Spring Real Estate Investment Trust : Payment of Base Fee and Variable Fee to Spring Asset Management Limited by Way of Units in Spring Real Estate Investment Trust and Cash

The Securities and Futures Commission of Hong Kong, Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company 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.

Spring Real Estate Investment Trust

(a Hong Kong collective investment scheme authorized under section 104 of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong))

(Stock Code: 01426)

Managed by

Spring Asset Management Limited

PAYMENT OF BASE FEE AND VARIABLE FEE TO SPRING ASSET

MANAGEMENT LIMITED BY WAY OF UNITS IN

SPRING REAL ESTATE INVESTMENT TRUST AND CASH

PAYMENT OF THE MANAGER'S BASE FEE AND VARIABLE FEE FOR THE PERIOD FROM 1 JULY 2019 TO 30 SEPTEMBER 2019

Reference is made to the announcement issued by the Manager dated 19 December 2018 in relation to the Manager's election for the Base Fee to be paid to the Manager in the form of Units as entirely, and Variable Fee to be paid to the Manager in the form of cash entirely, arising from any real estate of Spring Real Estate Investment Trust ("Spring REIT") for the year ending 31 December 2019.

The board of directors (the "Board") of the Manager announces that the Manager has on 30 October 2019 received payment of the Base Fee in the amount of HK$11,691,129.82, of which HK$11,691,129.82 was paid in the form of Units by way of 3,516,129 Units issued to the Manager on 30 October 2019. The fee was paid to the Manager for the period from 1 July 2019 to 30 September 2019. The 3,516,129 Units so issued to the Manager ("Issue") represent approximately 0.27% of the total number of 1,285,813,315 Units in issue immediately after the Issue.

The Variable Fee for the period from 1 July 2019 to 30 September 2019 was paid in the form of cash to the Manager on 30 October 2019. Disclosure of details of the Variable Fee will be made by the Manager in the next financial report of Spring REIT.

In accordance with the trust deed dated 14 November 2013 constituting Spring REIT, as supplemented by the first supplemental deed dated 22 May 2015 (collectively, the "Trust Deed"), the number of Units issued as mentioned above as payment of 100% of the Base Fee to the Manager, shall be such number of Units as may be purchased for the relevant amount of the Base Fee at the price of HK$3.325 per Unit (being the prevailing Market Price as defined in the Trust Deed), rounded down to the nearest whole number of Units.

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The above Issue of Units to the Manager is provided for in the Trust Deed. Pursuant to a waiver granted by the Securities and Futures Commission ("SFC") such Issue does not require the approval of the holders of the Units in Spring REIT (the "Unitholders").

The Manager held 17,491,686 Units immediately before the Issue. Immediately after the Issue of the 3,516,129 Units, the Manager holds 21,007,815 Units, representing approximately 1.63% of the 1,285,813,315 Units in issue.

PAYMENT OF THE MANAGER'S BASE FEE AND VARIABLE FEE FOR THE PERIOD FROM 1 JULY 2019 TO 30 SEPTEMBER 2019

Pursuant to the Trust Deed, Spring Asset Management Limited, manager of Spring REIT (the "Manager"), is entitled to receive, commencing on and from and including 5 December 2013, among others, the following fees:

1. a base fee (the "Base Fee"), which is defined in the Trust Deed as 0.4% per annum of the amount of the Deposited Property (as defined in the Trust Deed) calculated quarterly as of the close of business on the last Business Day of each calendar quarter, and allocated rateably for any partial periods and during the term of Spring REIT; and
2. a variable fee (the "Variable Fee"), which is defined in the Trust Deed as 3.0% per annum of the Net Property Income (as defined in the Trust Deed) of Spring REIT (before deduction therefrom of the Base Fee and the Variable Fee). For the purpose of calculating the Variable Fee, the Net Property Income was computed based on the unaudited management accounts of Spring REIT for the period ended 30 September 2019, subject to adjustments (if any) pursuant to Clause 11.1.2.4 of the Trust Deed.

Pursuant to the Trust Deed, the Manager may elect, annually on or before 15 January of each financial year, to receive the Base Fee and the Variable Fee in the form of cash and/or in the form of units of Spring REIT (the "Units") in respect of that financial year. Reference is made to the announcement issued by the Manager dated 19 December 2018 in relation to the Manager's election that the Base Fee for the year ending 31 December 2019 shall be paid to the Manager in the form of Units entirely, and Variable Fee shall be paid to the Manager in the form of cash entirely, arising from any real estate of Spring REIT for the year ending 31 December 2019.

The Board announces that the Manager has received on 30 October 2019 payment of the Base Fee in the amount of HK$11,691,129.82, of which HK$11,691,129.82 was paid in the form of Units by way of 3,516,129 Units issued to the Manager on 30 October 2019. The fee was paid to the Manager for the period from 1 July 2019 to 30 September 2019. The 3,516,129 Units so issued to the Manager represent approximately 0.27% of the total number of 1,285,813,315 Units in issue immediately after the Issue.

