Jinmao China Hotel Investments and Management : CONTINUING CONNECTED TRANSACTIONS IN RELATION TO THE SECOND COMMERCIAL PROPERTY MANAGEMENT AGREEMENTS

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Jinmao Hotel

金 茂 酒 店

(As constituted pursuant to a deed of trust on 13 June 2014 under the laws of Hong Kong,

the trustee of which is Jinmao (China) Investments Manager Limited)

and

Jinmao (China) Hotel Investments and Management Limited

金 茂（ 中 國 ）酒 店 投 資 管 理 有 限 公 司

(Registered in the Cayman Islands with limited liability)

(Stock Code: 06139)

CONTINUING CONNECTED TRANSACTIONS

IN RELATION TO THE SECOND COMMERCIAL PROPERTY

MANAGEMENT AGREEMENTS

Reference is made to (a) the prospectus of the Company dated 19 June 2014 in relation to, among others, the Original Commercial Property Management Agreement entered into between China Jin Mao (Group) and China Jinmao (Shanghai) on 13 June 2014; and (b) the announcement by the Company and the Trustee-Manager on 7 December 2016 in relation to the First Shanghai Commercial Property Management Agreement and the First Lijiang Commercial Property Management Agreement entered into between China Jinmao (Shanghai) and China Jin Mao (Group) and Jinmao (Li Jiang) respectively on 7 December 2016. Due to internal business restructuring of China Jinmao, effective from 1 July 2017, China Jinmao (Shanghai) transferred all its rights and obligations under the First Commercial Property Management Agreements to Jinmao Commercial (Shanghai).

On 13 December 2019, China Jin Mao (Group) entered into the Second Shanghai Commercial Property Management Agreement with Jinmao Commercial (Shanghai) for a period of three years with effect from 1 January 2020 pursuant to which the China Jinmao Group has agreed to provide certain property management services in relation to Shanghai J-Life to the Group. On the same date, Jinmao (Li Jiang) also entered into the Second Lijiang Commercial Property Management Agreement with Jinmao Commercial (Shanghai) for a period of three years with effect from 1 January 2020 pursuant to which the China Jinmao Group has agreed to provide certain property management services in relation to Lijiang J-Life to the Group. The transactions under the Second Commercial Property Management Agreements are in the ordinary and usual course of business of the Group.

Jinmao Commercial (Shanghai) is an indirect wholly-owned subsidiary of China Jinmao, which is the controlling holder of the Share Stapled Units, and is therefore a connected person of the Trust Group under Rule 14A.07(1) of the Listing Rules. Accordingly, the Second Commercial Property Management Agreements and the transactions contemplated thereunder constitute continuing connected transactions of the Trust Group under Chapter 14A of the Listing Rules.

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As the transactions under the Second Commercial Property Management Agreements are related to the same connected person, they will be aggregated in accordance with Rule 14A.83 of the Listing Rules. As the highest of the applicable percentage ratios under the Listing Rules in respect of the annual caps for the transactions under the Second Commercial Property Management Agreements will, on an annual basis, be more than 0.1% but less than 5%, these transactions will constitute continuing connected transactions that are exempt from the circular (including independent financial advice) and shareholders' approval requirements under Rule 14A.76(2) of the Listing Rules.

1. INTRODUCTION
   The Original Commercial Property Management Agreement was entered into for a period of three years with effect from 2 July 2014. On 7 December 2016, China Jin Mao (Group) entered into the First Shanghai Commercial Property Management Agreement with China Jinmao (Shanghai) for a period of three years with effect from 1 January 2017 and Jinmao (Li Jiang) entered into the First Lijiang Commercial Property Management Agreement with China Jinmao (Shanghai) for a period of three years with effect from 1 January 2017. The First Commercial Property Management Agreements may be renewed thereafter, subject to the parties complying with the applicable provisions of the Listing Rules in respect of any such renewal.
   Due to internal business restructuring of China Jinmao, effective from 1 July 2017, China Jinmao (Shanghai) transferred all its rights and obligations under the First Commercial Property Management Agreements to Jinmao Commercial (Shanghai).
   On 13 December 2019, China Jin Mao (Group) entered into the Second Shanghai Commercial Property Management Agreement with Jinmao Commercial (Shanghai) for a period of three years with effect from 1 January 2020 and Jinmao (Li Jiang) entered into the Second Lijiang Commercial Property Management Agreement with Jinmao Commercial (Shanghai) for a period of three years with effect from 1 January 2020. The First Commercial Property Management Agreements will be terminated on 31 December 2019 and the Second Commercial Property Management Agreements will be effective from 1 January 2020.
   The principal terms of the Second Commercial Property Management Agreements are set out below.
2. THE SECOND SHANGHAI COMMERCIAL PROPERTY MANAGEMENT AGREEMENT

