Link Real Estate Investment : Disposal of Properties

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The Securities and Futures Commission of Hong Kong, 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.

DISPOSAL OF PROPERTIES

Reference is made to the announcement of Link dated 19 February 2016 regarding the intention of Link to dispose of, among others, the Properties (being the Shek Yam Property and the Wan Tau Tong Property) by tender. The tender closed at 12:00 noon on 30 March 2016.

On 31 March 2016, Link (through the Vendor) entered into the Accepted Tender Documents for disposal of the Properties. Completion of the Disposals shall take place on 31 May 2016.

This announcement is made pursuant to 10.3 of the REIT Code. The Aggregate Consideration (being HK$1,690.3 million) for the Disposals (i) represents approximately 1.6% of the total market capitalisation of Link (based on the average closing price of the Units on the Stock Exchange for the five business days immediately preceding the date of this announcement); (ii) represents approximately 1.0% of the total assets of Link as at 30 September 2015 (as disclosed in the 2015/2016 Interim Report) after adjusting for the impact of the payment of interim distribution by Link on 4 December 2015, disposal of five properties by Link as announced and completed, respectively, on 27 October 2015 and 31 December 2015, and acquisition of a mixed-used commercial building at No. 700 Nathan Road, Kowloon by Link as announced on 19 February 2016; and (iii) is less than 15% of Link's gross asset value as at 30 September 2015 (as disclosed in the 2015/2016 Interim Report).

To the best knowledge, information and belief of the Directors, and having made all reasonable enquiries, each of the Purchasers, Savills and JLL (being the two sole agents appointed by the Manager for the purposes of the Disposals), the Principal Valuer, and their respective ultimate beneficial owner(s) is an Independent Third Party. Hence, none of the Disposals constitute a connected party transaction of Link under the REIT Code. The Manager is satisfied that no Unitholders' approval is required under the REIT Code for the Vendor to accept the Tender Documents submitted by the Purchasers and the respective transactions contemplated thereunder.

1. OVERVIEW

   
   

   
   

   Reference is made to the announcement of Link dated 19 February 2016 regarding the intention of Link to dispose of, among others, the Properties (being the Shek Yam Property and the Wan Tau Tong Property) by tender. The tender closed at 12:00 noon on 30 March 2016.

   
   

   The Board of the Manager announces that on 31 March 2016, the Vendor (being Link Properties Limited, which is a SPV wholly-owned by Link) accepted the Tender Documents submitted by the Purchasers, which constituted binding agreements in respect of the sale and purchase of the Properties. Savills and JLL, both of whom the Manager has been satisfied that they have the requisite expertise and resources, were appointed as the sole agents for the disposal of the Properties by tender, and the Principal Valuer was appointed to value each of the Properties for the purposes of the Disposals.

   To the best knowledge, information and belief of the Directors, and having made all reasonable enquiries, each of the Purchasers, Savills and JLL (being the two sole agents appointed by the Manager for the Disposals), the Principal Valuer, and their respective ultimate beneficial owner(s) is an Independent Third Party. Hence, none of the Disposals constitute a connected party transaction of Link under the REIT Code.

   
   

   Pursuant to the Tender Documents, the Vendor has expressly reserved its rights, among others,

2. to withdraw any Property for sale before acceptance of any tender and (b) not to accept the highest or any tender.

   
   

   Having considered the Appraised Value of each Property and with reference to recent large commercial investment property transactions in Hong Kong that were quoted for reference by the Principal Valuer in the Valuation Reports, the Manager decided to accept the Tender Documents submitted by the Purchasers (i.e. the Accepted Tender Documents). The Consideration for each Property represents the highest price tendered for the purchase of the relevant Property. The Purchaser, the Consideration (as stated in the Accepted Tender Document) for the Disposal and the Appraised Value of each relevant Property are described below:

   
   

   Property	Purchaser	Consideration for the Disposal	Appraised Value as at the Valuation Date (i.e. 31 March 2016)	Valuation as at 31 March 2015
   (HK$' million)	(HK$' million)	(HK$' million)
   Shek Yam Property	Yan Yan Motors Limited	880.0	719.0	639.4
   Wan Tau Tong Property	Prosperous Glory Investment (H.K.) Limited	810.3	746.0	689.0
   Total	1,690.3	1,465.0	1,328.4

   
   

3. SUMMARY OF KEY TERMS OF THE ACCEPTED TENDER DOCUMENTS

   
   

   
   

   Set out below is a summary of the key terms of the Accepted Tender Documents. Save for the identities of the Purchasers and the relevant Consideration set out above, the terms and conditions of each Accepted Tender Document are substantially the same. There is no indemnity or guarantee given by the Vendor or the Manager in respect of the Properties, or any deferred payment or payment otherwise than by cash in any of the Accepted Tender Documents.

