation for obtaining the BOT rights could be considered as more price feasible and cash flow effective as compared to an outright purchase of the land.

108 The table below sets out the BOT Scheme expiry date for each of the properties owned via BOT Schemes, as of December 31, 2018:

Retail Mall Expiry Date of BOT Scheme

Cibubur Junction ...... July 28, 2025 The Plaza Semanggi ...... July 8, 2054 Lippo Plaza Ekalokasari Bogor (formerly Ekalokasari Plaza) ...... June 27, 2032 Bandung Indah Plaza ...... December 31, 2030 Istana Plaza ...... January 17, 2034 Pluit Village ...... June 9, 2027 Plaza Medan Fair ...... July 23, 2027 Palembang Square Extension ...... January 24, 2041 Palembang Icon ...... April 30, 2040 Lippo Plaza Kendari ...... July 7, 2041

Strata titles Four of the retail malls, namely, Gajah Mada Plaza, Tamini Square, Palembang Square and Lippo Mall Kemang, are held via strata titles. Under Indonesian land law, if a building developer plans to market and sell a multi-story building, the building developer must divide the multi-story building into (i) rights of ownership (strata title) for each unit, (ii) rights on common properties, (iii) rights to common parts, and (iv) rights to the common land in the form of a sketch plan, which must be approved by the relevant authority. Such sketch plan must also provide an explanation on (i) unit separation that can be used by individuals, (ii) the limitation and separation of the strata title right over common properties, and (iii) the strata title right over the common land.

In general, if a party holds a property via strata titles, the party that owns the strata title unit, will also own the common areas, common property and common land (i.e. the underlying land) proportionately with the other strata title unit owners. We indirectly own, via the relevant retail mall Indonesian SPC, approximately 99.0% of the units of strata titles that are constructed on the relevant plot of land on which Gajah Mada Plaza is situated on.

Hak Guna Bangunan (“HGB”) titles Nine of the retail malls, namely, Mall Lippo Cikarang, Sun Plaza, Kramat Jati Indah Plaza (Lippo Plaza Kramat Jati), Pejaten Village, Binjai Supermall, Lippo Plaza Batu, Lippo Mall Kuta, Lippo Jogja and Kediri Town Square are held via a HGB title. Under Indonesian land law, the highest title which can be obtained by a company incorporated or located in Indonesia is a “Right to Build” or HGB title. HGB titles can only be obtained by an Indonesian citizen, or by a legal entity which is incorporated under Indonesian law and located in Indonesia including foreign investment companies (Penanaman Modal Asing, or “PMA”). A holder of HGB title has the right to erect, occupy and use buildings on that particular parcel of land, and also has the right to encumber and sell all or part of the parcel.

The validity period for a HGB title is different from that of a “freehold” title. A “freehold” title has no limitation on the validity period. A HGB title is granted for a maximum initial term of 30 years. By application to the relevant local land office upon the expiration of this initial term, a HGB title may be extended for an additional term not exceeding 20 years. Following expiration of this additional term, a renewal application may be made. The application should be made no later than two years prior to the expiration of the additional term. The land office has discretion to grant extensions.

Hak Pakai (“HP”) titles Two of the retail malls, namely The Plaza Semanggi and Lippo Plaza Ekalokasari Bogor (formerly Ekalokasari Plaza), are situated on plots of land which are owned by the land owner under HP (Right to Use) titles. We do not own these plots of land directly and instead, hold the two retail malls via BOT Schemes. The land owner (as the BOT Grantor) has granted the relevant retail mall Indonesian SPC (as BOT Grantee), a right to build and operate the relevant retail mall for a particular period of time as stipulated in the BOT Agreement. The HP titles where Plaza Semanggi and Lippo Plaza Ekalokasari

109 Bogor (formerly Ekalokasari Plaza) are constructed will be valid as long as the lands are being used by the respective land owner.

The BOT Land on which Palembang Square Extension is constructed is represented by HP No. 419/ Lorok Pakjo, registered under the name of the Government of Sumatera Province, which is currently in the process of being converted into Hak Pengelolaan (Right to Manage) in relation to additional areas.

A HP title allows its holder (the land owner) the right to use and/or collect the products of land directly administered by the State or of land owned by other persons. Hak Pakai over land can be granted by the Indonesian government in the form of a decree or by an Indonesian citizen in the form of an agreement. The decree or the agreement gives the user the rights and obligations laid down in that decree or agreement.

A HP title in Indonesia may be obtained and owned by the following entities: (i) an Indonesian citizen, (ii) a legal entity established under Indonesian law and domiciled in Indonesia, (iii) any Indonesian government department or government agency, (iv) any social or religious entity, (v) a foreign citizen residing in Indonesia and who has provided benefit to Indonesia, (vi) a foreign legal entity that has a registered representative office in Indonesia, and (vii) a state representative or a representative of certain international bodies.

Hak Pengelolaan (“HPL”) titles In the case of Bandung Indah Plaza, the BOT Grantor owns the land on which the retail mall is situated under a HPL (Right to Manage) title. A HPL title provides its holder (the land owner) with the right to manage on a parcel of land created by the State, in which the executing authorities of such right to manage is partially granted and in common practice (only) to Indonesian government entities. Such holder of a Right to Manage title may use the granted executing authority for the purpose of land utilization and allocation planning, utilization of the land related to the role of such Indonesian government entities, partial assignment of the land to third parties and/or land management in cooperation with third parties. Bandung Indah Plaza is constructed on land under HPL titles which will be valid as long as the land is being used by the land owner.

For Bandung Indah Plaza, the land owner (as BOT Grantor) has granted the relevant retail mall Indonesian SPC (as BOT Grantee) the right to apply for a HGB title on top of its HPL (Right to Manage) title. Pursuant to this BOT Scheme, the BOT Grantee is granted the right to build and operate the retail mall and to own a HGB title for the term of the BOT Agreement. Ownership of the HGB title allows the BOT Grantee to encumber the land with prior consent of the BOT Grantor and subject to the BOT Agreement.

The Retail Spaces Each of the retail spaces is wholly-owned by a retail space Indonesian SPC which is, in turn, owned by two retail space Singapore SPCs. We indirectly own the retail spaces. The retail spaces are held by the respective Indonesian SPCs under the following types of title:

Retail Space Held by us via:

Mall WTC Matahari Units ...... Strata titles ownership certificates Metropolis Town Square Units ...... Strata titles ownership certificates Depok Town Square Units ...... Strata titles ownership certificates Java Supermall Units ...... Strata titles ownership certificates Malang Town Square Units ...... Strata titles ownership certificates Plaza Madiun Unit ...... Strata titles ownership certificates Grand Palladium Medan Units ...... Strata titles ownership certificates

110 MANAGEMENT

The LMIRT Manager is appointed as the manager of the LMIR Trust in accordance with the terms of the LMIRT Trust Deed. The Board of Directors of the LMIRT Manager is collectively responsible for the business affairs and success of the LMIR Trust and the LMIRT Manager. The names and positions of the Board of Directors of the LMIRT Manager are set out below:

Name Position Ketut Budi Wijaya Non-Independent Non-Executive Director Gouw Vi Ven Executive Director Lee Soo Hoon, Phillip Independent Director Douglas Chew Lead Independent Director Goh Tiam Lock Independent Director

BOARD OF DIRECTORS OF THE LMIRT MANAGER Ketut Budi Wijaya Mr. Ketut Budi Wijaya was appointed as Non-Independent Non-Executive Director on June 1, 2015 and as Chairman on September 30, 2017. He is also a member of the Nominating and Remuneration Committee. Mr. Wijaya has more than 30 years of in-depth expertise in accounting and corporate finance. Over the course of his career, he has held various executive and directorship positions within the Lippo Group, including PT Matahari Putra Prima Tbk, PT Multipolar Tbk and PT Bank Lippo Tbk. He has also previously worked for Darmanwan & Co. Public Accountants and PT Bridgestone Tire Indonesia. Mr. Wijaya is currently the President Director of the Sponsor, the largest listed property company in Indonesia by total assets and revenue with a highly focused, unique and integrated business model stretching across urban and large-scale integrated developments, retail malls, healthcare, hospitality, property and portfolio management. Mr. Wijaya graduated with a degree in accounting and continued study at Sekolah Tinggi Ekonomi Indonesia in 1982.

Gouw Vi Ven Ms. Gouw Vi Ven was appointed as Executive Director on October 5, 2018. She was formerly the CEO of the Manager from 2007 to April 2013, Executive Director until March 2017 and served as CEO again from October 2018 to April 2019. Ms. Gouw has more than 25 years of experience in management, marketing and sales in the real estate industry. She played a pivotal role as President Director of the Sponsor, in propelling the Group into the largest listed property company in Indonesia by asset size. During her tenure, she was integral in identifying retail properties for the Sponsor to invest in (the strata malls and the planned leased malls), enhancing existing assets and ensuring the delivery of development projects, which span across diverse real estate sectors, including urban areas and townships, residential clusters, condominiums, hospitals and hotel projects throughout Indonesia. Ms. Gouw graduated from the University of New South Wales, Australia, with a degree in Computer Science and Statistics.

Lee Soo Hoon, Phillip Mr. Lee Soo Hoon, Phillip was appointed as Independent Director on August 4, 2011. He is also the Chairman of the Audit and Risk Committee. Mr. Lee concurrently serves as is the managing director of Phillip Lee Management Consultants Pte Ltd and was previously a Partner at Ernst & Young from 1978 to 1997. Mr. Lee’s areas of experience include audit, investigations, reorganizations, valuations and liquidations. Mr. Lee is a Chartered Accountant of the Institute of Chartered Accountants in England and Wales. He is also a member of the Institute of Singapore Chartered Accountants, the Malaysian Institute of Certified Public Accountants, the Malaysian Institute of Accountants and Singapore Institute of Directors. Mr. Lee has also received awards for his community work, including the UK Order of St John in 1998, the Singapore Public Medal in 1998 and the Singapore Public Service Star in 2007.

Douglas Chew Mr. Douglas Chew was appointed as Non-Executive Director on August 4, 2011, as Independent Director on November 26, 2013 and as Lead Independent Director on September 30, 2017. He is the

111 Chairman of the Nominating and Remuneration Committee and is also a member of the Audit and Risk Committee. Mr. Chew is concurrently a board member of the board of governors of SymAsia Singapore Fund, part of SymAsia Foundation Ltd (“SymAsia”). SymAsia is an umbrella philanthropic foundation, a wholly-owned subsidiary of Credit Suisse. He is also a member of the Investment Review Committee of SymAsia. Mr. Chew has extensive experience in general management, business strategies and risk management. From 2010 to 2012, he was the Regional Manager at the Asia-Pacific Regional Office of Raiffeisen Bank International AG (formerly known as ZB-Austria), where he was responsible for risk management, financial controlling, compliance, audit and human resources.

He started his career as a Credit Officer at ABN Bank in 1977, where he was responsible for credit analysis and evaluation. From 1979 to 1984, he was an Account Manager at the Bank of Montreal where he was responsible for the development and maintenance of a profitable loan portfolio. From 1984 onwards, he served as a Manager of the Michigan-based Chemical Bank in Singapore where he was responsible for business development of corporate and trade businesses. In 1988, he was appointed as the Assistant General Manager of Banque Worms where he oversaw the business strategy and management of risks at the Singapore Branch. He served as the General Manager of RZB-Austria Singapore Branch and was involved in the bank’s general management from 1997 to 2005. Mr. Chew holds a Bachelor of Business Administration from the National University of Singapore.

Goh Tiam Lock Mr. Goh Tiam Lock was appointed to the board as Independent Director on September 27, 2011. He is a member of the Audit and Risk Committee and Nominating and Remuneration Committee. Mr. Goh is currently the Managing Director of Lock Property Consultants Pte Ltd., a position he has held since setting up the practice in 1993. The firm has an estate agent licence from the Council of Estate Agency for which Mr Goh is the Key Executive Officer. In addition to estate agency, Mr Goh also advises clients on real estate taxation, development charges and management issues. Mr. Goh served as a member on the Strata Titles Board from 1999 until 2018. He is a Fellow of the Royal Institution of Chartered Surveyors. Mr. Goh is also a Fellow of the Singapore Institute of Surveyors & Valuers and he was its President from 1986 to 1987. Mr. Goh is also a Fellow of the Singapore Institute of Arbitrators and he was its Vice President from 1985 to 1987. Mr. Goh held the position of Property Manager in Supreme Holdings Ltd. before joining Jones Lang Wootton as a senior executive in 1974. In 1976, he became a partner in MH Goh, Tan & Partners, the legacy firm of Colliers International, and retired from the firm in 1991.

He was actively involved in community work, holding positions such as Chairman of the Marine Parade Community Club Management Committee from 1984 to 2001, and Master Mediator at the Marine Parade Community Mediation Centre. He is now a Patron of the Marine Parade Community Club Management Committee. Mr Goh has received several awards for his involvement in community service including the Public Service Medal in 1988, and the Public Service Star in 1997. In 2018 he received the People’s Association’s Platinum Award for Community Service.

MANAGEMENT TEAM The names and positions of the management team of the LMIRT Manager are set out below:

Name Position Liew Chee Seng, James Chief Executive Officer Wong Han Siang Chief Financial Officer Christina Lee Director, Legal and Compliance Heng Shao Sheng Director, Asset Management and Business Development Ella Jia Financial Controller Cesar Agor Manager, Legal and Compliance

Liew Chee Seng, James Mr. Liew is the Chief Executive Officer, having joined the LMIRT Manager in June 2018 as Chief Operating Officer. Mr. Liew was appointed as Deputy Chief Executive Officer in October 2018 and then as Chief Executive Officer, his latest role, in May 2019. Prior to joining the Manager, he was Senior Director, Corporate Finance and Asset Enhancement at Lippo Group from September 2015 to

112 May 2018, where he worked on various real estate projects in Indonesia. Mr. Liew has more than 20 years of experience in the finance and real estate industries, having served in various capacities with Temasek Holdings, United Overseas Bank, UOB Asset Management and Raiffeisen Bank. Mr. Liew obtained his Masters in Business Administration (Strategic Management) and Bachelor of Business, Banking and Finance (First Class Honours) from the Nanyang Technological University.

Wong Han Siang Mr. Wong Han Siang is the Chief Financial Officer. Mr. Wong joined the LMIRT Manager in September 2008 as Finance Manager and then as Financial Controller from January 2011 until June 2017. In July 2017, he was appointed as the Chief Financial Officer. Mr. Wong is responsible for our financial management functions. He oversees all matters relating to financial reporting, taxation, capital management, treasury and risk management. Mr. Wong has more than 15 years of accounting, auditing and corporate finance experience. Prior to joining the Manager, he was an Audit Manager with PricewaterhouseCoopers LLP Singapore. Mr. Wong is a Chartered Accountant of the Institute of Singapore Chartered Accountants and a fellow member of the Association of Chartered Certified Accountants (FCCA).

Christina Lee Ms. Lee joined the LMIRT Manager in March 2017 and oversees the compliance, legal, investor relations and company secretarial matters. She brings with her more than 25 years of experience in banking, in the areas of internal audit, compliance and operations. Prior to joining the Manager, she worked with both local and international banks as well as audit firms including Raiffeisen Bank International AG, Singapore, United Overseas Bank Ltd, Hongkong & Shanghai Bank, Ernst & Young Singapore and PricewaterhouseCooper Malaysia. Ms. Lee graduated with a BSc (Hons) in Accounting and Financial Analysis from the University of Warwick, England and is a Certified Internal Auditor and Certified Financial Services Auditor. She also obtained her Diploma in Compliance (FICS Specialist) from the International Compliance Association.

Heng Shao Sheng Mr. Heng joined the LMIRT Manager in April 2017 and is the director of the Asset Management and Business Development department. He has more than 15 years of experience in the banking and finance industry covering areas such as management information services, operations control, accounting and finance. Prior to joining the Manager, Mr. Heng was Deputy Head of Accounting and Finance at Raiffeisen Banking International, where he was involved in statutory compliance reporting, IFRS reporting, data and operations control and accounts payable. He started his career with BNP Paribas and has also worked for ABN Amro. Mr. Heng obtained his Bachelor of Business in Accountancy from RMIT University and is also a Certified Practising Accountant, CPA Australia.

Ella Jia Ms. Jia joined the LMIRT Manager in September 2013 as Finance Manager and then as Senior Manager, Treasury and Financial Accounting from July 2016 to December 2018. In January 2019, she was appointed as Financial Controller. She supports the CFO on financial reporting, treasury, taxation and assets acquisition activities. Ms. Jia has more than 10 years of industry experience in REITs and private funds. Prior to joining the Manager, she spent her first four years of her finance career with BDO Raffles and Deloitte & Touche LLP, and subsequently worked for Frasers Commercial Trust as a Finance Manager and Prologis Singapore as the Reporting Manager. Ms. Jia graduated with a Bachelor of Arts in English Literature and Linguistics and is a Chartered Accountant of the Institute of Singapore Chartered Accountants as well as a fellow member of the Association of Chartered Certified Accountants (FCCA).

Cesar Agor Mr. Agor joined the Manager in July 2012. He supports the activities of the LMIRT Manager in the areas of legal and compliance. From 2007 and prior to joining the Manager, Mr. Agor was a practicing lawyer in the Philippines, having worked as an associate lawyer in various law offices in Manila. He also served as an in-house legal counsel at Vista Land & Lifescapes, Inc., one of the largest real estate companies in the Philippines. He is a member of the Integrated Bar of the Philippines. Mr. Agor obtained his Bachelor of Arts in Legal Management and Bachelor of Laws from the Catholic University of Santo Tomas, Philippines. He is currently pursuing his Master of Laws at the University of London International Programmes.

113 INTERESTS OF UNITHOLDERS AND DIRECTORS OF THE LMIRT MANAGER

The following table sets forth details about the interest of the Unitholders who held interests of at least 5.0% or more (“Substantial Unitholders” and each a “Substantial Unitholder”) based on the Register of Substantial Unitholders as of March 31, 2019. None of the directors of the LMIRT Manager holds any interest in LMIR Trust. Deemed interest is determined in accordance with Section 7(4) of the Companies Act.

Total no. of Direct Interest Deemed Interest Units held Percentage(1) No. of Units No. of Units Bridgewater International Ltd. (“BIL”)(2) ..... 857,741,287 - 857,741,287 29.63% PT. Sentra Dwimandiri (“PTSD”) ...... - 913,971,515 913,971,515 31.57% PT. Lippo Karawaci Tbk (“Sponsor”)(3) ...... - 913,971,515 913,971,515 31.57% PT Inti Anugerah Pratama (“IAP”)(4) ...... - 913,971,515 913,971,515 31.57% PT Triyaja Utama Mandiri (“TUM”)(5) ...... - 913,971,515 913,971,515 31.57% James Tjahaja Riady (“JTR”)(6) ...... - 913,971,515 913,971,515 31.57% Fullerton Capital Limited (“Fullerton”)(7) ..... - 913,971,515 913,971,515 31.57% Sinovex Limited (“Sinovex”)(8) ...... - 913,971,515 913,971,515 31.57% Dr Stephen Riady (“SR”)(9) ...... - 913,971,515 913,971,515 31.57% Wealthy Fountain Holdings Inc.(10) ...... 161,938,500 - 161,938,500 5.59% Shanghai Summit Pte Ltd(10) ...... - 168,938,500 168,938,500 5.84% Tong Jinquan(10) ...... - 168,938,500 168,938,500 5.84%

1. Percentage interest is based on 2,894,902,627 Units in issue as of March 31, 2019. 2. BIL is directly held by PTSD and PT Prudential Development (“PD”) in the proportion of 99.98% and 0.02% respectively. The LMIRT Manager is directly held by Peninsula Investment Limited (“PIL”), which in turn is directly held by Mainland Real Estate Limited (“Mainland”) and Jesselton Investment Limited (“Jesselton”) in the proportion of 51.91% and 49.09% respectively. Mainland is directly held by PTSD, PD, Jesselton and Lippo Karawaci Corporation Pte Ltd (“LK Corp”) (together, the “subsidiaries of the Sponsor”) in the proportion of 28%, 18%, 27% and 27% respectively. PTSD is therefore deemed to be interested in (i) 857,741,287 Units held by BIL, and the (ii) 56,230,228 Units held by the LMIRT Manager. 3. The Sponsor is deemed to be interested in (i) 857,741,287 Units held by its indirect wholly-owned subsidiary, BIL, and the (ii) 56,230,228 Units held by the LMIRT Manager. 4. IAP directly holds 59.37% interest in the Sponsor and is therefore deemed to be interested in Sponsor’s interest in 913,971,515 Units. 5. TUM effectively holds 60% interest in IAP and is therefore deemed to be interested in 913,971,515 Units in which IAP has an interest. 6. JTR effectively holds 100% interest in TUM and is therefore deemed to be interested in 913,971,515 Units in which IAP has an interest. 7. Fullerton holds 40% interest in IAP and is therefore deemed to be interested in 913,971,515 Units in which IAP has an interest. 8. Sinovex holds 99% interest in Fullerton and is therefore deemed to be interested in 913,971,515 Units in which Fullerton has an interest. 9. SR effectively holds all the shares of Sinovex. Sinovex holds 99% interest and SR holds the remaining 1% interest in Fullerton which in turn holds 40% interest in IAP. Therefore, he is deemed to be interested in 913,971,515 Units in which Fullerton has an interest. 10. Wealthy Fountain Holdings Inc and Skyline Horizon Consortium Ltd are wholly owned by Tong Jinquan through Shanghai Summit Pte Ltd. Therefore, Tong Jinquan and Shanghai Summit Pte Ltd are deemed to be interested in 161,938,500 Units held by Wealthy Fountain Holdings Inc and 7,000,000 Units held by Skyline Horizon Consortium Ltd.

114 RELATED PERSON TRANSACTIONS

In general, transactions between us and any of our related parties constitute “related party transactions”. Below is a summary of key related party transactions that we have entered into with some of our affiliates. All of our related party transactions are conducted on an arms-length basis and on normal commercial terms. The related parties with whom we have entered into business transactions are Lippo Karawaci and its subsidiaries and affiliates, and Perpetual (Asia) Limited and the predecessor trustee, HSBC Institutional Trust Services (Singapore) Limited.

For the three months ended March 31, 2019, the aggregate value of transactions with PT Lippo Karawaci Tbk and its subsidiaries or associates amounted to S$2,856,000 for management fees, S$1,879,000 for property management fees and S$14,902,000 for rental revenue, service charge and recovery. The aggregate value for transactions with Perpetual (Asia) Limited amounted to S$115,000 for its trustee fee.

For the financial year ended December 31, 2018, the aggregate value of transactions with PT Lippo Karawaci Tbk and its subsidiaries or associates amounted to S$11,595,000 for management fees, S$7,714,000 for property management fees and S$62,743,000 for rental revenue, service charge and recovery. The aggregate value for transactions with Perpetual (Asia) Limited amounted to S$461,000 for its trustee fee.

For the financial year ended December 31, 2017, the aggregate value of transactions with PT Lippo Karawaci Tbk and its subsidiaries or associates amounted to S$12,518,000 for management fees, S$1,237,000 for acquisition fees, S$6,691,000 for property management fees, S$12,396,000 for rental revenue of master lessee, S$52,705,000 for rental revenue, service charge and recovery and S$96,753,000 for the acquisition of Lippo Plaza Kendari, Lippo Plaza Jogja and Kediri Town Square. The aggregate value for transactions with HSBC Institutional Trust Services (Singapore) Limited amounted to S$423,000 for its trustee fee.

For the financial year ended December 31, 2016, the aggregate value of transactions with PT Lippo Karawaci Tbk and its subsidiaries or associates amounted to S$11,940,000 for management fees, S$864,000 for acquisition fees, S$4,393,000 for property management fees, S$12,741,000 for rental revenue of master lessee, S$43,087,000 for rental revenue, service charge and recovery and S$86,402,000 for the acquisition of Lippo Mall Kuta. The aggregate value for transactions with HSBC Institutional Trust Services (Singapore) Limited amounted to S$332,000 for its trustee fee.

115 DESCRIPTION OF INDEBTEDNESS

As of December 31, 2016, 2017 and 2018, we had consolidated indebtedness totaling S$651.0 million, S$695.0 million and S$680.0 million, respectively. As of March 31, 2019, we had consolidated indebtedness totaling S$680.0 million.

The following table describes our primary consolidated indebtedness as of the dates described below. In addition to the description below, see also note 11 to our consolidated financial statements for the three months ended and as of March 31, 2019 attached hereto.

Description of Original Principal Amount outstanding No. Indebtedness Borrower Lender Currency Amount Maturity (as of March 31, 2019) (S$ (US$ (S$ (US$ millions) millions) millions) millions) 1 Bond Issuance .....LMIRT Capital Pte. Ltd. - SGD 75.0 55.0 June 22, 75.0 55.0 2020 2 Syndicated Term Loan . . . Perpetual (Asia) Limited, Syndicated SGD 175.0 129.0 August 22, 175.0 129.0 in its capacity as trustee Loan 2020 of LMIRT 3 Syndicated Term Loan . . . Perpetual (Asia) Limited, Syndicated SGD 175.0 129.0 August 22, 175.0 129.0 in its capacity as trustee Loan 2021 of LMIRT 4 Syndicated Term Loan . . . Perpetual (Asia) Limited, Syndicated SGD 67.5 50.0 November 9, 67.5 50.0 in its capacity as trustee Loan 2022 of LMIRT 5 Syndicated Term Loan . . . Perpetual (Asia) Limited, Syndicated SGD 67.5 50.0 November 9, 67.5 50.0 in its capacity as trustee Loan 2023 of LMIRT 6 Revolving Credit Facility ...... Perpetual (Asia) Limited, CIMB SGD 80.0 59.0 August 26, 80.0 59.0 in its capacity as trustee Bank 2019 of LMIRT Berhad, Labuan Offshore Branch 7. Revolving Credit Facility ...... Perpetual (Asia) Limited, BNP SGD 40.0 29.0 June 21, 40.0 29.0 in its capacity as trustee Paribas, 2019 of LMIRT acting through its Singapore Branch

Below are brief descriptions of the indebtedness listed in the table above.

Bond Issuance On June 22, 2015, the Issuer issued notes (the “2015 Notes”) under its S$750.0 million guaranteed euro medium term note programme (the “EMTN Programme”) with an aggregate principal amount of S$75.0 million. The 2015 Notes are unsecured and are guaranteed by the Guarantor. The 2015 Notes bear a fixed interest rate of 4.1% per annum payable semi-annually in arrear and will mature on June 22, 2020.

Under the terms of the 2015 Notes, the Guarantor is required to maintain the following:

(i) consolidated total assets shall not be less than S$1,250,000,000;

116 (ii) the ratio of consolidated total borrowings to consolidated total assets shall not exceed the Aggregate Leverage Limit applicable under the Property Funds Appendix;

(iii) the ratio of consolidated unsecured debt to consolidated unencumbered assets shall not exceed 0.67 times for the first two years from the issue date of the 2015 Notes and 0.50 times thereafter; and

(iv) the ratio of consolidated net property income to consolidated interest expense (rounded to the nearest two decimal places) for each test period of 12 months (on a rolling 12-month basis) ending on the last day of each quarter of each of the financial years of LMIR Trust shall not be less than 2.5 times.

S$350.0 million Facilities Agreement On August 22, 2016, HSBC Institutional Trust Services (Singapore) Limited, the then trustee of LMIR Trust, entered into a facilities agreement (the “2016 Facilities Agreement”) of up to S$350.0 million, consisting of two term loans of up to S$175.0 million each (“2016 Facility A” and “2016 Facility B”, respectively). The 2016 Facilities Agreement was novated from HSBC Institutional Trust Services (Singapore) Limited to the Guarantor on January 3, 2018. In relation to the 2016 Facilities Agreement, a charge and assignment over an interest reserve account was given by the Guarantor (as chargor) in favor of the security agent (as security trustee for itself and each of the secured parties therein). The facilities are arranged by BNP Paribas, acting through its Singapore Branch, CIMB Bank Berhad, Singapore Branch, JPMorgan Chase Bank, N.A., Singapore Branch, The Bank of East Asia, Limited, Singapore Branch and CTBC Bank Co., Ltd., Singapore. CIMB Bank Berhad, Singapore Branch acts as the facility agent and security agent.

The 2016 Facility A bears interest at SWAP rate plus a margin of 2.95% per annum and it matures on August 22, 2020. The 2016 Facility B bears interest at SWAP rate plus a margin of 3.15% per annum and it matures on August 22, 2021. Pursuant to these facilities, the Guarantor may not, subject to certain exceptions, without the prior written consent of the majority lenders, undertake, among others, the following activities: (i) the sale, lease, transfer or disposal of any asset; (ii) any amalgamation, demerger, merger or reconstruction; (iii) the making of any loans or giving of any guarantee other than in respect of the liabilities or obligations of any member of the Group; (iv) incur financial indebtedness secured by any of the properties of the Group; or (v) create or permit to subsist any security over any of its assets or any asset of the group. The Guarantor is also required to maintain the following:

(i) consolidated total assets shall not be less than S$1,250,000,000;

(ii) the ratio of net property income to consolidated interest expense for each test period of 12 months ending on the last day of each financial quarter of LMIR Trust shall not be less than 2.50:1;

(iii) the gearing ratio shall not exceed such aggregate leverage limit as may be permitted from time to time under the Property Funds Appendix at any time; and

(iv) the ratio of consolidated total unencumbered debt to consolidated total unencumbered assets for each test period of 12 months ending on the last day of each financial quarter of LMIR Trust shall not exceed: (a) 0.50:1 during the initial period ending on the earlier of (x) June 30, 2020 and (y) the date on which all the bonds under the EMTN Programme are refinanced, and (b) 0.67:1 after such initial period, provided that up to the end of such initial period no other indebtedness exists with a consolidated total unencumbered debt to consolidated total unencumbered asset ratio which is more favorable to other financiers.

S$135.0 million Facilities Agreement On November 9, 2018, the Guarantor entered into a facilities agreement (the “2018 Facilities Agreement”) of up to S$135.0 million, consisting of two term loans of up to S$67.5 million each (“2018 Facility A” and “2018 Facility B” respectively). In relation to the 2018 Facilities Agreement, a charge and assignment over an interest reserve account was given by the Guarantor (as chargor) in favor of the security agent (as security trustee for itself and each of the secured parties therein). The facilities are arranged by BNP Paribas, CIMB Bank Berhad, Singapore Branch, Credit Suisse AG, Singapore

117 Branch, Shanghai Pudong Development Bank Co., Ltd. Singapore Branch and The Bank of East Asia, Limited, Singapore Branch. CIMB Bank Berhad, Singapore Branch acts as the facility agent and security agent.

The 2018 Facility A bears interest at SWAP rate plus a margin of 3.05% per annum and it matures on November 9, 2022. The 2018 Facility B bears interest at SWAP rate plus a margin of 3.25% per annum and it matures on November 9, 2023. Pursuant to these facilities, the Guarantor may not, subject to certain exceptions, without the prior written consent of the majority lenders, undertake, among others, the following activities: (i) the sale, lease, transfer or disposal of any asset; (ii) any amalgamation, demerger, merger or reconstruction; (iii) the making of any loans or giving of any guarantee other than in respect of the liabilities or obligations of any member of the Group; (iv) incur financial indebtedness secured by a security over any of the assets of the Group or any financial indebtedness supported by credit support of any kind (other than (a) any letter of comfort for so long as such letter is not legally binding and (b) any guarantees issued or to be issued by the Guarantor in respect of unsecured borrowings of any of its subsidiaries); or (v) create or permit to subsist any security over any of its assets or any asset of the Group. The Guarantor is also required to maintain the following:

(i) consolidated total assets shall not be less than S$1,250,000,000;

(ii) the ratio of consolidated total borrowings to consolidated total assets shall not exceed 0.45:1;

(iii) the ratio of consolidated net property income to consolidated interest expense for each test period of 12 months ending on the last day of each financial quarter of LMIR Trust shall not be less than 2.50:1; and

(iv) the gearing ratio shall not exceed such maximum aggregate leverage limit as may be permitted from time to time under the Property Funds Appendix at any time.

Indebtedness with CIMB Bank Berhad, Labuan Offshore Branch On November 13, 2017, HSBC Institutional Trust Services (Singapore) Limited, the then trustee of LMIR Trust, entered into a facility letter with CIMB Bank Berhad, Singapore Branch and obtained an uncommitted revolving credit facility of S$80.0 million. The facility letter was novated from HSBC Institutional Trust Services (Singapore) Limited to the Guarantor on January 3, 2018. The facility letter was then novated from CIMB Bank Berhad, Singapore Branch to CIMB Bank Berhad, Labuan Offshore Branch on November 28, 2018. As of March 31, 2019, the outstanding amount under this facility was S$80.0 million, and it is due on August 26, 2019.

Pursuant to this facility, the Guarantor may not, subject to certain exceptions, without the prior written consent of CIMB Bank Berhad, Labuan Offshore Branch, undertake, among others, the following activities: (i) the sale, lease, transfer or disposal of any asset; (ii) incurring, assuming, guaranteeing or permitting to exist any indebtedness secured by any of the properties of the Guarantor and its subsidiaries; or (iii) directly or indirectly disposing of 50% or more of the properties of LMIR Trust and/ or its subsidiaries, save for those arising from ordinary course of business. The Guarantor is also required to comply with the leverage limit as prescribed under the Property Funds Appendix.

Indebtedness with BNP Paribas, acting through its Singapore Branch On March 1, 2018, the Guarantor entered into a facility letter with BNP Paribas, acting through its Singapore Branch and obtained an uncommitted revolving credit facility of S$40.0 million. As of March 31, 2019, the outstanding amount under this facility was S$40.0 million, and it is due on June 21, 2019.

Pursuant to this facility, the Guarantor may not, subject to certain exceptions, without the prior written consent of BNP Paribas, acting through its Singapore Branch, undertake, among others, the following activities: (i) the sale, transfer, lease out, lending or otherwise disposal of the Guarantor’s assets, its interest in the properties of the Group nor any shares or interest in the property holding companies that would result in a material adverse effect; (ii) the undertaking or permitting of the arrangement or reconstruction of the Guarantor’s present constitution or its directorship or any other scheme or compromise of arrangement affecting it; or (iii) create or permit to subsist any security over any of its assets or any assets of the Group. The Guarantor is also required to ensure that the gearing ratio shall not exceed such maximum aggregate leverage limit as may be permitted from time to time under the Property Funds Appendix at any time.

118 REGULATION

The ownership, acquisition, development and use of land in Indonesia are subject to regulation by the Government and regional and local authorities.

LAND OWNERSHIP AND ACQUISITION REGULATION Ownership of land in Indonesia is principally regulated under the Basic Agrarian Law (Law No. 5 of 1960). The Basic Agrarian Law and its implementing regulations (including Government Regulation No. 24 of 1997 (the “GR on Land Registration”) and Government Regulation No. 40 of 1996 on Right to Cultivate or “HGU title,” Right to Build or “HGB title,” Right to Use or “Hak Pakai”) provide various forms of land title and a registration system to protect legal ownership. The closest form of land title to an internationally recognized concept of “freehold” title is Hak Milik or “right of ownership.” Hak Milik title is available only to Indonesian individuals and only to land held by religious and social organizations and government bodies, so long as such land is utilized for religious and social purposes that are acknowledged and protected. Hak Milik title is not available to companies (whether Indonesian or foreign-owned) or foreign individuals. Hak Pakai is the only land title that is open for ownership by foreign individuals domiciled in Indonesia.

Both Indonesian individuals and legal entities established under the laws of Indonesia and domiciled in Indonesia may acquire HGB title. A holder of HGB title to a parcel of land has the right to build and own buildings on such parcel of land owned by another party and transfer and encumber all or part of such parcel of land. HGB title is granted for a maximum initial term of 30 years. Upon submission of an extension application to the relevant local land office subsequent to the expiration of the initial term, HGB title may be extended for an additional term not exceeding 20 years. Following expiration of the initial term and the additional term, an application for renewal of HGB title upon the same parcel of land may be granted to the former holder of the previous HGB title. The application for extension and renewal of HGB title must be made no later than two years prior to the expiration of the additional term. The land office has discretion to grant the various extensions.

The Basic Agrarian Law also recognizes a form of title based on Indonesian traditional law commonly referred to as Girik title (or Hak Milik Adat title or other name depending on the region). Girik title arises as a result of occupation or residence on land and payment of taxes and retributions with respect to the land, or by renouncement of right by the previous holder of land covered by Girik title. Girik title is an unregistered form of title but may be evidenced by certificates registered in the books of the relevant local sub-district office. Such certificates include a brief description of the land and the holder of Girik title and details with respect to the payment of taxes and retributions with respect to the land.

Under the Minister of Agrarian Affairs and Spatial Planning/Head of National Land Agency Decree No. 14 of 2018 dated August 2, 2018 on a Location Permit (as defined below), in order to acquire the land needed for a business activity, a company must obtain a location permit which grants the exclusive right to buy, clear and develop the particular parcel and also applies as a permit to transfer rights and to use the land for business purposes and/or activities (“Location Permit”). The procedures for obtaining a Location Permit are conducted through the Online Single Submission Institution. The term of a Location Permit is for a period of three years and extendable for another year upon approval from the relevant authorities on the condition that 50% of the total area being applied for has been purchased or obtained by the company. After obtaining the Location Permit with respect to a particular parcel of land, the holder can then begin with the land acquisition process. In order to acquire the land, the holder of the Location Permit is still required to negotiate with the individual landowners whose land is located within the area prescribed in the Location Permit. After the process of acquisition and the settlement of rights over the land with the previous land owners are completed, the holder of the Location Permit may apply for and be granted the relevant rights of land. Under the GR on Land Registration and the Regulation of the State Minister for Agrarian Affairs/Head of National Agency No. 9 of 1999 dated October 24, 1999, in order for a company to acquire HGB title to land purchased from a holder of Girik title, the company must make an application to the relevant land office together with a relinquishment of rights by the holder of Girik title. The company may then sell the land as developed or serviced plots.

On January 14, 2012, the Government enacted Law No. 2 of 2012 on Land Procurement for Public Interest, which is implemented by Presidential Regulation No. 71 of 2012 on the Implementation of

119 Land Procurement for Public Interest, as lastly amended by Presidential Regulation No. 148 of 2015 (collectively, the “Land Procurement Law”). The Land Procurement Law aims to ensure the smooth execution of development activities for public interest and is expected to provide a more effective legal basis for public interest land procurement. Under the Land Procurement Law, the term “public interest” is defined as the interest of the Indonesian people, nation and community as manifested through the Government and used optimally for the welfare of all the people of Indonesia.

Under the Land Procurement Law, the Central Government and/or the Regional Government are given the task to ensure the availability of land required for the public interest. The Land Procurement Law also clearly stipulates that a party who owns or otherwise controls land objects (the “Entitled Party”) is obliged to release its rights upon such land objects for the purpose of public interest land procurement, following the provision of fair and reasonable compensation or a legally binding court decision. After such land is released, it becomes the property of the central government, the regional government or a state-owned enterprise, as the case may be.

The Land Procurement Law specifically stipulates the development projects for public interest as follows:

(1) national defense and security;

(2) public roads, toll roads, tunnels, railways, train stations, and train operating facilities;

(3) water embankment, reservoirs, irrigation, drinking water channels, water disposal channels and sanitation and other water resource management construction;

(4) seaports, airports, and terminals;

(5) oil, gas, and geothermal infrastructure;

(6) power plants, power transmission, switch yards, power networks and distribution;

(7) government telecommunication and informatics networks;

(8) waste disposal and processing places;

(9) hospitals owned by the Central Government or Regional Government;

(10) public safety facilities;

(11) cemeteries owned by the Central Government or Regional Government;

(12) social facilities, public facilities and public open green space;

(13) wild life and culture preservation areas;

(14) office areas for the Central Government, Regional Government or sub-districts/villages;

(15) structuring of urban slum areas and/or land consolidation, and rented residential for low-income communities;

(16) education facilities or schools under the Central Government or Regional Government;

(17) sports facilities owned by Central Government or Regional Government; and

(18) public markets and public car parks.

The Land Procurement Law introduces clear and more expedited steps for the procurement of land for public interest. Initially, a government entity that plans to procure land for public interest must have a public consultation with the Entitled Party on the proposed development plan until consensus is reached. In the event that no consensus can be reached, the Governor will set up a team to examine the reasons for the Entitled Party’s objections. Based on this, the Governor will decide whether the

120 targeted land can be approved to be procured for public interest. To the extent that the Entitled Party still has objections, it may file a legal claim to the State Administrative Court, whose decision can thereafter be subject to final appeal at the Supreme Court. If by virtue of a legally binding court decision, the land has been approved to be procured for public interest, then the National Land Agency shall appoint an independent appraisal team to determine the compensation value to be paid to the Entitled Party. To challenge the compensation value, if required, the Entitled Party may file a legal claim to a District Court and if required, the decision of the District Court can be filed for final appeal at the Supreme Court.

STRATA TITLE REGULATIONS On November 10, 2011, Law No. 20 of 2011 on Strata Title Housing (“Law No. 20/2011”) was enacted. This law was issued to replace the previous Law No. 16 of 1985 on Strata Title Housing.

Law No. 20/2011 classifies several types of Strata Title Housing, namely (i) common Strata Title Housing (rumah susun umum) provided for low income persons, (ii) special Strata Title Housing (rumah susun khusus) provided for special needs, (iii) state Strata Title Housing (rumah susun negara) which are owned and provided by the state for residential purposes for state officials, and (iv) commercial Strata Title Housing (rumah susun komersial) for commercial purposes. On October 30, 2013, the Minister of Public Housing issued Minister of Public Housing Regulation No. 7 of 2013 on the implementation of Housing and Settlement Areas with Balanced Housing (“Regulation No. 7 of 2013”) which amended the Minister of Public Housing Regulation No. 10 of 2012 as the implementing regulation of Law No. 20/2011.

The Government is responsible for the development of common Strata Title Housing, special Strata Title Housing and state Strata Title Housing. Any party developing common Strata Title Housing is entitled to receive aid from the Government. The development of common Strata Title Housing and special Strata Title Housing may be conducted by a non-profit institution or business entity. The development of commercial Strata Title Housing may be conducted by any party. Under Law No. 20/2011, as implemented by Regulation No. 7 of 2013, the construction of balanced housing is implemented proportionally among luxury housing, medium housing, and decent housing. In terms of luxury housing construction, each developer is required to construct three times the number of medium and decent houses than the total number of luxury houses to be constructed. In terms of medium housing construction, each developer is required to construct one and a half times the number of decent houses than the total number of medium houses to be constructed. If the developer cannot construct decent housing under these terms, the developer may construct common Strata Title Housing in an amount equivalent to the obligated price of decent housing in the same area. A developer of commercial Strata Title Housing must provide common Strata Title Housing with a floor area of at least 20% of the total floor area of its commercial Strata Title Housing. Such common housing may be located outside the premises of the commercial Strata Title Housing, but within the same regency or city, except in the Jakarta area. Under Regulation No. 7 of 2013, such public Strata Title Housing may be located in a different city, provided it is still within the Jakarta (DKI) special province. Violation of this obligation makes the developer subject to imprisonment of up to two years or a fine of up to Rp20 billion.

Strata Title Housing may only be constructed on a parcel of land where the developer has Hak Milik title to the land, HGB title to the land or a right to use the land if such land is state-owned, or HGB title or right to use over right to manage land (Hak Pakai diatas tanah Hak Pengelolaan). In addition, common Strata Title Housing and/or special Strata Title Housing can be constructed by utilizing the state or region-owned land (by way of lease or cooperation for the utilization) or utilization of wakaf lands (by way of lease or cooperation for the utilization pursuant to ikrar wakaf). In December 2015, the Government enacted Government Regulation No. 103 of 2015 on Ownership of House or Residential for Foreigners Domiciled in Indonesia (“GR No. 103/2015”). In line with the restriction of land title that may be owned by foreign individuals, pursuant to GR No. 103/2015, only Strata Title Housing which is constructed over right to use (Hak Pakai) either in the form of single housing or multi-story building over state-owned land can be used by foreign individuals holding stay permits.

The developer of Strata Title Housing is required to divide the building into private property, common area, common property and common land. Such division is required to be elaborated in a clear picture design and description. In order to preserve the common interest among the owners and/or residents

121 regarding the use of common areas, land and property, the owners or residents must establish an Owners and Residents Association (Perhimpunan Pemilik dan Penghuni). Each of the owners of strata lots in a Strata Title Building has a proprietary interest, collectively, in accordance with its undivided proportionate interest, in the common area, common land and common property of the relevant Strata Title Building. However subject to the articles of association of the Owners and Residents Association, certain matters may require prior consent of the Owners and Residents Association. Further, certain matters such as the (i) formation of organizational structure, (ii) preparation of the articles of association and bylaws and (iii) work program of the management of the Owners and Residents Associations is made based on the deliberation of the strata lots owners and if such deliberation does not reach a consensus, voting has to take place. Nomination of the Owners and Residents Association’s management and supervisor is also based on the majority votes of the strata lots owners, whereas pursuant to the Regulation of the Minister of Public Work and Housing No.23/PRT/M/2018 concerning Owners and Residents Association, one owner is eligible for one vote, despite having ownership of several strata lots.

The requirements to develop Strata Title Housing include administrative, technical and ecological requirements. The administrative requirements include (i) the status of the relevant land and (ii) building construction permit (Izin Mendirikan Bagunan or “IMB”). Technical requirements include (i) the building landscape (location requirement, intensity and building architecture) and (ii) the building’s endurance (including safety, health, comfort and efficiency requirements). Ecological requirements include the balance and suitability of the environment. Further, the developer is required to submit the application to obtain a Certificate of Worthy-Function (Sertifikat Laik Fungsi or “SLF”) to the relevant regent/major after the completion of the entire or part of the Strata Title Housing, save for Jakarta, where the application to obtain SLF is required to be submitted to the Governor.

Foreign investment for the construction of Strata Title Housing is permitted under Law No. 20/2011 provided that prevailing regulations in the foreign investment sector are complied with.

Pursuant to this law, the developer may market the Strata Title Housing before the commencement of construction. However, prior to marketing the property, the developer is required to satisfy the following criteria: (i) the certainty of the space allotment; (ii) the certainty of the right over the land; (iii) the certainty of the status of the possession over the Strata Title Housing; (iv) holding a construction license; and (v) guarantee over the construction from the relevant surety institution. The developer may enter into a preliminary sale and purchase agreement with purchasers before a notary prior to completion of the Strata Title Housing. The preliminary sale and purchase agreement can only be entered into if the ownership of the land is clear, the building construction permit has been obtained, and in the event when the infrastructure, facilities and public utilities are available, the construction progress of the respective Strata Title Housing have reached at least 20% of the total construction and the object of the agreement is clear.

This law provides that the common Strata Title Housing may be owned or leased, the special Strata Title Housing may only be possessed by borrow-use or lease, state Strata Title Housing may only be possessed by borrow-use, lease or leasing, while commercial Strata Title Housing can be owned or leased. The title of ownership of a unit in Strata Title Housing constructed over the land with ownership right, right to build or right to use over state land, right to build or right to use over right to manage land is the Ownership Certificate for a Unit in Strata Title Housing (“SHM Sarusun”). The SHM Sarusun can be encumbered to secure loan repayments. The title of ownership for a unit in Strata Title Housing constructed over state/regional owned lands or a wakaf land is a Building Ownership Certificate for a Unit in Strata Title Housing (“SKBG Sarusun”). The SKBG Sarusun can be encumbered by fiduciary security to secure loan repayments.

Furthermore, based on Minister of Public Housing Regulation No. 21/PRT/M/2016 as amended by Regulation No. 26/PRT/M/2016 regarding the Convenience and/or Support of Housing Procurement for Low Income People, people with low income are provided with the credit facility to procure houses, one of which is the strata title house.

BUILD OPERATE TRANSFER REGULATIONS A BOT Scheme is a model cooperation agreement between the landowner (“BOT Grantor”) and the capital owner or investor (“BOT Grantee”) for the financing of a development project, whereby the BOT

122 Grantor surrenders physical control of the land, including the right to build or manage such land, to the BOT Grantee. The BOT Grantee will then have to utilize and manage the buildings, along with its facilities, on such land and will receive the benefit, or economical advantage, as a form of investment return for a certain period of time. The BOT Grantee shall return the land and building, including its facilities, to the landowner at the end of the agreed upon period. The period of a BOT agreement under the relevant regulations shall be a maximum of 30 years from the date of the BOT Agreement without extension. An agreement using the BOT form is usually initiated when there is an insufficiency or unavailability of funds or financing to build facilities or infrastructures. The terms and conditions of a BOT agreement fall under Government Regulation No. 27 of 2014 regarding Utilization of State or Regional Owned Assets (“Government Regulation 27/2014”), and Articles 1338 and 1320 of the Indonesian Civil Code, which provide that all forms of BOT agreements, if the parties so choose, shall be applicable as a law to the extent the agreement is lawful.

BOT schemes in Indonesia are regulated under the Government Regulation 27/2014, as further implemented by Minister of Finance Regulation No. 78/PMK.06/2014 Year 2014 regarding the Procedures of Utilization of State Owned Asset (“MOF Regulation 78/2014”) for state-owned assets, and Minister of Home Affair Regulation No. 19 of 2016, dated April 6, 2016, on Guidance of Utilization of Regional Owned Assets (“MOH Regulation 19/2016”) for regional-owned asset. Under the above- mentioned regulations, a BOT is defined as the utilization of state or regional land assets by another party, whereby the other party constructs a building and/or infrastructure, including facilities, to be utilized for a certain agreed upon period of time. Further, the building and/or infrastructure, together with its facilities, will be returned upon the expiry of the agreed upon period.

The definition of BOT provides that a cooperation agreement which utilizes the BOT model is carried out with respect to property, particularly property in the form of land owned by central or regional governments. As such, land falls under the classification of state or regional-owned property, hence the mechanism for the implementation of such BOT cooperation shall be subject to the applicable government regulations or policies related to the utilization of state or regional-owned property. A state or regional-owned asset is defined as: (i) property purchased and/or obtained at the expense of the State or Regional Revenues and Expenditures Budget (Anggaran Pendapatan dan Belanja Negara or Anggaran Pendapatan dan Belanja Daerah) or (ii) property derived from other legal acquisition, such as property obtained from the grant and/or donation, obtained from the execution of agreement/ contract, obtained in accordance with the law, obtained based on a court decision with binding legal force or asset recovery as a result of a divestment of capital participation by the government. The construction building permit in relation to the model BOT cooperation agreement shall be in the name of the Government of the Republic of Indonesia for state-owned assets or Regional Government for regional-owned assets.

With respect to the building and operation of an object under a model BOT cooperation agreement, the BOT Grantor may appoint a partner as an investor (“BOT Partner Investor”) of the project through a tender process. The BOT Partner Investor’s responsibilities include the following:

(a) pay the contribution to state or regional general cash (kas umum) annually, in which the nominal amount is determined based on the calculations of a team formed by authorized officials;

(b) maintain the BOT object; and

(c) comply with the prohibitions from guaranteeing, pledging or transferring the land of the BOT object and ensure that the BOT object is being utilized directly for the duties and functions of the central or regional government, and/or the building including the facilities built through the BOT.

Further, pursuant to MOF Regulation 78/2014 and MOH Regulation 19/2016, the BOT Partner Investor shall be in the form of a: (i) state-owned business enterprise; (ii) regional-owned business enterprise; (iii) private (except individual); and/or (iv) other legal entities. In the event the BOT will be operated in the form of a consortium, the BOT Partner Investor shall establish an Indonesian legal entity as the party who acts for and on behalf of the BOT Partner Investor in the BOT agreement.

During the BOT operational term, a BOT Partner Investor may make changes and/or additions to the BOT object, including its facilities, as implemented through an amendment of the BOT agreement, as

123 long as such change and/or addition is in accordance with the duties and functions of the applicable regional government and/or for national programs in accordance with the provisions of the applicable laws and regulations. In addition, a minimum of 10% of the BOT object, including its facilities, shall be used directly by an authorized official for the implementation of duties and functions of the central or regional government.

Each of the BOT Partner Investor or the BOT Grantor who breach the provisions as set out in the model BOT cooperation agreement are subject to sanctions as set out in such agreement.

REGULATIONS ON THE DEVELOPMENT AND USE OF LAND Following the acquisition of land and prior to construction, a developer must obtain an environmental impact analysis for the proposed project. Based on State Minister of Environment Regulation No. 5 of 2012 on Type of Business Plan and/or Activity which requires an Environmental Impact Analysis (Analisis Mengenai Dampak Lingkungan Hidup or “AMDAL”), business activity within residential properties in (i) metropolitan cities occupying 25 hectares or more of land; (ii) large scale cities occupying 50 hectares or more of land; (iii) medium and small scale cities occupying 100 hectares or more of land; as well as construction of office projects, education, sports, arts or religious buildings or shopping malls with an area of five hectares or more of land and buildings of 10,000 square meters or more must obtain AMDAL. Thereafter, the developer (or contractor responsible for construction) must obtain an IMB from the regional government. An IMB can only be granted if the purpose of the development is in line with the zoning plan as contemplated in the respective regional spatial planning. After the IMB is received, development and construction may commence, including clearing and preparing land and constructing infrastructure such as drainage systems, roads, landscaping, street lighting, electricity and telephone cables. If construction is conducted in various phases, an IMB must be obtained for each phase of construction.

The development of residential properties must also comply with regulatory requirements relating to the provision of social facilities benefiting the community, including schools, sports facilities, places of worship, markets, parks and playgrounds.

On January 22, 2010, the Government issued GR 11/2010 on the Administration and Utilization of Unused Land (Penertiban dan Pendayagunaan Tanah Terlantar) to replace Government Regulation No. 36 of 1998 (“GR36/1998”). Under GR 11/2010, the Government may revoke the Hak Milik, HGU, HGB, Hak Pakai and Hak Pengelolaan title and reclaim land without compensation in respect of land which has not been utilized, or is not being utilized in accordance with its conditions or characteristics and the purpose of the rights over the relevant land or the basis of possession over the land. However, unintentionally unused land registered as Hak Milik or HGB, which is privately owned or land authorized directly or indirectly and constitutes state-owned assets, are exempted from GR 11/2010. Before any land is declared unused, the Head of Regional Land Office will prepare an indicative list of unused land, which will be examined by a committee which is set up by the Head of Regional Land Office. Such investigation will commence (i) three years after the issuance of the respective land certificates; or (ii) on the expiry date of the document of the basis of repossession over the land. In the event that such examination results in a conclusion that the land is unused, the land office will issue three warning letters, each having a one-month period in between, and the owner of the land will be given a certain period of time to rectify the situation. Failure to rectify will lead to the Head of Regional Land Office declaring the land as unused land, terminating the land rights and the legal relations of the owner or controller with such land, and declaring that such area of land is under the direct control of the Government. As GR 11/2010 does not provide for any period of time to which it applies, GR 11/2010 is applicable to land acquired prior to its enactment.

REGULATIONS OF LAND AS SECURITY FOR FINANCING Article 1131 of the Indonesian Civil Code provides that all assets of a debtor, both immovable and movable and including land, which are already, or will be, in existence, shall become general security for the repayment of obligations of the debtor. Article 1133 states that preferential rights are given to (i) the holder of a hypothec and (ii) the holder of a pledge. The holder of a hypothec and/or a pledge take priority subject to legal costs incurred in the enforcement of the creditor’s rights.

Law No. 4 of 1996 on Security Right on Land and Land Related Objects provides that a company may encumber its HGB title to land to secure obligations to creditors. A security right (Hak Tanggungan)

124 may be granted over “immovable” property, including land, buildings erected therein and fixtures, which provides preferential rights over the land and property to the relevant creditor and is similar to a common law mortgage. Under Indonesian law, a mortgage (i) gives a preferential right to its holder; (ii) attaches to the secured object, regardless of the identity of the possessor of the object; and (iii) fulfills the principles of specialty and publicity in order to bind third parties and provides legal enforceability to the holder of the mortgage. The procedure for creation of a security right (Hak Tanggungan) over land requires firstly, the execution of an authenticated Deed of Grant of Security Right (Akta Pemberian Hak Tanggungan) (made in the Indonesian language) before a Land Deed Official (Pejabat Pembuat Akta Tanah or “PPAT”) and secondly, registration of the Deed of Grant of Security Right at the District Land Registration Office (“Land Office”) where the land is located. The security right (Hak Tanggungan) will only be effective upon the registration of the security rights in the land book by the Land Office. A Certificate of Security Rights (Sertipikat Hak Tanggungan) will be issued by the Land Office reflecting the lender as the secured party over the land. Security rights can be granted in ranks, where the first rank holder is the highest security rights holder.

SHOPPING CENTER REGULATIONS On December 27, 2007, the President of the Republic of Indonesia enacted the Presidential Regulation No. 112 of 2007 on the Organization and Development of Traditional Market, Shopping Center and Modern Store (“PR 112/2007”) that regulates among others, the shopping center industry in Indonesia. A shopping center is defined as a particular area comprising one or more buildings constructed vertically or horizontally, to be sold or leased to business actor(s) or managed independently for trading of goods. To engage in the business, the owner of the shopping center must acquire the Shopping Center Business License (Izin Usaha Pusat Perbelanjaan) that will be issued by the mayor or regent where the building is located, or by the Governor of Jakarta if the building is located in Jakarta area as further regulated under Governor of Jakarta Regulation No. 2 of 2018 on Markets.

PR 112/2007 requires (i) the shopping center’s location to be in line with the city’s spatial plan; (ii) an analysis and study of the community’s social and economy conditions and the distance between the existing hypermarket and traditional market, before deciding the shopping center’s location; (iii) availability of one four-wheeled vehicle parking space for every 100 square meters area in the shopping center; (iv) availability of facilities that promote a clean, healthy, and safe shopping center and convenient public area; and (v) availability of space for small businesses at affordable fees, or which can be used by small businesses through a partnership scheme with the owner of the shopping center.

On December 12, 2013, the Minister of Trade of Republic of Indonesia issued the implementing regulations of PR112/2007 — the Minister of Trade Regulation No.70/M-DAG/PER/12/2013 on the Guidelines of Organization and Development of Traditional Market, Shopping Center and Modern Store, as amended by Minister of Trade Regulation No. 56/M-DAG/PER/9/2014 (“MoT Decree No. 70”) which revokes and replaces the Minister of Trade Regulation No. 53/M-DAG/PER/12/2008 on the Guidelines of Organization and Development of Traditional Market, Shopping Center and Modern Store. The MOT Decree No. 70 requires the holder of the Shopping Center Business License to submit a report to the Trade Service Office (Kantor Dinas Perdagangan) every semester describing (i) the total outlets, (ii) the total revenue of all outlets, (iii) the total number of micro, small and medium enterprises partners along with the partnership scheme, and (iv) the total number of employees hired.

Failure to comply with the requirements under PR 112/2007 and MOT Decree No. 70 could result in administrative sanctions in the form of a warning letter, business license suspension, business license revocation and the closing down of business locations. These sanctions will be imposed in stages by the relevant authorities.

BUILDING WORTHINESS REGULATIONS The construction and utilization of buildings in Indonesia is governed under Law No. 28 of 2002 on Buildings, enacted on December 16, 2002 (“Law 28/2002”), and its implementing regulation, Government Regulation No. 36 of 2005 on Buildings (“GR 36/2005”). Pursuant to Law 28/2002 and GR 36/2005, the developer or contractor of a building must obtain a Building Construction Permit and a Building Worthiness Certificate (Sertifikat Laik Fungsi) in connection with the building to be developed.

Pursuant to GR 36/2005, an applicant for a Building Construction Permit must submit (i) land ownership documents; (ii) details regarding the building’s owner; (iii) the building’s technical plan; and (iv) an environmental analysis report, to the extent that the building affects the surrounding

125 environment. With respect to buildings that affect the surrounding environment, a Building Construction Permit will be granted only if a panel of building experts recommend such approval based on technical requirements, and once public opinion has been considered. Furthermore, a Building Construction Permit will be granted only if the purpose of the development is aligned with the applicable zoning plan. The grant of a Building Construction Permit must be approved by the mayor or governor, as applicable, of the area where the building is located.

Further, the relevant developer is required to obtain a Building Worthiness Certificate with respect to each building. Under GR 36/2005, building worthiness is defined as the condition where a building has complied with administrative and technical requirements in accordance with the building’s stipulated function.

Building Worthiness Certificates are issued for duration of twenty years for houses and five years for other buildings by the relevant regional government; provided, that such houses or other buildings have been completed and comply with building worthiness requirements according to building worthiness assessment. Such certificates are issued based on the owner’s application for all or part of the building in accordance with the building worthiness assessment. A building may commence operations following the grant of a Building Worthiness Certificate. In order to be granted a Building Worthiness Certificate, a building must pass an assessment on the function of the building, building layout requirements and safety, health, comfort and convenience requirements. Failure to comply with the requirements under GR 36/2005 could result in administrative sanctions in the form of warning letters, suspension and revocation of the building construction permit and/or Building Worthiness Certificate.

ENVIRONMENTAL REGULATIONS Environmental protection in Indonesia is governed by various laws, regulations, and decrees, including Law No. 32 of 2009 on Environmental Protection and Management (“Law 32/2009”), which was enacted on October 3, 2009 to replace Law No. 23 of 1997 Regarding Environmental Management (“Law 23/1997”). Law 32/2009 stipulates that all business sectors are required to obtain an AMDAL, or in the event that a company does not require an AMDAL, an Environment Management Effort and Environment Monitoring Effort (Upaya Pengelolaan Lingkungan Hidup dan Upaya Pemantauan Lingkungan Hidup or “UKL & UPL”). Businesses must also obtain an Environmental License, which is issued by the State Minister of Environment, Governor, or Mayor/Regent (in accordance with their respective authorities). Such Environmental License are issued based on an environmental feasibility decision (keputusan kelayakan lingkungan hidup) or UKL and UPL recommendation.

Law 32/2009 further stipulates that within two years after its enactment date, all businesses that have obtained business licenses but do not yet have an AMDAL document or UKL/UPL, are obligated to either complete an environmental audit, if they require an AMDAL, or to have an environment management document, if they require a UKL and UPL. Furthermore, Law 32/2009 requires businesses to integrate their current environmental permits (AMDAL or UKL/UPL documents) issued by the minister, governor or major, into an Environmental License by the first anniversary of the enactment date. The Environmental License is a prerequisite for a company to obtain the relevant operating license. Businesses that fail to comply with the Environmental License requirements are subject to certain sanctions, which may be in the form of administrative sanction, including (i) a written warning; (ii) Government coercion; (iii) suspension of the Environmental License; or (iv) revocation of the Environmental License, imprisonment for a period of one to three years, and fines ranging from Rp1 billion to Rp3 billion.

Further, in February 2012, the Government issued Government Regulation No. 27 of 2012 on Environmental License (“GR 27/2012”) as one of the implementing regulations of Law 32/2009. GR 27/2012 became effective on February 23, 2012. According to GR 27/2012, an Environmental License will be issued by the State Minister of Environment, governor or mayor/regent (in accordance with their respective authorities) following the publication of the application for an environmental license submitted by a company and will be issued simultaneously with the issuance of the environmental feasibility decision (keputusan kelayakan lingkungan hidup) or UKL and UPL recommendations.

GR 27/2012 stipulates that any environmental document which has been approved prior to February 23, 2012, shall be declared as a valid document and deemed to be an Environmental

126 License. GR 27/2012 requires an Environmental License holder to submit a periodical report showing the compliance to the holder’s requirements and obligations as set forth in its Environmental License. This report should be submitted every six months to the Minister of Environment/Governor/Mayor of the relevant region.

Law 32/2009 also requires licensing of all waste disposals, storage and handling activities. Waste disposal may only be conducted in specified locations determined by the State Minister of Environment. Waste water disposal is further regulated by Government Regulation No. 82 of 2001 on Water Quality Management and Water Pollution Control. This regulation requires responsible parties to submit reports regarding their disposal of waste water detailing their compliance with the relevant regulations. Such reports are to be submitted to the relevant mayor or regent, with a copy provided to the State Minister of Environment, on a quarterly basis.

On October 17, 2014, the Indonesian Government issued Government Regulation No.101 of 2014 on Management of Toxic and Hazardous Waste Substances (“GR 101/2014”). In general, GR 101/2014 regulates the management and disposal procedures for toxic and hazardous waste substances (“hazardous waste”), covering:

(a) the method of identifying, reducing, storing, collecting, transporting, utilizing, processing, and hoarding hazardous wastes;

(b) the procedures for dumping hazardous wastes into the open sea or land;

(c) risk mitigation and emergency responses to address environmental pollution caused by hazardous waste; and

(d) sanctions for non-compliance.

To store hazardous waste, businesses must hold an Environmental License and secure a permit from the regent/mayor where the storage facility is located. A permit to store hazardous waste may be cancelled for any of the following reasons:

(a) permit expiry;

(b) revocation by issuer (regent/mayor);

(c) the holder (company) of the permit is dissolved; or

(d) the Environment License of the permit holder is revoked.

Every business that produces hazardous waste must process their waste either by themselves or assign a third party to do so. Three types of processing methods are provided for under GR 101/2014, namely: 1) thermal; 2) stabilization and solidification; and/or 3) other methods in accordance with technological developments. Businesses or appointed third parties must secure a waste processing license from the Minister of Environmental Affairs. Applications for this license may only be submitted if the business or appointed third party has obtained the following documents:

(a) Environmental license; and

(b) Approval to perform hazardous waste processing test (for thermal processing or other methods).

Government Regulation No. 18 of 1999, as amended by Government Regulation No. 85 of 1999 which was revoked by GR 101/2014, on the Management of Hazardous and Toxic Waste Materials and Government Regulation No. 74 of 2001 on the Management of Hazardous or Toxic Materials relating to the management of certain materials and waste must also be observed.

Flammable, poisonous or infectious waste is subject to these regulations unless the company can scientifically prove that it falls outside the categories set forth in such regulation. These regulations require a company that uses such materials or produces waste to obtain a license from the State Minister of Environment or other environmental governmental institutions in order to store, collect, utilize process and/or stockpile such waste. If a company violates the regulations relating to such waste, this license may be revoked and the company may be required to cease operations.

127 MONEY LAUNDERING REGULATIONS On October 22, 2010, the Government enacted Law No. 8 of 2010 on the Prevention and Eradication of Money Laundering Criminal Crime (“Law No. 8/2010”). This law regulates among others, the types of transactions which are required to be reported to the Indonesian Financial Transaction Reports and Analysis Centre (Pusat Pelaporan dan Analisa Transaksi Keuangan or “PPATK”) and the entities responsible to report such transactions. Under this law, a property developer (the “Reporting Party”) is also one of the entities that are responsible to submit such report. Under Law No. 8/2010, the Reporting Party is required to report to PPATK on any suspicious financial transaction, and any transaction entered into with its customers having a minimum amount of Rp500 million, or an equivalent value in other currencies, and/or any financial transaction involving the transfer of funds from and to other countries, no later than 14 business days after the transaction is conducted (the “Reporting Obligation”). Failure to submit the report may subject the Reporting Party to administrative sanction(s) which will be imposed by the Supervisory and Regulatory Body (Lembaga Pengawas dan Pengatur) in the form of a warning letter, a public announcement on the action or sanction and/or an administrative penalty. Law No. 8/2010 also provides protection to the Reporting Party and/or the witness with regard to its report and/or testimony such that the Reporting Party and/or the witness shall be free from any civil or criminal claim, unless the Reporting Party provides a false testimony while under oath. Further, Law No. 8/2010 stipulates that as long as the Supervisory and Regulatory Body has not been established, the PPATK is authorized to give the administrative sanctions.

To implement the Reporting Obligation, PPATK has issued Regulation of PPATK Head No. PER-12/1.02/PPATK/09/11 dated September 19, 2011 regarding Transaction Reporting Procedures for Providers of Goods and/or Other Services (“PPATK Regulation 12/2011”) and Regulation of PPATK Head No. PER-10/1.02.1/PPATK/09/11TAHUN2011, dated September 19, 2011 regarding the implementation of Know Your Service Consumers Principles for Providers of Goods and/or Other Services (“PPATK Regulation 10/2011”) which particularly apply to providers of goods and/or services, among others, including developer companies. Under PPATK Regulation 10/2011, developer companies that carry out transactions with a minimum value of Rp100 million shall implement the Know Your Service Consumers principles in its business activities. Furthermore, pursuant to PPATK Regulation 12/2011, transactions with a minimum value of Rp500 million or equivalent in foreign currency shall be reported to PPATK and failure to so report shall be penalized with administrative sanction, which may be in the form of a (i) warning, (ii) written notice, (iii) public announcement of the action and/or the sanction, and/or (iv) fine.

On June 23, 2015, the Government issued Government Regulation No. 43 of 2015 on Reporting Parties in Preventing and Eradicating Criminal Act of Money Laundering (“GR 43/2015”). GR 43/2015 was issued as the implementing regulation of Law 8/2010, which added four categories of financial services providers that constitute “reporting parties”: (i) venture capital companies, (ii) infrastructure financing companies, (iii) micro financing companies, and (iv) export financing companies.

128 DESCRIPTION OF THE NOTES

For purposes of this “Description of the Notes,” the term “Issuer” refers only to LMIRT Capital Pte. Ltd., a private company incorporated with limited liability under the laws of Singapore, and any successor obligor of the Notes, and the term “Guarantor” refers only to Perpetual (Asia) Limited (in its capacity as trustee of Lippo Malls Indonesia Retail Trust or any successor thereto as appointed pursuant to the terms of the LMIRT Trust Deed (as defined herein)), and any other successor obligor of the Guarantee. The Guarantor’s guarantee of the Notes is referred to as the “Guarantee.”

The Notes are to be issued under an indenture (the “Indenture”), to be dated as of the Original Issue Date, among the Issuer, the Guarantor and Citicorp International Limited as trustee (the “Trustee”). The registered Holder will be treated as the owner of the Notes for all purposes. Only registered Holders will have rights under the Indenture.

The following is a summary of certain provisions of the Indenture, the Notes and the Guarantee. This summary does not purport to be complete and is qualified in its entirety by reference to all of the provisions of the Indenture, the Notes and the Guarantee. It does not restate those agreements in their entirety. Whenever particular sections or defined terms of the Indenture not otherwise defined herein are referred to, such sections or defined terms are incorporated herein by reference. Copies of the Indenture, upon request and on proof of Holders ownership, will be available for inspection on or after the Original Issue Date during normal office hours at the corporate trust office of the Trustee at Citicorp International Limited, 39/F, Champion Tower, 3 Garden Road, Central, Hong Kong.