2020. Save for the duration and the change in counterparty from China Jinmao (Shanghai) to Jinmao Commercial (Shanghai), all other principal terms are substantially the same as those in the First Shanghai Commercial Property Management Agreement.

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Under the Second Shanghai Commercial Property Management Agreement, Jinmao Commercial (Shanghai) will provide certain property management services in relation to Shanghai J-Life. The property management services mainly include: (a) leasing management;

1. marketing services; (c) project management; and (d) other relevant services as may be reasonably required by China Jin Mao (Group) in relation to Shanghai J-Life. The transactions under the Second Shanghai Commercial Property Management Agreement are in the ordinary and usual course of business of the Group.

Payment terms The annual property management fees to be paid to Jinmao Commercial (Shanghai) will comprise 3% of the annual rental income from Shanghai J-Life.

3. T H E S E C O N D L I J I A N G C O M M E R C I A L P R O P E R T Y M A N A G E M E N T AGREEMENT

Under the Second Lijiang Commercial Property Management Agreement, Jinmao Commercial (Shanghai) will provide certain property management services in relation to Lijiang J-Life. The property management services mainly include: (a) leasing management;

1. marketing services; (c) project management; and (d) other relevant services as may be reasonably required by Jinmao (Li Jiang) in relation to Lijiang J-Life. The transactions under the Second Lijiang Commercial Property Management Agreement are in the ordinary and usual course of business of the Group.

Payment terms The annual property management fees to be paid to Jinmao Commercial (Shanghai) will comprise 3% of the annual rental income from Lijiang J-Life.

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4. ANNUAL CAPS FOR CONTINUING CONNECTED TRANSACTIONS

Aggregate Annual Caps for the First Commercial Property Management Agreements

The aggregate annual caps for transactions under the First Commercial Property Management Agreements for each of the three years ended 31 December 2017, 2018 and 2019 are set out below:

Historical Transaction Amounts for the First Commercial Property Management Agreements

The historical transaction amounts for transactions under the First Commercial Property Management Agreements for each of the two years ended 31 December 2017 and 2018 and the six months ended 30 June 2019 are set out below:

Annual Caps for the Second Shanghai Commercial Property Management Agreement

The annual caps for the transactions contemplated under the Second Shanghai Commercial Property Management Agreement for the three years ending 31 December 2020, 2021 and

2022 are set out below:

The annual caps in respect of the Second Shanghai Commercial Property Management Agreement are estimated with reference to (a) estimated rental income from Shanghai J-Life; (b) the historical transaction amounts under the First Shanghai Commercial Property Management Agreement; and (c) similar commercial property management agreements entered into by other listed hospitality business trusts and real estate investment trusts which invest in commercial assets.

Annual Caps for the Second Lijiang Commercial Property Management Agreement

The annual caps for the transactions contemplated under the Second Lijiang Commercial Property Management Agreement for the three years ending 31 December 2020, 2021 and

2022 are set out below:

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The annual caps in respect of the Second Lijiang Commercial Property Management Agreement are estimated with reference to (a) the estimated annual rental income from Lijiang J-Life; (b) the historical transaction amounts under the First Lijiang Commercial Property Management Agreement; and (c) similar commercial property management agreements entered into by other listed hospitality business trusts and real estate investment trusts which invest in commercial assets.

