Beijing Properties : CONNECTED TRANSACTION RELATING TO LOAN AGREEMENT AND NOTICE OF SPECIAL GENERAL MEETING

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DEFINITIONS

In this circular, the following expressions have the following meanings unless the context requires otherwise:

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DEFINITIONS

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DEFINITIONS

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DEFINITIONS

All the English translation of certain Chinese names or words in this circular is included for information purpose only, and should not be regarded as the official English translation of such Chinese names or words.

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LETTER FROM THE BOARD

BEIJING PROPERTIES (HOLDINGS) LIMITED

北 京 建 設（ 控 股 ）有 限 公 司

(Incorporated in Bermuda with limited liability)

(Stock Code: 925)

CONNECTED TRANSACTION

RELATING TO THE LOAN AGREEMENT

AND

NOTICE OF SPECIAL GENERAL MEETING

INTRODUCTION

Reference is made to the Company's announcement dated 26 August 2020 in relation to the Loan Agreement.

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LETTER FROM THE BOARD

The Transactions under the Loan Agreement constitute a connected transaction of the Company under the Listing Rules.

The purpose of this circular is to provide you with further information regarding, among other things, (i) further information on the Loan Agreement, (ii) the recommendations from the Independent Board Committee to the Independent Shareholders, (iii) the letter of advice from Euto Capital, the independent financial adviser, to the Independent Board Committee and the Independent Shareholders, and (iv) the notice of the SGM.

THE LOAN AGREEMENT

The table below sets forth a summary of the principal terms of the Loan Agreement:

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LETTER FROM THE BOARD

As at the Latest Practicable Date, the LPR is 4.65%

After arm's length negotiations, the Borrower and the Lenders agreed to adopt the LPR, which is referred to by most of banks in the PRC for the issuance of new loans and is used as the pricing benchmark in floating rate loan contracts.

The People's Bank of China (PBOC) has authorised the National Interbank Funding Center（全國銀行間同業拆借中心）to serve as the designated publisher of the LPR and to publish the LPR on the 20th day of each month, after collecting quotes from the LPR Reporting Group and calculating the average of the quotes excluding the lowest and highest quotes.

As at the Latest Practicable Date, the LPR Reporting Group is comprised of 18 commercial banks in the PRC, including 10 national banks, two municipal commercial banks, two rural village commercial banks, two foreign invested banks and two privately operated banks.

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LETTER FROM THE BOARD

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LETTER FROM THE BOARD

1. the Company having obtained the approval of the Independent Shareholder with respect to the Loan Agreement and the transactions contemplated thereunder by way of ordinary resolution in general meeting in accordance with the Listing Rules, the memorandum and articles of association of the Company and applicable laws;
2. the Borrower having provided all documents as required by the Lenders, including without limitation, the Certificate of Incorporation, the Memorandum and Articles of Association, the identification documents of legal representatives, the Capital Contribution Verification Report, the relevant board resolutions and/or shareholders resolutions approving, among others, the entering into of the Loan Agreement and the transactions contemplated hereunder, the latest annual report and any other documents requested by the Lenders; and
3. the project capital of the Project having been raised in accordance with the capital ratio of the applicable laws and regulations.

As at the Latest Practicable Date, none of the Conditions Precedents have been fulfilled.

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THE PLEDGE AGREEMENT

In consideration of the provision of the Loans to the Borrower under the Loan Agreement, the Pledge Agreement shall be entered into by the Borrower as pledgor, the Lenders as pledgee and the Lead Bank and the Agent Bank on or before the First Drawing Date, pursuant to which the Borrower agreed to pledge to the Lenders the Pledged Property as security to the obligations of the Borrower under the Loan Agreement.

The table below sets forth a summary of the principal terms of the Pledge Agreement:

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THE GUARANTEE AGREEMENT

In consideration of the provision of the Loans to the Borrower under the Loan Agreement, the Guarantee Agreement shall be entered into by the Company as guarantor and the Lenders as guarantee, the Lead Bank and the Agent Bank, pursuant to which the Company agreed to provide a guarantee in favour of the Lenders of the total guaranteed amount equivalent to the total amount of the Loans up to a limit of RMB1,300,000,000.

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LETTER FROM THE BOARD

INFORMATION ON THE PARTIES TO THE LOAN AGREEMENT

The Company

The Company is an investment holding company incorporated in Bermuda. As at the date hereof, the Group is principally engaged in investment, development and operation of (i) high-end and modern general warehouses; (ii) cold chain logistics warehouses; (iii) specialised wholesale market for the trading and distribution of local agricultural products; and (iv) modernized industrial plants; and (v) investments in commercial properties and primary land development.

The Borrower

The Borrower is a company established in the PRC with limited liability and a wholly-owned subsidiary of China Industrial Properties (Holdings) Limited（中國工業地產（控股）有限公司）, a company owned as to approximately 72.48% by the Company. The Borrower is principally engaged in industrial property investment development and operation management.

The following diagram illustrates the corporate structure of the Borrower as at the Latest Practicable Date:

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LETTER FROM THE BOARD

Notes:

1. Red Supreme Limited is a limited liability company incorporated in Hong Kong.
2. Starry Vision Investments Limited is a limited liability company incorporated in the British Virgin Islands. As at the Latest Practicable Date, it is owned as to 50%, 45% and 5% by Mr. Yue Chen, Mr. Wang Yi and Ms. Tian Dongmei, respectively.
3. Champion Yield International Limited is a limited liability company incorporated in Hong Kong.
4. Sky Bloom Investment Limited is a limited liability company incorporated in the British Virgin Islands.
5. New Aim International Limited is a limited liability company incorporated in the British Virgin Islands. As at the Latest Practicable Date, it is owned as to 6%, 10%, 10%, 10%, 1%, 10%, 3%, 9.5%, 15%, 9%, 7%, 2.5% and 7% by Mr. Shen Bin, Mr. Li Wenping, Mr. Zhang Yi Fan, Mr. Yang Hong, Mr. Wang Xiao Tong, Mr. Ma Ning, Mr. Xu Chung Rong, Mr. Zhou Honglin, Mr. Deng Yong, Mr. Wang Kaiping, Mr. Mao Dongming, Ms. Jiang Jinglin and Ms. Lei Jing, respectively.

The Lenders

The 1st Lender

The 1st Lender is a company established in the PRC with limited liability. As BE Group beneficially owns not less than 30% equity interest in the 1st Lender, the 1st Lender is an associate of BE Group. The establishment of the 1st Lender as a non-bank financial services institute has been approved by China Banking Regulatory Commission. The 1st Lender acts as a platform of BE Group for provision of intragroup facilities through financial products including deposit-taking,money-lending and custodian services, etc.

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LETTER FROM THE BOARD

The following diagram illustrates the corporate structure of the 1st Lender as at the Latest Practicable Date:

the 1st Lender

Note:

1. As at the Latest Practicable Date, BE Group is wholly owned by The State-owned Assets Supervision and Administration Commission of the People's Government of Beijing Municipality（北京市人民政府國有資 產監督管理委員會）and is therefore a state-owned enterprise.
2. The shares of Beijing Enterprise Holdings Limited are listed on the main board of the Stock Exchange (stock code: 00392).
3. The shares of Beijing Enterprises Water Group Limited are listed on the main board of the Stock Exchange (stock code: 00371).
4. The shares of Beijing Yanjing Brewery Co., Ltd. are listed on the Shenzhen Stock Exchange (stock code: 000729).