The Notes are being sold outside the United States in accordance with Regulation S under the Securities Act. See “Transfer Restrictions.”

Brief Description of the Notes The Notes will:

Š be general obligations of the Issuer;

Š be senior in right of payment to any existing and future obligations of the Issuer expressly subordinated in right of payment to the Notes;

Š rank at least pari passu in right of payment with all unsecured, unsubordinated Indebtedness of the Issuer (subject to any priority rights of such unsecured, unsubordinated Indebtedness pursuant to applicable law);

Š be guaranteed by the Guarantor on an unsubordinated basis, subject to the limitations described below under the caption “— The Guarantee” and in “Risk Factors — Risks Relating to the Notes and the Guarantee”; and

Š be effectively subordinated to the secured obligations of the Issuer and the Guarantor, to the extent of the value of the assets serving as security therefor.

The Issuer will initially issue US$250,000,000 in aggregate principal amount of the Notes, which will mature on June 19, 2024 unless earlier redeemed pursuant to the terms thereof and the Indenture. Subject to the covenants described below under “— Certain Covenants” and applicable law, the Issuer may issue additional Notes (“Additional Notes”) under the Indenture. The Notes offered hereby and any Additional Notes would be treated as a single class for all purposes under the Indenture.

Interest The Notes will bear interest at 7.25% per annum from the Original Issue Date or, if interest has already been paid, from the most recent interest payment date to which interest has been paid or duly provided for, payable semi-annually in arrears on June 19 and December 19 of each year (each a “Notes Interest Payment Date”) commencing on December 19, 2019. Interest on the Notes will be paid to Holders of record at the close of business on the June 4 or December 4 immediately preceding each Notes Interest Payment Date (each a “Notes Record Date”), notwithstanding any transfer, exchange or cancellation thereof after a Notes Record Date and prior to the immediately following Notes Interest Payment Date. Interest on the Notes will be calculated on the basis of a 360-day year comprised of twelve 30-day months.

129 Notwithstanding the foregoing, so long as the Global Note is held on behalf of Euroclear, Clearstream or any other clearing system, each payment in respect of the Global Note will be made to the person shown as the Holder in the Register (as defined herein) at the close of business of the relevant clearing system on the Clearing System Business Day before the due date for such payments, where “Clearing System Business Day” means a weekday (Monday to Friday, inclusive) except December 25 and January 1.

Payment of Notes Except as described under “— Optional Redemption” and “— Redemption for Taxation Reasons” and as otherwise provided in the Indenture, the Notes may not be redeemed prior to maturity.

In any case in which the date of the payment of principal of, premium, if any, or interest on the Notes (including any payment to be made on any date fixed for redemption or purchase of any Note) is not a Business Day in the relevant place of payment, then payment of principal, premium, if any, or interest need not be made in such place on such date but may be made on the next succeeding Business Day in such place. Any payment made on such Business Day will have the same force and effect as if made on the date on which such payment is due, and no interest on the Notes will accrue for the period after such date.

The Notes will be issued only in fully registered form, without coupons, in minimum denominations of US$200,000 of principal amount and integral multiples of US$1,000 in excess thereof. See “— Book- Entry; Delivery and Form.” No service charge will be made for any registration of transfer or exchange of Notes, but the Issuer may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith.

All payments on the Notes will be made in U.S. dollars in immediately available funds by the Issuer at the office or agency of the Issuer maintained for that purpose in London (which initially will be the specified principal office of Citibank, N.A., London Branch (the “Principal Paying Agent”), currently located at c/o Citibank, N.A., Dublin Branch, 1 North Wall Quay, Dublin, Ireland), and the Notes may be presented for registration of transfer or exchange at such office or agency; provided that, at the option of the Issuer, payment of interest may be made by wire transfer.

Interest payable on the Notes held through Euroclear or Clearstream will be available to Euroclear or Clearstream participants on the Business Day following payment thereof.

Restricted Subsidiaries As of the Original Issue Date, each Subsidiary and Joint Operation of the Guarantor will be a Restricted Subsidiary. Unless otherwise designated as Unrestricted Subsidiaries in accordance with the Indenture, all of the Subsidiaries and Joint Operations of the Guarantor will be Restricted Subsidiaries under the Indenture. After the Original Issue Date, the Guarantor may designate certain Restricted Subsidiaries (other than the Issuer) as Unrestricted Subsidiaries and may designate Unrestricted Subsidiaries as Restricted Subsidiaries, as provided under the caption “— Certain Covenants — Designation of Restricted and Unrestricted Subsidiaries.” Unrestricted Subsidiaries will not be subject to the restrictive covenants in the Indenture.

The Guarantee The Guarantee of the Guarantor will:

Š be a general obligation of the Guarantor;

Š be senior in right of payment to all future obligations of the Guarantor expressly subordinated in right of payment to the Guarantee;

Š rank at least pari passu in right of payment with all other unsecured, unsubordinated Indebtedness of the Guarantor (subject to any priority rights of such unsecured, unsubordinated Indebtedness pursuant to applicable law);

Š be effectively subordinated to secured obligations of the Guarantor, to the extent of the value of the assets serving as security therefor; and

Š be effectively subordinated to all future obligations of any Subsidiary of the Guarantor.

130 Under the Indenture, the Guarantor will guarantee the due and punctual payment of the principal of, premium (if any) and interest on, and all other amounts payable under, the Notes and the Indenture. The Guarantor will (1) agree that its obligations under the Guarantee will be enforceable irrespective of any invalidity, irregularity or unenforceability of the Notes or the Indenture and (2) waive its right to require the Trustee to pursue or exhaust its legal or equitable remedies against the Issuer prior to exercising its rights under the Guarantee.

Moreover, if at any time any amount paid under a Note or the Indenture is rescinded or must otherwise be repaid, the rights of the Holders under the Guarantee will be reinstated with respect to such payments as though such payment had not been made. All payments under the Guarantee are required to be made in U.S. dollars.

As of March 31, 2019, LMIRT on a consolidated basis, had S$680.0 million (approximately US$500.0 million) of total current and non-current liabilities outstanding, none of which was secured by its properties. After giving pro forma effect to the issuance of the Notes and the application of proceeds therefrom as described under “Use of Proceeds,” LMIRT would have S$725.0 million of consolidated indebtedness outstanding, none of which would be secured by its properties.

Release of the Guarantee The Guarantee may be released in certain circumstances, including:

Š upon repayment in full of the Notes; or

Š upon a defeasance or satisfaction and discharge as described under “— Defeasance — Defeasance and Discharge” or “— Satisfaction and Discharge.”

Further Issues Subject to the covenants described below and in accordance with the terms of the Indenture, the Issuer may, from time to time, without notice to or the consent of the Holders, create and issue Additional Notes having the same terms and conditions as the Notes (including the benefit of the Guarantee) in all respects (or in all respects except for the issue date, issue price and the date and/or amount of the first payment of interest on them and, to the extent necessary, certain temporary securities law transfer restrictions) (a “Further Issue”) so that such Additional Notes may be consolidated and form a single class with the previously outstanding Notes and vote together as one class on all matters with respect to the Notes.

In addition, the issuance of any Additional Notes by the Issuer will be subject to the following conditions:

(1) all obligations with respect to the Additional Notes shall be guaranteed under the Indenture and the Guarantee to the same extent and on the same basis as the Notes outstanding on the date the Additional Notes are issued;

(2) the issuance of any such Additional Notes is then permitted under the “— Certain Covenants — Limitation on Indebtedness and Preferred Stock” covenant; and

(3) the Guarantor has delivered to the Trustee an Officers’ Certificate, in form and substance satisfactory to the Trustee, confirming that the issuance of the Additional Notes complies with the Indenture.

Optional Redemption At any time and from time to time on or after June 19, 2022, the Issuer may redeem the Notes, in whole or in part, at a redemption price equal to the percentage of principal amount set forth below, plus accrued and unpaid interest, if any, to (but not including) the redemption date and Additional Amounts, if any, if redeemed during the 12-month period commencing on June 19 of the years indicated below:

Period Redemption Price

2022 ...... 103.625% 2023 and thereafter ...... 101.813%

131 At any time and from time to time prior to June 19, 2022, the Issuer may at its option redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest, if any, to (but not including), the redemption date. Neither the Trustee nor any of the Agents will be responsible for calculating or verifying the Applicable Premium.

At any time and from time to time prior to June 19, 2022, the Issuer may redeem up to 35% of the aggregate principal amount of the Notes with the Net Cash Proceeds of one or more sales of Common Stock of LMIRT in Equity Offerings at a redemption price of 107.25% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, and Additional Amounts thereon, if any, to (but not including) the redemption date; provided that at least 65% of the aggregate principal amount of the Notes originally issued on the Original Issue Date remains outstanding after each such redemption and any such redemption takes place within 60 days after the closing of the related Equity Offering. Notice of any redemption upon any Equity Offering may be given prior to the completion of such Equity Offering, and any such redemption or notice may, at the Issuer’s discretion, be conditioned on the completion of the related Equity Offering.

In connection with any redemption of Notes referred to in the preceding paragraphs, any such redemption or notice may, at the Issuer’s discretion, be subject to one or more conditions precedent. In addition, if such redemption or notice is subject to satisfaction of one or more conditions precedent, such notice may state that, in the Issuer’s discretion, the redemption date may be delayed until such time (provided, however, that any delayed redemption date shall not be more than 60 days after the date the relevant notice of redemption was sent) as any or all such conditions shall be satisfied, or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the redemption date, or by the redemption date so delayed.

Selection and Notice The Issuer will give not less than 30 days’ nor more than 60 days’ notice of any redemption.

If less than all of the Notes are to be redeemed, the Notes will be selected for redemption as follows:

Š if the Notes are listed on any securities exchange and/or being held through the clearing systems, in compliance with the requirements of the principal securities exchange on which the Notes are then listed, or the requirements of the clearing systems, as applicable; or

Š if the Notes are not listed on any securities exchange and/or held through the clearing systems, on a pro rata basis or by lot or such other method as the Trustee may determine in its sole and absolute discretion, unless otherwise required by law.

A Note of US$200,000 in principal amount or less will not be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to such Note will state the portion of the principal amount to be redeemed. A new Note in principal amount equal to the unredeemed portion will be issued (at the Issuer’s expense) upon cancellation of the original Note. On and after the redemption date, interest will cease to accrue on Notes or portions of them called for redemption.

Repurchase of Notes Upon a Change of Control Triggering Event Not later than 30 days following a Change of Control Triggering Event, the Issuer or the Guarantor will make an Offer to Purchase all outstanding Notes (a “Change of Control Offer”) at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, and Additional Amounts, if any, to (but not including) the Offer to Purchase Payment Date.

The Issuer and the Guarantor will agree in the Indenture that they will timely repay all Indebtedness or obtain consents as necessary under, or terminate, agreements or instruments that would otherwise prohibit a Change of Control Offer required to be made pursuant to the Indenture. If the Issuer or the Guarantor is unable to repay (or cause to be repaid) all of the Indebtedness, if any, that would prohibit repurchase of the Notes or is unable to obtain the requisite consents of the holders of such Indebtedness, or terminate any agreements or instruments that would otherwise prohibit a Change of Control Offer, they will be prohibited from purchasing the Notes. In that case, the failure of the Issuer or the Guarantor to purchase tendered Notes will constitute an Event of Default under the Indenture.

132 The Issuer and the Guarantor will not be required to make a Change of Control Offer following a Change of Control Triggering Event if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer to be made by the Issuer or the Guarantor and such third party purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

Future debt of the Issuer or the Guarantor may (i) prohibit the Issuer and/or the Guarantor from purchasing Notes in the event of a Change of Control Triggering Event, (ii) provide that a Change of Control is a default, or (iii) require the repurchase of such debt upon a Change of Control or a Change of Control Triggering Event. Moreover, the exercise by Holders of their right to require the Issuer or the Guarantor to purchase the Notes could cause a default under other Indebtedness, even if the Change of Control or the Change of Control Triggering Event itself does not, due to the financial effect of the purchase on the Issuer or the Guarantor, as the case may be. The ability of the Issuer or the Guarantor to pay cash to Holders following the occurrence of a Change of Control Triggering Event may be limited by the Issuer’s or the Guarantor’s then-existing financial resources. There can be no assurance that sufficient funds will be available when necessary to make the required purchase of the Notes. See “Risk Factors — Risks Relating to the Notes and the Guarantee — The Issuer and the Guarantor may not have the ability to raise the funds necessary to finance an offer to repurchase the Notes upon the occurrence of certain events constituting a Change of Control Triggering Event as required by the Indenture governing the Notes.”

The Issuer and the Guarantor will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the covenant described hereunder, the Issuer and the Guarantor will comply with the applicable securities laws and regulations and will not be deemed to have breached its or their obligations under the covenant described hereunder by virtue of such compliance.

The Change of Control Offer feature is a result of negotiations between the Issuer, the Guarantor and the Joint Lead Managers named elsewhere in this Offering Memorandum. Management has no present intention to engage in a transaction involving a Change of Control, although it is possible that the Issuer or the Guarantor may decide to do so in the future. See “Risk Factors — Risks Relating to the Notes and the Guarantee — The Issuer and the Guarantor may not have the ability to raise the funds necessary to finance an offer to repurchase the Notes upon the occurrence of certain events constituting a Change of Control Triggering Event as required by the Indenture governing the Notes.” Subject to certain covenants described below, the Issuer or the Guarantor could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control Triggering Event under the Indenture, but that could increase the amount of debt outstanding at such time or otherwise affect the capital structure or credit ratings of the Issuer, the Guarantor or LMIRT.

The phrase “all or substantially all,” as used in the definition of “Change of Control,” will likely be interpreted under applicable law of the relevant jurisdictions and its meaning would depend on particular facts and circumstances. As a result, there may be a degree of uncertainty in ascertaining whether a sale or transfer of “all or substantially all” the assets of the Guarantor and its Subsidiaries taken as a whole has occurred. Accordingly, if the Guarantor and its Subsidiaries dispose of less than all their assets by any of the means described above, the ability of a Holder to require the Issuer or the Guarantor to repurchase its Notes may be uncertain. In such a case, Holders may not be able to resolve this uncertainty without resorting to legal action.

Except as described above with respect to a Change of Control Triggering Event, the Indenture does not contain provisions that permit the Holders to require that the Issuer or the Guarantor purchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction.

None of the Trustee or any of the Agents shall have any responsibility to monitor whether a Change of Control Triggering Event, or any event which could lead to the occurrence of a Change of Control Offer, has occurred or may occur.

Sinking Fund There will be no sinking fund payments for the Notes.

133 Additional Amounts All payments by, or on behalf of, the Issuer or a Surviving Person (as defined under the caption “— Consolidation, Merger and Sale of Assets”) of principal of, and premium, if any, and interest on the Notes and all payments by, or on behalf of, the Guarantor under the Guarantee will be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed or levied by or within any jurisdiction in which the Issuer, the Guarantor or Surviving Person is organized or resident for tax purposes (or any political subdivision or taxing authority thereof or therein) or any jurisdiction through which payment is made or any political subdivision or taxing authority thereof or therein (each, a “Relevant Jurisdiction”), unless such withholding or deduction is required by law or by regulation or governmental policy having the force of law. In the event that any such withholding or deduction is so required, the Issuer, the Guarantor or Surviving Person, as the case may be, will make such deduction or withholding, make payment of the amount so withheld to the appropriate governmental authority and will pay such additional amounts (“Additional Amounts”) as will result in receipt by the Holder of each Note of such amounts as would have been received by such Holder had no such withholding or deduction been required; provided that no Additional Amounts will be payable:

(a) for or on account of:

(i) any tax, duty, assessment or other governmental charge that would not have been imposed but for:

(A) the existence of any present or former connection between the Holder or beneficial owner of such Note or Guarantee, as the case may be, and the Relevant Jurisdiction including, without limitation, such Holder or beneficial owner being or having been a national, domiciliary or resident of such Relevant Jurisdiction or treated as a resident thereof or being or having been physically present or engaged in a trade or business therein or having or having had a permanent establishment therein, other than merely holding such Note, the receipt of payments thereunder or under the Guarantee or enforcing payment under the Notes or the Guarantee;

(B) the presentation of such Note (where presentation is required) more than 30 days after the later of the date on which the payment of the principal of, premium, if any, or interest on, such Note became due and payable pursuant to the terms thereof or was made or duly provided for, except to the extent that the Holder thereof would have been entitled to such Additional Amounts if it had presented such Note for payment on any date within such 30-day period;

(C) the failure of the Holder or beneficial owner to comply with a timely request of the Issuer, the Guarantor or Surviving Person addressed to the Holder or beneficial owner, as the case may be, to provide information to the Issuer, the Guarantor or Surviving Person concerning such Holder’s or beneficial owner’s nationality, residence, identity or connection with any Relevant Jurisdiction, if and to the extent that (a) due and timely compliance with such request would have reduced or eliminated any withholding or deduction as to which Additional Amounts would have otherwise been payable to such Holder and (b) the Issuer, the Guarantor or Surviving Person, as applicable, has given the Holder or beneficial owner at least 30 days’ notice that the Holder or beneficial owner will be required to provide such certification, identification, documentation or other requirement; or

(D) the presentation of such Note (where presentation is required) for payment in the Relevant Jurisdiction, unless such Note could not have been presented for payment elsewhere;

(ii) any estate, inheritance, gift, sale, transfer, excise or personal property or similar tax, assessment or other governmental charge;

(iii) any tax, duty, assessment or other governmental charge which is payable other than by deduction or withholding from payments of principal of or interest on the Note or payments under the Guarantee;

134 (iv) any tax, duty, assessment or other governmental charge which is required to be deducted or withheld under Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986, as amended, or any amended or successor versions of such Sections (“FATCA”), any regulations or other guidance thereunder, or any agreement (including any intergovernmental agreement) entered into in connection therewith, or any law, regulation or other official guidance enacted in any jurisdiction implementing FATCA or an intergovernmental agreement in respect of FATCA; or

(v) any combination of taxes, duties, assessments or other governmental charges referred to in the preceding clauses (i), (ii), (iii) and (iv); or

(b) with respect to any payment of the principal of, or premium, if any, or interest on, such Note or any payment under the Guarantee to such Holder, if the Holder is a fiduciary, partnership or person other than the sole beneficial owner of any payment to the extent that such payment would be required to be included in the income under the laws of a Relevant Jurisdiction, for tax purposes, of a beneficiary or settlor with respect to the fiduciary, or a member of that partnership or a beneficial owner who would not have been entitled to such Additional Amounts had that beneficiary, settlor, partner, or beneficial owner been the Holder thereof.

As a result of these provisions, there are circumstances in which taxes, duties, assessments or other government charges could be withheld or deducted but Additional Amounts would not be payable to some or all beneficial owners of the Notes.

In addition, each of the Issuer and the Guarantor, as applicable, will pay any stamp, issue, registration, documentary, value added or other similar taxes and other duties (including interest and penalties) payable in any Relevant Jurisdiction in respect of the creation, issue, offering, execution or enforcement of the Notes, the Guarantee or any documentation with respect thereto.

In the event that the Issuer and the Guarantor, as applicable, determines in its sole discretion that withholding for or on account of any Tax will be required by applicable law in connection with any payment due to any of the Agents on any Notes, then the Issuer and the Guarantor, as applicable, will be entitled to redirect or reorganize any such payment in any way that it sees fit in order that the payment may be made without such deductions or withholding provided that, any such redirected or reorganized payment is made through a recognized institution of international standing and otherwise made in accordance with this agreement. The Issuer and the Guarantor will promptly notify the Agents and the Trustee of any such redirection or reorganization.

At least 30 days prior to each date on which any payment under or with respect to the Notes is due and payable (unless the obligation to pay Additional Amounts arises after the 30th day prior to such date), if the Issuer, a Surviving Person or the Guarantor will be obligated to pay Additional Amounts with respect to such payment, the Issuer will deliver to the Trustee an Officers’ Certificate stating the fact that such Additional Amounts will be payable and the amounts so payable and will set forth such other information necessary to enable the Principal Paying Agent to pay such Additional Amounts to the Holders on such payment date.

Whenever there is mentioned in any context the payment of principal, premium or interest in respect of any Note or under the Guarantee, such mention will be deemed to include payment of Additional Amounts provided for in the Indenture to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

Redemption for Taxation Reasons The Notes may be redeemed, at the option of the Issuer or a Surviving Person, as a whole but not in part, upon giving not less than 30 days’ nor more than 60 days’ notice to the Holders (which notice will be irrevocable), at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, and any Additional Amounts to (but not including) the date fixed by the Issuer or the Surviving Person, as the case may be, for redemption (the “Tax Redemption Date”) if, as a result of:

(1) any change in, or amendment to, the laws or any regulations or rulings promulgated thereunder of a Relevant Jurisdiction, excluding any applicable treaty with the Relevant Jurisdiction, affecting taxation; or

135 (2) any change in, or amendment to, an official position regarding the application or interpretation of such laws, regulations or rulings (including a holding, judgment or order by a court of competent jurisdiction), which change or amendment becomes effective on or after the Original Issue Date (or, in the case of a Surviving Person, the date such Person became a Surviving Person, as the case may be) with respect to any payment due or to become due under the Notes, the Indenture or the Guarantee, the Issuer, the Guarantor or the Surviving Person, as the case may be, is, or on the next Notes Interest Payment Date would be, required to pay Additional Amounts, and such requirement cannot be avoided by taking reasonable measures by the Issuer, the Guarantor or the Surviving Person, as the case may be; provided that changing the jurisdiction of the Issuer, the Guarantor or the Surviving Person is not a reasonable measure for the purposes of this section; provided further that no such notice of redemption will be given earlier than 90 days prior to the earliest date on which the Issuer, the Guarantor or the Surviving Person, as the case may be, would be obligated to pay such Additional Amounts if a payment in respect of the Notes were then due.

The Issuer shall, at least 15 calendar days prior to the date the notice of redemption is to be sent to the Holders, notify the Trustee of such proposed Redemption Date and of the principal amount of the Notes to be redeemed. Prior to the mailing of any notice of redemption of the Notes pursuant to the foregoing, the Issuer or the Guarantor, as the case may be, and at their expense will deliver to the Trustee:

(1) an Officers’ Certificate stating that such change or amendment referred to in the prior paragraph has occurred, and describing the facts related thereto and stating that such requirement cannot be avoided by the Issuer or the Guarantor, as the case may be, taking reasonable measures available to it; and

(2) an Opinion of Counsel of recognized standing, or an opinion of a tax consultant of international recognized standing with respect to tax matters of the Relevant Jurisdiction, stating that the requirement to pay such Additional Amounts results from such change or amendment referred to in the prior paragraph.

The Trustee shall be entitled (but shall not be obliged) to accept and rely upon such certificate and opinion as conclusive evidence of the satisfaction of the conditions precedent described above, and it will be conclusive and binding on the Holders. The Trustee has no duty to investigate or verify such certificate and opinion.

Any Notes that are redeemed pursuant to this section will be cancelled.

Offers to Purchase; Open Market Purchases Under certain circumstances, the Issuer or the Guarantor may be required to offer to purchase Notes as described under the captions “— Repurchase of Notes upon a Change of Control Triggering Event” and “— Certain Covenants — Limitation on Asset Sales.” The Guarantor, the Issuer and any Restricted Subsidiary may purchase Notes by means other than a redemption, whether by tender offer, open market purchases, negotiated transactions or otherwise, in accordance with applicable securities laws and regulations, so long as such acquisition does not otherwise violate the terms of the Indenture. The Issuer or the Guarantor will notify the Trustee in writing at the completion of any such open market purchases. Any Notes acquired by the Guarantor, the Issuer or any Restricted Subsidiary will be cancelled.

Certain Covenants Set forth below are summaries of certain covenants contained in the Indenture.

Limitation on Indebtedness and Preferred Stock (a) The Issuer and the Guarantor will not, and the Guarantor will not permit any Restricted Subsidiary to, Incur any Indebtedness (including Acquired Indebtedness) if, immediately after giving effect to the Incurrence of such Indebtedness and the receipt and application of the proceeds therefrom, LMIRT’s ratio of its total borrowings (including guarantees, bonds, notes,

136 syndicated loans, bilateral loans or other debt) and deferred payments (including deferred payments for assets whether to be settled in cash or in units in LMIRT) to its deposited property will be greater than the Aggregate Leverage limit applicable under the Property Funds Appendix. For the purposes of this clause (a), each of “total borrowings”, “deferred payments” and “deposited property” has the meaning determined in accordance with the Property Funds Appendix.

(b) The Issuer and the Guarantor will not, and the Guarantor will not permit any Restricted Subsidiary to, Incur, directly or indirectly, any Indebtedness (including Acquired Indebtedness) or Preferred Stock (other than Disqualified Stock of Restricted Subsidiaries held by the Guarantor, so long as it is so held); provided that the Guarantor, the Issuer or any other Restricted Subsidiary may Incur Indebtedness (including Acquired Indebtedness) if, after giving effect to the Incurrence of such Indebtedness and the receipt and the application of the proceeds therefrom, (x) no Default has occurred and is continuing, (y) the Fixed Charge Coverage Ratio would be not less than 2.5 to 1.0, and (z) if such indebtedness constitutes Priority Indebtedness, such Indebtedness constitutes Permitted Priority Indebtedness.

(c) Notwithstanding clauses (a) and (b) of this covenant, the Guarantor, and, to the extent provided below, any Restricted Subsidiary, may Incur each and all of the following (“Permitted Indebtedness”):

(1) Indebtedness under the Notes (excluding any Additional Notes) and the Guarantee thereof;

(2) Indebtedness of the Guarantor or any Restricted Subsidiary outstanding on the Original Issue Date, after giving effect to the application of the proceeds from the sale of the Notes, excluding Indebtedness permitted under clause (c)(3) of this covenant below;

(3) Indebtedness of the Guarantor or any Restricted Subsidiary owed to the Guarantor or any Restricted Subsidiary; provided that (A) any event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to the Guarantor or any Restricted Subsidiary) shall be deemed, in each case, to constitute an Incurrence of such Indebtedness not permitted by this clause (c)(3) and (B) if the Issuer or the Guarantor is the obligor on such Indebtedness, such Indebtedness must be unsecured and expressly be subordinated in right of payment to the Notes, in the case of the Issuer, or the Guarantee, in the case of the Guarantor;

(4) Indebtedness of the Guarantor or any Restricted Subsidiary (“Permitted Refinancing Indebtedness”) issued in exchange for, or the net proceeds of which are used to refinance or refund, replace, exchange, renew, repay, defease, discharge or extend (collectively, “refinance” and “refinances” and “refinanced” shall have a correlative meaning), then outstanding Indebtedness (or Indebtedness repaid substantially concurrently with but in any case before the Incurrence of such Permitted Refinancing Indebtedness) Incurred under clause (b) or clause (c) (1) or (2) of this covenant and any refinancings thereof in an amount not to exceed the amount so refinanced or refunded (plus premiums, accrued interest, fees and expenses); provided that the Indebtedness to be refinanced is fully and irrevocably repaid no later than 60 days after the Incurrence of the Permitted Refinancing Indebtedness; and provided further that (A) Indebtedness the proceeds of which are used to refinance or refund the Notes or Indebtedness that is pari passu with, or subordinated in right of payment to, the Notes or the Guarantee shall only be permitted under this clause (c)(4) if (x) in case the Notes are refinanced in part or the Indebtedness to be refinanced is pari passu with the Notes or the Guarantee, such new Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such new Indebtedness is issued or remains outstanding, is expressly made pari passu with, or subordinate in right of payment to, the remaining Notes or the Guarantee thereof, or (y) in case the Indebtedness to be refinanced is subordinated in right of payment to the Notes or the Guarantee, such new Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such new Indebtedness is issued or remains outstanding, is expressly made subordinate in right of payment to the Notes or the Guarantee at least to the extent that the Indebtedness to be refinanced is

137 subordinated to the Notes or the Guarantee, (B) such new Indebtedness, determined as of the date of Incurrence of such new Indebtedness, does not mature prior to the Stated Maturity of the Indebtedness to be refinanced or refunded, and the Average Life of such new Indebtedness is at least equal to the remaining Average Life of the Indebtedness to be refinanced or refunded, (C) such new Indebtedness has an aggregate principal amount, or if Incurred with original issue discount, an aggregate issue price, that is equal to or less than the aggregate principal amount, or if Incurred with original issue account, the aggregate accreted value, then outstanding or committed, plus fees and expenses, including any premium and defeasance costs, under the Indebtedness being Refinanced, (D) in no event may Indebtedness of the Issuer or the Guarantor be refinanced pursuant to this clause (c)(4) by means of any Indebtedness of any Restricted Subsidiary (other than the Issuer or a Finance Subsidiary) and in no event may Indebtedness of an Unrestricted Subsidiary be refinanced pursuant to this clause by means of any Indebtedness of any Restricted Subsidiary or the Guarantor and (E) in no event may unsecured Indebtedness of the Issuer or the Guarantor be refinanced pursuant to this clause (c)(4) with Secured Indebtedness;

(5) Indebtedness Incurred by the Guarantor or any Restricted Subsidiary pursuant to Hedging Obligations entered into solely to protect the Guarantor or any Restricted Subsidiary from fluctuations in interest rates, foreign currency exchange rates or commodity prices and not for speculation; provided that such Hedging Obligation does not increase the Indebtedness of the Guarantor or such Restricted Subsidiary outstanding at any time other than as a result of fluctuations in interest rates, foreign currency exchange rates or commodity prices or by reason of fees, indemnities and compensation payable thereunder;

(6) Indebtedness Incurred by the Guarantor or any Restricted Subsidiary constituting reimbursement obligations with respect to workers’ compensation claims or self-insurance obligations or bid, performance or surety bonds (in each case other than for an obligation for borrowed money);

(7) Indebtedness Incurred by the Guarantor or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit or trade guarantees issued in the ordinary course of business to the extent that such letters of credit or trade guarantees are not drawn upon or, if drawn upon, to the extent such drawing is reimbursed no later than the 30 days following receipt by the Guarantor or such Restricted Subsidiary of a demand for reimbursement;

(8) Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from guarantees or letters of credit, surety bonds or performance bonds securing any obligation of the Guarantor or any Restricted Subsidiary pursuant to such agreements, in any case, Incurred in connection with the disposition of any business, assets or Restricted Subsidiary, other than guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by the Guarantor or a Restricted Subsidiary from the sale of such business, assets or Restricted Subsidiary;

(9) Indebtedness Incurred by the Guarantor or any Restricted Subsidiary arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of Incurrence;

(10) Indebtedness of the Guarantor or any Restricted Subsidiary with a maturity of one year or less used by the Guarantor or any Restricted Subsidiary for working capital; provided that the aggregate principal amount of Indebtedness permitted by this clause (c)(10) at any time outstanding does not exceed US$15.0 million (or the Dollar Equivalent thereof);

138 (11) Indebtedness of the Guarantor or any Restricted Subsidiary in an aggregate principal amount at any time outstanding (together with refinancings thereof) not to exceed US$10.0 million (or the Dollar Equivalent thereof);

(12) Indebtedness of a Finance Subsidiary that is guaranteed by the Guarantor to the extent the Guarantor is permitted to Incur such Indebtedness under this covenant; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes or the Guarantee, then the guarantee shall be subordinated or pari passu, as applicable, to the same extent as the Indebtedness so guaranteed; and

(13) Indebtedness Incurred by the Guarantor or any Restricted Subsidiary represented by Capitalized Lease Obligations or purchase money obligations in the ordinary course of business after the Original Issue Date to finance all or any part of the cost of construction, installation or improvement of property (real or personal) (including the lease purchase price of land use rights) or equipment to be used in the Permitted Business; provided that (i) such Indebtedness shall be Incurred no later than 90 days after the acquisition, construction, installation or improvement of such property (real or personal) or equipment and (ii) on the date of Incurrence of such Indebtedness and after giving effect thereto, the aggregate principal amount of such Indebtedness at any time outstanding (together with refinancings thereof) shall not exceed an amount equal to US$30.0 million (or the Dollar Equivalent thereof); provided that, with respect to the Incurrence of Indebtedness under this clause (c), if such Indebtedness constitutes Priority Indebtedness, on the date of the Incurrence of such Indebtedness and after giving effect thereto, such Indebtedness constitutes Permitted Priority Indebtedness.

(d) For the purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described above, including under clause (a) or the proviso in clause (b) of this covenant, the Guarantor, in its sole discretion, shall classify, and from time to time may reclassify, such item of Indebtedness except to the extent specified above.

(e) Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that may be Incurred pursuant to this covenant will not be deemed to be exceeded with respect to any outstanding Indebtedness due solely to the result of fluctuations in the exchange rate of currencies.

(f) The Issuer and the Guarantor will not Incur any Indebtedness if such Indebtedness is contractually subordinated in right of payment to any other Indebtedness of the Issuer or the Guarantor, as the case may be, unless such Indebtedness is also contractually subordinated in right of payment to the Notes or the Guarantee, on substantially identical terms.

Limitation on Restricted Payments (a) The Guarantor will not, and will not permit LMIRT or any Restricted Subsidiary to, directly or indirectly (the payments or any other actions described in clauses (a)(1) through (4) of this covenant being collectively referred to as “Restricted Payments”):

(1) declare or pay any dividend or make any distribution (whether in cash, securities or other property) on or with respect to the Guarantor’s, LMIRT’s or any Restricted Subsidiary’s Capital Stock (other than dividends or distributions payable solely in units or shares of the LMIRT’s or any Restricted Subsidiary’s Capital Stock (other than Disqualified Stock or Preferred Stock) or in options, warrants or other rights to acquire shares of such Capital Stock) held by Persons other than the Guarantor, LMIRT or any Restricted Subsidiary;

(2) purchase, call for redemption or redeem, retire or otherwise acquire for value any units or shares of Capital Stock of LMIRT, the Guarantor or any Restricted Subsidiary (including options, warrants or other rights to acquire such units or shares of Capital Stock) or any direct or indirect parent of the Guarantor held by any Persons other than LMIRT, the Guarantor or any Restricted Subsidiary;

139 (3) make any voluntary or optional principal payment, or voluntary or optional redemption, repurchase, defeasance, or other acquisition or retirement for value of Indebtedness that is subordinated in right of payment to the Notes or the Guarantee (excluding any intercompany Indebtedness between or among the Guarantor and any Restricted Subsidiary); or

(4) make any Investment, other than a Permitted Investment; if, at the time of, and after giving effect to, the proposed Restricted Payment:

(A) a Default has occurred and is continuing or would occur as a result of such Restricted Payment;

(B) the Guarantor could not Incur at least US$1.00 of Indebtedness under clause (a) of the covenant under the caption “— Limitation on Indebtedness and Preferred Stock;” or

(C) such Restricted Payment, together with the aggregate amount of all Restricted Payments made by the Guarantor and the Restricted Subsidiaries after the Original Issue Date, would exceed the sum (without duplication) of:

(1) 100.0% of the aggregate amount of Distributable Income of LMIRT accrued on a cumulative basis during the period (taken as one accounting period) beginning on April 1, 2019, in the case of amounts available for distribution to unitholders, and January 1, 2019, in the case of amounts reserved for distribution to perpetual security holders and ending on the last day of LMIRT’s most recently ended quarterly period for which consolidated financial statements of LMIRT (which the Guarantor shall procure to cause LMIRT to use its reasonable best efforts to compile in a timely manner) are available and provided to the Trustee at the time of such Restricted Payment; plus

(2) 100.0% of the aggregate Net Cash Proceeds received by LMIRT or the Guarantor after the Original Issue Date as: (1) a capital contribution or (2) from the issuance and sale of its Capital Stock (other than Disqualified Stock) to a Person who is not the Guarantor or a Subsidiary of the Guarantor (excluding any Net Cash Proceeds received by LMIRT or the Guarantor from the issuance and sale of its Capital Stock to the extent the proceeds from such issuance and sale are used to refinance, repay, redeem, repurchase or retire for value the Perpetual Securities existing as of the Original Issue Date pursuant to clause (b)(6) of this “Limitation on Restricted Payments” covenant); plus

(3) 100.0% of the amount by which Indebtedness of the Guarantor and any Restricted Subsidiary (other than Subordinated Indebtedness) is reduced on LMIRT’s statement of financial position upon conversion or exchange (other than by the Guarantor or a Subsidiary of the Guarantor) subsequent to the Original Issue Date of any Indebtedness (other than Subordinated Indebtedness) of the Guarantor and any Restricted Subsidiary convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Guarantor or LMIRT (less the amount of any cash, or the Fair Market Value of any other property, distributed by the Guarantor or LMIRT upon such conversion or exchange); plus

(4) an amount equal to the net reduction in Investments (other than reductions in Permitted Investments) that were made after the Original Issue Date in any Person resulting from (a) payments of interest on Indebtedness, dividends or repayments of loans or advances by such Person, in each case to the Guarantor or any Restricted Subsidiary (except, in each case, to the extent any such payment or proceeds are included in the calculation of Distributable Income), (b) the unconditional release of a guarantee provided by the Guarantor or any Restricted Subsidiary after the Original Issue Date of an obligation of another Person, (c) the Net Cash Proceeds from the sale of any such Investment (except to the extent such Net Cash Proceeds are included in the calculation of Distributable Income) or (d) from redesignations of

140 Unrestricted Subsidiaries as Restricted Subsidiaries, not to exceed, in each case, the amount of Investments made by the Guarantor or a Restricted Subsidiary after the Original Issue Date in any such Person.

(b) The foregoing clause (a) will not be violated by reason of:

(1) the payment of any dividend or redemption of Capital Stock within 60 days after the related date of declaration or call for redemption if, at such date of declaration or call for redemption, such payment or redemption would comply with clause (a) of this covenant;

(2) the redemption, repurchase, defeasance or other acquisition or retirement for value of Subordinated Indebtedness of the Issuer or the Guarantor with the Net Cash Proceeds of, or in exchange for, a substantially concurrent Incurrence of Permitted Refinancing Indebtedness;

(3) the redemption, repurchase or other acquisition of Capital Stock of LMIRT or the Guarantor (or options, warrants or other rights to acquire such Capital Stock) in exchange for, or out of the Net Cash Proceeds of a capital contribution or a substantially concurrent sale (other than to a Subsidiary of LMIRT or the Guarantor) of, units or shares of Capital Stock (other than Disqualified Stock) of LMIRT or the Guarantor (or options, warrants or other rights to acquire such Capital Stock); provided that the amount of any such Net Cash Proceeds that are utilized for any such Restricted Payment will be excluded from clause (a)(C)(2) of this covenant;

(4) the redemption, repurchase, defeasance or other acquisition or retirement for value of Subordinated Indebtedness of the Guarantor or any Restricted Subsidiary in exchange for, or out of the Net Cash Proceeds of a substantially concurrent sale (other than to a Subsidiary of the Guarantor) of, units or shares of Capital Stock (other than Disqualified Stock) of LMIRT (or options, warrants or other rights to acquire such Capital Stock); provided that the amount of any such Net Cash Proceeds that are utilized for any such Restricted Payment will be excluded from clause (a)(C)(2) of this covenant;

(5) the payment of any dividends or distributions declared, paid or made by a Restricted Subsidiary payable, on a pro rata basis or on a basis more favorable to LMIRT or the Guarantor, to all holders of any class of Capital Stock of such Restricted Subsidiary, other than with respect to another class of Capital Stock in a Joint Operation held by a Person other than the Guarantor, provided that such payments to other Persons are made in accordance with the terms of the contractual arrangements governing such Joint Operation;

(6) the repayment, redemption, repurchase, defeasance or other acquisition or retirement for value of the Perpetual Securities existing as of the Original Issue Date and any new Capital Stock of LMIRT or the Guarantor issued, the proceeds of which are used to refinance, repay, redeem, repurchase or retire for value the Perpetual Securities existing as of the Original Issue Date and are in an amount not to exceed the amount so refinanced (plus premiums (if any), fees and expenses), in each case in accordance with the terms thereof; or

(7) a Restricted Payment in an aggregate amount not to exceed, together with all other such Restricted Payments made pursuant to this clause (7), US$5.0 million (or the Dollar Equivalent thereof) since the Original Issue Date; provided that, in the case of clauses (b) (3) or (5) of this covenant, no Default will have occurred and be continuing or would occur as a consequence of the actions or payments set forth therein.

Each Restricted Payment permitted pursuant to clauses (b)(1) and (5) of this covenant and made after the Original Issue Date will be included in calculating whether the conditions of clause (a)(C) of this covenant have been met with respect to any subsequent Restricted Payments.

The amount of any Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by LMIRT,

141 the Guarantor or the Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The value of any assets or securities that are required to be valued by this covenant will be the Fair Market Value. The Board of Directors’ determination of the Fair Market Value of a Restricted Payment or any such assets or securities must be based upon an opinion or appraisal issued by an appraisal or investment banking firm of national standing if the Fair Market Value exceeds US$10.0 million (or the Dollar Equivalent thereof).

Not later than the date of making any Restricted Payment in an amount in excess of US$10.0 million (or the Dollar Equivalent thereof), the Guarantor will deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this covenant were computed, together with a copy of any fairness opinion or appraisal required by the Indenture.

Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries (a) Except as provided below, the Guarantor will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or become effective any encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions permitted by applicable law on any Capital Stock of such Restricted Subsidiary owned by the Guarantor or any other Restricted Subsidiary;

(2) pay any Indebtedness or other obligation owed to the Guarantor or any other Restricted Subsidiary;

(3) make loans or advances to the Guarantor or any other Restricted Subsidiary; or

(4) sell, lease or transfer any of its property or assets to the Guarantor or any other Restricted Subsidiary; provided that it being understood that: (i) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on Common Stock; (ii) the subordination of loans or advances made to the Guarantor or any Restricted Subsidiary to other Indebtedness Incurred by the Guarantor or any Restricted Subsidiary; and (iii) the provisions contained in documentation governing Indebtedness requiring transactions between or among the Guarantor and any Restricted Subsidiary or between or among any Restricted Subsidiary to be on fair and reasonable terms or on an arm’s length basis, in each case, shall not be deemed to constitute such an encumbrance or restriction.

(b) The provisions of clause (a) of this covenant do not apply to any encumbrances or restrictions:

(1) existing in agreements as in effect on the Original Issue Date, or in the Notes, the Guarantee or the Indenture and any extensions, refinancings, renewals or replacements of any of the foregoing agreements; provided that the encumbrances and restrictions in any such extension, refinancing, renewal or replacement, taken as a whole, are no more restrictive than those encumbrances or restrictions that are then in effect and that are being extended, refinanced, renewed or replaced;

(2) existing under or by reason of applicable law (including any statute, rule, regulation or government order);

(3) existing with respect to any Person or the property or assets of such Person acquired by the Guarantor or any Restricted Subsidiary, existing at the time of such acquisition and not incurred in contemplation thereof, which encumbrances or restrictions are not applicable to any Person or the property or assets of any Person other than such Person or the property or assets of such Person so acquired, and any extensions, refinancings, renewals or replacements thereof; provided that the encumbrances and restrictions in any such extension, refinancing, renewal or replacement, taken as a whole, are no more restrictive than those encumbrances or restrictions that are then in effect and that are being extended, refinanced, renewed or replaced and remain applicable only to the Person or the property or assets of such Person acquired;

142 (4) that otherwise would be prohibited by the provision described in clause (a)(4) of this covenant if they arise, or are agreed to in the ordinary course of business, and that (A) restrict in a customary manner the subletting, assignment or transfer of any property or asset that is subject to a lease or license or (B) exist by virtue of any Lien on, or agreement to transfer, option or similar right with respect to any property or assets of the Guarantor or any Restricted Subsidiary not otherwise prohibited by the Indenture;

(5) with respect to a Restricted Subsidiary and imposed pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock of, or property and assets of, such Restricted Subsidiary that is permitted by the “— Limitation on Sales and Issuances of Capital Stock of Restricted Subsidiaries,” “— Limitation on Indebtedness and Preferred Stock” and “— Limitation on Asset Sales” covenants; or

(6) any encumbrance or restriction with respect to a Restricted Subsidiary which was previously an Unrestricted Subsidiary pursuant to or by reason of an agreement that such Subsidiary is a party to entered into before the date on which such Subsidiary became a Restricted Subsidiary; provided that such agreement was not entered into in anticipation of such Subsidiary becoming a Restricted Subsidiary and any such encumbrance or restriction does not extend to any assets or property of the Guarantor or any other Restricted Subsidiary.

Limitation on Sales and Issuances of Capital Stock of Restricted Subsidiaries The Guarantor will not sell, pledge or otherwise dispose, and will not permit any Restricted Subsidiary, directly or indirectly, to issue or sell, pledge or otherwise dispose, any shares of Capital Stock of a Restricted Subsidiary (including options, warrants or other rights to purchase shares of such Capital Stock) except:

(a) to the Guarantor or a Restricted Subsidiary;

(b) to the extent such Capital Stock represents director’s qualifying shares or is required by applicable law to be held by a Person other than the Guarantor or a Restricted Subsidiary;

(c) the issuance or sale of Capital Stock of a Restricted Subsidiary if, immediately after giving effect to such issuance or sale, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any remaining Investment in such Person would have been permitted to be made under the “— Limitation on Restricted Payments” covenant if made on the date of such issuance or sale, and made in accordance with the “— Limitation on Asset Sales” covenant; or

(d) the issuance or sale of Capital Stock of a Restricted Subsidiary (which remains a Restricted Subsidiary after any such issuance or sale); provided that the Guarantor or such Restricted Subsidiary applies the Net Cash Proceeds of such issuance or sale in accordance with the “— Limitation on Asset Sales” covenant.

For the avoidance of doubt, this covenant shall not apply to a class of Capital Stock in a Joint Operation held by a Person other than the Guarantor or a Restricted Subsidiary.

Limitation on Issuances of Guarantees by Restricted Subsidiaries The Guarantor will not permit any Restricted Subsidiary, directly or indirectly, to provide any guarantee for any Indebtedness (“Guaranteed Indebtedness”) of the Guarantor or any other Restricted Subsidiary, unless (a) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to the Indenture providing for an unsubordinated Guarantee of payment of the Notes by such Restricted Subsidiary and (b) such Restricted Subsidiary waives and will not in any manner whatsoever claim, or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Guarantor or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee until the Notes have been paid in full.

If the Guaranteed Indebtedness (A) ranks pari passu in right of payment with the Notes or the Guarantee, then the guarantee of such Guaranteed Indebtedness shall rank pari passu in right of

143 payment with, or subordinated to, the Guarantee or (B) is subordinated in right of payment to the Notes or the Guarantee, then the guarantee of such Guaranteed Indebtedness shall be subordinated in right of payment to the Guarantee at least to the extent that the Guaranteed Indebtedness is subordinated to the Notes or the Guarantee.

Limitation on Transactions with Affiliates The Guarantor will not, and will not permit LMIRT or any Restricted Subsidiary to, directly or indirectly, enter into, renew or extend or permit to exist any transaction or arrangement (including, without limitation, the purchase, sale, lease, exchange, transfer or disposition of property or assets, or the rendering of any service) with (x) any holder (or any Affiliate of such holder) of 5.0% or more of any class of Capital Stock of LMIRT, the LMIRT Manager or the Guarantor or (y) with any Affiliate of LMIRT, the LMIRT Manager, the Guarantor or any Restricted Subsidiary (each an “Affiliate Transaction”), unless:

(a) the Affiliate Transaction is on terms that are no less favorable to the Guarantor, LMIRT or the relevant Restricted Subsidiary than those that would have been obtained, at the time of such Affiliate Transaction or, if such Affiliate Transaction is pursuant to a written agreement, at the time of the execution of the agreement providing therefor, in a comparable arm’s-length transaction by the Guarantor, LMIRT or the relevant Restricted Subsidiary with a Person that is not an Affiliate of the Guarantor, LMIRT or any Restricted Subsidiary; and

(b) the Guarantor delivers to the Trustee:

(1) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of US$5.0 million (or the Dollar Equivalent thereof), a Board Resolution set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with this covenant and such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors, including meeting the requirements of clause (a); and

(2) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of US$10.0 million (or the Dollar Equivalent thereof), in addition to the Board Resolution required in clause (b)(1), an opinion issued by an accounting, appraisal or investment banking firm of recognized national standing as to the fairness to the Guarantor, LMIRT or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view.

The foregoing limitation does not limit, and shall not apply to:

(A) the payment of reasonable and customary regular fees to directors and commissioners of the Guarantor, LMIRT or any Restricted Subsidiary who are not employees of the Guarantor, LMIRT or any Restricted Subsidiary;

(B) any transaction solely between or among LMIRT, the Guarantor and any of its Wholly-Owned Restricted Subsidiaries or solely among Wholly-Owned Restricted Subsidiaries;

(C) any Restricted Payment of the type described in clause (a)(1), (a)(2) or (a)(3) of the covenant described under the caption “— Limitation on Restricted Payments” if permitted by such covenant;

(D) any sale of Capital Stock (other than Disqualified Stock) of the Guarantor or LMIRT;

(E) the payment of compensation to officers and directors of the Guarantor, LMIRT or any Restricted Subsidiary pursuant to an employee stock or share option scheme, so long as such scheme is approved by the Board of Directors and is in compliance with the listing rules of the SGX-ST; and

(F) any transaction entered into between the Guarantor or LMIRT or any Restricted Subsidiary, on the one hand, and any of their Affiliates, on the other, on a basis no less favorable to the Guarantor, LMIRT or such Restricted Subsidiary that could be obtained from an unrelated third

144 party, taking into account the nature and purpose of the transaction, at the time of such transaction; provided that such transaction is entered into in the ordinary course of business of the Guarantor, LMIRT or such Restricted Subsidiary and to the extent applicable, in compliance with the relevant rules or regulations of the SGX-ST and/or the Property Funds Appendix.

In addition, the requirements of clause (b) of this covenant will not apply to: (I) Investments (other than Permitted Investments) not prohibited by the “— Limitation on Restricted Payments” covenant, (II) transactions pursuant to agreements in effect on the Original Issue Date, or any amendment or modification or replacement thereof, so long as such amendment, modification or replacement is not more disadvantageous to LMIRT, the Guarantor and the Restricted Subsidiaries than the original agreement in effect on the Original Issue Date or is otherwise consistent with the prevailing existing market conditions and (III) any transaction between or among LMIRT, the Guarantor and any Restricted Subsidiary that is not a Wholly-Owned Restricted Subsidiary; provided that in the case of clause (III) above, (a) such transaction is entered into in the ordinary course of business and (b) none of the minority shareholders or minority partners (if any) of or in such Restricted Subsidiary is a Person described in (x) or (y) of the first paragraph of this covenant (other than by reason of such minority shareholder or minority partner being an officer or director of such Restricted Subsidiary).

Limitation on Liens The Guarantor will not, and will not permit any Restricted Subsidiary to, directly or indirectly, Incur, assume or permit to exist any Lien of any nature whatsoever on any of its assets or properties of any kind, whether owned at the Original Issue Date or thereafter acquired, securing any Indebtedness except Permitted Liens, unless the Notes are secured equally and ratably with (or, if the obligation or liability to be secured by such Lien is subordinated in right of payment to the Notes, prior to) the obligations or liabilities so secured.

Limitation on Sale and Leaseback Transactions (a) The Guarantor will not, and will not permit any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction; provided that the Guarantor or any Restricted Subsidiary may enter into a Sale and Leaseback Transaction if:

(i) the Guarantor could have (A) Incurred Indebtedness in an amount equal to the Attributable Indebtedness relating to such Sale and Leaseback Transaction under the covenant described under “— Limitation on Indebtedness and Preferred Stock” and (B) Incurred a Lien to secure such Indebtedness pursuant to the covenant described under the caption “— Limitation on Liens”, in which case, the corresponding Indebtedness and Lien will be deemed incurred pursuant to those provisions; (ii) gross cash proceeds of that Sale and Leaseback Transaction are at least equal to the Fair Market Value of the property that is the subject of such Sale and Leaseback Transaction; and (iii) transfer of assets in that Sale and Leaseback Transaction is permitted by, and the Guarantor applies the proceeds of such transaction in compliance with, the covenant described under the caption “— Limitation on Asset Sales.”

Limitation on Asset Sales The Guarantor will not, and will not permit LMIRT or any Restricted Subsidiary to, consummate any Asset Sale, unless:

(a) no Default shall have occurred and be continuing or would occur as a result of such Asset Sale; and

(b) the consideration received by the Guarantor or such Restricted Subsidiary, as the case may be, is at least equal to the Fair Market Value of the assets sold or disposed of; and

(c) at least 75.0% of the consideration received consists of cash, Temporary Cash Investments or Replacement Assets provided that in the case of an Asset Sale in which the Guarantor, LMIRT or such Restricted Subsidiary receives Replacement Assets and/or Capital Stock involving

145 aggregate consideration in excess of US$10.0 million (or the Dollar Equivalent thereof), the Guarantor shall deliver to the Trustee an opinion of fairness to the Guarantor or such Restricted Subsidiary of such Asset Sale from a financial point of view issued by an accounting, appraisal or investment banking firm of recognized international standing. For purposes of this provision, each of the following will be deemed to be cash:

(i) any liabilities, as shown on LMIRT’s most recent consolidated statement of financial position (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or the Guarantee) that are assumed by the transferee of any such assets pursuant to a customary assumption, assignment, novation or similar agreement that releases the Guarantor or such Restricted Subsidiary from further liability; and

(ii) any securities, notes or other obligations received by the Guarantor or any Restricted Subsidiary from such transferee that are contemporaneously, but in any event within 30 days of closing, converted by the Guarantor or such Restricted Subsidiary into cash, to the extent of the cash received in that conversion.

Within 360 days after the receipt of any Net Cash Proceeds from an Asset Sale, the Guarantor (or the applicable Restricted Subsidiary, as the case may be) may apply such Net Cash Proceeds to:

(A) permanently repay Senior Indebtedness of the Guarantor or any Restricted Subsidiary (and, if such Senior Indebtedness repaid is revolving credit Indebtedness, to correspondingly permanently reduce commitments with respect thereto) in each case owing to a Person other than the Guarantor or a Restricted Subsidiary;

(B) make an Investment in Replacement Assets; or

(C) make an Investment in Temporary Cash Investments, pending application of such Net Cash Proceeds as set forth in clause (A) or (B) above.

On the 361st day after an Asset Sale or such earlier date, if any, as the Guarantor determines not to apply the Net Cash Proceeds relating to such Asset Sale as set forth in preceding paragraph (such date being referred as an “Excess Proceeds Trigger Date”), such aggregate amount of Net Cash Proceeds that has not been applied on or before the Excess Proceeds Trigger Date as permitted in the preceding paragraph (“Excess Proceeds”) will be applied by the Issuer or the Guarantor to make an Offer to Purchase to all Holders of Notes and all holders of other Indebtedness that is pari passu with the Notes or the Guarantee containing provisions similar to those set forth in the Indenture and the Notes with respect to offers to purchase with the proceeds of sales of assets, to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Offer to Purchase will be equal to 100.0% of the principal amount of the Notes then outstanding and such other pari passu Indebtedness plus accrued and unpaid interest, if any, to the date of purchase, and will be payable in cash.

The Guarantor may defer the Offer to Purchase until there are aggregate unutilized Excess Proceeds equal to or in excess of US$10.0 million (or the Dollar Equivalent thereof) resulting from one or more Asset Sales, at which time, within ten days thereof, the entire unutilized amount of Excess Proceeds will be applied as provided in the preceding paragraph. If any Excess Proceeds remain after consummation of an Offer to Purchase, the Guarantor or LMIRT may use such Excess Proceeds for any purpose not otherwise prohibited by the Indenture or the Notes. If the aggregate principal amount of Notes and such other pari passu Indebtedness tendered into such Offer to Purchase exceeds the amount of Excess Proceeds, the Trustee (in its sole and absolute discretion) will select the Notes and such other pari passu Indebtedness will be purchased on a pro rata basis based on the principal amount of Notes and such other pari passu Indebtedness tendered.

Limitation on Business Activities The Guarantor will not, and will not permit LMIRT or any Restricted Subsidiary to, directly or indirectly, engage in any business other than a Permitted Business; provided, however, that the Guarantor or any Restricted Subsidiary may own Capital Stock of an Unrestricted Subsidiary or joint venture or other entity that is engaged in a business other than Permitted Business as long as any Investment therein was not prohibited when made by the covenant under the caption “— Limitation on Restricted Payments.”

146 The Issuer will not engage in any business activity or undertake any other activity, except any activity (a) conducted on the Original Issue Date, (b) relating to the offering, sale or issuance of the Notes (including any Additional Notes), the Incurrence of Indebtedness represented by the Notes and any other activities in connection therewith, (c) relating to the offering, sale or issuance of debt obligations, the incurrence of Indebtedness represented by such debt obligations and any other activities in connection therewith, (d) undertaken with the purpose of fulfilling any obligations referred to in clauses (a) through (c) or the Indenture or any future indenture, trust deed or other facility agreements related to such obligations or the purpose of making and fulfilling obligations attributable to consent solicitations or tender offers for such obligations or refinancing of such obligations and any activities related thereto or (e) directly related to the establishment and/or maintenance of the Issuer’s corporate existence.

The Issuer shall not (a) issue any Capital Stock other than the issuance of its ordinary shares to the Guarantor or otherwise in a de minimis amount to local residents to the extent required by applicable law or (b) acquire or receive any property or assets (including, without limitation, any Equity Interests or Indebtedness of any Person), other than cash for ongoing corporate activities of the Issuer described in the preceding paragraph.

The Issuer shall at all times remain a Wholly-Owned Restricted Subsidiary of the Guarantor other than as a result of a consolidation, merger or transfer permitted by the “— Consolidation, Merger and Sale of Assets” covenant.

For so long as any Notes are outstanding, none of the Issuer or the Guarantor will commence or take any action to cause a winding-up or liquidation of the Issuer, LMIRT or the Guarantor except that the Issuer may be wound up or liquidated subsequent to a consolidation, merger or transfer of assets conducted in accordance with the first paragraph of the “— Consolidation, Merger and Sale of Assets” covenant and the Guarantor may be replaced in accordance with the LMIRT Trust Deed.

Use of Proceeds The Issuer will (a) use the net proceeds received from the Notes as set forth in this Offering Memorandum under the caption “Use of Proceeds” and (b) pending application of all of such net proceeds in such manner, be permitted to invest the portion of such net proceeds not yet so applied in Temporary Cash Investments.

Designation of Restricted and Unrestricted Subsidiaries The Board of Directors may designate any Restricted Subsidiary (other than the Issuer) to be an Unrestricted Subsidiary; provided that (a) such designation would not cause a Default; (b) none of the Guarantor nor any Restricted Subsidiary provides any guarantees or provides credit support for the Indebtedness of such Restricted Subsidiary; (c) such Restricted Subsidiary has no outstanding Indebtedness that could trigger a cross-default to the Indebtedness of the Guarantor or any other Restricted Subsidiary; (d) such Restricted Subsidiary does not own any Disqualified Stock of LMIRT or the Guarantor or Disqualified or Preferred Stock of another Restricted Subsidiary or hold any Indebtedness of, or Lien on any property of the Guarantor, LMIRT or any other Restricted Subsidiary; (e) such Restricted Subsidiary does not own any Capital Stock of LMIRT, the Guarantor or another Restricted Subsidiary, and all of its Subsidiaries are Unrestricted Subsidiaries or are being concurrently designated as Unrestricted Subsidiaries in accordance with this paragraph; and (f) the Investment deemed to have been made thereby in such newly designated Unrestricted Subsidiary and each other newly designated Unrestricted Subsidiary being concurrently redesignated would be permitted to be made by the covenant described under “— Limitation on Restricted Payments.”

The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that (a) such designation shall not cause a Default; (b) any Indebtedness of such Unrestricted Subsidiary outstanding at the time of such designation which will be deemed to have been Incurred by such newly designated Restricted Subsidiary as a result of such designation would be permitted to be Incurred by the covenant described under the caption “— Limitation on Indebtedness and Preferred Stock;” (c) any Lien on the property of such Unrestricted Subsidiary at the time of such designation which will be deemed to have been Incurred by such newly designated Restricted Subsidiary as a result of such designation would be permitted to be Incurred by the covenant described under the caption “— Limitation on Liens;” and (d) such Unrestricted Subsidiary is not a Subsidiary of another Unrestricted Subsidiary (that is not concurrently being designated as a Restricted Subsidiary).

147 Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions.

Maintenance of Insurance The Guarantor will and will cause each of the Restricted Subsidiaries to maintain insurance policies covering such risks, in such amounts and with such terms as are normally carried by similar companies engaged in a similar business to the Permitted Business in the country in which such entity is located, including property and casualty insurance.

Maintain Listing of LMIRT The Guarantor will use its best efforts to maintain the listing of all the Units of LMIRT on the SGX-ST or another internationally recognized stock exchange.

Government Approvals and Licenses; Compliance with Law The Guarantor will, and will cause LMIRT and each Restricted Subsidiary to (a) obtain and maintain in full force and effect all governmental approvals, authorizations, consents, permits, concessions and licenses as are necessary to engage in the Permitted Business and (b) comply with all laws, regulations, orders, judgments and decrees of any governmental body, except to the extent that failure so to obtain, maintain, preserve and comply would not reasonably be expected to have a material adverse effect on (1) the business, results of operations or prospects of LMIRT, the Guarantor and the Restricted Subsidiaries taken as a whole or (2) the ability of the Issuer or the Guarantor to perform its obligations under the Notes, the Guarantee or the Indenture.

Suspension of Certain Covenants when Notes are Rated Investment Grade If, on any date following the date of the Indenture, the Notes are rated Investment Grade from both of the Rating Agencies and no Default or Event of Default has occurred and is continuing, then, beginning on that day and continuing until such time, if any, at which the Notes cease to be rated Investment Grade by either of the Rating Agencies (such period, the “Suspension Period”), the following covenants will be suspended:

(a) the covenant described under the caption “— Limitation on Indebtedness and Preferred Stock”;

(b) the covenant described under the caption “— Limitation on Restricted Payments”;

(c) the covenant described under the caption “— Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries”;

(d) the covenant described under the caption “— Limitation on Sales and Issuances of Capital Stock of Restricted Subsidiaries”;

(e) the covenant described under the caption “— Limitation on Sale and Leaseback Transactions”;

(f) the covenant described under the caption “— Limitation on Issuances of Guarantees by Restricted Subsidiaries”;

(g) the covenant described under the caption “— Limitation on Asset Sales”;

(h) the covenant described under the caption “— Limitation on Transactions with Affiliates”; and

(i) clause (d) under the second paragraph of the covenant described under the caption “— Consolidation, Merger and Sale of Assets”.

During any period that the foregoing covenants have been suspended, the Board of Directors may not designate any of the Restricted Subsidiaries as Unrestricted Subsidiaries pursuant to the covenant summarized under the caption “— Certain Covenants — Designation of Restricted and Unrestricted Subsidiaries” or the definition of “Unrestricted Subsidiary”.

148 Such covenants will be reinstituted and apply according to their terms as of and from the first day on which a Suspension Period ceases to be in effect. Such covenants will not, however, be of any effect with regard to actions of the Issuer, LMIRT, the Guarantor or any Restricted Subsidiary properly taken in compliance with the provisions of the Indenture during the continuance of the Suspension Period, and following reinstatement (1) the calculations under the covenant summarized under “— Certain Covenants — Limitation on Restricted Payments” will be made as if such covenant had been in effect since the date of the Indenture except that no Default will be deemed to have occurred solely by reason of a Restricted Payment made while that covenant was suspended and (2) all Indebtedness incurred, or Disqualified Stock or preferred stock issued, during the Suspension Period will be classified to have been incurred or issued pursuant to clause (c)(2) of the covenant summarized under “— Certain Covenants — Limitation on Indebtedness and Preferred Stock.” Upon the occurrence of a Suspension Period, the amount of Excess Proceeds shall be reset at to the amount in effect at the beginning of the Suspension Period.

There can be no assurance that the Notes will ever achieve a rating of Investment Grade or that any such rating will be maintained.

Consolidation, Merger and Sale of Assets The Issuer will not consolidate with, merge with or into, another Person (other than the Guarantor), permit any Person to merge with or into it, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets to any Person (other than the Guarantor); provided that, in the event the Issuer so consolidates with, merges with or into, the Guarantor or sells, conveys, transfers, leases or otherwise disposes of all or substantially all or substantially all of its properties and assets to the Guarantor, the Guarantor (or if the Guarantor is not the surviving person, such surviving person), immediately after such transaction, will (a) assume, by a supplemental indenture to the Indenture, executed and delivered to the Trustee, all the obligations of the Issuer under the Indenture and the Notes, which shall remain in full force and effect and (b) deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, in each case stating that such transaction and such supplemental indenture complies with this provision and that all conditions precedent provided for herein relating to such transaction have been complied with.

The Guarantor will not consolidate with, merge with or into another Person, permit any Person to merge with or into it, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets (computed on a consolidated basis) in one transaction or a series of related transactions), unless:

(a) the Guarantor shall be the continuing Person, or the Person (if other than it) formed by such consolidation or merger or that acquired or leased such property and assets (the “Surviving Person”) shall be a corporation incorporated and validly existing under the laws of Singapore and shall expressly assume, by a supplemental indenture to the Indenture, executed and delivered to the Trustee, all the obligations of the Guarantor under the Indenture, the Notes and the Guarantee, as the case may be, and the Indenture, the Notes and the Guarantee, as the case may be, shall remain in full force and effect;

(b) immediately after giving effect to such transaction on a pro forma basis (and treating any Indebtedness which becomes an obligation of the Guarantor or the Surviving Person or any Subsidiary of the Guarantor as having been Incurred at the time of such transaction), no Default shall have occurred and be continuing;

(c) immediately after giving effect to such transaction on a pro forma basis, the Guarantor or the Surviving Person, as the case may be, shall have a Consolidated Net Worth equal to or greater than the Consolidated Net Worth of LMIRT immediately prior to such transaction;

(d) immediately after giving effect to such transaction on a pro forma basis, the Guarantor or the Surviving Person, as the case may be, could Incur at least US$1.00 of Indebtedness under clause (a) and the proviso in clause (b) of the “— Limitation on Indebtedness and Preferred Stock” covenant;

(e) the Guarantor delivers to the Trustee (i) an Officers’ Certificate (attaching the arithmetic computations to demonstrate compliance with clauses (c) and (d) of the “— Consolidation,

149 Merger and Sale of Assets” covenant, and (ii) an Opinion of Counsel, in each case stating that such consolidation, merger or transfer and such supplemental indenture complies with this provision and that all conditions precedent provided for herein relating to such transaction have been complied with; and

(f) the Guarantor shall have delivered to the Trustee an Opinion of Counsel in the jurisdiction of incorporation of the Issuer or the Guarantor and the Surviving Person to the effect that the holders of the Notes will not recognize income gain or loss for income tax purposes of such jurisdiction as a result of such transaction and will be subject to income tax in such jurisdiction on the same amounts, in the same manner and at the same times as would have been the case if such transaction had not occurred.

The Surviving Person will be the successor to the Guarantor and shall succeed to, and be substituted for, and may exercise every right and power of, the Guarantor under the Indenture, and the predecessor Guarantor, except in the case of a lease, shall be released from the obligation to pay principal and interest on the Notes.

Provision of Financial Statements and Reports (a) So long as any of the Notes remain outstanding, the Issuer or the Guarantor will file with the Trustee and furnish to the Holders:

(1) as soon as they are available, but in any event within 120 calendar days after the end of the fiscal year of LMIRT, copies of LMIRT’s financial statements (on a consolidated basis and in the English language) in respect of such financial year (including a statement of total return, statement of distribution, statement of financial position and statement of cash flows) prepared in accordance with GAAP and audited by a member firm of an internationally recognized firm of independent accountants;

(2) as soon as they are available, but in any event within 60 calendar days after the end of each of the first, second and third fiscal quarters of LMIRT, copies of LMIRT’s unaudited financial statements (on a consolidated basis and in the English language) in the form required by the listing rules of the SGX-ST; and

(3) promptly after the occurrence of (i) any Material Acquisition or Disposition or restructuring, (ii) any senior executive officer changes at the LMIRT Manager or change in auditors of LMIRT or (iii) any other material event not in the ordinary course of business, solely with respect to this sub-clause (iii), that the Guarantor, the LMIRT Manager, LMIRT or the Issuer announces publicly, a report containing a description of such event and, in the event of the occurrence of any Material Acquisition or Disposition, at the time of their issue, a copy in English of every report or other notice, statement or circular issued to the members (or any class of them) of LMIRT for any such Material Acquisition or Disposition.

(b) In addition, so long as any of the Notes remain outstanding, the Issuer or the Guarantor will provide to the Trustee (1) within 120 days after the end of each fiscal year and within 14 days of request made by the Trustee, an Officers’ Certificate stating the Fixed Charge Coverage Ratio with respect to the four most recent fiscal quarters and showing in reasonable detail the calculation of the Fixed Charge Coverage Ratio, including the arithmetic computations of each component of the Fixed Charge Coverage Ratio, with a certificate from LMIRT’s external auditors verifying the accuracy and correctness of the calculation and arithmetic computation; provided that the Issuer or the Guarantor shall not be required to provide such auditor certification if LMIRT’s external auditors refuse to provide such certification as a result of a policy of such external auditors not to provide such certification and (2) as soon as possible and in any event within 10 days after the Guarantor or the Issuer becomes aware or should reasonably become aware of the occurrence of a Default (and also within 14 days after any request made by the Trustee), an Officers’ Certificate setting forth the details of the Default, and the action which the Guarantor and/or the Issuer proposes to take with respect thereto.