1. INFORMATION IN RELATION TO THE GROUP, CHINA JIN MAO (GROUP), JINMAO (LI JIANG) AND JINMAO COMMERCIAL (SHANGHAI)
   The Group
   Jinmao Hotel is a fixed single investment trust with an initial focus on the hospitality industry in the PRC. The Group primarily owns and invests in a portfolio of hotels with diversified revenue sources and customer mix from a portfolio of high quality hotels and commercial properties, comprising eight hotels and Jin Mao Tower, a mixed-use development. The properties are all located in prime, strategic locations in top-tier cities or tourist hot spots in the PRC and comprise high quality hotels and commercial property.
   The ultimate controlling holder of the Share Stapled Units is Sinochem Group.
   China Jin Mao (Group)
   China Jin Mao (Group) is an indirect wholly-owned subsidiary of the Company and primarily owns and invests in a portfolio of hotels.
   Jinmao (Li Jiang)
   Jinmao (Lijiang) is an indirect wholly-owned subsidiary of the Company and primarily owns and invests in the Lijiang Jinmao Hotels.
   Jinmao Commercial (Shanghai)
   Jinmao Commercial (Shanghai) is a wholly-owned subsidiary of China Jinmao and primarily engages in the provision of commercial property management services.
   The ultimate beneficial owner of Jinmao Commercial (Shanghai) is Sinochem Group.
2. REASONS FOR, AND BENEFITS OF, THE SECOND COMMERCIAL PROPERTY MANAGEMENT AGREEMENTS
   The entry into the Second Commercial Property Management Agreements will facilitate the management and operations of Shanghai J-Life and Lijiang J-Life, which will potentially create value to the adjacent hotels owned by the Group.

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1. LISTING RULES IMPLICATIONS
   Jinmao Commercial (Shanghai) is a wholly-owned subsidiary of China Jinmao, which is the controlling holder of the Share Stapled Units, and is therefore a connected person of the Trust Group under Rule 14A.07(1) of the Listing Rules. Accordingly, the Second Commercial Property Management Agreements and the transactions contemplated thereunder constitute continuing connected transactions of the Trust Group under Chapter 14A of the Listing Rules.
   As the transactions under the Second Commercial Property Management Agreements are related to the same connected person, they will be aggregated in accordance with Rule 14A.83 of the Listing Rules. As the highest of the applicable percentage ratios under the Listing Rules in respect of the annual caps for the transactions under the Second Commercial Property Management Agreements will, on an annual basis, be more than 0.1% but less than 5%, these transactions will constitute continuing connected transactions that are exempt from the circular (including independent financial advice) and shareholders' approval requirements under Rule 14A.76(2) of the Listing Rules.
2. DIRECTORS' CONFIRMATION
   The Directors (including the independent non-executive Directors) are of the view that the Second Commercial Property Management Agreements are on normal commercial terms and in the ordinary and usual course of business of the Group, and that the terms of the Second Commercial Property Management Agreements are fair and reasonable and in the interests of the Company and the holders of the Share Stapled Units as a whole.
   Mr. Li Congrui, Mr. Zhang Hui and Mr. Jiang Nan had declared their interests in the transactions under the Second Commercial Property Management Agreements by virtue of their relationship with China Jinmao, and each of them has abstained from voting on the relevant resolutions of the respective Boards in respect of the Second Commercial Property Management Agreements and the annual caps for the years ending 31 December 2020, 2021 and 2022. Save as disclosed above, none of the Directors had a material interest in the Second Commercial Property Management Agreements and the transactions contemplated thereunder, and therefore no other Director has abstained from voting on the relevant resolutions of the respective Boards in respect of the Second Commercial Property Management Agreements and the annual caps for the years ending 31 December 2020, 2021 and 2022.

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9. DEFINITIONS

In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:

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As at the date of this announcement, the directors of the Trustee-Manager and the Company are Mr. LI Congrui (Chairman), Mr. ZHANG Hui and Mr. JIANG Nan as Non-executive Directors; Mr. TANG Yong as Executive Director and Chief Executive Officer; and Dr. CHUNG Shui Ming Timpson, Dr. CHEN Jieping and Dr. XIN Tao as Independent Non-executive Directors.

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