GENERAL ANNOUNCEMENT. Date Announced Type Subject Description : 12/02/2019

Transcription

1 GENERAL ANNOUNCEMENT Date Announced Type Subject Description : 12/02/2019 : Announcement : MULTIPLE PROPOSALS : ATRIUM REAL ESTATE INVESTMENT TRUST ("ATRIUM REIT") (I) PROPOSED ACQUISITION 1; (II) PROPOSED ACQUISITION 2; (III) PROPOSED PLACEMENT; AND (IV) PROPOSED RIGHTS ISSUE (COLLECTIVELY REFERRED TO AS THE PROPOSALS ) Contents : We refer to Atrium REIT s announcements dated 1 November 2018, 14 December 2018, 21 December 2018 and 17 January 2019 in relation to the Proposed Acquisitions. On behalf of the Board of Directors of the Manager, UOBKH wishes to announce that the Trustee (on behalf of Atrium REIT), had, on 12 February 2019, entered into the following agreements with the Vendor:- 1. a put and call option agreement ( Option Agreement ) for the option to enter into a conditional sale and purchase agreement ( SPA 1 )( Option ) and leaseback agreement for the proposed acquisition and leaseback of 2 pieces of leasehold land known as Lot No and Plot No. 203, both in Mukim 12, Daerah Barat Daya, Pulau Pinang held under Pajakan Negeri 2850 and H.S.(D) respectively, together with the factory and all buildings erected thereon ( Property 1 ) from the Vendor for a cash consideration of RM50.0 million ( Proposed Acquisition 1 ). For avoidance of doubt, the Trustee, on behalf of Atrium REIT, will enter into the SPA 1 and undertake the Proposed Acquisition 1 upon the exercise of the Option under the Option Agreement, which is subject to amongst others, the Certificate of Completion and Compliance ( CCC ) and/or Certificate of Fitness for Occupation ( CFO ) for Property 1 being obtained by the Vendor. Hence, for the purposes of undertaking the Proposed Acquisition 1, Atrium REIT will also seek approval from its unitholders at the unitholders meeting to be convened to exercise the Option and undertake the Proposed Acquisition 1 upon the Vendor obtaining the CCC/CFO for Property 1; and 2. a conditional sale and purchase agreement for the proposed acquisition of a lease arrangement in respect of a piece of leasehold land known as Lot No , Mukim 12, Daerah Barat Daya, Pulau Pinang held under Pajakan Negeri 9036 ( Lease ) together with the factory and all buildings erected thereon ( Property 2 ) from the Vendor for a cash consideration of RM130.0 million ( SPA 2 ) ( Proposed Acquisition 2 ). Concurrently with the execution of the SPA 2, the Trustee and Lumileds had also 1

2 on even date signed in escrow the leaseback agreement whereby the Trustee shall sub-lease Property 2 to the Vendor for a period of 15 years from the completion of SPA 2 ( Completion Date ) ( Leaseback Agreement 2 ). The Leaseback Agreement 2 shall take effect on the Completion Date. In conjunction with the Proposed Acquisitions, the Board also proposes to undertake the following fund raising exercises:- 1. proposed placement of up to 24,360,200 new units in Atrium REIT ( Units ), representing up to 20% of the total number of Units in Atrium REIT of 121,801,000 Units at an issue price to be determined later ( Proposed Placement ); and 2. proposed renounceable rights issue of up to 58,464,480 new Units ( Rights Units ) to the unitholders of Atrium REIT on the basis of 2 Rights Units for every 5 existing Units after the completion of the Proposed Placement at an issue price to be determined later ( Proposed Rights Issue ). Further details on the Proposals are set out in the attachment below. This announcement is dated 12 February

3 ATRIUM REAL ESTATE INVESTMENT TRUST ( ATRIUM REIT ) (I) (II) (III) (IV) PUT AND CALL OPTION AGREEMENT BETWEEN PACIFIC TRUSTEES BERHAD ( TRUSTEE ), ON BEHALF OF ATRIUM REIT, AND LUMILEDS MALAYSIA SDN BHD ( VENDOR OR LUMILEDS ) FOR THE OPTION TO ENTER INTO SALE AND PURCHASE AGREEMENT ( OPTION ) AND LEASEBACK OF 2 PIECES OF LEASEHOLD LAND KNOWN AS LOT NO AND PLOT NO. 203, BOTH IN MUKIM 12, DAERAH BARAT DAYA, PULAU PINANG HELD UNDER PAJAKAN NEGERI 2850 AND H.S.(D) RESPECTIVELY, TOGETHER WITH THE FACTORY AND ALL BUILDINGS ERECTED THEREON FROM FOR A CASH CONSIDERATION OF RM50.0 MILLION; PROPOSED ACQUISITION AND SUB-LEASE BY THE TRUSTEE, ON BEHALF OF ATRIUM REIT, OF A LEASE ARRANGEMENT IN RESPECT OF A PIECE OF LEASEHOLD LAND KNOWN AS LOT NO , MUKIM 12, DAERAH BARAT DAYA, PULAU PINANG HELD UNDER PAJAKAN NEGERI 9036 TOGETHER WITH THE FACTORY AND ALL BUILDINGS ERECTED THEREON FROM THE VENDOR FOR A CASH CONSIDERATION OF RM130.0 MILLION; PROPOSED PLACEMENT OF UP TO 24,360,200 NEW UNITS IN ATRIUM REIT ( UNITS ), REPRESENTING UP TO 20% OF THE TOTAL NUMBER OF UNITS IN ATRIUM REIT OF 121,801,000 UNITS AT AN ISSUE PRICE TO BE DETERMINED LATER; AND PROPOSED RENOUNCEABLE RIGHTS ISSUE OF UP TO 58,464,480 NEW UNITS IN ATRIUM REIT ON THE BASIS OF 2 RIGHTS UNITS FOR EVERY 5 EXISTING UNITS IN ATRIUM REIT AFTER COMPLETION OF THE PROPOSED PLACEMENT AT AN ISSUE PRICE TO BE DETERMINED LATER (COLLECTIVELY REFERRED TO AS THE PROPOSALS ) 1. INTRODUCTION We refer to the announcement dated 1 November 2018 on the acceptance of the letter of offer in respect of the industrial properties owned by Lumileds. Pursuant thereto, on behalf of the Board of Directors of Atrium REIT Managers Sdn Bhd ( Board ) ( Manager ), UOB Kay Hian Securities (M) Sdn Bhd ( UOBKH ) wishes to announce that the Trustee, on behalf of Atrium REIT, had, on 12 February 2019, entered into the following agreements with the Vendor:- (i) a put and call option agreement ( Option Agreement ) for the option to enter into a conditional sale and purchase agreement ( SPA 1 ) and leaseback agreement ( Leaseback Agreement 1 ) for the proposed acquisition and leaseback of 2 pieces of leasehold land known as Lot No and Plot No. 203, both in Mukim 12, Daerah Barat Daya, Pulau Pinang held under Pajakan Negeri 2850 and H.S.(D) respectively, together with the factory and all buildings erected thereon ( Property 1 ) from the Vendor for a cash consideration of RM50.0 million ( Purchase Consideration 1 ) ( Proposed Acquisition 1 ). For the avoidance of doubt, the Trustee, on behalf of Atrium REIT, will enter into the SPA 1 and undertake the Proposed Acquisition 1 upon the exercise of the Option under the Option Agreement, which is subject to amongst others, the Certificate of Completion and Compliance ( CCC ) and/or Certificate of Fitness for Occupation ( CFO ) for Property 1 being obtained by the Vendor. Hence, for the purposes of undertaking the Proposed Acquisition 1, Atrium REIT will seek approval from its unitholders at the unitholders meeting to be convened to exercise the Option and undertake the Proposed Acquisition 1 upon the Vendor obtaining the CCC/CFO for Property 1; and (ii) a conditional sale and purchase agreement for the proposed acquisition of a lease arrangement in respect of a piece of leasehold land known as Lot No , Mukim 12, Daerah Barat Daya, Pulau Pinang held under Pajakan Negeri 9036 ( Lease ) 3

