LMIR Trust's portfolio is well positioned to benefit from Indonesia's robust economic outlook and opportunities to further expand the portfolio.

Dear Unitholders,

On behalf of the Board of Directors of Lippo-Mapletree Indonesia Retail Trust Management Ltd, manager of LMIR Trust, I am pleased to present my report for the Financial Year ended 31 December 2009 ("FY2009").

Year in Review

2009 was a tumultuous year in which the global economy began its recovery from an upheaval in 2008 that was almost unparalleled. The effects of the stimulus packages offered by governments around the world began to show as the global economy slowly pulled itself out from the aftermath of the downturn. Across Asia, China, India and Indonesia were the only three economies that enjoyed GDP growth throughout the downturn. In Indonesia the successful reelection of Susilo Bambang Yudhoyono as President gave confidence to investors of the country's political continuity and stability. The Indonesian economy was unaffected by the downturn largely due to continued resilient domestic demand. Amongst a challenging global environment, 22 of Indonesia's biggest listed companies reported double digit net profit growth in 2009, with the biggest winners being those concentrating on the domestic market sectors. This is one of the main reasons for the Jakarta Composite Index ("JCI") being one of the world's best performing bourses in 2009. The strength of the domestic economy manifested itself in a much stronger Indonesian Rupiah ("IDR"), lower infl ation, and lower interest rates. The IDR posted its biggest annual advance in seven years to end at IDR 9,395 against US$1.00, up from IDR 10,900 at the start of the year – a 16% appreciation in value, infl ation was at its lowest rate in a decade and interest rates fell to new lows.

Notwithstanding the resilient domestic economy, the retail property market in Indonesia was affected by the impact of the global crisis. International retailers became more cost conscious, reducing new investment and curbing expenditure on advertising and promotional activities. On the supply side, several new shopping centres were opened in 2009, increasing the cumulative supply of retail space in Jakarta to 3.4 million sqm, an increase of 10% over the year. The supply/demand position has resulted in rentals remaining relatively fl at over the year and occupancy levels in the market have also remained steady.

Against this backdrop of a resilient macro economic picture and a benign retail property market, the LMIR Trust property portfolio was revalued upward by 10.5% in IDR terms. As at 31 December 2009, a revaluation of LMIR Trust's properties was carried out by CB Richard Ellis in Jakarta, which in IDR terms saw the portfolio increase in value from IDR 6.4 trillion to IDR 7.1 trillion. Given the appreciation in the IDR against the Singapore Dollar ("SGD") in 2009, the valuation gain in SGD was 27.2%.

Occupancy rates in LMIR Trust's portfolio remained fairly stable throughout the year, and at the end of the year the average occupancy rate of the portfolio increased to 96.9%, which remains well above the industry average rate of 82.2%.

LMIR Trust's portfolio of suburban malls and retail spaces, strategically located in high population urban middleclass catchment areas in Greater Jakarta, Bandung and Medan, performed reasonably well in a challenging retail environment. Total revenue in FY2009 was S$79.6 million, 14.2% below FY2008, mainly due to lower casual leasing, carpark and miscellaneous income as the portfolio felt the impact of the global economic crisis in the form of retailers reducing the amount of expenditure on promotional activities. In addition, the average IDR/SGD rate adopted in the financial statements in FY2008 was 5.1% stronger than in FY2009. If the IDR had been at the same level as FY2008, revenue in FY2009 would have been S$4.3 million higher.

Property operating expenses were considerably lower due to lower property management fees and no provision required for doubtful debts in FY2009. Administrative expenses were also lower than FY2008 as there were no one-off expenses written off in FY2009. Although revenue was affected by changes in IDR during the year, the Trust has entered into foreign exchange forward contracts to mitigate its exposure to fluctuations of income denominated in IDR from (a) dividends received or receivable from the Singapore subsidiaries and (b) capital receipts from the redemption of redeemable preference shares by the Singapore subsidiaries. The benefit from fixing the forward foreign exchange rates was recorded in the other gains and losses line below net property income and for FY2009 this was S$2.1 million compared to S$0.7 million in FY2008.

Due to the combined effects of the above, the available distributable income was S$54 million for FY2009, which was 2.1% above FY2008. This equates to a distribution per unit of 5.04 cents for FY2009, compared to 4.96 cents recorded in FY2008.

Capital Management

LMIR Trust's capital structure remained unchanged in the year under review. As at 31 December 2009, LMIR Trust's gearing ratio remained at a conservative 10.5%, which is well below the permitted aggregate leverage limit of 35%. The S$125 million debt facility with Deutsche Bank ("DB") was restructured during the year with the term loan duration reduced from 5 years to 4 years. As part of the restructuring, it was agreed to extend the deadline by which the Manager needed to obtain consents from certain Indonesian build, operate and transfer ("BOT") grantors in relation to the assignment of a number of BOT agreements as security for the benefit of the lender to 31 December 2009. I am pleased to advise that following further discussions, DB agreed to permanently waive the requirement to obtain these remaining consents.

Given the significant improvement recently seen in credit markets, it is expected that opportunities to tap new debt facilities and take advantage of additional gearing may become available at the same time that new acquisitions are considered. However we will continue to focus on prudent capital management strategy by conserving cash through tight controls over operating and capital expenditure.

Asset Enhancement Initiatives ("AEIs")

We are pleased to report on further AEIs that have been completed in the year under review. Our AEIs have been designed to add value to our existing malls and increase shopper traffic to maximise their growth potential from Indonesia's expanding and prospering urban middle-class segment.

In 2009, a number of AEIs were undertaken and these are highlighted in more detail in the CEO's Report.

Going forward, we will continue to look for opportunities to add value to our portfolio through AEIs. In 2010 there are a number of projects currently being considered.

Portfolio Well Situated

LMIR Trust's portfolio comprises retail malls and retail spaces located in Indonesia's major cities with large urban middle-class population catchment areas that are easily accessible via major transportation routes and highways. The portfolio features a well diversified tenant mix where no particular trade sector accounts for more than 23% of total Gross Revenue and no single property constitutes more than 17% of total net property income. The main shopper traffic at our retail malls and spaces continues to comprise urban middle income to upper-middle income consumer segments, whilst our malls are deemed as "everyday malls" for daily essentials, food outlets and family entertainment. Accordingly the LMIR Trust's portfolio is well situated as this sector of the Indonesian retail property market has been the most resilient in the past year.

In August 2009, national department store RIMO ceased its operations in Gajah Mada Plaza and Istana Plaza. However, the vacant space was quickly filled by Matahari Department Store which began operations in December 2009.

Outlook

Additional supply in the Jakarta retail market in 2010 is not expected to be significant. Given the improving global economy and the steady state of the Indonesian retail property market, leasing activities are expected to pick up in 2010. However rental trends in Indonesia are expected to remain stable.

LMIR Trust's portfolio is defensively placed with low staggered lease expiries in the next few years to ensure a steady earnings base.

We will continue to focus on proactive asset management by maintaining good occupancy and a balanced property and tenant diversification across our retail malls and spaces for steady, defensive earnings. In addition, we are confident that given Indonesia's robust economic outlook, there will be opportunities to further expand LMIR Trust's portfolio.

Acknowledgements

Once again we would like to thank our tenants, shoppers, business partners and employees for their continuous support. On behalf of the Board of Directors, I would also like to thank you, our Unitholders, for your continued belief and confidence in our business.

Mr Tan Bar Tien
Non-Executive Chairman