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LETTER FROM THE BOARD

The 2nd Lender

To the best knowledge, information and belief of the Directors having made all reasonable enquiries, the 2nd Lender is a company established in the PRC and principally engaged in banking, investment management, industrial investment and asset management. It is wholly owned by The Bank of Communications Co., Ltd.（交通銀行股份有限公司）, a company limited by shares established in the PRC, whose shares are listed on the Main Board of the Stock Exchange (stock code: 3328) and on the Shanghai Stock Exchange (stock code: 601328).

The 3rd Lender

To the best knowledge, information and belief of the Directors having made all reasonable enquiries, the 3rd Lender (also being the Lead Bank and the Agent Bank) is a company established in the PRC and principally engaged in banking, investment management, industrial investment and asset management. It is wholly owned by The Industrial and Commercial Bank Of China Limited. （中國工商銀行股份有限公司）, a company limited by shares established in the PRC, whose shares are listed on the Main Board of the Stock Exchange (stock code: 1398) and on the Shanghai Stock Exchange (stock code: 601398).

REASONS FOR AND BENEFITS OF ENTERING INTO THE LOAN AGREEMENT

The area of the land of the Project is approximately 133,181 square metres located at the east side of Qingyang North Road（青洋北路東側）, and to the north side of Taihu Lake Road（太湖東 路北側）in Tianning District, Changzhou City, Jiangsu Province, PRC, the land use rights of which are held by the Borrower. The land use rights of the property have been granted to the Borrower for a term of 50 years for industrial use. Upon completion of the construction work of the Project, it is expected that the Sunan Zhicheng Intelligence Industrial Park (the "SNZC") erected under the Project comprises various medium-rise and low-rise buildings including 45 buildings, 1 data center and ancillary commercial facilities with a total gross floor area of approximately 477,579 square metres. The industrial operators and headquarters in SNZC will focus on high-end intelligent manufacturing, new-generation information technology and big data industry.

The Loan Agreement will enable the Borrower to obtain adequate funds to meet its financial needs for the construction and development of the Project. It is expected that the Project will generate income when the construction and development is completed, which is in the interest of the Company as a whole, and is in line with its business strategy and overall interest. In addition, the 1st Lender is a platform of BE Group for provision of intragroup financing facilities, it represents the financial support for the development of the Group's businesses by the BE Group.

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LETTER FROM THE BOARD

The Board considers that (i) the interest rate of the Loans under the Loan Agreement is similar to the prevailing market interest rate; (ii) the Guarantee Agreement and Pledge Agreement are similar to those in the current market norm; and (iii) the tenor of the Loans is more flexible and imposes less pressure for the Group's to repay the Loans. The Directors are of the view that the Loan Agreement, the Guarantee Agreement and the Pledge Agreement contained therein, are or will be entered into on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

IMPLICATIONS OF THE LISTING RULES

As at the Latest Practicable Date, as the Company's ultimate controlling shareholder, BE Group owns not less than 30% equity interest in the 1st Lender. In this connection, the 1st Lender is an associate of BE Group and is therefore a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the transactions contemplated under the Loan Agreement and the Pledge Agreements constitute connected transactions of the Company under Chapter 14A of the Listing Rules.

As some of the applicable percentage ratios in respect of the transaction contemplated under Loan Agreement (in respect of the commitment of the 1st Lender under the Loan Agreement) and the Pledge Agreement (in respect of the proportional interest of the 1st Lender in the Pledge Agreement) are more than 5% and the Loans are secured on the Pledged Property which is an asset of the Group, the entering of the Loan Agreement is subject to reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

None of the Directors has material interest in the transactions contemplated under the Loan Agreement and the Pledge Agreement and abstained from voting on the Board resolutions to approve the transactions contemplated under the Loan Agreement and the Pledge Agreement.

SGM

Set out on pages 54 to 56 of this circular is a notice convening the SGM which will be held at 66/F., Central Plaza, 18 Harbour Road, Wanchai, Hong Kong at 11:00 a.m. on 5 October 2020, Monday at which resolutions will be proposed to approve, among others, the Loan Agreement and the transactions contemplated.

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LETTER FROM THE BOARD

The Loan Agreement is subject to, among other things, the approval by the Independent Shareholders at the SGM to be taken by way of a poll. The BE Group (including its associates) shall abstain from voting for the relevant resolution at the SGM due to their interests in the concerned transactions. Other than the above, no other Shareholders have material interest in the above transactions and will abstain from voting at the SGM. As at the Latest Practicable Date, the BE Group (including its associates) controls or is entitled to control over the entire voting right in respect of 4,659,292,560 Shares (representing about 66.85% of the issued share capital of the Company). Therefore, a total of 4,659,292,560 Shares (representing approximately 66.85% of the issued share capital of the Company) shall abstain from voting at the SGM. There is (i) no voting trust or other agreement or arrangement or understanding entered into by or binding upon BE Group (including its associates); and (ii) no obligation or entitlement of BE Group (including its associates) as at the Latest Practicable Date, whereby it has or may have temporarily or permanently passed control over the exercise of the voting right in respect of its Shares to a third party, either generally or on a case-by-case basis.

A form of proxy for the SGM is enclosed. Whether or not you propose to attend the SGM, you are requested to complete the form of proxy and return the same to Tricor Tengis Limited, the Company's branch share registrar in Hong Kong, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time appointed for the meeting (or any adjourned meeting). Completion and delivery of the form of proxy will not preclude you from attending and voting at the meeting (or any adjourned meeting) if you so wish.

RECOMMENDATIONS

The Independent Board Committee has been established to advise the Independent Shareholders whether the terms of the Loan Agreement are fair and reasonable so far as the Independent Shareholders are concerned and Euto Capital has been appointed to advise the Independent Board Committee and the Independent Shareholders in that connection.

The text of Euto Capital containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 22 to 45 of this circular and the text of the letter from the Independent Board Committee to the Independent Shareholders is set out on pages 20 to 21 of this circular.

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LETTER FROM THE BOARD

The Independent Board Committee, having taken into account the advice of Euto Capital, is of the opinion that the terms of the Loan Agreement are fair and reasonable and are in the interests of the Company and the Shareholders as a whole and recommends the Independent Shareholders to vote in favour of the relevant resolution to be proposed at SGM.

The Board considers that the terms of the Loan Agreement are fair and reasonable and are in the interest of the Company and the Shareholders as a whole and recommends the Independent Shareholders to vote in favour of the relevant resolution to be proposed at SGM.

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendix to this circular.

