SUNWAY REAL ESTATE INVESTMENT TRUST ( SUNREIT ) - FIRST SUPPLEMENTAL AGREEMENT TO THE HOTEL MASTER LEASE DATED 26 MAY 2010 BETWEEN RHB TRUSTEES BERHAD (AS TRUSTEE FOR SUNWAY REAL ESTATE INVESTMENT TRUST), SUNWAY REIT MANAGEMENT SDN BHD AND SUNWAY HOTEL (SEBERANG JAYA) SDN BHD 1. INTRODUCTION We refer to the Hotel Master Lease dated 26 May 2010 made between RHB Trustees Berhad as Trustee for SUNREIT ( the Lessor or the Trustee ), Sunway REIT Management Sdn Bhd as the Manager for SUNREIT ( the Manager ) and Sunway Hotel (Seberang Jaya) Sdn Bhd ( SHSJ or the Lessee ), a wholly-owned subsidiary of Sunway City Sdn Bhd ( SunCity ) which in turn is a wholly-owned subsidiary of Sunway Berhad ( Sunway ) ( SHSJ Hotel Master Lease ) whereby the Lessor agreed to lease the Land including the Hotel, the Plant, the Services Infrastructure including all equipment, fixtures, fittings, finishings and other property located in the Premises, and where the context permits, includes equipment, fixtures, fittings, finishings and other property installed by Lessee in the Premises, but excluding the Car Park to the Lessee to be operated as a hotel commencing from 8 July 2010 for a period of 10 years and will end on 7 July 2020 at a total rent in accordance with the formula and, subject to the terms and conditions as stipulated in the SHSJ Hotel Master Lease. 2. VARIATION TO THE SHSJ HOTEL MASTER LEASE The Lessor and Lessee have agreed that Sunway Carnival Convention Centre ( SCCC ) will cease to be operated by the Lessee and hence, the Manager and the Lessor (pursuant to the recommendation by the Manager) have agreed to reduce the Guaranteed Rent for the period from 1 July 2017 to 30 June 2020 (8th Fiscal Year to 10th Fiscal Year) for the portion of the Guaranteed Rent as set out in Annexure 1 of the First Supplemental Agreement to the SHSJ Hotel Master Lease ( First Supplemental Agreement ) as follows, subject to the terms and conditions as stipulated in the First Supplemental Agreement:-
3. INFORMATION ON SUNWAY, SUNCITY, SHSJ, 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 issued share capital of Sunway is RM2,121,684,224.61 comprising 2,085,246,462 ordinary shares. 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 issued share capital of SunCity is RM251,447.14 comprising 250,000 ordinary shares and 144,714 Non-Convertible Non- Cumulative Redeemable Preference Shares. The principal activity of SunCity is investment holding. 3.3 SHSJ SHSJ, 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 issued share capital of SHSJ is RM2,000,000.00 comprising 2,000,000 ordinary shares. The principal activity of SHSJ is hotelier. 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, 47500 Subang Jaya, Selangor Darul Ehsan. The issued share capital of the Manager is RM1,000,000.00 comprising 1,000,000 ordinary shares. The principal activity of the Manager is management of 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 to provide professional retail trustee services (will writing, estate planning and private trust) and corporate trustee services (collective investment schemes). The present share capital of the Trustee is RM25,000,000.00 comprising 2,500,000 ordinary shares. 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. SALIENT TERMS OF THE FIRST SUPPLEMENTAL AGREEMENT The Guaranteed Rent payable by the Lessee to the Lessor pursuant to the terms and conditions of SHSJ Hotel Master Lease shall be the revised Guaranteed Rent as stated in Column 4 of Annexure 1 of this First Supplemental Agreement, as reproduced below:- 5. RATIONALE The tenancy agreement for SCCC, which is located in Sunway Carnival Shopping Mall, between the Lessee and the Trustee has expired on 30 June 2017. The Lessee does not intend to renew the tenancy due to operational losses suffered. The Lessee has accordingly requested for the adjustment in the Guaranteed Rent in relation to the operation of the SCCC. SCCC has been rented to another third party tenant which will operate a seafood restaurant and convention & event hall from September 2017. 6. EFFECTS OF THE FIRST SUPPLEMENTAL AGREEMENT 6.1 On Unit Capital and Substantial Unitholders Unitholding The First Supplemental Agreement will not have any effect on the total units issued and substantial unitholders unitholding as they do not involve any issuance of new units of SunREIT. 6.2 On Net Asset Value ( NAV ) The First Supplemental Agreement will have no material impact or changes to the unaudited NAV of SunREIT at the time of completion.
6.3 On Earnings The First Supplemental Agreement is not expected to have any material effect on the earnings of SunREIT for the financial year ending 30 June 2018. 7. APPROVALS REQUIRED Pursuant to the Securities Commission s Guidelines on Real Estate Investment Trusts, the First Supplemental Agreement does not require approvals from the Securities Commission or the unitholders of SunREIT. 8. DIRECTORS' AND MAJOR UNITHOLDERS' INTERESTS Sarena Cheah Yean Tih is a director of Sunway and the Manager. 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, Sarena Cheah Yean Tih has abstained from deliberation and voting in the Board of the Manager in respect of matters pertaining to the First 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 First Supplemental Agreement. 9. THE MANAGER S AUDIT COMMITTEE S RECOMMENDATION The Audit Committee of the Manager, after having considered all aspects of the First Supplemental Agreement, is of the opinion that the First Supplemental Agreement 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 First Supplemental Agreement is fair, reasonable, on normal commercial terms and carried out on an arm s length basis. 10. STATEMENT BY THE BOARD OF DIRECTORS Save and except for Sarena Cheah Yean Tih (abstained from deliberation and voting in the Board of the Manager in respect of the First Supplemental Agreement), the Board of Directors of the Manager is of the opinion that the First Supplemental Agreement 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 First Supplemental Agreement is fair, reasonable, on normal commercial terms and carried out on an arm s length basis.
11. DOCUMENT AVAILABLE FOR INSPECTION The First 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 27 July 2017.