4 together with the factory and all buildings erected thereon ( Property 2 ) from the Vendor for a cash consideration of RM130.0 million ( Purchase Consideration 2 ) ( SPA 2 ) ( Proposed Acquisition 2 ). Concurrently with the execution of the SPA 2, the Trustee and Lumileds had also on even date signed in escrow the leaseback agreement whereby the Trustee shall sublease Property 2 to the Vendor for a period of 15 years from the completion of SPA 2 ( Completion Date ) ( Leaseback Agreement 2 ). The Leaseback Agreement 2 shall take effect on the Completion Date. (Proposed Acquisition 1, Proposed Acquisition 2, Proposed Placement and Proposed Rights Issue shall collectively be referred to as the Proposals. Proposed Acquisition 1 and Proposed Acquisition 2 shall collectively be referred to as the Proposed Acquisitions. Purchase Consideration 1 and Purchase Consideration 2 shall collectively be referred to as the Purchase Considerations. Property 1 and Property 2 shall collectively be referred to as the Properties. SPA 1 and SPA 2 shall collectively be referred to as the SPAs. Leaseback Agreement 1 and Leaseback Agreement 2 shall collectively be referred to as the Leaseback Agreements ) In conjunction with the Proposed Acquisitions, the Board also proposes to undertake the following fund raising exercises:- (i) (ii) proposed placement of up to 24,360,200 new units in Atrium REIT ( Units ), representing up to 20% of the total number of Units in Atrium REIT of 121,801,000 Units ( Placement Units ) at an issue price to be determined later ( Proposed Placement ); and proposed renounceable rights issue of up to 58,464,480 new Units ( Rights Units ) to the unitholders of Atrium REIT on the basis of 2 Rights Units for every 5 existing Units after the completion of the Proposed Placement at an issue price to be determined later ( Proposed Rights Issue ). Further details on the Proposals are set out in the ensuing sections. 2. DETAILS OF THE PROPOSED ACQUISITIONS The Proposed Acquisitions entail the following:- (a) (b) the exercise of the Option and the acquisition of Property 1 and all such fixtures and fittings attached to Property 1 free from all encumbrances with legal possession for a cash consideration of RM50.0 million; and acquisition of the Lease in respect of Property 2 and all such fixtures and fittings attached to Property 2 free from all encumbrances with legal possession for a cash consideration of RM130.0 million. Further details on the Properties and the Lease are set out in Section 2.1 below. 4

5 2.1 Information on the Properties and the Lease Summary details of the Properties Details Property 1 Property 2 Postal address Land title 150F, Blok A, Jalan Kampung Jawa Taman Perindustrian Bayan Lepas Bayan Lepas Pulau Pinang Plot No. 203 and Lot No held under Title Nos. HSD and PN 2850 respectively, both in Mukim 12, Daerah Barat Daya, Pulau Pinang Plot 401, Lintang Bayan Lepas 8 Kawasan Perindustrian Bayan Lepas Bayan Lepas Pulau Pinang Lot No held under Title No. PN 9036, Mukim 12, Daerah Barat Daya, Pulau Pinang Land area (i) Lot No. 2027: 16,198 square metres (174,354 square feet); and Lot No : hectares (514,730 square feet) (ii) Plot No. 203: Approximately 14,666 square metres (157,861 square feet) Tenure of leasehold land (i) Lot No. 2027: 60 years leasehold land (expiring on 7 March 2036); and Lot No : 60-year leasehold land (expiring on 7 May 2072) (ii) Plot No. 203: 60-year leasehold land (expiring on 3 March 2042) Category of land use Restrictions-ininterest Industrial/Manufacturing Lot No and Plot No. 203 (i) The land hereby alienated shall not be transferred, charged, leased, subleased or otherwise in any manner dealt with or disposed of without the written sanction of the State Authority. (ii) The land hereby alienated shall not be subdivided. Industrial/Manufacturing Lot No The land hereby alienated shall not be transferred, charged, leased, sub-leased, rented out or otherwise in any manner dealt with, without the written sanction of the State Authority Encumbrances Nil Nil Endorsements Plot No. 203: Nil Lot No. 2027: Part of the Property 1 has been leased to Tenaga Nasional Berhad for a term of 25-year, commencing on 1 November 2010 and expiring on 31 October 2035, vide Presentation No. 0799SC , registered on 11 August 2016 Lot No (i) The entire land has been leased to Philips Lumileds Lighting Company Sdn Bhd and Lumileds Malaysia Sdn Bhd for a term of 30-year commencing on 11 February 2011 and expiring on 10 February 2041 pursuant to the Principal Lease Agreement vide Presentation No. 0799SC , registered on 27 February 2013 (ii) Pajakan Kecil Seluruh Tanah ke atas Pajakan Seluruh Tanah to Tenaga Nasional Berhad for a term of 30-year commencing on 11 February 2011 and expiring on 10 February 2041 vide Presentation No. 0799SC , registered on 30 August

