KWG : Continuing Connected Transactions Lease of Properties

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.

KWG GROUP HOLDINGS LIMITED

Υ౻इబණྠછٰϞࠢʮ̡

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1813)

CONTINUING CONNECTED TRANSACTIONS

LEASE OF PROPERTIES

PROPERTY LEASE AGREEMENTS

The Board announces that on 19 March 2021, the Group entered into the 2021 Property Lease Agreements I with the Lessee, pursuant to which the Group agreed to lease the IMP properties to the Lessee, from 19 March 2021 to 30 April 2022.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Mr. KONG, an executive Director and chief executive officer of the Company, indirectly owns 100% equity interests in the Lessee, and therefore the Lessee is an associate of Mr. KONG and a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the transactions contemplated under the 2021 Property Lease Agreements I constitute continuing connected transactions of the Company.

Under Rule 14A.83 of the Listing Rules, as the 2021 Property Lease Agreements I and the Existing Property Lease and Management Agreements are all entered into between the Group and the Lessee or its wholly-owned subsidiaries, they are required to be aggregated. As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the highest annual caps of the transactions under the Property Lease and Management Agreements on an aggregated basis exceeds 0.1% but all of them are less than 5%, the transactions contemplated under the 2021 Property Lease Agreements I are subject to the reporting, annual review and announcement requirements but are exempt from independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.

PROPERTY LEASE AGREEMENTS

The Board announces that on 19 March 2021, the Group entered into the 2021 Property Lease Agreements I with the Lessee, pursuant to which the Group agreed to lease the IMP Properties to the Lessee, from 19 March 2021 to 30 April 2022.

Principal terms of the 2021 Property Lease Agreements I are set out as follows:

Date: 19 March 2021

Parties:

(1) Guangzhou Junzhao Real Estate Management Co., Ltd. (廣 州市君兆物業經營有限公司), a wholly-owned subsidiary of the Company as the Lessor

(2) Guangzhou Kai Chuang Business Investments Group

Company Limited* (廣州凱創商務投資集團有限公司 ) as Lessee

Leased properties:

the IMP Properties, which are located in Guangzhou, the PRC with a total gross floor area of approximately 3,577 sq.m.

Payment terms:

Rental fees shall be payable monthly in advance on the 5th day of each calendar month.

Usage: Office space

*

For identification purposes only

The IMP Properties

Details of the IMP Properties are set out as follows:

Location

Unit 03 and 04 on Level 51, Unit 03 on Level 56,

Unit 03 on Level 60, International Metropolitan Plaza, 68 Huacheng Avenue, Pearl River New Town, Tianhe District, Guangzhou, Guangdong Province, the PRC

Lease TermEffective

Monthly Rental Fee

(RMB)

19 March 2021 to 440,050.25

30 April 2022

Unit 01 and 02 on Level 60, International

Metropolitan Plaza, 68 Huacheng Avenue, Pearl River New Town, Tianhe District, Guangzhou, Guangdong Province, the PRC

19 March 2021 to 221,722.50

30 April 2022

Total 661,772.75

PROPOSED ANNUAL CAPS

Taking into account the aggregate annual rental fees for the transactions contemplated under the Existing Property Lease and Management Agreements, the aggregated annual caps under the Property Lease and Management Agreements for each of the financial years ending 31 December 2021, 2022 and 2023 will be revised as follows:

Annual Caps

For the	For the	For the
financial	financial	financial
year ending	year ending	year ending
31 December	31 December	31 December
2021	2022	2023
(RMB)	(RMB)	(RMB)
Annual caps under the Property Lease and
Management Agreements III	6,480,000	2,436,000	-
Annual caps under the Property Lease and
Management Agreements IV & V	6,432,000	6,432,000	1,033,000
Annual caps under the 2020 Property
Lease Agreements I & II	15,039,600	15,039,600	15,039,600
Annual caps under the 2021 Property
Lease Agreements I	6,233,472	2,647,091	-
Revised aggregate annual caps	34,185,072	26,554,691	16,072,600

The rental fees in respect of the 2021 Property Lease Agreements I were determined after taking into the consideration (a) the rental fees under the existing lease agreements (including the 2020 Property Lease Agreements II and the Property Lease and Management Agreements V) in respect of the lease of two units at the same buildings; (b) the prevailing market rates for comparable properties in the proximity of the IMP Properties; (c) the rental fees agreed between the Group and independent third party lessees for comparable transactions; and (d) the rental valuation conducted by an independent professional valuer based on comparisons to transacted rental fees or asking rental fees of comparable properties.

REASONS AND BENEFITS FOR PROPERTY LEASE AGREEMENTS

The IMP Properties are located in first tier city in the PRC, and there is a growing market in the PRC for co-working spaces. The Group has been leasing properties to the Lessee and its wholly-owned subsidiaries for sub-leasing to third parties as co-working spaces and serviced offices, to be used as offices and meeting venues, which will cater to entrepreneurs, start-up businesses, branches of large enterprises and professional services. The Company believes that it will benefit from the transactions under the 2021 Property Lease Agreements I due to the following reasons: (i) the Group will earn rental fee incomes which are at the prevailing market rates; and (ii) all the costs and risks relating to the operation of the business in the IMP Properties will be borne by the Lessee.

In light of the above, the Directors (including the independent non-executive Directors) are of the view that the 2021 Property Lease Agreements I and the transactions contemplated thereunder are on normal commercial terms and in the ordinary and usual course of business of the Group, and the terms in the 2021 Property Lease Agreements I, including the relevant annual caps, are fair and reasonable and are in the interest of the Company and the Shareholders as a whole.