The Variable Fee for the period from 1 July 2019 to 30 September 2019 was paid in the form of cash to the Manager on 30 October 2019. Disclosure of details of the Variable Fee will be made by the Manager in the next financial report of Spring REIT.

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In accordance with the Trust Deed, the number of Units issued to the Manager as mentioned above as payment of the Base Fee to the Manager, shall be such number of Units as may be purchased for the relevant amount of the Base Fee at the price of HK$3.325 per Unit (being the prevailing Market Price as defined in the Trust Deed), rounded down to the nearest whole number of Units.

The Market Price shall, according to the Trust Deed, be the price as determined by the Manager as being the average closing price of the Units in the ten (10) trading days immediately preceding the date on which the relevant Units are issued to the Manager. The number of Units under the Issue was determined on a basis which is consistent with the relevant provisions of the Trust Deed.

The payment of the Manager's fee is denominated in HKD. The exchange rates adopted by the Manager to calculate the payment of the Manager's fee for the period from 1 July 2019 to 30 September 2019 were the average of month-end central parity rates in the three months ended 30 September 2019, as announced by the People's Bank of China. Such exchange rates were deemed appropriate by the Manager in the circumstances, in accordance with the relevant provisions of the Trust Deed.

WAIVER OF REQUIREMENTS FOR UNITHOLDERS' APPROVAL AND VALUATION

The Issue of 3,516,129 Units as payment of the Base Fee to the Manager is in accordance with the terms of the Trust Deed and pursuant to a waiver granted by the SFC as disclosed in the offering circular for Spring REIT (the "Offering Circular") dated 25 November 2013, issued in connection with the initial public offering and listing of the Units (the "Waiver"). Accordingly, the Issue does not require the approval of the Unitholders and does not require a valuation of the real estate held under Spring REIT.

As disclosed in the Offering Circular, the Waiver was granted by the SFC subject to the following conditions:

1. the number of Units issued to the Manager as payment of all or part of the Manager's remuneration for each financial year of Spring REIT shall be counted as part of the 20% (or such lower percentage as permitted by the Code on Real Estate Investment Trusts (the "REIT Code") from time to time) of outstanding Units that the Manager may issue in each financial year without Unitholders' approval, pursuant to Paragraph 12.2 of the
   REIT Code;
2. in respect of each financial year, the maximum number of Units that may be issued to the Manager as payment of all or part of the Manager's remuneration for that financial year shall, in the aggregate, be limited to such number of Units as represents 3% of the total number of Units outstanding as at the last day of the immediately preceding financial year plus the number of Units, if any, issued in that financial year for the purpose of financing any acquisition of real estate by Spring REIT;
3. any issue of Units to the Manager as payment of all or part of the Manager's remuneration shall be made strictly in accordance with the requirements of the Trust Deed and the applicable rules; and

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1. in the event that any payment of all or part of the Manager's remuneration in the form of Units exceeds the relevant thresholds set out in Paragraph 12.2 of the REIT Code and condition (ii) (above), and Unitholders' approval is not obtained for the issue of Units for such purpose, then payment of that excess part of the Manager's remuneration shall be made by Spring REIT to the Manager in cash.

Accordingly, the Issue will be counted as part of: (i) the 20% of outstanding Units that the Manager may issue in the financial year ending 31 December 2019 without requirement for the Unitholders' approval pursuant to Paragraph 12.2 of the REIT Code, and (ii) the maximum number of Units permitted to be issued to the Manager as payment of all or part of the Manager's remuneration for the financial year ending 31 December 2019, as per condition (ii) (above).

TOTAL NUMBER OF UNITS ISSUED TO THE MANAGER IN RESPECT OF THIS FINANCIAL YEAR

The 10,175,617 Units comprising the Issue, being the total number of Units issued to the Manager so far as payment of Base Fee in respect of the financial year ending 31 December 2019, represents 0.80% of the Units outstanding as at 31 December 2018 (being the last day of the immediately preceding financial year), being less than 3.0% of the Units outstanding as at that date. For the period from 1 January 2019 to the date of this announcement, no Unit has been issued for the purpose of financing any acquisition of real estate by Spring REIT.

UNITHOLDING INTERESTS OF THE MANAGER

The Manager held 17,491,686 Units immediately before the Issue. Immediately after the Issue of the 3,516,129 Units, the Manager holds 21,007,815 Units, representing approximately 1.63% of the 1,285,813,315 Units in issue.

GENERAL

The announcement is made pursuant to Paragraph 10.4(k) of the REIT Code.

By order of the Board

Spring Asset Management Limited

(as manager of Spring Real Estate Investment Trust)

Mr. Toshihiro Toyoshima

Chairman of the Manager

Hong Kong, 30 October 2019

As at the date of this announcement, the directors of the Manager are Toshihiro Toyoshima (Chairman and non-executive director); Nobumasa Saeki, and Leung Kwok Hoe, Kevin (executive directors); Hideya Ishino (non-executive director); and Simon Murray, Lam Yiu Kin and Liping Qiu (independent non-executive directors).

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