(Unless otherwise stated, the words and abbreviations used herein shall have the same meaning as those defined in the announcements dated 18 January 2018, 15 May 2018, 31 July 2018, 5 October 2018 and 17 December 2018)

Further to the Company’s announcements dated 18 January 2018, 15 May 2018, 31 July 2018, 5 October 2018 and 17 December 2018, Sime Property wishes to inform the following additional information:

i) Basis of arriving at the consideration and justification for the consideration

As stated in our announcement dated 17 December 2018, the Proposed Disposal is structured to fund the costs to deliver the Phase 2 Commercial Property whilst providing Battersea Phase 2 Holdco with the ability to generate performance-based profits over a 5-year period post practical completion of the entirety of the Power Station building. The consideration also provides the JVCo with a 5-year rental income guarantee equivalent to a 5% yield on the Base Price paid.The 5% yield on the Base Price was deemed the average norm for the expected return on such similar assets.

ii) Rationale for the transaction

Sime Property is principally a property developer and the Proposed Disposal of such a material long-term investment property, would enable Sime Property to focus its resources on its core activities of securing the development profit of its 40% interest in Battersea Project Holding Company Limited (“BPHCL”). It would also enable Sime Property to more efficiently manage the capital structure of our overall businesses.

The Proposed Disposal would provide increased certainty of investment return to Sime Property as development partners. It is also an opportune timing, given the considerable progress which has been made regarding construction and procurement and that more than 50% of the commercial space available in the Power Station building has already been let as office space to Apple for their new London Campus and to No18, a business members club owned by IWG.

The proposed disposal will create a long-term asset management and ownership structure of the iconic building. Both PNB and EPF are long-term asset holders. The Proposed Disposal is essentially a reorganisation of the ownership of the Phase 2 Power Station Commercial Property, by virtue that PNB is our substantial shareholder and together with the funds managed by its subsidiary, Amanah Saham Nasional Berhad holding approximately 54% interest in Sime Property and, EPF is our major shareholder holding 11% interest in Sime Property and also has a direct 20% holding in BPHCL.  

iii) Risks in relation to the transaction

The risk in relation to the transaction is pursuant to the Rental Guarantee.

Following practical completion of the entirety of the Power Station building, Battersea Phase 2 Holdco will provide the JVCo with a 5-year rental income guarantee (net operating income) (“NOI”) equivalent to a 5% yield on the Base Price paid. This equates to a total annual payment of £79.15 million per year over a 5-year period. This amount will be funded from the top up payment and the actual net rental income generated by the Phase 2 Commercial Property. In the event the top up payment and the actual net rental income are not sufficient to meet the Rental Guarantee, the SPA obliges Battersea Phase 2 Holdco to provide any additional funds that may be required to meet the Rental Guarantee.     

iv) Approvals required/subject to the transaction (if any)

As stated in our announcement dated 17 December 2018, the Proposed Disposal is not regarded as a related party transaction pursuant to the Main Market Listing Requirements of Bursa Malaysia Securities Berhad as it involves the transaction by Battersea Phase 2 Holdco, a wholly owned subsidiary of BPHCL, which is in turn a 40% owned joint venture company of Sime Property.

Accordingly, the transaction is not subject to the approval of the shareholders. 

The transaction is also not subject to any other regulatory approvals. 

v) Financial effects on the transaction on EPS, net assets per share, gearing, share capital and substantial shareholder’s shareholding

As stated in our announcement dated 17 December 2018, the financial implications of the Proposed Disposal are expected to remain neutral for Battersea Phase 2 Holdco until the asset delivery and leasing have been substantially completed.

Hence, the Proposed Disposal will not have a material effect on the EPS, net assets per share, gearing, share capital and substantial shareholder’s shareholding of Sime Property for the financial period ending 31 December 2018.

This announcement is dated 20 December 2018.