Sunlight Real Estate Investment Trust : Discloseable Transaction in relation to Acquisition of Fung Shun Commercial Building

The Securities and Futures Commission of Hong Kong, Hong Kong Exchanges 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.

(a Hong Kong collective investment scheme authorized under section 104 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong))

恒基陽光資產管理有限公司

This announcement is made pursuant to paragraphs 10.3 and 10.4 of the REIT Code.

The Manager is pleased to announce that on 26 September 2017, Sunlight REIT (through King Firm, a special purpose vehicle wholly-owned and controlled by Sunlight REIT) entered into the Sale and Purchase Agreement with the Vendor (which is an Independent Third Party), pursuant to which the Vendor agreed to sell, and King Firm agreed to purchase, Fung Shun Commercial Building at the Consideration of HK$658,000,000. The subject property consists of the whole building currently known as "Fung Shun Commercial Building" situated at No. 591 Nathan Road and No. 13 Changsha Street, Mong Kok, Kowloon, Hong Kong.

The Appraised Value of Fung Shun Commercial Building at 12 September 2017 was HK$660,000,000. The Consideration represents a discount of approximately 0.3% to the Appraised Value.

Upon Completion, the Vendor shall lease back the entire subject property, which comprises the Office Portion and the Retail Portion, for fixed terms of 1 year and 4 years respectively, and an option shall be granted to the Vendor to renew the lease for the Office Portion for a further term of 1 year.

The Consideration represents (i) approximately 7.7% of the total market capitalization of Sunlight REIT (based on the average closing price of the Units on the Stock Exchange for the five business days immediately preceding the date of the Sale and Purchase Agreement); and

(ii) approximately 3.7% (which is less than 15%) of the gross asset value of Sunlight REIT at 30 June 2017 (i.e. its total assets adjusted for distributions declared).

The Board (including the independent non-executive Directors) is satisfied that the Acquisition and the Lease Back Arrangement pursuant to the terms of the Sale and Purchase Agreement are at arm's length, on normal commercial terms, and are fair and reasonable and in the interests of Sunlight REIT and the Unitholders as a whole.

The Manager is satisfied that no Unitholders' approval is required under the REIT Code and the Trust Deed for the Acquisition and the Lease Back Arrangement. Based on, and in sole reliance on, the information and confirmations given by the Manager to the Trustee, the Trustee is also satisfied that no Unitholders' approval is required for the Acquisition.

The Manager is pleased to announce that on 26 September 2017, Sunlight REIT (through King Firm, a special purpose vehicle wholly-owned and controlled by Sunlight REIT) entered into the Sale and Purchase Agreement with the Vendor, pursuant to which the Vendor agreed to sell, and King Firm agreed to purchase, Fung Shun Commercial Building at HK$658,000,000 (i.e. the Consideration). The subject property consists of the whole building currently known as "Fung Shun Commercial Building" situated at No. 591 Nathan Road and No. 13 Changsha Street, Mong Kok, Kowloon, Hong Kong.

Set out below is a summary of the key terms of the Sale and Purchase Agreement.

Date: 26 September 2017

Parties involved: (i) the Vendor, as vendor; and

(ii) King Firm, as purchaser

To the best knowledge, information and belief of the Manager, having made all reasonable enquiries, each of the Vendor and its ultimate beneficial owner is an Independent Third Party.

Subject matter: The Vendor shall sell, and King Firm shall purchase, Fung Shun Commercial Building pursuant to the terms of the Sale and Purchase Agreement.

Consideration: The Consideration for Fung Shun Commercial Building shall be paid by King Firm to the Vendor in the following manner:

1. a deposit in the sum of HK$65,800,000 has been paid on signing of the Sale and Purchase Agreement; and

2. the balance of the Consideration in the sum of HK$592,200,000 shall be paid on the date of Completion.

The Appraised Value of Fung Shun Commercial Building at 12 September 2017 was HK$660,000,000. The Consideration represents a discount of approximately 0.3% to the Appraised Value.