Since Mr. KONG has a material interest in the 2021 Property Lease Agreements I and the transactions contemplated thereunder, he had abstained from voting on the relevant board resolutions approving (i) the 2021 Property Lease Agreements I and the transactions contemplated thereunder; and (ii) the annual caps in respect of the 2021 Property Lease Agreements I and the aggregated annual caps of the Property Lease and Management Agreements.

INFORMATION ON THE GROUP AND THE PARTIES TO THE PROPERTY LEASE AGREEMENTS

The Group

The Group is a large-scale property developer in the PRC with a leadership position in Guangzhou and an established presence in various major cities in the PRC and Hong Kong.

Lessee

The Lessee is established under the laws of the PRC and is principally engaged in providing business services, including the provision of properties to third parties as co-working space and serviced offices.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Mr. KONG, an executive Director and chief executive officer of the Company, indirectly owns 100% equity interests in the Lessee, and therefore the Lessee is an associate of Mr. KONG and a connected person of the Company under Chapter 14A of the Listing Rules. Accordingly, the transactions contemplated under the 2021 Property Lease Agreements I constitute continuing connected transactions of the Company.

Under Rule 14A.83 of the Listing Rules, as the 2021 Property Lease Agreements I, and the Existing Property Lease and Management Agreements are all entered into between the Group and the Lessee or its wholly-owned subsidiaries, they are required to be aggregated. As one or more of the applicable percentage ratios (as defined in the Listing Rules) in respect of the highest annual caps of the transactions under the Property Lease and Management Agreements on an aggregated basis exceeds 0.1% but all of them are less than 5%, the transactions contemplated under the 2021 Property Lease Agreements I are subject to the reporting, annual review and announcement requirements but are exempt from independent Shareholders' approval requirement under Chapter 14A of the Listing Rules.

DEFINITIONS

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

''2020 Property Lease	the agreements entered into between the Group and the Lessee
Agreements I''	and its wholly-owned subsidiaries on 31 December 2020, details
of which were set out in the announcement of the Company
dated 31 December 2020
''2020 Property Lease	the agreements entered into between the Group and the Lessee
Agreements II''	and its wholly-owned subsidiaries on 31 December 2020, details
of which were set out in the announcement of the Company
dated 31 December 2020
2021 Property Lease	the agreement entered into between the Lessor and the Lessee on
Agreements I	19 March 2021 whereby the Lessor agreed to lease the IMP
Properties to the Lessee
''associate''	has the meaning ascribed thereto in the Listing Rules
''Board''	the board of Directors
''Company''	KWG Group Holdings Limited (合景泰富集團控股有限公司)
(stock code: 1813), a limited liability company incorporated in
the Cayman Islands, the Shares of which are listed on the Main
Board of the Stock Exchange
-6-

''connected person''	has the meaning ascribed thereto in the Listing Rules
''Director(s)''	the director(s) of the Company
''Existing Property	collectively, the 2020 Property Lease Agreements I, the 2020
Lease and	Property Lease Agreements II, the Property Lease and
Management	Management Agreements III, the Property Lease and
Agreements''	Management Agreements IV and the Property Lease and
Management Agreements V
''Group''	the Company and its subsidiaries
''Hong Kong''	the Hong Kong Special Administrative Region of the PRC
''IMP Properties''	the properties set out in the section ''The IMP Properties'' of this
announcement
''Lessee''	Guangzhou Kai Chuang Business Investments Group Company
Limited* (廣州凱創商務投資集團有限公司)
''Lessor''	Guangzhou Junzhao Real Estate Management Co., Ltd. (廣州市
君兆物業經營有限公司), a wholly-owned subsidiary of the
Company
''Listing Rules''	the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited
''Mr. KONG''	Mr. KONG Jiantao, an executive Director and chief executive
officer of the Company
''PRC''	the People's Republic of China, which for the purpose of this
announcement, shall exclude Hong Kong, the Macau Special
Administrative Region of the PRC and Taiwan
''Property Lease and	collectively, the 2021 Property Lease Agreements I and the
Management	Existing Property Lease and Management Agreements
Agreements''
''Property Lease and	the agreements entered into between the Group and the Lessee
Management	and its wholly-owned subsidiaries on 1 July 2019, details of
Agreements III''	which are set out in the announcement of the Company dated 2
July 2019

*

For identification purposes only

''Property Lease and	the agreements entered into between the Group and the Lessee
Management	and its wholly-owned subsidiaries respectively on 14 February
Agreements IV''	2020 and 26 February 2020, details of which are set out in the
announcement of the Company dated 27 March 2020
''Property Lease and	the agreements entered into between the Group and the Lessee
Management	and its wholly-owned subsidiaries on 27 March 2020, details of
Agreements V''	which are set out in the announcement of the Company dated 27
March 2020
''RMB''	Renminbi, the lawful currency of the PRC
''Share(s)''	ordinary share(s) of par value of HK$0.1 each in the share
capital of the Company
''Shareholder(s)''	holder(s) of the Share(s)
''sq.m.''	square metres
''Stock Exchange''	The Stock Exchange of Hong Kong Limited
''subsidiaries''	has the meaning ascribed thereto in the Listing Rules
''%''	per cent

By Order of the Board KWG Group Holdings Limited

KONG Jianmin

Chairman

Hong Kong, 19 March 2021

As at the date of this announcement, the Board comprises seven Directors, of whom Mr. KONG Jianmin (Chairman), Mr. KONG Jiantao (Chief Executive Officer), Mr. KONG Jiannan and Mr. CAI Fengjia are executive Directors; and Mr. LEE Ka Sze, Carmelo JP, Mr. TAM Chun Fai and Mr. LI Binhai are independent non-executive Directors.