Circular - Lippo Malls Indonesia Retail Trust - Investor Relations

2.1.2. Opportunity to Enhance the Earnings of LMIR TrustBased on the pro forma financial statements for the year ended 31 December 2011,the pro forma Net Property Income1 contribution from Pejaten Village and BinjaiSupermall was Rp.55.1 billion (S$7.0 million). Based on the pro forma financialstatements for the six months ended 30 June 2012, the pro forma Net PropertyIncome contribution from Pejaten Village and Binjai Supermall was Rp.39.4billion (S$5.0 million), which represents, on a historical pro forma basis, a 9.0%increase in LMIR Trust’s investment value and a 16.3% increase in LMIR Trust’sNet Property Income.2.1.3. Strategic Locations with Sustainable Retail TrafficThe Proposed Properties are strategically located within Jakarta and Binjai (atransit point between Medan, the largest city in Sumatra, and Aceh), giving LMIRTrust access to the dense populations located in these cities, thereby ensuringsustainable retail traffic at these properties.LMIR Trust’s retail malls are positioned as “Everyday Malls” that providenecessities (e.g. supermarkets and family shopping) to the community living in theregions neighbouring its retail malls and target the middle income population indensely populated cities in Indonesia. The positioning of the Proposed Propertiesare in line with LMIR Trust’s targeted market segment comprising Indonesia’sexpanding and prospering urban middle class segment.2.1.4. Increased Economies of Scale in Operations and MarketingThe Proposed Acquisitions and the Recent Acquisitions will enable LMIR Trust toenlarge its presence in the retail mall sector in Indonesia and to benefit fromincreased economies of scale as the Manager and the property manager(s) of theEnlarged Portfolio1 can potentially spread certain operating costs (e.g. staff andpersonnel costs) over a larger portfolio, and increase their bargaining power withsuppliers and service providers.The Proposed Acquisitions are similarly expected to deliver economies of scaleand benefit the marketing and leasing activities of LMIR Trust by expanding anddeepening LMIR Trust’s portfolio of key tenant relationships, especially withtenants of the Proposed Properties who are currently not tenants of LMIR Trust’smalls.2.1.5. Diversification of Assets Portfolio to Minimise Concentration RisksThe Proposed Acquisitions will allow LMIR Trust to diversify its portfoliogeographically across Indonesia, thereby reducing asset concentration risks withinLMIR Trust’s Enlarged Portfolio.Following the Proposed Acquisitions, the maximum contribution to LMIR Trust’sNet Property Income by any single property within LMIR Trust’s property portfoliowill decrease to approximately 13% based on the relevant figures for the periodended 30 June 2012. Further income diversification means greater resilience andA-9