BURSA ANNOUCEMENTS

Date : 07 August 2013

OTHERS SUNWAY REAL ESTATE INVESTMENT TRUST ("SUNREIT") - VARIATION TO THE MASTER LEASE AGREEMENT DATED 9 OCTOBER 2012 IN RELATION TO THE 7-STOREY PURPOSE BUILT HOSPITAL BUILDING WITH LOWER GROUND FLOOR ANNEXED WITH A MULTI-STOREY CAR PARK BLOCK AND A CONVENTION CENTRE SITUATED ON ALL THOSE PARCELS OF LEASEHOLD LANDS HELD UNDER PN12549 LOT 38160 AND PN12550 LOT 45 OF BANDAR SUNWAY, DAERAH PETALING, NEGERI SELANGOR (“THE SUNMED PROPERTY”) BETWEEN RHB TRUSTEES BERHAD (FORMERLY KNOWN AS OSK TRUSTEES BERHAD) (AS TRUSTEE FOR SUNWAY REAL ESTATE INVESTMENT TRUST), SUNWAY REIT MANAGEMENT SDN BHD AND SUNWAY MEDICAL CENTRE SDN BHD

SUNWAY REAL ESTATE INVESTMENT TRUST

TypeAnnouncement
SubjectOTHERS
DescriptionSUNWAY REAL ESTATE INVESTMENT TRUST ("SUNREIT")
- VARIATION TO THE MASTER LEASE AGREEMENT DATED 9 OCTOBER 2012 IN RELATION TO THE 7-STOREY PURPOSE BUILT HOSPITAL BUILDING WITH LOWER GROUND FLOOR ANNEXED WITH A MULTI-STOREY CAR PARK BLOCK AND A CONVENTION CENTRE SITUATED ON ALL THOSE PARCELS OF LEASEHOLD LANDS HELD UNDER PN12549 LOT 38160 AND PN12550 LOT 45 OF BANDAR SUNWAY, DAERAH PETALING, NEGERI SELANGOR (“THE SUNMED PROPERTY”) BETWEEN RHB TRUSTEES BERHAD (FORMERLY KNOWN AS OSK TRUSTEES BERHAD) (AS TRUSTEE FOR SUNWAY REAL ESTATE INVESTMENT TRUST), SUNWAY REIT MANAGEMENT SDN BHD AND SUNWAY MEDICAL CENTRE SDN BHD

1. INTRODUCTION
    We refer to our announcement dated 9 October 2012 in relation to the master lease made between RHB Trustees Berhad (formerly known as OSK Trustees Berhad) as Trustee for SUNREIT (“the Trustee or the Lessor”), Sunway REIT Management Sdn Bhd as the Manager for SUNREIT (“the Manager”) and Sunway Medical Centre Sdn Bhd (“SMC or the Lessee”), a subsidiary of Sunway City Sdn Bhd (“SunCity”) which in turn is a wholly-owned subsidiary of Sunway Berhad (“Sunway”) (“MLA”) whereby the Trustee agreed to lease to SMC, the SunMed Property for a term of 10 years commencing from 31 December 2012 and expiring on 30 December 2022 at the rental as set out in the MLA.
    The Manager had on 8 May 2013, issued a letter of approval (“Letter of Approval”) to SMC in relation to the proposed renovation works to Level 4 (Tower Block A) and Level 5 (Tower Block B) (“Renovation Works”) of the SunMed Property pursuant to Clause 11.1(b) of the MLA at estimated cost of RM7.053 million. The Renovation Works are expected to be completed by 30 November 2013.

    Subsequently, the Lessee had on 16 May 2013, accepted the conditions as set out in the Letter of Approval and the parties have agreed to document the variations required pursuant to Clause 22.7 of the MLA to reflect the new terms and conditions in relation to the Renovation Works subject to the terms and conditions of the Letter of Approval (“Supplemental Letter to the MLA”).


