BURSA ANNOUCEMENTS

Date : 06 October 2015

TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RELATED PARTY TRANSACTIONS SUNWAY REAL ESTATE INVESTMENT TRUST (SUNREIT) - THIRD SUPPLEMENTAL AGREEMENT TO THE HOTEL MASTER LEASE DATED 29 JUNE 2011, THE FIRST SUPPLEMENTAL AGREEMENT DATED 5 JANUARY 2012 AND THE SECOND SUPPLEMENTAL AGREEMENT DATED 3 JULY 2013 BETWEEN RHB TRUSTEES BERHAD (AS TRUSTEE FOR SUNWAY REAL ESTATE INVESTMENT TRUST), SUNWAY REIT MANAGEMENT SDN BHD AND SUNWAY PUTRA HOTEL SDN BHD

SUNWAY REAL ESTATE INVESTMENT TRUST

Type Announcement
Subject TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS)
RELATED PARTY TRANSACTIONS
Description
SUNWAY REAL ESTATE INVESTMENT TRUST (SUNREIT)
-	THIRD SUPPLEMENTAL AGREEMENT TO THE HOTEL MASTER LEASE DATED 29 JUNE 2011, THE FIRST SUPPLEMENTAL AGREEMENT DATED 5 JANUARY 2012 AND THE SECOND SUPPLEMENTAL AGREEMENT DATED 3 JULY 2013 BETWEEN RHB TRUSTEES BERHAD (AS TRUSTEE FOR SUNWAY REAL ESTATE INVESTMENT TRUST), SUNWAY REIT MANAGEMENT SDN BHD AND SUNWAY PUTRA HOTEL SDN BHD

1.   INTRODUCTION

We refer to our following announcements:-

(a)     Announcement dated 29 June 2011 in relation to the hotel master lease made between RHB Trustees Berhad as Trustee for SUNREIT (“the Trustee”), Sunway REIT Management Sdn Bhd as the Manager for SUNREIT (“the Manager”) and Sunway Putra Hotel Sdn Bhd (“SPHSB”), a wholly-owned subsidiary of Sunway City Sdn Bhd (“SunCity”) which in turn is a wholly-owned subsidiary of Sunway Berhad (“Sunway”) (“Hotel Master Lease”) whereby the Trustee agreed to lease out to SPHSB, the hotel consisting of 618 rooms / serviced apartments (inclusive 3 units of penthouses) located at 100 Jalan Putra, Kuala Lumpur (“Hotel”) for a term of 10 years commencing from 28 September 2011 and will end on 27 September 2021 at a total rent in accordance with the formula as stipulated in the Hotel Master Lease.

(b)     Announcements dated 5 January 2012 and 3 July 2013 where the Trustee, the Manager and SPHSB had entered into separate supplemental agreements to the Hotel Master Lease (“First Supplemental Agreement and Second Supplemental Agreement respectively”) to document the agreement reached by the parties on the guaranteed rent payable by SPHSB (“Guaranteed Rent”) for the period from 1 July 2013 to 30 June 2014 (3rd Fiscal Year).

(c)     Announcement dated 19 May 2014 with regards to a Letter of Variation to Guaranteed Rent pursuant to Clause 2.1 of the Second Supplemental Agreement (“Letter of Variation”) signed by the Trustee, the Manager and SPHSB to document the agreement reached by the parties on rent payable by SPHSB for the period from 1 July 2014 to 30 June 2015 (4th Fiscal Year).

Pursuant to Clause 2.1(b) and 2.1(c) of the Second Supplemental Agreement, the Parties agreed that if the Variable Rent is less than the amount of the Guaranteed Rent for the 3rd and 4th Fiscal Year, the difference between the Guaranteed Rent and the Variable Rent (“differential sum”) shall be adjusted in agreed proportions and added to the Guaranteed Rent from 5th Fiscal Year until the 11th Fiscal Year. The amount of the differential sum added to the Guaranteed Rent each year from 5th Fiscal Year until the 11th Fiscal Year as stated in Annexure 1 of the third supplemental agreement dated 6 October 2015 (“Third Supplemental Agreement”) is as follows:

 

 

Fiscal Year

Period

Guaranteed Rent (Original)

Additional Rent

 

Guaranteed Rent

(revised)

1.

5th Fiscal Year

(FY2016)

1 July 2015 –

30 June 2016

9,067,084

-

9,067,084

2.

6th Fiscal Year

(FY 2017)

1 July 2016 –

30 June 2017

9,067,084

871,623

9,938,707

3.

7th Fiscal Year

(FY2018)

1 July 2017-

30 June 2018

9,067,084

1,743,246

 

10,810,330

4.

8th Fiscal Year

(FY2019)

1 July 2018 –

30 June 2019

9,067,084

1,743,246

 

10,810,330

5.

9th Fiscal Year

(FY 2020)

1 July 2019 –

30 June 2020

9,067,084

1,743,246

 

10,810,330

6.

10th Fiscal Year

(FY2021)

1 July 2020 –

30 June 2021

9,067,084

1,743,246

 

10,810,330

7.

11th Fiscal Year

(FY2022)

1 July 2021 –

27 September 2021

2,266,771

871,623

3,138,394

 

2.   SALIENT TERMS OF THE THIRD SUPPLEMENTAL AGREEMENT

The Guaranteed Rent payable by SPHSB to the Trustee pursuant to the terms and conditions of the Hotel Master Lease shall be the Guaranteed Rent (revised) as stated in the table above.