By Order of the Board

Beijing Properties (Holdings) Limited

Cheng Ching Fu

Company Secretary

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

BEIJING PROPERTIES (HOLDINGS) LIMITED

北 京 建 設（ 控 股 ）有 限 公 司

(Incorporated in Bermuda with limited liability)

(Stock Code: 925)

16 September 2020

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION

RELATING TO THE LOAN AGREEMENT

We refer to the circular dated 16 September 2020 issued by the Company (the "Circular"), of which this letter forms part. Terms used in this letter shall bear the same meanings as given to them in the Circular unless the context otherwise requires.

We have been appointed as members of the Independent Board Committee to consider the Loan Agreement and the transactions contemplated thereunder and to advise the Independent Shareholders as to the fairness and reasonableness of the Loan Agreement and the transactions contemplated thereunder (including without limitation the Pledge Agreement), and to recommend how the Independent Shareholders should vote at the SGM. Euto Capital has been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

We wish to draw your attention to the letter from the Board, as set out on pages 5 to 19 of the Circular, and the letter from Euto Capital to the Independent Board Committee and the Independent Shareholders which contains its advice to us in respect of the Loan Agreement, as set out on pages 22 to 45 of the Circular.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having taken into account of the advice of Euto Capital, we consider that the Loan Agreement and the transactions contemplated thereunder are entered into upon normal commercial terms and in the ordinary and usual course of business of the Group which are fair and reasonable and are in the interest of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the SGM to approve the Loan Agreement and the transactions contemplated thereunder.

Yours faithfully,

the Independent Board Committee

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LETTER FROM EUTO CAPITAL LIMITED

The following is the text of a letter of advice from Euto Capital to the Independent Board Committee and the Independent Shareholders in respect of the Loan Agreement, and is prepared for inclusion in this circular.

16 September 2020

To the Independent Board Committee and the Independent Shareholders of

Beijing Properties (Holdings) Limited

Dear Sirs and Madams,

CONNECTED TRANSACTION

IN RELATION TO ENTERING INTO THE LOAN AGREEMENT

INTRODUCTION

We refer to our appointment as the independent financial adviser (the "Independent Financial Adviser") to advise the Independent Board Committee and the Independent Shareholders in respect of the Loan Agreement and the transaction contemplated thereunder (the "Transaction"), particulars of which are set out in the section headed "Letter from the Board" (the "Letter") contained in the circular of the Company to the Shareholders dated 16 September 2020 (the "Circular"), of which this letter forms part. Unless the contest requires otherwise, capitalised terms used in this letter shall have the same meanings as ascribed to them under the section headed "Definitions" in this Circular.

1. Background of the Transaction

Reference is made to the announcement of the Company dated 26 August 2020.

On 26 August 2020, the Borrower entered into the Loan Agreement with the Lenders, pursuant to which the Lenders agreed to provide the Loans of a total principal amounts up to RMB1,300,000,000 for a term of 10 years commencing from the First Drawing Date.

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LETTER FROM EUTO CAPITAL LIMITED

Pursuant to the Loan Agreement, (i) the Borrower shall also enter into the Pledge Agreement; and (ii) the Company shall enter into the Guarantee Agreement, with the 3rd Lender (as the Agent Bank) for itself and on behalf of the Lenders respectively, pursuant to which the Borrower agrees to charge to the Lenders all the land use rights and assets (if any) on the Pledged Property as security and the Company agrees to provide a guarantee to the Lenders with a total guaranteed amount equivalent to the maximum total principal amounts of the Loans (i.e. up to a limit of RMB1,300,000,000) (the "Corporate Guarantee") in favour of the Lenders to secure all the obligations of the Borrower under the Loan Agreement.

2. Listing Rules implication

As at the date of Latest Practicable Date, the Company's ultimate controlling shareholder, which is the BE Group, owns not less than 30% equity interest in the 1st Lender. Hence, the 1st Lender is an associate of the BE Group and a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the transactions contemplated under each of the Loan Agreement and the Pledge Agreement constitute connected transactions of the Company under Chapter 14A of the Listing Rules.

As certain applicable percentage ratios in respect of the transaction contemplated under the Loan Agreement (in respect of the commitment of the 1st Lender under the Loan Agreement) and the Pledge Agreement (in respect of the proportional interest of the 1st Lender in the Pledge Agreement) are more than 5% and the Loans are secured on the Pledged Property, the entering into of the Loan Agreement is subject to the reporting, announcement and the Independent Shareholders' approval requirements under Rule 14A of the Listing Rules.

INDEPENDENT BOARD COMMITTEE

An Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Goh Gen Cheung, Mr. Zhu Wuxiang, Mr. James Chan, Mr. Song Lishui and Mr. Xie Ming, has been established to consider and advise the Shareholders as to whether the terms of the Loan Agreement and the transaction contemplated thereunder are (i) fair and reasonable; (ii) on normal commercial terms or better and in the ordinary and usual course of business of the Company; (iii) in the interests of the Company and its shareholders as a whole; and (iv) how the Independent Shareholders should vote in favour of the Transaction. None of the members of the Independent Board Committee has any material interest in the Transaction.

In our capacity as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders for the purpose of the Listings Rules, our role is to give an independent opinion to advise the Independent Board Committee and the Independent Shareholders as to whether the terms of the Loan Agreement and the transaction contemplated thereunder are (i) fair and reasonable; (ii) on normal commercial terms or better and in the ordinary and usual course of business of the Company; (iii) in the interests of the Company and its shareholders as a whole; and (iv) how the Independent Shareholders should vote in favour of the Transaction.

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LETTER FROM EUTO CAPITAL LIMITED

OUR INDEPENDENCE

We, Euto Capital Partners Limited ("Euto Capital"), have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard. Euto Capital is a licensed corporation under the SFO to conduct Type 6 (advising on corporate finance) regulated activities, and participated in and completed various independent financial advisory transactions since 2015. Mr. Manfred Shiu ("Mr. Shiu") and Mr. Felix Huen ("Mr. Huen") are the persons jointly signing off the opinion letter from Euto Capital contained in the Circular. Mr. Shiu has been a responsible officer of Type 6 (advising on corporate finance) regulated activities under SFO since 2009, while Mr. Huen has been a responsible officer of Type 6 (advising on corporate finance) regulated activities under SFO since August 2019. Both Mr. Shiu and Mr. Huen have participated in and completed various independent financial advisory transactions in Hong Kong.

As at the Latest Practicable Date, we confirmed that there is no relationship or interest between Euto Capital and the Company or any other parties that could be reasonably be regarded as hindrance to Euto Capital's independence as set out under Rule 13.84 of the Listing Rules to act as the Independent Financial Adviser to the Independent Board Committee and the Shareholders in respect of the Transaction.

We are not associated with the Company, its subsidiaries, its associates or their respective substantial shareholders or associates, and accordingly, are eligible to give independent advice and recommendations. Apart from normal professional fees payable to us in connection with this appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, no arrangement exists whereby we will receive any fees from the Company, its subsidiaries, its associates or their respective substantial shareholders or associates. We are not aware of the existence of or change in any circumstances that would affect our independence. During the past two years, we have been appointed as the independent financial adviser to the Company regarding a discloseable transaction and continuing connected transactions relating to the second supplemental agreement on a deposit services which are provided by Beijing Enterprises Group Company Limited to the Group, of which the circular was dated 3 December 2019. The professional fees in connection with the above appointment have been fully settled and we are not aware of change in any circumstance that would affect our independence. Accordingly, we consider that we are eligible to give independent advice on the terms of the Loan Agreement and the transaction contemplated thereunder.