   
   

   Acceptance Date :	31 March 2016
   Parties :	(i) Link Properties Limited (as the Vendor of the relevant Property); and
   (ii) the respective Purchaser (as purchaser) of the relevant Property.
   Terms of Payment :	(i) the Initial Deposit was paid by the Purchaser by way of cashier's order to the Vendor at the time when the Purchaser submitted the Tender Document;

   
   

   (ii) a further deposit equivalent to a sum of 10% of the Consideration less the Initial Deposit (the Initial Deposit and the further deposit shall, together, represent 10% of the Consideration) shall be paid by the Purchaser to the Vendor by way of cashier's order on 15 April 2016;
   (iii) the balance of the Consideration (being 90% of the Consideration) shall be paid by the Purchaser to the Vendor on the Completion Date; and
   (iv) if the Purchaser makes default in the payment of any money or any part thereof to be payable, transferred or refunded to the Vendor on the relevant due date(s) under the Accepted Tender Document, the Purchaser shall pay to the Vendor interest on the money or such part thereof as shall for the time being remain unpaid at the rate of 4% per annum over the best lending rate from time to time of The Hongkong and Shanghai Banking Corporation Limited from the date or respective date(s) when the money or any part thereof falls due or becomes payable until the date(s) of payment. Such payment of interest shall be in addition to and shall be without prejudice to any other rights and remedies which the Vendor may have against the Purchaser on account of the Purchaser's default in payment on the due date(s) under the Accepted Tender Document.
   Condition :	The Property is sold subject to and with the benefit of the Tenancies.
   Completion :	There is no condition precedent to the Completion of the Disposals, all of which shall take place on 31 May 2016.
   Termination :	(i) If the Purchaser fails to observe or comply with any of the terms and conditions of the Accepted Tender Document, the Vendor may (without tendering an assignment to the Purchaser) terminate the Accepted Tender Document by giving notice of termination in writing to the Purchaser or its solicitors, and the Vendor is entitled to re-enter upon the Property and repossess the same if possession shall have been given to the Purchaser free from any right or interest of the Purchaser therein. The Initial Deposit and further deposit (if already paid by the Purchaser) shall be forfeited by the Vendor absolutely. Upon such determination, the Vendor may resell, let or otherwise deal with the relevant Property or any part(s) thereof either by public auction or by tender or by private contract or partly by one of such methods of sale and partly by another one or more of such methods of sale subject to such stipulations as the Vendor may think fit and any increase in price on resale shall belong to the Vendor. Without prejudice to the Vendor's right to recover the actual loss which may flow from the Purchaser's breach of the Accepted Tender Document, on such resale any deficiency in price shall be made good and all expenses attending such resale or any attempted resale shall be borne by the Purchaser and such deficiency and expenses shall be recoverable by the Vendor credit being given for any amount forfeited or retained as aforesaid.
   (ii) If the Vendor fails to complete the sale of the Property in accordance with the terms of the Accepted Tender Document, it shall not be necessary for the Purchaser to tender an assignment to the Vendor before taking legal proceedings to enforce specific performance of the Accepted Tender Document.

4. INFORMATION ON THE PROPERTIES







1. Shek Yam Property

   
   

   The Shek Yam Property, completed in 2000, comprises principally a 7-storey commercial/car park building and associated areas within Shek Yam Estate, 120 Lei Muk Road, Kwai Chung, New Territories, Hong Kong together with parking spaces thereat, and is being held under a government lease for a term of 50 years from 11 January 2010.

   
   

   The Appraised Value of the Shek Yam Property at the Valuation Date was HK$719.0 million, and its occupancy at, respectively, 30 September 2015 and 31 March 2015 was 92.8% and 92.8%.

   
   

   The turnover and net property income of the Shek Yam Property for the six months ended 30 September 2015 and the year ended 31 March 2015 are as follows:

   
   

   For the six months ended 30 September 2015 (unaudited) Approx. % of Link's entire For the year ended 31 March 2015 (audited) Approx. % of Link's entire Amount portfolio Amount portfolio

   (HK$'000) (%) (HK$'000) (%)

   
   

   Turnover	24,076	0.58	45,880	0.59
   Net property income	15,051	0.49	28,957	0.51

   
   

   As at 31 March 2015, the Shek Yam Property was valued at HK$639.4 million by the Principal Valuer, which represented approximately 0.46% of the total appraised value of Link's entire portfolio as at 31 March 2015.

   
   

2. Wan Tau Tong Property




The Wan Tau Tong Property, completed in 1991, comprises principally a 2-storey commercial centre, a 4-storey car park block, a shop unit and various open car parks within Wan Tau Tong Estate, No. 10 Hiu Wan Road, Tai Po, New Territories, Hong Kong together with parking spaces thereat, and is held under a government lease for a term of 50 years from 8 April 1998.




The Appraised Value of the Wan Tau Tong Property at the Valuation Date was HK$746.0 million, and its occupancy at, respectively, 30 September 2015 and 31 March 2015 was 100% and 100%.




The turnover and net property income of the Wan Tau Tong Property for the six months ended 30 September 2015 and the year ended 31 March 2015 are as follows:




For the six months ended 30 September 2015 (unaudited) Approx. % of Link's entire For the year ended 31 March 2015 (audited) Approx. % of Link's entire Amount portfolio Amount portfolio

(HK$'000) (%) (HK$'000) (%)




Turnover	21,577	0.52	38,910	0.50
Net property income	17,463	0.56	30,441	0.54




As at 31 March 2015, the Wan Tau Tong Property was valued at HK$689.0 million by the Principal Valuer, which represented approximately 0.50% of the total appraised value of Link's entire portfolio as at 31 March 2015.