Hengli Commercial Properties : Announcements and Notices - Announcement Continuing Connected Transaction Carpark Tenancy Agreement

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萬 達 酒 店 發 展 有 限 公 司 WANDA HOTEL DEVELOPMENT COMPANY LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code : 169) ANNOUNCEMENT CONTINUING CONNECTED TRANSACTION CARPARK TENANCY AGREEMENT CARPARK TENANCY AGREEMENT

On 27 March 2017, the Guilin Project Company (an indirect non-wholly owned subsidiary of the Company) entered into the Carpark Tenancy Agreement (as landlord) with Wanda Business Management (as tenant) for the Carpark Premises of Guilin Gaoxin Plaza in Guilin City, the PRC, for a term of one year commencing on 27 March 2017 to 26 March 2018 (both days inclusive), subject to renewal upon the expiry of the agreement.

The monthly rent shall be (i) during the period before the public is charged for use of the Carpark Premises: RMB100,000 (inclusive of value-added tax); and (ii) during the period when the public is charged for use of the Carpark Premises: 60% of the revenue generated by the carpark business carried on at the Carpark Premises by Wanda Business Management after deducting relevant tax and government levies.

LISTING RULES IMPLICATIONS

As at the date of this announcement, DWCP is an indirect holding company and controlling shareholder of the Company, and hence is a connected person of the Company under the Listing Rules. Since Wanda Business Management is indirectly wholly-owned by DWCP, Wanda Business Management is also a connected person of the Company under the Listing Rules. Accordingly, the Carpark Tenancy Agreement entered into by the Guilin Project Company with Wanda Business Management and the transactions contemplated thereby constitute continuing connected transactions of the Company under the Listing Rules.

Pursuant to Rule 14A.81 of the Listing Rules, the transactions contemplated under the Carpark Tenancy Agreement and the Existing Tenancy Agreements shall be aggregated. As the highest applicable percentage ratio (as defined under the Listing Rules) (other than the profits ratio) in respect of the aggregated annual caps of the Carpark Tenancy Agreement and the Existing Tenancy Agreements exceeds 0.1% but is below 5%, the transactions under the Carpark Tenancy Agreement are subject to the reporting, announcement and annual review requirements but are exempt from the independent Shareholders' approval requirement pursuant to Rule 14A.76 of the Listing Rules.

INTRODUCTION

On 27 March 2017, the Guilin Project Company (a non-wholly owned subsidiary of the Company) entered into the Carpark Tenancy Agreement as landlord with Wanda Business Management as tenant.

CARPARK TENANCY AGREEMENT

1. Principal terms

   A summary of the principal terms of the Carpark Tenancy Agreement is set out in the table below.

   Date of signing : 27 March 2017 Parties : (i) Guilin Project Company as landlord

   (ii) Wanda Business Management as tenant

   Premises : Comprising (i) the carpark of Guilin Gaoxin Plaza in Guilin City, the PRC, including all the car spaces thereof and area for equipment and storage; and (ii) the carpark management office Gross floor area : Approximately 48,281 square metres (inclusive of

   approximately 716 square metres of office area)

   Term : One year commencing from 27 March 2017 to 26 March 2018 (both days inclusive), unless early terminated by Guilin Project Company upon the occurrence of customary events of default as set out in the agreement (such as failure to pay rent within prescribed period or breach of other terms of the Carpark Tenancy Agreement by the tenant).

   Upon the expiry of the Carpark Tenancy Agreement, Wanda Business Management shall, subject to compliance with the Listing Rules and mutual agreement of the terms of the agreement by the parties (including the rent which shall be determined by the parties with reference to the prevailing fair market rent at that time), have a priority right to lease the Carpark Premises by extending the term of the Carpark Tenancy Agreement.

   Use : Operation of carpark business Rent and Payment : (i) During the period before the public is charged

   for use of the Carpark Premises: Monthly rent of RMB100,000 (inclusive of value-added tax).

   (ii) During the period when the public is charged for use of the Carpark Premises: Monthly rent equivalent to 60% of the revenue generated by the carpark business carried on at the Carpark Premises by Wanda Business Management after deducting relevant tax and government levies.

   The aforesaid rental is exclusive of utility charges, which will be borne and paid by Wanda Business Management.

   Wanda Business Management shall, prior to the fifth business day of each month, submit to Guilin Project Company a statement showing revenue from the preceding month after deducting relevant tax and government levies and pay the rental for the preceding month as calculated on the basis of (as the case may be) (i) or (ii) above. Guilin Project Company has the right to inspect the underlying financial statements regarding the parking fee and relevant invoices.

2. Annual caps (as aggregated with the Existing Tenancy Agreements)

It is estimated that the total amounts payable by each of Wanda Business Management, Wanda Kidsland and Wanda Cinema to Guilin Project Company under the Carpark Tenancy Agreement and each of the Existing Tenancy Agreements, respectively, for the two financial years ending 31 December 2018 will not exceed the annual caps set out below:

Year ending 31 December 2017 2018

Carpark Tenancy Agreement (RMB'000)	1,900	500
Kidsland Tenancy Agreement (RMB'000)	1,473	1,522
Cinema Tenancy Agreement (RMB'000)	3,580	3,846

Aggregate Annual Caps (RMB'000) 6,953 5,868

The determination of the above annual caps for the Carpark Tenancy Agreement has taken into consideration (i) revenue generated from comparable carparks in neighbouring cities/ areas of the Carpark Premises; (ii) estimated occupancy rate of the carpark at the Carpark Premises based on the location of the carpark and its surrounding facilities and attractions;

(iii) the current market price for parking in comparable areas in neighbouring cities/areas of the Carpark Premises; and (iv) a certain margin of buffer to accommodate any unexpected fluctuation in respect of the carpark business.

REASONS FOR AND BENEFITS OF ENTERING INTO THE CARPARK TENANCY AGREEMENT

The principal activities of the Group are property development, property leasing, property management and investment holding activities.

Wanda Business Management is principally engaged in operation and management of commercial properties and carparks in the PRC.

The Guilin Gaoxin Plaza is a new shopping mall developed by the Group through the Guilin Project Company and was opened in September 2015. Considering Wanda Business Management's expertise and experience in the management and operation of carpark businesses in the PRC, the Group agreed to lease the entire carpark of Guilin Gaoxin Plaza to Wanda Business Management to manage and operate the Carpark Premises.