Wharf : Continuing Connected Transactions - Master Hotel Services Agreement and Wharf Leasing Framework Agreement

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.

(Incorporated in Hong Kong with limited liability)

(Stock Code: 4)

On 8 November 2017, the Company entered into the Master Hotel Services Agreement and the Wharf Leasing Framework Agreement with Wharf REIC to set out the framework terms governing (i) the provision of Hotel Management Services by the Remaining Wharf Group to the Wharf REIC Group and (ii) the provision of Rental Services by the Wharf REIC Group to the Remaining Wharf Group respectively from time to time. The Master Hotel Services Agreement and the Wharf Leasing Framework Agreement are conditional upon (a) Listing Approval being granted by the Stock Exchange and (b) the commencement of dealings in the Wharf REIC Shares on the Stock Exchange. Subject to the satisfaction of these conditions, the Master Hotel Services Agreement and the Wharf Leasing Framework Agreement will be effective on the Listing Date, at which time Wharf REIC will become the Company's connected person, and the Master Hotel Services Agreement and the Wharf Leasing Framework Agreement and transactions contemplated thereunder respectively will constitute continuing connected transactions of the Remaining Wharf Group under the Listing Rules.

Reference is made to the Joint Announcement in relation to, among other matters, the Proposed Spin-off. Unless otherwise defined in the "Definitions" section in this announcement, capitalised terms used herein shall have the same meanings as defined in the Joint Announcement.

1. Master Hotel Services Agreement

   Signing Date	:	8 November 2017
   Parties	:	The Company and Wharf REIC
   Term	:	The Master Hotel Services Agreement will become effective on the Listing Date and will continue up to and including 31 December 2019, unless terminated earlier in accordance with its terms and conditions.

   Conditions Precedent	:	The Master Hotel Services Agreement is conditional upon:
   Scope of services to be provided by the Remaining Wharf Group to the Wharf REIC Group	:	Hotel Management Services, i.e. all forms of hotel-related services including management, marketing, technical services, and/or any other services relating to the development and/or operations of hotels and/or serviced apartments property(ies), including without limitation to the Hotels.
   Individual Agreements and Pricing Policy	:	During the term of the Master Hotel Services Agreement, Wharf REIC Group Member(s) may from time to time separately enter into Individual Agreement(s) with any of the Remaining Wharf Group Member(s) on agreed terms provided that the following conditions are met: After the Master Hotel Services Agreement has taken effect, its terms and conditions will also apply to the Existing Hotel

2. Listing Approval being granted by the Stock Exchange; and

3. the commencement of dealings in the Wharf REIC Shares on the Stock Exchange.

1. each Individual Agreement is entered into in the ordinary and usual course of business;

2. the term of each Individual Agreement must be fixed and not exceed three years;

3. the remuneration payable under each Individual Agreement will on each occasion be negotiated and determined on an arm's length basis to ensure that the relevant pricing term is fair and reasonable in accordance with prevailing market conditions and on normal commercial terms;

4. the terms and conditions of each Individual Agreement must be, from Wharf REIC's perspective, no less than favourable to the relevant Wharf REIC Group Member(s) when compared with similar services available from independent third parties, and from the Company's perspective, no less than favourable to the relevant Remaining Wharf Group Member(s) when compared with similar services provided to independent third parties; and

5. the aggregate annual amounts of the remuneration for any one year during the term of the Master Hotel Services Agreement payable under any and all Individual Agreements (if any) subsisting at any time shall not exceed the relevant Annual Cap Amount of the Master Hotel Services Agreement.

Services Agreements, including without limitation to the master hotel services agreement dated 10 November 2014 entered into between HCDL and the Company (details of which are contained in the announcement dated 10 November 2014 issued by HCDL).

In accordance with the procurement policy and procedures of the Wharf REIC Group, the terms and conditions of each Individual Agreement including, inter alia, remuneration and payment terms and termination provisions will be determined on the basis of commercial negotiations and (where applicable or appropriate) through a tendering/quotation procedure on an arm's length basis by reference to terms available to or from other third parties for similar services in the market as well as the fee scales and payment terms for the provision of the existing Hotel Management Services under the Master Hotel Services Agreement which are set out below:

1. Hotel management services - a hotel management fee which comprises a basic fee of 2% of the relevant hotel's gross revenue and an incentive fee calculated on the basis of a sliding scale from 0% to 9.5% or 10% (as the case may be) of the relevant hotel's gross operating profit, subject to the annual profit margin reaching certain agreed levels of intervals between 0% to 45% or above, payable once every month in arrears;
2. Marketing services - a marketing fee of 1.5% of the relevant hotel's gross revenue or gross rooms revenue (as the case may be) payable once every month in arrears;
3. Technical services - a fixed fee set with reference to the number of hotel rooms; and
4. Other services relating to the development and/or operations of the hotel - a fixed percentage of the costs and expenses actually incurred.

   In the event that for any year during the term of the Master Hotel Services Agreement, the aggregate amount of remuneration payable by the Wharf REIC Group under all Individual Agreements would exceed the relevant Annual Cap Amount of the Master Hotel Services Agreement, the Company and Wharf REIC will take appropriate action to comply with the relevant requirements under the Listing Rules regarding the payment of any and all amounts in excess of the relevant Annual Cap Amount of the Master Hotel Services Agreement by the Wharf REIC Group to the Remaining Wharf Group.

   Termination : The Master Hotel Services Agreement:

5. may be terminated by either party giving not less than two months' prior written notice to the other party;

6. will be automatically terminated upon the Company ceasing to be a connected person of Wharf REIC and Wharf REIC ceasing to be a connected person of the Company;

7. may be terminated if either other party fails to rectify any breach of provisions of the Master Hotel Services Agreement which can be rectified within 28 days;

8. may be terminated by either party if the other party commits a material breach of non-rectifiable provisions of the Master Hotel Services Agreement; or

9. may be terminated by either party immediately without notice in case the other party has become subject to any liquidation or insolvency.

10. Wharf Leasing Framework Agreement

Signing Date	:	8 November 2017
Parties	:	The Company and Wharf REIC
Term	:	The Wharf Leasing Framework Agreement shall commence on the Listing Date and shall continue up to and including 31 December 2019, unless terminated earlier in accordance with its terms and conditions.
Conditions Precedent	:	The Wharf Leasing Framework Agreement is conditional upon: Listing Approval being granted by the Stock Exchange; and the commencement of dealings in the Wharf REIC Shares on the Stock Exchange.
Scope of services to be provided by the Wharf REIC Group to the Remaining Wharf Group	:	Rental Services, i.e. leases, tenancies or licences in respect of the premises (including office premises, car parking spaces and building areas but excluding hotel premises) owned by the Wharf REIC Group from time to time. Wharf REIC has agreed to lease and license or to procure the relevant Wharf REIC Group Members to lease or license various premises (including office premises, car parking spaces and building areas but excluding hotel premises) it owns to the relevant Remaining Wharf Group Member(s) as