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LETTER FROM EUTO CAPITAL LIMITED

BASIS OF OUR OPINION AND RECOMMENDATION

In formulating our opinion and recommendation to the Independent Board Committee and the Independent Shareholders in relation to the terms of the Loan Agreement and the transaction contemplated thereunder, we have relied on the information, facts and representations contained or referred to in the Circular and the information, facts and representations provided by, and the opinions expressed by the Directors, management of the Company and its subsidiaries (the "Management"). We have assumed that all information, facts, opinions and representations made or referred to in the Circular were true, accurate and complete at the time they were made and continued to be true and that all expectations and intentions of the Directors and the Management, will be met or carried out as the case may be. We have no reason to doubt the truth, accuracy and completeness of the information, facts, opinions and representations provided to us by the Directors, the Management and its subsidiaries. The Directors jointly and severally accept full responsibility for the accuracy of the information contained in the Circular and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in the Circular have been arrived at after due and careful consideration and there are no other facts not contained in the Circular, the omission of which would make any statement in the Circular misleading. We have also sought and received confirmation from the Directors that no material facts have been omitted from the information supplied and opinions expressed.

We consider that we have been provided with, and we have reviewed sufficient information to reach an informed view, to justify relying on the accuracy of the information contained in the Circular and to provide a reasonable basis for our opinion. We have no reason to doubt that any relevant material facts have been withheld or omitted from the information provided and referred to in the Circular or the reasonableness of the opinions and representations provided to us by the Directors and the Management. We have not, however, conducted any independent verification of the information provided, nor have we carried out any independent investigation into the business, financial conditions and affairs of the Company or its future prospects.

Based on the foregoing, we confirm that we have taken all reasonable steps, which are applicable to the Transaction, as referred to in Rule 13.80 of the Listing Rules (including the notes thereof) in formulating our opinion and recommendation.

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LETTER FROM EUTO CAPITAL LIMITED

This letter is issued for the information for the Independent Board Committee and the Independent Shareholders solely in connection with their consideration of the terms of the Loan Agreement and the transaction contemplated thereunder, except for its inclusion in the Circular, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes, without our prior written consent.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion to the Independent Board Committee and the Independent Shareholders, we have considered the following principal factors and reasons:

1. Background of the Transaction

On 26 August 2020, the Borrower entered into the Loan Agreement with the Lenders.

1.1 Information of the Company and the Group

The Company is a company incorporated in Bermuda with limited liability and the issued Shares of which have been listed on the Main Board of the Stock Exchange. The Company is an investment holding company and the holding company of the Group.

1. Principal business of the Group

The Group is principally engaged in investment, development and operation of (i) high-end and modern general warehouses; (ii) cold chain logistics warehouses;

1. specialised wholesale market for the trading and distribution of local agricultural products; and (iv) modernised industrial plants; and (v) investments in commercial properties and primary land development.

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LETTER FROM EUTO CAPITAL LIMITED

1. Financial position of the Group

Set out below is a summary of the Group's financial position as at 31 December 2019 and 31 December 2018 as extracted from the 2019 annual report of the Company ("2019 Annual Report"):

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LETTER FROM EUTO CAPITAL LIMITED

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LETTER FROM EUTO CAPITAL LIMITED

As shown in the table above, the total cash and cash equivalents (including the restricted bank deposits) was decreased by approximately 43.00% from approximately HK$1.76 billion as at 31 December 2018 to approximately HK$1 billion as at 31 December 2019. As disclosed in 2019 Annual Report, such decrease was mainly due to the net effect of (i) refund of deposit received for setting up a fund of approximately HK$625.96 million; (ii) capital injection in associates and joint ventures of approximately HK$116.76 million; (iii) repayment of loans from Beijing Inland Port Co., Ltd. of HK$327.83 million; (iv) net bank loans of approximately HK$149.91 million drawn; (v) funding from Beijing BHL Logistics Limited of approximately HK$197.78 million; (vi) addition of investment properties of approximately HK$741.51million; and (vii) acquisition of Beijing BHL Logistics Limited of HK$82.91 million.

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LETTER FROM EUTO CAPITAL LIMITED

On the other hand, the Group's bank and other borrowings were increased by 4.27% from approximately HK$3,510.00 million as at 31 December 2018 to approximately HK$3,659.91 million as at 31 December 2019. As disclosed in the 2019 Annual Report, such increase was mainly attributable to the increased demand of funding to finance the construction of projects in the PRC.

As at 31 December 2019, for accounting purposes, the Group had total borrowings of approximately HK$7,936.10 million (31 December 2018: approximately HK$7,756.03 million) which included: (i) approximately HK$3,659.91 million from bank and other borrowings; and (ii) approximately HK$4,276.19 million from USD guaranteed bonds. The Group's gearing ratio, which was defined as sum of bank and other borrowings and guaranteed bonds, net of cash and cash equivalents and restricted cash, divided by the total equity, was approximately 133.69% (31 December 2018: approximately 90.34%).

In addition, the Group recorded net current liabilities of approximately HK$5.59 billion and outstanding contracted capital commitments of HK$874.48 million in aggregate as at 31 December 2019. As stated in the 2019 Annual Report, these facts and circumstances indicated the existence of material uncertainties which may cast significant doubt on the Group's ability to continue as a going concern ("Going Concern Issue"). Based on this, we have enquired with the Management and reviewed (i) the unaudited management accounts of the Group for the 6 months ended 30 June 2020 ("2020 Interim Accounts"), and (ii) the cashflow forecast for the 12 months from 1 July 2020 to 30 June 2021 (the "Forecast"), it is anticipated that the proceeds from (i) the issuance of guaranteed bonds by the Company with detailed information set out in the Company's announcement dated 7 August 2020; and (ii) the potential disposal through public tender with detailed information set out in the Company's announcement dated 29 October 2019 (the "Disposal") could alleviate the repayment pressure of the Group's existing credit facilities and moderate the Group's Going Concern Issue by lowering the Group's current liabilities and providing sufficient funding for the Group's daily operation.

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LETTER FROM EUTO CAPITAL LIMITED

However, there is an uncertainty on the timing of completion of the aforesaid exercises. In accordance with the Forecast, save as the proceeds from the Disposal and the said issuance of guaranteed bonds, the existing financial resources of the Group are planned to be utilised as general working capital for the Group; hence, the Group might not have sufficient internal resources for further development of the Project. Based on this, we concur with the Management's view that in order to match the capital needs with the construction schedule of the Project, the Group has an imminent need to arrange a sizeable fund-raising exercise either by way of debt or equity.

1.2 Information of the Borrower

The Borrower is a company established in the PRC with limited liability. As at the Latest Practicable Date, the Borrower is a wholly-owned subsidiary of China Industrial Properties (Holdings) Limited, which is a company owned as to approximately 72.48% by the Company. The Borrower is principally engaged in industrial property investment development and operational management.

