Lippo Malls Indonesia Retail Trust

Lippo-Mapletree Indonesia Retail Trust Management Ltd (now known as LMIRT Management Ltd effective since 16 September 2011)

"We believe the strong underlying economic growth, a sizeable population, rising per-capita income and the continued development of organized retail infrastructure are key factors to support our business in Indonesia"

Dear Unitholders,

On behalf of the Board of Directors of Lippo Malls Indonesia Retail Trust Management Ltd, Manager of LMIR Trust, we are pleased to present the report to LMIR Trust Unitholders for the Financial Year ended 31 December 2010 (FY 2010).

INDONESIA MACRO ECONOMY:
YEAR IN REVIEW

2010 has been a landmark year for the Indonesian economy, and the country can look back on its economic performance with a high degree of satisfaction. All the targets set by the Government for economic development were achieved. GDP grew 6.1 % in FY 2010 compared to 4.5% in 2009 as rising consumer demand, strong commodity prices and low interest rates combined to create a virtuous cycle. The main market index rose 46% by the end of 2010, boosted by foreign investment inflows and equally strong local support, which made the Indonesian Stock Exchange the best performing stock market in the Asia-Pacific region. On the country's strong economic growth, GDP per capita is expected to grow from US$3,000 to US$5,000 in the coming years, which will result in further reduction in poverty.

Moody's Investors Service has announced a possible upgrade on Indonesia's credit ratings, having already issued a positive outlook for the government's Ba2 foreign and local-currency bond ratings in June. Such a further rating upgrade will take Indonesia to being an investment grade economy.

On the back of the strong economic fundamentals, the modern retail industry in Indonesia will have great potential for growth. Despite the significant new retail space coming into the market during the year, we continue to experience healthy new rentals and rental renewals, with a large number of leases being recorded at the newly completed projects. Major foreign retailers are also becoming increasingly active in the market with their expansion plans in their eff orts to exploit market opportunities.

OPERATING COMPANIES

From January 2010, we have fully assumed the mall operating activities which had previously been contracted out to external parties. Our gross revenue has therefore increased to S$129 million as a result of LMIR Trust collecting the utility expenses and service charges from the tenants. At the same time, LMIR Trust will bear all the costs relating to the operation of the malls. The changeover has had an expected transitory negative impact on our net financial results in 2010. Since the changeover, the Manager has implemented various prudent and eff ective cost cutting measures to improve the efficiency and the profitability of the operations, with the expectation that the results will become positive going forward.

DISTRIBUTION TO UNITHOLDERS

Our total distribution per unit is 4.44 cents for FY 2010, which translates into a distribution yield of 8.4%, based on the closing price of S$0.53 (as at 31 December 2010). We have continued to maintain a distribution payout ratio of 100%.

RESILIENT BUSINESS MODEL

The strong underlying economic growth, a sizeable population (the world's fourth largest after China, India and US), rising per-capita income and the continued development of organized retail infrastructure are key factors which will help support our business growth in Indonesia. Our multi tenanted malls consist of well diversified, quality brands catering to the 'everyday shopping' needs of the growing middle income population. LMIR Trust's staggered lease expiries in the next few years will ensure a steady earning base.

OUTLOOK

We expect private consumption growth to remain robust over the coming years, boosted by strong economic growth and improving unemployment rates. This will lend support to the continuing growth of the retail property market. Moving forward we will remain focused on proactive asset management by maintaining good occupancy and balanced property and tenant diversification across our retail malls and spaces to achieve steady, defensive earnings.

ACKNOWLEDGEMENTS

We wish to thank Mr Tan Boon Leong and Mr Yeo Cheow Tong, who have retired from the Board of Directors on 29 July 2010, for their invaluable contribution to the Trust since the IPO. We also wish to welcome our new members of the Board, Ms Amy Ng, and Non-Executive Chairman, Mr Albert Cheok, who both joined the Board on 29 July 2010.

We would also like to convey our appreciation to our fellow directors, tenants, shoppers, business partners and employees for their continuous support over the past year. Finally, we thank you, our Unitholders, for being part of our growth and for your trust and confidence in the Board and Management of the Manager.

Mr Albert Saychuan Cheok
Chairman and Independent Non-Executive Director