6 Details Property 1 Property 2 Registered owner Vendor Penang Development Corporation ( PDC ) and leased to the Vendor pursuant to the Principal Lease Agreement, further details of which are set out in Section below Description of the buildings An industrial premises accommodating a double-storey office building annexed with a single-storey factory building, a single-storey warehouse with a mezzanine floor and other ancillary buildings An industrial premises accommodating a double-storey factory building and other ancillary buildings Age of buildings More than 40 years Approximately 6 years Existing use of the Properties Gross floor area Net lettable area ( NLA ) Occupied by Lumileds 17,957 square metres (193,288 square feet) 17,645 square metres (189,932 square feet) Occupied by Lumileds 30,493 square metres (328,226 square feet) 27,738 square metres (298,569 square feet) Audited net book value as at 31 December 2017 (RM 000) (1) 26, ,681 Market (RM 000) (2) value 51, ,000 Purchase Considerations (RM 000) 50, ,000 Tenancy description Rental rate in accordance to the Leaseback Agreements Property 1 will be leased to the Vendor for a period of 15 years from the date of completion of Proposed Acquisition 1 on a triple net lease basis pursuant to the Leaseback Agreement 1 Year 1 - RM4,558,368 per annum (subject to 3% yearly rental escalation) Property 2 will be sub-leased to the Vendor for a period of 15 years from the date of completion of Proposed Acquisition 2 on a triple net lease basis pursuant to the Leaseback Agreement 2 Year 1 - RM10,748,484 per annum (subject to 3% yearly rental escalation) Occupancy Rate 100% 100% Notes:- (1) Based on the latest audited financial statements of the Vendor for the financial year ended ( FYE ) 31 December (2) As appraised by Messrs Knight Frank Malaysia Sdn Bhd ( Independent Valuer ), being the independent registered valuer appointed by the Trustee, vide its valuation letter dated 31 January 2019 ( Valuation Letter ). The Independent Valuer had adopted the investment method and cost method in appraising the market value of the Properties. 6

7 2.1.2 Summary details of the Lease in respect of Property 2 On 11 February 2011, PDC (as the lessor) and the Vendor (as the lessee) entered into the agreement pertaining to the Lease in respect of Lot No , Mukim 12, Daerah Barat Daya, Pulau Pinang ( Land ) ( Principal Lease Agreement ), the salient terms of which are set out below:- Salient terms Lease Period Aggregate rental/ lease amount Lessor s covenants Lease Renewal Option Details 30 years commencing from 11 February 2011 and expiring on 10 February As at the LPD, the remaining lease period is 22 years. RM16,731,308 has been fully paid by the lessee as at the date of the Principal Lease Agreement The lessee shall exclusively, peaceably and quietly possess and enjoy the land during the term without any interruption from and/or disturbance by the lessor or any person claiming through or under the lessor Save and except for the quit rent and the assessment payable in respect of the Land which shall be borne by the lessee, the lessor shall pay all existing and future taxes payable in respect of the land and impositions of like nature by whatsoever name called levied and payable in respect of the land including any increase thereon imposed by any appropriate authority during the term of the lease The lessor shall comply with all requirement as may be imposed on the lessor by the state authority with respect to the Land, other than those to be complied with by the lessee The lessee has the option to renew the principal lease for a period of not less than 10 years but not exceeding any such remaining tenure on the Land (60-year leasehold interest expiring on 7 May 2072) ( Lease Renewal Option ) at a rental rate to be agreed by both parties ( Renewed Term ) In the event the parties fail to agree on the rental for the Renewed Term, an independent and qualified assessor (to be mutually agreed) will be appointed to determine the rental rate for the Renewed Term and such rental rate shall be final and binding Upon completion of Proposed Acquisition 2, the Trustee, on behalf of Atrium REIT, will be registered as the lessee to the Lease. Thereafter, within 8 months immediately after the completion of Proposed Acquisition 2, the Trustee, on behalf of Atrium REIT, shall exercise its best endeavours to liaise with PDC to exercise the Lease Renewal Option and extend the lease period to 32 years assuming the extension sought is based on a minimum of 10 years from February 2041 ( Lease Extension ). 2.2 Salient terms of the Option Agreement in respect of Property 1 The salient terms and conditions of the Option Agreement, amongst others, are set out below: Conditions precedent (a) The Option Agreement is subject to the following conditions precedent ( Option CP ) being fulfilled within 3 months from the date of the Option Agreement ( Conditional Period ):- Atrium REIT procuring the approval of its Board of Directors and/or unitholders for:- (i) (ii) the entry into and execution of the Option Agreement; the exercise of the Call Option and the Put Option upon the terms and conditions of the Option Agreement; and 7