150 Events of Default The following events will be defined as “Events of Default” in the Indenture with respect to the Notes:

(a) default in the payment of principal of (or premium, if any, on) the Notes when the same becomes due and payable at maturity, upon acceleration, redemption or otherwise;

(b) default in the payment of interest or Additional Amounts on any Note when the same becomes due and payable, and such default continues for a period of 30 days;

(c) (x) default in the performance or breaches of the provisions of the covenants described under “— Consolidation, Merger and Sale of Assets;” or (y) failure to make or consummate an Offer to Purchase in the manner described under the captions “— Repurchase of Notes Upon a Change of Control Triggering Event;” or “— Certain Covenants — Limitation on Asset Sales;”

(d) the Guarantor or the Issuer defaults in the performance of or breaches any other covenant or agreement in the Indenture or under the Notes (other than a default specified in clause (a), (b) or (c) above) and such default or breach continues for a period of 30 consecutive days after written notice by the Trustee or the Holders of 25% or more in aggregate principal amount of the Notes;

(e) there occurs with respect to any Indebtedness of any of the Guarantor or any Restricted Subsidiary having an outstanding principal amount of US$15.0 million (or the Dollar Equivalent thereof) or more in the aggregate for all such Indebtedness of all such Persons, whether such Indebtedness now exists or will hereafter be created, (A) an event of default that has caused the holder thereof to declare such Indebtedness to be due and payable prior to its Stated Maturity or (B) the failure to make a principal payment of or interest or premium (subject to the applicable grace period in the relevant documents) on, or any other amounts in respect of, such Indebtedness when the same becomes due and payable;

(f) one or more final judgments or orders for the payment of money are rendered against the Guarantor or any Restricted Subsidiary and are not paid or discharged, and there is a period of 60 consecutive days following entry of the final judgment or order that causes the aggregate amount for all such final judgments or orders outstanding and not paid or discharged against all such Persons to exceed US$15.0 million (or the Dollar Equivalent thereof) during which a stay of enforcement, by reason of a pending appeal or otherwise, is not in effect;

(g) an involuntary case or other proceeding is commenced against the Guarantor, LMIRT or any Significant Subsidiary with respect to it or its debts under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect seeking the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Guarantor, LMIRT or any Significant Subsidiary or for any substantial part of the property and assets of the Guarantor, LMIRT or any Significant Subsidiary and such involuntary case or other proceeding remains undismissed and unstayed for a period of 60 consecutive days; or an order for relief is entered against the Guarantor, LMIRT or any Significant Subsidiary under any applicable bankruptcy, insolvency or other similar law as now or hereafter in effect;

(h) the Guarantor, LMIRT or any Significant Subsidiary (A) commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (B) consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Guarantor, LMIRT or any Significant Subsidiary or for all or substantially all of the property and assets of the Guarantor, LMIRT or any Significant Subsidiary or (C) effects any general assignment for the benefit of creditors;

(i) the Guarantor denies or disaffirms its obligations under the Guarantee or, except as permitted by the Indenture, the Guarantee is determined in any judicial proceeding to be unenforceable or invalid or will for any reason cease to be in full force and effect, or the Issuer or the Guarantor repudiates the Indenture, the Notes or the Guarantee or does or causes or permits to be done any act or thing evidencing an intention to repudiate such agreement, except as permitted by the Indenture;

151 (j) the entire issued share capital of the Issuer ceases to be wholly owned, directly or indirectly, by the Guarantor or its successor as appointed under the LMIRT Trust Deed other than as a result of a transaction permitted under the “— Consolidation, Merger and Sale of Assets” covenant;

(k) it is or will become unlawful for the Issuer or the Guarantor to perform or comply with any of its material obligations under or in respect of the Indenture, the Notes or the Guarantee;

(l) a moratorium is agreed or declared in respect of any Indebtedness of the Issuer or the Guarantor or any governmental authority shall take any action to condemn, seize, nationalize or appropriate all or a substantial part of the assets of the Guarantor or any Significant Subsidiary or all or a substantial part of the Capital Stock of the Issuer or LMIRT or , the Guarantor shall be prevented from exercising normal control over all or a substantial part of its property;

(m) the capital and/or currency exchange controls in place in Singapore on the Original Issue Date shall be modified or amended in a manner that prevents the Issuer or the Guarantor from performing its respective payment obligations under the Indenture, the Notes or the Guarantee;

(n) the Guarantor resigns or is removed pursuant to the terms of the LMIRT Trust Deed and the replacement or substitute trustee is not appointed in accordance with the terms of the LMIRT Trust Deed;

(o) the LMIRT Manager is removed pursuant to the terms of the LMIRT Trust Deed, and the replacement or substitute manager is not appointed in accordance with the terms of the LMIRT Trust Deed; or

(p) LMIRT is terminated pursuant to the provisions of the LMIRT Trust Deed or LMIRT ceases to be an authorized collective investment scheme constituted in Singapore.

If an Event of Default (other than an Event of Default specified in clause (g), (h) or (i) above) occurs and is continuing under the Indenture, the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes, then outstanding, by written notice to the Issuer (and to the Trustee if such notice is given by the Holders), may, and the Trustee at the written request of such Holders will, (subject to being indemnified and/or secured and/or pre-funded to its satisfaction) declare the principal of, premium, if any, and accrued and unpaid interest on the Notes to be immediately due and payable. Upon a declaration of acceleration, such principal of, premium, if any, and accrued and unpaid interest will be immediately due and payable. If an Event of Default specified in clause (g), (h) or (i) above occurs with respect to the Guarantor or any Significant Subsidiary, the principal of, premium, if any, and accrued and unpaid interest on the Notes then outstanding will automatically become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

The Holders of at least a majority in principal amount of the outstanding Notes by written notice to the Issuer and to the Trustee, may on behalf of all of the Holders waive all past defaults and rescind and annul a declaration of acceleration and its consequences with respect to the Notes if:

(x) all existing Events of Default, other than the non-payment of the principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived, and

(y) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction.

Upon such waiver, the Default will cease to exist, and any Event of Default arising therefrom will be deemed to have been cured, but no such waiver will extend to any subsequent or other Default or impair any right consequent thereon.

If an Event of Default occurs and is continuing, the Trustee may pursue, in its own name or as trustee of an express trust, any available remedy by proceeding at law or in equity to collect the payment of principal of and interest on the Notes or to enforce the performance of any provision of the Notes or the Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding.

152 The Holders of at least a majority in aggregate principal amount of the outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee with respect to the Notes or exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or the Indenture that may involve the Trustee in personal liability or cause it to expend or risk its own funds or otherwise incur any financial liability in following such direction, and may take any other action it deems proper that is not inconsistent with any such direction received from Holders. In addition, the Trustee will not be required to expend its own funds or risk any liability in following any direction from the Holders if it has not been provided with indemnification, pre-funding or security satisfactory to it.

Notwithstanding anything to the contrary in the Indenture or any other document relating to the Notes, in the event the Trustee shall receive instructions from two or more groups of Holders, each holding at least 25% in aggregate principal amount of the then outstanding Notes, and the Trustee believes (in its sole discretion and subject to such legal or other advice as it may deem appropriate) that such instructions are conflicting, the Trustee may, in its sole discretion, exercise any one or more of the following options:

(i) refrain from acting on any such conflicting instructions;

(ii) take the action requested by the Holders of the highest percentage of the aggregate principal amount of the then outstanding Notes, notwithstanding any other provisions of the Indenture (and always subject to such indemnity, security and/or prefunding as is satisfactory to the Trustee); and

(iii) petition a court of competent jurisdiction for further instructions.

In all such instances where the Trustee has acted or refrained from acting as outlined above, the Trustee shall not be responsible or liable for any losses or liability of any nature whatsoever to any party.

Subject to the provisions of the Indenture relating to the duties of the Trustee, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any Holders unless such Holders have instructed the Trustee in writing and have offered to the Trustee security and/or indemnity (including by way of pre-funding) to its satisfaction against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium, if any, or interest or Additional Amounts when due, no Holder may pursue any remedy under the Indenture or the Notes, unless:

(1) the Holder has previously given the Trustee written notice of a continuing Event of Default;

(2) the Holders of at least 25% in aggregate principal amount of outstanding Notes make a written request to the Trustee to pursue the remedy;

(3) such Holder or Holders provide the Trustee security and/or indemnity and/or pre-funding satisfactory to the Trustee against any loss, fee, costs, liability or expense to be incurred in compliance with such written request;

(4) the Trustee does not comply with the request within 60 days after receipt of the written request and the offer of indemnity and/or security and/or pre-funding satisfactory to the Trustee; and

(5) during such 60-day period, the Holders of a majority in aggregate principal amount of the outstanding Notes do not give the Trustee a written direction that is inconsistent with the request.

However, such limitations do not apply to the right of any Holder of a Note to receive payment of the principal of, premium, if any, or interest, and Additional Amounts, if any, on, such Note or any payment under the Guarantee or to bring suit for the enforcement of any such payment, on or after the due date expressed in the Notes, which right will not be impaired or affected without the consent of the Holder.

Two Officers of the Guarantor must certify to the Trustee in writing, on or before a date not more than 120 days after the end of each fiscal year and within 14 days of any demand by the Trustee, that a

153 review has been conducted of the activities of the Guarantor and the Restricted Subsidiaries and the Guarantor’s and the Issuer’s performance under the Indenture and the Notes and that the Guarantor and the Issuer have fulfilled all of their respective obligations thereunder, or, if there has been a default in the fulfillment of any such obligation, specifying each such default and the nature and status thereof. The Guarantor and/or the Issuer will also be obligated to notify the Trustee of any default or defaults in the performance of any covenants or agreements under the Indenture. See “— Provision of Financial Statements and Reports.”

None of the Trustee or any Agent is obligated to do anything to ascertain whether any Event of Default or Default has occurred or is continuing and will not be responsible to Holders or any other person for any loss arising from any failure by it to do so, and each of the Trustee and the Agents may assume that no such event has occurred and that the Issuer and the Guarantor are performing all of their obligations under the Indenture and the Notes unless the Trustee or the Agent, as the case may be, has received written notice of the occurrence of such event or facts establishing that a Default or an Event of Default has occurred or that the Issuer and the Guarantor are not performing all of their obligations under the Indenture and/or the Notes.

No Payments for Consents The Guarantor will not, and the Guarantor will not permit, LMIRT or any Subsidiaries of the Guarantor to, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture, the Notes or Guarantee, unless such consideration is offered to be paid or is paid to all Holders that consent, waive or agree to amend such term or provision within the time period set forth in the solicitation documents relating to such consent, waiver or amendment.

Notwithstanding the foregoing, the Guarantor, LMIRT or its Subsidiaries shall be permitted, in any offer or payment of consideration for, or as an inducement to, any consent, waiver or amendment of any of the terms or provisions of the Indenture, to exclude Holders in any jurisdiction where (A) the solicitation of such consent, waiver or amendment in the manner deemed appropriate by the Guarantor and the Issuer and the payment of consideration therefor would require either of the Guarantor or the Issuer to (i) file a registration statement, prospectus or similar document or subject the Guarantor or the Issuer to ongoing periodic reporting or similar requirements under any securities laws (including, but not limited to, the United States federal securities laws and the laws of the European Union or its member states), (ii) qualify as a foreign corporation or other entity or as a dealer in securities in such jurisdiction if it is not otherwise required to so qualify, (iii) generally consent to service of process in any such jurisdiction or (iv) subject the Guarantor or the Issuer to taxation in any such jurisdiction if it is not otherwise so subject; or (B) such solicitation would otherwise not be permitted under applicable law in such jurisdiction.

Defeasance Defeasance and Discharge The Indenture will provide that the Issuer will be deemed to have paid and will be discharged from any and all obligations in respect of the Notes on the 183rd day after the deposit referred to below and payments of all amounts due to the Trustee, and the provisions of the Indenture will no longer be in effect with respect to the Notes (except for, among other matters, certain obligations to register the transfer or exchange of the Notes, to replace stolen, lost or mutilated Notes, to maintain paying agencies and to hold monies for payment in trust) if, among other things:

(A) the Issuer has (1) deposited with the Trustee (or another entity designated by the Trustee for such purpose), in trust, cash in U.S. dollars, U.S. Government Obligations or a combination thereof that through the payment of interest and principal in respect thereof in accordance with their terms will provide money in an amount sufficient to pay the principal of, premium, if any, and accrued interest on the Notes on the Stated Maturity of such payments in accordance with the terms of the Indenture and the Notes and (2) delivered to the Trustee a certificate of an internationally recognized firm of independent accountants to the effect that the amount deposited by the Issuer is sufficient to provide payment for the principal of, premium, if any, and accrued interest on, the Notes on the Stated Maturity of such payment in accordance with the terms of the Indenture and the Notes and an Opinion of Counsel to the effect that the Holders have a valid, perfected, exclusive security in such trust;

154 (B) the Issuer has delivered to the Trustee an Opinion of Counsel of recognized international standing to the effect that the creation of the defeasance trust does not violate the U.S. Investment Company Act of 1940, as amended, and after the passage of 183 days following the deposit, the trust fund will not be subject to the effect of Section 547 of the United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law;

(C) the Issuer shall have delivered to the Trustee an Officers’ Certificate of the Issuer stating that the deposit was not made by it with the intent of preferring the Holders over any other of its creditors or with the intent of defeating, hindering, delaying or defrauding any other of its creditors or others; and

(D) immediately after giving effect to such deposit on a pro forma basis, no Event of Default, or event that after the giving of notice or lapse of time or both would become an Event of Default, will have occurred and be continuing on the date of such deposit or during the period ending on the 183rd day after the date of such deposit, and such defeasance will not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Guarantor, LMIRT or any of the Restricted Subsidiaries is a party or by which the Guarantor, LMIRT or any of the Restricted Subsidiaries is bound.

In the case of either discharge or defeasance of the Notes, the Guarantee will terminate.

Defeasance of Certain Covenants The Indenture further will provide that the provisions of the Indenture applicable to the Notes will no longer be in effect with respect to clauses (c) and (d) under the second paragraph under “— Consolidation, Merger and Sale of Assets” and all the covenants described herein under “— Certain Covenants” other than as described under clause (f) of the covenant described under “— Certain Covenants — Limitation on Indebtedness and Preferred Stock”, clause (c) under “— Events of Default” with respect to such clauses (c) and (d) under the second paragraph under “— Consolidation, Merger and Sale of Assets” and with respect to the other events set forth in such clause, clause (d) under “— Events of Default” with respect to such other covenants and clauses (e) and (f) under “— Events of Default” will be deemed not to be Events of Default upon, among other things, the deposit with the Trustee, in trust, of U.S. dollars, U.S. Government Obligations or a combination thereof that through the payment of interest and principal in respect thereof in accordance with their terms will provide money in an amount sufficient to pay the principal of, premium, if any, Additional Amounts, if any, and accrued interest on the Notes on the Stated Maturity of such payments in accordance with the terms of the Indenture and the Notes, the satisfaction of the provisions described in clause (B) and (C) of the preceding paragraph and the delivery by the Issuer to the Trustee of an Opinion of Counsel of recognized international standing with respect to U.S. federal income tax matters to the effect that the beneficial owners of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance of certain covenants and Events of Default and will be subject to U.S. federal income tax on the same amount and in the same manner and at the same time as would have been the case if such deposit and defeasance had not occurred.

Defeasance and Certain Other Events of Default If in the event (i) the Issuer exercises its option to omit compliance with certain covenants and provisions of the Indenture as described in the immediately preceding paragraph and the Notes are declared due and payable because of the occurrence of an Event of Default that remains applicable and (ii) the amount of U.S. dollars and/or U.S. Government Obligations on deposit with the Trustee will be sufficient to pay amounts due on the Notes at the time of their Stated Maturity but may not be sufficient to pay amounts due on the Notes at the time of the acceleration resulting from such Event of Default, the obligations of the Issuer under the Indenture will be revived and no such defeasance will be deemed to have occurred.

155 Satisfaction and Discharge The Indenture will be discharged and will cease to be of further effect (except as to surviving rights of registration of transfer or exchange of the Notes, as expressly provided for in the Indenture) as to all outstanding Notes when:

(1) either:

(a) all of the Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust by the Issuer and thereafter repaid to the Issuer) have been delivered to the Trustee for cancellation; or

(b) (i) all Notes not previously delivered to the Trustee for cancellation (A) have become due and payable, (B) will become due and payable at their Stated Maturity within one year or (C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuer; and (ii) the Issuer has irrevocably deposited or caused to be deposited with the Trustee funds, in cash in U.S. dollars or U.S. Government Obligations, or a combination thereof, as applicable, in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not previously delivered to the Trustee for cancellation, for principal, premium, if any, and interest to the date of deposit (in the case of Notes that have become due and payable), or to the Stated Maturity or redemption date, as the case may be, together with irrevocable written instructions from the Issuer directing the Trustee to apply such funds to the payment thereof at Stated Maturity or on the redemption date, as the case may be;

(2) the Issuer or the Guarantor has paid all other sums payable under the Indenture; and

(3) such deposit will not result in a breach or violation of, or constitute a default under, any material instruments to which the Issuer or the Guarantor is a party or by which the Issuer or the Guarantor is bound, including the Indenture.

In addition, the Issuer must deliver to the Trustee an Officer’s Certificate and an Opinion of Counsel stating that all conditions precedent to satisfaction and discharge have been satisfied.

Amendments and Waivers Amendments Without Consent of Holders The Indenture, the Notes and the Guarantee may be amended, without the consent of any Holder of Notes, to:

(1) cure any ambiguity, defect, omission or inconsistency in the Indenture, the Notes or the Guarantee;

(2) comply with the provisions described under “— Consolidation, Merger and Sale of Assets;”

(3) evidence and provide for the acceptance of appointment by a successor Trustee;

(4) release the Guarantor from the Guarantee as provided or permitted by the terms of the Indenture or add any guarantor or any guarantee;

(5) add collateral to secure the Notes or the Guarantee;

(6) provide for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture;

(7) in any other case where a supplemental indenture to the Indenture is required or permitted to be entered into pursuant to the provisions of the Indenture without the consent of any Holder;

(8) effect any changes to the Indenture in a manner necessary to comply with the procedures of Euroclear or Clearstream or any applicable securities depository or clearing system;

156 (9) conform the text of the Indenture, the Notes or the Guarantee to any provision of this “Description of the Notes” to the extent that such provision in this “Description of the Notes” was intended to be a verbatim recitation of a provision of the Indenture, the Notes or the Guarantee;

(10) make any other change, as certified in the Issuer’s Officer’s Certificate that does not materially and adversely affect the rights of any Holder of Notes; or

(11) permit any successor to Perpetual (Asia) Limited (in its capacity as trustee of Lippo Malls Indonesia Retail Trust) to the extent such successor is appointed pursuant to the terms of the LMIRT Trust Deed, to become the Guarantor under the Indenture.

In connection with the matters indicated above, the Trustee shall be entitled to rely on an Opinion of Counsel and an Officer’s Certificate to the effect that the entry into such amendment, supplement or waiver is authorized or permitted.

Amendments With Consent of Holders Except as provided below, amendments of the Indenture, the Notes and the Guarantee may be made by the Issuer, the Guarantor and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the outstanding Notes, and the holders of a majority in principal amount of the outstanding Notes may waive future compliance by the Issuer or the Guarantor with any provision of the Indenture, the Notes or the Guarantee; provided, however, that no such modification, amendment or waiver may, without the consent of each Holder:

(1) change the Stated Maturity of the principal of, or any instalment of interest on, any Note;

(2) reduce the principal amount of, or premium, if any, or interest on, any Note;

(3) change the currency, time or place of payment of principal of, or premium, if any, or interest on, any Note;

(4) impair the right to institute suit for the enforcement of any payment on or after the Stated Maturity (or, in the case of a redemption, on or after the redemption date) of any Note or the Guarantee;

(5) reduce the above stated percentage of outstanding Notes the consent of whose Holders is necessary to modify or amend the Indenture, the Notes and the Guarantee;

(6) waive a default in the payment of principal of, premium, if any, or interest on the Notes;

(7) release the Guarantor from the Guarantee, except as provided in the Indenture;

(8) reduce the percentage or aggregate principal amount of outstanding Notes the consent of whose Holders is necessary for waiver of compliance with certain provisions of the Indenture, the Notes or the Guarantee or for waiver of certain defaults;

(9) amend, change or modify the Guarantee in a manner that adversely affects the Holders;

(10) reduce the amount payable upon a Change of Control Offer or an Offer to Purchase with the Excess Proceeds from any Asset Sale or, change the time or manner by which a Change of Control Offer or an Offer to Purchase with the Excess Proceeds or other proceeds from any Asset Sale may be made or by which the Notes must be repurchased pursuant to a Change of Control Offer or an Offer to Purchase with the Excess Proceeds or other proceeds from any Asset Sale;

(11) change the redemption date or the redemption price of the Notes from that stated under the captions “— Optional Redemption” or “— Redemption for Taxation Reasons;”

(12) amend, change or modify the obligation of the Issuer or the Guarantor to pay Additional Amounts; or

(13) amend, change or modify any provision of the Indenture or the related definition affecting the ranking of the Notes or the Guarantee in a manner which adversely affects the Holders.

157 The consent of the Holders is not necessary to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. After an amendment becomes effective, the Issuer is required to mail to each Holder at such Holder’s address appearing in the Register (as defined herein) a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, will not impair or affect the validity of the amendment.

Unclaimed Money Claims against the Issuer for the payment of principal of, premium, if any, or interest, on the Notes will become void unless presentation for payment is made as required in the Indenture within a period of six years.

No Personal Liability of Incorporators, Shareholders, Officers, Directors or Employees No recourse for the payment of the principal of, premium, if any, or interest on any of the Notes or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Issuer, the LMIRT Manager or the Guarantor in the Indenture, or in any of the Notes or the Guarantee or because of the creation of any Indebtedness represented thereby, will be had against any incorporator, shareholder, officer, commissioner, director, employee or controlling person of the Issuer, the LMIRT Manager or the Guarantor or of any successor Person thereof. Each Holder, by accepting the Notes, waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes and the Guarantee. Such waiver may not be effective to waive liabilities under the applicable securities laws.

Concerning the Trustee and the Agents Citicorp International Limited is to be appointed as Trustee under the Indenture, and Citibank N.A., London Branch is to be appointed as Principal Paying Agent with regard to the Notes. Citibank, N.A., London Branch is to be appointed registrar (the “Registrar”) and transfer agent (the “Transfer Agent”) with regard to the Notes. Except during the continuance of a Default, the Trustee will not be liable, except for the performance of such duties and only such duties as are specifically set forth in the Indenture, and no implied covenant or obligation shall be read into the Indenture against the Trustee and the Agents. If an Event of Default has occurred and is continuing, the Trustee will use the same degree of care and skill in its exercise of the rights and powers vested in it under the Indenture as a prudent person would exercise under the circumstances in the conduct of such person’s own affairs. If a Default or an Event of Default occurs and is continuing, all Agents will be required to act on the Trustee’s direction.

Pursuant to the terms of the Indenture and the Notes, the Issuer and the Guarantor will reimburse the Trustee and the Agents for all incurred costs and expenses.

The Trustee is permitted to engage in transactions with the Issuer, the Guarantor, LMIRT and their Affiliates and nothing herein shall obligate the Trustee to account for any profits earned from any business or transactional relationship; provided, however, that if it acquires any conflicting interest, it must eliminate such conflict or resign.

Notwithstanding anything to the contrary herein and except as specifically set forth in the Indenture, whenever the Trustee is required or entitled by the terms of the Indenture to exercise any discretion or power, take any action of any nature, make any decision or give any direction or certification, the Trustee is entitled, prior to exercising any such discretion or power, taking any such action, making any such decision, or giving any such direction or certification, to solicit Holders for direction, and the Trustee is not responsible for any loss or liability incurred by any person as a result of any delay in it exercising such discretion or power, taking such action, making such decision, or giving such direction or certification where the Trustee is seeking such directions or the non-exercise of such discretion or power, or not taking any such action or making any such decision or giving any such direction or certification in the absence of any such directions from Holders. In any event, and as provided elsewhere herein, even where the Trustee has been directed by the Holders, the Trustee shall not be required to exercise any such discretion, power or take any such action as aforesaid unless it has been indemnified and/or secured and/or prefunded to its satisfaction.

158 The Trustee will be under no obligation to exercise any rights or powers conferred under the Indenture for the benefit of the Holders at the written request or direction of any Holders unless such Holders have instructed the Trustee in writing and provided to the Trustee indemnity, pre-funding and/or security satisfactory to the Trustee against any loss, liability or expense that might be incurred by it in compliance with such request or direction. The foregoing prefunding requirements shall be in addition, and subject in all respects, to any other requirements of the Trustee regarding the indemnity, pre-funding or security to be provided to it in connection with any such enforcement request, including requirements regarding the creditworthiness of the requesting Holders.

Nothing in the Indenture shall require the Trustee to exercise any discretion in making any investments of any money at any time received by it pursuant to any of the provisions of the Indenture or the Notes. The Trustee shall be entitled to hold funds uninvested without liability to account for any interest to any party hereto.

In the exercise of its duties, the Trustee shall not be responsible for the verification of the accuracy or completeness of any certification, opinion or other documents submitted to it by the Issuer and is entitled to rely conclusively on the information contained therein. Notwithstanding anything described herein, the Trustee has no duty to monitor the performance or compliance of the Guarantor, the Issuer or any other Restricted Subsidiary in the fulfillment of their respective obligations under the Indenture, the Guarantee and the Notes. Furthermore, each Holder, by accepting the Notes will agree, for the benefit of the Trustee, that it is solely responsible for its own independent appraisal of and investigation into all risks arising under or in connection with the Indenture and has not relied on and will not at any time rely on the Trustee in respect of such risks.

For so long as the Notes are listed on the SGX-ST and the rules of the SGX-ST so require, the Issuer will appoint and maintain a paying agent in Singapore, where the Notes may be presented or surrendered for payment or redemption, if definitive Notes are issued in exchange for Global Notes. The Issuer will announce through the SGX-ST any issue of definitive Notes in exchange for Global Notes, including in the announcement all material information on the delivery of the definitive Notes and details of the paying agent in Singapore.

The Registrar will maintain a register reflecting ownership of the Notes outstanding from time to time (the “Register”) and will make payments on and facilitate transfer of the Notes on behalf of the Issuer.

None of the Trustee, the Agents or any of their respective agents will have any responsibility or be liable for any aspect of the records relating to the book-entry interests.

The Issuer may change the Principal Paying Agent, the Registrar or the Transfer Agent without prior notice to the Holders.

Book-Entry; Delivery and Form The Notes will be represented by a global note in registered form without interest coupons attached (the “Global Note”). On the Original Issue Date, the Global Note will be deposited with a common depositary and registered in the name of the common depositary or its nominee for the accounts of Euroclear and Clearstream.

Global Note Ownership of beneficial interests in the Global Note (the “book-entry interests”) will be limited to persons that have accounts with Euroclear and/or Clearstream or persons that may hold interests through such participants. Book-entry interests will be shown on, and transfers thereof will be effected only through, records maintained in book-entry form by Euroclear and Clearstream and their participants.

Except as set forth below under “— Individual Definitive Notes,” the book-entry interests will not be held in definitive form. Instead, Euroclear and/or Clearstream will credit on their respective book-entry registration and transfer systems a participant’s account with the interest beneficially owned by such participant. The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. The foregoing limitations may impair the ability to own, transfer or pledge book-entry interests.

159 So long as the Notes are held in global form, the common depositary for Euroclear and/or Clearstream (or its nominee) will be considered the sole holder of the Global Note for all purposes under the Indenture and “holders” of book-entry interests will not be considered the owners or “Holders” of the Notes for any purpose. As such, participants must rely on the procedures of Euroclear and Clearstream and indirect participants must rely on the procedures of the participants through which they own book-entry interests in order to transfer their interests in the Notes or to exercise any rights of Holders under the Indenture.

None of the Issuer, the Trustee or any of their respective agents will have any responsibility or be liable for any aspect of the records relating to the book-entry interests. The Notes are not issuable in bearer form.

Payments on the Global Note Payments of any amounts owing in respect of the Global Note (including principal, premium, interest and Additional Amounts) will be made to the Principal Paying Agent in U.S. dollars. The Principal Paying Agent will, in turn, make such payments to the common depositary for Euroclear and Clearstream, which will distribute such payments to participants in accordance with their procedures. The Issuer and the Guarantor will make payments of all such amounts without deduction or withholding for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature, except as may be required by law and as described under “— Additional Amounts.”

Under the terms of the Indenture, the Issuer, the Guarantor, the Trustee and the Agents will treat the registered holder of the Global Note (i.e., the common depositary or its nominee) as the owner thereof for the purpose of receiving payments and for all other purposes. Consequently, none of the Issuer, the Guarantor, the Trustee or any of their respective agents has or will have any responsibility or liability for:

Š any aspect of the records of Euroclear, Clearstream or any participant or indirect participant relating to or payments made on account of a book-entry interest, for any such payments made by Euroclear, Clearstream or any participant or indirect participants, or for maintaining, supervising or reviewing any of the records of Euroclear, Clearstream or any participant or indirect participant relating to or payments made on account of a book-entry interest; or

Š Euroclear, Clearstream or any participant or indirect participant.

Payments by participants to owners of book-entry interests held through participants are the responsibility of such participants.

Redemption of the Global Note In the event any Global Note, or any portion thereof, is redeemed, the common depositary will distribute the U.S. dollar amount received by it in respect of the Global Note so redeemed to Euroclear and/or Clearstream, as applicable, who will distribute such amount to the holders of the book-entry interests in such Global Note. The redemption price payable in connection with the redemption of such book-entry interests will be equal to the U.S. dollar amount received by the common depositary, Euroclear or Clearstream, as applicable in connection with the redemption of such Global Note (or any portion thereof). The Issuer understands that under existing practices of Euroclear and Clearstream, if fewer than all of the Notes are to be redeemed at any time, Euroclear and Clearstream will credit their respective participants’ accounts on a proportionate basis (with adjustments to prevent fractions) or by lot or on such other basis as they deem fair and appropriate; provided, however, that no book-entry interests of US$200,000 principal amount, or less, as the case may be, will be redeemed in part.

Action by Owners of Book-Entry Interests Euroclear and Clearstream have advised that they will take any action permitted to be taken by a Holder of Notes only at the direction of one or more participants to whose account the book-entry interests in a Global Note are credited and only in respect of such portion of the aggregate principal amount of Notes as to which such participant or participants has or have given such direction. Euroclear and Clearstream will not exercise any discretion in the granting of consents, waivers or the taking of any other action in respect of the Global Note. If there is an Event of Default under the Notes, however, each of Euroclear and Clearstream reserves the right to exchange the Global Note for individual definitive notes in certificated form, and to distribute such individual definitive notes to their participants.

160 Transfers Transfers between participants in Euroclear and Clearstream will be effected in accordance with Euroclear and Clearstream’s rules and will be settled in immediately available funds. If a Holder requires physical delivery of individual definitive notes for any reason, including to sell the Notes to persons in jurisdictions which require physical delivery of such securities or to pledge such securities, such Holder must transfer its interest in the Global Note in accordance with the normal procedures of Euroclear and Clearstream and in accordance with the provisions of the Indenture.

Book-entry interests in the Global Note will be subject to the restrictions on transfer discussed under “Transfer Restrictions.”

Any book-entry interest in a Global Note that is transferred to a person who takes delivery in the form of a book-entry interest in another Global Note (if applicable) will, upon transfer, cease to be a book- entry interest in the first-mentioned Global Note and become a book-entry interest in the other Global Note and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to book-entry interests in such other Global Note for as long as it retains such a book-entry interest.

Global Clearance and Settlement under the Book-Entry System Book-entry interests owned through Euroclear or Clearstream accounts will follow the settlement procedures applicable. Book-entry interests will be credited to the securities custody accounts of Euroclear and Clearstream holders on the business day following the settlement date against payment for value on the settlement date.

The book-entry interests will trade through participants of Euroclear or Clearstream, and will settle in same-day funds. Since the purchaser determines the place of delivery, it is important to establish at the time of trading of any book-entry interests where both the purchaser’s and seller’s accounts are located to ensure that settlement can be made on the desired value date.

Information Concerning Euroclear and Clearstream The Issuer understands as follows with respect to Euroclear and Clearstream:

Euroclear and Clearstream hold securities for participating organizations and facilitate the clearance and settlement of securities transactions between their respective participants through electronic book- entry changes in accounts of such participants. Euroclear and Clearstream provide to their participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream interface with domestic securities markets. Euroclear and Clearstream participants are financial institutions, such as underwriters, securities brokers and dealers, banks and trust companies, and certain other organizations. Indirect access to Euroclear and Clearstream is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodian relationship with a Euroclear or Clearstream participant, either directly or indirectly.

Although the foregoing sets out the procedures of Euroclear and Clearstream in order to facilitate the original issue and subsequent transfers of interests in the Notes among participants of Euroclear and Clearstream, neither Euroclear nor Clearstream is under any obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time.

None of the Issuer, the Guarantor, the Trustee or any of their respective agents will have responsibility for the performance of Euroclear or Clearstream or their respective participants of their respective obligations under the rules and procedures governing their operations, including, without limitation, rules and procedures relating to book-entry interests.

Individual Definitive Notes If (1) the common depositary or any successor to the common depositary is at any time unwilling or unable to continue as a depositary for the reasons described in the Indenture and a successor depositary is not appointed by the Issuer within 90 days, (2) either Euroclear or Clearstream, or a successor clearing system is closed for business for a continuous period of 14 days (other than by

161 reason of holidays, statutory or otherwise) or announces an intention to permanently cease business or does in fact do so, or (3) any of the Notes has become immediately due and payable in accordance with “— Events of Default” and the Issuer has received a written request from a Holder, the Issuer upon prior written notice given to the Trustee, will issue individual definitive notes in registered form in exchange for the Global Note. Upon receipt of such notice from the common depositary or the Trustee, as the case may be, the Issuer will use its best efforts to make arrangements with the common depositary for the exchange of interests in the Global Note for individual definitive notes and cause the requested individual definitive notes to be executed and delivered to the Registrar in sufficient quantities and authenticated by or on behalf of the Registrar for delivery to the Holders. Persons exchanging interests in a Global Note for individual definitive notes will be required to provide the Registrar, through the relevant clearing system, with written instruction and other information required by the Issuer and the Registrar to complete, execute and deliver such individual definitive notes. In all cases, individual definitive notes delivered in exchange for any Global Note or beneficial interest therein will be registered in the names, and issued in any approved denominations, requested by the relevant clearing system.

Individual definitive notes will not be eligible for clearing and settlement through Euroclear or Clearstream.

Notices All notices or demands required or permitted by the terms of the Notes or the Indenture to be given to or by the Holders are required to be in writing (in English) and may be given or served by being sent by prepaid courier or by being deposited, first-class postage prepaid, in the mails of the relevant jurisdiction (if intended for the Issuer or the Guarantor) addressed to the Issuer or the Guarantor, as the case may be, at the registered office of the Issuer or the Guarantor, as the case may be; (if intended for the Trustee) addressed to the Trustee at the specified corporate trust administration office of the Trustee; and (if intended for any Holder) addressed to such Holder at such Holder’s last address as it appears in the Note register (or otherwise delivered to such Holders in accordance with applicable Euroclear or Clearstream procedures).

Any such notice or demand will be deemed to have been sufficiently given or served when so sent or deposited and, if to the Holders, when delivered in accordance with the applicable rules and procedures of Euroclear or Clearstream, as the case may be. Any such notice shall be deemed to have been delivered on the day such notice is delivered to Euroclear or Clearstream, as the case may be, or if by mail, when so sent or deposited.

Acknowledgement by Parties (a) Notwithstanding any provision to the contrary in the Indenture, each of the parties to the Indenture, and each Holder, by accepting the Notes, hereby agrees and acknowledges that the Guarantor has entered into the Indenture only in its capacity as trustee of LMIRT and not in its personal capacity and all references to the Guarantor in the Indenture shall be construed accordingly. Accordingly, notwithstanding any provision to the contrary in the Indenture, the Guarantor has assumed all obligations under the Indenture in its capacity as trustee of LMIRT and not in its personal capacity. Any liability of or indemnity, covenant, undertaking, representation and/or warranty given or to be given by the Guarantor under the Indenture is given by the Guarantor in its capacity as trustee of LMIRT and not in its personal capacity and any power or right conferred on any receiver, attorney, agent and/or delegate by the Guarantor is and shall be limited to the assets of LMIRT over which the Guarantor has recourse and shall not extend to any personal assets of the Guarantor or any assets held by the Guarantor in its capacity as trustee of any trust (other than LMIRT). Any obligation, matter, act, action or thing required to be done, performed or undertaken by the Guarantor under the Indenture shall only be in connection with the matters relating to LMIRT and shall not extend to the obligations of the Guarantor in respect of any other trust or real estate investment trust of which it is trustee.

(b) Notwithstanding any provision to the contrary in the Indenture, each of the parties to the Indenture hereby agrees and acknowledges that the obligations of the Guarantor under the Indenture will be solely the corporate obligations of the Guarantor and there shall be no recourse against the shareholders, directors, officers or employees of the Guarantor for any claims, losses, damages, liabilities or other obligations whatsoever in connection with any of the transactions contemplated by the provisions of the Indenture.

162 (c) For the avoidance of doubt, any legal action or proceedings commenced against the Guarantor whether in Singapore or elsewhere pursuant to the Indenture shall be brought against the Guarantor in its capacity as trustee of LMIRT and not in its personal capacity.

(d) The foregoing shall not restrict or prejudice the rights or remedies of the Trustee under law or equity arising from or in connection with any gross negligence, fraud or breach of trust of the Guarantor.

(e) The provisions of this clause shall apply, mutatis mutandis, to any notice, certificate or other document which the Guarantor issues under or pursuant to the Indenture, as if expressly set out in such notice, certificate or document, and shall survive the termination or rescission of the Indenture.

Consent to Jurisdiction; Service of Process The Issuer and the Guarantor will irrevocably (i) submit to the non-exclusive jurisdiction of any U.S. federal or New York state court located in the Borough of Manhattan, The City of New York in connection with any suit, action or proceeding arising out of, or relating to, any Note, the Guarantee or the Indenture or any transaction contemplated thereby and (ii) designate and appoint Law Debenture Corporate Services Inc. at 801 2nd Avenue, Suite 403, New York, NY 10017 for receipt of service of process in any such suit, action or proceeding.

Governing Law Each of the Notes, the Guarantee and the Indenture provides that such instrument will be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflicts of law to the extent that the application of the law of another jurisdiction would be required thereby.

Definitions Set forth below are defined terms used in the covenants and other provisions of the Indenture. Reference is made to the Indenture for other capitalized terms used in this “Description of the Notes” for which no definition is provided.

“Acquired Indebtedness” means Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary or Indebtedness of a Restricted Subsidiary assumed in connection with an Asset Acquisition by such Restricted Subsidiary and not Incurred in connection with, or in contemplation of, the Person merging with or into or becoming a Restricted Subsidiary or the Asset Acquisition.

“Adjusted Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield in maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

“Affiliate” means, with respect to any Person, any other Person (a) directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person, (b) who is a director or officer of such Person or any Subsidiary of such Person or of any Person referred to in clause (a) of this definition, or (c) who is a spouse, child or step-child, parent or step-parent, brother, sister, step- brother or step-sister, parent-in-law, grandchild, grandparent, uncle, aunt, nephew and niece of a Person described in clause (a) or (b). For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“Agent” means any Registrar, Transfer Agent, Principal Paying Agent, their respective co-agent and additional agent.

“Aggregate Leverage” means, as defined under the Property Funds Appendix, the total borrowings and deferred payments of a real estate investment trust, or such other definition as may from time to time be provided for under the Property Funds Appendix.

163 “Applicable Premium” means with respect to a Note at any redemption date, the greater of (i) 1.00% of the principal amount of such Note and (ii) the excess of (A) the present value at such redemption date of (1) the redemption price of such Note on June 19, 2022 (such redemption price being described in “Optional Redemption” exclusive of any accrued interest) plus (2) all required remaining scheduled interest payments due on such Note through June 19, 2022 (but excluding accrued and unpaid interest to the redemption date), computed using a discount rate equal to the Adjusted Treasury Rate plus 50 basis points, over (B) the principal amount of such Note.

“Asset Acquisition” means (a) an Investment by the Guarantor or any Restricted Subsidiary in any other Person pursuant to which such Person shall become a Restricted Subsidiary or shall be merged into or consolidated with the Guarantor or any Restricted Subsidiary, or (b) an acquisition by the Guarantor or any Restricted Subsidiary of the property and assets of any Person other than the Guarantor or any Restricted Subsidiary that constitute substantially all of a division or line of business of such Person.

“Asset Disposition” means the sale or other disposition by the Guarantor or any Restricted Subsidiary (other than to the Guarantor or another Restricted Subsidiary) of (a) all or substantially all of the Capital Stock of any Restricted Subsidiary or (b) all or substantially all of the assets that constitute a division or line of business of the Guarantor or any Restricted Subsidiary.

“Asset Sale” means any sale, transfer or other disposition (including by way of merger, consolidation or Sale and Leaseback Transaction and including any sale or issuance of the Capital Stock of any Restricted Subsidiary) in one transaction or a series of related transactions by the Guarantor or any Restricted Subsidiary to any Person other than the Guarantor or any Restricted Subsidiary of any of its property or assets (including Capital Stock), in each case that is not governed by the provisions of the “— Consolidation, Merger and Sale of Assets” covenant; provided that “Asset Sale” shall not include:

(a) sales, transfers or other dispositions of inventory, (including properties under development for sale and completed properties for sale) in the ordinary course of business;

(b) sales, transfers or other dispositions of assets constituting a Permitted Investment or Restricted Payment permitted to be made under the “— Limitation on Restricted Payments” covenant;

(c) sales, transfers or other dispositions of assets with a Fair Market Value not in excess of US$1.0 million (or the Dollar Equivalent thereof) in any transaction or series of related transactions;

(d) the disposition of cash or Temporary Cash Investments;

(e) sales, transfers or other dispositions by the Guarantor or any Restricted Subsidiary of Qualified Receivables in any Qualified Receivables Transactions permitted under clause (q) of the definition of Permitted Lien;

(f) any sale, transfer, assignment or other disposition of any property or equipment that has become damaged, worn out, obsolete or otherwise unsuitable for use in connection with the business of LMIRT, the Guarantor or its Restricted Subsidiaries; or

(g) any transfer, assignment or other disposition deemed to occur in connection with creating or granting any Permitted Lien.

“Attributable Indebtedness” means, in respect of a Sale and Leaseback Transaction, at the time of determination, the present value, discounted at the interest rate borne by the Notes of the total obligations of the lessee for rental payments during the remaining term of the lease in such Sale and Leaseback Transaction, including any period for which such lease has been extended or may, at the option of the lessor, be extended.

“Average Life” means, at any date of determination with respect to any Indebtedness, the quotient obtained by dividing (a) the sum of the products of (i) the number of years from such date of determination to the dates of each successive scheduled principal payment or redemption or similar payment of such Indebtedness and (ii) the amount of such principal payment by (b) the sum of all such principal payments.

164 “Board of Directors” means the board of directors elected or appointed by the shareholders of the LMIRT Manager to manage the business of LMIRT or any committee of such board duly authorized to take the action purported to be taken by such committee.

“Board Resolution” means any resolution of the Board of Directors taking an action which it is authorized to take and adopted at a meeting duly called and held at which a quorum of disinterested members (if so required) was present and acting throughout or adopted by written resolution executed by a majority of the Board of Directors.

“Business Day” means any day which is not a Saturday, Sunday, legal holiday or other day on which banking institutions in The City of New York, Hong Kong or Singapore (or in any other place in which payments on the Notes are to be made) are authorized by law or governmental regulation to close.

“Capitalized Lease” means, with respect to any Person, any lease of any property (whether real, personal or mixed) which, in conformity with GAAP, is required to be capitalized on the balance sheet of such Person. For the purpose of the “— Limitation on Liens” covenant, a Capitalized Lease will be deemed to be secured by a Lien on the property being leased.

“Capitalized Lease Obligations” means the capitalized amount of any rental obligations under a Capitalized Lease in accordance with GAAP, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of penalty.

“Capital Stock” means, with respect to any Person, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents (however designated, whether voting or non-voting) in equity of such Person, whether outstanding on the Original Issue Date or issued thereafter, including, without limitation, all Common Stock, Preferred Stock and Perpetual Securities.

“Change of Control” means the occurrence of one or more of the following events:

(a) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Guarantor and the Restricted Subsidiaries, taken as a whole, in each case, to any “person” (within the meaning of Section 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder;

(b) LMIRT consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, LMIRT, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of LMIRT or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the Voting Stock of LMIRT outstanding immediately prior to such transaction is converted into or exchanged for (or continues as) Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance) and in substantially the same proportion as before the transaction;

(c) LMIRT Management Ltd. (in its capacity as manager of LMIRT) while it is the manager of LMIRT ceases to be controlled, directly or indirectly, by a Permitted Holder;

(d) LMIRT Management Ltd. ceases to be the manager of LMIRT and the new manager of LMIRT is controlled by any Person other than a Permitted Holder;

(e) individuals who on the Original Issue Date constituted the Board of Directors (together with any new directors whose election by the Board of Directors was approved by a vote of at least 66% of the members of the Board of Directors then in office who were members of the Board of Directors on the Original Issue Date or whose election was previously so approved) cease for any reason to constitute a majority of the members of the Board of Directors then in office; or

(f) the adoption of a plan relating to the liquidation or dissolution of LMIRT.

165 “Change of Control Triggering Event” means the occurrence of both a Change of Control and Ratings Decline.

“CIS Code” means the code on collective investment schemes issued by the Monetary Authority of Singapore pursuant to Section 321 of the Securities and Futures Act, Chapter 289 of Singapore, as amended, varied or supplemented from time to time.

“Common Stock” means, with respect to any Person, any and all shares, interests, rights to purchase, warrants, options or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person’s units, common stock or ordinary shares, whether or not outstanding at the date of the Indenture, and include, without limitation, all series and classes of such units, common stock or ordinary shares.

“Comparable Treasury Issue” means the United States Treasury security having a maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.

“Comparable Treasury Price” means, with respect to any redemption date: (1) the average bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such redemption date, as set forth in the daily statistical release (of any successor release) published by the Federal Reserve Bank of New York and designated “Composite 3:30 p.m. Quotations for U.S. Government Securities”; or (2) if such release (or any successor release) is not published or does not contain such prices on such Business Day, (a) the average of Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (b) if fewer than three such Reference Treasury Dealer Quotations are available, the average of all such quotations.

“Consolidated Fixed Charges” means, for any period, the sum (without duplication) of (a) Consolidated Interest Expense for such period and (b) all cash and non-cash dividends accrued or accumulated during such period on any Disqualified Stock or Preferred Stock of LMIRT, the Guarantor or any Restricted Subsidiary (other than on a separate class of shares held by a third party in a Joint Operation) held by Persons other than LMIRT, the Guarantor or any Wholly-Owned Restricted Subsidiary except for dividends payable in Capital Stock (other than Disqualified Stock) of LMIRT.

“Consolidated Interest Expense” means, for any period, the aggregate amount of interest accrued, paid or payable (including the net costs associated with Hedging Obligations and any capitalized interest but excluding the amortization of fees and other charges) by LMIRT and the Restricted Subsidiaries during such period, as determined on a consolidated basis for LMIRT and the Restricted Subsidiaries; provided that interest expense attributable to interest on any Indebtedness bearing a floating interest rate will be computed on a pro forma basis as if the rate in effect on the date of determination had been the applicable rate for the entire relevant period.

“Consolidated Net Property Income” means, with respect to any specified Person, for any period, the net property income for the period, as determined on a consolidated basis for such Person and the Restricted Subsidiaries of such Person from the most recently available annual or quarterly financial statements of such Person, as the case may be.

“Consolidated Net Worth” means, at any date of determination, unitholders funds as set forth on the most recently available quarterly or annual consolidated financial statements of LMIRT or any Surviving Person, as the case may be, in each case prepared in accordance with GAAP (which the Guarantor will use its reasonable best efforts to cause LMIRT to compile in a timely manner), plus, to the extent not included, the par or stated value of any Preferred Stock of LMIRT, less any amounts attributable to Disqualified Stock or any equity security convertible into or exchangeable for Indebtedness, any accumulated deficit, the cost of treasury stock and the principal amount of any promissory notes receivable from the sale of the Capital Stock of LMIRT or any Restricted Subsidiary, each item to be determined in conformity with GAAP.

“Contractor Guarantees” means guarantees by LMIRT, the Guarantor or any Restricted Subsidiary of Indebtedness of any contractor, builder or other similar Person engaged by LMIRT, the LMIRT

166 Manager, the Guarantor or such Restricted Subsidiary in connection with the development, construction or improvement of real or personal property or equipment to be used in a Permitted Business by LMIRT or any Restricted Subsidiary in the ordinary course of business, which Indebtedness was Incurred by such contractor, builder or other similar Person to finance the cost of such development, construction or improvement.

“Currency Agreement” means any foreign exchange forward contract, currency swap agreement or other similar agreement or arrangement designed to protect against fluctuations in foreign exchange rates.

“Default” means any event that is, or after notice or passage of time or both would be, an Event of Default.

“Disqualified Stock” means any class or series of Capital Stock of any Person that by its terms or otherwise is (1) required to be redeemed on or prior to the date that is 366 days after the Stated Maturity of the Notes, (2) redeemable at the option of the holder of such class or series of Capital Stock at any time on or prior to the date that is 366 days after the Stated Maturity of the Notes or (3) convertible into or exchangeable for Capital Stock referred to in clause (1) or (2) above or Indebtedness having a scheduled maturity on or prior to the date that is 366 days after the Stated Maturity of the Notes; provided that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an “asset sale” or “change of control” occurring prior to the date that is 366 days after the Stated Maturity of the Notes will not constitute Disqualified Stock if the “asset sale” or “change of control” provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the provisions contained in the “— Certain Covenants — Limitation on Asset Sales” and “— Repurchase of Notes Upon a Change of Control Triggering Event” covenants and such Capital Stock specifically provides that such Person will not repurchase or redeem any such stock pursuant to such provision prior to the Issuer’s or the Guarantor’s repurchase of such Notes as are required to be repurchased pursuant to the “— Certain Covenants — Limitation on Asset Sales” and “— Repurchase of Notes Upon a Change of Control Triggering Event” covenants.

“Distributable Income” means, with respect to LMIRT, for any period, the amount available for distribution to unitholders and an amount reserved for distribution to perpetual security holders for the period as set forth in the most recently available quarterly or annual consolidated financial statements, as the case may be, in each case prepared in accordance with, and determined in conformity with, GAAP.

“Dollar Equivalent” means, with respect to any monetary amount in (i) Rupiah, at any time for the determination thereof, the amount of US Dollars obtained by converting such Rupiah amounts involved in such computation into US Dollars at the base rate for the purchase of US Dollars with the applicable Rupiah as quoted by Bank Indonesia on the date of determination and (ii) with respect to any monetary amount in any currencies other than Rupiah and US Dollars, at any time for the determination thereof, the amount of US Dollars obtained by converting such foreign currency involved in such computation into US Dollars at the noon buying rate for US Dollars in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York on the date of determination.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Equity Offering” means any private or public underwritten offering of Common Stock of LMIRT after the Original Issue Date to any Person other than an Affiliate of LMIRT; provided that the aggregate net cash proceeds received by LMIRT from such offering shall be no less than US$25.0 million (or the Dollar Equivalent thereof).

“Fair Market Value” means the price that would be paid in an arm’s-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined in good faith by the Board of Directors, whose determination shall be conclusive if evidenced by a Board Resolution.

“Finance Subsidiary” means a Wholly-Owned Restricted Subsidiary of the Guarantor or another Finance Subsidiary (other than the Issuer) (i) the operations of which are primarily comprised of

167 Incurring Indebtedness to Persons other than the Guarantor or any of its Subsidiaries from time to time to finance the operations of the Guarantor, its Restricted Subsidiaries and/or LMIRT and other activities incidental, related to or ancillary to such operations, including activities related to the establishment or maintenance of its corporate existence; and (ii) which conducts no business and owns no material assets other than (w) any equity interests in another Finance Subsidiary, (x) intercompany loans or other securities representing the proceeds of Indebtedness described in clause (i), (y) any such debt obligations upon a repurchase, redemption or other acquisition thereof and prior to cancellation thereof, and (z) cash held for purposes similar to those for which the Issuer is permitted to hold cash pursuant to the “— Limitation on Business Activities” covenant.

“Fitch” means Fitch Ratings Ltd. and its affiliates or any successor to the rating agency business thereof.

“Fixed Charge Coverage Ratio” means, on any Transaction Date, the ratio of (a) the aggregate amount of Consolidated Net Property Income for the then most recent four quarterly periods prior to such Transaction Date for which consolidated financial statements of LMIRT (which the Guarantor will use its reasonable best efforts to compile in a timely manner) are available (the “Four Quarterly Period”) to (b) the aggregate Consolidated Fixed Charges during such Four Quarterly Period. In making the foregoing calculation:

(a) pro forma effect shall be given to any Indebtedness or Preferred Stock Incurred, repaid or redeemed during the period (the “Reference Period”) commencing on and including the first day of the Four Quarterly Period and ending on and including the Transaction Date (other than Indebtedness Incurred or repaid under a revolving credit or similar arrangement (or under any predecessor revolving credit or similar arrangement) in effect on the last day of such Four Quarterly Period), in each case as if such Indebtedness or Preferred Stock had been Incurred, repaid or redeemed on the first day of such Reference Period;

(b) Consolidated Interest Expense attributable to interest on any Indebtedness (whether existing or being Incurred) computed on a pro forma basis and bearing a floating interest rate shall be computed as if the rate in effect on the Transaction Date (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months or, if shorter, at least equal to the remaining term of such Indebtedness) had been the applicable rate for the entire period;

(c) pro forma effect will be given to the creation, designation or redesignation of Restricted Subsidiaries and Unrestricted Subsidiaries as if such creation, designation or redesignation had occurred on the first day of such Reference Period;

(d) pro forma effect shall be given to Asset Sales and Asset Acquisitions and Investments (including giving pro forma effect to the application of proceeds of any Asset Disposition) that occur during such Reference Period as if they had occurred and such proceeds had been applied on the first day of such Reference Period; and

(e) pro forma effect shall be given to asset dispositions and asset acquisitions and investments (including giving pro forma effect to the application of proceeds of any asset disposition) that have been made by any Person that has become a Restricted Subsidiary or has been merged with or into LMIRT, the Guarantor or any Restricted Subsidiary during such Reference Period and that would have constituted Asset Sales or Asset Acquisitions or Investments had such transactions occurred when such Person was a Restricted Subsidiary as if such asset dispositions or asset acquisitions were Asset Dispositions or Asset Acquisitions that occurred on the first day of such Reference Period; provided that to the extent that clause (d) or (e) of this paragraph requires that pro forma effect be given to an Asset Acquisition or Asset Sales (or asset acquisition or asset disposition), such pro forma calculation shall be based upon the four full quarterly periods immediately preceding the Transaction Date of the Person, or division or line of business of the Person, that is acquired or disposed for which financial information is available.

168 “GAAP” means generally accepted accounting principles in the Republic of Singapore as in effect from time to time, and, where the context so requires, as applicable to unit trusts established under the laws of Singapore.

“guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (b) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided that the term “guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The term “guarantee” used as a verb has a corresponding meaning.

“Guarantee” means the guarantee by the Guarantor of the Issuer’s obligations under the Indenture and the Notes, executed pursuant to the provisions of the Indenture.

“Hedging Obligation” of any Person means the obligations of such Person pursuant to any Currency Agreement or Interest Rate Agreement.

“Holder” means the Person in whose name a Note is registered in the Note register.

“Incur” means, with respect to any Indebtedness or Capital Stock, to incur, create, issue, assume, guarantee or otherwise become liable for or with respect to, or become responsible for, the payment of, contingently or otherwise, such Indebtedness or Capital Stock; provided that (a) any Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary will be deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary and (b) the accretion of original issue discount, the accrual of interest, the accrual of dividends, the payment of interest in the form of additional Indebtedness and the payment of dividends on Preferred Stock in the form of additional shares of Preferred Stock (to the extent provided for when the Indebtedness or Preferred Stock on which such interest or dividend is paid was originally issued) shall not be considered an Incurrence of Indebtedness. The terms “Incurrence,” “Incurred” and “Incurring” have meanings correlative with the foregoing.

“Indebtedness” means, with respect to any Person at any date of determination (without duplication):

(a) all indebtedness of such Person for borrowed money;

(b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(c) all obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments (including any premium to the extent such premium has become due and payable);

(d) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except Trade Payables; (e) all Capitalized Lease Obligations and Attributable Indebtedness;

(f) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided that the amount of such Indebtedness shall be the lesser of (i) the Fair Market Value of such asset at such date of determination and (ii) the amount of such Indebtedness;

(g) all Indebtedness of other Persons guaranteed by such Person to the extent such Indebtedness is guaranteed by such Person;

(h) to the extent not otherwise included in this definition, Hedging Obligations; and

169 (i) all Disqualified Stock issued by such Person valued at the greater of its voluntary or involuntary liquidation preference and its maximum fixed repurchase price plus accrued dividends.

Notwithstanding the foregoing, Indebtedness shall not include (i) tenant security deposits and advance payments received from tenants in the ordinary course of business and (ii) any capital commitments or similar obligations Incurred in the ordinary course of business in connection with the acquisition, development, construction or improvement of real or personal property (including land use rights) to be used in a Permitted Business; provided that in the case of (ii) such Indebtedness is not reflected on the balance sheet of LMIRT or any Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet).

The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation; provided that:

(a) the amount outstanding at any time of any Indebtedness issued with original issue discount is the face amount of such Indebtedness less the remaining unamortized portion of the original issue discount of such Indebtedness at such time as determined in conformity with GAAP, and

(b) money borrowed and set aside at the time of the Incurrence of any Indebtedness in order to pre-fund the payment of the interest on such Indebtedness shall not be deemed to be “Indebtedness” so long as such money is held to secure the payment of such interest.

“Interest Rate Agreement” means any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement, option or future contract or other similar agreement or arrangement designed to protect against fluctuations in interest rates.

“Investment” means:

(a) any direct or indirect advance, loan or other extension of credit to another Person;

(b) any capital contribution to another Person (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others);

(c) any purchase or acquisition of Capital Stock, Indebtedness, bonds, notes, debentures or other similar instruments or securities issued by another Person; or

(d) any guarantee of any obligation of another Person.

For the purposes of the provisions of the “— Limitation on Restricted Payments” covenant: (i) the Guarantor will be deemed to have made an Investment in an Unrestricted Subsidiary in an amount equal to the Fair Market Value of the Guarantor’s proportionate interest in the assets (net of the Guarantor’s proportionate interest in the liabilities owed to any Person other than the Guarantor or a Restricted Subsidiary and that are not guaranteed by the Guarantor or a Restricted Subsidiary) of such Unrestricted Subsidiary at the time of such designation, and (ii) any property transferred to or from any Person shall be valued at its Fair Market Value at the time of such transfer, as determined in good faith by the Board of Directors.

The acquisition by the Guarantor or a Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment by LMIRT, the Guarantor or such Restricted Subsidiary in such third Person.

“Investment Grade” means (a) a rating of “AAA,” “AA,” “A” or “BBB,” as modified by a “+” or “-” indication, or an equivalent rating representing one of the four highest Rating Categories, by Fitch or any of its successors, or assigns or (b) a rating of “Aaa,” or “Aa,” “A” or “Baa,” as modified by a “l,” “2” or “3” indication, or an equivalent rating representing one of the four highest Rating Categories, by Moody’s or any of its successors or assigns or (c) the equivalent ratings of any internationally recognized rating agency or agencies, as the case may be, which shall have been designated by the Guarantor as having been substituted for Moody’s or Fitch, as the case may be.

170 “Joint Operation” means (i) the Guarantor’s interest in the joint operation governed by the Joint Venture Deed dated October 13, 2017, by and between Icon1 Holdings Pte. Ltd. and Icon2 Investments Pte. Ltd. or (ii) any future joint operation of the like to the extent the entry by the Guarantor into an agreement or deed relating to such joint operation is otherwise permitted under the terms of the Notes, and in each case, the Guarantor’s interest shall be limited solely to the interest in the assets, liabilities, rights to the revenue and profits and the obligations for expenses and losses as agreed in the applicable joint operations agreement or deed and is consolidated in the financial statements of LMIRT, prepared in accordance with GAAP and, for the avoidance of doubt, the class or classes of Capital Stock in a Joint Operation held by the Guarantor or a Restricted Subsidiary. For the avoidance of doubt, the interest of the other member or members of a Joint Operation in such a Joint Operation will not be subject to the restrictive covenants in the Indenture.

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof or any agreement to create any mortgage, pledge, security interest, lien, charge, easement or encumbrance of any kind).

“LMIRT” means Lippo Malls Indonesia Retail Trust, a unit trust constituted August 8, 2007 under the laws of Singapore.

“LMIRT Manager” means LMIRT Management Ltd. (previously known as Lippo Malls Indonesia Retail Trust Management Ltd), as manager of LMIRT, and any successor or replacement manager of LMIRT, pursuant to, and in accordance with, the LMIRT Trust Deed.

“LMIRT Trust Deed” means the trust deed dated August 8, 2007 constituting LMIRT and made between the LMIRT Manager and the Guarantor (replacing HSBC Institutional Trust Services (Singapore) Limited), as amended, restated and/or supplemented.

“Material Acquisition or Disposition” means any transaction that would require the preparation of pro forma financial information pursuant to and in accordance with the rules, regulations and requirements of SGX-ST and the Monetary Authority of Singapore.

“Moody’s” means Moody’s Investors Service and its affiliates or any successor to the rating agency business thereof.

“Net Cash Proceeds” means: (a) with respect to any Asset Sale, the proceeds of such Asset Sale in the form of cash or Temporary Cash Investments, including payments in respect of deferred payment obligations (to the extent corresponding to the principal, but not interest, component thereof) when received in the form of cash or Temporary Cash Investments and proceeds from the conversion of other property received when converted to cash or Temporary Cash Investments, net of:

(1) brokerage commissions and other fees and expenses (including fees and expenses of counsel and investment bankers) related to such Asset Sale; (2) provisions for all taxes (whether or not such taxes will actually be paid or are payable) as a result of such Asset Sale without regard to the consolidated results of operations of LMIRT and its Restricted Subsidiaries, taken as a whole;

(3) payments made to repay Indebtedness or any other obligation outstanding at the time of such Asset Sale that either (A) is secured by a Lien on the property or assets sold or (B) is required to be paid as a result of such sale;

(4) appropriate amounts to be provided by LMIRT, the Guarantor or any Restricted Subsidiary as a reserve against any liabilities associated with such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as determined in conformity with GAAP;

(5) all distributions and other payments required to be made to minority interest holders; and

(6) any portion of the purchase price placed in escrow (until the termination of such escrow and up to the amount of funds released from such escrow); and

171 (b) with respect to any capital contribution or issuance or sale of Capital Stock, the proceeds of such capital contribution, issuance or sale in the form of cash or Temporary Cash Investments, including payments in respect of deferred payment obligations (to the extent corresponding to the principal, but not the interest, component thereof) when received in the form of cash or Temporary Cash Investments and proceeds from the conversion of other property received when converted to cash or Temporary Cash Investments, net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or commissions and brokerage, consultant and other fees incurred in connection with such contribution, issuance or sale, net of taxes paid or payable as a result thereof and net of the amount of any such Net Cash Proceeds used to redeem, repurchase, defease or otherwise acquire or retire for value any Indebtedness of LMIRT, the Guarantor or any Restricted Subsidiary.

“Offer to Purchase” means an offer to purchase the Notes by the Issuer or the Guarantor from the Holders commenced by mailing a notice by first class mail, postage prepaid, to the Trustee and each Holder at its last address appearing in the Note register stating:

(a) the provision of the Indenture pursuant to which the offer is being made and that all Notes validly tendered will be accepted for payment on a pro rata basis;

(b) the purchase price and the date of purchase (which shall be a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed) (the “Offer to Purchase Payment Date”);

(c) that any Note not tendered will continue to accrue interest pursuant to its terms;

(d) that, unless the Issuer or the Guarantor defaults in the payment of the purchase price, any Note accepted for payment pursuant to the Offer to Purchase shall cease to accrue interest on and after the Offer to Purchase Payment Date;

(e) that Holders electing to have a Note purchased pursuant to the Offer to Purchase will be required to surrender the Note, together with the form entitled “Option of the Holder to Elect Purchase” on the reverse side of the Note completed, to the Principal Paying Agent at the address specified in the notice prior to the close of business on the Business Day immediately preceding the Offer to Purchase Payment Date;

(f) that Holders will be entitled to withdraw their election if the Principal Paying Agent receives, not later than the close of business on the third Business Day immediately preceding the Offer to Purchase Payment Date, a facsimile transmission or letter setting forth the name of such Holder, the principal amount of Notes delivered for purchase and a statement that such Holder is withdrawing his election to have such Notes purchased; and

(g) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered; provided that each Note purchased and each new Note issued shall be in a principal amount of US$200,000 and integral multiples of US$1,000 in excess thereof.

On the Offer to Purchase Payment Date, the Issuer or the Guarantor shall (a) accept for payment on a pro rata basis Notes or portions thereof tendered pursuant to an Offer to Purchase; (b) one Business Day prior to the Offer to Purchase Payment Date, deposit with the Principal Paying Agent money sufficient to pay the purchase price of all Notes or portions thereof so accepted; and (c) deliver, or cause to be delivered, to the Registrar all Notes or portions thereof so accepted together with an Officers’ Certificate specifying the Notes or portions thereof accepted for payment by the Issuer or the Guarantor. The Principal Paying Agent shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the purchase price, and the Registrar shall promptly authenticate and mail to such Holders a new Note equal in principal amount to any unpurchased portion of the Note surrendered; provided that each Note purchased and each new Note issued shall be in a principal amount of US$200,000 each and integral multiples of US$1,000 in excess thereof. The Issuer or the Guarantor will publicly announce the results of an Offer to Purchase as soon as practicable after the Offer to Purchase Payment Date. The Issuer or the Guarantor will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and

172 regulations are applicable, in the event that the Issuer or the Guarantor is required to repurchase Notes pursuant to an Offer to Purchase.

The materials used in connection with an Offer to Purchase are required to contain or incorporate by reference information concerning the business of LMIRT, the Guarantor and its Subsidiaries which the Issuer or the Guarantor in good faith believes will assist such Holders to make an informed decision with respect to the Offer to Purchase, including a brief description of the events requiring the Issuer or the Guarantor to make the Offer to Purchase, and any other information required by applicable law to be included therein. The offer is required to contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Offer to Purchase.

“Officer” means one of the directors of the Issuer, in the case of the Issuer, or one of the authorized signatories of the Guarantor, in the case of the Guarantor, or one of the authorized signatories of the LMIRT Manager, in the case of the LMIRT Manager.

“Officers’ Certificate” means a certificate signed by one Officer, in the case of the Issuer and the LMIRT Manager, and two Officers, in the case of the Guarantor.

“Opinion of Counsel” means a written opinion, in form and substance that is, and from external legal counsel who is, acceptable to the Trustee.

“Original Issue Date” means the date on which the Notes (other than Additional Notes) are issued under the Indenture.

“Permitted Business” means the investment primarily in real estate and real estate-related assets, as contemplated by the Property Funds Appendix, including real estate projects under development, as well as any business conducted or proposed to be conducted by LMIRT, the Guarantor, its Restricted Subsidiaries on the Original Issue Date and other businesses reasonably related or ancillary thereto.

“Permitted Holder” means:

(a) PT Lippo Karawaci Tbk;

(b) any Affiliate (other than an Affiliate as defined in clause (c) of the definition of “Affiliate”) of the Person specified in clause (a); and

(c) any Person both the Capital Stock and the Voting Stock of which are owned 80.0% or more by one or more of the Persons specified in clauses (a) and (b).

“Permitted Investment” means:

(a) any Investment in LMIRT, the Guarantor or a Restricted Subsidiary or a Person which will, upon the making of such Investment, become a Restricted Subsidiary or be merged or consolidated with or into or transfer or convey all or substantially all its assets to LMIRT, the Guarantor or a Restricted Subsidiary;

(b) Temporary Cash Investments;

(c) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses in accordance with GAAP and not in excess of US$1.0 million (or the Dollar Equivalent thereof) outstanding at any time;

(d) stock, obligations, securities, or other assets received in the settlement of debts and trade receivables created in the ordinary course of business or satisfaction of judgments;

(e) an Investment in an Unrestricted Subsidiary consisting solely of an Investment in another Unrestricted Subsidiary;

(f) any Investment pursuant to a Hedging Obligation entered into in the ordinary course of business (and not for speculation) and designed solely to protect the Guarantor or any Restricted Subsidiary against fluctuations in interest rates, foreign currency exchange rates or commodity prices;

173 (g) receivables owing to the Guarantor or any Restricted Subsidiary, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms;

(h) any securities or other Investments received as consideration in, or retained in connection with, sales or other dispositions of property or assets, including Asset Dispositions made in compliance with the “— Limitation on Asset Sales” covenant;

(i) pledges or deposits (i) with respect to leases or utilities provided to third parties in the ordinary course of business or (ii) otherwise described in the definition of “Permitted Liens” or made in connection with Liens permitted under the “— Limitation on Liens” covenant;

(j) any Investment pursuant to Contractor Guarantees by the Guarantor or any Restricted Subsidiary;

(k) Investments in securities of trade creditors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers;

(l) repurchases of Notes;

(m) deposits made in order to comply with statutory or regulatory obligations to maintain deposits for workers, compensation claims and other purposes specified by statute or regulation from time to time in the ordinary course of a Permitted Business;

(n) Investments in Unrestricted Subsidiaries or joint ventures for and/or engaged in the Permitted Business, when taken together with all other Investments in Unrestricted Subsidiaries or joint ventures made pursuant to this clause (n), do not exceed 7.5% of Total Assets;

(o) guarantees by the Guarantor or any Restricted Subsidiary Incurred in any Qualified Receivables Transactions in an aggregate amount not to exceed US$30.0 million outstanding at any time; and

(p) any Investment pursuant to Pre-registration Mortgage Guarantees by LMIRT, the Guarantor or any Restricted Subsidiary otherwise permitted herein.