 

3.  INFORMATION ON SUNWAY, SUNCITY, SPHSB, THE MANAGER, THE TRUSTEE AND SUNREIT                                                                                                                                               

3.1 Sunway

Sunway is a company incorporated in Malaysia and having its registered office at Level 16, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 47500 Subang Jaya, Selangor Darul Ehsan. The authorised and paid-up share capital of Sunway are RM10,000,000,000/- and RM1,799,114,100/- respectively. The principal activities of Sunway are investment holding and provision of management services.

 

3.2 SunCity

SunCity, 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, 47500 Subang Jaya, Selangor Darul Ehsan. The authorised and paid-up share capital of SunCity are RM3,500,000,000/- and RM251,384.14 respectively. The principal activity of SunCity is investment holding.

 

 

3.3 SPHSB

SPHSB, a wholly-owned subsidiary of SunCity which in turn is 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, 47500 Subang Jaya, Selangor Darul Ehsan. The authorised and paid-up share capital of SPHSB are RM400,000/- and RM250,000/- respectively. The principal activity of SPHSB is hotel business. 

 

3.4 The Manager

The Manager, a subsidiary of Sunway, is a company incorporated in Malaysia and having its registered office at Level 16, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 47500 Subang 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 managing and administering a real estate investment fund.

 

3.5 The Trustee

The Trustee is a company incorporated in Malaysia and having its registered office at Level 9, Tower One, RHB Centre, Jalan Tun Razak, 50400 Kuala Lumpur. It is registered as a trust company under the Trust Companies Act, 1949.


The principal activity of the Trustee is providing professional retail 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.

 

3.6 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.

 

4.  RATIONALE

The variation to the Guaranteed Rent for the 3rd and 4th Fiscal Year was made pursuant to the appeal by SPHSB whereby its hotel business experienced adverse operating conditions due to the on-going refurbishments at the adjoining Sunway Putra Mall (“SPM”) and Sunway Putra Tower (“SPT”) during the period. The refurbishment works at both SPM and SPT were completed in February 2015 and June 2015 respectively.

With the completion of the refurbishment works, SPHSB’s operating conditions shall normalise and hence the Guaranteed Rent shall be revised in accordance with Clause 2.1(b) of the Second Supplemental Agreement.

 

5.  EFFECTS OF THE THIRD SUPPLEMENTAL AGREEMENT

5.1 On Unit Capital and Substantial Unitholders’ Unitholding

The Third Supplemental Agreement will not have any effect on the total units issued and substantial unitholders’ unitholding as the Third Supplemental Agreement does not involve any allotment or issuance of new units by SUNREIT.
 

5.2 On Net Asset Value (“NAV”)

The Third Supplemental Agreement will have no material impact or changes to the unaudited NAV of SUNREIT at the time of completion.

 

5.3 On Earnings

The Third Supplemental Agreement is not expected to have any material effect on the earnings of SUNREIT for the financial year ending 30 June 2016.

 

6.   APPROVALS REQUIRED

Pursuant to the Securities Commission’s Guidelines on Real Estate Investment Trusts, the Third Supplemental Agreement 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 and Sarena Cheah Yean Tih are Directors of Sunway as well as the Manager. Dato’ Ngeow Voon Yean is Director of the Manager and SPHSB. He has deemed interest in SUNREIT as well as direct and deemed interests in Sunway.

 

Tan Sri Dato’ Seri Dr Jeffrey Cheah Fook Ling, 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 are major shareholders of Sunway and major unitholders of SUNREIT.

 

Accordingly, Tan Sri Dato' Seri Dr Jeffrey Cheah Fook Ling, Dato’ Ngeow Voon Yean and Sarena Cheah Yean Tih have abstained from deliberation and voting in the Board of the Manager in respect of the Third Supplemental Agreement.

 

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 Third Supplemental Agreement.

 

8.    THE MANAGER’S AUDIT COMMITTEE’S RECOMMENDATION

The Audit Committee of the Manager, after having considered all aspects of the Third Supplemental Agreement, is of the opinion that the variation of the Guaranteed Rent for the 5th Fiscal Year until the 11th Fiscal Year 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 variation to the Guaranteed Rent for the 5th Fiscal Year until the 11th Fiscal Year is fair, reasonable and on normal commercial terms.

 

9.    STATEMENT BY THE BOARD OF DIRECTORS

Save and except for Tan Sri Dato' Seri Dr Jeffrey Cheah Fook Ling, Dato’ Ngeow Voon Yean and Sarena Cheah Yean Tih, the Board of Directors of the Manager is of the opinion that the terms of the Third Supplemental Agreement is in the best interests of SUNREIT.

 

10. DOCUMENT AVAILABLE FOR INSPECTION

The Third Supplemental Agreement is available for inspection by unitholders of SUNREIT at the registered office of the Manager at Level 16, Menara Sunway, Jalan Lagoon Timur, Bandar Sunway, 47500 Subang Jaya, Selangor Darul Ehsan during normal business hours (9.00 a.m. to 6.00 p.m.) from Monday to Friday (except public holidays) for a period of 3 months from the date of this announcement.

 

This announcement is dated 6 October 2015.






Announcement Info

Company Name SUNWAY REAL ESTATE INVESTMENT TRUST
Stock Name SUNREIT
Date Announced 06 Oct 2015
Category General Announcement for PLC
Reference Number GA1-06102015-00050


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