8 (iii) the entering into and execution of the purchase and transfer, and lease of Property 1 upon the terms and conditions contained in the agreed form of SPA 1 (Section below). (b) (c) In the event that any of the Option CP is not fulfilled within the Conditional Period, and provided always that such non-fulfilment is not due to any default or omission on the part of Atrium REIT, the Conditional Period shall be automatically extended by 1 month ( Extended Conditional Period ). This Agreement shall terminate in the event that all the Option CPs are not fulfilled within the Conditional Period or the Extended Conditional Period, as the case may be, unless the parties mutually agree in writing for a further extension of time. For the avoidance of doubt, the Call Option and Put Option shall only be exercisable by the parties upon fulfilment of the Option CP above by Atrium REIT notwithstanding that a copy of the CCC/CFO (Section below) has been obtained by Lumileds prior to the fulfilment of the Option CPs CCC/CFO Lumileds is in the process of obtaining a copy of the CCC/CFO, as the case may be for Property 1 from the relevant authority. Subject to the Option CP being fulfilled within the Conditional Period and the Vendor obtaining the CCC/CFO, within 6 months therefrom:- (a) (b) Atrium REIT may exercise the call option, whereby Atrium REIT has the right to require Lumileds to sell to Atrium REIT Property 1 at the Purchase Consideration 1 in form and substance of SPA 1, within 7 business days from the date Atrium REIT receives a copy of the CCC/CFO ( Call Period ) ( Call Option ); or Lumileds may exercise the put option, whereby Lumileds has the right to require Atrium REIT to purchase Property 1 from Lumileds at the Purchase Consideration 1 in form and substance of SPA 1, within 7 business days from the expiry or lapse of the Call Period ( Put Option ) Completion The Completion of the Option Agreement shall mean the parties shall proceed to complete the sale and purchase of Property 1 in accordance with the terms and conditions of the Option Agreement and SPA 1. THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK 8

9 2.3 Salient terms of SPA 1 in its agreed form The salient terms of SPA 1 to be entered pursuant to the Option Agreement are, amongst others, set out below: Purchase price The Purchase Consideration shall be satisfied by the Purchaser in the following manner:- Earnest deposit representing 2% of the Purchase Consideration which has already been paid on the date of the Letter of Acceptance Balance deposit representing 8% of the Purchase Consideration payable upon execution of SPA 1 Balance purchase price representing 90% of the Purchase Consideration ( Balance Purchase Price ) Proposed Acquisition 1 (RM 000) 1,000 4,000 45,000 TOTAL 50,000 The Balance Purchase Price shall be paid within 2 months from the date SPA 1 becomes or is declared unconditional ( Completion Period ), failing which the Completion Period will be automatically extended for 1 month ( Extended Completion Period ). Atrium REIT shall pay Lumileds an interest at the rate of 8% per annum on the unpaid balance sum calculated on daily basis from the next day after the expiry of the Completion Period until the date of full payment. However, Lumileds will grant an interest free period during the Extended Completion Period provided that the delay is not attributable to the fault of Atrium REIT and is substantiated by documentary evidence acceptable to Lumileds. In the event the Balance Purchase Price or any part thereof is not paid within the Extended Completion Period, Lumileds will consider to grant a further extension of 1 month from the Extended Completion Period subject to an interest rate of 8% per annum Conditions precedent Proposed Acquisition 1 is subject to the following conditions precedent ( SPA CP ) being fulfilled within 3 months from the date of SPA 1 ( Conditional Period ):- (a) (b) (c) (d) the Vendor obtaining all the necessary approval and written consent from PDC and Penang state authority ( State Authority ) for the sale and transfer of Property 1; the Purchaser obtaining all the necessary approval and written consent from PDC and State Authority for the charge of Property 1 to their financier (if applicable); the Vendor procuring the approval of its Board of Directors and its members, where necessary, for the disposal and transfer of Property 1 to the Purchaser; the Purchaser procuring the approval of its Board of Directors and its members and/or unitholders of Atrium REIT for the purchase and transfer of the Property 1 from the Vendor and for the leaseback of Property 1 to the Vendor; 9

10 (e) (f) (g) (h) the Purchaser obtaining all the necessary approvals and/or waivers from the relevant authorities for the purchase and lease including valuation report in respect of Property 1 (where applicable); the Purchaser obtaining all the necessary approval and written consent from PDC and State Authority for the leaseback of the Property 1; the Vendor procuring the approval of its Board of Directors and its members, where necessary, for the leaseback of Property 1 and authorising the affixing of its common seal on the Leaseback Agreement 1 and the Memorandum of Lease; and the satisfactory due diligence review on the following:- (i) (ii) measurement of land and buildings area; and structural stability of the buildings to be conducted by an independent and qualified land surveyor and consultant appointed by the Manager, Purchaser and/or their advisers/consultants and approved by the Vendor. In the event that any of the SPA CPs cannot be fulfilled within the Conditional Period, and provided always that such non-fulfilment is not due to any default or omission on the part of the Purchaser, the Conditional Period shall be automatically extended by 1 month free of interest ( Extended Conditional Period ). If any SPA CP is not fulfilled within the Extended Conditional Period not due to the fault of either party, either party may terminate the SPAs by giving notice to that effect to the other party and the Vendor shall, upon the Purchaser s compliance with Clause 8.1 of SPA 1 (Section below), refund to the Purchaser the deposit amounting to 10% of the Purchase Consideration ( Deposit ) free of interest within 10 days. In the event that any of the SPA CPs cannot be fulfilled within the Conditional Period or Extended Conditional Period (or CCC Extended Conditional Period pursuant to SPA 1), that such non-fulfilment is attributable to the wilful fault, act or negligence of a party ( Defaulting Party ) SPA 1 shall terminate. In the event the Defaulting Party is the Purchaser, the Deposit shall be forfeited absolutely to the Vendor as agreed liquidated damages. In the event the Defaulting Party is the Vendor, the Vendor shall refund the Deposit to the Purchaser and in addition to the said refund, pay to the Purchaser out-of-pocket expenses reasonably incurred up to the date of termination provided it is substantiated by documentary evidence up to a maximum of RM1.0 million for each SPA, being the agreed liquidated damages upon the Purchaser s compliance with Clause 8.1 of 1 SPA 1 (Section below) Completion Completion of SPA 1 shall mean the full payment of the Balance Purchase Consideration being received by Lumileds or Lumiled s solicitors in the manner set out in Section above Termination procedures Upon the lawful termination of SPA 1, the Purchaser shall within a reasonable time and in any event no later than 30 days of the termination notice being given: (a) return or caused to be returned to the Vendor the issue document of title (free from all encumbrances) with the Vendor s interest as registered owner of the Property 1 remaining intact, Memorandum of Transfer and all other documents in respect of the Property 1; 10