“Permitted Liens” means:

(a) Liens for taxes, assessments, governmental charges or claims that are being contested in good faith by appropriate legal or administrative proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made;

(b) statutory and common law Liens of landlords and carriers, warehousemen, mechanics, suppliers, repairmen or other similar Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate legal or administrative proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made;

(c) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory or regulatory obligations, bankers’ acceptances, surety and appeal bonds, government contracts, performance and return-of-money bonds and other obligations of a similar nature incurred in the ordinary course of business (exclusive of obligations for the payment of borrowed money);

(d) leases or subleases granted to others that do not materially interfere with the ordinary course of business of LMIRT, the Guarantor and the Restricted Subsidiaries, taken as a whole;

(e) Liens encumbering property or assets in connection with the development, construction or improvement of real or personal property or equipment to be used in a Permitted Business by

174 LMIRT, the Guarantor or any Restricted Subsidiary arising from progress or partial payments by a customer of LMIRT, the Guarantor or its Restricted Subsidiaries relating to such property or assets;

(f) any interest or title of a lessor in the property subject to any operating lease;

(g) Liens on property of, or on shares of Capital Stock or Indebtedness of, any Person existing at the time such Person becomes, or becomes a part of, any Restricted Subsidiary; provided that such Liens do not extend to or cover any property or assets of LMIRT, the Guarantor or any Restricted Subsidiary other than the property or assets acquired; provided further that such Liens were not created in contemplation of or in connection with the transactions or series of transactions pursuant to which such Person became a Restricted Subsidiary;

(h) Liens in favor of LMIRT, the Guarantor or any Restricted Subsidiary;

(i) Liens arising from attachment or the rendering of a final judgment or order against LMIRT, the Guarantor or any Restricted Subsidiary that does not give rise to an Event of Default;

(j) Liens securing reimbursement obligations with respect to letters of credit that encumber documents and other property relating to such letters of credit and the products and proceeds thereof or Liens in favor of any bank having a right of setoff, revocation, refund or chargeback with respect to money or instruments of LMIRT, the Guarantor or any Restricted Subsidiary on deposit with or in possession of such bank;

(k) Liens existing on the Original Issue Date;

(l) Liens on any interest reserve or similar account used to service interest payments on Indebtedness securing such Indebtedness for the sole benefit of the holders of such Indebtedness so long as such Indebtedness is permitted to be Incurred under the “— Limitation on Indebtedness and Preferred Stock” covenant;

(m) Liens securing Indebtedness which is Incurred to refinance secured Indebtedness which is permitted to be Incurred under clause (c)(4) of the “— Limitation on Indebtedness and Preferred Stock” covenant; provided that such Liens do not extend to or cover any property or assets of LMIRT, the Guarantor or any Restricted Subsidiary other than the property or assets securing the Indebtedness being refinanced;

(n) easements, rights-of-way, municipal and zoning ordinances or other restrictions as to the use of properties in favor of governmental agencies or utility companies that do not materially adversely affect the value of such properties or materially impair the use for the purposes of which such properties are held by LMIRT, the Guarantor or any Restricted Subsidiary;

(o) Liens securing Indebtedness under Hedging Obligations entered into in the ordinary course of business and designed solely to protect LMIRT, the Guarantor or any Restricted Subsidiary from fluctuations in interest rates, currencies or commodity prices and not for speculation;

(p) Liens securing Indebtedness of the Guarantor or any Restricted Subsidiary Incurred under clause (c)(10) of the “—Limitation on Indebtedness and Preferred Stock” covenant;

(q) Liens on Qualified Receivables securing Indebtedness arising from guarantees by the Guarantor or any Restricted Subsidiary in any Qualified Receivables Transactions in an aggregate amount not to exceed US$30.0 million outstanding at any time; and

(r) Liens securing Permitted Priority Indebtedness.

“Permitted Priority Indebtedness” means any Priority Indebtedness; provided that, on the date of determination, the aggregate amount of Priority Indebtedness then outstanding does not exceed 15.0% of Total Assets. In making the foregoing calculations, the amount of Permitted Priority Indebtedness, Priority Indebtedness and Total Assets as of any date of determination shall be as of the date (the “Reference Date”) of the last day of the most recent quarter for which consolidated financial

175 statements of LMIRT (which the Guarantor shall use its reasonable best efforts to cause LMIRT to compile in a timely manner) are available and have been provided to the Trustee, calculated after giving pro forma effect to:

(a) any Priority Indebtedness Incurred, repaid or redeemed during the period from the Reference Date to such date of determination (the “Relevant Period”);

(b) the provision of any Liens on Indebtedness during the Relevant Period that would result in such Indebtedness becoming Priority Indebtedness, or the release of any Liens during the Relevant Period that would result in any Priority Indebtedness ceasing to meet the definition of Priority Indebtedness;

(c) the creation, designation or redesignation of Restricted Subsidiaries and Unrestricted Subsidiaries during the Relevant Period;

(d) Asset Sales and Asset Acquisitions (including giving pro forma effect to the application of proceeds of any Asset Sales) during the Relevant Period; and

(e) asset sales and asset acquisitions (including giving pro forma effect to the application of proceeds of any asset sale) that have been made by any Person that has become a Restricted Subsidiary or has been merged with or into LMIRT, the Guarantor or any Restricted Subsidiary during the Relevant Period and that would have constituted Asset Sales or Asset Acquisitions had such transactions occurred when such Person was a Restricted Subsidiary as if such asset sales or asset acquisitions were Asset Sales or Asset Acquisitions.

“Perpetual Securities” means the S$140.0 million 7.0% subordinated perpetual securities issued by HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of Lippo Malls Indonesia Retail Trust) in September 2016 and subsequently substituted by Perpetual (Asia) Limited (in its capacity as trustee of Lippo Malls Indonesia Retail Trust) in January 2018 and the S$120.0 million 6.6% subordinated perpetual securities issued by HSBC Institutional Trust Services (Singapore) Limited (in its capacity as trustee of Lippo Malls Indonesia Retail Trust) in July 2017 and subsequently substituted by Perpetual (Asia) Limited (in its capacity as trustee of Lippo Malls Indonesia Retail Trust) in January 2018 and any other perpetual securities issued by the Guarantor under similar instruments which are treated as equity under GAAP in LMIRT’s consolidated financial statements and in conformity with the Property Funds Appendix.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof.

“Preferred Stock” as applied to the Capital Stock of any Person means Capital Stock of any class or classes that by its term is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over any other class of Capital Stock of such Person, but excluding any Perpetual Securities.

“Pre-registration Mortgage Guarantees” means any Indebtedness of the Guarantor or any Restricted Subsidiary consisting of a guarantee in favor of any bank or other similar financial institutions in the ordinary course of business of secured loans of purchasers of properties from the Guarantor or any Restricted Subsidiary; provided that any such guarantee shall be released in full on or before the perfection of a security interest in such properties under applicable law in favor of the relevant lender.

“Priority Indebtedness” means any (i) Subsidiary Indebtedness and (ii) Secured Indebtedness.

“Property Funds Appendix” means the guidelines for property funds issued by the Monetary Authority of Singapore as Appendix 6 to the CIS Code, as amended, varied or supplemented from time to time.

“Qualified Receivables” means any accounts receivables (whether now existing or arising in the future) of the Guarantor or any Restricted Subsidiary arising in the ordinary course of business, including tenant rental/service charge receivables, tax refund receivables and vendor support receivables, and any assets related thereto.

176 “Qualified Receivables Transaction” means a transaction or a series of transactions entered into by the Guarantor or any Restricted Subsidiary pursuant to which the Guarantor or such Restricted Subsidiary sells or otherwise transfers to a domestic bank or other financial institution in Indonesia Qualified Receivables.

“Rating Agencies” means (a) Moody’s, (b) Fitch and (c) if neither of Moody’s or Fitch make a rating of the Notes publicly available, an internationally recognized securities rating agency or agencies, as the case may be, selected by the Guarantor, which shall be substituted for either Moody’s or Fitch, as the case may be.

“Rating Category” means (a) with respect to Moody’s, any of the following categories: “Ba,” “B,” “Caa,” “Ca,” “C” and “D” (or equivalent successor categories); (b) with respect to Fitch, any of the following categories: “BB,” “B,” “CCC,” “CC,” “C” and “D” (or equivalent successor categories), and (c) the equivalent of any such category of Moody’s or Fitch used by another Rating Agency. In determining whether the rating of the Notes has decreased by one or more gradations, gradations within Rating Categories (“+” and “-” for Fitch; “l,” “2” and “3” for Moody’s; or the equivalent gradations for another Rating Agency) shall be taken into account.

“Rating Date” means in connection with a Change of Control Triggering Event, that date which is 90 days prior to the earlier of (i) a Change of Control and (ii) a public notice of the occurrence of a Change of Control or of the intention by the Guarantor, the Issuer, LMIRT or any other Person or Persons to effect a Change of Control.

“Ratings Decline” means in connection with a Change of Control Triggering Event, the occurrence on, or within six months after, the date, or public notice of the occurrence of, a Change of Control or the intention by the Guarantor or any Person or Persons to effect a Change of Control (which period shall be extended so long as any of the ratings of the Notes is under publicly announced consideration for possible downgrade by any Rating Agency) of any of the events listed below, the notification by the Rating Agencies that such proposed actions will result in any of the events listed below:

(A) in the event the Notes are rated by a Rating Agency on the Rating Date as Investment Grade, the rating of the Notes by such Rating Agency shall be below Investment Grade; or

(B) in the event the Notes are rated below Investment Grade by a Rating Agency on the Rating Date, the rating of the Notes by such Rating Agency shall be decreased by one or more gradations (including gradations within Rating Categories as well as between Rating Categories).

“Reference Treasury Dealer” means each of any three investment banks of recognized standing that is a primary U.S. Government securities dealer in The City of New York, selected by the Issuer in good faith and notified to the Trustee.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by an investment banking firm of recognized international standing, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day immediately preceding such redemption date.

“Replacement Assets” means properties and assets (other than current assets) that replace the properties and assets that were subject to an Asset Sale or properties and assets (other than current assets) that will be used in a Permitted Business (for the avoidance of doubt, Replacement Assets shall include Capital Stock of a company whose primary assets are properties and assets (other than current assets) that will be used in a Permitted Business, subject to where (a) the Guarantor, LMIRT or a Restricted Subsidiary acquiring more than 50.0% of the total voting power of the outstanding Capital Stock of such company and such company becomes a Restricted Subsidiary or (b) such acquisition of Capital Stock is in compliance with the “— Limitation on Restricted Payments” covenant (other than by compliance with paragraph (h) of the definition of Permitted Investment).

177 “Restricted Subsidiary” means (a) any Subsidiary of the Guarantor other than an Unrestricted Subsidiary and (b) a Joint Operation designated as a Restricted Subsidiary. For the avoidance of doubt, the Issuer is a Restricted Subsidiary.

“S&P” means S&P Global Ratings or any successor to the rating agency business thereof.

“Sale and Leaseback Transaction” means any direct or indirect arrangement relating to property (whether real, personal or mixed), now owned or hereafter acquired whereby the Guarantor, LMIRT or any Restricted Subsidiary transfers such property to another Person and the Guarantor, LMIRT or any Restricted Subsidiary leases it from such Person.

“Secured Indebtedness” means any Indebtedness of the Guarantor, LMIRT or a Restricted Subsidiary secured by a Lien.

“Senior Indebtedness” of the Guarantor, LMIRT or any Restricted Subsidiary, as the case may be, means all Indebtedness of the Guarantor, LMIRT or such Restricted Subsidiary, as relevant, whether outstanding on the Original Issue Date or thereafter created, except for Indebtedness which, in the instrument creating or evidencing the same, is expressly stated to be subordinated in right of payment to the Notes or, in respect of the Guarantor, its Guarantee; provided that Senior Indebtedness does not include (a) any obligation to the Guarantor, LMIRT or any Restricted Subsidiary, (b) trade payables or (c) Indebtedness Incurred in violation of the provisions of the Indenture.

“Significant Subsidiary” means any Restricted Subsidiary that accounts for 5.0% or more of Total Assets as of any date of determination or 5.0% or more of Consolidated Net Property Income of LMIRT for the Four Quarterly Period prior to such date of determination.

“Singapore Subsidiary” means any Subsidiary incorporated under the laws of Singapore.

“Stated Maturity” means, (a) with respect to any Indebtedness, the date specified in such debt instrument as the fixed date on which the final installment of principal of such Indebtedness is due and payable as set forth in the documentation governing such Indebtedness and (b) with respect to any scheduled installment of principal of or interest on any Indebtedness, the date specified as the fixed date on which such installment is due and payable as set forth in the documentation governing such Indebtedness.

“Subordinated Indebtedness” means any Indebtedness of the Issuer, the Guarantor or LMIRT which is contractually subordinated or junior in right of payment to the Notes or the Guarantee, as applicable, pursuant to a written agreement to such effect.

“Subsidiary” means, with respect to any Person, any corporation, association or other business entity of which (a) more than 50.0% of the voting power of the outstanding Voting Stock is owned, directly or indirectly, by such Person, or (b) 50% or less of the outstanding Voting Stock is owned, directly or indirectly, by such Person and which is “controlled” and consolidated by such Person in accordance with GAAP.

“Subsidiary Indebtedness” means all unsecured Indebtedness of any Restricted Subsidiary other than (a) unsecured Indebtedness of the Issuer or any Finance Subsidiary to the extent the Indebtedness of such Finance Subsidiary is permitted to be Incurred under clause (c)(12) of the covenant described under the caption “— Certain Covenants — Limitation on Indebtedness and Preferred Stock”, and (b) unsecured indebtedness of any Restricted Subsidiary Incurred following such Restricted Subsidiary having provided an unsubordinated Guarantee of payment of the Notes pursuant to the “— Limitation on Issuances of Guarantees by Restricted Subsidiaries” covenant; provided that such Guarantee has not been released.

“Temporary Cash Investment” means any of the following:

(a) direct obligations of the United States of America and any state of the European Economic Area or any agency thereof or obligations fully and unconditionally guaranteed by the United States of America and any state of the European Economic Area or any agency thereof, in each case maturing within one year;

178 (b) time deposit accounts, certificates of deposit and money market deposits maturing within 180 days of the date of acquisition thereof issued by a bank or trust company which is incorporated under the laws of the United States of America or any state thereof, any state of the European Economic Area and which bank or trust company has capital, surplus and undivided profits aggregating in excess of US$500.0 million (or the Dollar Equivalent thereof) and has outstanding debt which is rated “A” (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money market fund sponsored by a registered broker dealer or mutual fund distributor;

(c) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) above entered into with a bank or trust company meeting the qualifications described in clause (b) above;

(d) commercial paper, maturing within 180 days of the date of acquisition thereof, issued by a corporation (other than an Affiliate of LMIRT, the LMIRT Manager or the Guarantor) incorporated and in existence under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of “P-1” (or higher) according to Moody’s or “A-1” (or higher) according to S&P;

(e) securities, maturing within one year of the date of acquisition thereof, issued or fully and unconditionally guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, Hong Kong or Singapore and rated at least “A” by S&P or Moody’s;

(f) any mutual fund that has at least 95.0% of its assets continuously invested in investments of the types described in clauses (a) through (e) above;

(g) investments by the Singapore Subsidiaries in units or shares of Persons listed on a recognized stock exchange, provided that the aggregate amount invested under this clause (g) shall not exceed US$1.0 million at any time; and

(h) time deposit accounts, certificates of deposit, money market deposits and principal protected financial instruments maturing within 90 days of the date of acquisition thereof issued by (i) any bank incorporated or licensed to operate under the laws of Indonesia or Singapore whose long- term debt is rated “A” or higher according to at least one nationally recognized Indonesian or Singaporean, as applicable, statistical rating organization (or another recognized financial institution) and which has capital and surplus in excess of US$200.0 million or (ii) PT Bank Nationalnobu Tbk and CIMB Bank Berhad Singapore Branch, being the banks with which the LMIRT Group has existing banking relations and maintains accounts as of the Original Issue Date.

“Total Assets” means, as of any date of determination, the total consolidated assets of LMIRT and the Restricted Subsidiaries measured in accordance with GAAP as of the last day of the most recent fiscal quarter for which consolidated financial statements of LMIRT (which the Guarantor shall use its reasonable best efforts to cause LMIRT to compile in a timely manner) are available and have been provided to the Trustee pursuant to the provisions described under “Provision of Financial Statements and Reports”; provided that only with respect to the definition of “Permitted Priority Indebtedness,” Total Assets shall be calculated after giving pro forma effect to include the cumulative value of all of the real or personal property, asset or equipment the acquisition, development, construction or improvement of which requires or required the Incurrence of Indebtedness and calculation of Total Assets thereunder, as measured by the purchase price or cost therefor or budgeted cost provided in good faith by LMIRT or any of the Restricted Subsidiaries to the bank or other similar financial institutional lender providing such Indebtedness (but only to the extent that such cumulative value is not reflected in such total consolidated assets as of the last day of such fiscal quarter period).

“Trade Payables” means, with respect to any Person, any accounts payable or any other indebtedness or monetary obligation to trade creditors created, assumed or guaranteed by such Person or any of its Subsidiaries arising in the ordinary course of business in connection with the acquisition of goods or services and payable within 120 days.

179 “Transaction Date” means, with respect to the Incurrence of any Indebtedness, the date such Indebtedness is to be Incurred and, with respect to any Restricted Payment, the date such Restricted Payment is to be made.

“Units” means an undivided interest in LMIRT as provided for in the LMIRT Trust Deed.

“Unrestricted Subsidiary” means (a) any Subsidiary or Joint Operation of the Guarantor that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided under “Designation of Restricted and Unrestricted Subsidiaries” and (b) any Subsidiary or Joint Operation of an Unrestricted Subsidiary.

“U.S. Government Obligations” means securities that are (1) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the holder thereof at any time prior to the Stated Maturity of the Notes, and will also include a depository receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation held by such custodian for the account of the holder of a depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depository receipt.

“Voting Stock” means, with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person.

“Wholly-Owned” means, with respect to any Subsidiary of any Person, the ownership of 100.0% of the outstanding Capital Stock, excluding any Perpetual Securities, of such Subsidiary (other than any director’s qualifying shares or Investments by foreign nationals mandated by applicable law) by such Person or one or more Wholly-Owned Subsidiaries of such Person and, in the case of a Joint Operation, the ownership of 100.0% of the relevant class of Capital Stock of such Joint Operation.

180 TAXATION

The statements below are general in nature and are based on certain aspects of current tax laws (including administrative guidelines and circulars and guidelines issued by the MAS and the IRAS in force as of the date of this Offering Memorandum) and are subject to any changes in such laws, administrative guidelines or circulars, or the interpretation of those laws, guidelines or circulars, occurring after such date, which changes could be made on a retroactive basis. These laws, guidelines and circulars are also subject to various interpretations and the relevant tax authorities or the courts could later disagree with the explanations or conclusions set out below. The statements made herein do not purport to be a comprehensive or exhaustive description of all the tax considerations that may be relevant to a decision to subscribe for, purchase, own or dispose of the Notes and do not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as dealers in securities or financial institutions in Singapore which have been granted the relevant Financial Sector Incentive(s)) may be subject to special rules or tax rates. Neither these statements nor any other statements in this Offering Memorandum are intended or are to be regarded as advice on the tax position of any holder of the Notes or of any person acquiring, selling or otherwise dealing with the Notes or on any tax implications arising from the acquisition, sale or other dealings in respect of the Notes. Prospective holders of the Notes are advised to consult their own tax advisers as to the Singapore or other tax consequences of the acquisition, ownership of or disposal of the Notes, including, in particular, the effect of any foreign, state or local tax laws to which they are subject. It is emphasized that none of the Issuer, the Guarantor, the Joint Lead Managers and any other persons accepts responsibility for any tax effects or liabilities resulting from the subscription for, purchase, holding or disposal of the Notes.

Singapore Taxation Interest and Other Payments Subject to the following paragraphs, under Section 12(6) of the ITA, the following payments are deemed to be derived from Singapore:

(a) any interest, commission, fee or any other payment in connection with any loan or indebtedness or with any arrangement, management, guarantee, or service relating to any loan or indebtedness which is (i) borne, directly or indirectly, by a person resident in Singapore or a permanent establishment in Singapore (except in respect of any business carried on outside Singapore through a permanent establishment outside Singapore or any immovable property situated outside Singapore) or (ii) deductible against any income accruing in or derived from Singapore; or

(b) any income derived from loans where the funds provided by such loans are brought into or used in Singapore.

Such payments, where made to a person not known to the paying party to be a resident in Singapore for tax purposes, are generally subject to withholding tax in Singapore. The rate at which tax is to be withheld for such payments (other than those subject to the 15.0% final withholding tax described below) to non-resident persons (other than non-resident individuals) is currently 17.0%. The applicable rate for non-resident individuals is currently 22.0%. However, if the payment is derived by a person not resident in Singapore otherwise than from any trade, business, profession or vocation carried on or exercised by such person in Singapore and is not effectively connected with any permanent establishment in Singapore of that person, the payment is subject to a final withholding tax of 15.0%. The rate of 15.0%. may be reduced by applicable tax treaties.

However, certain Singapore-sourced investment income derived by individuals from financial instruments is exempt from tax, including:

(i) interest from debt securities derived on or after January 1, 2004;

(ii) discount income (not including discount income arising from secondary trading) from debt securities derived on or after February 17, 2006; and

181 (iii) prepayment fee, redemption premium and break cost from debt securities derived on or after February 15, 2007, except where such income is derived through a partnership in Singapore or is derived from the carrying on of a trade, business or profession in Singapore.

In addition, as the issue of the Notes is jointly lead managed by BNP Paribas, acting through its Singapore Branch, CIMB Bank Berhad, acting through its Singapore Branch, Credit Suisse (Singapore) Limited, and Deutsche Bank AG, Singapore Branch, each of which is a Financial Sector Incentive (Capital Market) Company or Financial Sector Incentive (Standard Tier) Company (as defined in the ITA) at such time, the Notes (the “Relevant Notes”) issued as debt securities before December 31, 2023 would be qualifying debt securities (“QDS”) for the purposes of the ITA, to which the following treatment shall apply:

(I) subject to certain prescribed conditions having been fulfilled (including the furnishing by the Issuer, or such other person as MAS may direct, to MAS of a return on debt securities for the Notes in the prescribed format within such period as MAS may specify and such other particulars in connection with the Notes as MAS may require and the inclusion by the Issuer in all offering documents relating to the Notes of a statement to the effect that where interest, discount income, prepayment fee, redemption premium or break cost from the Notes is derived by a person who is not resident in Singapore and who carries on any operation in Singapore through a permanent establishment in Singapore, the tax exemption for QDS shall not apply if the non-resident person acquires the Notes using the funds and profits of such person’s operations through the Singapore permanent establishment), interest, discount income (not including discount income arising from secondary trading), prepayment fee, redemption premium and break cost (collectively, the “Qualifying Income”) from the Notes paid by the Issuer and derived by a holder who is not resident in Singapore and who (aa) does not have any permanent establishment in Singapore or (bb) carries on any operation in Singapore through a permanent establishment in Singapore but the funds used by that person to acquire the Notes are not obtained from such person’s operation through a permanent establishment in Singapore, are exempt from Singapore tax;

(II) subject to certain conditions having been fulfilled (including the furnishing by the Issuer, or such other person as MAS may direct, to MAS of a return on debt securities for the Notes in the prescribed format within such period as MAS may specify and such other particulars in connection with the Notes as MAS may require), Qualifying Income from the Notes paid by the Issuer and derived by any company or a body of persons (as defined in the ITA) in Singapore is subject to tax at a concessionary rate of 10.0% (except for holders of the relevant Financial Sector Incentive(s) who may be taxed at different rates); and

(III) subject to: (a) the Issuer including in all offering documents relating to the Notes a statement to the effect that any person whose interest, discount income, prepayment fee, redemption premium or break cost derived from the Notes is not exempt from tax shall include such income in a return of income made under the ITA; and

(b) the furnishing by the Issuer, or such other person as MAS may direct, to MAS of a return on debt securities for the Notes in the prescribed format within such period as MAS may specify and such other particulars in connection with the Notes as MAS may require,

payments of Qualifying Income derived from the Notes are not subject to withholding of tax by the Issuer.

Notwithstanding the foregoing: (1) if during the primary launch of the Notes, the Notes are issued to fewer than four persons and 50.0% or more of the issue of the Notes is beneficially held or funded, directly or indirectly, by related parties of the Issuer, the Notes would not qualify as QDS; and

(2) even though the Notes are QDS, if, at any time during the tenure of the Notes, 50.0% or more of the Notes which are outstanding at any time during the life of their issue is beneficially held or

182 funded, directly or indirectly, by any related party(ies) of the Issuer, Qualifying Income derived from the Notes held by:

(a) any related party of the Issuer; or

(b) any person where the funds used by such person to acquire the Notes are obtained, directly or indirectly, from any related party of the Issuer, shall not be eligible for the tax exemption or concessionary rate of tax as described above.

The term “related party”, in relation to a person, means any other person who, directly or indirectly, controls that person, or is controlled, directly or indirectly, by that person, or where he and that other person, directly or indirectly, are under the control of a common person.

The terms “break cost”, “prepayment fee” and “redemption premium” are defined in the ITA as follows:

“break cost” means in relation to debt securities and qualifying debt securities, any fee payable by the issuer of the securities on the early redemption of the securities, the amount of which is determined by any loss or liability incurred by the holder of the securities in connection with such redemption;

“prepayment fee” means in relation to debt securities and qualifying debt securities, any fee payable by the issuer of the securities on the early redemption of the securities, the amount of which is determined by the terms of the issuance of the securities; and

“redemption premium” means in relation to debt securities and qualifying debt securities, any premium payable by the issuer of the securities on the redemption of the securities upon their maturity.

References to “break cost”, “prepayment fee” and “redemption premium” in this Singapore tax disclosure have the same meaning as defined in the ITA.

Where interest, discount income, prepayment fee, redemption premium or break cost (i.e. the Qualifying Income) is derived from the Notes by any person who is not resident in Singapore and who carries on any operations in Singapore through a permanent establishment in Singapore, the tax exemption available for QDS under the ITA (as mentioned above) shall not apply if such person acquires the Notes using the funds and profits of such person’s operations through a permanent establishment in Singapore. Any person whose interest, discount income, prepayment fee, redemption premium or break cost (i.e. the Qualifying Income) derived from the Notes is not exempt from tax is required to include such income in a return of income made under the ITA.

B. Capital Gains Any gains considered to be in the nature of capital made from the sale of the Notes will not be taxable in Singapore. However, any gains from the sale of the Notes which are gains from any trade, business, profession or vocation carried on by a person, if accruing in or derived from Singapore, may be taxable as such gains are considered revenue in nature.

Holders of the Notes who apply or who are required to apply Singapore Financial Reporting Standard (“FRS”) 39. FRS 109 or Singapore Financial Reporting Standard (International) 9 (“SFRS(I) 9”) (as the case may be) for Singapore income tax purposes may be required to recognize gains or losses (not being gains or losses in the nature of capital) on the Notes, irrespective of disposal, in accordance with the provisions of FRS 39, FRS 109 or SFRS(I) 9 (as the case may be). See also “Adoption of FRS 39, FRS 109 or SFRS(I) 9 for Singapore Income Tax Purposes”.

C. Adoption of FRS 39, FRS 109 or SFRS(I) 9 for Singapore Income Tax Purposes Section 34A of the ITA provides for the tax treatment for financial instruments in accordance with FRS 39 (subject to certain exceptions and “opt-out” provisions) to taxpayers who are required to comply with FRS 39 for financial reporting purposes. The IRAS has also issued a circular entitled “Income Tax Implications Arising from the Adoption of FRS 39 — Financial Instruments: Recognition and Measurement”.

FRS 109 or SFRS(I) 9 (as the case may be) is mandatorily effective for annual periods beginning on or after January 1, 2018, replacing FRS 39. Section 34AA of the ITA requires taxpayers who comply or

183 who are required to comply with FRS 109 or SFRS(I) 9 for financial reporting purposes to calculate their profit, loss or expense for Singapore income tax purposes in respect of financial instruments in accordance with FRS 109 or SFRS(I) 9 (as the case may be), subject to certain exceptions. The IRAS has also issued a circular entitled “Income Tax: Income Tax Treatment Arising from Adoption of FRS 109 — Financial Instruments”.

Holders of the Notes who may be subject to the tax treatment under Sections 34A or 34AA of the ITA should consult their own accounting and tax advisers regarding the Singapore income tax consequences of their acquisition, holding or disposal of the Notes.

D. Estate Duty Singapore estate duty has been abolished with respect to all deaths occurring on or after February 15, 2008.

Foreign Account Tax Compliance Act Pursuant to Sections 1471 to 1474 of the US Internal Revenue Code of 1986 and Treasury regulations promulgated thereunder (provisions commonly referred to as “FATCA”), a “foreign financial institution” may be required to withhold US tax on certain passthru payments made on or after the date that is two years after the publication of final regulations defining the term “foreign passthru payment” to the extent such payments are treated as attributable to certain US source payments. Obligations issued on or prior to the date that is six months after the publication of such final regulations generally will be “grandfathered” and exempt from withholding unless the obligations are materially modified after that date. If additional notes of the same issue as the Notes are issued after the expiration of the grandfathering period, the additional notes may not be treated as grandfathered, which may have negative consequences for the existing Notes, including a negative impact on market price. Many countries, including Singapore, have entered into agreements with the United States to implement FATCA in a manner that alters the rules described above. Under such intergovernmental agreement, the Issuer may be required to report certain information regarding investors to tax authorities in its jurisdiction, which information may be shared with taxing authorities in the United States. Holders should therefore consult their own tax advisors on how these rules may apply to their investment in the Notes.

184 PLAN OF DISTRIBUTION

BNP Paribas, CIMB Bank Berhad, acting through its Singapore Branch, Credit Suisse (Singapore) Limited and Deutsche Bank AG, Singapore Branch as Joint Lead Managers, pursuant to a purchase agreement dated June 12, 2019 (the “Purchase Agreement”) among the Issuer, the Guarantor and the Joint Lead Managers, agree subject to the satisfaction of certain conditions, to severally and not jointly subscribe and pay for, or procure subscriptions and payment for the respective principal amount of the Notes set forth opposite their names in the table below on the Issue Date at 98.973% of their principal amount of the Notes:

Joint Lead Managers Principal amount of Notes BNP Paribas ...... US$ 62,500,000 CIMB ...... US$ 62,500,000 Credit Suisse ...... US$ 62,500,000 Deutsche Bank ...... US$ 62,500,000 Total ...... US$250,000,000

The Purchase Agreement provides that the obligations of the Joint Lead Managers to purchase the Notes are subject to approval of certain legal matters by counsel and to certain other conditions. The initial offering price is set forth on the cover page of this Offering Memorandum. After the Notes are released for sale, the Joint Lead Managers may change the offering price and other selling terms. The Joint Lead Managers reserve the right to withdraw, cancel or modify offers to investors and to reject orders in whole or in part. Delivery of the Notes is expected to occur on or about June 19, 2019.

The Issuer, the Guarantor and the LMIRT Manager have agreed to indemnify the Joint Lead Managers against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that the Joint Lead Managers may be required to make in respect of any of such liabilities.

The Issuer and the Guarantor have agreed not to, for a period of 90 days after the date of this Offering Memorandum (i) offer for sale, sell, or otherwise dispose of (or enter into any transaction or device that is designed to, or would be expected to, result in the disposition by any person at any time in the future of) any debt securities substantially similar to the Notes or securities convertible into or exchangeable for such debt securities, or sell or grant options, rights or warrants with respect to such debt securities or securities convertible into or exchangeable for such debt securities, (ii) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of such debt securities, (iii) file or cause to be filed a registration statement, including any amendments, with respect to the registration of debt securities substantially similar to the Notes or securities convertible, exercisable or exchangeable into debt securities or (iv) publicly announce an offering of any debt securities substantially similar to the Notes or securities convertible or exchangeable into such debt securities, in each case without the prior written consent of the Joint Lead Managers.

The Notes and the Guarantee have not been registered under the Securities Act and, unless so registered, may not be offered or sold within the United States except in certain transactions exempt from, or not subject to, the registration requirements of the Securities Act. See “Transfer Restrictions.”

The Notes will constitute a new class of securities with no established trading market. Approval in-principle has been received for the listing and quotation of the Notes on the SGX-ST. The offering and settlement of the Notes is not conditioned upon obtaining the listing. The Issuer does not intend to apply for listing or quotation of the Notes on any national securities exchange in the United States or through NASDAQ. However, there can be no assurance that the prices at which the Notes will sell in the market after this offering will not be lower than the initial offering price or that an active trading market for the Notes after the completion of the offering will develop and continue after this offering. The Joint Lead Managers have advised us that they may discontinue market-making activities with respect to the Notes at any time without notice. In addition, market-making activity will be subject to the limits imposed by applicable law. Accordingly, there can be no assurance that the trading market for the Notes will have any liquidity.

185 In connection with this offering, Credit Suisse, as stabilizing manager, or any person acting for it, may purchase and sell Notes in the open market. These transactions may, to the extent permitted by law, include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale of a greater amount of Notes than the Joint Lead Managers are required to purchase in this offering. Stabilizing transactions consist of certain bids or purchases for the purpose of preventing or retarding a decline in the market price of the Notes while this offering is in progress. These activities, to the extent permitted by law, may stabilize, maintain or otherwise affect the market price of the Notes. These activities may be conducted in the over-the-counter market or otherwise. As a result, the price of the Notes may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time and must in any event be brought to an end after a limited time. These activities will be undertaken solely for the account of the stabilizing manager and not for and on behalf of the Issuer. The Joint Lead Managers may, from time to time, engage in transactions with and perform services for the Issuer or the Guarantor in the ordinary course of their business.

Delivery of the Notes is expected on or about June 19, 2019, which is the fifth business day following the date of this Offering Memorandum (such settlement cycle being referred to as “T+5”). Under Rule 15c6-1 under the Exchange Act, trades in the secondary market generally are required to settle in two business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the Notes on the date of pricing or the next succeeding two business days will be required, because the Notes initially will settle in T+5, to specify an alternate settlement cycle at the time of any such trade to prevent a failed settlement. Purchasers who wish to trade the Notes on the pricing date or the next succeeding business day should consult their own advisers.

OTHER RELATIONSHIPS The Joint Lead Managers and certain of their respective affiliates have engaged in, and may in the future engage in, advisory and investment banking services and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these activities and dealings. In addition, in the ordinary course of business, each of the Joint Lead Managers and their affiliates may trade our securities or the securities of our affiliates or derivatives relating to the foregoing securities for its and/or its affiliates’ own account and/or for the accounts of customers, and may at any time hold a long or short position in such securities. Such investment and trading activities may involve or relate to securities and/or instruments of LMIRT and its subsidiaries, the LMIRT Manager, the Guarantor, the Sponsor and/or persons and entities with relationships with LMIRT and its subsidiaries, the LMIRT Manager, the Guarantor or the Sponsor and may also include swaps and other financial instruments entered into for hedging purposes.

We will use a part of the net proceeds from the offering of the Notes to refinance existing indebtedness, comprising of S$120.0 million revolving credit facilities and S$175.0 million term loan due in 2020, to which BNP Paribas, CIMB Bank Berhad, or their affiliates, are party as lenders. See “Description of Indebtedness.”

SELLING RESTRICTIONS General No action has been taken or will be taken in any jurisdiction by the Issuer, the Guarantor or the Joint Lead Managers that would permit a public offering of Notes, or the possession, circulation or distribution of this Offering Memorandum or any other material relating to the Notes or this offering, in any jurisdiction where action for that purpose is required. Accordingly, the Notes may not be offered or sold, directly or indirectly, and neither this Offering Memorandum nor such other material may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations of such country or jurisdiction.

United States The Notes and the Guarantee have not been and will not be registered under the Securities Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Notes are being offered and sold only outside the United States in compliance with Regulation S under the Securities Act.

186 United Kingdom Any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the “FSMA”) in connection with the issue or sale of any Notes will only be communicated or cause to be communicated in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer and anything done by the Joint Lead Managers in relation to the Notes in, from or otherwise involving the United Kingdom will comply with all applicable provisions of the FSMA.

European Economic Area This Offering Memorandum has been prepared on the basis that any offer of Notes in any Member State of the European Economic Area will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of Notes. Accordingly, any person making or intending to make an offer in that Member State of Notes which are the subject of the offering contemplated in this Offering Memorandum may only do so in circumstances in which no obligation arises for the Issuer or any of the Joint Lead Managers to publish a prospectus pursuant to Article 3 of the Prospectus Directive, in each case, in relation to such offer. Neither the Issuer nor the Joint Lead Managers have authorized, nor do they authorize, the making of any offer of Notes in circumstances in which an obligation arises for the Issuer or the Joint Lead Managers to publish a prospectus for such offer. Neither the Issuer, the Guarantor nor the Joint Lead Managers have authorized, nor do they authorize, the making of any offer of Notes through any financial intermediary, other than offers made by the Joint Lead Managers, which constitute the final placement of the Notes contemplated in this offering memorandum. The expression “Prospectus Directive” means Directive 2003/71/EC (as amended), and includes any relevant implementing measure in the Member State concerned.

Each Joint Lead Manager has represented and agreed that it has not offered, sold, distributed or otherwise made available and will not offer, sell, distribute or otherwise make available any Notes to any retail investor in the European Economic Area. For the purposes of this provision:

(a) the expression “retail investor” means a person who is one (or more) of the following:

(i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID II”); or

(ii) a customer within the meaning of Directive 2016/97/EU (as amended, the “Insurance Distribution Directive”), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or

(iii) not a qualified investor as defined in Directive 2003/71/EC (as amended, the “Prospectus Directive”); and

(b) the expression “offer” includes the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes.

Hong Kong The Notes may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the Notes may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

187 Indonesia This offering does not constitute a public offering in Indonesia under Law No. 8 of 1995 regarding Capital Markets and its implementing regulations. This Offering Memorandum may not be distributed in Indonesia and the Notes may not be offered in Indonesia or sold to Indonesian citizens wherever they are domiciled, or to Indonesian residents in a manner which constitutes a public offering under the laws and regulations of Indonesia.

Singapore This Offering Memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. As such, each of the Joint Lead Managers will represent, warrant and agree, and each investor should note, as the case may be, that the Notes may not be offered or sold, or made the subject of an invitation for subscription or purchase, nor may the Offering Memorandum or any of the documents or materials in connection with the offer or sale or invitation for subscription or any Notes be circulated or distributed, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor (as defined in Section 4A of the SFA) pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA and (where applicable) Regulation 3 of the Securities and Futures (Classes of Investors) Regulations 2018, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Where the Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a) a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor; securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Notes pursuant to an offer made under Section 275 of the SFA except:

(1) to an institutional investor or to a relevant person, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; or

(2) where no consideration is or will be given for the transfer; or

(3) where the transfer is by operation of law; or

(4) as specified in Section 276(7) of the SFA; or

(5) as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018.

Any reference to the SFA is a reference to the Securities and Futures Act, Chapter 289 of Singapore and a reference to any term as defined in the SFA or any provision in the SFA is a reference to that term or provision as modified or amended from time to time including by such of its subsidiary legislation as may be applicable at the relevant time.

Switzerland Under Swiss law, REITs may qualify as a collective investment scheme. Neither the Issuer nor the Guarantor has been licensed for distribution to non-qualified investors by the Swiss Financial Market Supervisory Authority FINMA (“FINMA”) as a foreign collective investment scheme pursuant to article 120 para. 1 of the Swiss Federal Act on Collective Investment Schemes of June 23, 2006, as amended

188 (“CISA”), and no representative or paying agent in Switzerland has been appointed pursuant to article 120 para. 4 CISA. Accordingly, the Notes may only be offered, advertised or otherwise marketed, directly or indirectly, in or from Switzerland and this document and any other marketing or offering documents relating to the Issuer, the Guarantor or the Notes may only be made available in or from Switzerland (A) to financial institutions that are subject to prudential supervision by the FINMA as defined in article 10 para. 3 lit. a CISA or insurance institutions that are subject to prudential supervision by the FINMA as defined in article 10 para. 3 lit. b CISA and/or (B) in any other manner that does not constitute a distribution (Vertrieb/distribution/distribuzione) within the meaning of article 3 CISA, its implementing ordinance and guidelines. Investors in the Notes do not benefit from the specific investor protection provided by the CISA and the supervision by the FINMA in connection with the licensing for distribution or the appointment of a representative or a paying agent in Switzerland.

Alternative Investment in Fund Managers Directive This Offering Memorandum is not intended to be an offer or placement for the purposes of the Alternative Investment Fund Managers Directive (“AIFMD”), and any “marketing” as defined under AIFMD will take place in accordance with the national private placement regimes of the applicable European Economic Area jurisdictions in which the Notes shall be offered or on a reverse-enquiry basis.

189 TRANSFER RESTRICTIONS

Because of the following restrictions, purchasers are advised to consult legal counsel prior to making any offer, sale, resale, pledge or other transfer of the Notes.

The Notes and the Guarantee have not been and will not be registered under the Securities Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Notes are being offered and sold only outside the United States in compliance with Regulation S under the Securities Act.

By its purchase of the Notes, each purchaser of the Notes will be deemed to:

1. represent that it is purchasing the Notes for its own account or an account with respect to which it exercises sole investment discretion and is purchasing the Notes in an offshore transaction in accordance with Regulation S;

2. acknowledge that the Notes and the Guarantee have not been and will not be registered under the Securities Act and may not be offered or sold within the United States except as set forth below;

3. agree that it will inform each person to whom it transfers Notes of any restrictions on transfer of such Notes; and

4. acknowledge that the Issuer, the Guarantor, the Joint Lead Managers, the Transfer Agent and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements, and agree that if any of the acknowledgments, representations or agreements deemed to have been made by its purchase of the Notes are no longer accurate, it shall promptly notify the Issuer, the Guarantor and the Joint Lead Managers. If it is acquiring any Notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and it has full power to make the foregoing acknowledgments, representations and agreements on behalf of each such account.

190 LEGAL MATTERS

Certain legal matters with respect to the Notes will be passed upon for us by Milbank LLP as to matters of United States federal and New York law, Makes & Partners as to matters of Indonesian law and Allen & Gledhill LLP as to matters of Singapore law. Certain legal matters will be passed upon for the Joint Lead Managers by White & Case Pte. Ltd. as to matters of United States federal and New York law and Witara Cakra Advocates as to matters of Indonesian law.

191 INDEPENDENT AUDITORS

The audited consolidated financial statements as of and for the years ended December 31, 2016, 2017 and 2018 have been audited by RSM Chio Lim LLP, independent public accountants, as stated in their report appearing in this Offering Memorandum.

The unaudited interim consolidated financial information for the three months ended March 31, 2018 and March 31, 2019 presented in this Offering Memorandum have been reviewed by RSM Chio Lim LLP and prepared in accordance with Financial Reporting Standard 34 Interim Financial Reporting.

192 RATINGS

The Notes are expected to be rated “Ba3” by Moody’s and “BB (Expected)” by Fitch. The credit ratings accorded the Notes are not a recommendation to purchase, hold or sell the Notes inasmuch as such ratings do not comment as to market price or suitability for a particular investor. There can be no assurance that the ratings will remain in effect for any given period or that the ratings will not be revised by the rating agencies in the future if, in their judgment, circumstances so warrant. See “Risk Factors — Risks Relating to the Notes and the Guarantee — The ratings assigned to the Notes may be lowered or withdrawn.”

193 GLOSSARY

The following definitions have, where appropriate, been used in this Offering Memorandum:

“AEI” Asset enhancement initiative.

“Acquisition of Puri Mall” The acquisition of the strata title units of Lippo Mall Puri from an indirect wholly-owned subsidiary of the Sponsor.

“Average Rental Rate” Rent payable per sq m over the leased area.

“BOT Agreement” An agreement entered into between the BOT Grantor and 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.

“BOT Grantor” The owner of the BOT Land (relevant Indonesian government), who grants a BOT Grantee a right to construct and operate a building on BOT Land for a particular period of time, pursuant to a BOT Agreement; and at the end of the BOT period the BOT Grantee will transfer the BOT Land and building to the BOT Grantor.

“BOT Land” Land owned by the BOT Grantor under the Right to Manage (Hak Pengelolaan).

“BOT Schemes” A contractual arrangement in which a right to build over a state or regional property (in the form of land) is granted by a BOT Grantor to a BOT Grantee, whereas the BOT Grantee will construct buildings and/or facilities on such land to then be utilized and/or operated by the BOT Grantee for a particular period and returned to the BOT Grantor at the end of the agreed period.

“CBD” Central business district.

“Fitch” Fitch Ratings Ltd. and its affiliates or any successor to the rating agency business thereof.

“GDP” Gross domestic product.

“GFA” Gross floor area.

“GRDP” Gross regional domestic product.

“Global Certificates” Certificates representing Registered Notes that are registered in the name of a nominee for one or more clearing systems.

“Indonesian SPCs” Each of the special purpose corporations established under the laws of the Republic of Indonesia that directly hold title to the retail malls and retail spaces.

“IRAS” Inland Revenue Authority of Singapore.

“ITA” Income Tax Act, Chapter 134 of Singapore, as amended or modified from time to time.

194 “LMIRT” or “LMIR Trust” Lippo Malls Indonesia Retail Trust, a unit trust constituted on August 8, 2007 under the laws of the Republic of Singapore.

“LMIRT Manager” LMIRT Management Ltd. (previously known as Lippo Malls Indonesia Retail Trust Management Ltd), as manager of LMIR Trust.

“LMIRT Trust Deed” The trust deed dated August 8, 2007 constituting LMIR Trust and made between LMIRT Management Ltd. (previously known as Lippo Malls Indonesia Retail Trust Management Ltd), as manager of LMIR Trust and the LMIRT Trustee, as amended or supplemented.

“LMIRT Trustee” Perpetual (Asia) Limited, acting in its capacity as trustee of LMIR Trust, or any other person that replaces Perpetual (Asia) Limited as trustee of LMIR Trust under the LMIRT Trust Deed.

“MAS” The Monetary Authority of Singapore.

“Moody’s” Moody’s Investor service and its affiliates or any successor to the rating agency business thereof.

“NAV” Net asset value.

“NLA” Net lettable area.

“Occupancy Rate” Ratio of rented space (including leases committed via executed letters of intent) to the total amount of available space (excluding casual leasing areas).

“Outsource Agreement” An agreement relating to certain maintenance services for our retail malls, such as cleaning and maintenance of utilities that have been contacted to a third party service provider.

“PPP” Purchasing power parity.

“Properties” Together, the retails malls and the retail spaces.

“Property Funds Appendix” The guidelines for property funds issued by the MAS as Appendix 6 to the Code on Collective Investment Schemes, as amended, varied or supplemented from time to time.

“Property Manager” PT Lippo Malls Indonesia

“Prospectus Directive” Prospectus Directive means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the relevant Member State of the EEA), and includes any relevant implementing measure in each such relevant Member State and the expression 2010 PD Amending Directive means Directive 2010/73/EU.

“Real GDP” Gross domestic product as adjusted for inflation.

“REIT” Real estate investment trust.

“Rp” or “Rupiah” The lawful currency of Indonesia.

“S$” or “Singapore Dollars” The lawful currency of Singapore.

195 “S&P” S&P Global Ratings or any successor to the rating agency business thereof.

“Securities and Futures The Securities and Futures Ordinance (Cap. 571) of Hong Ordinance” Kong.

“SFA” The Securities and Futures Act, Chapter 289 of Singapore.

“SFRS” Singapore Financial Reporting Standards.

“Singapore” The Republic of Singapore.

“Singapore SPCs” Each of the special purpose corporations established under the laws of the Republic of Singapore that directly hold the shares of the Indonesian SPCs.

“Sponsor” PT Lippo Karawaci Tbk.

“Sq m” Square meter.

“Unit(s)” An undivided interest in LMIR Trust as provided for in the LMIRT Trust Deed.

“US$” or “US Dollars” The lawful currency of the United States of America.

“WALE” Weighted average lease expiry.

196 INDEX TO FINANCIAL STATEMENTS

Index Page Independent Auditor’s Report on the Review of the Unaudited interim consolidated Financial Information for the Three Month Periods Ended March 31, 2019 and 2018 ...... F-2 Consolidated Statement of Total Return for the Three Months ended March 31, 2019 and 2018 ...... F-5 Consolidated Statement of Distribution for the Three Months ended March 31, 2019 and 2018 ...... F-6 Consolidated Statement of Financial Position as of December 31, 2018 and March 31, 2019 . . F-7 Consolidated Statement of Cash Flows for the Three Months ended March 31, 2019 and 2018 ...... F-9 Consolidated Statement of Changes in Unitholders’ Funds for the Three Months ended March 31, 2019 and 2018 ...... F-8 Independent Auditor’s Report for the Years ended December 31, 2018 and 2017 ...... F-21 Statements of Total Return for the Years ended December 31, 2018 and 2017 ...... F-24 Statements of Distribution for the Years ended December 31, 2018 and 2017 ...... F-25 Statements of Financial Position as of December 31, 2018 and 2017 ...... F-26 Statements of Changes in Unitholders’ Funds for the Years ended December 31, 2018 and 2017 ...... F-27 Statement of Cash Flows for the year ended December 31, 2018 and 2017 ...... F-28 Statement of portfolio as of December 31, 2018 and 2017 ...... F-29 Notes to the Consolidated Financial Statements for the Years ended December 31, 2018 and 2017 ...... F-37 Independent Auditor’s Report for the Years ended December 31, 2017 and 2016 ...... F-93 Statements of Total Return for the Years ended December 31, 2017 and 2016 ...... F-97 Statements of Distribution for the Years ended December 31, 2017 and 2016 ...... F-98 Statements of Financial Position as of December 31, 2017 and 2016 ...... F-99 Statements of Changes in Unitholders’ Funds for the Years ended December 31, 2017 and 2016 ...... F-100 Statement of Cash Flows for the year ended December 31, 2017 and 2016 ...... F-101 Statement of portfolio as of December 31, 2017 and 2016 ...... F-103 Notes to the Consolidated Financial Statements for the Years ended December 31, 2017 and 2016 ...... F-113

F-1 F-2 F-3 F-4 F-5 F-6 F-7 F-8 F-9 F-10 F-11 F-12 F-13 F-14 F-15 F-16 F-17 F-18 F-19 F-20 Independent Auditor’s Report To the Unitholders of LIPPO MALLS INDONESIA RETAIL TRUST

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

OPINION

We have audited the accompanying financial statements of Lippo Malls Indonesia Retail Trust (the “Trust”) and its subsidiaries (the “Group”), which comprise the statements of financial position of the Group and of the Trust and the statement of portfolio of the Group as at 31 December 2018, the statements of total return, statements of distribution, statements of changes in unitholders’ funds of the Group and of the Trust, and the statement of cash flows of the Group for the reporting year then ended, and notes to the financial statements, including significant accounting policies.

In our opinion, the accompanying financial statements of the Group and of the Trust are properly drawn up in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” (“RAP 7”) issued by the Institute of Singapore Chartered Accountants so as to present fairly, in all material respects, the financial positions of the Group and of the Trust and portfolio holdings of the Group as at 31 December 2018 and the financial performance and changes in unitholders’ funds for the Group and Trust, and cash flows of the Group for the reporting year then ended.

BASIS FOR OPINION

We conducted our audit in accordance with Singapore Standards on Auditing (SSAs). Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Trust in accordance with the Accounting and Corporate Regulatory Authority (ACRA) Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (ACRA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current reporting year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

VALUATION OF INVESTMENT PROPERTIES

Please refer to Note 2A on accounting policies, 2C on critical judgements, assumptions and estimation uncertainties, Note 14 on investment properties and the annual report on the section on the audit committee’s views and responses to the reported key audit matter.

The Group owns a portfolio of investment properties comprising retail malls and retail spaces located within other malls in Indonesia. The investment properties are stated at fair value of $1,831,646,000 as at 31 December 2018 and there is a fair value loss of $1,495,000 accounted in the statement of total return. The valuation of the portfolio is a significant judgement area and the fair values are impacted by a number of assumptions and factors including contracted and future potential rental revenue, quality and condition of the properties, tenant covenants, and yields. All the valuations are carried out by third party independent professional valuers in accordance with the professional standards for valuation, FRS 40 and FRS 113. Sensitivity of the valuations to key assumptions is disclosed in Note 14 to the financial statements.

We assessed the processes used by management for the selection of the independent professional valuers, the determination of the scope of work of these independent professional valuers, and the review of the valuations reported by these independent professional valuers. The independent professional valuers used by management have considerable experience in the markets in which the properties are located. With assistance from our own internal valuation specialists, we assessed the independence, competence and experience of the independent professional valuers used by management in assessing their objectivity, professional qualifications and resources; assessed the results of the independent professional valuers’ reports by checking whether the valuations were in accordance with international valuation professional standards and that the methodology adopted was appropriate by reference to acceptable valuation practice, FRS 40 and FRS 113. We tested the integrity of inputs of the projected cash flows used in the valuations to supporting leases and other documents.

LIPPO MALLS INDONESIA RETAIL TRUST 83 ANNUAL REPORT 2018

F-21 Independent Auditor’s Report (cont’d) To the Unitholders of LIPPO MALLS INDONESIA RETAIL TRUST

VALUATION OF INVESTMENT PROPERTIES (CONT’D)

We challenged the key assumptions upon which the valuations were based including those relating to forecast rents, yields, capital expenditure by making a comparison to our own understanding of the market and obtained an understanding of the reasons for significant or unusual movements in the property values by forming our own view on the general market conditions with reference to the key assumptions noted above. We compared the information provided by management to the independent professional valuers, such as lease data, rental revenue and property costs, to supporting documents including lease agreements and purchase agreements. We also considered the adequacy of the disclosures about the degree of estimation made when valuing these properties as disclosed in Note 14.

The testing performed in relation to the final fair values of the investment properties proved to be satisfactory.

OTHER INFORMATION

The Manager of the Trust (LMIRT Management Ltd) is responsible for the other information. The other information comprises the information included in the report of the trustee, statement by the manager and the annual report, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

RESPONSIBILITIES OF MANAGER FOR THE FINANCIAL STATEMENTS

The Manager is responsible for the preparation and fair presentation of these financial statements in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” (“RAP 7”) issued by the Institute of Singapore Chartered Accountants, and for such internal control as the Manager determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Manager is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The Manager’s responsibilities include overseeing the Group’s financial reporting process.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

84

F-22 Independent Auditor’s Report (cont’d) To the Unitholders of LIPPO MALLS INDONESIA RETAIL TRUST

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS (CONT’D)

As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: a) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. b) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. d) Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. e) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. f) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the Manager regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Manager with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Manager, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Derek How Beng Tiong.

RSM Chio Lim LLP Public Accountants and Chartered Accountants Singapore

15 March 2019 Engagement partner – effective from year ended 31 December 2018

LIPPO MALLS INDONESIA RETAIL TRUST 85 ANNUAL REPORT 2018

F-23 STATEMENTS OF Total Return Year Ended 31 December 2018

Group Trust Notes 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Gross revenue 4 230,299 197,376 97,185 116,131 Property operating expenses 5 (65,332) (13,125) – – Net property income 164,967 184,251 97,185 116,131 Interest income 150 1,148 4 6 Other income 6 159 312 – – Manager’s management fees 7 (11,595) (12,518) (11,578) (12,518) Trustee’s fees (461) (423) (461) (423) Finance costs 8 (34,653) (31,589) (35,808) (32,736) Other expenses 9 (1,803) (3,538) (1,702) (3,450) Net income before the undernoted 116,764 137,643 47,640 67,010 Decrease in fair values of investment properties 14 (1,495) (30,399) – – Impairment loss on investments in subsidiaries 16 – – (133,017) (122,076) Realised (losses)/gains on derivative financial instruments (2,956) 1,452 (2,956) 1,452 Decrease in fair values of derivative financial instruments 28 (135) (568) (135) (568) Realised foreign exchange adjustment losses (12,253) (5,521) (12,213) (5,161) Unrealised foreign exchange adjustment gains/ (losses) 2,288 (1,509) (3,450) (11,180) Amortisation of intangible assets 15 (2,613) (12,996) – – Total return/(loss) for the year before income tax 99,600 88,102 (104,131) (70,523) Income tax (expense)/income 10 (38,668) (25,392) (283) 283 Total return/(loss) for the year after income tax 60,932 62,710 (104,414) (70,240) Other comprehensive return/(loss): Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations, net of tax (73,260) (140,788) – – Total comprehensive loss (12,328) (78,078) (104,414) (70,240)

Total return/(loss) attributable to: Unitholders of Trust 43,212 48,657 (122,134) (84,293) Perpetual securities holders 17,720 14,053 17,720 14,053 60,932 62,710 (104,414) (70,240)

Total comprehensive loss attributable to: Unitholders of Trust (30,048) (92,131) (122,134) (84,293) Perpetual securities holders 17,720 14,053 17,720 14,053 (12,328) (78,078) (104,414) (70,240)

Cents Cents Earnings per unit Basic and diluted earnings per unit 11 1.52 1.73

The accompanying notes form an integral part of these financial statements.

86

F-24 STATEMENTS OF Distribution Year Ended 31 December 2018

Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Total return/(loss) for the year after income tax 60,932 62,710 (104,414) (70,240) Add: net adjustments (Note A below) (2,517) 34,250 162,829 167,200 Income available for distribution to Unitholders 58,415 96,960 58,415 96,960

Distributions to Unitholders: Total interim distribution paid in the year ended 31 December (Note 12A) 49,730 74,674 49,730 74,674 Total return available for distribution to Unitholders for the quarter ended 31 December paid after year-end (Note 12A) 8,685 22,286 8,685 22,286 58,415 96,960 58,415 96,960

Unitholders’ distribution: - As distribution from operations 29,525 63,637 29,525 63,637 - As distribution of Unitholders’ capital contribution 28,890 33,323 28,890 33,323 58,415 96,960 58,415 96,960

Note A Net adjustments: Decrease in fair values of investment properties, net of deferred tax 1,372 22,102 – – Manager’s management fees settled in units 10,356 8,671 10,356 8,671 Depreciation of plant and equipment 3,015 2,457 – – Decrease in fair values of derivative financial instruments 135 568 135 568 Unrealised foreign exchange adjustment (gains)/losses (2,288) 1,509 3,450 11,180 Amortisation of intangible assets 2,613 12,996 – – Amount reserved for distribution to perpetual securities holders (17,720) (14,053) (17,720) (14,053) Capital repayment of shareholders’ loans – – 28,890 33,323 Exchange differences arising from recognising dividend income – – 1,553 3,230 Impairment loss on investments in subsidiaries – – 133,017 122,076 Allocation of realised exchange differences to capital repayment of shareholders’ loans – – 9,131 4,176 Other adjustments – – (5,983) (1,971) (2,517) 34,250 162,829 167,200

The accompanying notes form an integral part of these financial statements.

LIPPO MALLS INDONESIA RETAIL TRUST 87 ANNUAL REPORT 2018

F-25 STATEMENTS OF Financial Position As at 31 December 2018

Group Trust Notes 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Non-current assets Plant and equipment 13 10,595 9,931 – – Investment properties 14 1,831,646 1,908,141 – – Derivative financial instruments, non-current 28 – 394 – 394 Intangible assets 15 8,790 11,906 – – Investments in subsidiaries 16 – – 1,521,282 1,712,880 Total non-current assets 1,851,031 1,930,372 1,521,282 1,713,274

Current assets Trade and other receivables 18 40,486 38,989 203,806 231,924 Other assets 19 21,964 29,613 6 198 Cash and cash equivalents 20 52,676 64,900 17,524 9,560 Total current assets 115,126 133,502 221,336 241,682 Total assets 1,966,157 2,063,874 1,742,618 1,954,956

Non-current liabilities Deferred tax liabilities 10 23,241 23,364 – – Other financial liabilities, non-current 24 555,216 421,090 479,545 345,732 Other liabilities, non-current 25 89,499 94,688 – – Derivative financial instruments, non-current 28 1,885 1,954 1,885 1,954 Total non-current liabilities 669,841 541,096 481,430 347,686

Current liabilities Income tax payable 3,881 5,715 – – Trade and other payables, current 26 50,192 45,337 171,387 287,262 Other financial liabilities, current 24 120,034 268,469 120,000 169,209 Other liabilities, current 27 42,279 34,415 – – Derivative financial instruments, current 28 719 909 719 909 Total current liabilities 217,105 354,845 292,106 457,380 Total liabilities 886,946 895,941 773,536 805,066

Net assets 1,079,211 1,167,933 969,082 1,149,890

Represented by: Net assets attributable to Unitholders 21 819,564 908,286 709,435 890,243

Perpetual securities 23 259,647 259,647 259,647 259,647

Total net assets 1,079,211 1,167,933 969,082 1,149,890

Net assets attributable to Unitholders per unit (in cents) 21 28.66 32.16 24.81 31.52

The accompanying notes form an integral part of these financial statements.

88

F-26 STATEMENTS OF Changes in Unitholders’ Funds Year Ended 31 December 2018

Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Total Unitholders’ funds at beginning of the year 908,286 1,091,688 890,243 1,065,807

Operations Total return/(loss) for the year 60,932 62,710 (104,414) (70,240) Less: Amount reserved for distribution to perpetual securities holders (17,720) (14,053) (17,720) (14,053) Net increase/(decrease) in net assets resulting from operations attributed to Unitholders 43,212 48,657 (122,134) (84,293)

Unitholders’ contributions Manager’s management fees settled in units 12,428 6,874 12,428 6,874 Manager’s acquisition fees settled in units 914 864 914 864 Change in net assets resulting from creation of units 13,342 7,738 13,342 7,738

Distributions (Note 12) (72,016) (99,009) (72,016) (99,009) Total increase in net assets before movements in foreign currency translation reserve and perpetual securities 892,824 1,049,074 709,435 890,243

Foreign currency translation reserve Net movement in other comprehensive loss (73,260) (140,788) – –

Total Unitholders’ funds at 31 December 819,564 908,286 709,435 890,243

Perpetual securities Balance at beginning of the year 259,647 140,867 259,647 140,867 Issue of perpetual securities – 120,000 – 120,000 Issue expense – (1,502) – (1,502) Amount reserved for distribution to perpetual securities holders 17,720 14,053 17,720 14,053 Distributions to perpetual securities holders (17,720) (13,771) (17,720) (13,771) Balance at 31 December 259,647 259,647 259,647 259,647

Total 1,079,211 1,167,933 969,082 1,149,890

The accompanying notes form an integral part of these financial statements.

LIPPO MALLS INDONESIA RETAIL TRUST 89 ANNUAL REPORT 2018

F-27 STATEMENT OF Cash Flows Year Ended 31 December 2018

Group 2018 2017 $’000 $’000

Cash flows from operating activities Total return before tax 99,600 88,102 Adjustments for: Interest income (150) (1,148) Interest expense 30,954 27,041 Amortisation of borrowing costs 3,699 4,548 Depreciation of plant and equipment 3,015 2,457 Amortisation of intangible assets 2,613 12,996 Decrease in fair values of investment properties 1,495 30,399 Fair value loss on derivative financial instruments 135 568 Unrealised foreign exchange adjustment (gain)/losses (2,288) 1,509 Manager’s management fees settled in units 10,356 8,671 Operating cash flows before changes in working capital 149,429 175,143 Trade and other receivables (108) (23,078) Other assets 8,622 (10,368) Trade and other payables 14,903 28,959 Other liabilities, current 9,354 4,434 Net cash flows from operations before tax 182,200 175,090 Income tax paid (40,625) (34,128) Net cash flows from operating activities 141,575 140,962

Cash flows from investing activities Acquisition of investment properties (1) – (132,486) Capital expenditure on investment properties (7,704) (45,638) Purchase of plant and equipment (4,112) (5,630) Interest received 150 1,148 Net cash flows used in investing activities (11,666) (182,606)

Cash flows from financing activities Repayment of bank borrowings (90,000) (55,000) Proceeds from bank borrowings 175,000 224,290 Net proceeds from issuance of perpetual securities – 118,498 Repayment of notes issued under EMTN (100,000) (125,000) Distributions to Unitholders (72,016) (99,009) Distributions to perpetual securities holders (17,720) (13,771) Other financial liabilities, current (3,723) (4,566) Other liabilities, non-current (1,132) 14,597 Interest paid (30,954) (27,041) Cash restricted in use for bank facilities (2,264) (1,630) Net cash flows (used in)/from financing activities (142,809) 31,368

Net decrease in cash and cash equivalents (12,900) (10,276) Effect of exchange rate changes on cash and cash equivalents (1,588) (4,208) Cash and cash equivalents, statement of cash flows, beginning balance 59,787 74,271 Cash and cash equivalents, statement of cash flows, ending balance (Note 20) 45,299 59,787

(1) Acquisitions of investment properties in 2017 are in relation to the acquisitions of Lippo Plaza Kendari, Lippo Plaza Jogja and Kediri Town Square recorded in Notes 14 and 15 respectively. The total settlement amount is $133,400,000 which consists of an amount settled in cash of $132,486,000 and amounts payable in units of $914,000.

The accompanying notes form an integral part of these financial statements.

90

F-28 STATEMENT OF Portfolio As at 31 December 2018

By Geographical Area

Group Percentage Percentage Gross of Total of Total Floor Tenure of Fair Value Net Assets Fair Value Net Assets Description Area in Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Square Valuation December December December December Acquisition Date Meter Date 2018 2018 2017 2017 $’000 % $’000 %

Indonesia Retail Malls (1) Gajah Mada Plaza 66,160 Strata Title 75,344 7.0 78,768 6.7 Address: Jalan Gajah Mada constructed 19-26 Sub-District of Petojo on Hak Guna Utara, District of Gambir, Bangunan (“HGB”) Regency of Central Jakarta, Title common Jakarta-Indonesia land. Expires on Acquisition date: 24 January 2020. 19 November 2007 Revalued at 31 December 2018.

(2) Cibubur Junction 66,071 Build, Operate and 35,367 3.3 42,480 3.6 Address: Jalan Jambore Transfer (“BOT”) No.1 Cibubur, Sub-District Scheme. Expires of Ciracas, Regency of East on 28 July 2025. Jakarta, Jakarta-Indonesia Revalued at Acquisition date: 31 December 2018. 19 November 2007

(3) The Plaza Semanggi 155,122 BOT Scheme. 100,821 9.3 113,260 9.7 Address: Jalan Jenderal Expires on 8 July Sudirman Kav.50, Sub-District 2054. Revalued at of Karet Semanggi, District of 31 December 2018. Setiabudi, Regency of South Jakarta, Jakarta-Indonesia Acquisition date: 19 November 2007

The accompanying notes form an integral part of these financial statements.

LIPPO MALLS INDONESIA RETAIL TRUST 91 ANNUAL REPORT 2018

F-29 STATEMENT OF Portfolio (cont’d) As at 31 December 2018

By Geographical Area

Group Percentage Percentage Gross of Total of Total Floor Tenure of Fair Value Net Assets Fair Value Net Assets Description Area in Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Square Valuation December December December December Acquisition Date Meter Date 2018 2018 2017 2017 $’000 % $’000 %

Indonesia Retail Malls (cont’d) (4) Mal Lippo Cikarang 39,293 HGB Title. 64,995 6.0 63,479 5.4 Address: Jalan MH Thamrin, Expires on Lippo Cikarang, Sub-District of 5 May 2023. Cibatu, District of Lemah Abang, Revalued at Regency of Bekasi, West Java- 31 December 2018. Indonesia Acquisition date: 19 November 2007

(5) Lippo Plaza Ekalokasari Bogor 58,859 BOT Scheme. 35,999 3.3 39,115 3.3 Address: Jalan Siliwangi Expires on No. 123, Sub-District of Sukasari, 27 June 2032. District of Kota Bogor Timur, Revalued at Administrative City of Bogor, 31 December 2018. West Java-Indonesia Acquisition date: 19 November 2007

(6) Bandung Indah Plaza 75,868 BOT Scheme. 72,122 6.7 74,555 6.4 Address: Jalan Merdeka No. 56, Expires on Sub-District of Citarum, 31 December 2030. District of Bandung Wetan, Revalued at Regency of Bandung, 31 December 2018. West Java-Indonesia Acquisition date: 19 November 2007

(7) Istana Plaza 46,809 BOT Scheme. 60,752 5.6 65,480 5.6 Address: Jalan Pasir Kaliki Expires on No. 121 – 123, Sub-District of 17 January 2034. Pamayonan, District of Cicendo, Revalued at Regency of Bandung, 31 December 2018. West Java-Indonesia Acquisition date: 19 November 2007

The accompanying notes form an integral part of these financial statements.

92

F-30 STATEMENT OF Portfolio (cont’d) As at 31 December 2018

By Geographical Area

Group Percentage Percentage Gross of Total of Total Floor Tenure of Fair Value Net Assets Fair Value Net Assets Description Area in Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Square Valuation December December December December Acquisition Date Meter Date 2018 2018 2017 2017 $’000 % $’000 %

Indonesia Retail Malls (cont’d) (8) Sun Plaza 107,373 HGB Title. 203,399 18.8 193,937 16.6 Address: Jalan Haji Zainul Arifin Expires on No. 7, Madras Hulu, 24 November 2032. Medan Polonia, Medan, Revalued at North Sumatra-Indonesia 31 December 2018. Acquisition date: 31 March 2008

(9) Pluit Village 134,576 BOT Scheme. 79,804 7.4 93,958 8.0 Address: Jalan Pluit Indah Raya, Expires on Sub-District of Pluit, 9 June 2027. District of Penjaringan, Revalued at City of North Jakarta, 31 December 2018. Province of DKI Jakarta, Indonesia Acquisition date: 6 December 2011

(10) Plaza Medan Fair 138,767 BOT Scheme. 95,084 8.8 108,740 9.3 Address: Jalan Jendral Gatot Expires on Subroto, Sub-District of Sekip, 23 July 2027. District of Medan Petisah, Revalued at City of Medan, Province of 31 December 2018. North Sumatera, Indonesia Acquisition date: 6 December 2011

(11) Palembang Square Extension 22,527 BOT Scheme. 27,162 2.5 27,237 2.3 Address: Jalan Angkatan Expires on 45/POM IX, Lorok Pakjo 25 January 2041. Sub District, Ilir Barat 1 Revalued at District, Palembang City, 31 December 2018. South Sumatera Province, Indonesia Acquisition date: 15 October 2012

The accompanying notes form an integral part of these financial statements.

LIPPO MALLS INDONESIA RETAIL TRUST 93 ANNUAL REPORT 2018

F-31 STATEMENT OF Portfolio (cont’d) As at 31 December 2018

By Geographical Area

Group Percentage Percentage Gross of Total of Total Floor Tenure of Fair Value Net Assets Fair Value Net Assets Description Area in Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Square Valuation December December December December Acquisition Date Meter Date 2018 2018 2017 2017 $’000 % $’000 %

Indonesia Retail Malls (cont’d) (12) Lippo Plaza Kramat Jati 67,285 HGB Title. 61,021 5.7 58,688 5.0 Address: Jalan Raya Bogor Km Expires on 19, Kramat Jati Sub District, 24 October 2024. Kramat Jati District, Revalued at East Jakarta Region, 31 December 2018. DKI Jakarta Province, Indonesia Acquisition date: 15 October 2012

(13) Tamini Square 18,963 Strata Title 26,030 2.4 26,593 2.3 Address: Jalan Raya Taman Mini constructed on Pintu 1 No.15, Pinang Ranti Sub HGB Title common District, Makasar Distrik, land. Expires on East Jakarta Region, 26 September 2035. DKI Jakarta Province, Revalued at Indonesia 31 December 2018. Acquisition date: 14 November 2012

(14) Palembang Square 46,546 Strata Title 67,811 6.3 67,979 5.8 Address: Jalan Angkatan constructed on 45/POM IX, Lorok Pakjo Sub HGB Title common District, Ilir Barat 1 District, land. Expires on Palembang City, 1 September 2039. South Sumatera Province, Revalued at Indonesia 31 December 2018. Acquisition date: 14 November 2012

(15) Pejaten Village 89,157 HGB Title. 109,120 10.1 105,827 9.1 Address: Jalan Warung Expires on Jati Barat No.39, 3 November 2027. Jati Padang Sub District, Revalued at Pasar Minggu District, 31 December 2018. South Jakarta Region, DKI Jakarta Province, Indonesia Acquisition date: 20 December 2012

The accompanying notes form an integral part of these financial statements.

