Great Eagle : Discloseable Transaction in relation to Disposal of Property in San Francisco, the United States by The U.S. Real Estate Fund

Hong Kong Exchange and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever fo

Hong Kong Exchange and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

(Stock Code: 41)

ANNOUNCEMENT DISCLOSEABLE TRANSACTION IN RELATION TO DISPOSAL OF PROPERTY IN SAN FRANCISCO, THE UNITED STATES BY THE U.S. REAL ESTATE FUND

The Board is pleased to announce that on 22 June 2016, the Seller, a wholly-owned subsidiary of the U.S. Real Estate Fund, which in turn is an indirect non-wholly owned subsidiary of the Company, entered into the Purchase and Sale Agreement with the Buyer whereby the Seller shall sell the Property to the Buyer at a consideration of US$255,000,000 (equivalent to approximately HK$1,981,350,000) in cash subject to the terms and conditions as set out therein. To the best of the Directors' knowledge, information and belief having made all reasonable enquiry, the Buyer and its ultimate beneficial owner are parties independent of the Company and its connected persons.

As two of the applicable percentage ratios as defined under the Listing Rules in relation to the aggregate amount receivable under the Disposal are more than 5% but less than 25%, the Disposal constitutes a discloseable transaction for the Company subject to the reporting and announcement requirements under the Listing Rules.

Shareholders should note that completion of the Disposal is subject to the satisfaction or waiver of various conditions under the Purchase and Sale Agreement. Accordingly, the Disposal may or may not be completed. Shareholders and potential investors should exercise caution when dealing in the Shares.

The Board is pleased to announce that on 22 June 2016, the Seller, a wholly-owned subsidiary of the U.S. Real Estate Fund, entered into the Purchase and Sale Agreement with the Buyer whereby the Seller shall sell the Property to the Buyer at a consideration of US$255,000,000 (equivalent to approximately HK$1,981,350,000) in cash subject to the terms and conditions as set out therein.

THE PURCHASE AND SALE AGREEMENT Date

22 June 2016

Parties

1. the Seller, a wholly-owned subsidiary of the U.S. Real Estate Fund, as the owner of the Property and the seller; and

2. the Buyer as the buyer.

   To the best of the Directors' knowledge, information and belief having made all reasonable enquiry, the Buyer and its ultimate beneficial owner are parties independent of the Company and its connected persons.

   Subject matter

   The Property includes the following components:

3. certain real property located at 123 Mission Street, San Francisco, California, the United States (the "Land");

4. the buildings and structures situated on the Land together with all improvements erected or located on the Land (the "Building") (the Land and the Building, collectively, the "Premises");

5. all appurtenances pertaining to the Land owned by the Seller (the "Appurtenant Rights");

6. all leases and licence agreements for portion of the Premises, any guarantees thereof and all security deposits deposited by the tenants in respect of all leases (the "Leases");

7. all agreements affecting the Premises which the Buyer is required to assume pursuant to the Purchase and Sale Agreement (the "Miscellaneous Agreements");

8. all tangible personal property located on the Premises owned by the Seller, including furniture and equipment (the "Personal Property");

9. assignable intangible property owned by the Seller and used exclusively in connection with the occupancy and operation of the Premises (the "Intangible Property");

10. all the written warranties of any contractor, manufacturer or materialman relating to the Building or the Personal Property ( the "Contractors' Warranties"); and

11. all assignable permits and licences pertaining to the Premises held by the Seller (the "Permits").

12. Consideration

    Subject to certain adjustment for any prorations and credits provided under the provisions of the Purchase and Sale Agreement, the Consideration of US$255,000,000 (equivalent to approximately HK$1,981,350,000) for the Disposal is payable in cash by the Buyer to the Seller as follows:

13. an initial deposit of US$12,750,000 (equivalent to approximately HK$99,068,000) shall be paid within two (2) Business Days after execution of the Purchase and Sale Agreement and held in escrow pending Closing;

14. the balance of the Consideration, subject to the Extension Deposit (if any) as described below and certain adjustment for any prorations and credits, will be paid upon Closing which is scheduled to take place on 4 August 2016.