11 (b) (c) re-deliver to the Vendor legal possession of Property 1 in the same state as at the time of delivery of legal possession of Property 1 by the Vendor to the Purchaser; and remove and caused to be removed all encumbrances against Property 1 by the Purchaser and/or the Purchaser s financier(s), at the Purchaser s own cost and expenses. 2.4 Salient terms of SPA 2 Save as disclosed below, the salient terms of SPA 2 in respect of Proposed Acquisition 2 are substantially the same with SPA 1: Purchase price The Purchase Consideration shall be satisfied by the Purchaser in the following manner:- Earnest deposit representing 2% of the Purchase Consideration which has already been paid on the date of the Letter of Acceptance Balance deposit representing 8% of the Purchase Consideration paid to the Vendor s solicitors on 12 February 2019 Balance Purchase Price representing 90% of the Purchase Consideration, payable within the Completion Period Proposed Acquisition 2 (RM 000) 2,600 10, ,000 TOTAL 130, Conditions precedent In addition to the conditions precedent for SPA 1 set out in Section above that are applicable in SPA 2, the parties are required to fulfil the following conditions precedents (which are specific to SPA 2):- (a) (b) the Vendor procuring the approval of its Board of Directors and its members, where necessary, for the disposal and transfer of the Lease to the Purchaser; the Purchaser obtaining all the necessary approvals and/or waivers from the Securities Commission Malaysia ( SC ) for the purchase of the Lease. 2.5 Salient terms of the Leaseback Agreement 1 in its agreed form Concurrently with the execution of SPA 1, the Trustee and Lumileds will also sign in escrow the Leaseback Agreement 1 to lease Property 1 to Lumileds. The salient terms of the Leaseback Agreement 1 are, amongst others, set out below: The terms of the lease Upon completion of Proposed Acquisition 1, the Trustee (on behalf of Atrium REIT) will leaseback Property 1 to Lumileds pursuant to the Leaseback Agreement 1, details of which are set out below:- Terms Commencement Date Term Details The leaseback will commence on the completion date of SPA 1 15 years from the Commencement Date 11

12 Terms Renewal Term Details Option to renew for a further term of 5 years in each renewal commencing from the expiry of the Term, until the expiry of the leasehold land tenure as set out in Section 2.1 above Rental sum Property 1 Year 1 Rental rate (based on NLA) RM2.00 per square feet Year 1 Annual rental RM4,558,368 Year 1 Gross rental yield (first year) 9.12% The above rental sum is subject to yearly increase of 3% during the Term Deposit Lumileds shall pay to the Trustee in cash, an amount equivalent to 4 months rental as security deposit and an amount equivalent to 1 month rental as utilities deposit prior to or upon the Commencement Date Triple net lease Each time the monthly rental is increased in accordance with the Leaseback Agreement, the security deposit and utilities deposit shall be increased accordingly and Lumileds shall make the necessary payment in cash towards the security deposit and utilities deposit no less than 30 days prior to the date when the monthly rental is to be increased The Leaseback Agreements are on a Triple Net Basis with the effect that, the Trustee shall not have any responsibility of any kind or nature whatsoever to maintain, repair, improve, alter or in any way incur any expenses in connection with the Property 1 (including but not limited to the cost for rectification of defects, payment of the supply of utilities, quit rent, assessment, other capital expenditure or the engagement of a facilities manager). 2.6 Salient terms of the Leaseback Agreement 2 Upon completion of Proposed Acquisition 2, the Trustee (on behalf of Atrium REIT) will leaseback Property 2 to Lumileds pursuant to the Leaseback Agreement 2. Save as disclosed below, the salient terms of the Leaseback Agreement 2 in respect of Property 2 are substantially the same as Leaseback Agreement 1: Rental sum Terms Details Rental sum Property 2 Year 1 Rental rate (based on NLA) RM3.00 per square feet Year 1 Annual rental RM10,748,484 Year 1 Gross rental yield 8.23% The above rental sum is subject to yearly increase of 3% during the Term 12

13 2.6.2 Greenfield development on Property 2 At any time during the Term, Lumileds may wish to develop the greenfield land ( Greenfield Land ) for the purpose of expansion. The parties agree that the Greenfield Land shall be developed based on built-to-suit basis to meet the requirements of Lumileds s usage of the building(s) to be constructed in respect of the Greenfield Land ( Greenfield Development ) and the parties shall negotiate in good faith on the terms and conditions which are to be mutually agreed upon in relation to the Greenfield Development. In such event, Lumileds shall notify the Trustee of its intention to develop the Greenfield Land and Trustee shall have the option to undertake the Greenfield Development whether solely or jointly with Lumileds at Lumileds own costs and expenses. The Trustee shall at all times consult with Lumileds on all decisions and matters pertaining to the Greenfield Development. Upon completion of the construction of building(s) in respect of the Greenfield Development ( Greenfield Building(s) ):- (a) (b) the Greenfield Building(s) shall form part of Property 2 in respect of the sublease and Lumileds shall have the right to maintain, occupy and operate in the Greenfield Building(s) during the Term or the renewal term, as the case may be; and the monthly rental will be adjusted to account for the additional area of the Greenfield Building(s) at a rate to be mutually agreed upon by the parties. 2.7 Basis and justification for the Purchase Considerations The Purchase Considerations were arrived at on a willing-buyer willing-seller basis after taking into consideration the market value of the Properties. The Independent Valuer had, in the Valuation Letter, adopted the market value derived from the investment method of valuation as fair representation of the market value of the Properties, taking into consideration that the Properties will be leased to Lumileds for a period of 15 years on a triple net lease basis pursuant to the Leaseback Agreements as set out in Sections 2.5 and 2.6 above. The valuation is also supported by the market value derived from the cost approach. The market value is defined as the estimated amount for which a property should exchange on the date of valuation between a willing-seller and a willing-buyer in an arm s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The Purchase Consideration 1 of RM50.0 million for Proposed Acquisition 1 represent a discount of RM1.0 million or 1.96% to the appraised market value of the Property 1 of RM51.0 million derived from both the investment method and cost method. The Purchase Consideration 2 of RM130.0 million represents a premium of RM10.0 million or 8.33% to the appraised market value of the Property 2 of RM120.0 million derived from both the investment method and the cost method. The premium of RM10.0 million also takes into consideration, amongst others, the Leaseback Agreement 2, the scarcity of available industrial properties in Bayan Lepas industrial zone and the Greenfield Development disclosed in Section above. 2.8 Mode of satisfaction for the Purchase Considerations and the source of funding The Purchase Considerations will be funded through a combination of proceeds from the Proposed Placement, Proposed Rights Issue and bank borrowings. The actual breakdown of funding has not been determined at this juncture and will depend upon amongst others, the actual placement and rights issue size as well as the issue price of the Placement Units and Rights Units as set out in Sections 3 and 4 below. 13