94

F-32 STATEMENT OF Portfolio (cont’d) As at 31 December 2018

By Geographical Area

Group Percentage Percentage Gross of Total of Total Floor Tenure of Fair Value Net Assets Fair Value Net Assets Description Area in Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Square Valuation December December December December Acquisition Date Meter Date 2018 2018 2017 2017 $’000 % $’000 %

Indonesia Retail Malls (cont’d) (16) Binjai Supermall 28,760 HGB Title. 28,483 2.6 27,812 2.4 Address: Jalan Soekarno Hatta Expires on No.14, Timbang Langkat Sub 2 September 2036. District, East Binjai District, Revalued at Binjai City, North Sumatera 31 December 2018. Province, Indonesia Acquisition date: 28 December 2012

(17) Lippo Mall Kemang 150,932 Strata Title 296,440 27.5 314,792 27.0 Address: Jalan Kemang VI, constructed Bangka Sub District, on HGB Title Mampang Prapatan District, common land. South Jakarta, Expires on DKI Jakarta Province, 28 June 2035. Indonesia Revalued at Acquisition date: 31 December 2018. 17 December 2014

(18) Lippo Plaza Batu 34,586 HGB Title. 23,671 2.2 26,675 2.3 Address: Jalan Diponegoro Expires on RT. 07 RW. 05, Sub District of 8 June 2031. Sisir, District of Batu, City of Batu, Revalued at Province of East Java, 31 December 2018. Indonesia Acquisition date: 7 July 2015

(19) Palembang Icon 42,361 HGB Title. 71,577 6.6 74,755 6.4 Address: Jalan POM IX, BOT scheme. Sub District of Lorok Pakjo, Expires on District of llir Barat I, 30 April 2040. City of Palembang, Revalued at Province of South Sumatera, 31 December 2018. Indonesia Acquisition date: 10 July 2015

The accompanying notes form an integral part of these financial statements.

LIPPO MALLS INDONESIA RETAIL TRUST 95 ANNUAL REPORT 2018

F-33 STATEMENT OF Portfolio (cont’d) As at 31 December 2018

By Geographical Area

Group Percentage Percentage Gross of Total of Total Floor Tenure of Fair Value Net Assets Fair Value Net Assets Description Area in Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Square Valuation December December December December Acquisition Date Meter Date 2018 2018 2017 2017 $’000 % $’000 %

Indonesia Retail Malls (cont’d) (20) Lippo Mall Kuta 36,312 HGB Title. 76,043 7.0 78,463 6.7 Address: Jalan Kartika Plaza, Expires on Sub District of Kuta, 22 March 2037. District of Kuta, Regency of Revalued at Badung, Province of Bali, 31 December 2018. Indonesia Acquisition date: 29 December 2016

(21) Lippo Plaza Kendari 34,831 BOT Scheme. 32,563 3.0 29,944 2.6 Address: Jalan MT Haryono Expires on No.61-63, Kendari, 7 July 2041. South East Sulawesi 93117, Revalued at Indonesia 31 December 2018. Acquisition date: 21 June 2017

(22) Lippo Plaza Jogja 66,098 HGB Title. 52,681 4.9 53,823 4.6 Address: Jalan Laksda Adi Sucipto Expires on No.32-34, Yogyakarta, 27 December 2043. Indonesia Revalued at Acquisition date: 31 December 2018. 22 December 2017

(23) Kediri Town Square 28,688 HGB Title. 37,363 3.5 35,858 3.1 Address: Jalan Hasanudin Expires on No. 2, RT/22 RW/06, 12 August 2024. Balowerti Subdistrict, Kediri, Revalued at East Java, Indonesia 31 December 2018. Acquisition date: 22 December 2017

The accompanying notes form an integral part of these financial statements.

96

F-34 STATEMENT OF Portfolio (cont’d) As at 31 December 2018

By Geographical Area

Group Percentage Percentage Gross of Total of Total Floor Tenure of Fair Value Net Assets Fair Value Net Assets Description Area in Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Square Valuation December December December December Acquisition Date Meter Date 2018 2018 2017 2017 $’000 % $’000 %

Indonesia Retail Spaces (1) Mall WTC Matahari Units 11,184 Strata Title 10,659 1.0 12,264 1.1 Address: Jalan Raya Serpong constructed on No.39, Sub-District of Pondok HGB Title common Jagung, District of Serpong, land.Expires on Regency of Tangerang, 8 April 2038. Banten-Indonesia Revalued at Acquisition date: 31 December 2018. 19 November 2007

(2) Metropolis Town Square Units 15,248 Strata Title 13,276 1.2 16,139 1.4 Address: Jalan Hartono Raya, constructed on Sub-District of Cikokol, HGB Title common District of Cipete, Regency of land. Expires on Tangerang, Banten-Indonesia 27 December 2029. Acquisition date: Revalued at 19 November 2007 31 December 2018.

(3) Depok Town Square Units 13,045 Strata Title 14,669 1.4 16,070 1.4 Address: Jalan Margonda Raya constructed on No. 1, Sub-District of Pondok HGB Title common Cina, District of Depok, land. Expires on Regency of Depok, 27 February 2035. West Java-Indonesia Revalued at Acquisition date: 31 December 2018. 19 November 2007

(4) Java Supermall Units 11,082 Strata Title 13,994 1.3 14,128 1.2 Address: Jalan MT Haryono, constructed on No. 992-994, Sub-District of HGB Title common Jomblang, District of Semarang land. Expires on Selatan, Regency of Semarang, 24 September 2037. Central Java-Indonesia Revalued at Acquisition date: 31 December 2018. 19 November 2007

The accompanying notes form an integral part of these financial statements.

LIPPO MALLS INDONESIA RETAIL TRUST 97 ANNUAL REPORT 2018

F-35 STATEMENT OF Portfolio (cont’d) As at 31 December 2018

By Geographical Area

Group Percentage Percentage Gross of Total of Total Floor Tenure of Fair Value Net Assets Fair Value Net Assets Description Area in Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Square Valuation December December December December Acquisition Date Meter Date 2018 2018 2017 2017 $’000 % $’000 %

Indonesia Retail Spaces (cont’d) (5) Malang Town Square Units 11,065 Strata Title 16,032 1.5 15,971 1.4 Address: Jalan Veteran constructed on No. 2, Sub-District of HGB Title common Penanggungan, District of Klojen, land. Expires on Regency of Malang, East Java- 21 April 2033. Indonesia Revalued at Acquisition date: 31 December 2018. 19 November 2007

(6) Plaza Madiun Units 19,029 Strata Title 19,949 1.8 19,649 1.7 Address: Jalan Pahlawan constructed on No. 38-40, Sub-District of HGB Title common Pangongangan, land. District of Manguharjo, Expires on Regency of Madiun, East 9 February 2032. Java-Indonesia Revalued at Acquisition date: 31 December 2018. 19 November 2007

(7) Grand Palladium Units 13,417 Strata Title 9,415 0.9 11,702 1.0 Address: Jalan Kapten Maulana constructed on Lubis, Sub-District of Petisah HGB Title common Tengah, District of Medan Petisah, land. Expires on Regency of Medan, 9 November 2028. North Sumatera-Indonesia Revalued at Acquisition date: 31 December 2018. 19 November 2007

Portfolio of Investment Properties at Valuation 1,831,646 169.6 1,908,141 163.4 Other Net Liabilities (752,435) (69.6) (740,208) (63.4) Net Assets Values 1,079,211 100.0 1,167,933 100.0

The accompanying notes form an integral part of these financial statements.

98

F-36 Notes to the Financial Statements 31 December 2018

1. GENERAL

Lippo Malls Indonesia Retail Trust (“LMIR Trust” or the “Trust”) is a Singapore-domiciled unit trust constituted pursuant to the Trust Deed dated 8 August 2007 (“Trust Deed”) entered into between LMIRT Management Ltd (the “Manager”) and HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”), governed by the laws of the Republic of Singapore. On 1 November 2017, the Manager entered into a Supplemental Deed of Retirement and Appointment of Trustee with HSBC Institutional Trust Services (Singapore) Limited as retiring Trustee and Perpetual (Asia) Limited as new Trustee. The change of trustee took effect on 3 January 2018.

The Trust is listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”).

The financial statements are presented in Singapore dollars, recorded to the nearest thousands, unless otherwise stated, and they cover LMIR Trust and its subsidiaries (collectively the “Group”).

The board of directors of the Manager approved and authorised these financial statements for issue on 15 March 2019.

The principal activity of the Group and of the Trust is to invest in a diversified portfolio of income-producing real estate properties in Indonesia. These are primarily used for retail and/or retail-related purposes. The primary objective is to deliver regular and stable distributions to Unitholders and to achieve long-term growth in the net asset value per unit.

The registered office of the Manager is located at 50 Collyer Quay, #06-07 OUE Bayfront, Singapore 049321.

The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the notes to the financial statements. In addition, the notes to the financial statements include the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposures to credit risk, foreign currency risk, interest rate risk and liquidity risk. The current liabilities are more than the current assets. The Group’s forecasts and projections, taking account of reasonably possible changes in performance, show that the Group should be able to operate within its existing facilities. The Group has considerable financial resources together with good relationships with its bankers, tenants and suppliers. As a consequence, the Manager believes that the Group is well placed to manage its business risks successfully. Accordingly, the management continues to adopt the going concern basis in preparing the financial statements.

Accounting convention

The financial statements have been prepared in accordance with the recommendations of the Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” (“RAP 7”) issued by the Institute of Singapore Chartered Accountants and the applicable requirements of the Code on Collective Investment Schemes (“CIS Code”) issued by the Monetary Authority of Singapore (“MAS”) and the provisions of the Trust Deed. RAP 7 requires that the accounting policies should generally comply with the principles relating to recognition and measurement of the Financial Reporting Standards (“FRS”) issued by the Accounting Standards Council. The financial statements are prepared on a going concern basis under the historical cost convention except where a FRS requires an alternative treatment (such as fair values) as disclosed where appropriate in these financial statements. The accounting policies in FRS may not be applied when the effect of applying them is immaterial. The disclosures required by FRS need not be made if the information is immaterial.

Other comprehensive return comprises items of income and expenses (including reclassification adjustments) that are not recognised in the profit or loss, as required or permitted by FRS. Reclassification adjustments are amounts reclassified to profit or loss in the income statement in the current period that were recognised in other comprehensive income in the current or previous periods.

LIPPO MALLS INDONESIA RETAIL TRUST 99 ANNUAL REPORT 2018

F-37 Notes to the Financial Statements (cont’d) 31 December 2018

1. GENERAL (CONT’D)

Basis of presentation

The consolidated financial statements include the financial statements made up to the end of the reporting year of the Trust and all of its subsidiaries. The consolidated financial statements are the financial statements of the Group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity and are prepared using uniform accounting policies for like transactions and other events in similar circumstances. All significant intragroup balances and transactions, including income, expenses and cash flows are eliminated on consolidation. Subsidiaries are consolidated from the date the reporting entity obtains control of the investee and cease when the reporting entity loses control of the investee. Control exists when the Group has the power to govern the financial and operating policies so as to gain benefits from its activities.

Changes in the Group’s ownership interest in a subsidiary that do not result in the loss of control are accounted for within Unitholders’ funds as transactions with owners in their capacity as owners. The carrying amounts of the Group’s and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. When the Group loses control of a subsidiary it derecognises the assets and liabilities and related equity components of the former subsidiary. Any gain or loss is recognised in profit or loss. Any investment retained in the former subsidiary is measured at its fair value at the date when control is lost and is subsequently accounted for as equity investments financial assets in accordance with the financial reporting standard on financial instruments.

Basis of preparation of financial statements

The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates. The estimates and assumptions are reviewed on an ongoing basis. Apart from those involving estimations, management has made judgements in the process of applying the entity’s accounting policies.

The areas requiring management’s most difficult, subjective or complex judgements, or areas where assumptions and estimates are significant to the financial statements, are disclosed at the end of this footnote, where applicable.

Net assets attributable to Unitholders

RAP 7 requires that the unit trusts classify the units on initial recognition as equity. The net assets attributable to Unitholders comprise the residual interest in the assets of the unit trust after deducting its liabilities. Under RAP 7, distributions are accrued for at the reporting year end date if the Manager has the discretion to declare distributions without the need for Unitholder or trustee approval and a constructive or legal obligation has been created. Distributions to Unitholders have been recognised as liabilities when they are declared.

100

F-38 Notes to the Financial Statements (cont’d) 31 December 2018

2. SIGNIFICANT ACCOUNTING POLICIES AND OTHER ExPLANATORY INFORMATION

2A. Significant accounting policies

Income and revenue recognition

The financial reporting standard on revenue from contracts with customers establishes a five-step model to account for revenue arising from contracts with customers. Revenue is recognised at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer (which excludes estimates of variable consideration that are subject to constraints, such as right of return exists, trade discounts, volume rebates and changes to the transaction price arising from modifications), net of any related sales taxes and excluding any amounts collected on behalf of third parties. An asset (goods or services) is transferred when or as the customer obtains control of that asset. As a practical expedient the effects of any significant financing component is not adjusted if the payment for the good or service will be within one year. Revenue is recognised as follows:

Rental revenue from operating leases

Rental revenue, service charge revenue, income from rental of mechanical, electrical and mall operating equipment and other rental income are recognised on a time-proportion basis that takes into account the effective yield on the asset on a straight-line basis over the lease term.

Dividend income

Dividend from equity instruments is recognised in profit or loss only when the entity’s right to receive payment of the dividend is established; it is probable that the economic benefits associated with the dividend will flow to the entity; and the amount of the dividend can be measured reliably.

Revenue from rendering of services

Car park revenue is recognised when the entity satisfies the performance obligation at a point in time. Utility recovery revenue is recognised over time at the amount that the entity has right to bill a fixed amount for service provided.

Interest income

Interest income is recognised using the effective interest method.

LIPPO MALLS INDONESIA RETAIL TRUST 101 ANNUAL REPORT 2018

F-39 Notes to the Financial Statements (cont’d) 31 December 2018

2. SIGNIFICANT ACCOUNTING POLICIES AND OTHER ExPLANATORY INFORMATION (CONT’D)

2A. Significant accounting policies (cont’d)

Income tax

The income taxes are accounted for using the asset and liability method that requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequence of events that have been recognised in the financial statements or tax returns. The measurements of current and deferred tax liabilities and assets are based on provisions of the enacted or substantially enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. Tax expense (tax income) is the aggregate amount included in the determination of profit or loss for the reporting year in respect of current tax and deferred tax. Current and deferred income taxes are recognised as income or as an expense in profit or loss unless the tax relates to items that are recognised in the same or a different period outside profit or loss. For such items recognised outside profit or loss the current tax and deferred tax are recognised (a) in other comprehensive income if the tax is related to an item recognised in other comprehensive income and (b) directly in Unitholders’ funds if the tax is related to an item recognised directly in Unitholders’ funds. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same income tax authority. The carrying amount of deferred tax assets is reviewed at each end of the reporting year and is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realised. A deferred tax amount is recognised for all temporary differences, unless the deferred tax amount arises from the initial recognition of an asset or liability in a transaction which (i) is not a business combination; and (ii) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). A deferred tax liability or asset is recognised for all taxable temporary differences associated with investments in subsidiaries except where the reporting entity is able to control the timing of the reversal of the taxable temporary difference and it is probable that the taxable temporary difference will not be reversed in the foreseeable future or for deductible temporary differences, they will not be reversed in the foreseeable future and they cannot be utilised against taxable profits.

Foreign currency transactions

The functional currency of the Trust is the Singapore dollar as it reflects the primary economic environment in which the entity operates. Transactions in foreign currencies are recorded in the functional currency at the rates ruling at the dates of the transactions. At each end of the reporting year, recorded monetary balances and balances measured at fair value that are denominated in non-functional currencies are reported at the rates ruling at the end of the reporting year and fair value measurement dates respectively. All realised and unrealised exchange adjustment gains and losses are dealt with in the profit or loss except when recognised in other comprehensive income and if applicable deferred in Unitholders’ funds such as for qualifying cash flow hedges. The presentation is the functional currency.

Translation of financial statements of other entities

Each entity in the Group determines the appropriate functional currency as it reflects the primary economic environment in which the relevant reporting entity operates. In translating the financial statements of such an entity for incorporation in the consolidated financial statements in the presentation currency the assets and liabilities denominated in other currencies are translated at end of the reporting year rates of exchange and the income and expense items for each statement presenting profit or loss and other comprehensive return are translated at average rates of exchange for the reporting year. The resulting translation adjustments (if any) are recognised in other comprehensive return and accumulated in a separate component of Unitholders’ funds until the disposal of that relevant reporting entity.

102

F-40 Notes to the Financial Statements (cont’d) 31 December 2018

2. SIGNIFICANT ACCOUNTING POLICIES AND OTHER ExPLANATORY INFORMATION (CONT’D)

2A. Significant accounting policies (cont’d)

Segment reporting

Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing the performance. Segment information has not been presented as all of the Group’s investment properties are used primarily for retail purposes and are all located in Indonesia. They are regarded as one component by the chief operating decision maker.

Borrowing costs

Borrowing costs are interest and other costs incurred in connection with the borrowing of funds. The interest expense is calculated using the effective interest rate method. Borrowing costs are recognised as an expense in the period in which they are incurred except that borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset that necessarily take a substantial period of time to get ready for their intended use or sale are capitalised as part of the cost of that asset until substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.

Unit based payments

The issued capital is increased by the fair value of the transaction. Incidental costs directly attributable to the issuance of units are deducted against Unitholders’ funds.

Plant and equipment

Depreciation is provided on a straight-line basis to allocate the gross carrying amounts of the assets less their residual values over their estimated useful lives of each part of an item of these assets. The annual rates of depreciation are as follows:

Plant and equipment – 25% to 33%

An asset is depreciated when it is available for use until it is derecognised even if during that period the item is idle. Fully depreciated assets still in use are retained in the financial statements.

Plant and equipment are carried at cost on initial recognition and after initial recognition at cost less any accumulated depreciation and any accumulated impairment losses. The gain or loss arising from the derecognition of an item of plant and equipment is measured as the difference between the net disposal proceeds, if any, and the carrying amount of the item and is recognised in profit or loss.

The residual value and the useful life of an asset is reviewed at least at each end of the reporting year and, if expectations differ significantly from previous estimates, the changes are accounted for as a change in an accounting estimate, and the depreciation charge for the current and future periods are adjusted.

Cost also includes acquisition cost, borrowing cost capitalised and any cost directly attributable to bringing the asset or component to the location and condition necessary for it to be capable of operating in the manner intended by management. Subsequent costs are recognised as an asset only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss when they are incurred.

LIPPO MALLS INDONESIA RETAIL TRUST 103 ANNUAL REPORT 2018

F-41 Notes to the Financial Statements (cont’d) 31 December 2018

2. SIGNIFICANT ACCOUNTING POLICIES AND OTHER ExPLANATORY INFORMATION (CONT’D)

2A. Significant accounting policies (cont’d)

Investment property

Investment property is property (land or a building or part of a building or both) owned or held under a finance lease to earn rentals or for capital appreciation or both, rather than for use in the production or supply of goods or services or for administrative purposes or sale in the ordinary course of business. It includes an investment property in the course of construction. After initial recognition at cost including transaction costs the fair value model is used to measure the investment property at fair value as of the end of the reporting year. A gain or loss arising from a change in the fair value of investment property is included in profit or loss for the reporting year in which it arises. The fair values are measured periodically on a systematic basis at least once yearly by independent professional valuers having an appropriate recognised professional qualification and recent experience in the location and category of property being valued.

Leases

Leases are classified as finance leases if substantially all the risks and rewards of ownership are transferred to the lessee. All other leases are classified as operating leases. At the commencement of the lease term, a finance lease is recognised as an asset and as a liability in the statements of financial position at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is practicable to determine, the lessee’s incremental borrowing rate is used. Any initial direct costs of the lessee are added to the amount recognised as an asset. The excess of the lease payments over the recorded lease liability are treated as finance charges which are allocated to each reporting year during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are charged as expenses in the reporting years in which they are incurred. The assets are depreciated as owned depreciable assets. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. For operating leases, lease payments are recognised as an expense in the profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is representative of the time pattern of the user’s benefit, even if the payments are not on that basis. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense. Rental revenue from operating leases is recognised in the profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is representative of the time pattern of the user’s benefit, even if the payments are not on that basis. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term. Contingent rents receivable are recognised in the periods in which they occur.

104

F-42 Notes to the Financial Statements (cont’d) 31 December 2018

2. SIGNIFICANT ACCOUNTING POLICIES AND OTHER ExPLANATORY INFORMATION (CONT’D)

2A. Significant accounting policies (cont’d)

Intangible assets

Intangible assets which relate to the rental guaranteed payments from certain master lease agreements are measured initially at cost, being the fair value as at the date of acquisition. Following the initial recognition, intangible asset is measured at cost less any accumulated amortisation and any impairment losses. Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and amortisation method are reviewed at each financial year-end.

The amortisable amount of an intangible asset with finite useful life is allocated on a systematic basis over the best estimate of its useful life from the point at which the asset is ready for use.

The useful life is as follows:

Rental guaranteed payments – Over the guarantee periods, which range from 3 to 25 years

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit and loss when the asset is derecognised.

Subsidiaries

A subsidiary is an entity including unincorporated and special purpose entity that is controlled by the reporting entity and the reporting entity is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The existence and effect of substantive potential voting rights that the reporting entity has the practical ability to exercise (that is, substantive rights) are considered when assessing whether the reporting entity controls another entity.

In the Trust’s separate financial statements, the investments in subsidiaries are accounted for at cost less any allowance for impairment in value. Impairment loss recognised in profit or loss for a subsidiary is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying values and the net book values of the investments in subsidiaries are not necessarily indicative of the amounts that would be realised in a current market exchange.

Joint arrangements – joint operations

A joint arrangement (that is, either a joint operation or a joint venture, depending on the rights and obligations of the jointly controlling parties to the arrangement), is one in which the reporting entity is party to an arrangement of which two or more parties have joint control, which is the contractually agreed sharing of control of the arrangement; it exists only when decisions about the relevant activities (that is, activities that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control. In a joint operation, the parties with joint control have rights to the assets, and obligations for the liabilities, relating to the arrangement. The reporting entity recognises its share of the operation’s assets, liabilities, income and expenses that are combined line by line with similar items in the reporting entity’s financial statements and accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the FRSs applicable to the particular assets, liabilities, revenues and expenses. When the reporting entity enters into a transaction with a joint operation, such as a sale or contribution of assets, the reporting entity recognises gains and losses resulting from such a transaction only to the extent of the other parties’ interests in the joint operation.

LIPPO MALLS INDONESIA RETAIL TRUST 105 ANNUAL REPORT 2018

F-43 Notes to the Financial Statements (cont’d) 31 December 2018

2. SIGNIFICANT ACCOUNTING POLICIES AND OTHER ExPLANATORY INFORMATION (CONT’D)

2A. Significant accounting policies (cont’d)

Business combinations

Business combinations are accounted for by applying the acquisition method. There were none during the reporting year.

Impairment of non-financial assets

Irrespective of whether there is any indication of impairment, an annual impairment test is performed at the same time every year on an intangible asset with an indefinite useful life or an intangible asset not yet available for use. The carrying amount of other non-financial assets is reviewed at each end of the reporting year for indications of impairment and where an asset is impaired, it is written down through the profit or loss to its estimated recoverable amount. The impairment loss is the excess of the carrying amount over the recoverable amount and is recognised in the profit or loss unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use. When the fair value less costs of disposal method is used, any available recent market transactions are taken into consideration. When the value in use method is adopted, in assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). At each end of the reporting year non-financial assets other than goodwill with impairment loss recognised in prior periods are assessed for possible reversal of the impairment. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Financial instruments

Recognition and derecognition of financial instruments:

A financial asset or a financial liability is recognised in the statement of financial position when, and only when, the entity becomes party to the contractual provisions of the instrument. All other financial instruments (including regular-way purchases and sales of financial assets) are recognised and derecognised, as applicable, using trade date accounting or settlement date accounting. A financial asset is derecognised when the contractual rights to the cash flows from the financial asset expire or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the entity neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. A financial liability is removed from the statement of financial position when, and only when, it is extinguished, that is, when the obligation specified in the contract is discharged or cancelled or expires. At initial recognition the financial asset or financial liability is measured at its fair value plus or minus, in the case of a financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

Classification and measurement of financial assets:

1. Financial asset classified as measured at amortised cost: A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at fair value through profit or loss (FVTPL), that is (a) the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Typically trade and other receivables, bank and cash balances are classified in this category.

2. Financial asset that is a debt asset instrument classified as measured at fair value through other comprehensive income (FVTOCI): There were no financial assets classified in this category at reporting year end date.

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F-44 Notes to the Financial Statements (cont’d) 31 December 2018

2. SIGNIFICANT ACCOUNTING POLICIES AND OTHER ExPLANATORY INFORMATION (CONT’D)

2A. Significant accounting policies (cont’d)

Financial instruments (cont’d)

3. Financial asset that is an equity investment measured at fair value through other comprehensive income (FVTOCI): There were no financial assets classified in this category at reporting year end date.

4. Financial asset classified as measured at fair value through profit or loss (FVTPL): All other financial assets are classified as measured at FVTPL. In addition, on initial recognition, management may irrevocably designate a financial asset as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases.

Classification and measurement of financial liabilities:

Financial liabilities are classified as at fair value through profit or loss (FVTPL) in either of the following circumstances: (1) the liabilities are managed, evaluated and reported internally on a fair value basis; or (2) the designation eliminates or significantly reduces an accounting mismatch that would otherwise arise. All other financial liabilities are carried at amortised cost using the effective interest method. Reclassification of any financial liability is not permitted.

Cash and cash equivalents

Cash and cash equivalents include bank and cash balances, and on demand deposits. For the statement of cash flows, the items include cash and cash equivalents less cash subject to restriction.

Hedging

The entity is exposed to currency and interest rate risks. The policy is to reduce currency and interest rate exposures through derivatives and other hedging instruments. From time to time, there may be borrowings and foreign exchange arrangements or interest rate swap contracts or similar instruments entered into as hedges against changes in interest rates, cash flows or the fair value of financial assets and liabilities. The gain or loss from remeasuring these hedging or other arrangement instruments at fair value are recognised in profit or loss. The applicable derivatives and other hedging instruments used are described below in the notes to the financial statements.

Derivatives

A derivative financial instrument is a financial instrument with all three of the following characteristics (a) its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices, credit ratings or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract; (b) it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; and (c) it is settled at a future date. The derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently classified as measured at FVTPL unless the derivative is designated and effective as a hedging instrument.

LIPPO MALLS INDONESIA RETAIL TRUST 107 ANNUAL REPORT 2018

F-45 Notes to the Financial Statements (cont’d) 31 December 2018

2. SIGNIFICANT ACCOUNTING POLICIES AND OTHER ExPLANATORY INFORMATION (CONT’D)

2A. Significant accounting policies (cont’d)

Fair value measurement

The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When measuring the fair value of an asset or a liability, market observable data to the extent possible is used. If the fair value of an asset or a liability is not directly observable, an estimate is made using valuation techniques that maximise the use of relevant observable inputs and minimise the use of unobservable inputs (eg by use of the market comparable approach that reflects recent transaction prices for similar items, discounted cash flow analysis, or option pricing models refined to reflect the issuer’s specific circumstances). Inputs used are consistent with the characteristics of the asset or liability that market participants would take into account. The entity’s intention to hold an asset or to settle or otherwise fulfil a liability is not taken into account as relevant when measuring fair value.

Fair values are categorised into different levels in a fair value hierarchy based on the degree to which the inputs to the measurement are observable and the significance of the inputs to the fair value measurement in its entirety: Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices). Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Transfers between levels of the fair value hierarchy are recognised at the end of the reporting period during which the change occurred.

The carrying values of current financial instruments approximate their fair values due to the short-term maturity of these instruments and the disclosures of fair value are not made when the carrying amount of current financial instruments is a reasonable approximation of the fair value. The fair values of non-current financial instruments may not be disclosed separately unless there are significant differences at the end of the reporting year and in the event the fair values are disclosed in the relevant notes to the financial statements.

In making the fair value measurement for a non-financial asset, management determines the highest and best use of the asset and whether the asset is used in combination with other assets or a stand-alone basis.

2B. Other explanatory information

Provisions

A liability or provision is recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. A provision is made using best estimates of the amount required in settlement and where the effect of the time value of money is material, the amount recognised is the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. Changes in estimates are reflected in profit or loss in the reporting year they occur.

Perpetual securities

Proceeds from the issuance of perpetual securities have been recognised as equity. Distributions to the perpetual securities holders will be payable semi-annually in arrears on a discretionary basis and will be non-cumulative. The expenses relating to the issue of the perpetual securities are deducted against the proceeds from the issue.

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F-46 Notes to the Financial Statements (cont’d) 31 December 2018

2. SIGNIFICANT ACCOUNTING POLICIES AND OTHER ExPLANATORY INFORMATION (CONT’D)

2C. Critical judgements, assumptions and estimation uncertainties

The critical judgements made in the process of applying the accounting policies that have the most significant effect on the amounts recognised in the financial statements and the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting year, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting year are discussed below. These estimates and assumptions are periodically monitored to make sure they incorporate all relevant information available at the date when financial statements are prepared. However, this does not prevent actual figures differing from estimates.

Fair values of investment properties: Certain judgements and assumptions are made in the valuation of the investment properties based on calculations and these calculations require the use of estimates in relation to future cash flows, growth rates, discount rates and market capitalisation as disclosed in Note 14.

Income tax amounts: The entity recognises tax liabilities and tax assets based on an estimation of the likely taxes due, which requires significant judgement as to the ultimate tax determination of certain items. Where the actual amount arising from these issues differs from these estimates, such differences will have an impact on income tax and deferred tax amounts in the period when such determination is made. In addition, management judgement is required in determining the amount of current and deferred tax recognised and the extent to which amounts should or can be recognised. A deferred tax asset is recognised if it is probable that the entity will earn sufficient taxable profit in future periods to benefit from a reduction in tax payments. This involves the management making assumptions within its overall tax planning activities and periodically reassessing them in order to reflect changed circumstances as well as tax regulations. Moreover, the measurement of a deferred tax asset or liability reflects the manner in which the entity expects to recover the asset’s carrying value or settle the liability. As a result, due to their inherent nature assessments of likelihood are judgmental and not susceptible to precise determination. The income tax amounts are disclosed in Note 10.

Deferred tax: Recovery of underlying assets: The deferred tax relating to an asset is dependent on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in FRS 40 Investment Property or when fair value is required or permitted by a FRS for a non-financial asset. Management has taken the view that there is clear evidence that it will consume the relevant asset’s economic benefits throughout its economic life. The amount is stated in Note 10.

Determination of functional currency: Judgement is required to determine the functional currency of the reporting entity. Management considers economic environment in which the reporting entity operates and factors such as the currency that mainly influences sales prices for goods and services; the currency of the country whose competitive forces and regulations mainly determine the sales prices of its goods and services; and the currency that mainly influences labour, material and other costs of providing goods or services. It also considers other relevant factors that may also provide evidence of an entity’s functional currency.

Allowance for trade receivables: The trade receivables are subject to the expected credit loss model under the financial reporting standard on financial instruments. The expected lifetime losses are recognised from initial recognition of these assets. These assets are grouped based on shared credit risk characteristics and the days past due for measuring the expected credit losses. The allowance matrix is based on its historical observed default rates (over a period of certain months) over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date the historical observed default rates are updated and changes in the forward-looking estimates are analysed. The loss allowance was determined accordingly. The carrying amounts might change materially within the next reporting year but these changes may not arise from assumptions or other sources of estimation uncertainty at the end of the reporting year. The carrying amount is disclosed in the Note 18 on trade and other receivables.

LIPPO MALLS INDONESIA RETAIL TRUST 109 ANNUAL REPORT 2018

F-47 Notes to the Financial Statements (cont’d) 31 December 2018

2. SIGNIFICANT ACCOUNTING POLICIES AND OTHER ExPLANATORY INFORMATION (CONT’D)

2C. Critical judgements, assumptions and estimation uncertainties (cont’d)

Fair value of derivative financial instruments: Some of the financial instruments stated at fair values are not based on quoted prices in active markets, and therefore there is significant measurement uncertainty involved in this valuation. Management makes any adjustments where necessary to reflect the assumptions that marketplace participants would use in similar circumstances. The assumptions and the fair values are disclosed in Note 28 on derivative financial instruments.

Measurement of impairment of subsidiaries: Where an investee is in net equity deficit and or has suffered losses, a test is made whether the investment in the investee has suffered any impairment. This determination requires significant judgement. An estimate is made of the future profitability of the investee, and the financial health of and near-term business outlook for the investee, including factors such as industry and sector performance, and operational and financing cash flows. It is impracticable to disclose the extent of the possible effects. It is reasonably possible, based on existing knowledge, that outcomes within the next reporting year that are different from assumptions could require a material adjustment to the carrying amount of the asset affected. The carrying amount of the investment in subsidiaries at the end of the reporting year affected by the assumption is $1,018,713,000 (2017: $794,617,000).

Classification of joint arrangements: The joint venture agreements in relation to the PT Yogya Central Terpadu partnership require unanimous consent from all parties for all relevant activities. The two partners have direct rights to the assets of the partnership and are jointly and severally liable for the liabilities incurred by the partnership. This entity is therefore classified as a joint operation and the Group recognises its direct right to the jointly held assets, liabilities, revenues and expenses as described in 2A.

3. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS

FRS 24 on related party disclosures requires the reporting entity to disclose: (a) transactions with its related parties; and (b) relationships between parents and subsidiaries irrespective of whether there have been transactions between those related parties. A party is related to a party if the party controls, or is controlled by, or can significantly influence or is significantly influenced by the other party.

The ultimate controlling party is PT Lippo Karawaci Tbk.

3A. Related party transactions:

There are transactions and arrangements between the Trust and related parties and the effects of these on the basis determined between the parties are reflected in these financial statements. The intercompany balances are unsecured without fixed repayment terms and interest unless stated otherwise. For any balances and financial guarantees no interest or charge is imposed unless stated otherwise.

Intragroup transactions and balances that have been eliminated in these consolidated financial statements are not disclosed as related party transactions and balances below.

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F-48 Notes to the Financial Statements (cont’d) 31 December 2018

3. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (CONT’D)

3A. Related party transactions (cont’d):

In addition to the transactions and balances disclosed elsewhere in the notes to the financial statements, this item includes the following:

The Trust has entered into several service agreements in relation to the management of the Trust and its property operations. The fee structures of these services are as follows:

(A) Manager’s management fees

Under the Trust Deed, the Manager is entitled to management fees as follows:

(i) A base fee of 0.25% (2017: 0.25%) per annum of the value of the Deposited Property, the manager may opt to receive the base fee in the form of units and/or cash.

(ii) A performance fee is fixed at 4.0% (2017: 4.0%) per annum of the Group’s net property income (“NPI”) (calculated before accounting for this additional fee expense in the reporting year). NPI in relation to real estate, whether held directly by the Trust or indirectly through a special purpose company, and in relation to any year or part thereof, means its property income less property operating expenses for such real estate for that year or part thereof. The Manager may opt to receive the performance fee in the form of units and/or cash. Based on the First Amending & Restating Deed dated 18 March 2016, the performance fees for the financial year is computed based on audited accounts of the Trust.

The performance fee of the Manager is paid annually, in accordance with the Code on Collective Investment Schemes.

(iii) An authorised investment management fee of 0.5% (2017: 0.5%) per annum of the value of Authorised Investments which are not in the form of real estate (whether held directly by the Trust or indirectly through one or more subsidiaries). Where such authorised investment is an interest in a property fund (either a REIT or private property fund) wholly managed by a wholly-owned subsidiary of PT Lippo Karawaci Tbk (“Sponsor”), no authorised investment management fee shall be payable in relation to such authorised investment;

(iv) Manager’s acquisition fee is determined at 1.0% (2017: 1.0%) flat of value or consideration as defined in the Trust Deed for any real estate or other investments (subject to there being no double-counting). Payment of such acquisition fee must comply with Appendix 6: Investment Property Funds of the Code on Collective Investment Scheme; and

(v) Divestment fee at the rate of 0.5% (2017: 0.5%) flat of the sales price of any authorised investment directly or indirectly sold or divested from time to time by the Trustee on behalf of the Trust. The Manager may opt to receive the divestment fee in the form of units and/or cash.

(B) Property manager’s fees

Under the Property Management Agreements in respect of each Retail Mall and Retail Space, the property manager is entitled to the following fees:

(i) 2.0% (2017: 2.0%) per annum of the gross revenue for the relevant Retail Mall and Retail Space;

(ii) 2.0% (2017: 2.0%) per annum of the net property income for relevant Retail Mall and Retail Space (after accounting for the fee expense of 2% per annum of the gross revenue for the relevant Retail Mall and Retail Space);

(iii) 0.5% (2017: 0.5%) per annum of the net property income for the relevant Retail Mall and Retail Space in lieu of leasing commissions otherwise payable to the property manager and/or third party agents; and

LIPPO MALLS INDONESIA RETAIL TRUST 111 ANNUAL REPORT 2018

F-49 Notes to the Financial Statements (cont’d) 31 December 2018

3. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (CONT’D)

3A. Related party transactions (cont’d):

(B) Property manager’s fees (cont’d)

Under each existing Property Management Agreement, each of the Indonesian subsidiaries that are owners of Retail Malls (“Retail Mall Property Companies”) agrees to reimburse the property manager, for its expenses incurred in connection with the provision of property management services and with the performance of its duties which are in compliance with the approved annual business plan and budget as stated in the existing Property Management Agreement. Such expenses include but are not limited to rent, service charge and Value-Added Tax (“VAT”) payable by the property manager of its lease of its office premises; advertising and promotion costs; and salaries of the Property Manager’s employees who are approved by the relevant Retail Mall Property Companies.

(C) Trustee’s fees

The Trustee’s fees shall not exceed 0.03% (2017: 0.03%) per annum of the value of the deposited property (as defined in the Trust Deed), subject to a minimum of $15,000 per month, excluding out-of-pocket expenses and GST. The Trustee’s fee is presently charged on a scaled basis of up to 0.03% per annum of the value of the deposited property, subject to a minimum sum per month. Any increase in the rate of the remuneration of the Trustee above the permitted limit or any change in the structure of the remuneration of the Trustee shall be approved by an Extraordinary Resolution at a Unitholders’ meeting duly convened and held in accordance with the provisions of the Trust Deed. Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

The Manager (1) Manager’s management fees expense (Note 7) 11,595 12,518 11,578 12,518 Manager’s acquisition fees (Note 14) – 1,237 – 1,205

The Trustee Trustee’s fees expense 461 423 461 423

The Property Manager (2) Property manager fees expense (Note 5) 7,714 6,691 ––

Master Lessee (3) Rental revenue – (12,396) ––

Affiliates of Sponsor(4) Rental revenue, service charge and utilities recovery (5) (6) (7) (62,743) (52,705) –– Acquisition of investment properties (Notes 14 and 15) – 96,753 ––

(1) The parent company of the Manager is PT Lippo Karawaci Tbk (“Sponsor”), incorporated in Indonesia and it is a substantial Unitholder. (2) The Property manager of the properties is PT Lippo Malls Indonesia, a wholly-owned subsidiary of PT Lippo Karawaci Tbk. (3) The Master Lessee of the retail spaces is PT Multipolar Tbk, in which the Sponsor has an interest. (4) The Affiliates of the Sponsor are PT First Media Tbk, Yayasan Universitas Pelita Harapan, PT Bank National Nobu, PT Matahari Putra Prima Tbk, PT Gratia Prima Indonesia, PT Matahari Graha Fantasi, PT Maxx Coffee Prima, PT Maxx Food Pasifik, PT Matahari Department Store Tbk, PT Cinemaxx Global Pasifik, PT Internux, PT Sky Parking Utama, and PT Solusi Ecommerce Global. The Affiliates of the Sponsor are entities that either have common shareholders with the Sponsor, or in which the Sponsor has an interest. (5) The amount also includes revenue from Lippo Mall Kemang under Sponsor Lessees with PT Multiguna Selaras Maju, PT Harapan Insan Mandiri, and PT Violet Pelangi Indah. (6) The amount also includes revenue from Lippo Mall Kuta under Sponsor Lessees with PT Kencana Agung Pratama, PT Kridakarya Anugerah Utama and PT Trimulia Kencana Abdi. (7) The amount also includes revenue from Lippo Plaza Jogja under Sponsor Capital Lessees with PT Andhikarya Sukses Pratama, PT Manunggal Megah Serasi and PT Mulia Cipta Sarana Sukses.

112

F-50 Notes to the Financial Statements (cont’d) 31 December 2018

3. RELATED PARTY RELATIONSHIPS AND TRANSACTIONS (CONT’D)

3B. Key management compensation:

The Group and the Trust have no employees. All its services are provided by the Manager and others. There are no charges made other than the fees disclosed above.

The Trust obtains key management personnel services from the Manager. Key management personnel of the Manager include the directors of those persons having authority and responsibility for planning, directing and controlling the activities of the Trust, directly or indirectly.

Further information about the remuneration of individual directors of the Manager is provided in the Report on Corporate Governance of the Trust’s Annual Report.

3C. Interest in the Trust: 2018 2017 Number of % interest Number of % interest units held held units held held

The Manager LMIRT Management Ltd 178,557,533* 6.24 142,611,671 5.05

* On 17 January 2019, the Manager sold 157,296,347 units in LMIR Trust to Bridgewater International Limited, a subsidiary of the sponsor at a price of $0.21 per unit. Following the sale, the Manager holds 21,261,186 units, representing 0.74% of the total number of issued units of the Group at the date of the report.

4. GROSS REvENUE Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Rental revenue 155,215 164,203 – – Car park revenue 19,141 20,908 – – Dividend income from subsidiaries – – 97,185 116,131 Service charge and utility recovery (1) 51,623 – – – Income from rental of mechanical, electrical and mall operating equipment (2) 1,707 10,290 – – Other rental income 2,613 1,975 – – 230,299 197,376 97,185 116,131

(1) Since May 2012, certain maintenance services for the Group, such as cleaning and maintenance of utilities, are outsourced to a third party service provider. Pursuant to the outsourced agreements, the third party service provider has the right to collect service charges and utilities recovery charges from the tenants of the retail malls, and is responsible for all costs directly related to the maintenance and operation of the retail malls, as well as to pay for the rental for use of electrical, mechanical and mall operating equipment of the retail malls. The latter forms part of the other rental income and is subject to Indonesian Corporate Tax of 25%. Pursuant to Government Regulation Number 34 of 2017, which came into effect on 2 January 2018, all income received or earned from land and/or building leases in Indonesia are subject to income tax at 10% of the gross amount of the value of the land and/or building lease which comprises the total amount that is paid or acknowledged as debt by a tenant in any form whatsoever, including service charges and utilities recovery charges. Previously, property owners were not liable to pay income tax on such charges which are paid by tenants to a third-party operator appointed by the property owner to manage and maintain the property. However, following the implementation of Government Regulation Number 34 of 2017, tenants are now required to withhold income tax on service charges and utilities recovery charges as well, notwithstanding that these are not paid to the property owner. As such, LMIR Trust has incurred higher tax expenses in year 2018 resulting from this change. Following the implementation of Government Regulation Number 34 of 2017, the Group has terminated all outsourced agreements with the third party service provider over two phases - phase one is for five retail malls by end April 2018 and phase two is for the rest of the retail malls by end June 2018. Hence after the termination of such agreements, all the malls collect service charges and utilities recovery charges from the tenants and pay for all costs for the maintenance and operation of the malls directly. (2) This relates to the rental income from the third party operating company for use of electrical, mechanical and mall operating equipment of the retail malls.

Car park revenue is recognised based on point in time. The customers are visitors of the retail malls. The operating of the car park is outsourced to a related party service provider, PT Sky Parking Utama based on profit sharing arrangement.

Utility recovery revenue is recognised over time. The customers are tenants of the retail malls and spaces.

LIPPO MALLS INDONESIA RETAIL TRUST 113 ANNUAL REPORT 2018

F-51 Notes to the Financial Statements (cont’d) 31 December 2018

5. PROPERTY OPERATING ExPENSES Group 2018 2017 $’000 $’000

Land rental expense 1,614 1,974 Property management fees (Note 3) 7,714 6,691 Legal and professional fees 1,806 1,584 Depreciation of plant and equipment (Note 13) 3,015 2,457 Reversal of allowance for impairment loss on trade receivables (Note 18) (546) (3,390) Allowance for impairment loss on trade receivables (Note 18) 5,321 1,361 Property operating and maintenance expenses 45,303 – Other property operating expenses 1,105 2,448 65,332 13,125

6. OTHER INCOME

Other income relates to miscellaneous income.

7. MANAGER’S MANAGEMENT FEES Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Base fee 4,996 5,148 4,979 5,148 Performance fee 6,599 7,370 6,599 7,370 Total (Note 3) 11,595 12,518 11,578 12,518

Included in the base fee of the Group are management fees paid in cash by the subsidiaries to the manager for managing investment related activities in current year.

The Manager elected to receive certain of the above fees in the form of units as shown in Note 22.

8. FINANCE COSTS Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Interest expense 30,954 27,041 32,343 28,930 Amortisation of borrowing costs 3,699 4,548 3,465 3,806 34,653 31,589 35,808 32,736

114

F-52 Notes to the Financial Statements (cont’d) 31 December 2018

9. OTHER ExPENSES Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Bank charges 71 110 6 46 Professional fees 554 670 441 652 Investor relation expenses 81 95 81 95 Listing expenses 62 71 59 65 Security agent fees 60 82 60 82 Valuation expenses 282 327 282 327 Expenses relating to change of Trustee (1) – 1,433 – 1,433 Other expenses 693 750 773 750 1,803 3,538 1,702 3,450

(1) Including expenses incurred for a consent solicitation exercise by LMIRT Capital Pte. Ltd. and HSBC Institutional Trust Services (Singapore) Limited (in its capacity as Trustee of Lippo Malls Indonesia Retail Trust) in connection with certain perpetual securities.

Group 2018 2017 $’000 $’000

Audit fees to the independent auditors of the Trust 397 397 Audit fees to the other independent auditors 280 288 Non-audit fees to the independent auditors of the Trust 130 82

Total fees to independent auditors are included in property operating expenses (Note 5) and other expenses (Note 9).

10. INCOME TAx

10A. Components of tax expense recognised in statements of total return include:

Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Current tax expense/(income): Foreign income tax 28,033 21,515 – – Foreign withholding tax 10,475 12,458 – – Under/(over) provision in respect of prior periods 283 (283) 283 (283) Subtotal 38,791 33,690 283 (283)

Deferred tax (income)/expense: Deferred tax income (312) (5,777) – – Change in foreign exchange rates 189 (2,521) – – Subtotal (123) (8,298) – – Total income tax expense/(income) 38,668 25,392 283 (283)

LIPPO MALLS INDONESIA RETAIL TRUST 115 ANNUAL REPORT 2018

F-53 Notes to the Financial Statements (cont’d) 31 December 2018

10. INCOME TAx (CONT’D)

10A. Components of tax expense recognised in statements of total return include (cont’d):

The income tax in statements of total return varied from the amount of income tax expense determined by applying the Singapore income tax rate of 17.0% (2017: 17.0%) to total return/(loss) before income tax as a result of the following differences:

Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Total return/(loss) before tax 99,600 88,102 (104,131) (70,523)

Income tax expense/(income) at the above rate 16,932 14,977 (17,702) (11,989) Not deductible 22,035 13,676 17,702 11,989 Foreign withholding tax 10,475 12,458 – – Effect of different tax rates in different countries (12,181) (13,601) – – Deferred tax adjustments due to changes in foreign exchange rates 189 (2,521) – – Under/(over) provision in respect of prior periods 283 (283) 283 (283) Other minor items less than 3% each 935 686 – – Total income tax expense/(income) 38,668 25,392 283 (283)

Effective tax rate 38.8% 28.8% 0.3% 0.4%

The amount of current income taxes outstanding for the Group as at end of reporting year was $3,881,000 (2017: $5,715,000). Such an amount is net of tax advances, which, according to the tax rules, were paid before the year- end.

Please refer to Note 12 for income tax on distributions to Unitholders.

10B. Deferred tax income recognised in statements of total return includes:

Group 2018 2017 $’000 $’000

Deferred tax income relating to the changes in fair value of investment properties (123) (8,298)

10C. Deferred tax balance in the statements of financial position:

Group 2018 2017 $’000 $’000

Deferred tax liabilities recognised in statements of total return: Deferred tax relating to the changes in fair value of investment properties 23,241 23,364

It is impracticable to estimate the amount expected to be settled or used within one year.

Temporary differences arising in connection with interests in subsidiaries are insignificant.

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F-54 Notes to the Financial Statements (cont’d) 31 December 2018

10. INCOME TAx (CONT’D)

10C. Deferred tax balance in the statements of financial position (cont’d):

Taxation of income from Indonesia properties

Corporate income tax in Indonesia

Article 3 of Indonesian Government Regulation No. 5/2002 on the payment of income tax on income from the lease of land and/or building stipulates that income tax on income received or acquired by individuals or entities from the leasing of land and/or buildings consisting of land, houses, multi-storey houses, apartments, condominiums, office buildings, office-cum-living spaces, shops, shop-cum-houses, warehouses, and industrial spaces which is received or earned from a tenant acting or appointed as a tax withholder, is to be withheld by the tenant. The tax rate is 10% of the gross value of the land and/or building rental and is final in nature.

Withholding tax in Indonesia

Under the income tax treaty between Singapore and Indonesia, the Indonesia withholding tax is capped at 10% in respect of:

(a) Dividends paid by a company resident in Indonesia to a company resident in Singapore which owns directly at least 25% of the capital of the company paying the dividends; and

(b) Interest paid to a resident of Singapore.

Indonesia withholding tax is at 15% in respect of dividends paid by a company resident in Indonesia to a company resident in Singapore who owns directly less than 25% of the capital of the company paying the dividends.

Dividends from Indonesia subsidiaries

Dividends received by the Singapore subsidiaries of the Trust from their respective Indonesia subsidiaries are exempt from Singapore income tax under section 13(8) of the Income Tax Act provided the following conditions are met:

(a) In the year the dividends are received in Singapore, the headline corporate tax rate in the foreign country from which the dividends are received is at least 15%;

(b) The dividends have been subject to tax in the foreign country from which they are received; and

(c) The Singapore Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to the Singapore subsidiaries.

Dividends from Singapore subsidiaries

Dividends received by the Trust from the Singapore subsidiaries are exempt from Singapore income tax provided that the Singapore subsidiaries are tax residents of Singapore for income tax purposes.

Interest Income from Indonesia subsidiaries

Interest received by the Singapore subsidiaries of the Trust on loans made to the Indonesia subsidiaries is exempt from Singapore income tax under section 13(12) of the Income Tax Act on the condition that the full amount of remitted interest, less attributable expenses, is distributed by the Singapore subsidiaries to the Trust for onward distribution to its Unitholders.

LIPPO MALLS INDONESIA RETAIL TRUST 117 ANNUAL REPORT 2018

F-55 Notes to the Financial Statements (cont’d) 31 December 2018

10. INCOME TAx (CONT’D)

10C. Deferred tax balance in the statements of financial position (cont’d):

Redemption of redeemable preference shares in Singapore subsidiaries

Proceeds received by the Trust from the redemption of its redeemable preference shares in the Singapore subsidiaries at the original cost of the redeemable preference shares are regarded as capital receipts and hence not subject to Singapore income tax.

Receipt from Indonesia subsidiaries for repayment of shareholder loans

Proceeds received by the Singapore subsidiaries for the repayment of the principal amount of the shareholder loans from their Indonesia subsidiaries are capital receipts and hence not subject to Singapore income tax.

11. EARNINGS PER UNIT

The following table illustrates the numerators and denominators used to calculate earnings per unit of no par value:

Group 2018 2017

Denominator: Weighted average number of units 2,842,849,699 2,819,472,796

$’000 $’000

Numerator: Earnings attributable to Unitholders Total return after tax 60,932 62,710 Less: Amount reserved for distribution to perpetual securities holders (17,720) (14,053) Total return attributable to Unitholders 43,212 48,657

Group 2018 2017 cents cents

Earnings per unit 1.52 1.73

Adjusted earnings per unit (1) 1.57 2.51

(1) Adjusted earnings exclude changes in the fair value of investment properties (net of deferred tax).

The weighted average number of units refers to units in circulation during the reporting year.

Diluted earnings per unit are the same as the basic earnings per unit as there were no dilutive instruments in issue during the reporting year.

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F-56 Notes to the Financial Statements (cont’d) 31 December 2018

12. DISTRIBUTIONS TO UNITHOLDERS Group and Trust 2018 2017 $’000 $’000

Total distributions paid during the year: Distribution of 0.87 cents per unit for the period from 1 October 2016 to 31 December 2016 – 24,335 Distribution of 0.89 cents per unit for the period from 1 January 2017 to 31 March 2017 – 25,120 Distribution of 0.90 cents per unit for the period from 1 April 2017 to 30 June 2017 – 25,403 Distribution of 0.86 cents per unit for the period from 1 July 2017 to 30 September 2017 – 24,151 Distribution of 0.79 cents per unit for the period from 1 October 2017 to 31 December 2017 22,286 – Distribution of 0.67 cents per unit for the period from 1 January 2018 to 31 March 2018 19,018 – Distribution of 0.59 cents per unit for the period from 1 April 2018 to 30 June 2018 16,816 – Distribution of 0.49 cents per unit for the period from 1 July 2018 to 30 September 2018 13,896 – 72,016 99,009

12A. Distributions per unit

Distribution Type

Name of Distribution Distribution during the year (interim distributions) Distribution Type Income / Capital

Group and Trust 2018 2017 2018 2017 cents cents $’000 $’000 per unit per unit

Tax-exempt income (1) : 0.95 1.79 26,954 50,410 Capital (2) : 0.80 0.86 22,776 24,264 Subtotal : 1.75 2.65 49,730 74,674

LIPPO MALLS INDONESIA RETAIL TRUST 119 ANNUAL REPORT 2018

F-57 Notes to the Financial Statements (cont’d) 31 December 2018

12. DISTRIBUTIONS TO UNITHOLDERS (CONT’D)

12A. Distributions per unit (cont’d)

Name of Distribution Distribution declared subsequent to year-end (final distribution) Distribution Type Income / Capital

Group and Trust 2018 2017 2018 2017 cents cents $’000 $’000 per unit per unit

Tax-exempt income (1) : 0.09 0.47 2,571 13,227 Capital (2) : 0.21 0.32 6,114 9,059 Subtotal : 0.30 0.79 8,685 22,286

Total distributions (3) 2.05 3.44 58,415 96,960

(1) Unitholders are exempt from tax on such distributions. (2) Such distributions are treated as returns of capital for Singapore income tax purposes. For Unitholders who are liable to Singapore income tax on profits from the sale of the Trust’s Units, the amount of capital distribution will be applied to reduce the cost base of their LMIR Trust Units for Singapore income tax purposes. (3) The Trust makes the distribution quarterly. The distribution rates above are based on the amount distributed quarterly divided by the Units outstanding as at the end of the relevant quarters.

Current distribution policy: The Trust’s current distribution policy is to distribute at least 90% (2017: at least 90%) of its tax-exempt income (after deduction of applicable expenses) and capital receipts. The tax-exempt income comprises dividends received from the Singapore tax resident subsidiaries. The capital receipts comprise amounts received by the Trust from redemption of redeemable preference shares in the Singapore subsidiaries. The Trust has distributed 100% of its tax-exempt income (after deduction of applicable expenses) and capital receipts to-date.

13. PLANT AND EqUIPMENT Group Plant and Equipment 2018 2017 $’000 $’000

Cost: At beginning of year 16,757 12,383 Additions 4,112 5,630 Exchange difference adjustments (737) (1,256) At end of year 20,132 16,757

Accumulated depreciation: At beginning of year 6,826 4,875 Depreciation for the year 3,015 2,457 Exchange difference adjustments (304) (506) At end of year 9,537 6,826

Net book value: At beginning of year 9,931 7,508 At end of year 10,595 9,931

The depreciation expense is charged to statements of total return as property operating expenses (Note 5).

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F-58 Notes to the Financial Statements (cont’d) 31 December 2018

14. INvESTMENT PROPERTIES Group 2018 2017 $’000 $’000

At valuation: Fair value at beginning of year 1,908,141 1,922,642 Acquisitions of investment properties (1) – 126,640 Enhancement expenditure capitalised 7,704 45,638 1,915,845 2,094,920 Decrease in fair value included in profit or loss (1,495) (30,399) Translation differences (82,704) (156,380) Fair value at end of year 1,831,646 1,908,141

Rental and service income from investment properties 230,299 197,376 Direct operating expenses (including repairs and maintenance) arising from investment properties that generated rental revenue during the year (65,332) (13,125)

(1) The acquisitions in 2017 relate to the acquisitions of Lippo Plaza Kendari, Lippo Plaza Jogja, Kediri Town Square. This amount also included an acquisition fee of $1,237,000 and other acquisition related expenses of $1,748,000.

Acquisitions in prior year

In 2017, the Trust acquired:

(1) Lippo Plaza Kendari, which is located at Jalan MT Haryono No.61-63, Kendari, South East Sulawesi 93117, Indonesia for a total purchase consideration of $32,241,290;

(2) Lippo Plaza Jogja, which is located at Demangan Subdistrict, Gondokusuman District, Yogyakarta, with postal address Jalan Laksda Adi Sucipto No.32-34, Yogyakarta for a total purchase consideration of $57,000,000; and

(3) Kediri Town Square, which is located at Jalan Hasanudin No. 2, RT/22 RW/06, Balowerti Subdistrict, Kediri, East Java for a total purchase consideration of $34,413,965.

The acquisitions of Lippo Plaza Kendari, Lippo Plaza Jogja and Kediri Town Square were carried out by the Trust indirectly via its subsidiaries, namely Picon1 Holdings Pte Ltd and Picon2 Investments Pte Ltd for Lippo Plaza Kendari, Icon2 Investments Pte Ltd and PT Yogya Central Terpadu for Lippo Plaza Jogja and Pejaten Holdings Pte Ltd, Pejatenmall Investment Pte Ltd and PT Panca Permata Pejaten, for Kediri Town Square respectively. The acquisitions were funded from bank borrowings, issuance of perpetual securities and the Group’s operating cash flows.

Lippo Plaza Kendari is a family mall strategically located in the heart of Kendari, the capital of Southeast Sulawesi. Kendari’s economy is mostly agricultural with some industrial centres near the city. The government of Sulawesi has rolled out a series of major infrastructure projects to improve connectivity and spur economic development in Southeast Sulawesi, including a railway network which will connect all major cities in Sulawesi. The Manager believes that the property would benefit from such developments in the region. Further, there is minimal competition in the near future for retail space in the property’s vicinity.

Lippo Plaza Jogja is situated in Yogyakarta, is renowned as a centre of education with large numbers of schools and universities, as well as classical Javanese fine art. As such, the city has attracted large numbers of students from all over Indonesia. Yogyakarta also attracts plenty of foreign visitors, majority of whom are foreign students that usually stay to learn Bahasa or Javanese culture.

LIPPO MALLS INDONESIA RETAIL TRUST 121 ANNUAL REPORT 2018

F-59 Notes to the Financial Statements (cont’d) 31 December 2018

14. INvESTMENT PROPERTIES (CONT’D)

Kediri Town Square is a lifestyle mall strategically located in East Java and well connected to other parts of East Java. Kediri city is a vibrant trading hub for tobacco and sugar and its economy is mostly agricultural with some industrial centres. It also has a growing tourism industry from its cultural heritage as well as its transport connections with cities such as Surabaya and Yogyakarta.

The acquisitions of these properties with their stable occupancies are expected to contribute to the organic growth of the Group.

The fair values were made by the following firms of independent professional valuers:-

2018: Name of Independent Professional Valuers Name of Retail Malls and Spaces

Colliers International - Lippo Mall Kemang, Bandung Indah Plaza and Istana Plaza.

Cushman & Wakefield - Lippo Plaza Kramat Jati, Tamini Square, Pejaten Village and Cibubur Junction.

KJPP Wilson & Rekan - Pluit Village, Plaza Medan Fair, Lippo Plaza Kendari, Sun Plaza, Gajah Mada Plaza, Lippo Plaza Ekalokasari Bogor and Mal Lippo Cikarang.

KJPP Rengganis, Hamid & - Mall WTC Matahari Units, Java Supermall Units, Plaza Madiun Units, Depok Rekan Town Square Units, Malang Town Square Units, Metropolis Town Square Units, Grand Palladium Units, Lippo Plaza Batu, Lippo Plaza Jogja, Kediri Town Square and Lippo Mall Kuta.

Savills Valuation and - The Plaza Semanggi, Palembang Square, Palembang Square Extension, Binjai Professional Services (S) Pte Supermall and Palembang Icon. Ltd

2017: Name of Independent Professional Valuers Name of Retail Malls and Spaces

KJPP Wilson & Rekan - Tamini Square, Lippo Plaza Kramat Jati, Palembang Square, Palembang Square Extension, Pejaten Village, Binjai Supermall, Pluit Village, Plaza Medan Fair and Lippo Mall Kuta.

KJPP Rengganis, Hamid & - Bandung Indah Plaza, Gajah Mada Plaza, Mal Lippo Cikarang, Lippo Plaza Rekan Ekalokasari Bogor, The Plaza Semanggi, Istana Plaza, Cibubur Junction, Sun Plaza, Palembang Icon, Lippo Plaza Batu, Lippo Plaza Kendari, Kediri Town Square and Lippo Plaza Jogja.

Savills Valuation and - Mall WTC Matahari Units, Java Supermall Units, Plaza Madiun Units, Depok Professional Services (S) Pte Town Square Units, Malang Town Square Units, Metropolis Town Square Units, Ltd Grand Palladium Units and Lippo Mall Kemang.

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F-60 Notes to the Financial Statements (cont’d) 31 December 2018

14. INvESTMENT PROPERTIES (CONT’D)

All fair value measurements of investment properties are based on the discounted cash flow method and are categorised within Level 3 of the fair value hierarchy. The information about the significant unobservable inputs used in the fair value measurements are as follows:

2018 2017

1. Estimated discount rates using pre-tax rates that reflect current market assessments at the risks specific to the properties 12.4% to 13.5% 12.4% to 14.6% 2. Growth rates 3.0% to 6.7% 3.0% to 6.9% 3. Terminal discount rates 7.9% to 10.5% 8.1% to 9.5% 4. Cash flow forecasts derived from the most recent financial budgets and plans approved by management Note 1 Note 1

Note 1: Discounted cash flow analysis over the remaining lease period for existing Build, Operate and Transfer (“BOT”) malls and over a 10-year projection for non-BOT malls and for retail spaces.

Relationship of unobservable inputs to fair value:

1. Discount rates – The higher the discount rates, the lower the fair value. 2. Growth rates – The higher the growth rates, the higher the fair value. 3. Terminal discount rates – The higher the terminal discount rates, the lower the fair value.

Sensitivity analysis on management’s estimates:

1. Discount rates

A hypothetical 10% (2017: 10%) increase or decrease in the pre-tax discount rate applied to the discounted cash flows would have an effect on return before tax of – lower by $134,733,000; higher by $161,143,000 (2017: lower by $162,951,000; higher by $195,959,000).

2. Growth rates

A hypothetical 10% (2017: 10%) increase or decrease in the rental revenue would have an effect on return before tax of – higher by $87,951,000; lower by $83,141,000 (2017: higher by $189,302,000; lower by $187,300,000).

3. Terminal discount rates

A hypothetical 10% (2017: 10%) increase or decrease in the terminal discount rate would have an effect on return before tax of – lower by $63,725,000; higher by $77,261,000 (2017: lower by $50,996,000; higher by $62,436,000).

LIPPO MALLS INDONESIA RETAIL TRUST 123 ANNUAL REPORT 2018

F-61 Notes to the Financial Statements (cont’d) 31 December 2018

14. INvESTMENT PROPERTIES (CONT’D)

The decrease in fair value is mainly due to the weakening Rupiah currency.

By relying on the valuation reports, the management is satisfied that the independent professional valuers have appropriate professional qualifications and recent experience in the location and category of the properties being valued. Other details on the properties are disclosed in the Statement of Portfolio.

The types of property titles in Indonesia which are held by the Group are as follows:

(a) Hak Guna Bangunan (“HGB”) Title

This title gives the right to construct and own buildings on a plot of land. The right is transferable and may be encumbered. Technically, HGB is a leasehold title where the state retains “ownership”. However, for practical purposes, there is little difference from a freehold title. HGB title is granted for an initial period of up to 30 years and is extendable for a subsequent 20-year period and another 30-year period. Upon the expiration of such extensions, new HGB title may be granted on the same land. The cost of extension is determined based on certain formula as stipulated by the National Land Office (Badan Pertanahan Nasional) in Indonesia. The commencement date of each title varies.

(b) Build, Operate and Transfer Schemes (“BOT Schemes”)

This title gives the Indonesia subsidiaries (“BOT Grantee”) the right to build and operate the retail mall for a particular period of time as stipulated in the BOT Agreement by the land owner (“BOT Grantor”). A BOT scheme is not registered with any Indonesian authority. Rights under a BOT scheme do not amount to a legal title and represent only contractual interests.

In exchange for the right to build and operate the retail mall on the land owned by the BOT Grantor, the BOT Grantee is obliged to pay a certain compensation (as stipulated in the BOT agreement), which may be made in the form of a lump sum or staggered.

A BOT scheme is granted for an initial period of 20 to 30 years and is extendable upon agreement of both parties. Upon the expiration of the term of the BOT agreement, the BOT Grantee must return the land, together with any buildings and fixtures on top of the land, without either party providing any form of compensation to the other.

(c) Strata Title

This title gives the party who holds the property the ownership of common areas, common property and common land proportionately with other strata title unit owners.

The investment properties are leased out to tenants under operating leases.

In 2017, certain investment properties at a carrying value of $428,192,000 were pledged as security for the bank facilities. On 7 March 2018, the Trust discharged all the securities including mortgage on properties granted for the facility, other than a charge over interest escrow account and sale account, With the completion of discharge, the Trust’s property portfolio is now unencumbered.

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F-62 Notes to the Financial Statements (cont’d) 31 December 2018

15. INTANGIBLE ASSETS Group 2018 2017 $’000 $’000

Cost: At the beginning of the year 46,421 43,263 Additions – 6,760 Exchange differences adjustments (1,966) (3,602) At the end of the year 44,455 46,421

Accumulated amortisation: At beginning of year 34,515 24,057 Amortisation for the year 2,613 12,996 Exchange difference adjustments (1,463) (2,538) At the end of the year 35,665 34,515

Net book value: At the beginning of the year 11,906 19,206 At the end of the year 8,790 11,906

Intangible assets represent the unamortised aggregate rental guarantee amounts receivable by the Group from master leases upon the acquisition of Palembang Icon and Lippo Plaza Batu in 2015, Lippo Mall Kuta in 2016, Lippo Plaza Kendari and Lippo Plaza Jogja in 2017 respectively (Note 32). The master leases range from 3 to 5 years apart from the sports centre at Palembang Icon, which is under a master lease of 25 years. At the end of reporting year, the remaining rental guarantee periods are for 4 to 21 (2017: 1 to 22) years.

The master leases agreement signed with respective master lessors are summarised as follows:

Master leases Master leases period Amount per annum From To Rp million

Lippo Mall Kemang* 17 December 2014 16 December 2019 208,000 Palembang Icon** 10 July 2015 9 July 2018 19,142 Palembang Icon (Sports Centre) 10 July 2015 30 April 2040 6,908 Lippo Plaza Batu** 7 July 2015 6 July 2018 18,219 Lippo Mall Kuta 29 December 2016 28 December 2021 43,281 Lippo Plaza Kendari 21 June 2017 20 June 2022 15,100 Lippo Plaza Jogja 22 December 2017 21 December 2022 42,636 353,286

* The group has renewed the master lease for 2 years from 17 December 2017 to 16 December 2019 for no consideration. ** The master lease accounts represent the annual amount and not prorated for the year of expiry.

LIPPO MALLS INDONESIA RETAIL TRUST 125 ANNUAL REPORT 2018

F-63 Notes to the Financial Statements (cont’d) 31 December 2018

15. INTANGIBLE ASSETS (CONT’D)

The master leases as a percentage of the respective mall’s gross revenue are as follows:

2018 2017 Master Master leases leases Gross as % of Gross as % of Master revenue of the gross Master revenue of the gross leases the Mall revenue leases the Mall revenue $’000 $’000 % $’000 $’000 %

Lippo Mall Kemang 19,666 31,803 61.8 21,529 30,453 70.7 Palembang Icon (1) 1,709 10,742 15.9 2,696 9,155 29.4 Lippo Plaza Batu (1) 1,068 2,525 42.3 1,886 2,704 69.7 Lippo Mall Kuta 4,092 7,747 52.8 4,480 7,046 63.6 Lippo Plaza Kendari 1,428 4,242 33.7 781 2,114 36.9 Lippo Plaza Jogja 4,031 6,293 64.1 119 138 86.2 31,994 63,352 31,491 51,610

(1) The gross revenue from master leases is pro-rated to the date of expiry on 9 July 2018 and 6 July 2018 respectively for Palembang Icon and Lippo Plaza Batu. Gross revenue of the mall represents the full revenue for the financial year.

16. INvESTMENTS IN SUBSIDIARIES Trust 2018 2017 $’000 $’000

Unquoted equity shares, at cost 984,733 984,733 Redeemable preference shares, at cost 826,975 885,556 Quasi equity loans (1) 22,339 22,339 Less: Allowance for impairment (312,765) (179,748) 1,521,282 1,712,880

Net book value of subsidiaries 1,738,978 1,838,738

Analysis of above amount denominated in non-functional currency: United States Dollars (US$) 2,979 2,979 Indonesian Rupiah (Rupiah) 936,023 1,197,420

(1) The quasi-equity loans, which are extended to three Singapore subsidiaries, are unsecured and interest-free with no fixed repayment terms. They are, in substance, part of the Trust’s net investment in the subsidiaries.

