BURSA ANNOUNCEMENTS

Date : 23 January 2013

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS): RELATED PARTY TRANSACTIONS SUNWAY REAL ESTATE INVESTMENT TRUST (“SUNREIT”) - LETTER OF AWARD TOTALING RM258.4 MILLION TO SUNWAY CONSTRUCTION SDN BHD IN RELATION TO THE PROPOSED EXTENSION AND REFURBISHMENT OF SUNWAY PUTRA MALL

SUNWAY REAL ESTATE INVESTMENT TRUST

TypeAnnouncement
SubjectTRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS)
RELATED PARTY TRANSACTIONS
DescriptionSUNWAY REAL ESTATE INVESTMENT TRUST (“SUNREIT”)
- LETTER OF AWARD TOTALING RM258.4 MILLION TO SUNWAY CONSTRUCTION SDN BHD IN RELATION TO THE PROPOSED EXTENSION AND REFURBISHMENT OF SUNWAY PUTRA MALL

1. INTRODUCTION

We wish to inform that OSK Trustees Berhad as trustee for SunREIT (“the Trustee”) has on 23 January 2013, authorised Sunway REIT Management Sdn Bhd, the Manager for SunREIT (”the Manager”) to award and appoint Sunway Construction Sdn Bhd (“SunCon”), a wholly-owned subsidiary of Sunway Holdings Sdn Bhd (“SunH”) which in turn is a wholly-owned subsidiary of Sunway Berhad (“Sunway”) as project delivery partner (PDP) for the planning, coordination, construction and completion of the proposed extension and refurbishment of Sunway Putra Mall which includes the following :

a) 3-storey basement car park including 1-storey retail mall;
b) 9-storey retail mall including 4-storey car park; and
c) Addition of 4-storey cineplex at level 6
    on Lot No 38, Seksyen 51, Jalan Putra, Wilayah Persekutuan, Kuala Lumpur [hereinafter referred to as the “Award”].
      2. INFORMATION ON SUNWAY, SUNH, SUNCON, THE MANAGER, THE TRUSTEE AND SUNREIT
        2.1 Sunway

          Sunway is a company incorporated in Malaysia and having its registered office at Level 16, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan. The authorised and paid-up share capital of Sunway are RM1,000,0000,000.00 and RM1,292,505,004.00 respectively. The principal activities of Sunway are investment holding and provision of management services.

        2.2 SunH
          SunH, a wholly-owned subsidiary of Sunway, is a company incorporated in Malaysia and having its registered office at Level 16, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan. The authorised and paid-up share capital of SunH are RM2,500,000,000.00 and RM1,928.67 respectively. The principal activities of SunH are investment holding and provision of management services.

        2.3 SunCon
          SunCon, a wholly-owned subsidiary of SunH, is a company incorporated in Malaysia and having its registered office at Level 16, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan. The authorised and paid-up share capital of SunCon are RM1,000,000,000.00 and RM193,954,000.00 respectively. The principal activities of SunCon are turnkey, construction related design and build, civil engineering and building works.
        2.3 The Manager

          The Manager (also referred to as “the Employer” under the Award), a wholly-owned subsidiary of Sunway, is a company incorporated in Malaysia and having its registered office at Level 16, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 46150 Petaling Jaya, Selangor Darul Ehsan. The authorised and paid-up share capital of the Manager are RM1,000,000/- respectively. The principal activity of the Manager is management of real estate investment fund.
        2.4 The Trustee

          The Trustee is a company incorporated in Malaysia and having its registered office at 20th Floor, Plaza OSK, Jalan Ampang, 50450 Kuala Lumpur. It is registered as a trust company under the Trust Companies Act, 1949.

          The principal activity of the Trustee is providing professional private and corporate trustee services.

          The present authorised share capital of the Trustee is RM25,000,000 comprising 2,500,000 ordinary shares of RM10.00 each, of which 1,200,000 are currently issued and credited as partially paid-up of RM5.00 each in the Trustee.
        2.5 SunREIT

          SunREIT was established pursuant to a Deed dated 20 May 2010 (as amended by a Supplementary Deed dated 10 June 2010) entered into between the Manager and the Trustee. The principal investment policy of SunREIT is to invest in commercial, office, industrial and other real estate assets.
        3. SALIENT TERMS OF THE AWARD
          The salient terms of the Award are as follows:-
        3.1 The general scope of the PDP’s duties and responsibilities for the Works includes the following stages (i) pre-construction stage (planning coordination, tender and award), (ii) construction and completion stage and (iii) defect liability period.

        “Works” is defined as the scope of the refurbishment works, including but not limited to the following:
          i) Retrofitting of existing carpark and retail mall (B2 to Level 8) including new architectural and interior finishes, piling & underpinning works, structural modification and strengthening works together with new mechanical and electrical equipment and services including retrofitting works to common areas affecting the retail mall, offices and hotel
          ii) Demolition of existing steel/RC structural and skylight works
          iii) Construction of new retail area including new structure
          iv) Refurbishment of entrances, ground floor lobbies and back of house (BOH) areas to retail mall, offices and hotel
          v) Upgrading of building façade
          vi) External and infrastructure works including improvement of external traffic and road system to and surrounding the Project
          vii) Pedestrian link bridge to existing Light Rail Transit (LRT) Station
          viii) Any other works related to and necessary for the functionality of the Works.
        3.2 The whole of the Works shall be completed within twenty two (22) months from the date of commencement which is the date that possession of site is handed over. Notwithstanding this provision, the PDP shall endeavour to complete the Works expeditiously and diligently at no extra cost to the Employer.