14 2.9 Liabilities to be assumed Save for the obligations and liabilities arising from or in connection with the Option Agreement, SPAs and Leaseback Agreements, there are no other liabilities, contingent liabilities and/or guarantees to be assumed by Atrium REIT pursuant to the Proposed Acquisitions Additional financial commitment Save for the borrowings to be secured and the fund raising exercise to be undertaken to fund the Proposed Acquisitions and related expenses for the transactions being contemplated (such as the costs for the transfer of the Properties and the renewal expenses relating to the Lease Extension), Atrium REIT does not expect to incur any other additional financial commitments arising from the Proposed Acquisitions. 3. PROPOSED PLACEMENT 3.1 Details of the Proposed Placement The Manager proposes to undertake the Proposed Placement to part fund the Proposed Acquisitions. The Proposed Placement will involve the issuance of up to 24,360,200 new Units, representing up to 20% of the existing approved fund size of Atrium REIT of 121,801,000 Units. The unitholders at the Sixth Annual General Meeting ( AGM ) of Atrium REIT held on 26 April 2018 approved, amongst others, the authority to allot and issue new Units of up to 20% of the approved fund size of Atrium REIT based on Paragraph of the Guidelines on Real Estate Investment Trusts issued by the SC. As such, the Proposed Placement is not subject to the further approval of unitholders. The Proposed Placement may be implemented in tranches within 6 months from the date of approval of Bursa Malaysia Securities Berhad ( Bursa Securities ) for the listing of and quotation for the Placement Units, or any extended period as may be approved by Bursa Securities subject to, amongst others, the prevailing market conditions and investors interests at the point of implementation. 3.2 Allocation to placees The Placement Units will be placed out to third party investors to be identified where such investors will be persons falling under Schedules 6 and 7 of the Capital Markets and Services Act, 2007 ( CMSA ). In accordance with Paragraph 6.59(1A)(b) of the Main Market Listing Requirements of Bursa Securities ( Listing Requirements ), placement to any single placee must not exceed 10% of the total number of Placement Units to be issued under the Proposed Placement. 3.3 Basis of determining the issue price of the Placement Units The issue price for the Placement Units will be determined and announced at a later date by the Board after obtaining the relevant approvals. The issue price for the Placement Units will be based on the 5-day volume weighted average market price ( VWAP ) of Atrium Units at a discount of not more than 10% after taking into consideration, amongst others, the prevailing market conditions and market price of the Units immediately prior to the price-fixing date. For illustrative purposes, the indicative issue price for the Placement Units is assumed to be RM1.10 per Placement Unit, which represents a discount of RM0.03 or 2.65% to the 5-day VWAP of Atrium Units up to and including 11 February 2019, being the latest practicable date prior to this announcement ( LPD ) of RM

15 3.4 Use of proceeds The exact amount of proceeds to be raised from the Proposed Placement will be dependent on the issue price and actual number of Placement Units to be issued. For illustrative purposes, assuming the maximum number of Placement Units are issued at an issue price of RM1.10 per Unit, the Proposed Placement is expected to raise total gross proceeds of approximately RM26.80 million to be used by Atrium REIT in the following manner:- Purpose Amount (RM 000) Estimated timeframe for use of proceeds from the date of listing of the Placement Units Partial payment for the Proposed Acquisitions 26,196 Within 6 months Defray estimated expenses relating to the 600 Within 1 month Proposed Placement Total 26,796 In the event the Proposed Acquisitions are terminated for whatever reason, the total net proceeds from the Proposed Placement will be utilised for other future acquisitions of Atrium REIT. 3.5 Ranking of the Placement Units The Placement Units will, upon allotment and issue, rank pari passu in all respects with the existing Units, save and except that the Placement Units will not be entitled to any distributable income, rights, benefits, entitlements and/or any other distributions declared, made or paid where the entitlement date is prior to the allotment and issue of the Placement Units. 3.6 Listing of and quotation for the Placement Units The Placement Units will be listed and quoted on the Main Market of Bursa Securities. Applications will be made to Bursa Securities for the listing of and quotation for the Placement Units on the Main Market of Bursa Securities. 4. PROPOSED RIGHTS ISSUE 4.1 Basis and quantum The Proposed Rights Issue entails the issuance of up to 58,464,480 Rights Units on a renounceable basis of 2 Rights Units for every 5 existing Atrium Units held by the entitled unitholders whose names appear in the Record of Depositors of Atrium REIT on the entitlement date to be determined later ( Entitlement Date ) ( Entitled Unitholders ) after the completion of the Proposed Placement. The Rights Units will be provisionally allotted to the Entitled Unitholders after obtaining all the relevant approvals in respect of the Proposed Rights Issue. The Proposed Rights Issue is renounceable in full or in part. Accordingly, the Entitled Unitholders can subscribe for and/or renounce their entitlements to the Rights Units in full or in part. The issue price of the Rights Units will be determined by the Board at a later date, based on a discount that is deemed appropriate after taking into consideration, amongst others, the theoretical ex-price of Atrium Units based on the 5-day VWAP of Atrium Units immediately preceding the price-fixing date. 15