2. SALIENT TERMS OF THE SUPPLEMENTAL LETTER TO THE MLA
    Pursuant to the Supplemental Letter to the MLA, the parties have agreed to vary the MLA to reflect that the final total cost and expense of the Renovation Works to be carried out at SunMed Property shall be borne by the Lessee during the construction stages and later reimbursed by the Lessor in one lump sum payment upon completion of the Renovation Works which is the date of receipt of the certificate of completion and compliance by the Lessee from the relevant authorities (“Completion Date”).

    As such, additional rent will be charged to the Lessor from the Completion Date or any other date as may be agreed by the parties in writing as follows:-

    (a) the amount of the additional rent shall be calculated at the rate of 6.13% of the Final Total Cost and Expense.

    (b) the additional rent shall be added to the existing Rent which in aggregate shall constitute the new rent payable by the Lessee to the Lessor and shall therefore be subject to the agreed 3.5% annual rental increase for Year 2 onwards of the Principal Lease Period. The new Rent payable shall be reflected in an amended Schedule 3 of the MLA to be signed by the Parties by way of a supplemental agreement to the MLA.


3. INFORMATION ON SUNWAY, SUNCITY, SMC, 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, 46150 Petaling Jaya, Selangor Darul Ehsan. The authorised and paid-up share capital of Sunway are RM10,000,000,000/- and RM1,723,489,001/- respectively. The principal activities of Sunway are investment holding and provision of management services.
3.2 SunCity

    SunCity 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 SunCity are RM3,500,000,000/- and RM251,354.14 respectively. The principal activity of SunCity is investment holding.

3.3 SMC
    SMC is a 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, 46150 Petaling Jaya, Selangor Darul Ehsan. The authorised and paid-up share capital of SMC are RM220,000,000/- and RM131,121,845/- respectively. The principal activity of SMC is operating of medical centre.

3.4 The Manager

    The Manager, 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 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 10, 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 ordinary shares 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 Renovation Works will enable SMC to increase its operational bed capacity and more outpatient clinics to cater for needs of patients. SMC will accordingly pay an additional rent to Sunway REIT as explained in Section 2 above.

5. EFFECTS OF THE SUPPLEMENTAL LETTER TO THE MLA
    5.1 On Unit Capital and Substantial Unitholders’ Unitholding
      The Supplemental Letter to the MLA 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 Supplemental Letter to the MLA will have no material impact or changes to the unaudited NAV of SUNREIT at the time of completion.

    5.3 On Earnings

    The Supplemental Letter to the MLA is not expected to have any material effect on the earnings of SUNREIT for the financial year ending 30 June 2014.


    6. APPROVALS REQUIRED

      Pursuant to the Securities Commission’s Guidelines on Real Estate Investment Trusts, the Supplemental Letter to the MLA 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 has deemed interest in SUNREIT.

      Tan Sri Dato’ Seri Dr Jeffrey Cheah Fook Ling, Puan Sri Datin Seri (Dr) Susan Cheah Seok Cheng, Sarena Cheah Yean Tih, 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 Supplemental Letter to the MLA.
      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 Supplemental Letter to the MLA.

    8. THE MANAGER’S AUDIT COMMITTEE’S RECOMMENDATION
      The Audit Committee of the Manager, after having considered all aspects of the Supplemental Letter to the MLA, is of the opinion that the Supplemental Letter to the MLA 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 Supplemental Letter to the MLA 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 Supplemental Letter to the MLA is in the best interests of SUNREIT.

    10. DOCUMENT AVAILABLE FOR INSPECTION
      The Supplemental Letter to the MLA 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, 46150 Petaling 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 7 August 2013.


    Announcement Info

    Company NameSUNWAY REAL ESTATE INVESTMENT TRUST  
    Stock Name SUNREIT    
    Date Announced7 Aug 2013  
    CategoryGeneral Announcement
    Reference NoSR-130807-44641

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