SUN HUNG KAI & CO. LIMITED Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
(Incorporated in Hong Kong with limited liability)
(Stock Code: 86)The Board announces that on 2 December 2015, the Company as lessee, entered into the Renewed Master Lease Agreement with Art View as lessor, whereby any member of the Group may continue, amend or renew the Existing Leases or enter into new leases in relation to the Property with Art View as the lessor from time to time during the period commenced from 1 January 2016 and ending on 31 December 2017 subject to the annual caps.
The Company is a subsidiary of APL which, in turn, owns 50% indirect shareholding interest in Art View. In addition, given that APL is held as to approximately 74.91% by AGL, AGL is an associate of APL. Accordingly, both Art View and AGL are connected persons of the Company within the meaning of the Listing Rules, and the transactions contemplated under both the Renewed Master Lease Agreement and the Renewed Sub-tenancy Agreement constitute continuing connected transactions of the Company under the Listing Rules.
Since the applicable percentage ratios of the Listing Rules calculated with reference to the Annual Caps are more than 0.1% but less than 5%, the transactions contemplated under the Renewed Master Lease Agreement and the Renewed Sub-tenancy Agreement are subject to the announcement, reporting and annual review requirements, but are exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.
Details of the Renewed Master Lease Agreement and the Renewed Sub-tenancy Agreement and the transactions contemplated thereunder will be included in the Company's next published annual report and accounts in accordance with Rules 14A.49 of the Listing Rules.
INTRODUCTIONReference is made to the announcement of the Company dated 14 February 2014 in relation to, among other things, the Master Lease Agreement and the announcement of the Company dated 8 April 2015 in relation to, among other things, the Renewed Sub-tenancy Agreement.
Since the Master Lease Agreement is due to expire on 31 December 2015, the Board announces that the Company as lessee, has entered into the Renewed Master Lease Agreement with Art View as lessor on 2 December 2015, whereby any member of the Group may continue, amend or renew the Existing Leases or enter into new leases, sub-leases and licenses in relation to the Property with Art View as the lessor from time to time as are necessary for the future business needs of the Group.
Date: 2 December 2015
Parties: (1) The Company
(2) Art View
Term: Two years from 1 January 2016 to 31 December 2017
The Renewed Master Lease Agreement sets out a framework of the terms on which any member of the Group may continue, amend or renew the Existing Leases or enter into new leases in relation to the Property from time to time with Art View as the lessor (collectively, the 'Leases').
Major terms of the Leases:
The terms of all Leases shall be negotiated on an arm's length basis and shall be fair and reasonable.
All the terms of the Existing Leases in effect at the effective date of the Renewed Master Lease Agreement shall remain in full force and effect notwithstanding the Renewed Master Lease Agreement, and any renewal or amendment of the terms of the Existing Leases shall comply with the terms of the Renewed Master Lease Agreement.
The rent and management fees payable by the member(s) of the Group to Art View under the Leases will be determined between Art View and the relevant member(s) of the Group with reference to the prevailing market conditions and the rental level of similar properties in the vicinity of the Property and the actual management fee charged by the property manager.
The terms of the Leases (including options to renew the relevant lease, sub-lease or licence, if any) shall expire on or before the expiry date of the Renewed Master Lease Agreement.
The aggregate annual rent and management fees payable by the Group to Art View under all the Leases shall be within the limit of the annual caps under the Renewed Master Lease Agreement.
In the event that the aggregate annual rent and management fees under all the Leases exceed the annual caps under the Renewed Master Lease Agreement, Art View and the Company shall enter into a supplemental agreement for the purpose of amending the terms and conditions therein in particular the annual caps and Art View agrees to provide assistance to the Company in complying with the applicable requirements under the Listing Rules.
Details of the Existing Leases which have been renewed are set out below:
(sq. feet) (HK$) (HK$)
7/F., Allied Kajima Building 9,506 1January2016- 31December2017
Room 1601-3, Allied Kajima Building 5,626 1January2016-
31December2017
20/F., Allied Kajima Building 9,506 1January2016- 31December2017
21/F., Allied Kajima Building 9,506 1January2016-
31December2017
332,710.00 63,690.20
196,910.00 37,694.20
332,710.00 63,690.20
332,710.00 63,690.20
The annual caps of the Leases for the years ending 31 December 2016 and 31 December 2017 are HK$19,465,000.00 and HK$21,843,000.00 respectively. They are calculated (i) with reference to the estimated total annual rent and management fees payable by the Group to Art View under the Existing Leases and (ii) taking into consideration a possible new office to be leased in the area of the Property by the Group from Art View for the 18-month period from 1 July 2016 to 31 December 2017.
THE RENEWED SUB-TENANCY AGREEMENTOn 8 April 2015, UAF and AGL entered into the Renewed Sub-tenancy Agreement, pursuant to which AGL has agreed to sub-lease a portion of the 24/F. of the Property to UAF for a term of two years from 1 April 2015 to 31 March 2017 (both days inclusive). Such portion forms part of the leasing arrangement between AGL and Art View in respect of the 24/F. of the Property as contemplated under a tenancy agreement entered into between Art View as lessor and AGL as lessee dated 17 March 2015. The monthly rental and management fee payable under the Renewed Sub-tenancy Agreement is HK$21,100.00 for 1 April 2015 to 30 April 2015 and HK$21,300.00 for 1 May 2015 to 31 March 2017.
Since Art View is owned by APL as to 50% indirect shareholding interest and in turn, APL is a non wholly-owned subsidiary of AGL, Art View is a party connected with AGL. Therefore, in accordance with the Rules 14A.82(1) of the Listing Rules, the annual caps under the Renewed Master Lease Agreement from 1 January 2016 to 31 December 2017 and the total amount of rent and management fees payable under the remaining term of the Renewed Sub-tenancy Agreement from 1 January 2016 to 31 March 2017 have to be aggregated for the purpose of calculating the Annual Caps as follows:
(HK$) (HK$)
Annual caps of the Leases under the Renewed Master Lease Agreement
19,465,000.00 21,843,000.00
Total rent and management fees to be payable under the remaining term of the Renewed Sub-tenancy
Agreement
256,000.00 64,000.00
(from 1 January 2017 to
31 March 2017)
Annual Caps 19,721,000.00 21,907,000.00
The entering into of the Renewed Master Lease Agreement and the Renewed Sub-tenancy Agreement is for the continuing business needs of the Group. The rent and management fees payable pursuant to the Renewed Master Lease Agreement was determined between Art View and the relevant member(s) of the Group with reference to the prevailing market conditions and the rental level of similar properties in the vicinity of the Property. For the Renewed
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