The Consideration of US$255,000,000 (equivalent to approximately HK$1,981,350,000) was arrived at after arm's length negotiation between the Buyer and the Seller and also after taking into account the independent valuation of the Property as at 31 December 2015 carried out by the independent property valuer appointed by the Company, of US$225,000,000 (equivalent to approximately HK$1,748,250,000).

Conditions

Closing is conditional upon, among other things, the following Conditions being satisfied or waived:

1. the Seller shall have deposited into escrow all instruments and documents to be delivered by the Seller to the Buyer;

2. delivery, by the Seller to the Buyer prior to the Closing, of the estoppels certificates executed by the tenants leasing not less than 85% of the square footage of the Building;

3. the Seller shall have performed and satisfied all material covenants and material obligations required by the Purchase and Sale Agreement to be performed and satisfied with on its part prior to and as of the date of Closing;

4. the title company having committed to issue an owner's title insurance policy to the Buyer insuring the Buyer's title to the Property;

5. the Buyer shall have performed and satisfied all material covenants and material obligations required by the Purchase and Sale Agreement to be performed and satisfied with on its part prior to and as of the date of Closing;

6. the Buyer shall have deposited into escrow all instruments and documents to be delivered by the Buyer to the Seller; and

7. the Buyer shall have deposited into escrow, the Consideration, subject to adjustment for any prorations and credits provided under the Purchase and Sale Agreement, and all other moneys required to be deposited by Buyer under the Purchase and Sale Agreement.

The Buyer shall have the right at all times to waive any Conditions (a) to (d) by written notice to the Seller and the escrow holder. The Seller shall have the right at all times to waive any Conditions (e) to (g) by written notice to the Buyer and the escrow holder.

Closing

Closing will take place on 4 August 2016 or such other date and time as the Seller and the Buyer may mutually agree upon in writing subject to the satisfaction or waiver (as the case may be) of the Conditions. The Buyer has the right to extend the date of Closing for a period of up to fifteen (15) days, provided that no later than three (3) Business Days prior to the date of Closing, the Buyer delivers to the escrow holder an additional deposit of US$7,650,000 (equivalent to approximately HK$59,440,000) together with a written notice to that effect to the escrow holder and the Seller. If the Buyer exercises its right to extend the date of the Closing and the Closing thereafter fails to occur due to a default of the Buyer, the amount of liquidated damages payable by the Buyer will be increased to include the Extension Deposit.

Information of the Property

The Property includes a 28-storey office building consisting of approximately 346,000 rentable square feet located in San Francisco, State of California, the United States and commonly known as 123 Mission Street and that building is currently approximately 95% occupied by a total of 14 tenants.

FINANCIAL IMPACT OF THE DISPOSAL AND USE OF PROCEEDS

For the financial years ended 31 December 2014 and 31 December 2015, the audited total rental income of the Property was US$12,917,000 (equivalent to approximately HK$100,365,000) and US$14,026,000 (equivalent to approximately HK$108,982,000) respectively.

As at 31 December 2015, the book carrying value on the basis of appraised value of the Property was US$225,000,000 (equivalent to approximately HK$1,748,250,000). Based on the above and after deducting estimated tax and transaction costs of approximately US$18,150,000 (equivalent to approximately HK$141,026,000), the Company expects that there will be a profit on the Disposal (before taking into account prior years' revaluation gain) of approximately US$11,850,000 (equivalent to approximately HK$92,075,000) attributable to the U.S. Real Estate Fund for the year 2016.

After taking into account the 49.97% equity interest held by the Company in the U.S. Real Estate Fund, a net disposal gain of approximately US$5,921,000 (equivalent to approximately HK$46,006,000) will be attributable to the Shareholders in the year of 2016. Further taking into account the unrealised revaluation gain recorded in prior years, it is expected that the Company will realise a net profit of US$18,668,000 (equivalent to approximately HK$145,050,000), which is to be recorded as core earnings.

After repaying the related debt and deducting the transaction costs and expenses, the U.S. Real Estate Fund will receive net proceeds of approximately US$119,750,000 (equivalent to approximately HK$930,458,000) upon Closing. It is expected that the U.S. Real Estate Fund will distribute the sum of US$59,860,000 (equivalent to approximately HK$465,112,000) to the Company which in turn can be used by the Company as general working capital.