The following diagram illustrates the corporate structure of the Borrower as at the Latest Practicable Date:

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LETTER FROM EUTO CAPITAL LIMITED

Notes:

1. Red Supreme Limited is a limited liability company incorporated in Hong Kong.
2. Starry Vision Investments Limited is a limited liability company incorporated in the British Virgin Islands. As the Latest Practicable Date, it is owned as to 50%, 45% and 5% by Mr. Yue Chen, Mr. Wang Yi and Ms. Tian Dongmei, respectively.
3. Champion Yield International Limited is a limited liability company incorporated in Hong Kong.
4. Sky Bloom Investment Limited is a limited liability company incorporated in the British Virgin Islands.
5. New Aim International Limited is a limited liability company incorporated in the British Virgin Islands. As the Latest Practicable Date, it is owned as to 6%, 10%, 10%, 10%, 1%, 10%, 3%, 9.5%, 15%, 9%, 7%, 2.5% and 7% by Mr. Shen Bin, Mr. Li Wenping, Mr. Zhang Yi Fan, Mr. Yang Hong, Mr. Wang Xiao Tong, Mr. Ma Ning, Mr. Xu Chung Rong, Mr. Zhou Honglin, Mr. Deng Yong, Mr. Wang Kaiping, Mr. Mao Dongming, Ms. Jiang Jinglin and Ms. Lei Jing, respectively.

1.3 Information of the Lenders

The 1st Lender

The 1st Lender is a company established in the PRC with limited liability and a non-bank financial institution with the approval of China Banking Regulatory Commission. As at the Latest Practicable Date, the 1st Lender acts as a platform of the BE Group for provision of intragroup facilities through financial products including deposit-taking,money-lending and custodian services, etc.

As at the Latest Practicable Date, the BE Group, which is the ultimate controlling shareholder of the Company, owns not less than 30% equity interest in the 1st Lender. Accordingly, the 1st Lender is an associate of the BE Group.

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LETTER FROM EUTO CAPITAL LIMITED

The following diagram illustrates the corporate structure of the 1st Lender as at the Latest Practicable Date:

Note:

1. As at the Latest Practicable Date, BE Group is wholly owned by The State-owned Assets Supervision and Administration Commission of the People's Government of Beijing Municipality*（北京市人民政府國有資產監督管理委員會）and is therefore a state-owned enterprise.
2. The shares of Beijing Enterprise Holdings Limited are listed on the main board of the Stock Exchange (stock code: 00392).
3. The shares of Beijing Enterprises Water Group Limited are listed on the main board of the Stock Exchange (stock code: 00371).
4. The shares of Beijing Yanjing Brewery Co., Ltd. are listed on the Shenzhen Stock Exchange (stock code: 000729).

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LETTER FROM EUTO CAPITAL LIMITED

The 2nd Lender

The 2nd Lender is a company established in the PRC with limited liability. To the best knowledge, information and belief of the Directors and having made all reasonable enquiries, the 2nd Lender is principally engaged in banking, investment management, industrial investment and asset management. It is wholly owned by The Bank of Communications Co., Ltd.（交通銀行股份有限公司）, a company limited by shares established in the PRC, whose shares are listed on the Main Board of the Stock Exchange (stock code: 3328) and on the Shanghai Stock Exchange (stock code: 601328).

The 3rd Lender

The 3rd Lender is a company established in the PRC. To the best knowledge, information and belief of the Directors and having made all reasonable enquiries, the 3rd Lender is principally engaged in banking, investment management, industrial investment and asset management. It is wholly owned by The Industrial and Commercial Bank Of China Limited.（中國工商銀行股份有限公司）, a company limited by shares established in the PRC, whose shares are listed on the Main Board of the Stock Exchange (stock code: 1398) and on the Shanghai Stock Exchange (stock code: 601398).

2. Reasons for and benefits of entering into the Loan Agreement, the Pledge Agreement and the Guarantee Agreement

As stated in the Letter, the Company is of the view that entering into the Loan Agreement will satisfy the Group's financial needs and enable the Group to obtain funding for development of the Project.

In assessing whether the terms under the Loan Agreement is in the interests of the Company and the Shareholders as a whole, we have discussed with the Management in relation to the aforesaid Company's reasons for entering into the Loan Agreement. In addition, we have also considered the followings for assessing the reasonableness and fairness of the Loans and the terms under the Loan Agreement:

1. Intended use of proceeds from the Loans

As set out in the Loan Agreement, the maximum total principal amount of the Loans is RMB1,300,000,000. As set out in the Letter, the Company intends to apply the Loans to finance the development of the Project.

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LETTER FROM EUTO CAPITAL LIMITED

Information of the Project

The Project is located at Changzhou City, Jiangsu Province, the PRC. It occupies a parcel of land with a site area of approximately 133,181 square meters. As advised by the Management, the Project comprises various medium-rise and low- rise building with a total gross floor area of approximate 477,579 square meters and will be developed into commercial buildings. The land use rights of the property have been granted to the Borrower for a term of 50 years for industrial use. The Project is expected to be completed by 2022. Upon completion of the construction work of the Project, the Group intends to sell all the units on or before 2024.

In accordance with the planned development of the Project, the estimated construction costs are approximately RMB430 million, RMB787 million and RMB533 million for the year ending 31 December 2020, 2021 and 2022, respectively.

As advised by the Management, the total amount of estimated construction costs and expenses is approximately RMB1,816 million mainly comprising, among other matters:

1. construction and renovation costs (including building materials) of approximately RMB1,670 million;
2. finance costs and interest expenses of approximately RMB88 million; and
3. miscellaneous expenses, including but not limited to, development cost, design expense, of approximately RMB58 million.

We have reviewed the 10-year financial projection of the Project for the period ending 2029 (the "Projection") and noted that the expected rate of return is approximately 20.9%. In order to justify the said expected rate of return, we have reviewed the underlying basis and assumptions of the Projection, include but is not limited to (i) the number of units expected to be sold out during the Projection period;

1. the expected selling price per unit; and (iii) the portion of units expected to be sold out during the Projection period, and concluded that the per-unit value adopted in the Projection is comparable to the current market value. Accordingly, we are of the view that the Projection is justifiable, subject to the changes in the market conditions.

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LETTER FROM EUTO CAPITAL LIMITED

Given the Group's experience in property development projects in the PRC, the Project will enable the Group to diversify its source of revenue by penetrating its property business into the Jiangsu Province, the PRC, and to enjoy potential positive prospects.

1. Review on the existing financial resources of the Group

As disclosed in the Company's unaudited interim results announcement dated 31 August 2020, the cash and cash equivalents amounted to approximately HK$1,838 million as at 30 June 2020. We have also reviewed the Forecast and noted that cash and bank balance of (i) approximately RMB1,244 million was maintained for repayment of bank and other borrowings for the second half of 2020; and (ii) approximately RMB281 million was maintained for repayment of accrued interest of existing credit facilities, the remaining cash resources (including those generated from operating activities) would be utilised for maintaining the Group's daily operation and capital injection to its existing investment associate. In view of that, we concur with the Directors' view that the Group might not have sufficient internal resources to further invest in the Project and meet the construction timeline unless the proceeds from the Disposal could be realised upon the completion.