Title and condition of the subject property:

Fung Shun Commercial Building shall be sold to King Firm on "as is" basis, and the Vendor shall prove and give good and marketable title to the subject property in accordance with sections 13 and 13A of the Conveyancing and Property Ordinance (Chapter 219 of the Laws of Hong Kong) respectively.

Condition: Completion is conditional upon the compliance by the Vendor with all further requirements if required by the Stock Exchange in respect of the transactions under the Sale and Purchase Agreement before Completion (the "Condition"). If the Condition cannot be satisfied before the third business day prior to the date of Completion, the Sale and Purchase Agreement shall automatically lapse and of no further effect and the deposit paid shall be returned to King Firm without costs or compensation.

Date of Completion: Subject to the satisfaction of the Condition, Completion shall take place on or before 15 December 2017.

Lease back of the entire subject property:

The subject property, which comprises the Retail Portion and the Office Portion, shall be leased back to the Vendor upon Completion on the following basic terms:

1. In respect of the Retail Portion:

2. for a fixed term of 4 years;

3. the rent for each of the first, second and third year of the term shall be HK$920,000 per month (exclusive of Government rent, rates and management fees); the Vendor shall be entitled to a rent free period of one month which shall be (1) the 13th month of the

   term if the Vendor does not exercise the option to renew the lease in respect of the Office Portion; or

   (2) the 25th month of the term if the Vendor exercises such option to renew ;

4. the rent for the fourth year of the term shall be HK$996,500 per month (exclusive of Government rent, rates and management fees);

5. the Vendor shall deliver vacant possession of the Retail Portion to King Firm on "as is" basis upon expiration of the lease term; and

6. the management fee shall be paid by the Vendor to King Firm in accordance with the prevailing practice or in such other manner as may be agreed between the Vendor and King Firm.

7. In respect of the Office Portion:

8. for a fixed term of 1 year with an option to renew for a further term of 1 year by the Vendor giving King Firm a written notice not less than 6 months but not more than 7 months prior to the expiration of the fixed term;

9. the rent for the fixed term shall be HK$720,000 per month (exclusive of Government rent, rates and management fees);

10. the rent for the further term shall remain unchanged at HK$720,000 per month (exclusive of Government rent, rates and management fees);

11. the Vendor shall deliver vacant possession of the Office Portion to King Firm on "as is" basis upon expiration of the lease term; and

12. the management fee shall be paid by the Vendor to King Firm in accordance with the prevailing practice or in such other manner as may be agreed between the Vendor and King Firm.

Stamp duty: All stamp duty payable in relation to the Acquisition shall be borne by King Firm.

Representations, warranties and undertakings:

The Vendor has given representations, warranties and undertakings under the Sale and Purchase Agreement in customary terms for transactions of similar nature and scale.

Failure to complete: If King Firm fails to complete the acquisition of Fung Shun Commercial Building in accordance with the Sale and Purchase Agreement (other than owing to the default of the Vendor), the Vendor may terminate the Sale and Purchase Agreement, in which case the Vendor shall be entitled to forfeit the deposit paid by King Firm and to resell the subject property. Any increase in price on such resale shall belong to the Vendor and any deficiency in price on the resale shall be made good by King Firm, without prejudice to the Vendor's right to recover loss.

If the Vendor fails to complete the disposal of Fung Shun Commercial Building in accordance with the Sale and Purchase Agreement (other than owing to the default of King Firm), the deposit paid shall be returned to King Firm which shall also be entitled to recover from the Vendor such damages as it may sustain by reason of such failure.

Right of way in respect of areas at the adjacent property:

Fung Shun Commercial Building is sold subject to an existing deed of grants of right of way and mutual covenants, which provides that, among others, owners and occupiers of the subject property will have the right of way in respect of certain areas including entrance and staircase located at the adjacent building at No. 589 Nathan Road. The costs of management and maintenance of such areas shall be shared between the owner of the subject building and the owner of the adjacent building.