Movements in allowance for impairment: Balance at beginning of the year (179,748) (57,672) Impairment loss charged to profit or loss (133,017) (122,076) Balance at the end of the year (312,765) (179,748)

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F-64 Notes to the Financial Statements (cont’d) 31 December 2018

16. INvESTMENTS IN SUBSIDIARIES (CONT’D)

The list of the subsidiaries is in Note 37.

The management has assessed that there are indicators of impairment for those subsidiaries with shortfalls between the cost of investment in subsidiaries and the recoverable amount of the investments. Based on the above assessment, the management had made an allowance for impairment loss of $133,017,000 (2017: $122,076,000) in the Trust’s financial statements as at 31 December 2018.

17. INvESTMENTS IN jOINT OPERATION

Name of joint operation, country of incorporation, place of operation, Percentage of equity held principal activities and independent auditor by the Group 2018 2017 % %

Joint operation - PT Yogya Central Terpadu, Indonesia, owner of Lippo Plaza Jogja and Siloam Hospital Yogyakarta (RSM Amir Abadi Jusuf, Aryanto, Mawar & Rekan) 68.3 68.3

The Group has entered into a Joint Venture Deed through its wholly owned Singapore incorporated subsidiary Icon2 Investments Pte Ltd (“Icon2”) on 13 October 2017 with Icon1 Holdings Pte Ltd (“Icon1”), a wholly owned Singapore incorporated subsidiary of Singapore-listed First Real Estate Investment Trust (“First REIT”) to acquire an integrated development, comprising a hospital component known as Siloam Hospital Yogyakarta (“SHYG”) and a retail mall component known as Lippo Plaza Jogja with carrying value of $52,681,000 at the reporting year end date.

Icon2 and Icon1 each holds 100.0% of the Class B Shares and Class A Shares respectively in Indonesia incorporated PT Yogya Central Terpadu, which acquired the integrated development on 22 December 2017. Class B shares entitle it to, inter alia, all the rights to the revenue and profits and all the obligations for the expenses and losses relating to Lippo Plaza Jogja and Class A shares entitle it to, inter alia, all the rights to the revenue and profits and all the obligations for the expenses and losses relating to SHYG. The Class B Shares comprises 68.3% and Class A shares 31.7% of the total issued share capital of PT Yogya Central Terpadu. The Group has classified it as a joint operation.

PT Yogya Central Terpadu incorporated in Indonesia is audited by RSM Amir Abadi Jusuf, Aryanto, Mawar & Rekan (RSM Indonesia), a member firm of RSM International of which RSM Chio Lim LLP in Singapore is a member.

18. TRADE AND OTHER RECEIvABLES Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Trade receivables: Outside parties 11,803 11,564 307 180 Related parties (Note 3) 18,148 16,658 – – Less: Allowance for impairment (4,412) (1,222) – – Subtotal 25,539 27,000 307 180

LIPPO MALLS INDONESIA RETAIL TRUST 127 ANNUAL REPORT 2018

F-65 Notes to the Financial Statements (cont’d) 31 December 2018

18. TRADE AND OTHER RECEIvABLES (CONT’D)

Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Other receivables: Subsidiaries (Note 3) – – 203,499 231,445 Related parties (Note 3) 62 96 – – Other receivables 14,885 11,893 – 299 Subtotal 14,947 11,989 203,499 231,744 Total trade and other receivables 40,486 38,989 203,806 231,924

Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Movements in above allowance: Balance at beginning of the year (1,222) (3,554) – – Bad debt written back (Note 5) 546 3,390 – – Allowance used during the year 1,432 – – – Charge for trade receivables to profit or loss included in property operating expenses (Note 5) (5,321) (1,361) – – Effect of changes in exchange rates 153 303 – – Balance at end of the year (4,412) (1,222) – –

Concentration of credit risk relating to trade receivables is limited due to the Group’s many varied tenants and credit policy of obtaining security deposits from most tenants for leasing the Group’s investment properties. These tenants comprise retailers engaged in a wide variety of consumer trades.

The trade receivables are subject to the expected credit loss model under the financial reporting standard on financial instruments. The methodology applied for impairment loss is the simplified approach to measuring expected credit losses (ECL) which uses a lifetime expected loss allowance for all trade receivables and contract assets. The expected lifetime losses are recognised from initial recognition of these assets. These assets are grouped based on shared credit risk characteristics and the days past due for measuring the expected credit losses. The allowance matrix is based on its historical observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date the historical observed default rates are updated and changes in the forward-looking estimates are analysed. The loss allowance was determined as follows for trade receivables:

Gross amount Loss allowance 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Trade receivables: Current 16,490 17,374 – – 1 to 30 days past due 3,485 3,425 – – 31 to 60 days past due 2,844 2,137 – – Over 61 days past due 7,132 5,286 4,412 1,222 Total 29,951 28,222 4,412 1,222

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F-66 Notes to the Financial Statements (cont’d) 31 December 2018

19. OTHER ASSETS Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Prepayments 4,964 2,093 6 198 Prepaid tax 17,000 27,520 – – 21,964 29,613 6 198

Prepaid tax includes prepaid VAT (“value-added tax”) amounting to $8,219,000 (2017: $8,591,000) relating to Lippo Plaza Jogja and Kediri Town Square acquisitions that is recoverable from the relevant tax authority in Indonesia.

20. CASH AND CASH EqUIvALENTS Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Not restricted in use 45,299 59,787 10,147 4,447 Cash pledged for bank facilities 7,377 5,113 7,377 5,113 Cash at end of the year 52,676 64,900 17,524 9,560

Interest earning balances 35,152 49,283 – –

The rate of interest for the cash on interest earning accounts is between 0.2% and 5.5% (2017: 0.2% and 6.0%) per annum.

For the purpose of presenting the statement of cash flows, the consolidated cash and cash equivalents comprise the following: Group 2018 2017 $’000 $’000

Amount as shown above 52,676 64,900 Less: Cash pledged for bank facilities (7,377) (5,113) Cash and cash equivalents per statement of cash flows 45,299 59,787

20A. Non-cash and other transactions

During the year, the significant non-cash transaction was units that were issued as settlement of the Manager’s management fees amounting to $12,428,000 (2017: $6,874,000).

LIPPO MALLS INDONESIA RETAIL TRUST 129 ANNUAL REPORT 2018

F-67 Notes to the Financial Statements (cont’d) 31 December 2018

20. CASH AND CASH EqUIvALENTS (CONT’D)

20B. Reconciliation of liabilities arising from financing activities:

Non-cash 2017 Cash flows Changes Reclassification 2018 $’000 $’000 $’000 $’000 $’000

Non-current borrowings 419,810 135,000 (827) – 553,983 Current borrowings 268,460 (150,000) 1,540 – 120,000 Finance lease liabilities 1,289 (43) 21 – 1,267 Cash pledged for bank facilities 5,113 2,264 – – 7,377 Total liabilities from financing activities 694,672 (12,779) 734 – 682,627

Non-cash 2016 Cash flows Changes Reclassification* 2017 $’000 $’000 $’000 $’000 $’000

Non-current borrowings 516,584 89,290 3,936 (190,000) 419,810 Current borrowings 124,269 (45,000) (809) 190,000 268,460 Finance lease liabilities 1,307 (56) 38 – 1,289 Cash pledged for bank facilities 3,483 1,630 – – 5,113 Total liabilities from financing activities 645,643 45,864 3,165 – 694,672

* Reclassification between long-term borrowings and short-term borrowing due to change in maturity of the borrowings.

21. NET ASSETS ATTRIBUTABLE TO UNITHOLDERS

Group Trust 2018 2017 2018 2017

Net assets attributable to Unitholders at end of the year ($’000) 819,564 908,286 709,435 890,243

Units in issue (Note 22) 2,859,933,585 2,823,987,723 2,859,933,585 2,823,987,723

Net assets attributable to Unitholders per unit (in cents) 28.66 32.16 24.81 31.52

130

F-68 Notes to the Financial Statements (cont’d) 31 December 2018

21. NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (CONT’D)

The foreign currency translation reserve comprises foreign exchange differences arising from the translation of the financial statements of foreign operations.

Issuable at end of the reporting year:

At the end of the reporting year, Nil (2017: 3,252,120) units are issuable as settlement for the Manager’s management fees for the last quarter of the reporting year.

The issue price for determining the number of units issued and issuable as Manager’s management base fee, performance fee and acquisition fees is calculated based on the volume weighted average traded price for all trades done on SGX-ST in the ordinary course of trading for 10 business days immediately preceding the respective last business day of the respective quarter end date, year end date and issuance date respectively. The new units, upon issue and allotment, will rank pari passu in all respect with the units of the Trust.

Each unit in the Trust presents an undivided interest in the Trust. The rights and interests of Unitholders are contained in the Trust Deed and include the right to:

• receive income and other distributions attributable to the Units held;

• receive audited financial statements and the annual report of the Trust; and

• participate in the termination of the Trust by receiving a share of all net cash proceeds derived from the realisation of the assets of the Trust less any liabilities, in accordance with their proportionate interests in the Trust.

No Unitholder has a right to require that any assets of the Trust be transferred to him.

Further, Unitholders cannot give directions to the Trustee or the Manager (whether at a meeting of Unitholders duly convened and held in accordance with the provisions of the Trust Deed or otherwise) if it would require the Trustee or the Manager to do or omit doing anything which may result in:

• The Trust ceasing to comply with applicable laws and regulations; or

• The exercise of any discretion expressly conferred on the Trustee or the Manager by the Trust Deed or the determination of any matter which, under the Trust Deed, requires the agreement of either or both of the Trustee and the Manager.

The Trust Deed contains provisions that are designed to limit the liability of a Unitholder to the amount paid or payable for any unit. The provisions seek to ensure that if the issue price of the units held by a Unitholder has been fully paid, no such Unitholder, by reason alone of being a Unitholder, will be personally liable to indemnify the Trustee or any creditor of the Trust in the event that the liabilities of the Trust exceed its assets.

Under the Trust Deed, every unit carries the same voting rights.

Capital management:

The objectives when managing capital are: to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for Unitholders and benefits for other stakeholders, and to provide an adequate return to Unitholders by pricing services commensurately with the level of risk. The Manager sets the amount of capital in proportion to risk.

LIPPO MALLS INDONESIA RETAIL TRUST 131 ANNUAL REPORT 2018

F-69 Notes to the Financial Statements (cont’d) 31 December 2018

21. NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (CONT’D)

Capital management (cont’d):

The Manager manages the capital structure and makes adjustments to it where necessary or possible in the light of changes in economic conditions and the risk characteristics of the underlying assets. Please refer to Note 12 on the distribution policy.

The only externally imposed capital requirement is that for the Group to maintain its listing on the SGX-ST it has to have issued equity with a free float of at least 10% of the units. Management receives a report from the registrar frequently on substantial unit interests showing the non-free float and it demonstrated continuing compliance with the SGX-ST requirement on the 10% limit throughout the year.

In accordance with the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore, the total borrowings and deferred payments of the Group should not exceed 45% (2017: 45%) of the Group’s deposited property. The Group had computed its aggregate leverage ratio as follows: Group 2018 2017 $’000 $’000

Total gross borrowings and deferred payments 680,000 695,000 Total deposited property 1,966,157 2,063,874 Aggregated leverage ratio (%) 34.6% 33.7%

The Group met the aggregate leverage ratio as at the end of the reporting year. The increase in the aggregate leverage ratio for the reporting year is due primarily from weakening of Rupiah currency resulting in a decrease in the fair value of investment properties.

22. UNITS IN ISSUE Group and Trust 2018 2017

Units at beginning of the year 2,823,987,723 2,802,992,873 Manager’s management fees settled in units 33,619,215 18,675,322 Manager’s acquisition fees settled in units 2,326,647 2,319,528 Units at end of the year 2,859,933,585 2,823,987,723

23. PERPETUAL SECURITIES

The perpetual securities are classified as equity instruments and recorded in equity in the statement of financial position. The details are: Group and Trust 2018 2017 $’000 $’000

Balance at 1 January 259,647 140,867 Issue of perpetual securities – 120,000 Issue expense – (1,502) Amount reserved for distribution to perpetual securities holders 17,720 14,053 Distribution to perpetual securities holders (17,720) (13,771) Perpetual securities per statement of financial position 259,647 259,647

132

F-70 Notes to the Financial Statements (cont’d) 31 December 2018

23. PERPETUAL SECURITIES (CONT’D)

LMIRT Capital and the Trustee established a $1.0 billion Guaranteed Euro Medium Term Securities Programme (“EMTS”) (together with EMTN as per Note 24B, “Programmes”) on 9 September 2015. Under EMTS,

(i) Each of LMIRT Capital and the Trustee may from time to time issue Medium Term Notes (“Notes”) which, in the case of Notes issued by LMIRT Capital, will be unconditionally and irrevocably guaranteed by the Trustee; and

(ii) The Trustee may from time to time issue perpetual securities.

On 19 June 2017, the Trust issued perpetual securities of $120.0 million under the $1.0 billion EMTS to finance the acquisition of Lippo Plaza Kendari, repayment of matured $50.0 million EMTN notes and for working capital purposes.

The key terms and conditions of the perpetual securities are as follows:

• there is no fixed redemption date;

• the redemption of the security is at the option of the Trust, in whole, but not in part, on 19 December 2022 or later;

• the holders have the right to receive distribution payments at a rate of 6.6% per annum with the first reset date falling on 19 December 2022 and subsequent resets occurring every five years thereafter;

• the distributions will be payable semi-annually in arrears on 19 June and 19 December in each year on a discretionary basis and is non cumulative; and

• the payment obligations of the Trust under the perpetual securities will at all times rank ahead of the holders of junior obligations of the Trust.

In 2016, the Trust issued perpetual securities of $140.0 million under the $1.0 billion EMTS to partially refinance the $150.0 million 4.25% EMTN notes. The remaining $10.0 million was being refinanced by the drawdown from facility A & B of $5.0 million each.

The key terms and conditions of the perpetual securities are as follows:

• there is no fixed redemption date;

• the redemption of the security is at the option of the Trust, in whole, but not in part, on 27 September 2021 or later;

• the holders have the right to receive distribution payments at a rate of 7.0% per annum with the first reset date falling on 27 September 2021 and subsequent resets occurring every five years thereafter;

• the distributions will be payable semi-annually in arrears on 27 March and 27 September in each year on a discretionary basis and is non cumulative; and

• the payment obligations of the Trust under the perpetual securities will at all times rank ahead of the holders of junior obligations of the Trust.

LIPPO MALLS INDONESIA RETAIL TRUST 133 ANNUAL REPORT 2018

F-71 Notes to the Financial Statements (cont’d) 31 December 2018

24. OTHER FINANCIAL LIABILITIES Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Non-current: Financial instruments with floating interest rates: Bank loans (unsecured) (Note 24A) 485,000 350,000 485,000 350,000 Less: Unamortised transaction costs (5,455) (4,268) (5,455) (4,268) 479,545 345,732 479,545 345,732

Financial instruments with fixed interest rates: Medium term notes (unsecured) (Note 24B) 75,000 75,000 – – Less: Unamortised transaction costs (562) (922) – – 74,438 74,078 – – Finance leases (Note 24C) 1,233 1,280 – – Non-current, total 555,216 421,090 479,545 345,732

Current: Financial instruments with floating interest rates: Bank loans (secured) (Note 24A) – 90,000 – 90,000 Less: Unamortised transaction costs – (791) – (791) – 89,209 – 89,209 Bank loans (unsecured) (Note 24A) 120,000 80,000 120,000 80,000 Current, total 120,000 169,209 120,000 169,209

Financial instruments with fixed interest rates: Medium term notes (unsecured) (Note 24B) – 100,000 – – Less: Unamortised transaction costs – (749) – – – 99,251 – – Finance leases (Note 24C) 34 9 – – Current, total 120,034 268,469 120,000 169,209 Total 675,250 689,559 599,545 514,941

The non-current portion is repayable as follows: Due within 2 to 5 years 555,182 421,056 479,545 345,732 Due after 5 years 34 34 – – Total non-current portion 555,216 421,090 479,545 345,732

134

F-72 Notes to the Financial Statements (cont’d) 31 December 2018

24. OTHER FINANCIAL LIABILITIES (CONT’D)

At the end of reporting year, the range of floating interest rates paid per annum was as follows:

Group and Trust 2018 2017

Bank loans (secured and unsecured) 3.46% to 5.02% 2.88% to 4.30%

At the end of reporting year, the ranges of fixed interest rates paid per annum were as follows:

Group 2018 2017

Medium term notes (unsecured) 4.1% 4.1% to 4.5% Finance leases 14.0% 14.0%

The weighted effective interest rates for outstanding bank loans and medium term notes paid per annum were as follows: Group Trust 2018 2017 2018 2017

Bank loans (secured and unsecured) 4.87% 4.73% 4.87% 4.73% Medium term notes (unsecured) 4.61% 5.02% – –

24A. Bank loans

Bank loans (Unsecured)

In December 2014, the Trust drew down on its secured bank loan facility of $155.0 million maturing in December 2018 at an interest rate of 3.0% per annum plus SGD swap offer rate (“SOR”). An amount of $10.0 million and $55.0 million were repaid in 2015 and 2017 respectively. On 19 November 2018, the outstanding $90.0 million under this facility were fully repaid before maturity.

The fair value (Level 2) of the bank loan is a reasonable approximation of the carrying amount as it is a floating rate instrument that is frequently re-priced to market interest rates.

On 13 November 2017, the Trust signed a facility agreement for a $80.0 million unsecured uncommitted revolving credit facility at interest rate of 1.8% per annum plus SOR. The full amount of $80.0 million was drawn in 2017. As at 31 December 2018, the outstanding bank loan amounted to $80.0 million (2017: $80.0 million).

On 5 March 2018, the Trust signed a facility agreement for a $40.0 million unsecured uncommitted revolving credit facility at interest rate of 1.8% per annum plus SOR. The full amount of $40.0 million was drawn during the year. As at 31 December 2018, the outstanding bank loan amounted to $40.0 million.

LIPPO MALLS INDONESIA RETAIL TRUST 135 ANNUAL REPORT 2018

F-73 Notes to the Financial Statements (cont’d) 31 December 2018

24. OTHER FINANCIAL LIABILITIES (CONT’D)

24A. Bank loans (cont’d)

Non-current bank loans (Unsecured)

(i) On 22 August 2016, the Trust signed a facility agreement of $350.0 million which consists of 2 tranches A & B of $175.0 million each, maturing in August 2020 and August 2021 at interest rates of 2.95% per annum plus SOR and 3.15% per annum plus SOR respectively. Each drawdown is equal share from each of the tranche A & B.

The Trust drew the entire $350.0 million in year 2016 and 2017 for the purpose of refinancing its EMTN notes and acquisition of Lippo Mall Kuta, Lippo Plaza Kendari and Kediri Town Square respectively.

As at 31 December 2018, the outstanding bank loan amounted to $350.0 million (2017: $350.0 million).

(ii) On 9 November 2018, the Trust signed a facility agreement of $135.0 million which consists of 2 tranches A & B of $67.5 million each, maturing in November 2022 and November 2023 at interest rates of 3.05% per annum plus SOR and 3.25% per annum plus SOR respectively. Each drawdown is equal share from each of the tranche A & B.

On 19 November 2018, the Trust drew $135.0 million to partially refinance the $90.0 million term loan that expired on 15 December 2018 and to redeem the $100.0 million 4.5% EMTN notes (Note 24B) due on 23 November 2018.

As of 31 December 2018, the outstanding bank loan amounted to $135.0 million.

24B. Medium term notes (Unsecured)

On 25 June 2012, a wholly-owned subsidiary, LMIRT Capital Pte Ltd (“LMIRT Capital”) established a $750.0 million Guaranteed Euro Medium Term Note Programme (“EMTN”). Under the EMTN, LMIRT Capital may, subject to compliance with all relevant laws, regulations and directives, from time to time issue notes in series or tranches. Each series or tranches of notes may be issued in various currencies and tenor, and may bear fixed, floating or variable rates of interest. All sum payable in respect of the notes will be unconditionally and irrevocably guaranteed by the Trustee.

In November 2018, notes issued by LMIRT Capital on 23 November 2015 amounted to $100.0 million was repaid upon maturity.

At the end of the reporting year, $75.0 million notes are outstanding. The $75.0 million notes were issued on 22 June 2015, bear a fixed rate of 4.1% per annum payable semi-annually in arrears and will mature on 22 June 2020.

The fair value of the fixed rate notes (Level 1) is $66,192,000 (2017: $174,779,500).

The notes are listed on the Singapore Exchange Securities Trading Limited.

136

F-74 Notes to the Financial Statements (cont’d) 31 December 2018

24. OTHER FINANCIAL LIABILITIES (CONT’D)

24C. Finance leases Minimum Finance Present payments charges value $’000 $’000 $’000

Group 2018 Minimum lease payments payable: Due within one year 72 (38) 34 Due within 2 to 5 years 1,223 (24) 1,199 Due after 5 years 51 (17) 34 Total 1,346 (79) 1,267

2017 Minimum lease payments payable: Due within one year 43 (34) 9 Due within 2 to 5 years 1,307 (61) 1,246 Due after 5 years 60 (26) 34 Total 1,410 (121) 1,289

Finance lease represents Build, Operate and Transfer (“BOT”) fees payable.

The fixed rate of interest for finance leases is 14% (2017: 14%) per year. The finance lease is on fixed repayment term and no arrangements have been entered into for contingent rental payments.

The carrying amount of the lease liabilities is not significantly different from the fair value.

25. OTHER LIABILITIES, NON-CURRENT Group 2018 2017 $’000 $’000

Advance payments by tenants 89,499 94,688

This relates to the rental received in advance from certain tenants.

26. TRADE AND OTHER PAYABLES, CURRENT Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000 Trade payables: Outside parties and accrued liabilities 24,860 21,247 23,606 29,558 Related parties (Note 3) 1,562 221 – – Subtotal 26,422 21,468 23,606 29,558

Other payables: Loan payable to subsidiaries (1) – – 110,191 228,832 Subsidiaries (Note 3) – – 37,590 28,872 Other payables 23,770 23,869 – – Subtotal 23,770 23,869 147,781 257,704 Total trade and other payables, current 50,192 45,337 171,387 287,262

(1) The loan payable agreements provide that they are unsecured, with fixed interest rates ranging from 4.1% to 5.0% (2017: ranging from 4.1% to 5.0%) per annum and repayable on demand. The carrying amount is a reasonable approximation of fair value (Level 2).

LIPPO MALLS INDONESIA RETAIL TRUST 137 ANNUAL REPORT 2018

F-75 Notes to the Financial Statements (cont’d) 31 December 2018

27. OTHER LIABILITIES, CURRENT Group 2018 2017 $’000 $’000

Security deposits from tenants 42,279 34,415

28. DERIvATIvE FINANCIAL INSTRUMENTS

The table below summarises the fair value of derivatives engaged into at the end of year. All derivatives are not designated as hedging instruments. Group and Trust 2018 2017 $’000 $’000

Assets – Derivatives with positive fair values: Currency option contracts (Note 28B) – 394 Total – 394

Non-current portion – 394 – 394

Liabilities – Derivatives with negative fair values: Interest rate swaps (Note 28A) (1,885) (909) Currency option contracts (Note 28B) (719) (1,954) (2,604) (2,863)

Non-current portion (1,885) (1,954) Current portion (719) (909) (2,604) (2,863) Net balance (2,604) (2,469)

Group and Trust 2018 2017 $’000 $’000

The movements during the year were as follows: Balance at beginning of year (2,469) (1,901) Fair value losses recognised in profit or loss (135) (568) Total net balance at end of the year (2,604) (2,469)

138

F-76 Notes to the Financial Statements (cont’d) 31 December 2018

28. DERIvATIvE FINANCIAL INSTRUMENTS (CONT’D)

28A. Interest rate swaps

The notional amount of interest rate swaps for 2018 is $100,000,000 and $135,000,000 respectively. They are designed to convert floating rate borrowings to fixed rate exposure. The Group pays the fixed interest rates of 2.02% and 2.098% per annum respectively, and receives a variable rate equal to the Singapore swap offer rate (“SOR”) on the notional contract amount (Level 2). The interest rate swaps will expire on 13 December 2021 and 3 December 2021 respectively.

The notional amount of interest rate swaps for 2017 is $155,000,000. They are designed to convert floating rate borrowings to fixed rate exposure. The Group pays the fixed interest rates, ranging from 1.85% to 1.88% per annum, and receives a variable rate equal to the Singapore swap offer rate (“SOR”) on the notional contract amount (Level 2). The interest rate swaps expired on 16 December 2018.

Information on the maturities of the borrowings is provided in Note 24A.

28B. Currency option contracts

Notional amounts Maturity Fair value 2018 2017 Reference 2018 2017 $’000 $’000 currency 2018 2017 $’000 $’000

Currency option 8,347 43,625 Rupiah February 2017 February 2017 (200) (613) contracts to February to February 2019 2019 Currency option 8,300 43,379 Rupiah February 2017 February 2017 (203) (670) contracts to February to February 2019 2019 Currency option 4,716 24,647 Rupiah February 2017 February 2017 (80) (255) contracts to February to February 2019 2019 Currency option 3,584 18,732 Rupiah February 2017 February 2017 (118) 394 contracts to February to February 2019 2019 Currency option 3,584 18,732 Rupiah February 2017 February 2017 (118) (416) contracts to February to February 2019 2019 28,531 149,115 (719) (1,560)

The purpose of the currency option contracts is to mitigate the fluctuation of income denominated in Rupiah arising from (i) dividends received or receivable, by the Singapore subsidiaries, and (ii) capital receipts from repayment of shareholders loans to Singapore subsidiaries.

Currency derivatives are utilised to hedge significant future transactions and cash flows. The Trust is a party to a variety of foreign currency options in the management of its exchange rate exposures. The instruments purchased are primarily denominated in the currency of the entity’s principal market. As a matter of principle, the Trust does not enter into derivative contracts for speculative purposes.

LIPPO MALLS INDONESIA RETAIL TRUST 139 ANNUAL REPORT 2018

F-77 Notes to the Financial Statements (cont’d) 31 December 2018

28. DERIvATIvE FINANCIAL INSTRUMENTS (CONT’D)

28C. Fair values of derivative financial instruments

The derivative financial instruments are not traded in an active market. As a result, their fair values are based on valuation techniques currently consistent with generally accepted valuation methodologies for pricing financial instruments, and incorporate all factors and assumptions that knowledgeable, willing market participants would consider in setting the price (Level 2).

The fair value (Level 2) of interest rate swaps was measured on the basis of the current value of the difference between the contractual interest rate and the market rate at the end of the reporting year. The valuation technique used market observable inputs including interest rate curves.

The fair value (Level 2) of currency option contracts is based on option models. The valuation technique uses market observable inputs including forward rate curves and annualised volatility of exchange rate.

29. FINANCIAL RATIOS Group Trust 2018 2017 2018 2017

Expenses to average net assets ratio – excluding performance related fee (1) 0.65% 0.75% 0.67% 0.76% Expenses to average net assets ratio – including performance related fee (1) 1.23% 1.37% 1.30% 1.38% Portfolio turnover ratio (2) – – – –

(1) The annualised ratios are computed in accordance with the guidelines of Investment Management Association of Singapore. The expenses used in the computation relate to expenses at the Group and Trust levels excluding any property related expenses, borrowing costs, foreign exchange losses/(gains), tax deducted at source and costs associated with the purchase of investments. (2) Turnover ratio means the number of times per year that a dollar of assets is reinvested. It is calculated based on the lesser of purchases or sales of underlying investments of a scheme expressed as a percentage of daily average net asset value.

30. FINANCIAL INSTRUMENTS: INFORMATION ON FINANCIAL RISKS

30A. Categories of financial assets and liabilities

The following table categorises the carrying amount of financial assets and liabilities recorded at the end of the reporting year: Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Financial assets: Financial assets at fair value through profit or loss (FVTPL) – 394 – 394 Financial assets at amortised cost 93,162 103,889 221,330 241,484 At end of the year 93,162 104,283 221,330 241,878

Financial liabilities: Financial liabilities at fair value through profit or loss (FVTPL) 2,604 2,863 2,604 2,863 Financial liabilities at amortised cost 725,442 734,896 770,932 802,203 At end of the year 728,046 737,759 773,536 805,066

140

F-78 Notes to the Financial Statements (cont’d) 31 December 2018

30. FINANCIAL INSTRUMENTS: INFORMATION ON FINANCIAL RISKS (CONT’D)

30A. Categories of financial assets and liabilities (cont’d)

Further quantitative disclosures are included throughout these financial statements.

The Group’s financial assets that were classified as “cash and cash equivalents” and “loans and receivables” under FRS 39 in previous financial year have been classified as “financial assets at amortised cost” for the current financial year under FRS 109.

The Group’s financial liabilities that were classified as “borrowings measured at amortised cost” and “trade and other payables measured at amortised cost” under FRS 39 in previous financial year have been classified as “financial liabilities at amortised cost” for the current financial year under FRS 109.

30B. Financial risk management

The main purpose for holding or issuing financial instruments is to raise and manage the finances for the entity’s operating, investing and financing activities. There are exposures to the financial risks on the financial instruments such as credit risk, liquidity risk and market risk comprising interest rate risk, currency risk and price risk exposures. Management has certain practices for the management of financial risks and actions to be taken in order to manage the financial risks. The guidelines include the following:

1. Minimise interest rate, currency, credit and market risks for all kinds of transactions. 2. Maximise the use of “natural hedge”: favouring as much as possible the natural off-setting of sales and costs and payables and receivables denominated in the same currency and therefore put in place hedging strategies only for the excess balance. The same strategy is pursued with regard to interest rate risk. 3. Enter into derivatives or any other similar instruments solely for hedging purposes. 4. All financial risk management activities are carried out and monitored by senior management staff. 5. All financial risk management activities are carried out following acceptable market practices. 6. May consider investing in shares, bonds or similar instruments.

The Chief Financial Officer of the Manager who monitors the procedures reports to the management of the Manager.

There have been no changes to the exposures to risk; the objectives, policies and processes for managing the risk and the methods used to measure the risk.

30C. Fair values of financial instruments

The analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 are disclosed in the relevant notes to the financial statements. These include the significant financial instruments stated at amortised cost and at fair value in the statement of financial position. The carrying values of current financial instruments approximate their fair values due to the short-term maturity of these instruments and the disclosures of fair value are not made when the carrying amount of current financial instruments is a reasonable approximation of the fair value.

LIPPO MALLS INDONESIA RETAIL TRUST 141 ANNUAL REPORT 2018

F-79 Notes to the Financial Statements (cont’d) 31 December 2018

30. FINANCIAL INSTRUMENTS: INFORMATION ON FINANCIAL RISKS (CONT’D)

30D. Credit risk on financial assets

Financial assets that are potentially subject to concentrations of credit risk and failures by counterparties to discharge their obligations in full or in a timely manner. These arise principally from cash balances with banks, cash equivalents, receivables and other financial assets. The maximum exposure to credit risk is the total of the fair value of the financial assets at the end of the reporting year. Credit risk on cash balances with banks and any other financial instruments is limited because the counter-parties are entities with acceptable credit ratings. For expected credit losses (ECL) on financial assets, the three-stage approach in the financial reporting standard on financial instruments is used to measure the impairment allowance. Under this approach the financial assets move through the three stages as their credit quality changes. However, a simplified approach is permitted by the financial reporting standards on financial instruments for financial assets that do not have a significant financing component, such as trade receivables. On initial recognition, a day-1 loss is recorded equal to the 12 month ECL (or lifetime ECL for trade receivables), unless the assets are considered credit impaired. For credit risk on trade receivables an ongoing credit evaluation is performed on the financial condition of the debtors and an impairment loss is recognised in profit or loss. Reviews and assessments of credit exposures in excess of designated limits are made. Renewals and reviews of credits limits are subject to the same review process.

Note 20 discloses the maturity of the cash and cash equivalents balances. Cash and cash equivalents are also subject to the impairment requirements of the standard on financial instruments. There was no identified impairment loss.

30E. Liquidity risk – financial liabilities maturity analysis

The following table analyses non-derivative financial liabilities by remaining contractual maturity (contractual and undiscounted cash flows):

Less than 1 to 3 3 to 5 Over 1 year years years 5 years Total $’000 $’000 $’000 $’000 $’000

Non-derivative financial liabilities:

2018 Group Gross borrowings commitments 147,056 453,452 144,088 – 744,596 Gross finance lease obligations 72 313 910 51 1,346 Trade and other payables 50,192 – – – 50,192 At end of the year 197,320 453,765 144,998 51 796,134

Trust Gross borrowings commitments 143,981 376,986 144,088 – 665,055 Trade and other payables 171,387 – – – 171,387 At end of the year 315,368 376,986 144,088 – 836,442

142

F-80 Notes to the Financial Statements (cont’d) 31 December 2018

30. FINANCIAL INSTRUMENTS: INFORMATION ON FINANCIAL RISKS (CONT’D)

30E. Liquidity risk – financial liabilities maturity analysis (cont’d)

Less than 1 to 3 3 to 5 Over 1 year years years 5 years Total $’000 $’000 $’000 $’000 $’000

Non-derivative financial liabilities:

2017 Group Gross borrowings commitments 295,731 280,948 179,800 – 756,479 Gross finance lease obligations 43 146 1,161 60 1,410 Trade and other payables 45,337 – – – 45,337 At end of the year 341,111 281,094 180,961 60 803,226

Trust Gross borrowings commitments 188,637 201,407 179,800 – 569,844 Trade and other payables 287,262 – – – 287,262 At end of the year 475,899 201,407 179,800 – 857,106

The following table analyses the derivative financial instruments by remaining contractual maturity:

Less than 1 to 3 1 year years Total $’000 $’000 $’000

Derivative financial instruments:

2018 Group and Trust Net settled: Currency option contracts (719) – (719) Interest rate swaps – (1,885) (1,885) At end of the year (719) (1,885) (2,604)

Less than 1 to 3 1 year years Total $’000 $’000 $’000

Derivative financial instruments:

2017 Group and Trust Net settled: Currency option contracts – (1,560) (1,560) Interest rate swaps (909) – (909) At end of the year (909) (1,560) (2,469)

The above amounts disclosed in the maturity analysis are the contractual undiscounted cash flows and such undiscounted cash flows differ from the amount included in the statement of financial position. When the counterparty has a choice of when an amount is paid, the liability is included on the basis of the earliest date on which it can be required to pay.

LIPPO MALLS INDONESIA RETAIL TRUST 143 ANNUAL REPORT 2018

F-81 Notes to the Financial Statements (cont’d) 31 December 2018

30. FINANCIAL INSTRUMENTS: INFORMATION ON FINANCIAL RISKS (CONT’D)

30E. Liquidity risk – financial liabilities maturity analysis (cont’d)

The liquidity risk refers to the difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. It is expected that all the liabilities will be settled at their contractual maturity. The average credit period taken to settle trade payables is about 30 (2017: 30) days. The other payables are with short-term durations. The classification of the financial assets is shown in the statements of financial position as they may be available to meet liquidity need and no further analysis is deemed necessary.

A schedule showing the maturity of financial liabilities and unused bank facilities is provided regularly to management of the Manager to assist in monitoring the liquidity risk. The Manager also monitors and observes the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore concerning limits on total borrowings. The Manager is of the view that cash from operating activities will be sufficient to meet the current requirements to support ongoing operations, capital expenditures, and debt repayment obligations. The Trust’s structure necessitates raising funds through debt financing and the capital markets to fund strategic acquisitions and capital expenditures. The Manager also ensures that there are sufficient funds for declared and payable distributions and any other commitments.

30F. Interest rate risk

The interest rate risk exposure is from changes in fixed rates and floating interest rates and it mainly concerns financial liabilities which are both fixed rate and floating rate. The following table analyses the breakdown of the significant financial instruments by type of interest rate:

Group Trust 2018 2017 2018 2017 $’000 $’000 $’000 $’000

Financial liabilities with interest: Fixed rates 75,705 174,618 – – Floating rates 599,545 514,941 599,545 514,941 Total at end of the year 675,250 689,559 599,545 514,941

The floating rate debt instruments are with interest rates that are re-set at regular intervals. The interest rates are disclosed in the respective notes.

In order to manage the interest rate risk, interest rate swaps are entered into to mitigate the fair value risk by converting floating rate borrowings to fixed rate borrowings, as described in Notes 24A and 28A.

The derivatives are carried at fair value, and changes in the fair value are recognised directly in the profit or loss. However, there is no impact to distributable income until realised.

Sensitivity analysis: Group 2018 2017 $’000 $’000

Financial liabilities: A hypothetical variation in interest rates by 10 (2017: 10) basis points with all other variables held constant, would have an increase/decrease in total return before tax for the year by 600 515

The analysis has been performed for floating interest rate over a year for financial instruments. The impact of a change in interest rates on floating interest rate financial instruments has been assessed in terms of changing of their cash flows and therefore in terms of the impact on net expenses. The hypothetical changes in basis points are not based on observable market data (unobservable inputs).

144

F-82 Notes to the Financial Statements (cont’d) 31 December 2018

30. FINANCIAL INSTRUMENTS: INFORMATION ON FINANCIAL RISKS (CONT’D)

30G. Foreign currency risk

Analysis of amounts denominated in non-functional currency:

Indonesian Singapore United States Rupiah Dollar Dollar Total $’000 $’000 $’000 $’000

Group 2018: Financial assets: Cash and cash equivalents – 67 39 106 Trade and other receivables – 35,753 – 35,753 Total financial assets – 35,820 39 35,859

Financial liabilities: Trade and other payables 11,412 – – 11,412 Total financial liabilities 11,412 – – 11,412 Net financial (liabilities)/assets at end of the year (11,412) 35,820 39 24,447

Indonesian Singapore United States Rupiah Dollar Dollar Total $’000 $’000 $’000 $’000

Group 2017: Financial assets: Cash and cash equivalents – 6,770 38 6,808 Total financial assets – 6,770 38 6,808

Financial liabilities: Trade and other payables 12,179 – – 12,179 Total financial liabilities 12,179 – – 12,179 Net financial (liabilities)/assets at end of the year (12,179) 6,770 38 (5,371)

Indonesian Rupiah $’000

Trust 2018: Financial assets: Other receivables from subsidiaries 176,874 Total financial assets 176,874

Financial liabilities: Trade and other payables 11,412 Other payables to subsidiaries 1,961 Total financial liabilities 13,373 Net financial assets at end of the year 163,501

LIPPO MALLS INDONESIA RETAIL TRUST 145 ANNUAL REPORT 2018

F-83 Notes to the Financial Statements (cont’d) 31 December 2018

30. FINANCIAL INSTRUMENTS: INFORMATION ON FINANCIAL RISKS (CONT’D)

30G. Foreign currency risk (cont’d)

Analysis of amounts denominated in non-functional currency (cont’d): Indonesian Rupiah $’000

Trust 2017: Financial assets: Trade and other receivables 172,847 Total financial assets 172,847

Financial liabilities: Trade and other payables 12,179 Other payables to subsidiaries 2,050 Total financial liabilities 14,229 Net financial assets at end of the year 158,618

There is exposure to foreign currency risk as part of its normal business. In particular, there is significant exposure to Indonesian Rupiah currency risk due to the operations of the malls and retail spaces in Indonesia. In this respect, foreign currency contracts are entered into to take into consideration of anticipated revenues in Indonesian Rupiah over operating expenses. Note 28B illustrates the foreign currency derivatives in place at end of the reporting year.

Group 2018 2017 $’000 $’000

A hypothetical 10% (2017: 10%) strengthening in the exchange rate of the functional currency SGD against Rupiah with all other variables held constant would have a favourable effect on total return before tax of 1,141 1,218

A hypothetical 10% (2017: 10%) strengthening in the exchange rate of the functional currency Rupiah against SGD with all other variables held constant would have an adverse effect on total return before tax of (3,582) (677)

Trust 2018 2017 $’000 $’000

A hypothetical 10% (2017: 10%) strengthening in the exchange rate of the functional currency SGD against Rupiah with all other variables held constant would have an adverse effect on total return before tax of (16,350) (15,862)

The hypothetical changes in exchange rates are not based on observable market data (unobservable inputs). The sensitivity analysis is disclosed for each currency to which the entity has significant exposure. The analysis above has been carried out without taking into consideration hedged transactions.

The above table shows sensitivity to a hypothetical 10% variation in the functional currency against the relevant non-functional foreign currencies. The sensitivity rate used is the reasonably possible change in foreign exchange rates. For similar rate weakening of the functional currency against the relevant foreign currencies above, there would be comparable impacts in the opposite direction on the profit or loss.

In management’s opinion, the above sensitivity analysis is unrepresentative of the foreign currency risks as the historical exposure does not reflect the exposure in future. 146

F-84 Notes to the Financial Statements (cont’d) 31 December 2018

31. CAPITAL COMMITMENTS

Estimated amounts committed at end of reporting year for future capital expenditure but not recognised in the financial statements are as follows: Group 2018 2017 $’000 $’000

Commitments for purchase of plant and equipment and assets enhancements in retail malls 3,058 5,934

32. OPERATING LEASE INCOME COMMITMENTS – AS LESSOR

At the end of reporting year the total future minimum lease receivables committed under non-cancellable operating leases are as follows: Group 2018 2017 $’000 $’000

Not later than one year 103,015 109,830 Later than one year and not later than five years 222,539 225,769 More than five years 72,387 95,573

Rental revenue for the year (Note 4) 155,215 164,203

The Trust has no operating lease payment commitments at the end of the reporting year.

The Group has commercial property leases for retail malls and spaces. The lease rental income terms are negotiated for an average term of five to ten years for anchor tenants and an average of three to five years for speciality tenants. These leases are cancellable with conditions and rentals may be subject to an escalation clause.

Upon the completion of the acquisition of Lippo Mall Kemang, the Group entered into 3 master leases pursuant to which certain retail spaces of Lippo Mall Kemang were leased to the Sponsor Lessees for guaranteed rental receivable, in accordance with the terms and conditions of the master leases. The master leases were valid for a period of 3 years from 17 December 2014 to 16 December 2017 with an option for the Sponsor lessees to renew for a further term of 2 years from 17 December 2017 to 16 December 2019. The Group has renewed the master leases based on substantially the same terms and conditions to 16 December 2019.

Upon completion of the acquisition of Lippo Plaza Batu, the Group entered into 4 master leases, pursuant to which casual leasing, car park, certain specialty retail spaces and the rooftop space of Lippo Plaza Batu were leased to the Vendor lessees for guaranteed rental receivables, in accordance with the terms and conditions of the master leases. The master leases were valid for a period of 3 years from 7 July 2015 to 6 July 2018. The master leases have expired during the year.

Upon completion of the acquisition of Palembang Icon, the Group entered into 5 master leases, pursuant to which casual leasing, car park, a major retail unit space, certain specialty retail spaces and a Sports Centre of Palembang Icon were leased to the Vendor lessees for guaranteed rental receivables, in accordance with the terms and conditions of the master leases. Other than the master lease for Sports Centre, the other master leases were valid for a period of 3 years from 10 July 2015 to 9 July 2018 with no option to renew. These master leases have expired during the year. The master leases for the Sports Centre will run for the remaining period of the BOT agreement which expires on 30 April 2040.

Upon completion of the acquisition of Lippo Mall Kuta, the Group entered into 3 master leases, pursuant to which casual leasing, car park and certain specialty retail spaces were leased to the Vendor lessees for guaranteed rental receivables, in accordance with the terms and conditions of the master lease. The master lease are valid for a period of 5 years from 29 December 2016 to 28 December 2021.

LIPPO MALLS INDONESIA RETAIL TRUST 147 ANNUAL REPORT 2018

F-85 Notes to the Financial Statements (cont’d) 31 December 2018

32. OPERATING LEASE INCOME COMMITMENTS – AS LESSOR (CONT’D)

Upon completion of the acquisition of Lippo Plaza Kendari, the Group entered into 2 master leases, pursuant to which casual leasing and certain anchor and specialty retail spaces were leased to the Vendor lessees for guaranteed rental receivables, in accordance with the terms and conditions of the master leases. The master leases are valid for a period of 5 years from 21 June 2017 to 20 June 2022.

Upon completion of the acquisition of Lippo Plaza Jogja, the Group entered into 3 master leases, pursuant to which casual leasing, car park and certain anchor and specialty retail spaces were leased to the Vendor lessees for guaranteed rental receivables, in accordance with the terms and conditions of the master leases. The master leases are valid for a period of 5 years from 22 December 2017 to 21 December 2022.

33. OTHER MATTERS

Right of First Refusal (“ROFR”)

On 14 August 2007, an agreement was entered into between the Trustee and the Sponsor pursuant to which the Sponsor granted the Trust, for so long as (a) LMIRT Management Ltd remains the Manager of the Trust; and (b) the Sponsor and/or any of its related corporations, alone or in aggregate, remains a controlling shareholder of the Manager; a ROFR over any retail properties located in Indonesia (each such property to be known as a “Relevant Asset”): (i) which the Sponsor or any of its subsidiaries (each a “Sponsor Entity”) proposes to sell or transfer (whether such Relevant Asset is wholly-owned or partly-owned by the Sponsor Entity and excluding any sale of Relevant Asset by a Sponsor Entity to any related corporation of such Sponsor Entity pursuant to a reconstruction, amalgamation, restructuring, merger or any analogous event) to an unrelated third party; or (ii) for which a proposed offer for sale or transfer of such Relevant Asset has been made to a Sponsor Entity.

34. EvENT AFTER THE END OF THE REPORTING YEAR

On 12 March 2019, the Trust has announced the entry into a conditional sales and purchase agreement through its wholly-owned Indonesia-incorporated subsidiary, PT Puri Bintang Terang with PT Mandiri Cipta Gemilang to acquire strata title unit of Lippo Mall Puri. The total consideration for the sale and purchase of the Property is Rupiah 3,700 billion.

35. CHANGES AND ADOPTION OF FINANCIAL REPORTING STANDARDS

For the current reporting year new or revised Financial Reporting Standards in Singapore and the related Interpretations to FRS (“INT FRS”) were issued by the Singapore Accounting Standards Council. Those applicable to the reporting entity are listed below. These applicable new or revised standards did not require any modification of the measurement methods or the presentation in the financial statements.

FRS No. Title

FRS 7 Amendments to FRS 7: Disclosure Initiative FRS 12 Amendments to FRS 12: Recognition Of Deferred Tax Assets For Unrealised Losses FRS 109 Financial Instruments FRS 115 Revenue from Contracts with Customers. Amendments to FRS 115: Clarifications to FRS 115 Revenue from Contracts with Customers

36. NEw OR AMENDED STANDARDS IN ISSUE BUT NOT YET EFFECTIvE

For the future reporting years certain new or revised financial reporting standards were issued and these will only be effective for future reporting years. Those applicable to the reporting entity for future reporting years are listed below. The transfer to the applicable new or revised standards from the effective dates is not expected to result in any significant modification of the measurement methods or the presentation in the financial statements for the following year from the known or reasonably estimable information relevant to assessing the possible impact that application of the new or revised standards may have on the entity’s financial statements in the period of initial application. 148

F-86 Notes to the Financial Statements (cont’d) 31 December 2018

36. NEw OR AMENDED STANDARDS IN ISSUE BUT NOT YET EFFECTIvE (CONT’D)

Effective date for periods beginning FRS No. Title on or after

FRS 116 Leases and Leases - Illustrative Examples & Amendments to Guidance on 1 January 2019 Other Standards

37. LISTING OF INvESTMENTS IN SUBSIDIARIES

All the subsidiaries are wholly owned. The subsidiaries held by the Trust and the Group are listed below:

Name of Subsidiaries, Country of Incorporation, Place of Operations and Principal Activities Cost 2018 2017 $’000 $’000

Singapore Gajah Mada Investments Pte Ltd 80,124 80,540 Investment holding

Mal Lippo Investments Pte Ltd 51,640 54,316 Investment holding

Cibubur Holdings Pte Ltd 50,079 50,314 Investment holding

Tangent Investments Pte Ltd 76,238 76,818 Investment holding

Magnus Investments Pte Ltd 97,476 97,476 Investment holding

Elok Holdings Pte Ltd 51,433 53,889 Investment holding

PS International Holdings Pte Ltd 126,185 126,185 Investment holding

Great Properties Pte Ltd 59,360 59,360 Investment holding

Grace Capital Pte Ltd 34,278 34,278 Investment holding

Realty Overseas Pte Ltd 26,500 26,500 Investment holding

Java Properties Pte Ltd 17,952 18,428 Investment holding

Serpong Properties Pte Ltd 14,688 15,879 Investment holding

LIPPO MALLS INDONESIA RETAIL TRUST 149 ANNUAL REPORT 2018

F-87 Notes to the Financial Statements (cont’d) 31 December 2018

37. LISTING OF INvESTMENTS IN SUBSIDIARIES (CONT’D)

Name of Subsidiaries, Country of Incorporation, Place of Operations and Principal Activities Cost 2018 2017 $’000 $’000

Singapore Metropolis Properties Pte Ltd 26,217 26,261 Investment holding

Matos Properties Pte Ltd 19,877 19,938 Investment holding

Detos Properties Pte Ltd 20,593 20,817 Investment holding

Palladium Properties Pte Ltd 43,618 44,952 Investment holding

Madiun Properties Pte Ltd 23,019 24,226 Investment holding

GMP International Holdings Pte Ltd 765 765 Investment holding

MLC Holdings Pte Ltd 765 765 Investment holding

CJ Retail Investments Pte Ltd 89 89 Investment holding

Maxia Investments Pte Ltd 535 535 Investment holding

Fenton Investments Pte Ltd 1,256 1,256 Investment holding

EP International Investments Pte Ltd 60 60 Investment holding

Plaza Semanggi Investments Pte Ltd 161 161 Investment holding

PV International Holdings Pte Ltd 169,306 169,306 Investment holding

Pluit Village Investments Pte Ltd 29,189 29,189 Investment holding

PMF Holdings Pte Ltd 48,773 57,083 Investment holding

150

F-88 Notes to the Financial Statements (cont’d) 31 December 2018

37. LISTING OF INvESTMENTS IN SUBSIDIARIES (CONT’D)

Name of Subsidiaries, Country of Incorporation, Place of Operations and Principal Activities Cost 2018 2017 $’000 $’000

Singapore Plaza Medan Investments Pte Ltd 1* 1* Investment holding

PSX Holdings Pte Ltd 9,218 9,938 Investment holding

Palembang Square Holdings Pte Ltd 50,407 51,216 Investment holding

Taminis Holdings Pte Ltd 19,372 19,565 Investment holding

Kramati Holdings Pte Ltd 36,330 38,432 Investment holding

Binjaimall Holdings Pte Ltd 23,408 23,430 Investment holding

Pejaten Holdings Pte Ltd 111,996 117,066 Investment holding

Super Binjai Investment Pte Ltd 1* 1* Investment holding

Pejatenmall Investment Pte Ltd 2,151 2,151 Investment holding

Kramat Jati Investment Pte Ltd 1* 1* Investment holding

Tamini Square Investment Pte Ltd 1* 1* Investment holding

Palem Square Investment Pte Ltd 1* 1* Investment holding

PSEXT Investment Pte Ltd 1* 1* Investment holding

LMIRT Capital Pte Ltd 1* 1* Provision of treasury services

KMT1 Holdings Pte Ltd 312,449 332,043 Investment holding

LIPPO MALLS INDONESIA RETAIL TRUST 151 ANNUAL REPORT 2018

F-89 Notes to the Financial Statements (cont’d) 31 December 2018

37. LISTING OF INvESTMENTS IN SUBSIDIARIES (CONT’D)

Name of Subsidiaries, Country of Incorporation, Place of Operations and Principal Activities Cost 2018 2017 $’000 $’000

Singapore KMT2 Investment Pte Ltd 16,104 16,104 Investment holding

Picon1 Holdings Pte Ltd 80,550 86,873 Investment holding

Picon2 Investments Pte Ltd 16,475 16,375 Investment holding

Kuta1 Holdings Pte Ltd 84,634 86,129 Investment holding

Kuta2 Investments Pte Ltd 4,320 4,320 Investment holding

Icon2 Investments Pte Ltd 53,857 57,000 Investment holding

Indonesia PT Graha Baru Raya 805 805 Owner of Gajah Mada Plaza

PT Graha Nusa Raya 805 805 Owner of Mal Lippo Cikarang

PT Cibubur Utama 1,772 1,772 Owner of Cibubur Junction

PT Megah Semesta Abadi 10,692 10,692 Owner of Bandung Indah Plaza

PT Suryana Istana Pasundan 25,112 25,112 Owner of Istana Plaza

PT Indah Pesona Bogor 1,208 1,208 Owner of Lippo Plaza Ekalokasari Bogor

PT Primatama Nusa Indah 3,222 3,222 Owner of The Plaza Semanggi

PT Manunggal Wiratama 10,476 10,476 Owner of Sun Plaza

PT Duta Wisata Loka 30,031 30,031 Owner of Pluit Village

152

F-90 Notes to the Financial Statements (cont’d) 31 December 2018

37. LISTING OF INvESTMENTS IN SUBSIDIARIES (CONT’D)

Name of Subsidiaries, Country of Incorporation, Place of Operations and Principal Activities Cost 2018 2017 $’000 $’000

Indonesia PT Anugrah Prima 14,630 14,630 Owner of Plaza Medan Fair and Plaza Medan Fair Extension

PT Amanda Cipta Utama 6,270 6,270 Owner of Binjai Supermall

PT Panca Permata Pejaten 24,532 24,532 Owner of Pejaten Village and Kediri Town Square

PT Benteng Teguh Perkasa 10,263 10,263 Owner of Lippo Plaza Kramat Jati

PT Cahaya Megah Nusantara 2,566 2,566 Owner of Tamini Square

PT Jaya Integritas 2,566 2,566 Owner of Palembang Square

PT Palembang Paragon Mall 4,362 4,362 Owner of Palembang Square Extension

PT Cahaya Bimasakti Nusantara 2,566 2,566 Owner of Palembang Square Extension

PT Dinamika Serpong 805 805 Owner of Mall WTC Matahari Units

PT Gema Metropolis Modern 805 805 Owner of Metropolis Town Square Units

PT Matos Surya Perkasa 805 805 Owner of Malang Town Square Units

PT Megah Detos Utama 805 805 Owner of Depok Town Square Units

PT Palladium Megah Lestari 5,364 5,364 Owner of Grand Palladium Units and Lippo Plaza Batu

PT Madiun Ritelindo 805 805 Owner of Plaza Madiun Units

PT Java Mega Jaya 805 805 Owner of Java Supermall Units

LIPPO MALLS INDONESIA RETAIL TRUST 153 ANNUAL REPORT 2018

F-91 Notes to the Financial Statements (cont’d) 31 December 2018

37. LISTING OF INvESTMENTS IN SUBSIDIARIES (CONT’D)

Name of Subsidiaries, Country of Incorporation, Place of Operations and Principal Activities Cost 2018 2017 $’000 $’000

Indonesia PT Kemang Mall Terpadu 64,417 64,417 Owner of Lippo Mall Kemang

PT Griya Inti Sejatera Insani 5,223 5,223 Owner of Palembang Icon

PT Rekreasi Pantai Terpadu 17,280 17,280 Owner of Lippo Mall Kuta

PT Mitra Anda Sukses Bersama 1,115 1,115 Owner of Lippo Plaza Kendari

Joint operations held by subsidiary, Icon2 Investments Pte Ltd PT Yogya Central Terpadu 14,250 14,250 Owner of Lippo Plaza Jogja and Siloam Hospital Yogyakarta

PT Puri Bintang Terang 1* N.A. Dormant during the year

* Amount is less than $1,000.

The subsidiaries incorporated in Indonesia are audited by RSM Amir Abadi Jusuf, Aryanto, Mawar & Rekan (RSM Indonesia), a member firm of RSM International of which RSM Chio Lim LLP in Singapore is a member.

The subsidiaries incorporated in Singapore are audited by RSM Chio Lim LLP in Singapore.

The investments include investment in redeemable preference shares that are redeemable at the option of the subsidiaries.

154

F-92 82

Independent Auditor’s Report To the Unitholders of LIPPO MALLS INDONESIA RETAIL TRUST

Report on the audit of the financial statements

Opinion

We have audited the accompanying financial statements of Lippo Malls Indonesia Retail Trust (the “Trust”) and its subsidiaries (the “Group”), which comprise the statements of financial position of the Group and of the Trust and the statement of portfolio of the Group as at 31 December 2017, the statements of total return, statements of distribution, statements of changes in Unitholders’ funds of the Group and of the Trust, and the statement of cash flows of the Group for the reporting year then ended, and notes to the financial statements, including significant accounting policies.

In our opinion, the accompanying financial statements of the Group and of the Trust are properly drawn up in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” (“RAP 7”) issued by the Institute of Singapore Chartered Accountants so as to present fairly, in all material respects, the financial positions of the Group and of the Trust and portfolio holdings of the Group as at 31 December 2017 and the financial performance and changes in Unitholders’ funds for the Group and Trust, and cash flows of the Group for the reporting year then ended.

Basis for opinion

We conducted our audit in accordance with Singapore Standards on Auditing (SSAs). Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Trust in accordance with the Accounting and Corporate Regulatory Authority (ACRA) Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (ACRA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current reporting year. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Valuation of investment properties

Please refer to Note 2A on accounting policies, 2C on critical judgements, assumptions and estimation uncertainties, Note 14 on investment properties and the annual report on the section on the audit committee’s views and responses to the reported key audit matter.

The Group owns a portfolio of investment properties comprising retail malls and retail spaces located within other malls in Indonesia. The investment properties are stated at fair value of $1,908,141,000 as at 31 December 2017 and there is a fair value loss of $30,399,000 accounted in the statement of total return. The valuation of the portfolio is a significant judgement area and the fair values are impacted by a number of assumptions and factors including contracted and future potential rental income, quality and condition of the properties, tenant covenants, and yields. All the valuations are carried out by third party independent professional valuers in accordance with the professional standards for valuation, FRS 40 and FRS 113. Sensitivity of the valuations to key assumptions is disclosed in Note 14 to the financial statements.

F-93 LIPPO MALLS annual report 2017 83 INDONESIA RETAIL TRUST

Independent Auditor’s Report (cont’d) To the Unitholders of LIPPO MALLS INDONESIA RETAIL TRUST

Valuation of investment properties (cont’d)

We assessed the processes used by management for the selection of the independent external valuers, the determination of the scope of work of these valuers, and the review of the valuations reported by these valuers. The external valuers used by management have considerable experience in the markets in which the properties are located. With assistance from our own internal valuation specialists, we assessed the independence, competence and experience of the independent external valuers used by management in assessing their objectivity, professional qualifications and resources; assessed the results of the external valuers’ reports by checking whether the valuations were in accordance with international valuation professional standards and that the methodology adopted was appropriate by reference to acceptable valuation practice, FRS 40 and FRS 113. We tested the integrity of inputs of the projected cash flows used in the valuations to supporting leases and other documents.

We challenged the key assumptions upon which the valuations were based including those relating to forecast rents, yields, capital expenditure by making a comparison to our own understanding of the market and obtained an understanding of the reasons for significant or unusual movements in the property values by forming our own view on the general market conditions with reference to the key assumptions noted above. We compared the information provided by management to the independent external valuers, such as lease data, rental income and property costs, to supporting documents including lease agreements and purchase agreements. We also considered the adequacy of the disclosures about the degree of estimation made when valuing these properties as disclosed in Note 14.

The testing performed in relation to the final fair values of the investment properties proved to be satisfactory.

Other information

The Manager of the Trust (LMIRT Management Ltd) is responsible for the other information. The other information comprises the information included in the report of the trustee, statement by the manager and the annual report, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Manager for the financial statements

The Manager is responsible for the preparation and fair presentation of these financial statements in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” (“RAP 7”) issued by the Institute of Singapore Chartered Accountants, and for such internal control as the Manager determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Manager is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The Manager’s responsibilities include overseeing the Group’s financial reporting process.

F-94 84

Independent Auditor’s Report (cont’d) To the Unitholders of LIPPO MALLS INDONESIA RETAIL TRUST

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

a) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

b) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

d) Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

e) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

f) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

F-95 LIPPO MALLS annual report 2017 85 INDONESIA RETAIL TRUST

Independent Auditor’s Report (cont’d) To the Unitholders of LIPPO MALLS INDONESIA RETAIL TRUST

Auditor’s responsibilities for the audit of the financial statements (cont’d)

We communicate with the Manager regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Manager with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Manager, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Chow Khen Seng.

RSM Chio Lim LLP Public Accountants and Chartered Accountants Singapore

14 March 2018 Engagement partner – effective from year ended 31 December 2013

F-96 86

STATEMENTS OF Total Return Year Ended 31 December 2017

Group Trust Notes 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Gross revenue 4 197,376 188,066 116,131 104,239 Property operating expenses 5 (13,125) (16,206) – – Net property income 184,251 171,860 116,131 104,239 Interest income 1,148 1,678 6 10 Other gains 6 312 – – – Manager’s management fees 7 (12,518) (11,940) (12,518) (11,940) Trustee’s fees (423) (332) (423) (332) Finance costs 8 (31,589) (34,963) (32,736) (38,550) Other expenses 9 (3,538) (1,923) (3,450) (1,808) Net income before the undernoted 137,643 124,380 67,010 51,619 Decrease in fair values of investment properties 14 (30,399) (48,045) – – Impairment loss on investments in subsidiaries 16 – – (122,076) (8,294) Realised gains on derivative financial instruments 1,452 4,010 1,452 4,010 Decrease in fair values of derivative financial instruments 28 (568) (3,120) (568) (3,120) Realised foreign exchange adjustment losses (5,521) (6,853) (5,161) (5,295) Unrealised foreign exchange adjustment (losses)/ gains (1,509) (5,116) (11,180) 2,647 Amortisation of intangible assets 15 (12,996) (11,889) – – Total return/(loss) for the year before income tax 88,102 53,367 (70,523) 41,567 Income tax (expense)/income 10 (25,392) (24,532) 283 309 Total return/(loss) for the year after income tax 62,710 28,835 (70,240) 41,876 Other comprehensive return/(loss): Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations, net of tax (140,788) 82,531 – – Total comprehensive (loss)/return (78,078) 111,366 (70,240) 41,876

Total return/(loss) attributable to: Unitholders of Trust 48,657 26,258 (84,293) 39,299 Perpetual securities holders 14,053 2,577 14,053 2,577 62,710 28,835 (70,240) 41,876

Total comprehensive (loss)/return attributable to: Unitholders of Trust (92,131) 108,789 (84,293) 39,299 Perpetual securities holders 14,053 2,577 14,053 2,577 (78,078) 111,366 (70,240) 41,876

Cents Cents Earnings per unit Basic and diluted earnings per unit 11 1.73 0.94

The accompanying notes form an integral part of these financial statements.

F-97 LIPPO MALLS annual report 2017 87 INDONESIA RETAIL TRUST

STATEMENTS OF Distribution Year Ended 31 December 2017

Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Total return/(loss) for the year after income tax 62,710 28,835 (70,240) 41,876 Add: net adjustments (Note A below) 34,250 66,633 167,200 53,592 Income available for distribution to Unitholders 96,960 95,468 96,960 95,468

Distributions to Unitholders: Total interim distribution paid in the year ended 31 December (Note 12) 74,674 71,133 74,674 71,133 Total return available for distribution to Unitholders for the quarter ended 31 December paid after year-end (Note 12) 22,286 24,335 22,286 24,335 96,960 95,468 96,960 95,468

Unitholders’ distribution: – As distribution from operations 63,637 61,549 63,637 61,549 – As distribution of Unitholders’ capital contribution 33,323 33,919 33,323 33,919 96,960 95,468 96,960 95,468

Note A Net adjustments: Decrease in fair values of investment properties, net of deferred tax 22,102 40,483 – – Manager’s management fees settled in units 8,671 6,874 8,671 6,874 Depreciation of plant and equipment 2,457 1,728 – – Decrease in fair values of derivative financial instruments 568 3,120 568 3,120 Unrealised foreign exchange adjustment losses/(gains) 1,509 5,116 11,180 (2,647) Amortisation of intangible assets 12,996 11,889 – – Amount reserved for distribution to perpetual securities holders (14,053) (2,577) (14,053) (2,577) Capital repayment of shareholders’ loans – – 33,323 33,919 Exchange differences arising from recognising dividend income – – 3,230 (589) Impairment loss on investments in subsidiaries – – 122,076 8,294 Allocation of realised exchange differences to capital repayment of shareholders’ loans – – 4,176 5,685 Other adjustments – – (1,971) 1,513 34,250 66,633 167,200 53,592

The accompanying notes form an integral part of these financial statements.

F-98 88

STATEMENTS OF Financial Position As at 31 December 2017

Group Trust 2017 2016 2017 2016 Notes $’000 $’000 $’000 $’000

Non-current assets Plant and equipment 13 9,931 7,508 – – Investment properties 14 1,908,141 1,922,642 – – Derivative financial instruments, non-current 28 394 – 394 – Intangible assets 15 11,906 19,206 – – Investments in subsidiaries 16 – – 1,712,880 1,709,440 Total non-current assets 1,930,372 1,949,356 1,713,274 1,709,440

Current assets Trade and other receivables 18 38,989 17,223 231,924 219,126 Other assets 19 29,613 20,900 198 110 Cash and cash equivalents 20 64,900 77,754 9,560 7,053 Total current assets 133,502 115,877 241,682 226,289 Total assets 2,063,874 2,065,233 1,954,956 1,935,729

Non-current liabilities Deferred tax liabilities 10 23,364 31,662 – – Other financial liabilities, non-current 24 421,090 517,869 345,732 343,380 Other liabilities, non-current 25 94,688 87,039 – – Derivative financial instruments, non-current 28 1,954 1,811 1,954 1,811 Total non-current liabilities 541,096 638,381 347,686 345,191

Current liabilities Income tax payable 5,715 6,154 – – Trade and other payables, current 26 45,337 31,180 287,262 383,774 Other financial liabilities, current 24 268,469 124,291 169,209 – Other liabilities, current 27 34,415 32,582 – – Derivative financial instruments, current 28 909 90 909 90 Total current liabilities 354,845 194,297 457,380 383,864 Total liabilities 895,941 832,678 805,066 729,055

Net assets 1,167,933 1,232,555 1,149,890 1,206,674

Represented by: Issued equity 1,401,380 1,393,642 1,401,380 1,393,642 Retained earnings/(accumulated losses) 119,675 170,027 (511,137) (327,835) Foreign currency translation reserve (adverse balance) (612,769) (471,981) – – Net assets attributable to Unitholders 21 908,286 1,091,688 890,243 1,065,807

Perpetual securities 23 259,647 140,867 259,647 140,867 Net assets attributable to perpetual securities holders 259,647 140,867 259,647 140,867 1,167,933 1,232,555 1,149,890 1,206,674

Net assets attributable to Unitholders per unit (in cents) 21 32.16 38.95 31.52 38.02

The accompanying notes form an integral part of these financial statements.

F-99 LIPPO MALLS annual report 2017 89 INDONESIA RETAIL TRUST

STATEMENTS OF Changes in Unitholders’ Funds Year Ended 31 December 2017

Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Total Unitholders’ funds at beginning of the year 1,091,688 1,075,115 1,065,807 1,118,724

Operations Total return/(loss) for the year 62,710 28,835 (70,240) 41,876 Less: Amount reserved for distribution to perpetual securities holders (14,053) (2,577) (14,053) (2,577) Net increase/(decrease) in net assets resulting from operations attributed to Unitholders 48,657 26,258 (84,293) 39,299

Unitholders’ contributions Manager’s management fees settled in units 6,874 1,608 6,874 1,608 Manager’s acquisition fees settled in units 864 – 864 – Change in net assets resulting from creation of units 7,738 1,608 7,738 1,608

Distributions (Note 12) (99,009) (93,824) (99,009) (93,824) Total increase in net assets before movements in foreign currency translation reserve and perpetual securities 1,049,074 1,009,157 890,243 1,065,807

Foreign currency translation reserve Net movement in other comprehensive (loss)/ income (140,788) 82,531 – –

Total Unitholders’ funds at 31 December 908,286 1,091,688 890,243 1,065,807

Perpetual securities Balance at beginning of the year 140,867 – 140,867 – Issue of perpetual securities 120,000 140,000 120,000 140,000 Issue expense (1,502) (1,710) (1,502) (1,710) Amount reserved for distribution to perpetual securities holders 14,053 2,577 14,053 2,577 Distributions to perpetual securities holders (13,771) – (13,771) – Balance at 31 December 259,647 140,867 259,647 140,867

Total 1,167,933 1,232,555 1,149,890 1,206,674

The accompanying notes form an integral part of these financial statements.

F-100 90

STATEMENT OF Cash Flows Year Ended 31 December 2017

Group 2017 2016 $’000 $’000

Cash flows from operating activities Total return before tax 88,102 53,367 Adjustments for: Interest income (1,148) (1,678) Interest expense 27,041 29,106 Amortisation of borrowing costs 4,548 5,857 Depreciation of plant and equipment 2,457 1,728 Amortisation of intangible assets 12,996 11,889 Decrease in fair values of investment properties 30,399 48,045 Fair value loss on derivative financial instruments 568 3,120 Unrealised foreign exchange adjustment losses 1,509 5,116 Manager’s management fees settled in units 8,671 6,874 Operating cash flows before changes in working capital 175,143 163,424 Trade and other receivables (23,078) 14,920 Other assets (10,368) 29,211 Trade and other payables 28,959 (40,846) Other liabilities, current 4,434 (1,996) Net cash flows from operations before tax 175,090 164,713 Income tax paid (34,128) (32,810) Net cash flows from operating activities 140,962 131,903

Cash flows from investing activities Acquisition of investment properties (1) (132,486) (87,485) Capital expenditure on investment properties (45,638) (11,218) Purchase of plant and equipment (5,630) (3,629) Interest received 1,148 1,678 Net cash flows used in investing activities (182,606) (100,654)

Cash flows from financing activities Repayment of bank borrowings (55,000) (200,000) Proceeds from bank borrowings 224,290 305,710 Net proceeds from issuance of perpetual securities 118,498 138,290 Repayment of notes issued under EMTN (125,000) (150,000) Distributions to Unitholders (99,009) (93,824) Distributions to perpetual securities holders (13,771) – Other financial liabilities, current (4,566) (5,774) Other financial liabilities, non-current – (2,645) Other liabilities, non-current 14,597 399 Interest paid (27,041) (29,106) Cash restricted in use for bank facilities (1,630) (1,983) Net cash flows from/(used in) financing activities 31,368 (38,933)

The accompanying notes form an integral part of these financial statements.

