Swire Pacific : Sale of 100% Interest in Company which owns Investment Property at Kowloon Bay, Hong Kong

THE SALE AND PURCHASE AGREEMENT

Date: 28th October 2016

Parties: Swire Properties (as the seller) The Purchaser (as the purchaser)

Sale Interest: The Sale Share and the Sale Loan

Consideration: HK$6,528 million, subject to adjustment as described below

Particulars of the Disposal

On 28th October 2016, Swire Properties and the Purchaser entered into the Sale and Purchase Agreement for the sale of Swire Properties' 100% interest in the Target Company, a wholly-owned subsidiary of Swire Properties, to the Purchaser. The Sale Interest comprises the entire issued share capital of the Target Company and the loan which will be owing by the Target Company to Swire Properties as at Completion. The Target Company owns the land situated at Kowloon Bay, Hong Kong, known and registered in the Land Registry as New Kowloon Inland Lot No. 6312 and the building being developed on the Land.

Swire Properties has agreed to procure the Target Company to complete the construction of the Building on the Land in accordance with the Sale and Purchase Agreement prior to Completion. The Building is expected to be a 25-storey Grade A commercial building above a three-storey carpark basement.

Completion is conditional upon the Occupation Permit and the Certificate of Compliance being obtained on or before 31st December 2018.

On Completion, the Target Company will cease to be a subsidiary of Swire Pacific and Swire Properties.

Consideration for the Disposal

The Consideration is a cash consideration of HK$6,528 million, subject to adjustment as described below.

The Consideration is to be satisfied as follows:-

1. HK$652.8 million has been paid by the Purchaser to Swire Properties as a deposit;

2. HK$652.8 million will be paid by the Purchaser within 90 days from the date of the Sale and Purchase Agreement;

3. if the Purchaser gives a Purchaser's Pre-letting Request to Swire Properties in accordance with the Sale and Purchase Agreement, HK$326.4 million will be

(d) the balance of the Consideration will be paid on Completion.

If the Target Company amends the Approved GBP prior to Completion such that the total GFA of the Building as approved to be built in accordance with the Final Approved GBP is less than the Agreed Minimum GFA, the Consideration will be reduced by HK$126,599.95 for every square metre in the shortfall in the GFA.

The Consideration is also subject to completion adjustments.

The Consideration was determined after arm's length negotiations between the parties and having regard to an independent valuation of the Investment Property as at 30th June 2016.

Further Information relating to the Sale Interest

As at 31st December 2015, the audited net asset value attributable to the Sale Interest was approximately HK$3,412 million. For the year ended 31st December 2015, the audited net profits before and after taxation and extraordinary items attributable to the Sale Interest were both approximately HK$538 million. For the year ended 31st December 2014, the audited net losses before and after taxation and extraordinary items attributable to the Sale Interest were both approximately HK$53 million.

Swire Properties is expected to record a gain on disposal of approximately HK$1,170 million by reference to the carrying value of the Sale Interest as at 30th June 2016 and having regard to the capital expenditure incurred or expected to be incurred in respect of the Investment Property since 30th June 2016. Swire Pacific is expected to record an attributable gain on disposal of approximately HK$959 million in respect of its 82% interest in Swire Properties.

Reasons for and benefits of the Disposal

The Disposal will enable Swire Properties to realise cash from its investment in the Sale Interest. The proceeds from the Disposal will be applied towards the general working capital requirements of Swire Properties.

The directors of Swire Pacific consider that the terms of the Disposal are fair and reasonable and in the interests of Swire Pacific and its shareholders as a whole.

The directors of Swire Properties consider that the terms of the Disposal are fair and reasonable and in the interests of Swire Properties and its shareholders as a whole and will put Swire Properties in a strong position to continue its major investment programmes.

Compliance with the Listing Rules

Swire Pacific confirms that, to the best of its directors' knowledge, information and belief having made all reasonable enquiries, the Purchaser and its ultimate beneficial owner are third parties independent of and not connected with Swire Pacific or any of its connected persons.

Swire Properties confirms that, to the best of its directors' knowledge, information and belief having made all reasonable enquiries, the Purchaser and its ultimate beneficial owner are third parties independent of and not connected with Swire Properties or any of its connected persons.

As the highest of the relevant percentage ratios under Rule 14.07 of the Listing Rules for the Disposal for Swire Pacific is more than 5% but less than 25%, the Disposal constitutes a discloseable transaction for Swire Pacific under the Listing Rules. Accordingly, the Disposal is subject to the announcement requirement but is exempt from the circular (including accountants' report) and shareholders' approval requirements under Chapter 14 of the Listing Rules.

The relevant percentage ratios under Rule 14.07 of the Listing Rules for the Disposal for Swire Properties are less than 5%. As such, the Disposal does not constitute a discloseable transaction for Swire Properties under the Listing Rules. This announcement is made by Swire Properties pursuant to Rule 13.09(2) of the Listing Rules and Part XIVA of the SFO.

Directors

As at the date of this announcement, the Directors of Swire Pacific are:

Executive Directors: J.R. Slosar (Chairman), G.M.C. Bradley, I.K.L. Chu, M. Cubbon, I.S.C. Shiu, A.K.W. Tang;

Non-Executive Directors: M.B. Swire, S.C. Swire; and

Independent Non-Executive Directors: T.G. Freshwater, C. Lee, R.W.M. Lee,

G.R.H. Orr, M.C.C. Sze and M.M.T. Yang.

As at the date of this announcement, the Directors of Swire Properties are:

Executive Directors: J.R. Slosar (Chairman), G.M.C. Bradley, M.M.S. Low; Non-Executive Directors: M. Cubbon, P. Healy, R.S.K. Lim, M.B. Swire; and

Independent Non-Executive Directors: S.E. Bradley, J.C.C. Chan, P.K. Etchells, S.T. Fung and S.C. Liu.