Moreover, we are given to understand that there may be uncertainties on the timing of

1. the completion of the Disposal and (ii) the receipt of the relevant proceeds which might not be able to match with the capital needs of the Project. In that case, the construction schedule of the Project would be postponed which may cause a significant influence on the planned development and operation timetable and result in a potential financial loss of the Group. Apart from this, we also understand that the proceeds from the Disposal were planned to be used to repay part of the Loans upon maturity.

In view of the above, we concur with the Director's view that (i) the Loans could sufficiently cover the estimated total construction cost for development of the Project; (ii) the Group could mitigate the financing risk of the Project when no internal financial resources are available on hand; and (iii) when the proceeds from the Disposal is available, the Group will have the flexibility in allocating its financial resources which allow it to repay the Loans upon maturity.

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LETTER FROM EUTO CAPITAL LIMITED

With available funds to initiate the development of the Project, the Group and the Shareholders can enjoy the potential upside of the Project while the relevant operational and financial risks associated with the Project are contained.

1. Other financing alternatives

Upon enquiry, the Management advised that the Group had considered alternative methods, including but not limited to borrowings from banks or other financial institutions, placing, rights issue, open offer and direct subscription of new Shares, for rising sufficient fund to meet the construction schedule of the Project before entering into of the Loan Agreement.

In respect of the borrowings from banks or other financial institutions, we are given to understand that the Management has approached several banks in the PRC apart from the 2nd Lender and the 3rd Lender regarding the possibility and feasibility of granting new credit line or loan to the Group. However, such banks declined to provide financial assistance of sufficient amount in view of the Company's leverage.

As regards the equity fund-raising exercise, such as placing, subscription of new Shares, rights issue and/or open offer, the Company is required to undergo a relatively lengthy process to (i) identify suitable underwriter(s) and negotiate terms agreeable to the Company; and (ii) prepare the requisite compliance and legal documentation (including but not limited to underwriting agreement(s), announcement(s) and prospectus(es)), and thus the Group may not be able to complete the whole process of fund-raising exercise by end of December 2020 and meet the construction timeline of the Project.

Furthermore, the ultimate fund-raising size of equity financing substantially depends on the market sentiment. Having considered (i) the loss-making position of the Group since the financial year ended 31 December 2019; (ii) the unsatisfactory price performance of Shares which demonstrated a diminishing trend since December 2019 and up to the date of the Loan Agreement; and (iii) the low trading liquidity of the Shares, the Management expected that it is difficult to attract investors and/or Shareholders to participate in the equity fund-raising exercises without adopting a substantial discount of the subscription price as compared to the then prevailing market price of the Shares. As to direct subscription of new Shares, the Management believes that it is hard for the Company to identify a subscriber to subscribe a large amount of Shares without adopting a substantial discount on the subscription price in view of the Group's unsatisfactory financial performance and position as detailed above.

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LETTER FROM EUTO CAPITAL LIMITED

On the contrary, the Loans will (i) offer a good opportunity for the Group to relieve its short-term liquidity pressure; (ii) not incur a dilution effect on the shareholding of the existing Shareholders; and (iii) demonstrate the continuous financial support from the controlling Shareholder (i.e. the 1st Lender) to the Group. In view of the above, the Directors consider, and we agree with them, that the Loans are the most feasible and suitable fund- raising method to the Company.

Conclusion

Having considered (i) the capital needs of the Group to match with the construction timeline of the Project; (ii) the difficulties of the Group to obtain financing from other sources; (iii) the Loans are the most feasible fund-raising method for the Group to raise sufficient for the Project; (iv) the Loans can sufficiently cover the estimated total construction cost for the development of the Project, mitigating any project financing risk when no external financial resources are available; (v) the provision of the Corporate Guarantee and the Pledged Property in substance can obtain more principal amount under the Loan Agreement; and (vi) the financial support from the 1st Lender, which is the controlling Shareholder, will bring positive impression to the Shareholders and potential investors of the Company, we concur with the Directors' view that it is fair and reasonable for the Company and in the interests of the Company and the Independent Shareholders as a whole to (a) provide the Corporate Guarantee and the Pledged Property in favour of the Lenders as security under the Loan Agreement; and (b) enter into the Loan Agreement.

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LETTER FROM EUTO CAPITAL LIMITED

3. Principal terms of the Loan Agreement, the Pledge Agreement and the Guarantee Agreement

On 26 August 2020, the Borrower entered into the Loan Agreement with the Lenders. Pursuant to the Loan Agreement, (i) the Borrower shall also enter into the Pledge Agreement; and

1. the Company shall enter into the Guarantee Agreement, with the 3rd Lender (as the Agent Bank) for itself and on behalf of the Lenders respectively, in favour of the Lenders to secure all the obligations of the Borrower under the Loan Agreement.
   3.1 The Loan Agreement

The principal terms of the Loan Agreement are summarized as follows:

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LETTER FROM EUTO CAPITAL LIMITED

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LETTER FROM EUTO CAPITAL LIMITED

3.2 The Pledge Agreement

The principal terms of the Pledge Agreement are summarized as follows:

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LETTER FROM EUTO CAPITAL LIMITED

3.3 The Guarantee Agreement

Pursuant to the Guarantee Agreement, the Company as guarantor agreed to provide a guarantee in favour of the Lenders to secure all the obligations of the Borrower under the Loan Agreement with a total guaranteed amount equivalent to the maximum total principal amount of the Loans (i.e. up to a limit of RMB1,300,000,000).

4. Evaluation of the major terms of the Loan Agreement, the Pledge Agreement and the Guarantee Agreement

The entering into of the Loan Agreement, provision of the Corporate Guarantee and the Pledged Property as a whole is in substance a package of financing arrangement of the Company with the assistance of Lenders. In order to assess the fairness and reasonableness of the terms of the Loan Agreement including the Corporate Guarantee and the Pledged Property, we have conducted analysis as follows:

1. Evaluation on the interest rate

As set out in the Loan Agreement, the interest rate of the Loans was determined based on the LPR. Based on our independent research, we understand that the LPR, which was introduced in August 2019, is the most preferential lending rate published by the People's Bank of China (the "PBOC") and offered by a commercial bank to its prime clients. The LPR is based on a weighted average of lending rates from 18 commercial banks, which will submit their LPR quotations, based on what they bid for the PBOC liquidity in open market operations, to the national interbank funding centre. Since then, The PBOC has been publishing the loan prime rate for the one-year and five-year RMB loan on a monthly basis.

When assessing the fairness and reasonableness of the interest rate adopted under the Loan Agreement, we have conducted desktop research on the LPR and noted that the latest LPR for RMB loan with tenor of over 5 years is 4.65% per annum. Also, we noted that the LPR for the five-year RMB loan exhibited a year to year downward trend, from 4.85% in August 2019 to 4.65% in August 2020 and the latest LPR of 4.65% also demonstrated the lowest lending rate since its introduction.

