Yuexiu REIT entered into a facility agreement with China Merchants Bank Co. Ltd. The New Facility Agreement provides a loan facility in an amount up to RMB4,000 million bearing a fixed interest rate of 3.2% per annum secured by a second mortgage over part of Guangzhou International Finance Center given in favour of the Lender by Guangzhou Yue Xiu City Construction International Finance Centre Co. Ltd.*, which is a subsidiary of Yuexiu REIT and the registered owner of Guangzhou International Finance Center (the "New RMB Facility").

The New RMB Facility will mature and become payable three years from the date of the first drawdown. The Lender is an independent third party and not a connected person (as defined in the REIT Code) of Yuexiu REIT. Therefore, the New RMB Facility and the entering into of the New Facility Agreement by the Borrower do not constitute a connected party transaction for Yuexiu REIT.

It is expected that: (i) RMB1,500 million of the New RMB Facility will be drawn on or before 27 June 2023 to prepay part of the HK$2,800 million syndicated unsecured term loan facility bearing interest at a margin of 1.38% per annum over 1-month HIBOR and maturing on 20 August 2023; (ii) RMB1,500 million of the New RMB Facility will be drawn on or before 11 July 2023 to prepay the remaining part of the Existing HKD Facility 1 and part of the HK$2,000 million syndicated unsecured term loan facility bearing interest at a margin of 1.35% per annum over 1-month HIBOR and maturing on 21 December 2023 (the "Existing HKD Facility 2", together with Existing HKD Facility 1, the "Existing HKD Facilities"); and (iii) the remaining RMB1,000 million of the New RMB Facility will be drawn on or before 25 July 2023 to prepay part of the Existing HKD Facility 2. The outstanding balance under Existing HKD Facility 2 will be repaid by way of drawing down on other loan facilities to be entered into (which may or may not be denominated in RMB) and/or using the internal resources of Yuexiu REIT. None of the drawdowns for repayment as described above will result in the gearing ratio of Yuexiu REIT exceeding the 50% threshold prescribed under paragraph 7.9 of the REIT Code at any time. For illustration purposes, taking into account the change in the exchange rate of HKD against RMB ^, immediately after the full repayment of Existing HKD Facility 1 and the partial repayment of Existing HKD Facility 2 using amounts drawn down under the New RMB Facility, the gearing ratio of Yuexiu REIT is expected to increase from approximately 45.4% (as disclosed in the latest audited financial statements of Yuexiu REIT as at 31 December 2022 (the "Latest Financials")) to approximately 46.4%.

In view of the current rising interest rate environment and exchange rate fluctuations between HKD and RMB, the Board believes that drawing down on a fixed interest rate RMB facility to prepay HKD loan facilities with variable interest rates will achieve significant savings on interest expense and serve as an effective hedge against currency risks for Yuexiu REIT. Having regard to the above and the New RMB Facility being secured against part of the assets of Yuexiu REIT that has already been mortgaged under another onshore RMB loan facility of Yuexiu REIT, the Board believes that the New RMB Facility will have a positive impact on the overall financial position of Yuexiu REIT with respect to the Latest Financials, and as such, is in the best interests of Yuexiu REIT and its unitholders as a whole. The Board considers the New RMB Facility and the transactions under the New Facility Agreement to be conducted at arm's length and on terms that are commensurate with those of transactions of similar size and nature.

The Board is satisfied that the New RMB Facility and the transactions under the New Facility Agreement are: (a) consistent with Yuexiu REIT's investment policy; (b) in compliance with the REIT Code and the trust deed constituting Yuexiu REIT dated 7 December 2005 (as amended, supplemented and restated from time to time) (the "Trust Deed"); and (c) not subject to approval by the unitholders of Yuexiu REIT.