16 4.2 Ranking of the Rights Units The Rights Units will, upon allotment and issue, rank pari passu in all respects with the existing Units, save and except that the Rights Units will not be entitled to any distributable income, rights, benefits, entitlements and/or any other distributions declared, made or paid where the entitlement date is prior to the allotment and issue of the Rights Units. 4.3 Listing of the Rights Units The Rights Units will be listed and quoted on the Main Market of Bursa Securities. Applications will be made to Bursa Securities for the listing of and quotation for the Rights Units on the Main Market of Bursa Securities. 4.4 Unitholders undertakings and underwriting arrangement The Proposed Rights Issue is intended to be undertaken on a full subscription basis. The Manager intends to procure irrevocable undertakings from certain unitholders, namely Chan Kam Tuck and Glory Blitz Industries Sdn Bhd as well as the Manager, to subscribe in full for their respective entitlements under the Proposed Rights Issue based on their unitholdings in Atrium REIT as at the Entitlement Date ( Undertakings ). The remaining portion of the Rights Units for which no undertaking has been obtained will be fully underwritten where the underwriting arrangement will be in place prior to the announcement of the Entitlement Date for the Proposed Rights Issue. 4.5 Utilisation of proceeds The exact amount of proceeds to be raised from the Proposed Rights Issue will be dependent on the issue price and actual number of Rights Units to be issued. For illustrative purposes, assuming the maximum number of Rights Units are issued at an issue price of RM1.00 per Unit, the Proposed Rights Units is expected to raise total gross proceeds of approximately RM58.46 million to be used by Atrium REIT in the following manner:- Purpose Amount (RM 000) Estimated timeframe for use of proceeds from the date of listing of the Rights Units Part finance Proposed Acquisition 2 and its 57,065 Within 6 months related expenses Defray estimated expenses relating to the 1,400 Within 1 month Proposed Rights Issue Total 58, INFORMATION ON THE VENDOR AND THE LESSOR 5.1 Background information on Lumileds Lumileds was incorporated in Malaysia under the Companies Act, 1965 as a private limited company on 25 November Lumileds is a wholly-owned subsidiary of Lumileds International B.V., a private company with limited liability incorporated in the Netherlands. Lumileds group is headquartered in San Jose, California, with operations in US, Germany, China, Singapore, Malaysia and the Netherlands and sales offices throughout the world. Lumileds is principally involved in the manufacturing and sale of light emitting diodes (LED) based lighting products. As at the LPD, the directors of Lumileds are Iruthaya Das A/L Arulanadam, Dato Dr Mohd Sofi bin Osman and Sow Yeek Kooi. As at the LPD, the shareholders of Lumileds are as follows:- 16

17 Shareholders Direct Indirect No. of shares % No. of shares % Lumileds International B.V. 536,095, (Source: The management of Lumileds) 5.2 Background information on PDC PDC was established on 17 November 1969 and is the premier development agency of the State Government of Penang. Its principal activities include being the government think-tank, industrial park development, township development, urban redevelopment, affordable housing and investments. As at 16 January 2019, the board members of PDC are Chow Kon Yeow, Dato Ir. Hj. Ahmad Zakiyuddin bin Abd Rahman, Prof Dr P Ramasamy A/L Palanisamy, Jagdeep Singh Deo A/L Karpal Singh, Zairil Khir Johari, Dato Seri Lee Kah Choon, Dato Seri Farizan bin Darus, Dato Sarul Bahiyah binti Haji Abu, Tajol Azhar bin Md Tahir, Khiruddin Said and Dr. Shahrazat binti Hj Ahmad. 6. RATIONALE FOR THE PROPOSALS 6.1 Proposed Acquisitions Since listing on the Main Market of Bursa Securities, the Manager has been primarily focusing on growing Atrium REIT organically through its existing portfolio of assets, all of which are located in Selangor, Malaysia. The Manager has also been actively identifying and pursuing potential acquisition targets to expand Atrium REIT s footprint in the industrial property market. The Manager believes that the Proposed Acquisitions represent a good opportunity for Atrium REIT to expand its existing portfolio of investment properties. The Properties are located in Bayan Lepas, Pulau Pinang, which is a mature industrial estate, home to various multinational firms with close proximity to the airport and the Second Penang Bridge. Further, Property 1 is situated within the Bayan Lepas Free Industrial Zone, which is suitable for export-oriented electronic manufacturers due to tax exemptions on custom duties, taxable services and imports/exports on selected equipment and raw materials. It is also pertinent to note that the rental contribution of Property 2 is higher than Property 1 and Atrium REIT may enjoy a higher rental rate once the Greenfield Development as set out in Section above is completed. As such, the Manager believes that the Properties have good prospects given the strategic location of the Properties and the scarcity of vacant industrial lots in Penang. Pursuant to the Proposed Acquisitions, the Properties will provide Atrium REIT with a stable and sustainable income stream through the Leaseback Agreements for a committed triple net lease period of 15 years augmented by a rental escalation of 3% every year. It is also pertinent to note that the Lessee of the Properties has strong credit standing given that Lumileds is a blue chip multinational company with strong balance sheet and financial standing. Lumileds is one of the world's leading manufacturers of high-power LEDs and a pioneer in the use of solid-state lighting solution for everyday purpose (including automotive lighting, traffic signalling, signage, LCD backlighting and general lighting). For the FYE 31 December 2017, Lumileds recorded a profit after tax of approximately RM million with a total assets of RM2.05 billion. 17