In addition, we understand that the Group has approached several independent PRC financial institutions for banking facilities granted to finance construction of the Project, the terms granted are initially determined based on (i) the LPR plus basis point or (ii) benchmark interest rate offered by the PBOC plus a fixed agreed rate (the "PBOC Rate").

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LETTER FROM EUTO CAPITAL LIMITED

Based on this, we have obtained a summary of guaranteed banking facilities granted by independent PRC financial institutions with loan tenor of 5 years or above, we noted that a majority of interest rates granted is determined based on the PBOC Rate and all of which are above 4.9% (the "PBOC Comparables"), while the quote granted based on the LPR is adjusted after adding a basis point.

Given the LPR has not exceeded 4.9% since its introduction, we are able to conclude that, as compared to the terms offered by other independent PRC financial institutions,

1. the historical record of LPR shows that LPR is a better term as compared to the PBOC Comparables and (ii) the interest rate under the Loan Agreement, which was determined based on the LPR without any adjustment, is on normal commercial terms, fair and reasonable.

Given (i) the interest rate of the Loans is referenced to the RMB interest rate set by the PBOC, which is a benchmark, (ii) the LPR is at its lowest since its introduction; and (iii) the LPR is the lowest interest rate available to the Group, we are of the view that the interest rate of the Loans is on normal commercial terms, fair and reasonable so far as the Company and the Independent Shareholders are concerned.

1. Evaluation on the terms of the Pledge Agreement

As set out in the Letter, the fair value of the Pledged Property amounted to approximately RMB518 million as at the date of the Loan Agreement. As advised by the Management, the said fair value of the Pledged Property was referenced to the valuation results of the Pledged Property as extracted from the preliminary valuation of the fair value of the Pledged Property as at 31 July 2020.

We understand that pursuant to the Loan Agreement, the Borrower further agrees that upon completion of the construction work of the Project and after obtaining the ownership certificate(s) of the Constructed Properties, the Borrower will (i) withdraw the Pledged Property and (ii) pledge the Constructed Properties as security to the Agent Bank (for and on behalf of all the Lenders) within 3 months upon such withdrawal. The Borrower shall complete the necessary procedures for the pledge of the Constructed Properties by the end of 2023 and the estimated value of the Constructed Properties is approximately RMB2 billion.

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LETTER FROM EUTO CAPITAL LIMITED

Based on the above, we noted that the estimated value of the Constructed Properties (i.e. RMB2 billion) to the Lender is higher than the aggregate value of the Loans (i.e. RMB1,300 million). As advised by the Management, the credit risk borne by the lender and the interest rate chargeable will generally decrease as the value of the collateral increases. Moreover, we understand that pledged assets may also be subject to a substantial marketability discount to compensate for their low liquidity. In light of this, we consider the pledge of assets to the Lender is on normal commercial terms

Having considered that the arrangement under the Pledge Agreement is a prerequisite for the Loans drawdown, we consider that the entering into of the Pledge Agreement is justifiable.

1. Evaluation on the terms of the Guarantee Agreement

The Corporate Guarantee shall be provided by the Company in favour of the Lenders to secure all the obligation of the Borrower under the Loan Agreement. In other words, in any event if the Borrower has defaulted in its repayment due to the Lenders and the Lenders has enforced the Corporate Guarantee, the Company would incur a liability equivalent to the amount due by the Borrower to the Lenders.

Pursuant to the Guarantee Agreement, the guarantee obligation provided by the Company under the Guarantee Agreement will be reduced and/or released in correspondence to the Borrower's fulfilment of its repayment obligation under the Loan Agreement. As the maximum loan amount under the Loan Agreement of RMB1,300 million is equivalent to the Corporate Guarantee, we consider that the arrangement under the Guarantee Agreement which is a prerequisite for the Loans drawdown to be justifiable.

Conclusion

Having considered all the factors mentioned above, we are of the view that the terms of the Loan Agreement, provision of Corporate Guarantee and Pledged Property are fair and reasonable so far as the Company and the Independent Shareholders are concerned and in the interests of the Group and the Shareholders as a whole.

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LETTER FROM EUTO CAPITAL LIMITED

5. Potential financial effects of the Transaction

5.1 Effect on net asset value

According to the 2019 Annual Report, audited net asset value of the Group as at 31 December 2019 was approximately HK$5,181,998,000. The Transaction is not expected to have any material effect on the net asset value of the Group save for the interest expenses incurred thereof.

5.2 Effect on working capital and gearing

As mentioned, it is the intention of the Company to utilise the Loans for financing the construction works of the Project. According to the 2019 Annual Report, the Group's gearing ratio was approximately 133.69%. It is expected that the gearing ratio of the Group would increase subsequent to the completion of the Transaction.

RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that (i) the terms of the Transaction are on normal commercial terms and are fair and reasonable; and (ii) although the Transaction is not conducted in the ordinary and usual course of business of the Group, the Transaction is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to recommend the Independent Shareholders, to vote in favour of the resolution to be proposed at the SGM to approve the Transaction and we recommend the Independent Shareholders to vote in favour of the resolutions in this regard.

• For identification purpose only and should not be regarded as the official English translation of the Chinese names. In the event of any inconsistency, the Chinese names prevail.

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1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS OF DIRECTORS AND CHIEF EXECUTIVE

1. Interests and short positions of the Directors and the chief executive of the Company

As at the Latest Practicable Date, the interests and short positions of the Directors and the chief executive of the Company in the Shares, underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which (i) were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or (ii) were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (iii) were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, were as follows:

1. Long positions in the Shares

Note: 42,491,800 Shares are held by Jade Investment Limited which is beneficially owned by Mr.

Ng. Kin Nam and his spouse.

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1. Long positions in the Underlying Shares

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Other than as disclosed above, as at the Latest Practicable Date, no person (other than the Directors) has interests or short positions in the Shares or underlying Shares which were recorded in the register of substantial shareholders maintained under Section 336 of the SFO.

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any other person (other than the Directors and the chief executive of the Company) who had interests or short positions in the Shares or underlying Shares, which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly interested in 10% or more of the issued voting shares of any other member of the Group.

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1. Directors or proposed directors being a director employee in a company having an interest under Division 2 and 3 of Part XV of the SFO

So far as the Directors are aware, as at the Latest Practicable Date, each of the following Directors is a director and/or employee of respective companies which have an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provision of Divisions 2 and 3 of Part XV of the SFO:-

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The aforesaid companies had the following interest in the Shares or underlying Shares which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO:

Long positions in Shares and underlying Shares

Notes:

1. Brilliant Bright Holding Limited ("Brilliant Bright") holds 1,557,792,500 Shares.
2. Beijing Enterprise Real Estate (HK) Limited ("BEREHK") (i) holds 2,526,882,407 Shares; and
3. 1. is deemed to be interested in the 1,557,792,500 Shares of Brilliant Bright by virtue of its controlling interests in its wholly owned subsidiary, Brilliant Bright.
4. BEREHK is a wholly-owned subsidiary of Beijing Enterprise Group Real-Estate Co., Ltd ("BE Real Estate"). BE Real Estate is deemed to be interested in the Shares which BEREHK is interested in.
5. Illumination Holdings Limited ("Illumination") holds 87,451,458 Shares.
6. Beijing Holdings Limited ("BHL") (i) holds 487,166,195 shares; and (ii) is deemed to be interested in the 87,451,458 Shares of Illumination by virtue of its controlling interests in its wholly-owned subsidiary, Illumination. BHL is deemed to be interested in the Shares which Illumination is interested in.
7. BE Real Estate and BHL are wholly-owned subsidiaries of BE Group. BE Group is deemed to be interested in the Shares which BE Real Estate and BHL are interested in.

