DISCLOSEABLE TRANSACTION JOINT VENTURE WITH CAESARS IN INCHEON, THE REPUBLIC OF KOREA

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1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. (a joint stock company incorporated in the People s Republic of China with limited liability) (Stock Code: 2777) DISCLOSEABLE TRANSACTION JOINT VENTURE WITH CAESARS IN INCHEON, THE REPUBLIC OF KOREA JOINT VENTURE WITH CAESARS On 5 December 2016, R&F Properties (HK) Company Limited, a company incorporated under the laws of Hong Kong and a wholly-owned subsidiary of the Company ( R&F (HK) ),enteredintotheagreementwithcaesars Korea Holding Company, LLC, a limited liability company organized under the laws of the State of Delaware, the United States of America ( Caesars )inrelationtotheformationofajointventure(the JV Company ) to develop, own and operate an integrated resort in Asia to be located within Yeongjong Island, Incheon, the Republic of Korea (the Integrated Resort ). Upon completion of the Initial Closing, each of R&F (HK) and Caesars will have a 50% interest in the JV Company which will in turn acquire the Project Company for the development, construction and operation of the Integrated Resort. IMPLICATIONS UNDER THE LISTING RULES The relevant applicable percentage ratios in respect of the transactions contemplated under theagreementaremorethan5%andallofsuch ratios are less than 25%. The transactions contemplated under the Agreement constitute a discloseable transaction for the Company under Chapter 14 of the Listing Rules and are subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules. Shareholders and potential investors should note that the Initial Closing and the other transactions contemplated under the Agreement are subject to the fulfillment or waiver (as the case may be) of the conditions as set out in the Agreement. The transactions under the Agreement may or may not be completed. Shareholders and potential investors are reminded to exercise caution when dealing in the Shares. 1

2 JOINT VENTURE WITH CAESARS On 5 December 2016, R&F (HK), a wholly-owned subsidiary of the Company, entered into the Agreement with Caesars. A summary of the key terms of the Agreement is set out below: Parties (1) R&F (HK); and (2) Caesars. R&F (HK) is a wholly-owned subsidiary of the Company as at the date of this announcement. To the best of the Board s knowledge, information and belief and having made all reasonable enquires, Caesars and its ultimate beneficial owners are independent of the Company and connected persons (as defined in the Listing Rules) of the Company. Contribution The Agreement contemplates an initial equity contribution by each of R&F (HK) and Caesars to the JV Company in the amount of US$30,500,000 (in cash or other property), subject to the fulfillment of certain conditions (the Initial Closing ). Upon completion of the Initial Closing, each of R&F (HK) and Caesars will hold a 50% interest in the JV Company, and the JV Company will in turn acquire the Project Company from its current shareholders which are third parties not connected with the Company. The Agreement contemplates potential further equity contributions by each of R&F (HK) and Caesars in the amount of up to US$110,000,000 in cash. These further equity contributions would be made in four tranches. Each tranche would be subject to further conditions, including certain necessary changes in the gaming licensing laws regarding credit rating requirements of the parties and the parties reaching mutual agreement on certain governance terms and the terms under which R&F (HK) and Caesars or their respective related entities would provide certain services to the Project Company. On or prior to the date on which the final tranche of equity contribution is made, R&F (HK) will be required to further extend to the JV Company a loan facility of not more than US$100,000,000. The amount of the equity and debt to be contributed to the JV Company on the part of R&F (HK) has been arrived at on the basis of the estimated capital requirements for the construction of the Integrated Resort at the time the Agreement is entered into. The Board considers that the amount of the equity and debt that may be contributed to the JV Company on the part of R&F (HK) is fair and reasonable having taken into account the funding requirements and the business potential of the Integrated Resort. The Group intends to fund its commitment for the JV Company from the Group s internal resources. 2

3 Conditions to the Initial Closing The Initial Closing is subject to fulfillment of, among others, the following conditions: (a) the Preliminary License shall remain in full force and effect; (b) the MCST shall have (i) approved in writing the revised ownership of the Project Company as contemplated by the Agreement, and (ii)waivedinwritingaspecifiedside condition set out in the Preliminary License, or each of Caesars and R&F (HK) shall be satisfied in its sole discretion that the execution, delivery and performance of the Agreement shall not result in a breach or violation of a side condition of the Preliminary License or otherwise require the approval of any governmental authority, other than such approvals obtained prior to the date of the Initial Closing; (c) the concurrent closing under the agreement in relation to, among other things, the acquisition of the Project Company and the transactions contemplated thereby (other than the payment of any amounts which are due after the execution of such agreement as provided therein); (d) (i) the land sale & purchase agreement dated 29 December 2014 entered into by and among MCDC, Caesars and certain other parties thereto shall, effective as of the date of the Initial Closing, be terminated, and (ii) the land sale and purchase agreement pursuant to which the Project Company will acquire the phase one land on which the Integrated Resort will be developed and the land sale and purchase agreement pursuant to which R&F (HK) or its affiliate will acquire the adjoining phase two land shall be duly executed and delivered by MCDC and IDTC; (e) (f) (g) each of the parties and their respective affiliates shall have received all necessary internal corporate and other approvals to perform its obligations under the Agreement (which shall include, for the avoidance of doubt, approval of the board of directors of CEC and the Company), if required (as determined by each party with respect to its own approval requirements in its sole discretion); there shall not have occurred any Adverse Regulatory Development (as defined in the Agreement); there shall not have occurred any gaming unsuitability event as specified in the Agreement; (h) the representations and warranties of each of the parties set forth in the Agreement shall be true and correct in all material respects as of the date of the Initial Closing and each of the parties shall have performed in all material respects its respective covenants and agreements to be performed on or before the date of the Initial Closing; (i) (j) the JV Company shall be established on terms satisfactory to each of Caesars and R&F (HK); and to the extent required under PRC anti-monopoly laws, R&F (HK) and Caesars or their respective affiliates shall have obtained clearance from the Anti-Monopoly Bureau of the Ministry of Commerce of the PRC approving the transactions contemplated by the Agreement. 3