F-101 LIPPO MALLS annual report 2017 91 INDONESIA RETAIL TRUST

STATEMENT OF Cash Flows (cont’d) Year Ended 31 December 2017

Group 2017 2016 $’000 $’000

Net decrease in cash and cash equivalents (10,276) (7,684) Effect of exchange rate changes on cash and cash equivalents (4,208) 2,865 Cash and cash equivalents, statement of cash flows, beginning balance 74,271 79,090 Cash and cash equivalents, statement of cash flows, ending balance (Note 20) 59,787 74,271

(1) Acquisitions of investment properties in 2017 are in relation to the acquisitions of Lippo Plaza Kendari, Lippo Plaza Jogja and Kediri Town Square recorded in Notes 14 and 15 respectively. The total settlement amount is $133,400,000 which consists of an amount settled in cash of $132,486,000 and amounts payable in units of $914,000.

Acquisition of investment property in 2016 is in relation to the acquisition of Lippo Mall Kuta recorded in Notes 14 and 15 respectively. The total settlement amount is $88,349,000, which consists of an amount settled in cash of $87,485,000 and an amount settled in units of $864,000.

The accompanying notes form an integral part of these financial statements.

F-102 92

STATEMENT OF Portfolio As at 31 December 2017

By Geographical Area

Group Percentage Percentage of Total of Total Tenure of Fair Value Net Assets Fair Value Net Assets Description Gross Floor Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Area in Valuation December December December December Acquisition Date Square Meter Date 2017 2017 2016 2016 $’000 % $’000 %

Indonesia Retail Malls (1) Gajah Mada Plaza 66,160 Strata Title 78,768 6.7 83,670 6.7 Address: Jalan Gajah Mada constructed 19-26 Sub-District of Petojo on Hak Guna Utara, District of Gambir, Bangunan (“HGB”) Regency of Central Jakarta, Title common Jakarta-Indonesia land. Acquisition date: Expires on 19 November 2007 25 January 2020. Revalued at 31 December 2017.

(2) Cibubur Junction 66,071 Build, Operate and 42,480 3.6 48,339 3.9 Address: Jalan Jambore Transfer (“BOT”) No.1 Cibubur, Sub-District Scheme. Expires of Ciracas, Regency of East on 28 July 2025. Jakarta, Jakarta-Indonesia Revalued at Acquisition date: 31 December 19 November 2007 2017.

(3) The Plaza Semanggi 155,122 BOT Scheme. 113,260 9.7 125,753 10.2 Address: Jalan Jenderal Expires on Sudirman Kav.50, Sub- 8 July 2054. District of Karet Semanggi, Revalued at District of Setiabudi, 31 December Regency of South Jakarta, 2017. Jakarta-Indonesia Acquisition date: 19 November 2007

The accompanying notes form an integral part of these financial statements.

F-103 LIPPO MALLS annual report 2017 93 INDONESIA RETAIL TRUST

STATEMENT OF Portfolio (cont’d) As at 31 December 2017

By Geographical Area

Group Percentage Percentage of Total of Total Tenure of Fair Value Net Assets Fair Value Net Assets Description Gross Floor Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Area in Valuation December December December December Acquisition Date Square Meter Date 2017 2017 2016 2016 $’000 % $’000 %

Indonesia Retail Malls (Cont’d) (4) Mal Lippo Cikarang 39,293 HGB Title. 63,479 5.4 65,256 5.3 Address: Jalan MH Thamrin, Expires on Lippo Cikarang, Sub-District 5 May 2023. of Cibatu, District of Lemah Revalued at Abang, Regency of Bekasi, 31 December West Java-Indonesia 2017. Acquisition date: 19 November 2007

(5) Lippo Plaza Ekalokasari Bogor 58,859 BOT Scheme. 39,115 3.3 43,958 3.6 Address: Jalan Siliwangi No. Expires on 123, Sub-District of Sukasari, 27 June 2032. District of Kota Bogor Timur, Revalued at Administrative City of Bogor, 31 December West Java-Indonesia 2017. Acquisition date: 19 November 2007

(6) Bandung Indah Plaza 75,868 BOT Scheme. 74,555 6.4 85,471 6.9 Address: Jalan Merdeka No. Expires on 56, Sub-District of 31 December Citarum, District of Bandung 2030. Wetan, Regency of Bandung, Revalued at West Java-Indonesia 31 December Acquisition date: 2017. 19 November 2007

The accompanying notes form an integral part of these financial statements.

F-104 94

STATEMENT OF Portfolio (cont’d) As at 31 December 2017

By Geographical Area

Group Percentage Percentage of Total of Total Tenure of Fair Value Net Assets Fair Value Net Assets Description Gross Floor Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Area in Valuation December December December December Acquisition Date Square Meter Date 2017 2017 2016 2016 $’000 % $’000 %

Indonesia Retail Malls (Cont’d) (7) Istana Plaza 46,809 BOT Scheme. 65,480 5.6 76,392 6.2 Address: Jalan Pasir Kaliki Expires on No. 121 – 123, Sub-District 17 January 2034. of Pamayonan, District Revalued at of Cicendo, Regency of 31 December Bandung, West Java- 2017. Indonesia Acquisition date: 19 November 2007

(8) Sun Plaza 107,373 HGB Title. 193,937 16.6 195,650 15.9 Address: Jalan Haji Zainul Expires on Arifin No. 7, Madras Hulu, 24 November Medan Polonia, Medan, 2032. North Sumatra-Indonesia Revalued at Acquisition date: 31 December 31 March 2008 2017.

(9) Pluit Village 134,576 BOT Scheme. 93,958 8.0 110,016 8.9 Address: Jalan Pluit Indah Expires on Raya, Sub-District of Pluit, 9 June 2027. District of Penjaringan, City Revalued at of North Jakarta, Province 31 December of DKI Jakarta, Indonesia 2017. Acquisition date: 6 December 2011

The accompanying notes form an integral part of these financial statements.

F-105 LIPPO MALLS annual report 2017 95 INDONESIA RETAIL TRUST

STATEMENT OF Portfolio (cont’d) As at 31 December 2017

By Geographical Area

Group Percentage Percentage of Total of Total Tenure of Fair Value Net Assets Fair Value Net Assets Description Gross Floor Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Area in Valuation December December December December Acquisition Date Square Meter Date 2017 2017 2016 2016 $’000 % $’000 %

Indonesia Retail Malls (Cont’d) (10) Plaza Medan Fair 138,767 BOT Scheme. 108,740 9.3 116,059 9.4 Address: Jalan Jendral Expires on Gatot Subroto, Sub-District 23 July 2027. of Sekip, District of Medan Revalued at Petisah, City of Medan, 31 December Province of North Sumatera, 2017. Indonesia Acquisition date: 6 December 2011

(11) Palembang Square 22,527 BOT Scheme. 27,237 2.3 27,641 2.2 Extension Expires on Address: Jalan Angkatan 25 January 2041. 45/POM IX, Lorok Pakjo Revalued at Sub District, Ilir Barat 1 31 December District, Palembang City, 2017. South Sumatera Province, Indonesia Acquisition date: 15 October 2012

(12) Lippo Plaza Kramat Jati 67,285 HGB Title. 58,688 5.0 61,473 5.0 Address: Jalan Raya Bogor Expires on 24 Km 19, Kramat Jati Sub October 2024. District, Kramat Jati District, Revalued at East Jakarta Region, DKI 31 December Jakarta Province, Indonesia 2017. Acquisition date: 15 October 2012

The accompanying notes form an integral part of these financial statements.

F-106 96

STATEMENT OF Portfolio (cont’d) As at 31 December 2017

By Geographical Area

Group Percentage Percentage of Total of Total Tenure of Fair Value Net Assets Fair Value Net Assets Description Gross Floor Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Area in Valuation December December December December Acquisition Date Square Meter Date 2017 2017 2016 2016 $’000 % $’000 %

Indonesia Retail Malls (Cont’d) (13) Tamini Square 18,963 Strata Title. 26,593 2.3 26,032 2.1 Address: Jalan Raya Taman Mini Constructed on Pintu 1 No.15, Pinang Ranti Sub HGB Title common District, Makasar Distrik, East land. Expires on Jakarta Region, 26 September DKI Jakarta Province, Indonesia 2035. Acquisition date: Revalued at 14 November 2012 31 December 2017. (14) Palembang Square 46,546 Strata Title. 67,979 5.8 69,589 5.7 Address: Jalan Angkatan Constructed on 45/POM IX, Lorok Pakjo Sub HGB Title common District, Ilir Barat 1 District, land. Expires on Palembang City, South 1 September 2039. Sumatera Province, Indonesia Revalued at Acquisition date: 31 December 14 November 2012 2017. (15) Pejaten Village 89,157 HGB Title. 105,827 9.1 104,319 8.5 Address: Jalan Warung Expires on Jati Barat No.39, Jati Padang 3 November 2027. Sub District, Pasar Minggu Revalued at District, South Jakarta Region, 31 December DKI Jakarta Province, Indonesia 2017. Acquisition date: 20 December 2012 (16) Binjai Supermall 28,760 HGB Title. 27,812 2.4 28,597 2.3 Address: Jalan Soekarno Hatta Expires on No.14, Timbang Langkat Sub 2 September 2036. District, East Binjai District, Revalued at Binjai City, North Sumatera 31 December Province, Indonesia 2017. Acquisition date: 28 December 2012

The accompanying notes form an integral part of these financial statements.

F-107 LIPPO MALLS annual report 2017 97 INDONESIA RETAIL TRUST

STATEMENT OF Portfolio (cont’d) As at 31 December 2017

By Geographical Area

Group Percentage Percentage of Total of Total Tenure of Fair Value Net Assets Fair Value Net Assets Description Gross Floor Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Area in Valuation December December December December Acquisition Date Square Meter Date 2017 2017 2016 2016 $’000 % $’000 %

Indonesia Retail Malls (Cont’d) (17) Lippo Mall Kemang 150,932 Strata Title 314,792 27.0 335,205 27.2 Address: Jalan Kemang constructed VI, Bangka Sub District, on HGB Title Mampang Prapatan District, common land. South Jakarta, Expires on 28 DKI Jakarta Province, June 2035. Indonesia Revalued at Acquisition date: 31 December 17 December 2014 2017.

(18) Lippo Plaza Batu 34,586 HGB Title. 26,675 2.3 26,787 2.2 Address: Jalan Diponegoro Expires on RT. 07 RW. 05, Sub District 8 June 2031. of Sisir, District of Batu, City Revalued at of Batu, Province of East 31 December Java, Indonesia 2017. Acquisition date: 7 July 2015

(19) Palembang Icon 42,361 HGB Title. 74,755 6.4 81,678 6.6 Address: Jalan POM IX, BOT Sub District of Lorok Pakjo, scheme. District of llir Barat I, City Expires on 30 April of Palembang, Province of 2040. South Sumatera, Indonesia Revalued at Acquisition date: 31 December 10 July 2015 2017.

(20) Lippo Mall Kuta 36,312 HGB Title. 78,463 6.7 80,925 6.6 Address: Jalan Kartika Plaza, Expires on 22 Sub District of Kuta, District March 2037. of Kuta, Regency of Badung, Revalued at Province of Bali, Indonesia 31 December Acquisition date: 2017. 29 December 2016

The accompanying notes form an integral part of these financial statements.

F-108 98

STATEMENT OF Portfolio (cont’d) As at 31 December 2017

By Geographical Area

Group Percentage Percentage of Total of Total Tenure of Fair Value Net Assets Fair Value Net Assets Description Gross Floor Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Area in Valuation December December December December Acquisition Date Square Meter Date 2017 2017 2016 2016 $’000 % $’000 %

Indonesia Retail Malls (Cont’d) (21) Lippo Plaza Kendari 34,831 BOT Scheme. 29,944 2.6 – – Address: Jalan MT Haryono Expires on No.61-63, Kendari, South 7 July 2041. East Sulawesi 93117, Revalued at Indonesia. 31 December Acquisition date: 2017. 21 June 2017

(22) Lippo Plaza Jogja 66,098 HGB Title. Expires 53,823 4.6 – – Address: Jalan Laksda on Adi Sucipto No.32-34, 27 December Yogyakarta, Indonesia. 2043. Acquisition date: Revalued at 22 December 2017 31 December 2017.

(23) Kediri Town Square 28,688 HGB Title. 35,858 3.1 – – Address: Jalan Hasanudin Expires on No. 2, RT/22 RW/06, 12 August 2024. Balowerti Subdistrict, Kediri, Revalued at East Java, Indonesia. 31 December Acquisition date: 2017. 22 December 2017

The accompanying notes form an integral part of these financial statements.

F-109 LIPPO MALLS annual report 2017 99 INDONESIA RETAIL TRUST

STATEMENT OF Portfolio (cont’d) As at 31 December 2017

By Geographical Area

Group Percentage Percentage of Total of Total Tenure of Fair Value Net Assets Fair Value Net Assets Description Gross Floor Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Area in Valuation December December December December Acquisition Date Square Meter Date 2017 2017 2016 2016 $’000 % $’000 %

Indonesia Retail Spaces (1) Mall WTC Matahari Units 11,184 Strata Title 12,264 1.1 15,642 1.3 Address: Jalan Raya Serpong constructed No.39, Sub-District of Pondok on HGB Title Jagung, District of Serpong, common land. Regency of Tangerang, Expires on 8 April Banten-Indonesia 2038. (1) Acquisition date: Revalued at 19 November 2007 31 December 2017.

(2) Metropolis Town Square 15,248 Strata Title 16,139 1.4 19,971 1.6 Units constructed Address: Jalan Hartono on HGB Title Raya, Sub-District of Cikokol, common land. District of Cipete, Regency of Expires on Tangerang, Banten-Indonesia 27 December Acquisition date: 2029. 19 November 2007 Revalued at 31 December 2017.

(3) Depok Town Square Units 13,045 Strata Title 16,070 1.4 18,182 1.5 Address: Jalan Margonda constructed Raya No. 1, Sub-District on HGB Title of Pondok Cina, District of common land. Depok, Regency of Depok, Expires on West Java-Indonesia 27 February 2035. Acquisition date: Revalued at 19 November 2007 31 December 2017.

The accompanying notes form an integral part of these financial statements.

F-110 100

STATEMENT OF Portfolio (cont’d) As at 31 December 2017

By Geographical Area

Group Percentage Percentage of Total of Total Tenure of Fair Value Net Assets Fair Value Net Assets Description Gross Floor Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Area in Valuation December December December December Acquisition Date Square Meter Date 2017 2017 2016 2016 $’000 % $’000 %

Indonesia Retail Spaces (Cont’d) (4) Java Supermall Units 11,082 Strata Title 14,128 1.2 16,457 1.3 Address: Jalan MT Haryono, constructed No. 992-994, Sub-District on HGB Title of Jomblang, District of common land. Semarang Selatan, Regency Expires on of Semarang, Central Java- 24 September Indonesia 2037. (2) Acquisition date: Revalued at 19 November 2007 31 December 2017.

(5) Malang Town Square 11,065 Strata Title 15,971 1.4 18,492 1.5 Units constructed Address: Jalan Veteran on HGB Title No. 2, Sub-District of common land. Penanggungan, District Expires on of Klojen, Regency of 21 April 2033. Malang, East Java-Indonesia Revalued at Acquisition date: 31 December 19 November 2007 2017.

(6) Plaza Madiun Units 19,029 Strata Title 19,649 1.7 24,310 2.0 Address: Jalan Pahlawan constructed No. 38-40, Sub-District of on HGB Title Pangongangan, District of common land. Manguharjo, Regency of Expires on Madiun, East 9 February 2032. Java-Indonesia Revalued at Acquisition date: 31 December 19 November 2007 2017.

The accompanying notes form an integral part of these financial statements.

F-111 LIPPO MALLS annual report 2017 101 INDONESIA RETAIL TRUST

STATEMENT OF Portfolio (cont’d) As at 31 December 2017

By Geographical Area

Group Percentage Percentage of Total of Total Tenure of Fair Value Net Assets Fair Value Net Assets Description Gross Floor Land/Last as at 31 as at 31 as at 31 as at 31 of Property/Location/ Area in Valuation December December December December Acquisition Date Square Meter Date 2017 2017 2016 2016 $’000 % $’000 %

Indonesia Retail Spaces (Cont’d) (7) Grand Palladium Units 13,417 Strata Title 11,702 1.0 16,778 1.3 Address: Jalan Kapten constructed Maulana Lubis, Sub-District on HGB Title of Petisah Tengah, District of common land. Medan Petisah, Regency of Expires on Medan, North 9 November 2028. Sumatera-Indonesia Revalued at Acquisition date: 31 December 19 November 2007 2017.

Portfolio of Investment Properties at Valuation 1,908,141 163.4 1,922,642 156.0 Other Net Liabilities (740,208) (63.4) (690,087) (56.0) Net assets values 1,167,933 100.00 1,232,555 100.00

Please refer to Note 14 for the description of the various titles held for the retail malls and spaces.

(1) In December 2017, the National Land Authority (Badan Pertanahan Nasional) has extended the Hak Guna Bangunan or HGB title for the underlying land on which the four strata title ownership certificates of Mall WTC Matahari units are registered for a period of 20 years to 8 April 2038 and the validity of the four strata title ownership certificates have accordingly been extended for the same period.

(2) In August 2017, the National Land Authority (Badan Pertanahan Nasional) has extended the Hak Guna Bangunan or HGB title for the underlying land on which the four strata title ownership certificates of Java Supermall units are registered for a period of 20 years to 24 September 2037 and the validity of the four strata title ownership certificates have accordingly been extended for the same period.

The accompanying notes form an integral part of these financial statements.

F-112 102

Notes to the Financial Statements 31 December 2017

1. General

Lippo Malls Indonesia Retail Trust (“LMIR Trust” or the “Trust”) is a Singapore-domiciled unit trust constituted pursuant to the Trust Deed dated 8 August 2007 (“Trust Deed”) (as amended) entered into between LMIRT Management Ltd (the “Manager”) and HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”), governed by the laws of the Republic of Singapore. On 1 November 2017, the Manager entered into a Supplemental Deed of Retirement and Appointment of Trustee with HSBC Institutional Trust Services (Singapore) Limited as retiring Trustee and Perpetual (Asia) Limited as new Trustee. The change of trustee took effect on 3 January 2018.

The Trust is listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”).

The financial statements are presented in Singapore dollars, recorded to the nearest thousands, unless otherwise stated, and they cover LMIR Trust and its subsidiaries (collectively the “Group”).

The board of directors of the Manager approved and authorised these financial statements for issue on ­­­­­­­­­­14 March 2018.

The principal activity of the Group and of the Trust is to invest in a diversified portfolio of income-producing real estate properties in Indonesia. These are primarily used for retail and/or retail-related purposes. The primary objective is to deliver regular and stable distributions to Unitholders and to achieve long-term growth in the net asset value per unit.

The registered office of the Manager is located at 50 Collyer Quay, #06-07 OUE Bayfront, Singapore 049321.

The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the notes to the financial statements. In addition, the notes to the financial statements include the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposures to credit risk, foreign currency risk, interest rate risk and liquidity risk. The current liabilities are more than the current assets. The Group’s forecasts and projections, taking account of reasonably possible changes in performance, show that the Group should be able to operate within its current facilities. The Group has considerable financial resources together with good relationships with its bankers, tenants and suppliers. As a consequence, the Manager believes that the Group is well placed to manage its business risks successfully. Accordingly, the management continues to adopt the going concern basis in preparing the financial statements.

F-113 LIPPO MALLS annual report 2017 103 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

1. General (cont’d)

Accounting convention

The financial statements have been prepared in accordance with the recommendations of the Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” (“RAP 7”) issued by the Institute of Singapore Chartered Accountants and the applicable requirements of the Code on Collective Investment Schemes (“CIS Code”) issued by the Monetary Authority of Singapore (“MAS”) and the provisions of the Trust Deed. RAP 7 requires that the accounting policies should generally comply with the principles relating to recognition and measurement of the Financial Reporting Standards (“FRS”) issued by the Accounting Standards Council. The financial statements are prepared on a going concern basis under the historical cost convention except where a FRS requires an alternative treatment (such as fair values) as disclosed where appropriate in these financial statements. The accounting policies in FRS may not be applied when the effect of applying them is immaterial. The disclosures required by FRS need not be made if the information is immaterial.

Other comprehensive return comprises items of income and expenses (including reclassification adjustments) that are not recognised in the profit or loss, as required or permitted by FRS. Reclassification adjustments are amounts reclassified to profit or loss in the income statement in the current period that were recognised in other comprehensive income in the current or previous periods.

Basis of presentation

The consolidated financial statements include the financial statements made up to the end of the reporting year of the Trust and all of its subsidiaries. The consolidated financial statements are the financial statements of the Group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity and are prepared using uniform accounting policies for like transactions and other events in similar circumstances. All significant intragroup balances and transactions, including income, expenses and cash flows are eliminated on consolidation. Subsidiaries are consolidated from the date the reporting entity obtains control of the investee and cease when the reporting entity loses control of the investee. Control exists when the Group has the power to govern the financial and operating policies so as to gain benefits from its activities.

Changes in the Group’s ownership interest in a subsidiary that do not result in the loss of control are accounted for within Unitholders’ funds as transactions with owners in their capacity as owners. The carrying amounts of the Group’s and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. When the Group loses control of a subsidiary it derecognises the assets and liabilities and related equity components of the former subsidiary. Any gain or loss is recognised in profit or loss. Any investment retained in the former subsidiary is measured at its fair value at the date when control is lost and is subsequently accounted for as available-for-sale financial assets in accordance with FRS 39.

F-114 104

Notes to the Financial Statements (cont’d) 31 December 2017

1. General (cont’d)

Basis of preparation of financial statements

The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Actual results could differ from those estimates. The estimates and assumptions are reviewed on an ongoing basis. Apart from those involving estimations, management has made judgements in the process of applying the entity’s accounting policies. The areas requiring management’s most difficult, subjective or complex judgements, or areas where assumptions and estimates are significant to the financial statements, are disclosed at the end of this footnote, where applicable.

Net assets attributable to Unitholders

RAP 7 requires that the unit trusts classify the units on initial recognition as equity. The net assets attributable to Unitholders comprise the residual interest in the assets of the unit trust after deducting its liabilities. Under RAP 7, distributions are accrued for at the reporting year end date if the Manager has the discretion to declare distributions without the need for Unitholder or trustee approval and a constructive or legal obligation has been created. Distributions to Unitholders have been recognised as liabilities when they are declared.

2. Significant accounting policies and other explanatory information

2A. Significant accounting policies

Revenue recognition

The revenue amount is the fair value of the consideration received or receivable from the gross inflow of economic benefits during the reporting year arising from the course of the activities of the entity and it is shown net of any related sales taxes and discounts. Revenue is recognised as follows:

Rental income from operating leases

Rental revenue is recognised on a time-proportion basis that takes into account the effective yield on the asset on a straight-line basis over the leased term.

Interest income

Interest revenue is recognised using the effective interest method.

Dividend income

Dividend from equity instruments is recognised as income when the entity’s right to receive payment is established.

Revenue from rendering of services

Revenue from rendering of services that are short of duration is recognised when the services are completed.

F-115 LIPPO MALLS annual report 2017 105 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

2. Significant accounting policies and other explanatory information (cont’d)

2A. Significant accounting policies (cont’d)

Income tax

The income taxes are accounted for using the asset and liability method that requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequence of events that have been recognised in the financial statements or tax returns. The measurements of current and deferred tax liabilities and assets are based on provisions of the enacted or substantially enacted tax laws; the effects of future changes in tax laws or rates are not anticipated. Tax expense (tax income) is the aggregate amount included in the determination of profit or loss for the reporting year in respect of current tax and deferred tax. Current and deferred income taxes are recognised as income or as an expense in profit or loss unless the tax relates to items that are recognised in the same or a different period outside profit or loss. For such items recognised outside profit or loss the current tax and deferred tax are recognised (a) in other comprehensive income if the tax is related to an item recognised in other comprehensive income and (b) directly in Unitholders’ funds if the tax is related to an item recognised directly in Unitholders’ funds. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same income tax authority. The carrying amount of deferred tax assets is reviewed at each end of the reporting year and is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realised. A deferred tax amount is recognised for all temporary differences, unless the deferred tax amount arises from the initial recognition of an asset or liability in a transaction which (i) is not a business combination; and (ii) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss). A deferred tax liability or asset is recognised for all taxable temporary differences associated with investments in subsidiaries except where the reporting entity is able to control the timing of the reversal of the taxable temporary difference and it is probable that the taxable temporary difference will not be reversed in the foreseeable future or for deductible temporary differences, they will not be reversed in the foreseeable future and they cannot be utilised against taxable profits.

Foreign currency transactions

The functional currency of the Trust is the Singapore dollar as it reflects the primary economic environment in which the entity operates. Transactions in foreign currencies are recorded in the functional currency at the rates ruling at the dates of the transactions. At each end of the reporting year, recorded monetary balances and balances measured at fair value that are denominated in non-functional currencies are reported at the rates ruling at the end of the reporting year and fair value measurement dates respectively. All realised and unrealised exchange adjustment gains and losses are dealt with in the profit or loss except when recognised in other comprehensive income and if applicable deferred in Unitholders’ funds such as for qualifying cash flow hedges. The presentation is the functional currency.

Translation of financial statements of other entities

Each entity in the Group determines the appropriate functional currency as it reflects the primary economic environment in which the relevant reporting entity operates. In translating the financial statements of such an entity for incorporation in the consolidated financial statements in the presentation currency the assets and liabilities denominated in other currencies are translated at end of the reporting year rates of exchange and the income and expense items for each statement presenting profit or loss and other comprehensive return are translated at average rates of exchange for the reporting year. The resulting translation adjustments (if any) are recognised in other comprehensive return and accumulated in a separate component of Unitholders’ funds until the disposal of that relevant reporting entity.

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Notes to the Financial Statements (cont’d) 31 December 2017

2. Significant accounting policies and other explanatory information (cont’d)

2A. Significant accounting policies (cont’d)

Segment reporting

Reportable segments are operating segments or aggregations of operating segments that meet specified criteria. Operating segments are components about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing the performance. Segment information has not been presented as all of the Group’s investment properties are used primarily for retail purposes and are all located in Indonesia. They are regarded as one component by the chief operating decision maker.

Borrowing costs

Borrowing costs are interest and other costs incurred in connection with the borrowing of funds. The interest expense is calculated using the effective interest rate method. Borrowing costs are recognised as an expense in the period in which they are incurred except that borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset that necessarily take a substantial period of time to get ready for their intended use or sale are capitalised as part of the cost of that asset until substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete.

Unit based payments

The issued capital is increased by the fair value of the transaction. Incidental costs directly attributable to the issuance of units are deducted against Unitholders’ funds.

Plant and equipment

Depreciation is provided on a straight-line basis to allocate the gross carrying amounts of the assets less their residual values over their estimated useful lives of each part of an item of these assets. The annual rates of depreciation are as follows:

Plant and equipment – 25%

An asset is depreciated when it is available for use until it is derecognised even if during that period the item is idle. Fully depreciated assets still in use are retained in the financial statements.

Plant and equipment are carried at cost on initial recognition and after initial recognition at cost less any accumulated depreciation and any accumulated impairment losses. The gain or loss arising from the derecognition of an item of plant and equipment is measured as the difference between the net disposal proceeds, if any, and the carrying amount of the item and is recognised in profit or loss.

The residual value and the useful life of an asset is reviewed at least at each end of the reporting year and, if expectations differ significantly from previous estimates, the changes are accounted for as a change in an accounting estimate, and the depreciation charge for the current and future periods are adjusted.

F-117 LIPPO MALLS annual report 2017 107 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

2. Significant accounting policies and other explanatory information (cont’d)

2A. Significant accounting policies (cont’d)

Plant and equipment (cont’d)

Cost also includes acquisition cost, borrowing cost capitalised and any cost directly attributable to bringing the asset or component to the location and condition necessary for it to be capable of operating in the manner intended by management. Subsequent costs are recognised as an asset only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss when they are incurred.

Investment property

Investment property is property (land or a building or part of a building or both) owned or held under a finance lease to earn rentals or for capital appreciation or both, rather than for use in the production or supply of goods or services or for administrative purposes or sale in the ordinary course of business. It includes an investment property in the course of construction. After initial recognition at cost including transaction costs the fair value model is used to measure the investment property at fair value as of the end of the reporting year. A gain or loss arising from a change in the fair value of investment property is included in profit or loss for the reporting year in which it arises. The fair values are measured periodically on a systematic basis at least once yearly by external independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of property being valued.

Leases

Leases are classified as finance leases if substantially all the risks and rewards of ownership are transferred to the lessee. All other leases are classified as operating leases. At the commencement of the lease term, a finance lease is recognised as an asset and as a liability in the statements of financial position at amounts equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is practicable to determine, the lessee’s incremental borrowing rate is used. Any initial direct costs of the lessee are added to the amount recognised as an asset. The excess of the lease payments over the recorded lease liability are treated as finance charges which are allocated to each reporting year during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent rents are charged as expenses in the reporting years in which they are incurred. The assets are depreciated as owned depreciable assets. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. For operating leases, lease payments are recognised as an expense in the profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is representative of the time pattern of the user’s benefit, even if the payments are not on that basis. Lease incentives received are recognised in profit or loss as an integral part of the total lease expense. Rental income from operating leases is recognised in the profit or loss on a straight-line basis over the term of the relevant lease unless another systematic basis is representative of the time pattern of the user’s benefit, even if the payments are not on that basis. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term. Contingent rents receivable are recognised in the periods in which they occur.

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Notes to the Financial Statements (cont’d) 31 December 2017

2. Significant accounting policies and other explanatory information (cont’d)

2A. Significant accounting policies (cont’d)

Intangible assets

Intangible assets which relate to the rental guaranteed payments from certain master lease agreements are measured initially at cost, being the fair value as at the date of acquisition. Following the initial recognition, intangible asset is measured at cost less any accumulated amortisation and any impairment losses. Intangible assets with finite useful lives are amortised over the estimated useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and amortisation method are reviewed at each financial year-end.

The amortisable amount of an intangible asset with finite useful life is allocated on a systematic basis over the best estimate of its useful life from the point at which the asset is ready for use.

The useful life is as follows:

Rental guaranteed payments – Over the guarantee periods, which range from 1 to 25 years

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit and loss when the asset is derecognised.

Subsidiaries

A subsidiary is an entity including unincorporated and special purpose entity that is controlled by the reporting entity and the reporting entity is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The existence and effect of substantive potential voting rights that the reporting entity has the practical ability to exercise (that is, substantive rights) are considered when assessing whether the reporting entity controls another entity.

In the Trust’s separate financial statements, the investments in subsidiaries are accounted for at cost less any allowance for impairment in value. Impairment loss recognised in profit or loss for a subsidiary is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying values and the net book values of the investments in subsidiaries are not necessarily indicative of the amounts that would be realised in a current market exchange.

F-119 LIPPO MALLS annual report 2017 109 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

2. Significant accounting policies and other explanatory information (cont’d)

2A. Significant accounting policies (cont’d)

Joint arrangements – joint operations

A joint arrangement (that is, either a joint operation or a joint venture, depending on the rights and obligations of the jointly controlling parties to the arrangement), is one in which the reporting entity is party to an arrangement of which two or more parties have joint control, which is the contractually agreed sharing of control of the arrangement; it exists only when decisions about the relevant activities (that is, activities that significantly affect the returns of the arrangement) require the unanimous consent of the parties sharing control. In a joint operation, the parties with joint control have rights to the assets, and obligations for the liabilities, relating to the arrangement. The reporting entity recognises its share of the operation’s assets, liabilities, income and expenses that are combined line by line with similar items in the reporting entity’s financial statements and accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the FRSs applicable to the particular assets, liabilities, revenues and expenses. When the reporting entity enters into a transaction with a joint operation, such as a sale or contribution of assets, the reporting entity recognises gains and losses resulting from such a transaction only to the extent of the other parties’ interests in the joint operation.

Business combinations

Business combinations are accounted for by applying the acquisition method. There were none during the reporting year.

Impairment of non-financial assets

Irrespective of whether there is any indication of impairment, an annual impairment test is performed at the same time every year on an intangible asset with an indefinite useful life or an intangible asset not yet available for use. The carrying amount of other non-financial assets is reviewed at each end of the reporting year for indications of impairment and where an asset is impaired, it is written down through the profit or loss to its estimated recoverable amount. The impairment loss is the excess of the carrying amount over the recoverable amount and is recognised in the profit or loss unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use. When the fair value less costs of disposal method is used, any available recent market transactions are taken into consideration. When the value in use method is adopted, in assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). At each end of the reporting year non-financial assets other than goodwill with impairment loss recognised in prior periods are assessed for possible reversal of the impairment. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

F-120 110

Notes to the Financial Statements (cont’d) 31 December 2017

2. Significant accounting policies and other explanatory information (cont’d)

2A. Significant accounting policies (cont’d)

Financial assets

Initial recognition, measurement and derecognition:

A financial asset is recognised on the statements of financial position when, and only when, the entity becomes a party to the contractual provisions of the instrument. The initial recognition of financial assets is at fair value normally represented by the transaction price. The transaction price for financial asset not classified at fair value through profit or loss includes the transaction costs that are directly attributable to the acquisition or issue of the financial asset. Transaction costs incurred on the acquisition or issue of financial assets classified at fair value through profit or loss are expensed immediately. The transactions are recorded at the trade date. When the settlement date accounting is applied, any change in the fair value of the asset to be received during the period between the trade date and the settlement date is recognised in net profit or loss for assets classified as trading.

Irrespective of the legal form of the transactions performed, financial assets are derecognised when they pass the “substance over form” based on the derecognition test prescribed by FRS 39 relating to the transfer of risks and rewards of ownership and the transfer of control. Financial assets and financial liabilities are offset and the net amount is reported in the statements of financial position if there is currently a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Subsequent measurement:

Subsequent measurement based on the classification of the financial assets in one of the following four categories under FRS 39 is as follows:

1. Financial assets at fair value through profit or loss: Assets are classified in this category when they are incurred principally for the purpose of selling or repurchasing in the near term (trading assets) or are derivatives (except for a derivative that is a designated and effective hedging instrument) or have been classified in this category because the conditions are met to use the “fair value option” and it is used. All changes in fair value relating to assets at fair value through profit or loss are recognised directly in profit or loss.

F-121 LIPPO MALLS annual report 2017 111 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

2. Significant accounting policies and other explanatory information (cont’d)

2A. Significant accounting policies (cont’d)

Financial assets (cont’d)

Subsequent measurement: (cont’d)

2. Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Assets that are for sale immediately or in the near term are not to be classified in this category. These assets are carried at amortised costs using the effective interest method (except that short-duration receivables with no stated interest rate are normally measured at original invoice amount unless the effect of imputing interest would be significant) minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility.

Impairment charges are provided only when there is objective evidence that an impairment loss has been incurred as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The methodology ensures that an impairment loss is not recognised on the initial recognition of an asset. Losses expected as a result of future events, no matter how likely, are not recognised. For impairment, the carrying amount of the asset is reduced through use of an allowance account. The amount of the loss is recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. Typically the trade and other receivables are classified in this category.

3. Held-to-maturity financial assets: As at the reporting year date there were no financial assets classified in this category.

4. Available for sale financial assets: As at the reporting year date there were no financial assets classified in this category.

Cash and cash equivalents

Cash and cash equivalents include bank and cash balances, and on demand deposits. For the statement of cash flows, the items include cash and cash equivalents less cash subject to restriction.

Hedging

The entity is exposed to currency and interest rate risks. The policy is to reduce currency and interest rate exposures through derivatives and other hedging instruments. From time to time, there may be borrowings and foreign exchange arrangements or interest rate swap contracts or similar instruments entered into as hedges against changes in interest rates, cash flows or the fair value of financial assets and liabilities. The gain or loss from remeasuring these hedging or other arrangement instruments at fair value are recognised in profit or loss. The applicable derivatives and other hedging instruments used are described below in the notes to the financial statements.

F-122 112

Notes to the Financial Statements (cont’d) 31 December 2017

2. Significant accounting policies and other explanatory information (cont’d)

2A. Significant accounting policies (cont’d)

Derivatives

All derivatives are initially recognised and subsequently carried at fair value. Certain derivatives are entered into in order to hedge some transactions and if all the strict hedging criteria prescribed by FRS 39 are not met, even though the transaction has its economic and business rationale, hedge accounting cannot be applied. As a result, changes in the fair value of those derivatives are recognised directly in profit or loss and the hedged item follows normal accounting policies.

Financial liabilities

Initial recognition, measurement and derecognition:

A financial liability is recognised on the statements of financial position when, and only when, the entity becomes a party to the contractual provisions of the instrument and it is derecognised when the obligation specified in the contract is discharged or cancelled or expires.

The initial recognition of financial liability is at fair value normally represented by the transaction price. The transaction price for financial liability not classified at fair value through profit or loss includes the transaction costs that are directly attributable to the acquisition or issue of the financial liability. Transaction costs incurred on the acquisition or issue of financial liability classified at fair value through profit or loss are expensed immediately. The transactions are recorded at the trade date. Financial liabilities including bank and other borrowings are classified as current liabilities unless there is an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting year.

Subsequent measurement:

Subsequent measurement based on the classification of the financial liabilities in one of the following two categories under FRS 39 is as follows:

1. Liabilities at fair value through profit or loss: Liabilities are classified in this category when they are incurred principally for the purpose of selling or repurchasing in the near term (trading liabilities) or are derivatives (except for a derivative that is a designated and effective hedging instrument) or have been classified in this category because the conditions are met to use the “fair value option” and it is used. All changes in fair value relating to liabilities at fair value through profit or loss are charged to profit or loss as incurred.

2. Other financial liabilities: All liabilities, which have not been classified as in the previous category fall into this residual category. These liabilities are carried at amortised cost using the effective interest method.

F-123 LIPPO MALLS annual report 2017 113 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

2. Significant accounting policies and other explanatory information (cont’d)

2A. Significant accounting policies (cont’d)

Fair value measurement

When measuring fair value, management uses the assumptions that market participants would use when pricing the asset or liability under current market conditions, including assumptions about risk. The Group and Trust’s intention to hold an asset or to settle or otherwise fulfil a liability is not taken into account as relevant when measuring fair value. In making the fair value measurement, management determines the following: (a) the particular asset or liability being measured (these are identified and disclosed in the relevant notes below); (b) for a non-financial asset, the highest and best use of the asset and whether the asset is used in combination with other assets or on a stand-alone basis; (c) the market in which an orderly transaction would take place for the asset or liability; and (d) the appropriate valuation techniques to use when measuring fair value. The valuation techniques used maximise the use of relevant observable inputs and minimise unobservable inputs. These inputs are consistent with the inputs a market participant may use when pricing the asset or liability.

The fair value measurements and related disclosures categorise the inputs to valuation techniques used to measure fair value by using a fair value hierarchy of three levels. These are recurring fair value measurements unless stated otherwise in the relevant notes to the financial statements. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The level is measured on the basis of the lowest level input that is significant to the fair value measurement in its entirety. Transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of the reporting year. If a financial instrument measured at fair value has a bid price and an ask price, the price within the bid-ask spread or mid-market pricing that is most representative of fair value in the circumstances is used to measure fair value regardless of where the input is categorised within the fair value hierarchy. If there is no market, or the markets available are not active, the fair value is established by using an acceptable valuation technique.

The carrying values of current financial instruments approximate their fair values due to the short-term maturity of these instruments and the disclosures of fair value are not made when the carrying amount of current financial instruments is a reasonable approximation of the fair value. The fair values of non-current financial instruments may not be disclosed separately unless there are significant differences at the end of the reporting year and in the event the fair values are disclosed in the relevant notes to the financial statements.

2B. other explanatory information

Provisions

A liability or provision is recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. A provision is made using best estimates of the amount required in settlement and where the effect of the time value of money is material, the amount recognised is the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. Changes in estimates are reflected in profit or loss in the reporting year they occur.

F-124 114

Notes to the Financial Statements (cont’d) 31 December 2017

2. Significant accounting policies and other explanatory information (cont’d)

2B. other explanatory information (cont’d)

Perpetual securities

Proceeds from the issuance of perpetual securities have been recognised as equity. Distributions to the perpetual securities holders will be payable semi-annually in arrears on a discretionary basis and will be non-cumulative. The expenses relating to the issue of the perpetual securities are deducted against the proceeds from the issue.

2C. Critical judgements, assumptions and estimation uncertainties

The critical judgements made in the process of applying the accounting policies that have the most significant effect on the amounts recognised in the financial statements and the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting year, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next reporting year are discussed below. These estimates and assumptions are periodically monitored to make sure they incorporate all relevant information available at the date when financial statements are prepared. However, this does not prevent actual figures differing from estimates.

Fair values of investment properties: Certain judgements and assumptions are made in the valuation of the investment properties based on calculations and these calculations require the use of estimates in relation to future cash flows, growth rates, discount rates and market capitalisation as disclosed in Note 14.

Income tax amounts: The entity recognises tax liabilities and tax assets based on an estimation of the likely taxes due, which requires significant judgement as to the ultimate tax determination of certain items. Where the actual amount arising from these issues differs from these estimates, such differences will have an impact on income tax and deferred tax amounts in the period when such determination is made. In addition, management judgement is required in determining the amount of current and deferred tax recognised and the extent to which amounts should or can be recognised. A deferred tax asset is recognised if it is probable that the entity will earn sufficient taxable profit in future periods to benefit from a reduction in tax payments. This involves the management making assumptions within its overall tax planning activities and periodically reassessing them in order to reflect changed circumstances as well as tax regulations. Moreover, the measurement of a deferred tax asset or liability reflects the manner in which the entity expects to recover the asset’s carrying value or settle the liability. As a result, due to their inherent nature assessments of likelihood are judgmental and not susceptible to precise determination. The income tax amounts are disclosed in Note 10.

Deferred tax: Recovery of underlying assets: The deferred tax relating to an asset is dependent on whether the entity expects to recover the carrying amount of the asset through use or sale. It can be difficult and subjective to assess whether recovery will be through use or through sale when the asset is measured using the fair value model in FRS 40 Investment Property or when fair value is required or permitted by a FRS for a non-financial asset. Management has taken the view that there is clear evidence that it will consume the relevant asset’s economic benefits throughout its economic life. The amount is stated in Note 10.

F-125 LIPPO MALLS annual report 2017 115 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

2. Significant accounting policies and other explanatory information (cont’d)

2C. Critical judgements, assumptions and estimation uncertainties (cont’d)

Determination of functional currency: Judgement is required to determine the functional currency of the reporting entity. Management considers economic environment in which the reporting entity operates and factors such as the currency that mainly influences sales prices for goods and services; the currency of the country whose competitive forces and regulations mainly determine the sales prices of its goods and services; and the currency that mainly influences labour, material and other costs of providing goods or services. It also considers other relevant factors that may also provide evidence of an entity’s functional currency.

Allowance for doubtful trade accounts: An allowance is made for doubtful trade accounts for estimated losses resulting from the subsequent inability of the customers to make required payments. If the financial conditions of the customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required in future periods. To the extent that it is feasible, impairment and uncollectibility is determined individually for each item. In cases where that process is not feasible, a collective evaluation of impairment is performed.

At the end of the reporting year, the trade receivables carrying amount approximates the fair value and the carrying amounts might change materially within the next reporting year but these changes may not arise from assumptions or other sources of estimation uncertainty at the end of the reporting year. The carrying amount is disclosed in Note 18.

Fair value of derivative financial instruments: Some of the financial instruments stated at fair values are not based on quoted prices in active markets, and therefore there is significant measurement uncertainty involved in this valuation. Management makes any adjustments where necessary to reflect the assumptions that marketplace participants would use in similar circumstances. The assumptions and the fair values are disclosed in Note 28 on derivative financial instruments.

Measurement of impairment of subsidiaries: Where an investee is in net equity deficit and or has suffered losses, a test is made whether the investment in the investee has suffered any impairment. This determination requires significant judgement. An estimate is made of the future profitability of the investee, and the financial health of and near-term business outlook for the investee, including factors such as industry and sector performance, and operational and financing cash flows. It is impracticable to disclose the extent of the possible effects. It is reasonably possible, based on existing knowledge, that outcomes within the next reporting year that are different from assumptions could require a material adjustment to the carrying amount of the asset affected. The carrying amount of the investment in subsidiaries at the end of the reporting year affected by the assumption is $794,617,000 (2016: $651,359,000).

Classification of joint arrangements: The joint venture agreements in relation to the PT Yogya Central Terpadu partnership require unanimous consent from all parties for all relevant activities. The two partners have direct rights to the assets of the partnership and are jointly and severally liable for the liabilities incurred by the partnership. This entity is therefore classified as a joint operation and the Group recognises its direct right to the jointly held assets, liabilities, revenues and expenses as described in 2A.

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Notes to the Financial Statements (cont’d) 31 December 2017

3. Related party relationships and transactions

FRS 24 on related party disclosures requires the reporting entity to disclose: (a) transactions with its related parties; and (b) relationships between parents and subsidiaries irrespective of whether there have been transactions between those related parties. A party is related to a party if the party controls, or is controlled by, or can significantly influence or is significantly influenced by the other party.

The ultimate controlling party is PT Lippo Karawaci Tbk.

3A. Related party transactions:

There are transactions and arrangements between the Trust and related parties and the effects of these on the basis determined between the parties are reflected in these financial statements. The intercompany balances are unsecured without fixed repayment terms and interest unless stated otherwise. For any balances and financial guarantees no interest or charge is imposed unless stated otherwise.

Intragroup transactions and balances that have been eliminated in these consolidated financial statements are not disclosed as related party transactions and balances below.

In addition to the transactions and balances disclosed elsewhere in the notes to the financial statements, this item includes the following:

The Trust has entered into several service agreements in relation to the management of the Trust and its property operations. The fee structures of these services are as follows:

(A) Manager’s management fees

Under the Trust Deed, the Manager is entitled to management fees as follows:

(i) A base fee of 0.25% (2016: 0.25%) per annum of the value of the deposited property;

(ii) A performance fee is fixed at 4.0% (2016: 4.0%) per annum of the Group’s net property income (“NPI”) (calculated before accounting for this additional fee expense in the reporting year). NPI in relation to real estate, whether held directly by the Trust or indirectly through a special purpose company, and in relation to any year or part thereof, means its property income less property operating expenses for such real estate for that year or part thereof. The Manager may opt to receive the performance fee in the form of units and/or cash. Based on the First Amending & Restating Deed dated 18 March 2016, the performance fees for the financial year is computed based on audited accounts of the Trust.

With effect from 1 January 2016, the performance fee of the Manager is paid annually, in accordance with the revised Code on Collective Investment Schemes issued on 1 January 2016.

(iii) An authorised investment management fee of 0.5% (2016: 0.5%) per annum of the value of Authorised Investments which are not in the form of real estate (whether held directly by the Trust or indirectly through one or more subsidiaries). Where such authorised investment is an interest in a property fund (either a REIT or private property fund) wholly managed by a wholly-owned subsidiary of PT Lippo Karawaci Tbk (“Sponsor”), no authorised investment management fee shall be payable in relation to such authorised investment;

F-127 LIPPO MALLS annual report 2017 117 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

3. Related party relationships and transactions (cont’d)

3A. Related party transactions (cont’d):

(A) Manager’s management fees (cont’d)

(iv) Manager’s acquisition fee is determined at 1.0% (2016: 1.0%) flat of value or consideration as defined in the Trust Deed for any real estate or other investments (subject to there being no double- counting). Payment of such acquisition fee must comply with Appendix 6: Investment Property Funds of the Code on Collective Investment Schemes; and

(v) Divestment fee at the rate of 0.5% (2016: 0.5%) flat of the sales price of any authorised investment directly or indirectly sold or divested from time to time by the Trustee on behalf of the Trust. The Manager may opt to receive the divestment fee in the form of units and/or cash.

(B) Property manager’s fees

Under the Property Management Agreements in respect of each Retail Mall, the property manager is entitled to the following fees:

(i) 2.0% (2016: 2.0%) per annum of the gross revenue for the relevant Retail Mall;

(ii) 2.0% (2016: 2.0%) per annum of the net property income for relevant Retail Mall (after accounting for the fee expense of 2% per annum of the gross revenue for the relevant Retail Mall);

(iii) 0.5% (2016: 0.5%) per annum of the net property income for the relevant Retail Mall in lieu of leasing commissions otherwise payable to the property manager and/or third party agents; and

(iv) Rp60,000,000 (2016: Rp60,000,000) per annum for the relevant Retail Spaces up to November 2017. Upon expiry of the master leases in November 2017, the property manager’s fees for Retail Spaces are aligned that for the Retail Malls as described above in (i), (ii) and (iii).

Under each existing Property Management Agreement, each of the Indonesian subsidiaries that are owners of Retail Malls (“Retail Mall Property Companies”) agrees to reimburse the property manager, for its expenses incurred in connection with the provision of property management services and with the performance of its duties which are in compliance with the approved annual business plan and budget as stated in the existing Property Management Agreement. Such expenses include but are not limited to rent, service charge and Value-Added Tax (“VAT”) payable by the Property Manager of its lease of its office premises; advertising and promotion costs; and salaries of the Property Manager’s employees who are approved by the relevant Retail Mall Property Companies.

(C) Trustee’s fees

The Trustee’s fees shall not exceed 0.03% (2016: 0.03%) per annum of the value of the deposited property (as defined in the Trust Deed), subject to a minimum of $15,000 per month, excluding out-of-pocket expenses and GST. The Trustee’s fee is presently charged on a scaled basis of up to 0.03% per annum of the value of the deposited property, subject to a minimum sum per month. Any increase in the rate of the remuneration of the Trustee above the permitted limit or any change in the structure of the remuneration of the Trustee shall be approved by an Extraordinary Resolution at a Unitholders’ meeting duly convened and held in accordance with the provisions of the Trust Deed.

F-128 118

Notes to the Financial Statements (cont’d) 31 December 2017

3. Related party relationships and transactions (cont’d)

3A. Related party transactions (cont’d):

Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

The Manager (1) Manager’s management fees expense (Note 7) 12,518 11,940 12,518 11,940 Manager’s acquisition fees (Note 14) 1,237 864 1,205 864

The Trustee Trustee’s fees expense 423 332 423 332

The Property manager (2) Property manager fees expense (Note 5) 6,691 4,393 – –

Master Lessee (3) Rental revenue (12,396) (12,741) – –

Affiliates of Sponsor (4) Rental revenue, service charge and utilities recovery (5) (6) (7) (52,705) (43,087) – – Acquisition of investment properties (Notes 14 and 15) 96,753 86,402 – –

Fees recoverable relating to put option for Lippo Mall Kemang – 841 – 841

(1) The parent company of the Manager is PT Lippo Karawaci Tbk (“Sponsor”), incorporated in Indonesia and it is a substantial Unitholder.

(2) The Property manager of the properties is PT Lippo Malls Indonesia, a wholly-owned subsidiary of PT Lippo Karawaci Tbk.

(3) The Master Lessee of the retail spaces is PT Multipolar Tbk, in which the Sponsor has an interest.

(4) The Affiliates of the Sponsor are PT First Media Tbk, Yayasan Universitas Pelita Harapan, PT Bank National Nobu, PT Matahari Putra Prima Tbk, PT Gratia Prima Indonesia, PT Matahari Graha Fantasi, PT Maxx Coffee Prima, PT Maxx Food Pasifik, PT Matahari Department Store Tbk, PT Cinemaxx Global Pasifik, PT Internux, PT Sky Parking Utama, and PT Solusi Ecommerce Global. The Affiliates of the Sponsor are entities that either have common shareholders with the Sponsor, or in which the Sponsor has an interest.

(5) The amount also includes revenue from Lippo Mall Kemang under Sponsor Lessees with PT Multiguna Selaras Maju, PT Harapan Insan Mandiri, and PT Violet Pelangi Indah.

(6) The amount also includes revenue from Lippo Mall Kuta under Sponsor Lessees with PT Kencana Agung Pratama, PT Kridakarya Anugerah Utama and PT Trimulia Kencana Abdi.

(7) The amount also includes revenue from Lippo Plaza Jogja under Sponsor lessees with PT Andhikarya Sukses Pratama, PT Manunggal Megah Serasi and PT Mulia Cipta Sarana Sukses.

F-129 LIPPO MALLS annual report 2017 119 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

3. Related party relationships and transactions (cont’d)

3B. Key management compensation:

The Group and the Trust have no employees. All its services are provided by the Manager and others. There are no charges made other than the fees disclosed above.

The Trust obtains key management personnel services from the Manager. Key management personnel of the Manager include the directors of those persons having authority and responsibility for planning, directing and controlling the activities of the Trust, directly or indirectly.

Further information about the remuneration of individual directors of the Manager is provided in the Report on Corporate Governance of the Trust’s Annual Report.

3C. Interest in the Trust:

2017 2016 Number of % interest Number of % interest units held held units held held

The Manager LMIRT Management Ltd 142,611,671 5.05 121,616,821 4.34

The director of the Manager Mr Albert Saychuan Cheok* – – 400,000 0.01

* Mr Albert Saychuan Cheok retired as the director of the manager effective from 30 September 2017.

4. Gross revenue Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Rental revenue 164,203 152,878 – – Car park revenue 20,908 26,439 – – Dividend income from subsidiaries – – 116,131 104,239 Income from rental of mechanical, electrical and mall operating equipment (1) 10,290 6,789 – – Other rental income 1,975 1,960 – – 197,376 188,066 116,131 104,239

(1) A third party operating company was engaged to co-manage the individual retail malls and agreed to be responsible for all costs directly related to the maintenance and operation of the individual malls, as well as pay for the rental of office and use of electrical, mechanical and mall operating equipment of the individual malls subject to the terms in the operating agreements.

F-130 120

Notes to the Financial Statements (cont’d) 31 December 2017

5. Property operating expenses Group 2017 2016 $’000 $’000

Land rental expense 1,974 2,054 Property management fees (Note 3) 6,691 4,393 Legal and professional fees 1,584 1,266 Depreciation of plant and equipment (Note 13) 2,457 1,728 Reversal of allowance for impairment loss on trade receivables (Note 18) (3,390) (65) Allowance for impairment loss on trade receivables (Note 18) 1,361 614 Property operating and maintenance expenses 2,448 6,216 13,125 16,206

6. Other gains Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Other income 312 – – – 312 – – –

7. Manager’s management fees Group and Trust 2017 2016 $’000 $’000

Base fee 5,148 5,066 Performance fee 7,370 6,874 Total (Note 3) 12,518 11,940

The Manager elected to receive certain of the above fees in the form of units. These were as follows:

Group and Trust 2017 2016 2017 2016 Number of Units $’000 $’000

Settled during the year through the issuance of units 18,675,322 5,178,677 7,738 1,608

Settled subsequent to year-end through the issuance of units (Note 21) 3,252,120 – 1,301 – 21,927,442 5,178,677 9,039 1,608

F-131 LIPPO MALLS annual report 2017 121 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

8. Finance costs Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Interest expense 27,041 29,106 28,930 32,945 Amortisation of borrowing costs 4,548 5,857 3,806 5,605 31,589 34,963 32,736 38,550

9. Other expenses Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Bank charges 110 48 46 4 Professional fees 670 1,158 652 1,140 Investor relation expenses 95 20 95 20 Listing expenses 71 48 65 43 Security agent fees 82 75 82 75 Valuation expenses 327 176 327 176 Expenses relating to change of Trustee (1) 1,433 – 1,433 – Other expenses 750 398 750 350 3,538 1,923 3,450 1,808

(1) Including expenses incurred for a consent solicitation exercise by LMIRT Capital Pte. Ltd. and HSBC Institutional Trust Services (Singapore) Limited (in its capacity as Trustee of Lippo Malls Indonesia Retail Trust) in connection with certain perpetual securities.

Group 2017 2016 $’000 $’000

Audit fees to the independent auditors of the Trust 397 397 Audit fees to the other independent auditors 288 247 Non-audit fees to the independent auditors of the Trust 82 35

Total fees to independent auditors are included in property operating expenses (Note 5) and other expenses (Note 9).

F-132 122

Notes to the Financial Statements (cont’d) 31 December 2017

10. Income tax

10A. Components of tax expense recognised in statements of total return include:

Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Current tax expense/(income): Foreign income tax 21,515 20,303 – – Foreign withholding tax 12,458 12,100 – – Over provision in respect of prior periods (283) (309) (283) (309) Subtotal 33,690 32,094 (283) (309)

Deferred tax (income)/expense: Deferred tax income (5,777) (9,128) – – Change in foreign exchange rates (2,521) 1,566 – – Subtotal (8,298) (7,562) – – Total income tax expense/(income) 25,392 24,532 (283) (309)

The income tax in statements of total return varied from the amount of income tax expense determined by applying the Singapore income tax rate of 17.0% (2016: 17.0%) to total return/(loss) before income tax as a result of the following differences:

Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Total return/(loss) before tax 88,102 53,367 (70,523) 41,567

Income tax expense/(income) at the above rate 14,977 9,072 (11,989) 7,066 Not deductible/(not liable to tax) items 13,676 15,031 11,989 (7,066) Foreign withholding tax 12,458 12,100 – – Effect of different tax rates in different countries (13,601) (13,583) – – Deferred tax adjustments due to changes in foreign exchange rates (2,521) 1,566 – – Over provision in respect of prior periods (283) (309) (283) (309) Other minor items less than 3% each 686 655 – – Total income tax expense/(income) 25,392 24,532 (283) (309)

Effective tax rate 28.8% 46.0% 0.4% 0.7%

The amount of current income taxes outstanding for the Group as at end of reporting year was $5,715,000 (2016: $6,154,000). Such an amount is net of tax advances, which, according to the tax rules, were paid before the year- end.

Please refer to Note 12 for income tax on distributions to Unitholders.

F-133 LIPPO MALLS annual report 2017 123 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

10. Income tax (cont’d)

10B. Deferred tax income recognised in statements of total return includes:

Group 2017 2016 $’000 $’000

Deferred tax income relating to the changes in fair value of investment properties (8,298) (7,562)

10C. Deferred tax balance in the statements of financial position:

Group 2017 2016 $’000 $’000

Deferred tax liabilities recognised in statements of total return: Deferred tax relating to the changes in fair value of investment properties 23,364 31,662

It is impracticable to estimate the amount expected to be settled or used within one year.

Temporary differences arising in connection with interests in subsidiaries are insignificant.

Taxation of income from Indonesia properties

Corporate income tax in Indonesia

Article 3 of Indonesian Government Regulation No. 5/2002 on the payment of income tax on income from the lease of land and/or building stipulates that income tax on income received or acquired by individuals or entities from the leasing of land and/or buildings consisting of land, houses, multi-storey houses, apartments, condominiums, office buildings, office-cum-living space, shops, shop cum house, warehouse, and industrial space which is received or earned from a tenant acting or appointed as a tax withholder, is to be withheld by the tenant. The tax rate is 10% of the gross value of the land and/or building rental and is final in nature.

Withholding tax in Indonesia

Under the income tax treaty between Singapore and Indonesia, the Indonesia withholding tax is capped at 10% in respect of:

(a) Dividends paid by a company resident in Indonesia to a company resident in Singapore which owns directly at least 25% of the capital of the company paying the dividends; and

(b) Interest paid to a resident of Singapore.

Indonesia withholding tax is at 15% in respect of dividends paid by a company resident in Indonesia to a company resident in Singapore who owns directly less than 25% of the capital of the company paying the dividends.

F-134 124

Notes to the Financial Statements (cont’d) 31 December 2017

10. Income tax (cont’d)

10C. Deferred tax balance in the statements of financial position (cont’d):

Dividends from Indonesia subsidiaries

Dividends received by the Singapore subsidiaries of the Trust from their respective Indonesia subsidiaries are exempt from Singapore income tax under section 13(8) of the Income Tax Act provided the following conditions are met:

(a) In the year the dividends are received in Singapore, the headline corporate tax rate in the foreign country from which the dividends are received is at least 15%;

(b) The dividends have been subject to tax in the foreign country from which they are received; and

(c) The Singapore Comptroller of Income Tax is satisfied that the tax exemption would be beneficial to the Singapore subsidiaries.

Dividends from Singapore subsidiaries

Dividends received by the Trust from the Singapore subsidiaries are exempt from Singapore income tax provided that the Singapore subsidiaries are tax residents of Singapore for income tax purposes.

Interest income from Indonesia subsidiaries

Interest received by the Singapore subsidiaries of the Trust on loans made to the Indonesia subsidiaries is exempt from Singapore income tax under section 13(12) of the Income Tax Act on the condition that the full amount of remitted interest, less attributable expenses, is distributed by the Singapore subsidiaries to the Trust for onward distribution to its Unitholders.

Redemption of redeemable preference shares in Singapore subsidiaries

Proceeds received by the Trust from the redemption of its redeemable preference shares in the Singapore subsidiaries at the original cost of the redeemable preference shares are regarded as capital receipts and hence not subject to Singapore income tax.

Receipt from Indonesia subsidiaries for repayment of Shareholder loans

Proceeds received by the Singapore subsidiaries for the repayment of the principal amount of the shareholder loans from their Indonesia subsidiaries are capital receipts and hence not subject to Singapore income tax.

F-135 LIPPO MALLS annual report 2017 125 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

11. Earnings per unit

The following table illustrates the numerators and denominators used to calculate earnings per unit of no par value: Group 2017 2016

Denominator: weighted average number of units 2,819,472,796 2,801,228,708

$’000 $’000

Numerator: Earnings attributable to Unitholders Total return after tax 62,710 28,835 Less: Amount reserved for distribution to perpetual securities holders (14,053) (2,577) Total return attributable to Unitholders 48,657 26,258

Group 2017 2016 $’ cents $’ cents

Earnings per unit 1.73 0.94

Adjusted earnings per unit (1) 2.51 2.38

(1) Adjusted earnings exclude changes in the fair value of investment properties (net of deferred tax).

The weighted average number of units refers to units in circulation during the reporting year.

Diluted earnings per unit are the same as the basic earnings per unit as there were no dilutive instruments in issue during the reporting year.

F-136 126

Notes to the Financial Statements (cont’d) 31 December 2017

12. Distributions

Distribution Type Name of Distribution Distribution during the year (interim distributions)

Distribution Type Income / Capital

Group and Trust 2017 2016 2017 2016 $’ cents $’ cents $’000 $’000 per unit per unit

Tax-exempt income (1) : 1.79 1.63 50,410 45,947 Capital (2) : 0.86 0.91 24,264 25,186 Subtotal : 2.65 2.54 74,674 71,133

Name of Distribution Distribution declared subsequent to year-end (final distribution) (Note 34)

Distribution Type Income / Capital

Group and Trust 2017 2016 2017 2016 $’ cents $’ cents $’000 $’000 per unit per unit

Tax-exempt income (1) : 0.47 0.56 13,227 15,602 Capital (2) : 0.32 0.31 9,059 8,733 Subtotal : 0.79 0.87 22,286 24,335

Total distributions (3) 3.44 3.41 96,960 95,468

(1) Unitholders are exempt from tax on such distributions.

(2) Such distributions are treated as returns of capital for Singapore income tax purposes. For Unitholders who are liable to Singapore income tax on profits from the sale of the Trust’s Units, the amount of capital distribution will be applied to reduce the cost base of their LMIR Trust Units for Singapore income tax purposes.

(3) The Trust makes the distribution quarterly. The distribution rates above are based on the amount distributed quarterly divided by the Units outstanding as at the end of the relevant quarters.

The amount of the distributions paid in the year totalled $99,009,000 (2016: $93,824,000).

Current distribution policy: The Trust’s current distribution policy is to distribute at least 90% (2016: at least 90%) of its tax-exempt income (after deduction of applicable expenses) and capital receipts. The tax-exempt income comprises dividends received from the Singapore tax resident subsidiaries. The capital receipts comprise amounts received by the Trust from redemption of redeemable preference shares in the Singapore subsidiaries. The Trust has distributed 100% of its tax-exempt income (after deduction of applicable expenses) and capital receipts to-date.

F-137 LIPPO MALLS annual report 2017 127 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

13. Plant and equipment Group Plant and Equipment 2017 2016 $’000 $’000

Cost: At beginning of year 12,383 8,314 Additions 5,630 3,629 Exchange difference adjustments (1,256) 440 At end of year 16,757 12,383

Accumulated depreciation: At beginning of year 4,875 2,977 Depreciation for the year 2,457 1,728 Exchange difference adjustments (506) 170 At end of year 6,826 4,875

Net book value: At beginning of year 7,508 5,337 At end of year 9,931 7,508

The depreciation expense is charged to statements of total return as property operating expenses (Note 5).

14. Investment properties Group 2017 2016 $’000 $’000

At valuation: Fair value at beginning of year 1,922,642 1,804,930 Acquisitions of investment properties (1) 126,640 82,977 Enhancement expenditure capitalised 45,638 11,218 2,094,920 1,899,125 Decrease in fair value included in profit or loss (30,399) (48,045) Translation differences (156,380) 71,562 Fair value at end of year 1,908,141 1,922,642

Rental and service income from investment properties 197,376 188,066 Direct operating expenses (including repairs and maintenance) arising from investment properties that generated rental income during the year (13,125) (16,206)

(1) The acquisitions in 2017 relate to the acquisitions of Lippo Plaza Kendari, Lippo Plaza Jogja, Kediri Town Square. This amount also included an acquisition fee of $1,237,000 and other acquisition related expenses of $1,748,000.

The acquisition in 2016 relates to the acquisition of Lippo Mall Kuta. This amount also included an acquisition fee of $864,000 and other acquisition related expenses of $1,082,000.

F-138 128

Notes to the Financial Statements (cont’d) 31 December 2017

14. Investment properties (cont’d)

Acquisitions during the year

In 2017, the Trust acquired:

(1) Lippo Plaza Kendari, which is located at Jalan MT Haryono No.61-63, Kendari, South East Sulawesi 93117, Indonesia for a total purchase consideration of $32,241,290;

(2) Lippo Plaza Jogja, which is located at Demangan Subdistrict, Gondokusuman District, Yogyakarta, with postal address Jalan Laksda Adi Sucipto No.32-34, Yogyakarta for a total purchase consideration of $57,000,000; and

(3) Kediri Town Square, which is located at Jalan Hasanudin No. 2, RT/22 RW/06, Balowerti Subdistrict, Kediri, East Java for a total purchase consideration of $34,413,965.

The acquisitions of Lippo Plaza Kendari, Lippo Plaza Jogja and Kediri Town Square were carried out by the Trust indirectly via its subsidiaries, namely Picon1 Holdings Pte Ltd and Picon2 Investments Pte Ltd for Lippo Plaza Kendari, Icon2 Investments Pte Ltd and PT Yogya Central Terpadu for Lippo Plaza Jogja and Pejaten Holdings Pte Ltd, Pejatenmall Investment Pte Ltd and PT Panca Permata Pejaten, for Kediri Town Square respectively. The acquisitions were funded from bank borrowings, issuance of perpetual securities and the Group’s operating cash flows.

Lippo Plaza Kendari is a family mall strategically located in the heart of Kendari, the capital of Southeast Sulawesi. Kendari’s economy is mostly agricultural with some industrial centres near the city. The government of Sulawesi has rolled out a series of major infrastructure projects to improve connectivity and spur economic development in Southeast Sulawesi, including a railway network which will connect all major cities in Sulawesi. The Manager believes that the property would benefit from such developments in the region. Further, there is minimal competition in the near future for retail space in the property’s vicinity.

Lippo Plaza Jogja is situated in Yogyakarta, is renowned as a centre of education with large numbers of schools and universities, as well as classical Javanese fine art. As such, the city has attracted large numbers of students from all over Indonesia. Yogyakarta also attracts plenty of foreign visitors, majority of whom are foreign students that usually stay to learn Bahasa or Javanese culture.

Kediri Town Square is a lifestyle mall strategically located in East Java and well connected to other parts of East Java. Kediri city is a vibrant trading hub for tobacco and sugar and its economy is mostly agricultural with some industrial centres. It also has a growing tourism industry from its cultural heritage as well as its transport connections with cities such as Surabaya and Yogyakarta.

The acquisitions of these properties with their stable occupancies are expected to contribute to the organic growth of the Group.

F-139 LIPPO MALLS annual report 2017 129 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

14. Investment properties (cont’d)

Acquisition in prior year

On 29 December 2016, the Trust acquired Lippo Mall Kuta, which is located in the city of Kuta Bali, for a total purchase consideration of $88,349,000.

The acquisition of Lippo Mall Kuta was carried out by the Trust indirectly via its subsidiaries, namely Kuta1 Holdings Pte Ltd, Kuta2 Investments Pte Ltd and PT Rekreasi Pantai Terpadu. The acquisition was funded from bank borrowings and the Group’s operating cashflows. The management’s rationale for the acquisition of Lippo Mall Kuta was to benefit from the stable occupancies in this mall located in a strategic location in Bali with organic growth potential.

These investment properties include the mechanical and electrical equipment located in the respective properties. The fair value of each investment property was measured in December 2017 based on the highest and best use method to reflect the actual market state and circumstances as of the end of the reporting year. The fair value was based on valuations made by independent professional valuers on a systematic basis at least once yearly. The independent professional valuers hold recognised and relevant professional qualifications with sufficient recent experience in the location and category of the investment property being valued. The valuations were based on the discounted cash flow method and the market capitalisation method as appropriate. Management determined that the highest and best use of the asset is the current use and that it would provide maximum value to market participants principally through its use in combination with other assets.

The fair values were made by the following firms of independent professional valuers:–

2017: Name of Independent Professional Valuers Name of Retail Malls and Spaces

KJPP Wilson & Rekan – Tamini Square, Lippo Plaza Kramat Jati, Palembang Square, Palembang Square Extension, Pejaten Village, Binjai Supermall, Pluit Village, Plaza Medan Fair and Lippo Mall Kuta.

KJPP Rengganis, Hamid & – Bandung Indah Plaza, Gajah Mada Plaza, Mal Lippo Cikarang, Lippo Plaza Rekan Ekalokasari Bogor, The Plaza Semanggi, Istana Plaza, Cibubur Junction, Sun Plaza, Palembang Icon, Lippo Plaza Batu, Lippo Plaza Kendari, Kediri Town Square and Lippo Plaza Jogja.

Savills Valuation and – Mall WTC Matahari Units, Java Supermall Units, Plaza Madiun Units, Depok Professional Services (S) Pte Town Square Units, Malang Town Square Units, Metropolis Town Square Units, Ltd Grand Palladium Units and Lippo Mall Kemang.

