Link Real Estate Investment Trust : Acquisition of Property - Metropolitan Plaza in Guangzhou

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.

The Board is pleased to announce that pursuant to the SPA dated 7 April 2017, Link (through the Purchaser which is an SPV wholly-owned by it) has agreed to acquire the Sale Shares (being the entire issued share capital of the Target Company) and the Sale Loan for the Consideration from the Vendor, which is an Independent Third Party. The Vendor is Barrel Holdings (Cayman) Limited, an exempted company incorporated in the Cayman Islands and indirectly owned as to 41.2% by the NH Vendor Guarantors and 58.8% by the GC Vendor Guarantor.

The Consideration is equal to the Agreed Property Value of RMB4,065.0 million and will be adjusted by the current assets and current liabilities of the Target Group as at the Completion Date pursuant to the relevant terms of the SPA (such adjustment being the Final Net Assets Adjustment). For the purpose of determining the amount payable on the Completion Date, the Vendor and the Purchaser have estimated the Initial Consideration (as defined below) to be RMB4,060,109,130 (equivalent to approximately HK$4,575 million). If, based on the Completion Statement, the Consideration is greater than the Initial Consideration, the Purchaser shall pay the excess to the Vendor. Conversely, if the Consideration is less than the Initial Consideration, the Vendor shall pay the shortfall to the Purchaser.

The Target Company owns the entire issued share capital of the BVI Target Subsidiary 1 and the BVI Target Subsidiary 2, which in turn own 50% and 50%, respectively, of the issued share capital of the HK Target Subsidiary. The HK Target Subsidiary owns the entire registered capital of the Project Company. The Project Company owns the Property which is located at No. 8 Huangsha Road, Liwan District, Guangzhou, the PRC. Based on the information provided by the Vendor, the occupancy rate of retail portion of the Property was approximately 94.1% as at 28 February 2017. Link intends to hold the Property as a long-term investment.

As at the Valuation Date, the Property, based on its existing use, had an Appraised Value of RMB4,060.0 million according to the Valuation Report by the Independent Property Valuer. The Agreed Property Value represents a premium of approximately 0.12% marginally over the Appraised Value.

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Pursuant to the terms of the SPA, the Purchaser has paid the Deposit in the US$ equivalent of RMB203.25 million (being 5% of the Agreed Property Value) to the Vendor upon signing of the SPA. In accordance with the terms of the SPA, the remaining balance of the Initial Consideration (except for the tax withholding amount (equivalent of US$16,504,734) which will be paid to the Vendor's solicitors in escrow for the purpose of tax payable under Bulletin 7) will be paid by the Purchaser to the Vendor on Completion.

According to the terms of the SPA, Completion (subject to Conditions Precedent as defined in Section II of this announcement) will take place on the Completion Date (which is 11 May 2017 (or such other date as the Vendor and the Purchaser may agree in writing)). The Manager will make an announcement if the Conditions Precedent are not satisfied (and have not been waived) on or prior to the Completion Date and no Completion takes place on the Completion Date. The Manager will make an announcement when Completion takes place on the Completion Date, and will also make an announcement when the Consideration is finally determined upon the Final Net Assets Adjustment according to the Completion Statement. Upon Completion, Link will become the sole owner of the Target Group and (through the Project Company) owns entirely the Property. Completion of the Acquisition is subject to the fulfilment or (where applicable) waiver of the Conditions Precedent. Unitholders and potential investors of Link are advised to exercise caution when dealing in the Units.

The Vendor Guarantors (being the NH Vendor Guarantors and the GC Vendor Guarantor) have severally (as to 41.2% by the NH Vendor Guarantors and 58.8% by the GC Vendor Guarantor), unconditionally and irrevocably guaranteed to the Purchaser the due and punctual performance, observance and discharge by the Vendor of all its obligations, commitments, undertakings, representations, warranties, indemnities and covenants under and pursuant to the SPA.

This announcement is made pursuant to 10.3 and 10.4 of the REIT Code. The Initial Consideration of RMB4,060,109,130 (equivalent to approximately HK$4,575 million) together with the Expenses (approximately HK$6.0 million): (1) represents approximately 3.8% of the total market capitalisation of Link (based on the average closing price of the Units on the Stock Exchange for the five business days immediately preceding the date of this announcement); (2) represents approximately 2.7% of the total assets of Link as at 30 September 2016 (as disclosed in the 2016/2017 Interim Report) after adjusting for the impact of the payment of interim distribution by Link on 2 December 2016 and the completion of disposal of five properties on 14 February 2017; and (3) is less than 15% of the gross asset value of Link as at 30 September 2016 (as disclosed in the 2016/2017 Interim Report).

To the best of the Directors' knowledge, information and belief, having made all reasonable enquiries, each of the Vendor, the Vendor Guarantors, and their respective ultimate beneficial owner(s) is an Independent Third Party. Accordingly, the Acquisition does not constitute a connected party transaction of Link under the REIT Code.

The Board (including the independent non-executive Directors) is satisfied that the Acquisition and the entering into by the Purchaser of the SPA and the transactions contemplated thereunder are at arm's length, on normal commercial terms, fair and reasonable and in the interest of Link and the Unitholders as a whole. The Board is satisfied, and (based on and in sole reliance on the opinion of the Board and the information and confirmation provided by the Manager, and having taken into account its duties under the Trust Deed and the REIT Code) the Trustee is also satisfied, that no Unitholders' approval is required under the REIT Code and the Trust Deed for the Purchaser to enter into the SPA and the transactions contemplated thereunder.

The Board is pleased to announce that the Purchaser, being an SPV wholly-owned by Link, has entered into the SPA with the Vendor in respect of the Acquisition.

On and subject to the terms and conditions of the SPA, Link (through the Purchaser) has agreed to acquire the Sale Shares (being the entire issued share capital of the Target Company) and the Sale Loan for the Consideration (which is equal to the Agreed Property Value as adjusted by the Final Net Assets Adjustment) from the Vendor (which is an Independent Third Party). The Target Company owns the entire issued share capital of the BVI Target Subsidiary 1 and the BVI Target Subsidiary 2, which in turn own 50% and 50%, respectively, of the issued share capital of the HK Target Subsidiary. The HK Target Subsidiary owns the entire registered capital of the Project Company. The Project Company owns entirely the Property, which Link intends to hold as a long-term investment.