        3.3 The Provisional Contract Sum is RM258,400,000.00 (Ringgit Malaysia: Two Hundred and Fifty Eight Million Four Hundred Thousand Only) which comprises amongst others, various work contract packages to be competitively tendered. The price is deemed to include the cost of all works necessary for the timely and satisfactory completion of the Works in its entirety. The PDP is fully responsible and liable for the due performance by all the works contractors who are awarded the work contract packages.

        3.4 All Works carried out on site shall comply with all relevant authorities’ requirements and approvals. The PDP shall be fully responsible and liable for the consequences of any Works executed without prior approval from the local authority including any form of fines or “Stop Work Order” issued by the relevant authority.

        3.5 The Defect Liability Period (DLP) shall be twenty four (24) Months from the Date of Practical Completion stated in the Certificate of Practical Completion of the Works.
          4. RATIONALE
            The refurbishment of Sunway Putra Mall is to be undertaken via a PDP arrangement as opposed to a traditional approach. A PDP arrangement is based on a concept whereby a PDP is appointed at a pre-construction stage and the rationale are as follows:

            - To leverage on the PDP’s capability, experience and resources from an early stage due to the complexity and magnitude of the refurbishment project
            - Limit post award uncertainties by involving the PDP on all aspects of design and procurement
            - Potentially lower cost due to better control over uncertainties with PDP’s early involvement and expertise
            - Shorter completion period compared to a traditional approach

          SunCon is appointed as the PDP based on the following justification:
            - It is a reputable company with good track record
            - It has the necessary expertise and resources to undertake the project
            - It is selected based on competitive quotation
          5. EFFECTS OF THE AWARD
            5.1 On Unit Capital and Substantial Unitholders’ Unitholding
              The Award will not have any effect on the total units of SunREIT in issue and substantial unitholders’ unitholding of SunREIT as they do not involve any allotment or issuance of new units by SunREIT.

            5.2 On Net Asset Value (“NAV”)

            The Award will have no material impact or changes to the unaudited NAV of SunREIT at the time of completion.

            5.3 On Earnings

            The Award is not expected to have any material effect on the earnings of SunREIT for the financial year ending 30 June 2013.

            6. APPROVALS REQUIRED

              Pursuant to the Securities Commission’s Guidelines on Real Estate Investment Trusts, the Award does not require approvals from the Securities Commission or the unitholders of SunREIT.
            7. DIRECTORS' AND MAJOR UNITHOLDERS' INTERESTS

              Tan Sri Dato' Seri Dr Jeffrey Cheah Fook Ling is the Chairman and Non-Independent Non-Executive Director of the Manager and the Executive Chairman and a Non-Independent Executive Director of Sunway.

              Ms Sarena Cheah Yean Tih is a Non-Independent Non-Executive Director of the Manager and a Non-Independent Executive Director of Sunway.

              Dato’ Ngeow Voon Yean is a Non-Independent Non-Executive Director of the Manager who has direct interest in Sunway and indirect interest in SunREIT’s units through his spouse and child. In the interest of good corporate governance, as he also sits on the Board of Management Committee of Sunway and on the board of directors of certain subsidiaries of Sunway, he has opted to abstain and will continue to abstain from all deliberations and from voting in respect of the Award.
              Sunway is a major unitholder of SunREIT. Tan Sri Dato’ Seri Dr Jeffrey Cheah Fook Ling has direct as well as indirect interests in SunREIT via Sunway. Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng, Sarena Cheah Yean Tih, Evan Cheah Yean Shin, Sungei Way Corporation Sdn Bhd and Active Equity Sdn Bhd being major shareholders of Sunway also have deemed interest in SunREIT via Sunway.

              Accordingly, Tan Sri Dato' Seri Dr Jeffrey Cheah Fook Ling, Sarena Cheah Yean Tih and Dato’ Ngeow Voon Yean have abstained from all deliberations and from voting in respect of the Award.
              Save as disclosed above, none of the other directors of the Manager or major unitholders of SunREIT or persons connected with them has any interest, direct or indirect, in the Award.
            8. THE MANAGER’S AUDIT COMMITTEE’S RECOMMENDATION
              The Audit Committee of the Manager, after having considered all aspects of the Award, is of the opinion that the Award is in the best interests of SunREIT and is not detrimental to the interests of the non-interested unitholders of SunREIT. The Audit Committee of the Manager is of the view that the Award is fair, reasonable, on normal commercial terms and carried out on an arm’s length basis.
            9. STATEMENT BY THE BOARD OF DIRECTORS

              Save and except for Tan Sri Dato' Seri Dr Jeffrey Cheah Fook Ling, Sarena Cheah Yean Tih and Dato’ Ngeow Voon Yean (abstained from deliberation and voting in the Board of the Manager in respect of the Award), the Board of Directors of the Manager is of the opinion that the Award is in the best interests of SunREIT and is not detrimental to the interests of the non-interested unitholders of SunREIT. The Board of Directors of the Manager is of the view that the Award is fair, reasonable, on normal commercial terms and carried out on an arm’s length basis.
            This announcement is dated 23 January 2013.

            Announcement Info

            Company NameSUNWAY REAL ESTATE INVESTMENT TRUST  
            Stock Name SUNREIT    
            Date Announced23 Jan 2013  
            CategoryGeneral Announcement
            Reference NoSR-130123-496A2

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