18 The Proposed Acquisitions will also strengthen Atrium REIT s position as a sizeable REIT. The Proposed Acquisitions will enlarge the net lettable area of Atrium REIT by 488,501 square feet or 49.18% from the existing size of 993,216 square feet to 1,481,717 square feet. The total asset value of Atrium REIT will also increase from approximately RM million as at 31 December 2018 to RM million, representing an increase of approximately 59.42% or RM million. Premised on the above, the Manager believes that the Proposed Acquisitions meet the investment objectives of Atrium REIT and fits in with Atrium REIT s key objectives of acquiring strategic yield accretive industrial properties to grow its income base investment portfolio of industrial properties. 6.2 Proposed Placement (i) (ii) (iii) The Proposed Placement will enable Atrium REIT to raise the necessary funds expeditiously to part fund the Proposed Acquisitions as detailed in Section 3.4 of this announcement; The Proposed Placement represents a good opportunity for Atrium REIT to attract potential investments from strategic institutional investors; and The Proposed Placement will increase the number of Units in circulation which may potentially widen Atrium REIT s unitholders base and enhances the liquidity and trading of its Units. 6.3 Proposed Rights Issue (i) (ii) (iii) The Proposed Rights Issue will enable Atrium REIT to raise funds without incurring interest cost, as compared to bank borrowings. The funds raised will be utilised to part-finance Proposed Acquisition 2, which is expected to contribute positively towards the future earnings of Atrium REIT; The Proposed Rights Issue will increase the number of Units in circulation and may lead to an improvement in the trading liquidity of Atrium REIT; and The Proposed Rights Issue will provide the Entitled Unitholders with the opportunity to increase their equity participation in Atrium REIT via the subscription of the Rights Units without diluting the existing unitholders percentage unitholdings assuming all Entitled Unitholders fully subscribe for their respective entitlements. 7. INDUSTRY OVERVIEW AND PROSPECTS 7.1 Overview and outlook of the Malaysian economy The Malaysian economy recorded a sustained growth of 4.4% in the third quarter of 2018 (second quarter ( 2Q ) 2018: 4.5%), supported by expansion in domestic demand amid a decline in net exports growth. Private sector expenditure remained the key driver of growth, expanding at a faster pace of 8.5% (2Q 2018: 7.5%), while public sector expenditure turned around to register a positive growth of 1.1% (2Q 2018: -1.4%). On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 1.6% (2Q 2018: 0.3%). Domestic demand expanded at a faster pace during the quarter (6.9%; 2Q 2018: 5.6%), driven by private sector activity. Private consumption growth accelerated to 9.0% (2Q 2018: 8.0%). Household spending was boosted in July and August 2018, following the zerorisation of the Goods and Services Tax (GST) rate, particularly on durable goods such as motor vehicles and furnishings, as well as food and beverages. Continued expansion in income and employment provided key support to household spending. 18

19 On the sectoral front, growth was mainly affected by lingering commodity-specific supply shocks. Nevertheless, the impact on overall growth was mitigated by expansions in the other economic sectors, mainly the services, manufacturing and construction sectors which account for 82% of the economy. During the quarter, the manufacturing sector registered sustained growth, as improvements in the electrical and electronic ( E&E ) and consumer-related clusters offset softer growth in primary-related output. Faster expansion in the E&E and consumer-related cluster was accounted by higher production of consumer-based electronics, household appliances, passenger cars and auto parts, following higher spending on durable goods during the tax holiday period. Manufacture of construction related materials was sustained in line with activity in the construction sector. Primary-related output growth, however, slowed further during the quarter, weighed by lower output of natural feedstocks such as crude palm oil and natural gas. (Source: Economic and Financial Developments in the Malaysian Economy in the Third Quarter of 2018, Quarterly Bulletin, Bank Negara Malaysia) 7.2 Overview and prospects of the property sector in Malaysia Market activity recorded a total of 149,889 transactions valued at RM67.74 billion, down by 2.4% in the number and 0.1% in value compared to the first half ( H1 ) The residential sub-sector continued to lead the overall market, with a contribution of 62.8% and 46.7% in volume and value respectively. However, this sub-sector recorded a slight decrease of 0.8% and 3.6% in the number and value respectively. Commercial and industrial sub-sectors recorded upward movements in the volume, increased by 3.5% and 3.8% respectively. The industrial sub-sector recorded 2,514 transactions worth RM7.41 billion an increase of 3.8% and 37.4% in volume and value respectively. Selangor continued to dominate the market, with 33.4% of total, followed by Johor and Perak, with 12.7% and 11.9% market share respectively. The industrial overhang continued to increase, recording a total of 1,021 units with a value of RM1.68 billion (Second half ( H2 ) 2017: 999 units worth RM1.51 billion). The unsold under construction units decreased by 10.3% to 822 units compared to H Johor continued to dominate most of the overhang units (50.6%; 517 units). Terraced units formed the bulk of the unsold completed units (40.1%; 409 units). Semi-detached units dominated the unsold under construction (41.8%; 344 units) and unsold not constructed categories (100%; 100 units). The industrial sub-sector recorded more starts, up 54.4% to 403 units while the new planned supply recorded an increase of 34.4% to 301 units. Completed units showed a decrease of 50.9% to 573 units compared to the same period of the previous year. As at end-june 2018, there were 114,393 existing industrial units with another 5,410 units in incoming supply and 7,096 units in planned supply. Prices of industrial property showed a mixed performance. One and a-half storey semidetached factory located in prominent areas of Johor remained firm. On a different note, one and a-half storey terrace factory in Perindustrian Gembira and Perindustrian Tampoi Jaya saw prices softening, declined by 15.8% and 13.0% respectively. In Pulau Pinang, prices of one and a-half storey terrace factories in Diamond Valley, Barat Daya were transacted ranging from RM1.72 million to RM1.84 million per unit, increased by 12.6% due to limited supply for the property type. (Source: Property Market Report First Half 2018, Valuation and Property Services Department, Ministry of Finance Malaysia) 19