4 If any of the conditions to the Initial Closing (which has not previously been waived) has not been satisfied on or before 5: 00 p.m. on 10 March 2017 or such later date that is approved by the MCST, or such later date as may be mutually agreed in writing by Caesars and R&F (HK), then the Agreement shall terminate and all rights and obligations of the parties shall cease to have effect immediately upon termination except that termination shall not affect the accrued rights and obligations of the parties at the date of termination and the continued existence and validity of certain rights and obligations of the parties under the Agreement. Subject to the satisfaction (or, if applicable, waiver) of the conditions to the Initial Closing, the Initial Closing will take place on the earlier of (a) 10 March 2017 or such later date that is approved by the MCST, and (b) the third business day following the satisfaction (or, if applicable, waiver) of the conditions to the Initial Closing, or such other date as may be agreed by Caesars and R&F (HK). THE INTEGRATED RESORT The JV Company through the Project Company will be engaged in the development and operation of the Integrated Resort in Incheon, Korea. The Integrated Resort will be managed by a related entity of CEC. Location The Integrated Resort will be located in Midan City, within the Northeastern part of Yeongjong Island, which is one of the three regions under the Incheon Free Economic Zone (IFEZ). IFEZ is tasked to transform these designated regions into major international business and leisure hubs in North East Asia. Midan City enjoys a favorable location within IFEZ being approximately minutes away from the Incheon International Airport, which has existing flights to key North Asia cities including Beijing, Shanghai, Tokyo, Hong Kong and Taipei all within a 2 to 3.5 hour radius. In addition, Midan City is conveniently located within 50 minutes of the Seoul CBD. The Integrated Resort is expected to serve as the stimulus of Midan City s plan to become a tourism and leisure city. Project Overview The Integrated Resort is expected to include the elements described below (as currently proposed, subject to modification):. Total area: Over 170,000 sq.m. of development (gross floor area) on 3.8 ha site. Expected completion: Luxury hotel and serviced residences comprising over 720 rooms, suites and villas. Conference center, ballroom, and meeting rooms. Multiple live entertainment venues including performance theater. A foreigner-only casino. Restaurants, lounges and bars. Luxury boutique shops and spa 4

5 The Project Company The Project Company is a company (jusik hoesa) incorporated under the laws of Korea in The MCST granted the Preliminary License on 17 March 2014, confirming that the Project Company has received preliminary review conditional approval for a foreigner-only casino business license, subject to compliance with certain conditions. Caesars and R&F (HK) will pursue the grant of the Final License by the MCST upon completion of the construction of the Integrated Resort. Set out below is the audited financial information of the Project Company for the two years ended 31 December 2014 and 2015: Year ended 31 December Profit before taxation Profit for the year KRW1,246.7 million (equivalent to approximately HK$8.3 million) KRW1,164.6 million (equivalent to approximately HK$7.7 million) KRW2,015.9 million (equivalent to approximately HK$13.4 million) KRW1,543.7 million (equivalent to approximately HK$10.2 million) The audited total equity of the Project Company as at 31 December 2015 was approximately KRW55,029.5 million (equivalent to approximately HK$365.2 million). INFORMATION ON CAESARS Caesars is a wholly-owned subsidiary of Caesars Entertainment Corporation ( CEC ), which is the world s most geographically diversified casino-entertainment company. Since its beginning in Reno, Nevada, more than 77 years ago, CEC has grown through development of new resorts, expansions and acquisitions and now operates casinos on four continents. Its resorts operate primarily under the Caesars 1, Harrah s 1 and Horseshoe 1 brand names. CEC also owns the London Clubs International family of casinos. CEC is focused on building loyalty and value with its guests through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership. CEC is listed on the NASDAQ Stock Market under the ticker symbol CZR. CEC is a corporation formed under the laws of the State of Delaware, the United States of America. REASONS FOR AND BENEFITS OF THE AGREEMENT The Group is principally engaged in the development and sale of properties, property investment, hotel operations and other property development related services in the PRC. The Company has from time to time been looking for suitable investment opportunities in the real estate, entertainment and hotel and hospitality markets and other related businesses which may further enhance the investment portfolio and future earning capability and potential of the Group. The joint venture with Caesars provides an opportunity for the Group to further 5