F-140 130

Notes to the Financial Statements (cont’d) 31 December 2017

14. Investment properties (cont’d)

2016: Name of Independent Professional Valuers Name of Retail Malls and Spaces

KJPP Wilson & Rekan – Tamini Square, Lippo Plaza Kramat Jati, Palembang Square, Palembang Square Extension, Pejaten Village, Binjai Supermall, Palembang Icon, Lippo Plaza Batu and Lippo Mall Kuta.

KJPP Rengganis, Hamid & – Bandung Indah Plaza, Gajah Mada Plaza, Mal Lippo Cikarang, Lippo Plaza Rekan Ekalokasari Bogor, The Plaza Semanggi, Istana Plaza, Cibubur Junction, Sun Plaza, Pluit Village and Plaza Medan Fair.

Savills Valuation and – Mall WTC Matahari Units, Java Supermall Units, Plaza Madiun Units, Depok Professional Services (S) Pte Town Square Units, Malang Town Square Units, Metropolis Town Square Units, Ltd Grand Palladium Units and Lippo Mall Kemang.

All fair value measurements of investment properties are based on the discounted cash flow method and are categorised within Level 3 of the fair value hierarchy. The information about the significant unobservable inputs used in the fair value measurements are as follows:

2017 2016

1. Estimated discount rates using pre-tax rates that reflect current market assessments at the risks specific to the properties 12.4% to 14.6% 12.9% to 13.3% 2. Growth rates 3.0% to 6.9% 2.2% to 9.0% 3. Terminal discount rates 8.1% to 9.5% 8.4% to 9.5% 4. Cash flow forecasts derived from the most recent financial budgets and plans approved by management Note 1 Note 1

Note 1: Discounted cash flow analysis over the remaining lease period for existing Build, Operate and Transfer (“BOT”) malls and over a 10-year projection for non-BOT malls and for retail spaces.

Relationship of unobservable inputs to fair value:

1. Discount rates – The higher the discount rates, the lower the fair value. 2. Growth rates – The higher the growth rates, the higher the fair value. 3. Terminal discount rates – The higher the terminal discount rates, the lower the fair value.

F-141 LIPPO MALLS annual report 2017 131 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

14. Investment properties (cont’d)

Sensitivity analysis on management’s estimates:

1. Discount rates

A hypothetical 10.0% (2016: 10.0%) increase or decrease in the pre-tax discount rate applied to the discounted cash flows would have an effect on return before tax of – lower by $162,951,000; higher by $195,959,000 (2016: lower by $157,517,000; higher by $212,451,000).

2. Growth rates

A hypothetical 10.0% (2016: 10.0%) increase or decrease in the rental income would have an effect on return before tax of – higher by $189,302,000; lower by $187,300,000 (2016: higher by $131,262,000; lower by $132,909,000).

3. Terminal discount rates

A hypothetical 10.0% (2016: 10.0%) increase or decrease in the terminal discount rate would have an effect on return before tax of – lower by $50,996,000; higher by $62,436,000 (2016: lower by $49,692,000; higher by $65,551,000).

The decrease in fair value is due to the weakening of property prices in Indonesia.

By relying on the valuation reports, the management is satisfied that the independent valuers have appropriate professional qualifications and recent experience in the location and category of the properties being valued. Other details on the properties are disclosed in the Statement of Portfolio.

The types of property titles in Indonesia which are held by the Group are as follows:

(a) Hak Guna Bangunan (“HGB”) Title

This title gives the right to construct and own buildings on a plot of land. The right is transferable and may be encumbered. Technically, HGB is a leasehold title where the state retains “ownership”. However, for practical purposes, there is little difference from a freehold title. HGB title is granted for an initial period of up to 30 years and is extendable for a subsequent 20-year period and another 30-year period. Upon the expiration of such extensions, new HGB title may be granted on the same land. The cost of extension is determined based on certain formula as stipulated by the National Land Office (Badan Pertanahan Nasional) in Indonesia. The commencement date of each title varies.

F-142 132

Notes to the Financial Statements (cont’d) 31 December 2017

14. Investment properties (cont’d)

(b) Build, Operate and Transfer Schemes (“BOT Schemes”)

This title gives the Indonesia subsidiaries (“BOT Grantee”) the right to build and operate the retail mall for a particular period of time as stipulated in the BOT Agreement by the land owner (“BOT Grantor”). A BOT scheme is not registered with any Indonesian authority. Rights under a BOT scheme do not amount to a legal title and represent only contractual interests.

In exchange for the right to build and operate the retail mall on the land owned by the BOT Grantor, the BOT Grantee is obliged to pay a certain compensation (as stipulated in the BOT agreement), which may be made in the form of a lump sum or staggered.

A BOT scheme is granted for an initial period of 20 to 30 years and is extendable upon agreement of both parties. Upon the expiration of the term of the BOT agreement, the BOT Grantee must return the land, together with any buildings and fixtures on top of the land, without either party providing any form of compensation to the other.

(c) Strata Title

This title gives the party who holds the property the ownership of common areas, common property and common land proportionately with other strata title unit owners.

The investment properties are leased out to tenants under operating leases.

Certain investment properties at a carrying value of $428,192,000 (2016: $470,567,000) are pledged as security for the bank facilities (Note 24A).

F-143 LIPPO MALLS annual report 2017 133 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

15. Intangible assets Group 2017 2016 $’000 $’000

Cost: At the beginning of the year 43,263 36,474 Additions 6,760 5,372 Exchange differences adjustments (3,602) 1,417 At the end of the year 46,421 43,263

Accumulated amortisation: At the beginning of the year 24,057 11,362 Amortisation for the year 12,996 11,889 Exchange differences adjustments (2,538) 806 At the end of the year 34,515 24,057

Net book value: At the beginning of the year 19,206 25,112 At the end of the year 11,906 19,206

Intangible assets represent the unamortised aggregate rental guarantee amounts receivable by the Group from master leases upon the acquisition of Palembang Icon and Lippo Plaza Batu in 2015, Lippo Mall Kuta in 2016, Lippo Plaza Kendari and Lippo Plaza Jogja in 2017 respectively (Note 32). The master leases range from 3 to 5 years apart from the sports centre at Palembang Icon, which is under a master lease of 25 years. At the end of reporting year, the remaining rental guarantee periods are for 1 to 22 (2016: 1 to 23) years.

The master leases agreement signed with respective master lessors are summarised as follows:

Master leases Master leases period Amount per annum From To Rp million

Lippo Mall Kemang 17 December 2014 16 December 2017 208,000 Palembang Icon 10 July 2015 9 July 2018 19,142 Palembang Icon (Sports Centre) 10 July 2015 30 April 2040 6,908 Lippo Plaza Batu 7 July 2015 6 July 2018 18,219 Lippo Mall Kuta 29 December 2016 28 December 2021 43,281 Lippo Plaza Kendari 21 June 2017 20 June 2022 15,100 Lippo Plaza Jogja 22 December 2017 21 December 2022 42,636 353,286

F-144 134

Notes to the Financial Statements (cont’d) 31 December 2017

15. Intangible assets (cont’d)

The master leases as a percentage of the respective mall’s gross revenue are as follows:

2017 2016 Master Master Gross leases as % Gross leases as % Master revenue of of the gross Master revenue of of the gross leases the Mall revenue leases the Mall revenue $’000 $’000 % $’000 $’000 %

Lippo Mall Kemang 21,529 30,453 70.7 21,646 30,633 70.7 Palembang Icon 2,696 9,155 29.4 2,711 8,764 30.9 Lippo Plaza Batu 1,886 2,704 69.7 1,896 2,684 70.6 Lippo Mall Kuta 4,480 7,046 63.6 – – – Lippo Plaza Kendari (1) 781 2,114 36.9 – – – Lippo Plaza Jogja (2) 119 138 86.2 – – – 31,491 51,610 26,253 42,081

(1) The master lease per annum for Lippo Plaza Kendari is pro-rated from the date of acquisition from 21 June 2017. (2) The master lease per annum for Lippo Plaza Jogja is pro-rated from the date of acquisition from 22 December 2017.

16. Investments in subsidiaries Trust 2017 2016 $’000 $’000

Unquoted equity shares, at cost 984,733 984,205 Redeemable preference shares, at cost 885,556 760,568 Quasi equity loans (1) 22,339 22,339 Less: Allowance for impairment (179,748) (57,672) 1,712,880 1,709,440

Net book value of subsidiaries 1,838,738 1,876,382

Analysis of above amount denominated in non-functional currency: United States Dollars (US$) 2,979 2,979 Indonesian Rupiah (Rupiah) 1,197,420 1,218,851

(1) The quasi-equity loans, which are extended to three Singapore subsidiaries, are unsecured and interest-free with no fixed repayment terms. They are, in substance, part of the Trust’s net investment in the subsidiaries.

Movements in allowance for impairment: Balance at beginning of the year (57,672) (49,378) Impairment loss charged to profit or loss (122,076) (8,294) Balance at the end of the year (179,748) (57,672)

F-145 LIPPO MALLS annual report 2017 135 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

16. Investments in subsidiaries (cont’d)

The list of the subsidiaries is in Note 38.

The management has assessed that there are indicators of impairment for those subsidiaries with shortfalls between the cost of investment translated at year-end rates and the revalued net asset value (“NAV”). Such shortfalls would indicate that the NAV of these subsidiaries have declined against their costs. Based on the above assessment, the management had made an allowance for impairment loss of $122,076,000 (2016: $8,294,000) in the Trust’s financial statements as at 31 December 2017.

17. Investment in joint operation

Name of joint operation, country of incorporation, place of operation, Percentage of equity held principal activities and independent auditor by the Group 2017 2016 % %

Joint operation – PT Yogya Central Terpadu, Indonesia, owner of Lippo Plaza Jogja and Siloam Hospital Yogyakarta (RSM Amir Abadi Jusuf, Aryanto, Mawar & Rekan) 68.3 –

The Group has entered into a Joint Venture Deed through its wholly owned Singapore incorporated subsidiary Icon2 Investments Pte Ltd (“Icon2”) on 13 October 2017 with Icon1 Holdings Pte Ltd (“Icon1”), a wholly owned Singapore incorporated subsidiary of Singapore-listed First Real Estate Investment Trust (“First REIT”) to acquire an integrated development, comprising a hospital component known as Siloam Hospital Yogyakarta (“SHYG”) and a retail mall component know as Lippo Plaza Jogja.

Icon2 and Icon1 each holds 100.0% of the Class B Shares and Class A Shares respectively in Indonesia incorporated PT Yogya Central Terpadu, which acquired the integrated development on 22 December 2017. Class B shares entitle it to, inter alia, all the rights to the revenue and profits and all the obligations for the expenses and losses relating to Lippo Plaza Jogja and Class A shares entitle it to, inter alia, all the rights to the revenue and profits and all the obligations for the expenses and losses relating to SHYG. The Class B Shares comprises 68.3% and Class A shares 31.7% of the total issued share capital of PT Yogya Central Terpadu. The Group has classified it as a joint operation.

PT Yogya Central Terpadu incorporated in Indonesia is audited by RSM Amir Abadi Jusuf, Aryanto, Mawar & Rekan (RSM Indonesia), a member firm of RSM International of which RSM Chio Lim LLP in Singapore is a member.

F-146 136

Notes to the Financial Statements (cont’d) 31 December 2017

18. Trade and other receivables Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Trade receivables: Outside parties 11,564 8,128 180 837 Related parties (Note 3) 16,658 4,142 – – Less: Allowance for impairment (1,222) (3,554) – – Subtotal 27,000 8,716 180 837

Other receivables: Subsidiaries (Note 3) – – 231,445 217,148 Related parties (Note 3) 96 528 – 842 Other receivables 11,893 7,979 299 299 Subtotal 11,989 8,507 231,744 218,289 Total trade and other receivables 38,989 17,223 231,924 219,126

Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Movements in above allowance: Balance at beginning of the year (3,554) (2,917) – – Bad debt written back (Note 5) 3,390 65 – – Charge for trade receivables to profit or loss included in property operating expenses (Note 5) (1,361) (614) – – Effect of changes in exchange rates 303 (88) – – Balance at end of the year (1,222) (3,554) – –

Concentration of credit risk relating to trade receivables is limited due to the Group’s many varied tenants and credit policy of obtaining security deposits from most tenants for leasing the Group’s investment properties. These tenants comprise retailers engaged in a wide variety of consumer trades. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade receivables. Please refer to Note 30D for ageing analysis.

19. Other assets Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Prepayments 2,093 1,560 198 110 Prepaid tax 27,520 19,340 – – 29,613 20,900 198 110

Prepaid tax includes prepaid VAT (“value-added tax”) amounting to $8,591,000 relating to Lippo Plaza Jogja and Kediri Town Square acquisitions (2016: $8,163,000 relating to Lippo Mall Kuta acquisition) that is recoverable from the relevant tax authority in Indonesia.

F-147 LIPPO MALLS annual report 2017 137 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

20. Cash and cash equivalents Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Not restricted in use 59,787 74,271 4,447 3,570 Cash pledged for bank facilities 5,113 3,483 5,113 3,483 Cash at end of the year 64,900 77,754 9,560 7,053

Interest earning balances 49,283 62,778 – –

The rate of interest for the cash on interest earning accounts is between 0.2% and 6.0% (2016: 0.35% and 7.0%) per annum.

For the purpose of presenting the statement of cash flows, the consolidated cash and cash equivalents comprise the following: Group 2017 2016 $’000 $’000

Amount as shown above 64,900 77,754 Less: Cash pledged for bank facilities (5,113) (3,483) Cash and cash equivalents per statement of cash flows 59,787 74,271

20A. Non-cash and other transactions

During the year, the significant non-cash transaction was units that were issued as settlement of performance fee element of the Manager’s management fees (Note 7).

20B. Reconciliation of liabilities arising from financing activities:

Non-cash 2016 Cash flows Changes Reclassification* 2017 $’000 $’000 $’000 $’000 $’000

Non-current borrowings 516,584 89,290 3,936 (190,000) 419,810 Current borrowings 124,269 (45,000) (809) 190,000 268,460 Finance lease liabilities 1,307 (56) 38 – 1,289 Cash pledged for bank facilities 3,483 1,630 – – 5,113 Total liabilities from financing activities 645,643 45,864 3,165 – 694,672

* Reclassification between long-term borrowings and short-term borrowing due to change in maturity of the borrowings.

F-148 138

Notes to the Financial Statements (cont’d) 31 December 2017

21. Net assets attributable to Unitholders

Group Trust 2017 2016 2017 2016

Net assets attributable to Unitholders at end of the year ($’000) 908,286 1,091,688 890,243 1,065,807

Units in issue (Note 22) 2,823,987,723 2,802,992,873 2,823,987,723 2,802,992,873

Net assets attributable to Unitholders per unit (in cents) 32.16 38.95 31.52 38.02

The foreign currency translation reserve comprises foreign exchange differences arising from the translation of the financial statements of foreign operations.

Issuable at end of the reporting year:

At the end of the reporting year, 3,252,120 (2016: Nil) units are issuable as settlement for the Manager’s management fees for the last quarter of the reporting year (Note 7). Subsequent to financial year end, 2,326,647 units have been issued as settlement for the acquisition fees for acquisitions of Lippo Plaza Jogja and Kediri Town Square (Note 34).

The issue price for determining the number of units issued and issuable as Manager’s management base fee, performance fee and acquisition fees is calculated based on the volume weighted average traded price for all trades done on SGX-ST in the ordinary course of trading for 10 business days immediately preceding the respective last business day of the respective quarter end date, year end date and issuance date respectively. The new units, upon issue and allotment, will rank pari passu in all respect with the units of the Trust.

Each unit in the Trust presents an undivided interest in the Trust. The rights and interests of Unitholders are contained in the Trust Deed and include the right to:

• receive income and other distributions attributable to the Units held;

• receive audited financial statements and the annual report of the Trust; and

• participate in the termination of the Trust by receiving a share of all net cash proceeds derived from the realisation of the assets of the Trust less any liabilities, in accordance with their proportionate interests in the Trust.

No Unitholder has a right to require that any assets of the Trust be transferred to him.

Further, Unitholders cannot give directions to the Trustee or the Manager (whether at a meeting of Unitholders duly convened and held in accordance with the provisions of the Trust Deed or otherwise) if it would require the Trustee or the Manager to do or omit doing anything which may result in:

• The Trust ceasing to comply with applicable laws and regulations; or

• The exercise of any discretion expressly conferred on the Trustee or the Manager by the Trust Deed or the determination of any matter which, under the Trust Deed, requires the agreement of either or both of the Trustee and the Manager.

F-149 LIPPO MALLS annual report 2017 139 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

21. Net assets attributable to Unitholders (cont’d)

The Trust Deed contains provisions that are designed to limit the liability of a Unitholder to the amount paid or payable for any unit. The provisions seek to ensure that if the issue price of the units held by a Unitholder has been fully paid, no such Unitholder, by reason alone of being a Unitholder, will be personally liable to indemnify the Trustee or any creditor of the Trust in the event that the liabilities of the Trust exceed its assets.

Under the Trust Deed, every unit carries the same voting rights.

Capital management:

The objectives when managing capital are: to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for Unitholders and benefits for other stakeholders, and to provide an adequate return to Unitholders by pricing services commensurately with the level of risk. The Manager sets the amount of capital in proportion to risk. The Manager manages the capital structure and makes adjustments to it where necessary or possible in the light of changes in economic conditions and the risk characteristics of the underlying assets. Please refer to Note 12 on the distribution policy.

The only externally imposed capital requirement is that for the Group to maintain its listing on the SGX-ST it has to have issued equity with a free float of at least 10% of the units. Management receives a report from the registrar frequently on substantial unit interests showing the non-free float and it demonstrated continuing compliance with the SGX-ST requirement on the 10% limit throughout the year.

In accordance with the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore, the total borrowings and deferred payments of the Group should not exceed 45% (2016: 45%) of the Group’s deposited property. The Group had computed its aggregate leverage ratio as follows:

Group 2017 2016 $’000 $’000

Total borrowings and deferred payments 695,000 650,710 Total deposited property 2,063,874 2,065,233 Aggregated leverage ratio (%) 33.7% 31.5%

The Group met the aggregate leverage ratio as at the end of the reporting year. The increase in the aggregate leverage ratio for the reporting year is due primarily from the increase in debt to fund the acquisitions during the year.

The Group has been assigned a rating of “Baa3” since June 2015 by Moody’s Investors Services. On 15 February 2018, the Group has requested to withdraw Moody’s issuer rating. The rating was Baa3 at the time of withdrawal and the rating was under review by Moody’s. The withdrawal has been made as there is no longer any regulatory requirement for the Trust to maintain a credit rating in order to be able to benefit from a higher aggregate leverage limit. Subsequently, on 7 March 2018, Moody’s downgraded the Trust’s rating to Ba1.

F-150 140

Notes to the Financial Statements (cont’d) 31 December 2017

22. Units in issue Group and Trust 2017 2016

Units at beginning of the year 2,802,992,873 2,797,814,196 Manager’s management fees settled in units 18,675,322 5,178,677 Manager’s acquisition fees settled in units 2,319,528 – Units at end of the year 2,823,987,723 2,802,992,873

23. Perpetual securities

The perpetual securities are classified as equity instruments and recorded in equity in the statement of financial position. The details are:

Group and Trust 2017 2016 $’000 $’000

Balance at 1 January 140,867 – Issue of perpetual securities 120,000 140,000 Issue expense (1,502) (1,710) Amount reserved for distribution to perpetual securities holders 14,053 2,577 Distribution to perpetual securities holders (13,771) – Perpetual securities per statement of financial position 259,647 140,867

LMIRT Capital and the Trustee established a $1.0 billion Guaranteed Euro Medium Term Securities Programme (“EMTS”) (together with EMTN as per Note 24B, “Programmes”) on 9 September 2015. Under EMTS,

(i) Each of LMIRT Capital and the Trustee may from time to time issue Medium Term Notes (“Notes”) which, in the case of Notes issued by LMIRT Capital, will be unconditionally and irrevocably guaranteed by the Trustee, and

(ii) The Trustee may from time to time issue perpetual securities.

On 19 June 2017, the Trust issued perpetual securities of $120.0 million under the $1.0 billion EMTS to finance the acquisition of Lippo Plaza Kendari, repayment of matured $50.0 million EMTN notes (Note 24B) and for working capital purposes.

F-151 LIPPO MALLS annual report 2017 141 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

23. Perpetual securities (cont’d)

The key terms and conditions of the perpetual securities are as follows:

• there is no fixed redemption date;

• the redemption of the security is at the option of the Trust, in whole, but not in part, on 19 December 2022 or later;

• the holders have the right to receive distribution payments at a rate of 6.6% per annum with the first reset date falling on 19 December 2022 and subsequent resets occurring every five years thereafter;

• the distributions will be payable semi-annually in arrears on 19 June and 19 December in each year on a discretionary basis and is non cumulative; and

• the payment obligations of the Trust under the perpetual securities will at all times rank ahead of the holders of junior obligations of the Trust.

In 2016, the Trust issued perpetual securities of $140.0 million under the $1.0 billion EMTS to partially refinance the $150.0 million 4.25% EMTN notes (Note 24B). The remaining $10.0 million was being refinanced by the drawdown from facility A & B of $5.0 million each.

The key terms and conditions of the perpetual securities are as follows:

• there is no fixed redemption date;

• the redemption of the security is at the option of the Trust, in whole, but not in part, on 27 September 2021 or later;

• the holders have the right to receive distribution payments at a rate of 7.0% per annum with the first reset date falling on 27 September 2021 and subsequent resets occurring every five years thereafter;

• the distributions will be payable semi-annually in arrears on 27 March and 27 September in each year on a discretionary basis and is non cumulative; and

• the payment obligations of the Trust under the perpetual securities will at all times rank ahead of the holders of junior obligations of the Trust.

F-152 142

Notes to the Financial Statements (cont’d) 31 December 2017

24. Other financial liabilities Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Non-current: Financial instruments with floating interest rates: Bank loans (secured) (Note 24A) – 145,000 – 145,000 Less: Unamortised transaction costs – (1,704) – (1,704) – 143,296 – 143,296 Bank loans (unsecured) (Note 24A) 350,000 205,710 350,000 205,710 Less: Unamortised transaction costs (4,268) (5,626) (4,268) (5,626) 345,732 200,084 345,732 200,084

Financial instruments with fixed interest rates: Medium term notes (unsecured) (Note 24B) 75,000 175,000 – – Less: Unamortised transaction costs (922) (1,796) – – 74,078 173,204 – –

Finance leases (Note 24C) 1,280 1,285 – – Non-current, total 421,090 517,869 345,732 343,380

Current: Financial instruments with floating interest rates: Bank loans (secured) (Note 24A) 90,000 – 90,000 – Less: Unamortised transaction costs (791) – (791) – 89,209 – 89,209 – Bank loans (unsecured) (Note 24A) 80,000 – 80,000 – Current, total 169,209 – 169,209 –

Financial instruments with fixed interest rates: Medium term notes (unsecured) (Note 24B) 100,000 125,000 – – Less: Unamortised transaction costs (749) (731) – – 99,251 124,269 – –

Finance leases (Note 24C) 9 22 – – Current, total 268,469 124,291 169,209 – Total 689,559 642,160 514,941 343,380

The non-current portion is repayable as follows: Due within 2 to 5 years 421,056 517,154 345,732 343,380 Due after 5 years 34 715 – – Total non-current portion 421,090 517,869 345,732 343,380

F-153 LIPPO MALLS annual report 2017 143 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

24. Other financial liabilities (cont’d)

At the end of reporting year, the range of floating interest rates paid per annum was as follows:

Group and Trust 2017 2016

Bank loans (secured and unsecured) 2.88% to 4.30% 3.13% to 4.63%

At the end of reporting year, the ranges of fixed interest rates paid per annum were as follows:

Group 2017 2016

Medium term notes (unsecured) 4.1% to 4.5% 4.1% to 5.875% Finance leases 14.0% 14.0%

The weighted effective interest rates for outstanding bank loans and medium term notes paid per annum were as follows: Group Trust 2017 2016 2017 2016

Bank loans (secured and unsecured) 4.73% 4.76% 4.73% 4.76% Medium term notes (unsecured) 5.02% 5.06% – –

24A. Bank loans

Bank loan (Secured)

In December 2014, the Trust drew down on its secured bank loan facility of $155.0 million maturing in December 2018 at an interest rate of 3.0% per annum plus SGD swap offer rate (“SOR”). An amount of $55.0 million was repaid in 2017. As at 31 December 2017, the outstanding under this facility amounted to $90.0 million (2016: $145.0 million).

The bank loan agreement provides among other matters for the following:

(i) The Trust to procure that none of its subsidiaries will create or have any outstanding security over the relevant retail malls and spaces, the shares and the charged assets (collectively “Relevant Assets”). The carrying amount of the relevant assets at the end of the reporting year was $428,192,000 (2016: $470,567,000).

(ii) The Trust shall not without prior consent in writing from the lender:

(a) sell, transfer or dispose any of the Relevant Assets on terms whereby they are leased or re-acquired by any other members of the Group;

(b) sell, transfer or dispose any of its receivables in relation to the Relevant Assets on recourse terms;

(c) enter into any arrangement in relation to the Relevant Assets, under which money or the benefit of a bank or other account may be applied, set off or made subject to a combination of accounts; and

F-154 144

Notes to the Financial Statements (cont’d) 31 December 2017

24. Other financial liabilities (cont’d)

24A. Bank loans (cont’d)

Bank loan (Secured) (cont’d)

(ii) The Trust shall not without prior consent in writing from the lender: (cont’d)

(d) enter into any preferential arrangement in relation to the Relevant Assets having a similar effect;

in circumstances where the arrangement or transaction is entered into primarily as a method of raising financial indebtedness or of financing the acquisition of an asset.

The fair value (Level 2) of the bank loan is a reasonable approximation of the carrying amount as it is a floating rate instrument that is frequently re-priced to market interest rates.

In 2015, the Trust entered into interest rate swap contracts to convert the floating interest rate borrowings to fixed rate exposure, ranging from 1.85% to 1.88% per annum, for a total notional amount of $155.0 million (Note 28A). The contracts will expire on 16 December 2018.

Current bank loans (Unsecured)

On 13 November 2017, the Trust signed a facility agreement for a $80.0 million unsecured uncommitted revolving credit facility at interest rate of 1.8% per annum plus SOR. As at 31 December 2017, full amount of $80.0 million has been drawn.

Non-current bank loans (Unsecured)

On 22 August 2016, the Trust signed a facility agreement of $350.0 million which consists of 2 tranches A & B of $175.0 million each, maturing in August 2020 and August 2021 interest rates of 2.95% per annum plus SOR and 3.15% per annum plus SOR respectively. Each drawdown is equal share from each of the tranche A & B.

In August 2016, the Trust drew $100.0 million to refinance the $100.0 million 4 January 2016 term loan, in October 2016, the Trust drew $10.0 million to partially refinance the $150.0 million 4.25% EMTN notes (Note 24B) and in December 2016, the Trust drew $95.7 million to refinance the acquisition of Lippo Mall Kuta.

In July 2017, the Trust drew $35.0 million to refinance the acquisition of Lippo Plaza Kendari, in November 2017, the Trust drew $76.6 million to refinance the $75.0 million 4.48% EMTN notes and in December 2017, the Trust drew $32.6 million to refinance the acquisition of Kediri Town Square.

As of 31 December 2017, the full $350.0 million has been utilised.

F-155 LIPPO MALLS annual report 2017 145 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

24. Other financial liabilities (cont’d)

24B. Medium term notes (Unsecured)

On 25 June 2012, a wholly-owned subsidiary, LMIRT Capital Pte Ltd (“LMIRT Capital”) established a $750.0 million Guaranteed Euro Medium Term Note Programme (“EMTN”). Under the EMTN, LMIRT Capital may, subject to compliance with all relevant laws, regulations and directives, from time to time issue notes in series or tranches. Each series or tranches of notes may be issued in various currencies and tenor, and may bear fixed, floating or variable rates of interest. All sum payable in respect of the notes will be unconditionally and irrevocably guaranteed by the Trustee.

As at 31 December 2017, notes issued by LMIRT Capital are as follows:

(i) $75.0 million 4.1% notes due 2020. The $75.0 million notes were issued on 22 June 2015, will mature on 22 June 2020, and bear a fixed rate of 4.1% per annum payable semi-annually in arrears; and

(ii) $100.0 million 4.5% notes due 2018. The $100.0 million notes were issued on 23 November 2015, will mature on 23 November 2018, and bear a fixed rate of 4.5% per annum payable semi-annually in arrears.

On 6 July 2017, the $50.0 million 5.875% notes payable semi-annually in arrears issued on 6 July 2012 were fully repaid upon maturity (Note 24A).

On 28 November 2017, the $75.0 million 4.48% notes payable semi-annually in arrears issued on 28 November 2012 were fully repaid upon maturity (Note 24A).

In 2016, the $150.0 million 4.25% notes payable semi-annually in arrears issued on 4 October 2013 were fully repaid upon maturity (Note 24A).

The fair value of the fixed rate notes (Level 1) is $174,779,500 (2016: $297,375,000).

The notes are listed on the Singapore Exchange Securities Trading Limited.

24C. Finance leases Minimum Finance Present payments charges value Group $’000 $’000 $’000

2017 Minimum lease payments payable: Due within one year 43 (34) 9 Due within 2 to 5 years 1,307 (61) 1,246 Due after 5 years 60 (26) 34 Total 1,410 (121) 1,289

F-156 146

Notes to the Financial Statements (cont’d) 31 December 2017

24. Other financial liabilities (cont’d)

24C. Finance leases (cont’d)

Minimum Finance Present payments charges value $’000 $’000 $’000

2016 Minimum lease payments payable: Due within one year 56 (34) 22 Due within 2 to 5 years 691 (121) 570 Due after 5 years 830 (115) 715 Total 1,577 (270) 1,307

Finance lease represents Build, Operate and Transfer (“BOT”) fees payable.

The fixed rate of interest for finance leases is 14% (2016: 14%) per year. The finance lease is on fixed repayment term and no arrangements have been entered into for contingent rental payments.

The carrying amount of the lease liabilities is not significantly different from the fair value.

PT Cibubur Utama (a subsidiary)

PT Cibubur Utama (“Cibubur”) entered into a BOT agreement with Perusahaan Daerah Pembangunan Sarana Jaya DKI Jakarta (“Sarana”). Cibubur has the right to build, operate and transfer the property for a period of 20 years commencing July 2005 and the first priority to extend the agreement.

Cibubur has the following payment obligations: (a) US$2,260,000 including VAT that is to be paid by instalments from the year 2004 until 2024; (b) Goodwill compensation of Rp1,500,000,000 was paid in prior years; and (c) Monitoring fee of Rp5,000,000 per month including VAT that is to be paid quarterly on 15 January, 15 April, 15 July and 15 October from 2004 until 2024.

PT Duta Wisata Loka (a subsidiary)

PT Duta Wisata Loka (“PT DWL”) entered into a BOT agreement with Governor of Special City of Jakarta. PT DWL has the right to build, operate and transfer the property for a period of 30 years commencing June 1995.

PT DWL has the following payment obligations: (a) Rp19,500,000,000 including VAT that is to be paid by instalments from the year 1995 until 2021 and (b) Goodwill compensation of Rp500,000,000 that was paid in 1995.

PT Anugrah Prima (a subsidiary)

PT Anugrah Prima (“PT AP”) entered into a BOT agreement with the Regional Government of City of Medan. PT AP has the right to build, operate and transfer the property for a period of 25 years commencing July 2002.

PT AP has the following payment obligations: (a) US$1,089,770 including VAT that is to be paid by instalments of US$49,535 per year from the year 2005 until 2026; and (b) Goodwill compensation of US$99,070 has been paid.

F-157 LIPPO MALLS annual report 2017 147 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

24. Other financial liabilities (cont’d)

24C. Finance leases (cont’d)

PT Palembang Paragon Mall (a subsidiary)

PT Palembang Paragon Mall (“PT PPM”) entered into a BOT agreement with South Sumatera Provincial Government. PT PPM has the right to build, operate and transfer the property for a period of 30 years commencing January 2011.

PT PPM has the following payment obligations: (a) Rp3,750,000,000 that is to be paid by instalments from year 2011 until 2040 and (b) 40% retribution tax from the net parking income received by PT PPM each year.

PT Griya Inti Sejahtera Insani (a subsidiary)

PT Griya Inti Sejahtera Insani (“PT GISI”) entered into a BOT agreement with Government of South Sumatra Province. PT GISI has the right to build, operate and transfer the property for a period of 30 years commencing April 2010.

PT GISI has the following obligations: (a) Rp20,604,677,199 that is to be paid by instalments on a yearly instalment from March 2012 until 2039.

PT Mitra Anda Sukses Bersama (a subsidiary)

PT Mitra Anda Sukses Bersama (“PT MASB”) entered into a BOT agreement with Southeast Sulawesi Government. PT MASB has the right to build, operate and transfer the property for a period of 30 years commencing November 2012.

PT MASB has the following obligations: (a) Rp6,714,480,333 that is to be paid by instalments on a yearly instalment from November 2012 until 2042. These amounts have been fully paid by PT MASB prior to the completion of acquisition by the Group and (b) 30% of the gross revenue of the parking income received by PT MASB each year.

All the above obligations have been met by the respective Indonesian subsidiaries.

25. Other liabilities, non-current Group 2017 2016 $’000 $’000

Advance payments by tenants 94,688 87,039

This relates to the rental received in advance from certain tenants.

F-158 148

Notes to the Financial Statements (cont’d) 31 December 2017

26. Trade and other payables, current Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Trade payables: Outside parties and accrued liabilities 21,247 15,278 29,558 11,840 Related parties (Note 3) 221 860 – – Subtotal 21,468 16,138 29,558 11,840

Other payables: Loan payable to a subsidiary (1) – – 201,054 325,107 Subsidiaries (Note 3) – – 56,650 46,827 Other payables 23,869 15,042 – – Subtotal 23,869 15,042 257,704 371,934 Total trade and other payables, current 45,337 31,180 287,262 383,774

(1) The loan payable agreements provide that they are unsecured, with fixed interest rates ranging from 4.1% to 4.5% (2016: 4.1% to 5.875%) per annum and repayable on demand. The carrying amount is a reasonable approximation of fair value (Level 2).

27. Other liabilities, current Group 2017 2016 $’000 $’000

Security deposits from tenants 34,415 32,582

F-159 LIPPO MALLS annual report 2017 149 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

28. Derivative financial instruments

The table below summarises the fair value of derivatives engaged into at the end of year. All derivatives are not designated as hedging instruments. Group and Trust 2017 2016 $’000 $’000

Assets – Derivatives with positive fair values: Currency option contracts (Note 28B) 394 – Total 394 –

Non-current portion 394 – 394 –

Liabilities – Derivatives with negative fair values: Interest rate swaps (Note 28A) (909) (927) Currency option contracts (Note 28B) (1,954) (974) (2,863) (1,901)

Non-current portion (1,954) (1,811) Current portion (909) (90) (2,863) (1,901) Net balance (2,469) (1,901)

Group and Trust 2017 2016 $’000 $’000

The movements during the year were as follows: Balance at beginning of year (1,901) 1,219 Fair value losses recognised in profit or loss (568) (3,120) Total net balance at end of the year (2,469) (1,901)

The maximum exposure to credit risk at the reporting date is the fair value of derivative assets.

F-160 150

Notes to the Financial Statements (cont’d) 31 December 2017

28. Derivative financial instruments (cont’d)

28A. Interest rate swaps

The notional amount of interest rate swaps for 2017 is $155.0 million (2016: $155.0 million). They are designed to convert floating rate borrowings to fixed rate exposure. The Group pays the fixed interest rates, ranging from 1.85% to 1.88% per annum, and receives a variable rate equal to the Singapore swap offer rate (“SOR”) on the notional contract amount (Level 2). The interest rate swaps will expire on 16 December 2018. Information on the maturities of the borrowings is provided in Note 24A.

28B. Currency option contracts

Notional amounts Maturity Fair value 2017 2016 Reference 2017 2016 $’000 $’000 currency 2017 2016 $’000 $’000

Currency option 43,625 49,820 Rupiah February 2017 to February 2017 to (613) (455) contracts February 2019 February 2019 Currency option 43,379 50,892 Rupiah February 2017 to February 2017 to (670) (392) contracts February 2019 February 2019 Currency option 24,647 60,266 Rupiah February 2017 to February 2017 to (255) (127) contracts February 2019 February 2019 Currency option 18,732 – Rupiah February 2017 to – 394 – contracts February 2019 Currency option 18,732 – Rupiah February 2017 to – (416) – contracts February 2019 149,115 160,978 (1,560) (974)

The purpose of the currency option contracts is to mitigate the fluctuation of income denominated in Rupiah arising from (i) dividends received or receivable, by the Singapore subsidiaries, and (ii) capital receipts from repayment of shareholders loans to Singapore subsidiaries.

Currency derivatives are utilised to hedge significant future transactions and cash flows. The Trust is a party to a variety of foreign currency options in the management of its exchange rate exposures. The instruments purchased are primarily denominated in the currency of the entity’s principal market. As a matter of principle, the Trust does not enter into derivative contracts for speculative purposes.

F-161 LIPPO MALLS annual report 2017 151 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

28. Derivative financial instruments (cont’d)

28C. Fair values of derivative financial instruments

The derivative financial instruments are not traded in an active market. As a result, their fair values are based on valuation techniques currently consistent with generally accepted valuation methodologies for pricing financial instruments, and incorporate all factors and assumptions that knowledgeable, willing market participants would consider in setting the price (Level 2).

The fair value (Level 2) of interest rate swaps was measured on the basis of the current value of the difference between the contractual interest rate and the market rate at the end of the reporting year. The valuation technique used market observable inputs including interest rate curves.

The fair value (Level 2) of currency option contracts is based on option models. The valuation technique uses market observable inputs including forward rate curves and annualised volatility of exchange rate.

29. Financial ratios

Group Trust 2017 2016 2017 2016

Expenses to average net assets ratio – excluding performance related fee (1) 0.75% 0.63% 0.76% 0.61% Expenses to average net assets ratio – including performance related fee (1) 1.37% 1.22% 1.38% 1.20% Portfolio turnover ratio (2) – – – –

(1) The annualised ratios are computed in accordance with the guidelines of Investment Management Association of Singapore. The expenses used in the computation relate to expenses at the Group and Trust levels excluding any property related expenses, borrowing costs, foreign exchange losses/(gains), tax deducted at source and costs associated with the purchase of investments.

(2) Turnover ratio means the number of times per year that a dollar of assets is reinvested. It is calculated based on the lesser of purchases or sales of underlying investments of a scheme expressed as a percentage of daily average net asset value.

F-162 152

Notes to the Financial Statements (cont’d) 31 December 2017

30. Financial instruments: information on financial risks

30A. Categories of financial assets and liabilities

The following table categorises the carrying amount of financial assets and liabilities recorded at the end of the reporting year: Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Financial assets: Financial assets at fair value through profit or loss 394 – 394 – Cash and cash equivalents 64,900 77,754 9,560 7,053 Loans and receivables 38,989 17,223 231,924 219,126 At end of the year 104,283 94,977 241,878 226,179

Financial liabilities: Financial liabilities at fair value through profit or loss 2,863 1,901 2,863 1,901 Measured at amortised cost: – Borrowings 688,270 640,853 514,941 343,380 – Trade and other payables 45,337 31,180 287,262 383,774 – Finance leases 1,289 1,307 – – At end of the year 737,759 675,241 805,066 729,055

Further quantitative disclosures are included throughout these financial statements.

30B. Financial risk management

The main purpose for holding or issuing financial instruments is to raise and manage the finances for the entity’s operating, investing and financing activities. There are exposures to the financial risks on the financial instruments such as credit risk, liquidity risk and market risk comprising interest rate risk, currency risk and price risk exposures. Management has certain practices for the management of financial risks and actions to be taken in order to manage the financial risks. The guidelines include the following:

1. Minimise interest rate, currency, credit and market risks for all kinds of transactions. 2. Maximise the use of “natural hedge”: favouring as much as possible the natural off-setting of sales and costs and payables and receivables denominated in the same currency and therefore put in place hedging strategies only for the excess balance. The same strategy is pursued with regard to interest rate risk. 3. Enter into derivatives or any other similar instruments solely for hedging purposes. 4. All financial risk management activities are carried out and monitored by senior management staff. 5. All financial risk management activities are carried out following acceptable market practices. 6. May consider investing in shares, bonds or similar instruments.

The Chief Financial Officer of the Manager who monitors the procedures reports to the management of the Manager.

There have been no changes to the exposures to risk; the objectives, policies and processes for managing the risk and the methods used to measure the risk.

F-163 LIPPO MALLS annual report 2017 153 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

30. Financial instruments: information on financial risks (cont’d)

30C. Fair values of financial instruments

The analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 are disclosed in the relevant notes to the financial statements. These include the significant financial instruments stated at amortised cost and at fair value in the statement of financial position. The carrying values of current financial instruments approximate their fair values due to the short-term maturity of these instruments and the disclosures of fair value are not made when the carrying amount of current financial instruments is a reasonable approximation of the fair value.

30D. Credit risk on financial assets

Financial assets that are potentially subject to concentrations of credit risk and failures by counterparties to discharge their obligations in full or in a timely manner consist principally of cash balances with banks, cash equivalents, receivables, and certain other financial assets. The maximum exposure to credit risk is: the total of the fair value of the financial assets, the maximum amount the entity would have to pay if the guarantee is called on, and the full amount of any payable commitments at the end of the reporting year. Credit risk on cash balances with banks and any other financial instruments is limited because the counter-parties are entities with acceptable credit ratings. Credit risk on other financial assets is limited because the other parties are entities with acceptable credit ratings. For credit risk on receivables, an ongoing credit evaluation is performed on the financial condition of the debtors and a loss from impairment is recognised in profit or loss. The exposure to credit risk with customers are controlled by setting limits on the exposure to individual customers and these are disseminated to the relevant persons concerned and compliance is monitored by management. Credit risk is also mitigated by the rental deposits held for each of the customers. There is no significant concentration of credit risk on receivables, as the exposure is spread over a large number of counter-parties and customers unless otherwise disclosed in the notes to the financial statements below.

Note 20 discloses the maturity of the cash and cash equivalents balances.

Other receivables are normally with no fixed terms and therefore there is no maturity.

As part of the process of setting customer credit limits, different credit terms are used. The average credit period granted to trade receivables customers is about 30 (2016: 30) days.

Ageing analysis of the trade receivable amounts that are past due as at the end of reporting year:

Group 2017 2016 $’000 $’000

Trade receivables: Less than 30 days 3,425 1,850 31 to 60 days 2,177 50 Over 61 days 5,286 6,034 At end of year 10,888 7,934

F-164 154

Notes to the Financial Statements (cont’d) 31 December 2017

30. Financial instruments: information on financial risks (cont’d)

30D. Credit risk on financial assets (cont’d)

The allowance totalling $1,222,000 (2016: $3,554,000) is based on individual accounts that are determined to be impaired at the reporting year end date. These are not secured.

As at 31 December 2017, concentration of credit risk with respect to trade receivables were trade receivables from related parties (Note 18).

Revenue from the Group’s top customer amounted to $17,880,000 (2016: $17,134,000).

30E. Liquidity risk – financial liabilities maturity analysis

The following table analyses non-derivative financial liabilities by remaining contractual maturity (contractual and undiscounted cash flows):

Less than 1 to 3 3 to 5 Over 1 year years years 5 years Total $’000 $’000 $’000 $’000 $’000

Non-derivative financial liabilities:

2017 Group Gross borrowings commitments 295,731 280,948 179,800 – 756,479 Gross finance lease obligations 43 146 1,161 60 1,410 Trade and other payables 45,337 – – – 45,337 At end of the year 341,111 281,094 180,961 60 803,226

Trust Gross borrowings commitments 188,637 201,407 179,800 – 569,844 Trade and other payables 287,262 – – – 287,262 At end of the year 475,899 201,407 179,800 – 857,106

Less than 1 to 3 3 to 5 Over 1 year years years 5 years Total $’000 $’000 $’000 $’000 $’000

Non-derivative financial liabilities:

2016 Group Gross borrowings commitments 150,211 275,741 291,143 – 717,095 Gross finance lease obligations 56 158 533 830 1,577 Trade and other payables 31,180 – – – 31,180 At end of the year 181,447 275,899 291,676 830 749,852

Trust Gross borrowings commitments 13,084 165,572 214,676 – 393,332 Trade and other payables 383,774 – – – 383,774 At end of the year 396,858 165,572 214,676 – 777,106

F-165 LIPPO MALLS annual report 2017 155 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

30. Financial instruments: information on financial risks (cont’d)

30E. Liquidity risk – financial liabilities maturity analysis (cont’d)

The following table analyses the derivative financial instruments by remaining contractual maturity:

Less than 1 year 1 to 3 years Total $’000 $’000 $’000

Derivative financial instruments:

2017: Group and Trust Net settled: Currency option contracts – (1,560) (1,560) Interest rate swaps (909) – (909) At end of the year (909) (1,560) (2,469)

Less than 1 year 1 to 3 years Total $’000 $’000 $’000

Derivative financial instruments:

2016 Group and Trust Net settled: Currency option contracts (90) (884) (974) Interest rate swaps – (927) (927) At end of the year (90) (1,811) (1,901)

The above amounts disclosed in the maturity analysis are the contractual undiscounted cash flows and such undiscounted cash flows differ from the amount included in the statement of financial position. When the counterparty has a choice of when an amount is paid, the liability is included on the basis of the earliest date on which it can be required to pay.

The liquidity risk refers to the difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. It is expected that all the liabilities will be settled at their contractual maturity. The average credit period taken to settle trade payables is about 30 (2016: 30) days. The other payables are with short-term durations. The classification of the financial assets is shown in the statements of financial position as they may be available to meet liquidity need and no further analysis is deemed necessary.

F-166 156

Notes to the Financial Statements (cont’d) 31 December 2017

30. Financial instruments: information on financial risks (cont’d)

30E. Liquidity risk – financial liabilities maturity analysis (cont’d)

Bank facilities: Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Undrawn borrowing facilities – 144,290 – 144,290

The undrawn borrowing facilities are available for operating activities and to settle other commitments. Borrowing facilities are maintained to ensure funds are available for the operations.

A schedule showing the maturity of financial liabilities and unused bank facilities is provided regularly to management of the Manager to assist in monitoring the liquidity risk. The Manager also monitors and observes the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore concerning limits on total borrowings. The Manager is of the view that cash from operating activities will be sufficient to meet the current requirements to support ongoing operations, capital expenditures, and debt repayment obligations. The Trust’s structure necessitates raising funds through debt financing and the capital markets to fund strategic acquisitions and capital expenditures. The Manager also ensures that there are sufficient funds for declared and payable distributions and any other commitments.

30F. Interest rate risk

The interest rate risk exposure is from changes in fixed rates and floating interest rates and it mainly concerns financial liabilities which are both fixed rate and floating rate. The following table analyses the breakdown of the significant financial instruments by type of interest rate:

Group Trust 2017 2016 2017 2016 $’000 $’000 $’000 $’000

Financial liabilities with interest: Fixed rates 174,618 298,780 – – Floating rates 514,941 343,380 514,941 343,380 Total at end of the year 689,559 642,160 514,941 343,380

The floating rate debt instruments are with interest rates that are re-set at regular intervals. The interest rates are disclosed in the respective notes.

In order to manage the interest rate risk, interest rate swaps are entered into to mitigate the fair value risk by converting floating rate borrowings to fixed rate borrowings, as described in Notes 24A and 28A.

The derivatives are carried at fair value, and changes in the fair value are recognised directly in the profit or loss. However, there is no impact to distributable income until realised.

F-167 LIPPO MALLS annual report 2017 157 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

30. Financial instruments: information on financial risks (cont’d)

30F. Interest rate risk (cont’d)

Sensitivity analysis: Group 2017 2016 $’000 $’000

Financial liabilities: A hypothetical variation in interest rates by 10 (2016: 10) basis points with all other variables held constant, would have an increase/decrease in total return before tax for the year by 515 343

The analysis has been performed for floating interest rate over a year for financial instruments. The impact of a change in interest rates on floating interest rate financial instruments has been assessed in terms of changing of their cash flows and therefore in terms of the impact on net expenses. The hypothetical changes in basis points are not based on observable market data (unobservable inputs).

30G. Foreign currency risk

Analysis of amounts denominated in non-functional currency: Singapore United States Dollars Dollars Total $’000 $’000 $’000

Group 2017: Financial assets: Cash and cash equivalents 6,770 38 6,808 Total financial assets 6,770 38 6,808

Financial liabilities: Other financial liabilities – – – Total financial liabilities – – – Net financial assets at end of the year 6,770 38 6,808

Singapore United States Dollars Dollars Total $’000 $’000 $’000

2016: Financial assets: Cash and cash equivalents 11,361 160 11,521 Total financial assets 11,361 160 11,521

Financial liabilities: Other financial liabilities – – – Total financial liabilities – – – Net financial assets at end of the year 11,361 160 11,521

F-168 158

Notes to the Financial Statements (cont’d) 31 December 2017

30. Financial instruments: information on financial risks (cont’d)

30G. Foreign currency risk (cont’d)

Analysis of amounts denominated in non-functional currency (cont’d): Indonesian Rupiah $’000

Trust 2017: Financial assets: Trade and other receivables 172,847 Total financial assets 172,847

Financial liabilities: Trade and other payables 2,050 Total financial liabilities 2,050 Net financial assets at end of the year 170,797

2016: Financial assets: Trade and other receivables 165,036 Total financial assets 165,036

Financial liabilities: Trade and other payables 2,227 Total financial liabilities 2,227 Net financial assets at end of the year 162,809

There is exposure to foreign currency risk as part of its normal business. In particular, there is significant exposure to Indonesian Rupiah currency risk due to the operations of the malls and retail spaces in Indonesia. In this respect, foreign currency contracts are entered into to take into consideration of anticipated revenues in Indonesian Rupiah over operating expenses. Note 28B illustrates the foreign currency derivatives in place at end of the reporting year.

F-169 LIPPO MALLS annual report 2017 159 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

30. Financial instruments: information on financial risks (cont’d)

30G. Foreign currency risk (cont’d)

Sensitivity analysis: Group 2017 2016 $’000 $’000

A hypothetical 10% (2016: 10%) strengthening in the exchange rate of the functional currency Rupiah against USD with all other variables held constant would have an adverse effect on total return before tax of (4) (16)

A hypothetical 10% (2016: 10%) strengthening in the exchange rate of the functional currency Rupiah against SGD with all other variables held constant would have an adverse effect on total return before tax of (677) (1,136)

Trust 2017 2016 $’000 $’000

A hypothetical 10% (2016: 10%) strengthening in the exchange rate of the functional currency SGD against Rupiah with all other variables held constant would have an adverse effect on total return before tax of (17,080) (16,281)

The hypothetical changes in exchange rates are not based on observable market data (unobservable inputs). The sensitivity analysis is disclosed for each currency to which the entity has significant exposure. The analysis above has been carried out without taking into consideration hedged transactions.

The above table shows sensitivity to a hypothetical 10% variation in the functional currency against the relevant non-functional foreign currencies. The sensitivity rate used is the reasonably possible change in foreign exchange rates. For similar rate weakening of the functional currency against the relevant foreign currencies above, there would be comparable impacts in the opposite direction on the profit or loss.

In management’s opinion, the above sensitivity analysis is unrepresentative of the foreign currency risks as the historical exposure does not reflect the exposure in future.

F-170 160

Notes to the Financial Statements (cont’d) 31 December 2017

31. Capital commitments

Estimated amounts committed at end of reporting year for future capital expenditure but not recognised in the financial statements are as follows:

Group 2017 2016 $’000 $’000

Commitments for purchase of plant and equipment and assets enhancements in retail malls 5,934 4,032

32. Operating lease income commitments – as lessor

At the end of reporting year the total future minimum lease receivables committed under non-cancellable operating leases are as follows: Group 2017 2016 $’000 $’000

Not later than one year 109,830 114,899 Later than one year and not later than five years 225,769 214,139 More than five years 95,573 121,359

Rental income for the year (Note 4) 164,203 152,878

The Trust has no operating lease payment commitments at the end of the reporting year.

The Group has commercial property leases for retail malls and spaces. The lease rental income terms are negotiated for an average term of five to ten years for anchor tenants and an average of three to five years for speciality tenants. These leases are cancellable with conditions and rentals are subject to an escalation clause.

On 18 October 2007, each of the Indonesian subsidiaries that are owners of retail spaces (as landlord) and the master lessee (as tenant) entered into a master leases, pursuant to which the retail spaces were leased to the master lessee in accordance with the terms and conditions of the master leases. The term of each of the master leases is for 10 years with an option for the master lessee to renew for a further term of 10 years. On 17 October 2017, each of these Indonesia subsidiaries entered into new leases for three year terms with effect from 18 November 2017 with the underlying tenants of retail spaces at certain of the malls in the Group’s existing portfolio. Certain of these new leases were entered into with lessees which are under common control by the same beneficial owner as the Sponsor.

Upon the completion of the acquisition of Lippo Mall Kemang, the Group entered into 3 master leases pursuant to which certain retail spaces of Lippo Mall Kemang were leased to the Sponsor Lessees for guaranteed rental receivable, in accordance with the terms and conditions of the master lease. The master lease were valid for a period of 3 years from 17 December 2014 to 16 December 2017 with an option for the Sponsor lessees to renew for a further term of 2 years from 17 December 2017 to 16 December 2019. During the year, the Group has renewed the master lease based on substantially the same terms and conditions.

F-171 LIPPO MALLS annual report 2017 161 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

32. Operating lease income commitments – as lessor (cont’d)

Upon completion of the acquisition of Lippo Plaza Batu, the Group entered into 4 master leases, pursuant to which casual leasing, car park, certain specialty retail spaces and the rooftop space of Lippo Plaza Batu were leased to the Vendor lessees for guaranteed rental receivables, in accordance with the terms and conditions of the master leases. The master leases are valid for a period of 3 years from 7 July 2015 to 6 July 2018.

Upon completion of the acquisition of Palembang Icon, the Group entered into 5 master leases, pursuant to which casual leasing, car park, a major retail unit space, certain specialty retail spaces and a Sports Centre of Palembang Icon were leased to the Vendor lessees for guaranteed rental receivables, in accordance with the terms and conditions of the master lease. The master lease are valid for a period of 3 years from 10 July 2015 to 9 July 2018 with no option to renew. The master lease for the Sports Centre will run for the remaining period of the BOT agreement which expires on 30 April 2040.

Upon completion of the acquisition of Lippo Mall Kuta, the Group entered into 3 master leases, pursuant to which casual leasing, car park and certain specialty retail spaces were leased to the Vendor lessees for guaranteed rental receivables, in accordance with the terms and conditions of the master lease. The master lease are valid for a period of 5 years from 29 December 2016 to 28 December 2021.

Upon completion of the acquisition of Lippo Plaza Kendari, the Group entered into 2 master leases, pursuant to which casual leasing and certain anchor and specialty retail spaces were leased to the Vendor lessees for guaranteed rental receivables, in accordance with the terms and conditions of the master lease. The master lease are valid for a period of 5 years from 21 June 2017 to 20 June 2022.

Upon completion of the acquisition of Lippo Plaza Jogja, the Group entered into 3 master leases, pursuant to which casual leasing, car park and certain anchor and specialty retail spaces were leased to the Vendor lessees for guaranteed rental receivables, in accordance with the terms and conditions of the master lease. The master lease are valid for a period of 5 years from 22 December 2017 to 21 December 2022.

33. Other matters

Right of First Refusal (“ROFR”)

On 14 August 2007, an agreement was entered into between the Trustee and the Sponsor pursuant to which the Sponsor granted the Trust, for so long as (a) LMIRT Management Ltd remains the Manager of the Trust; and (b) the Sponsor and/or any of its related corporations, alone or in aggregate, remains a controlling shareholder of the Manager; a ROFR over any retail properties located in Indonesia (each such property to be known as a “Relevant Asset”): (i) which the Sponsor or any of its subsidiaries (each a “Sponsor Entity”) proposes to sell or transfer (whether such Relevant Asset is wholly-owned or partly-owned by the Sponsor Entity and excluding any sale of Relevant Asset by a Sponsor Entity to any related corporation of such Sponsor Entity pursuant to a reconstruction, amalgamation, restructuring, merger or any analogous event) to an unrelated third party; or (ii) for which a proposed offer for sale or transfer of such Relevant Asset has been made to a Sponsor Entity.

F-172 162

Notes to the Financial Statements (cont’d) 31 December 2017

34. Events after the end of the reporting year

On 13 February 2018, a final distribution of $0.79 cents per unit was declared totalling $22,286,000, in respect of the quarter ended 31 December 2017.

On 27 February 2018, 3,252,120 new units have been issued to the Manager at the issue price of $0.3999 cents per unit as payment of base fee elements of the Manager fee for the quarter ended 31 December 2017. The issue price was based on the volume weighted average traded price for all trades done on the SGX-ST in the ordinary course of trading for the last 10 business days of the quarter.

On 27 February 2018, 2,326,647 new units have been issued at the issue price of $0.3929 cents per unit as payment of acquisition fee for acquisitions of Lippo Plaza Jogja and Kediri Town Square. The issue price was based on the volume weighted average traded price for all trades done on the SGX-ST in the ordinary course of trading for the last 10 business days immediately preceding the issuance of the acquisition units.

On 5 March 2018, the Trust obtained a $40 million unsecured uncommitted revolving credit facility which will be used for general corporate funding including but not limited to acquisition, working capital and asset enhancement initiatives.

On 7 March 2018, the Trust discharged all the securities including mortgage on properties granted for the facility other than a charge over interest escrow account and sale account. With the completion of the discharge, the Trust’s property portfolio is now unencumbered.

35. Changes and adoption of financial reporting standards

For the current reporting year new or revised Financial Reporting Standards in Singapore and the related Interpretations to FRS (“INT FRS”) were issued by the Singapore Accounting Standards Council. Those applicable to the reporting entity are listed below. These applicable new or revised standards did not require any modification of the measurement methods or the presentation in the financial statements.

FRS No. Title

FRS 7 Amendments to FRS 7: Disclosure Initiative FRS 112 Amendments to FRS 112: Disclosure of Interests in Other Entities

F-173 LIPPO MALLS annual report 2017 163 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

36. New or amended standards in issue but not yet effective

Certain new standards and amendments and interpretations to existing standards have been published and are mandatory for the Trust’s accounting periods beginning on or after 1 January 2018 or later periods for which the Trust has not early adopted.

For those new standards and amendments and interpretations to existing standards that are expected to have an effect on the financial statements of the Trust in future financial periods, the Trust is currently assessing the transition options and the potential impact on the financial statements. The Trust does not plan to adopt these standards early.

Effective date for periods beginning on FRS No. Title or after

FRS 109 Financial Instruments 1 January 2018 FRS 115 Revenue from Contracts with Customers 1 January 2018 FRS 115 Amendments to FRS 115: Clarifications to FRS 115 Revenue from 1 January 2018 Contracts with Customers FRS 116 Leases 1 January 2019

Listed companies with annual periods beginning on or after 1 January 2018 are required to adopt the Singapore Financial Reporting Standards (International) (that would be IFRS compliant). Therefore the first SFRS(I) compliant interim financial statements (SGX Quarterly or Half Yearly Announcements) will be effective from this date. SFRS(I) will also apply to the comparative interim periods. The financial statements will also need figures for the opening ‘third’ statement of financial position at 1 January 2017, which is the date of transition to SFRS(I) and the starting point for SFRS(I).

However, real estate investment trusts (“REITs”) must comply with the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore, and will continue to prepare their financial statements in the manner prescribed under ISCA’s Statement of Recommended Accounting Practice 7 (“RAP 7”) Reporting Framework for Unit Trusts. RAP 7 requires that the accounting policies generally comply with SFRS principles relating to recognition and measurement, unless prescribed by RAP 7.

On the basis of the facts and circumstances that exist as at 31 December 2017 the Group does not anticipate that the application of the new standards will have a material impact on the financial position and financial performance of the Group.

F-174 164

Notes to the Financial Statements (cont’d) 31 December 2017

37. Comparative figures

Certain comparative figures have been reclassified to conform with current year’s presentation as set out below:

Previously stated Adjustment Restated 2016 2016 $’000 $’000 $’000

Group Statement of Total Return Finance costs (44,509) 9,546 (34,963)

Realised gains on derivative financial instruments 13,556 (9,546) 4,010

In view of the above changes consequential reclassifications were made to the Statement of Cash Flows of the Group. These included reclassifying of $9,546,000 from operating activities to financing activities.

Previously stated Adjustment Restated 2016 2016 $’000 $’000 $’000

Trust Statement of Total Return Finance costs (48,096) 9,546 (38,550) Realised gains on derivative financial instruments 13,556 (9,546) 4,010

F-175 LIPPO MALLS annual report 2017 165 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

38. Listing of investments in subsidiaries

All the subsidiaries are wholly owned. The subsidiaries held by the Trust and the Group are listed below:

Name of Subsidiaries, Country of Incorporation, Place of Operations and Principal Activities Cost 2017 2016 $’000 $’000

Singapore Gajah Mada Investments Pte Ltd 80,540 81,069 Investment holding

Mal Lippo Investments Pte Ltd 54,316 55,352 Investment holding

Cibubur Holdings Pte Ltd 50,314 52,523 Investment holding

Tangent Investments Pte Ltd 76,818 78,887 Investment holding

Magnus Investments Pte Ltd 97,476 97,476 Investment holding

Elok Holdings Pte Ltd 53,889 39,607 Investment holding

PS International Holdings Pte Ltd 126,185 126,185 Investment holding

Great Properties Pte Ltd 59,360 59,360 Investment holding

Grace Capital Pte Ltd 34,278 34,278 Investment holding

Realty Overseas Pte Ltd 26,500 26,500 Investment holding

Java Properties Pte Ltd 18,428 18,697 Investment holding

Serpong Properties Pte Ltd 15,879 16,524 Investment holding

Metropolis Properties Pte Ltd 26,261 26,408 Investment holding

Matos Properties Pte Ltd 19,938 20,197 Investment holding

F-176 166

Notes to the Financial Statements (cont’d) 31 December 2017

38. Listing of investments in subsidiaries (cont’d)

Name of Subsidiaries, Country of Incorporation, Place of Operations and Principal Activities Cost 2017 2016 $’000 $’000

Singapore Detos Properties Pte Ltd 20,817 21,150 Investment holding

Palladium Properties Pte Ltd 44,952 45,970 Investment holding

Madiun Properties Pte Ltd 24,226 24,604 Investment holding

GMP International Holdings Pte Ltd 765 765 Investment holding

MLC Holdings Pte Ltd 765 765 Investment holding

CJ Retail Investments Pte Ltd 89 89 Investment holding

Maxia Investments Pte Ltd 535 535 Investment holding

Fenton Investments Pte Ltd 1,256 1,256 Investment holding

EP International Investments Pte Ltd 60 60 Investment holding

Plaza Semanggi Investments Pte Ltd 161 161 Investment holding

PV International Holdings Pte Ltd 169,306 169,306 Investment holding

Pluit Village Investments Pte Ltd 29,189 29,189 Investment holding

PMF Holdings Pte Ltd 57,083 42,153 Investment holding

Plaza Medan Investments Pte Ltd 1* 1* Investment holding

F-177 LIPPO MALLS annual report 2017 167 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

38. Listing of investments in subsidiaries (cont’d)

Name of Subsidiaries, Country of Incorporation, Place of Operations and Principal Activities Cost 2017 2016 $’000 $’000

Singapore PSX Holdings Pte Ltd 9,938 10,912 Investment holding

Palembang Square Holdings Pte Ltd 51,216 51,963 Investment holding

Taminis Holdings Pte Ltd 19,565 19,757 Investment holding

Kramati Holdings Pte Ltd 38,432 39,614 Investment holding

Binjaimall Holdings Pte Ltd 23,430 23,430 Investment holding

Pejaten Holdings Pte Ltd 117,066 86,462 Investment holding

Super Binjai Investment Pte Ltd 1* 1* Investment holding

Pejatenmall Investment Pte Ltd 2,151 1* Investment holding

Kramat Jati Investment Pte Ltd 1* 1* Investment holding

Tamini Square Investment Pte Ltd 1* 1* Investment holding

Palem Square Investment Pte Ltd 1* 1* Investment holding

F-178 168

Notes to the Financial Statements (cont’d) 31 December 2017

38. Listing of investments in subsidiaries (cont’d)

Name of Subsidiaries, Country of Incorporation, Place of Operations and Principal Activities Cost 2017 2016 $’000 $’000

Singapore PSEXT Investment Pte Ltd 1* 1* Investment holding

LMIRT Capital Pte Ltd 1* 1* Provision of treasury services

KMT 1 Holdings Pte Ltd 332,043 341,062 Investment holding

KMT 2 Investment Pte Ltd 16,104 16,104 Investment holding

Picon1 Holdings Pte Ltd 86,873 75,416 Investment holding

Picon2 Investments Pte Ltd 16,375 10,807 Investment holding

Kuta1 Holdings Pte Ltd 86,129 86,403 Investment holding

Kuta2 Investments Pte Ltd 4,320 4,320 Investment holding

Icon2 Investments Pte Ltd 57,000 1* Investment holding

F-179 LIPPO MALLS annual report 2017 169 INDONESIA RETAIL TRUST

Notes to the Financial Statements (cont’d) 31 December 2017

38. Listing of investments in subsidiaries (cont’d)

Name of Subsidiaries, Country of Incorporation, Place of Operations and Principal Activities Cost 2017 2016 $’000 $’000

Indonesia PT Graha Baru Raya 805 805 Owner of Gajah Mada Plaza

PT Graha Nusa Raya 805 805 Owner of Mal Lippo Cikarang

PT Cibubur Utama 1,772 1,772 Owner of Cibubur Junction

PT Megah Semesta Abadi 10,692 10,692 Owner of Bandung Indah Plaza

PT Suryana Istana Pasundan 25,112 25,112 Owner of Istana Plaza

PT Indah Pesona Bogor 1,208 1,208 Owner of Lippo Plaza Ekalokasari Bogor

PT Primatama Nusa Indah 3,222 3,222 Owner of The Plaza Semanggi

PT Manunggal Wiratama 10,476 10,476 Owner of Sun Plaza

PT Duta Wisata Loka 30,031 30,031 Owner of Pluit Village

PT Anugrah Prima 14,630 14,630 Owner of Plaza Medan Fair and Plaza Medan Fair Extension

PT Amanda Cipta Utama 6,270 6,270 Owner of Binjai Supermall

PT Panca Permata Pejaten 24,532 15,929 Owner of Pejaten Village and Kediri Town Square

PT Benteng Teguh Perkasa 10,263 10,263 Owner of Lippo Plaza Kramat Jati

PT Cahaya Megah Nusantara 2,566 2,566 Owner of Tamini Square

PT Jaya Integritas 2,566 2,566 Owner of Palembang Square

PT Palembang Paragon Mall 4,362 4,362 Owner of Palembang Square Extension

F-180 170

Notes to the Financial Statements (cont’d) 31 December 2017

38. Listing of investments in subsidiaries (cont’d)

Name of Subsidiaries, Country of Incorporation, Place of Operations and Principal Activities Cost 2017 2016 $’000 $’000

Indonesia PT Cahaya Bimasakti Nusantara 2,566 2,566 Owner of Palembang Square Extension

PT Dinamika Serpong 805 805 Owner of Mall WTC Matahari Units

PT Gema Metropolis Modern 805 805 Owner of Metropolis Town Square Units

PT Matos Surya Perkasa 805 805 Owner of Malang Town Square Units

PT Megah Detos Utama 805 805 Owner of Depok Town Square Units

PT Palladium Megah Lestari 5,364 5,364 Owner of Grand Palladium Units and Lippo Plaza Batu

PT Madiun Ritelindo 805 805 Owner of Plaza Madiun Units

PT Java Mega Jaya 805 805 Owner of Java Supermall Units

PT Kemang Mall Terpadu 64,417 64,417 Owner of Lippo Mall Kemang

PT Griya Inti Sejatera Insani 5,223 5,223 Owner of Palembang Icon

PT Rekreasi Pantai Terpadu 17,280 8,775 Owner of Lippo Mall Kuta

PT Mitra Anda Sukses Bersama 1* – Owner of Lippo Plaza Kendari

Joint operations held by subsidiary, Icon2 Investments Pte Ltd PT Yogya Central Terpadu 14,250 – Owner of Lippo Plaza Jogja and Siloam Hospital Yogyakarta

* Amount is less than $1,000.

The subsidiaries incorporated in Indonesia are audited by RSM Amir Abadi Jusuf, Aryanto, Mawar & Rekan (RSM Indonesia), a member firm of RSM International of which RSM Chio Lim LLP in Singapore is a member.

The subsidiaries incorporated in Singapore are audited by RSM Chio Lim LLP in Singapore.

The investments include investment in redeemable preference shares that are redeemable at the option of the subsidiaries.

The share certificates of certain subsidiaries are pledged as security for bank facilities (Note 24A).

F-181 Registered Office of the Issuer 50 Collyer Quay #06-07, OUE Bayfront Singapore 049321

Trustee Principal Paying Agent, Registered Office of Registrar and the Guarantor Transfer Agent

Citicorp International Citibank N.A., London Branch Perpetual (Asia) Limited Limited c/o Citibank, N.A., Dublin Branch 8 Marina Boulevard 39/F, Champion Tower 1 North Wall Quay #05-02 Marina Bay 3 Garden Road Dublin 1 Financial Centre Central Ireland Singapore 018981 Hong Kong

Legal Advisers To the Company

as to U.S. law as to Singapore law as to Indonesian law

Milbank LLP Allen & Gledhill LLP Makes & Partners 12 Marina Boulevard One Marina Boulevard #28-00 Menara Batavia 7th Floor #36-03 MBFC Tower 3 Singapore 018989 Jl. K.H. Mas Mansyur Kav.126 Singapore 018982 Jakarta 10220, Indonesia

Legal Advisers To the Joint Lead Managers

as to U.S. law as to Indonesian law

White & Case Pte. Ltd. Witara Cakra Advocates 8 Marina View #27-01 Sampoerna Strategic Square Asia Square Tower 1 North Tower, Level 17, Jl. Jend. Sudirman Kav. 45-46 Singapore 018960 Jakarta 12930, Indonesia

Legal Adviser To the Trustee

Allen & Overy LLP 50 Collyer Quay #09-01, OUE Bayfront Singapore 049321

Independent Public Accountants

RSM Chio Lim LLP 8 Wilkie Road #03-08, Wilkie Edge Singapore 228095 732459