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3. DIRECTORS' OTHER INTERESTS

As the Board is independent of the board of the aforesaid company and maintains five independent non-executive Directors, the Group operates its businesses independently of and at arm's length from the business of the aforesaid company.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and their respective close associates had any business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

As at the Latest Practicable Date, none of the Directors has any interest, either direct or indirect, in any assets which have been acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group since 31 December 2019, being the date to which the latest published audited financial statements of the Company were made up.

There was no contract or arrangement entered into by any member of the Group subsisting at the Latest Practicable Date in which any Director was materially interested and which was significant to the business of the Group.

4. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with the Company or any member of the Group which is not determinable by the employer within one year without payment of compensation (other than statutory compensation).

5. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors are not aware of any material adverse change in the financial or trading position of the Group since 31 December 2019, being the date to which the latest audited financial statements of the Company were made up.

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6. EXPERT

The following is the qualification of the expert who has given its opinion which is contained in this circular.

As at the Latest Practicable Date, Euto Capital was not beneficially interested in the share capital of any member of the Group nor did it have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for any Shares, convertible securities, warrants, options or derivatives which carry voting rights in any member of the Group nor did either of them have any interest, either direct or indirect, in any assets which have been, since the date to which the latest published audited financial statements of the Company were made up (i.e. 31 December 2019), acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

Euto Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and reference to its name in the form and context in which it is included.

7. DOCUMENT AVAILABLE FOR INSPECTION

Copies of the following document is available for inspection during normal business hours at the Company's principal place of business in Hong Kong from the date of this circular up to and including the date of SGM:

(a) the Loan Agreement.

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NOTICE OF SPECIAL GENERAL MEETING

BEIJING PROPERTIES (HOLDINGS) LIMITED

北 京 建 設（ 控 股 ）有 限 公 司

(Incorporated in Bermuda with limited liability)

(Stock Code: 925)

NOTICE IS HEREBY GIVEN that an special general meeting ("SGM") of Beijing Properties (Holdings) Limited (the "Company") will be held at 11:00 a.m. on 5 October 2020, Monday at 66/F., Central Plaza, 18 Harbour Road, Wanchai, Hong Kong for the purpose of considering and, if thought fit, passing, with or without modifications, the following resolution as ordinary resolution:

ORDINARY RESOLUTION

"THAT:

1. the fixed asset syndicated loan agreement 固定資產銀團貸款合同(the "Agreement") dated 26 August 2020 entered into by and among: (1) Jiangsu Sunan Zhicheng Technology Development Co., Ltd.*（江蘇蘇南智城科技發展有限公司）as borrower, (2) Changzhou Xiaoyingqian Branch of Industrial and Commercial Bank of China*（中國工商銀行股份有限公司常州小營前支行）as lead bank, (3)(i) Beijing Enterprises Group Finance Co., Ltd.*（北京控股集團財務有限公司）, (ii) Changzhou Branch of Bank of Communications Co., Ltd*（交通銀行股份有限公司 常州分行）; and (iii) Changzhou Xiaoyingqian Branch of Industrial and Commercial Bank of China*（中國工商銀行股份有限公司常州小營前支行）as lenders, and
2. 1. Changzhou Xiaoyingqian Branch of Industrial and Commercial Bank of China*
   • 中國工商銀行股份有限公司常州小營前支行）as agent bank in relation to

RMB1,300,000,000 on the project relating to development of industrial properties in Changzhou City, Jiangsu Province, the People's Republic of China (details of the Agreement are set out in the Company's circular dated 16 September 2020 (the "Circular"), copies of the Agreement and the Circular have been tabled at the meeting marked "A" and "B" respectively and signed by the Chairman of the meeting for the purpose of identification), and the transactions contemplated thereunder (including without limitation the Guarantee Agreement and the Pledge Agreement (as defined and more particularly described in the Circular)) be and are hereby approved, confirmed and ratified; and

• for identification purpose only

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NOTICE OF SPECIAL GENERAL MEETING

1. the directors of the Company, acting together, individually or by committee, be and are hereby authorised to take such actions, do all such acts and things and execute all such further documents or deeds as they may consider necessary, appropriate, desirable or expedient for implementation of or giving effect to the Agreement and any of the transactions contemplated thereunder."

By Order of the Board

Beijing Properties (Holdings) Limited

Cheng Ching Fu

Company Secretary

Hong Kong, 16 September 2020

Registered Office:

Clarendon House

2 Church Street

Hamilton HM 11

Bermuda

Head office and principal place of business in Hong Kong 66th Floor

Central Plaza

18 Harbour Road

Wanchai, Hong Kong

Notes:

1. A member entitled to attend and vote at the SGM is entitled to appoint one or more proxy to attend and vote on his behalf. A proxy need not be a member of the Company. If more than one proxy is so appointed, the appointment shall specify the number and class of share in respect of which each such proxy is so appointed.
2. To be valid, a form of proxy and the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of such power of attorney or authority, must be lodged with the Company's branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong not less than 48 hours before the time appointed for holding the SGM.
3. Delivery of an instrument appointing a proxy shall not preclude a member from attending and voting in person at the SGM convened.

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NOTICE OF SPECIAL GENERAL MEETING

1. A form of proxy for use at the SGM is enclosed.
2. The voting on the above resolution at the SGM will be conducted by way of a poll.

PRECAUTIONARY MEASURES FOR THE SPECIAL GENERAL MEETING

To safeguard the health and safety of shareholders of the Company and to prevent the spreading of the novel coronavirus disease (COVID-19) pandemic, the following precautionary measures will be implemented at the special general meeting:

1. Compulsory body temperature screening/checks
2. Compulsory wearing of surgical face mask
3. No provision of food or beverages and no distribution of gifts

For the health and safety of shareholders of the Company, the Company would strongly encourage shareholders of the Company to exercise their right to vote at the special general meeting by appointing the chairman of the special general meeting as their proxy and to return their forms of proxy by the time specified above, instead of attending the special general meeting in person.

As at the date of this notice, Mr. Qian Xu, Mr. Zhao Jiansuo, Mr. Siu Kin Wai, Mr. Zhang Xudong, Mr. Dong Qilin, Mr. Li Changfeng, Mr. Cheng Ching Fu, Mr. Yu Luning and Mr. Ng Kin Nam are the executive Directors; and Mr. Goh Gen Cheung, Mr. Zhu Wuxiang, Mr. James Chan, Mr. Song Lishui and Mr. Xie Ming are the independent non-executive Directors.

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