6 enhance its capabilities in the development and operation of entertainment focused integrated resorts in addition to creating a strong foothold in Korea for future real estate development opportunities. The Company is also able to secure an additional 50,806.3 sq.m. site area of developable land adjacent to the Integrated Resort that will allow the Company to build residential projects. The additional land designated for residential development is located in a prime location that is expected to generate significant sales and investment return for the Company. The Board considers that the terms of the Agreement are normal commercial terms, fair and reasonable and are in the interests of the Group and the Shareholders as a whole. IMPLICATIONS UNDER THE LISTING RULES The relevant applicable percentage ratios in respect of the transactions contemplated under the Agreement are more than 5% and all of such ratios are less than 25%. The transactions contemplated under the Agreement constitute a discloseable transaction for the Company under Chapter 14 of the Listing Rules and are subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules. CAUTION The Board cannot assure you (a) that the conditions to the Initial Closing will be satisfied, (b) if the Initial Closing occurs, that the parties will reach mutual agreement on the terms under which R&F (HK) and Caesars or their respective related entities would provide certain services to the Project Company which is a condition to subsequent fundings or that the other conditions to funding after the Initial Closing will be met, (c) that the Integrated Resort will be developed on the terms, on the timeline or for the amounts currently contemplated, (d) that the parties will be able to raise the third party financing necessary for the development of the Integrated Resort, (e) that the JV Company will be able to obtain the requisite governmental approvals for the development of the Integrated Resort on the timeline contemplated or (f) that, once developed, the Integrated Resort willbeawardedthefinallicensenecessaryto operate. Shareholders and potential investors should note that the Initial Closing and the other transactions contemplated under the Agreement are subject to the fulfillment or waiver (as the case may be) of the conditions as set out in the Agreement. The transactions under the Agreement may or may not be completed. Shareholders and potential investors are reminded to exercise caution when dealing in the Shares. DEFINITIONS In this announcement, the following expressions have the meanings set out below unless the context requires otherwise: Agreement Board the agreement dated 5 December 2016 between R&F (HK) and Caesars in relation to the formation of the JV Company the board of the Company Caesars has the meaning ascribed to it in the summary box in this announcement 6

7 CEC has the meaning ascribed to it in the paragraph headed INFORMATION ON CAESARS in this announcement Company Guangzhou R&F Properties Co., Ltd., a joint stock company established in the PRC with limited liability, the H-shares of which are listed on the main board of the Stock Exchange Final License Group HK$ a final, written license and approval to be issued by the MCST confirming its approval for the grant to the Project Company of all rights necessary under applicable gaming laws to operate a casino as part of the Integrated Resort the Company and its subsidiaries Hong Kong dollar, the lawful currency of Hong Kong Hong Kong the Hong Kong Special Administrative Region of the People s Republic of China IDTC Incheon Development Tourism Corporation, a company organized under the laws of Korea Initial Closing has the meaning ascribed to it in the paragraph headed Contribution in this announcement Integrated Resort has the meaning ascribed to it in the summary box in this announcement JV Company has the meaning ascribed to it in the summary box in this announcement Korea KRW Listing Rules MCDC MCST PRC Preliminary License Project Company the Republic of Korea Korean Won, the lawful currency of Korea the Rules Governing the Listing of Securities on the Stock Exchange Midan City Development Co., Ltd., a company incorporated in Korea the Ministry of Culture, Sports and Tourism of Korea the People s Republic of China, which, for the purposes of this announcement only, excludes Hong Kong, the Macau Special Administrative Region of the People s Republic of China and Taiwan the preliminary review conditional approval issued by the MCST on 17 March 2014, confirming that the Project Company is eligible for a foreigner-only casino business license, subject to compliance with certain conditions LOCZ Korea Corporation, a company (jusik hoesa) organised under the laws of Korea which is owned by third parties not connected with the Company as at the date of this announcement 7

8 RMB Renminbi, the lawful currency of the PRC R&F (HK) has the meaning ascribed to it in the summary box in this announcement Shareholder(s) Shares Stock Exchange US$ the holder(s) of Share(s) shares of RMB0.25 each in the capital of the Company The Stock Exchange of Hong Kong Limited United States dollar, the lawful currency of the United States of America % percent By order of the Board Guangzhou R&F Properties Co., Ltd. Michael Lee Joint Company Secretary Hong Kong, 5 December 2016 As at the date of this announcement, the executive directors of the Company are Mr. Li Sze Lim, Mr. Zhang Li, Mr. Zhou Yaonan and Mr. Lu Jing; the non-executive directors of the Company are Ms. Zhang Lin and Ms. Li Helen; and the independent non-executive directors of the Company are Mr. Lai Ming, Joseph, Mr. Zheng Ercheng and Mr. Ng Yau Wah, Daniel. In this announcement, save as otherwise stated, figures in KRW are translated to HK$ at the exchange rate of KRW1.00 = HK$ for illustration purposes only. No representation is made that any amount in HK$ or KRW would have been or can be converted at the above rate. * For identification purpose only 8