1. INFORMATION REGARDING the LEASEHOLD TITLE to the PROPERTIES 1.1 City One Shatin Property City One Shatin Property Is Held
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APPENDIX 5 SUMMARY OF GOVERNMENT LEASES, DEEDS OF MUTUAL COVENANT AND PROPERTY COMPANY STRUCTURE 1. INFORMATION REGARDING THE LEASEHOLD TITLE TO THE PROPERTIES 1.1 City One Shatin Property City One Shatin Property is held from the Government for the residue of the term of 99 years less the last three days thereof commencing from 1 July 1898 (the said term is extended until 30 June 2047 by virtue of Section 6 of the New Territories Leases (Extension) Ordinance 1988) under a Government Lease of Sha Tin Town Lot No. 1 deemed to have been issued under and by virtue of Section 14(3) of the Conveyancing and Property Ordinance (Chapter 219 of the Laws of Hong Kong) upon compliance with the conditions precedent contained in certain Agreement and Conditions of Sale deposited and registered in the Land Registry as New Grant No. 11064, which was dated 30 October 1975 and made between Paramatta Investment Company Limited and the Deputy Secretary for the New Territories for and on behalf of the Governor of Hong Kong as varied and modified by three Modification Letters respectively registered in the Land Registry by Memorial No. ST180771, ST184534 and ST334013 and a No-objection letter registered in the Land Registry by Memorial No.ST400998 (such compliance being evidenced by a Certificate of Compliance dated 31 July 1990 and registered in the Land Registry by Memorial No.ST571878). Under Special Condition 5(a) of the Government Lease, Paramatta Investment Company Limited (“Paramatta”), the grantee of the Government Lease, to the intent that this obligation shall be binding upon it personally during the whole of the lease term as well as on its successors and assigns, shall at its own proper costs and charges including such costs and charges recoverable under the Deed of Mutual Covenant in respect of the development erected on Sha Tin Town Lot No. 1 throughout the lease term (notwithstanding that it has assigned, mortgaged, underlet, parted with the possession of or otherwise disposed of such Lot or some interest therein) well and sufficiently manage, repair, uphold, support, maintain, pave, purge, scour, cleanse, empty, amend and keep such Lot and all buildings and structures erected or to be erected thereon and all walls, banks, cuttings, hedges, ditches, rails, lights, pavements, privies, sinks, drains, channels, watercourses, roads, paths, gardens, lawns and recreational and other facilities thereunto belonging and which shall in any-wise belong or appertain to the Lot in, by and with all and all manner of needful and necessary reparations, cleansings and amendments whatsoever the whole to be done to the satisfaction of the Secretary for the New Territories. In respect of the two non-domestic units on the ground floor of Block 17 and Block 23 of the residential towers of City One Shatin (the “two units”), in 1981, Paramatta entered into sale and purchase agreements (“Paramatta SPAs”) to sell, among other things, the two units to King Hong Development Company Limited (“King Hong”). King Hong paid the purchase price in full to Paramatta upon signing of the Paramatta SPAs, but the parties did not enter into an assignment of the two units. In 1990, when Paramatta sold the two units to a Property Company — Maxon Investment Limited, which is the predecessor in title to another Property Company — Million Nice Development Limited, King Hong was not a party to assign its title to, or to confirm the assignment of, the two units. Therefore, Million Nice Development Limited holds the legal title to the two units as a bare trustee on behalf of King Hong, and King Hong retains the beneficial title to the two units. Legally, Fortune REIT may be required by King Hong, as the beneficial owner of the two units, to assign the ownership of such units to King Hong and to account to King Hong all income arising from the letting of the two units since their acquisition by Fortune REIT. Based on information currently available to the Manager, it understands that King Hong has been dissolved since November 2005. At the time when Fortune REIT acquired City One Shatin Property in 2005, the vendor has given an indemnity in favour of Maxon Investment Limited and Million Nice Development Limited against, among other things, all losses and liabilities that any of those V-1 APPENDIX 5 SUMMARY OF GOVERNMENT LEASES, DEEDS OF MUTUAL COVENANT AND PROPERTY COMPANY STRUCTURE Property Companies suffers or incurs directly or indirectly upon account of or in respect of or arising under the Paramatta SPAs. The value contribution by the two units to Fortune REIT has been negligible. In respect of the roof (referred to in this paragraph as the “roof”) of Ngan Shing Commercial Centre (Commercial Block A) (referred to in this paragraph as the “building”), it is unclear from the Sub-Deed of Mutual Covenant of the building whether the roof forms part of City One Shatin Property, in which case Fortune REIT has title to it, or it forms part of the common areas of the building, in which case Fortune REIT has no title to it. The roof generates no income and has no commercial value. 1.2 Ma On Shan Plaza Ma On Shan Plaza is held from the Government for the residue of the term of years from 6 December 1991 until 30 June 2047 under a Government Lease of Sha Tin Town Lot No. 382 deemed to have been issued under and by virtue of Section 14(3) of the Conveyancing and Property Ordinance (Chapter 219 of the Laws of Hong Kong) upon compliance with the conditions precedent contained in certain Agreement and Conditions of Grant deposited and registered in the Land Registry as New Grant No. 12378, which was dated 6 December 1991 and made between Poko Shine Limited, as grantee and the District Lands Officer, Sha Tin for and on behalf of the then Governor of Hong Kong as varied and modified by three Modification Letters respectively registered in the Land Registry by Memorial Nos. ST731682, ST769520 and ST890100 (such compliance being evidenced by a Certificate of Compliance dated 10 October 1996 and registered in the Land Registry by Memorial No. ST904760). Under Special Condition 20 of the Government Lease: (i) Poko Shine Limited (excluding its assigns) has a personal obligation to manage and maintain two single storey footbridges constructed by Poko Shine Limited under the terms of the Government Lease (referred to in this paragraph as the “footbridges”) in good and substantial repair and condition in all respects to the satisfaction of the Director of Lands; and (ii) Poko Shine Limited has to indemnify the Government (its officers, agents, contractors and workmen or other authorised personnel) from and against all liability and actions, proceedings, costs, claims and expenses, loss and damages etc arising out of, inter alia, the repair and maintenance of the footbridges. Special Condition 33(viii) of the Government Lease further provides that Poko Shine Limited shall not assign or otherwise dispose of or part with possession of, except as a whole, the undivided shares allocated to the parts of the Podium at Level 2 and Level 3 of the commercial development comprised in Ma On Shan Plaza (referred to in this paragraph as the “commercial areas”) except that it may underlet the commercial areas or part(s) thereof for non-renewable terms of not more than 10 years at a time (or for renewable terms where the aggregate of the original term and the term so renewed does not exceed 10 years). 1.3 Metro Town Metro Town is held from the Government for the residue of the term of 50 years commencing on 11 February 2003 and expiring on 10 February 2053 created by a Government Lease deemed to have been issued pursuant to the Conveyancing and Property Ordinance (Chapter 219 of the Laws of Hong Kong) upon compliance of all the conditions precedent contained in an Agreement and Conditions of Grant registered in the Land V-2 APPENDIX 5 SUMMARY OF GOVERNMENT LEASES, DEEDS OF MUTUAL COVENANT AND PROPERTY COMPANY STRUCTURE Registry as New Grant No.SK9700 as varied or modified by a Modification Letter registered in the Land Registry by Memorial No.SK626197 (such compliance being evidenced by a Certificate of Compliance dated 16 April 2008 and registered in the Land Registry by Memorial No. 08042202080013). Adjacent to and outside the lot where Metro Town is located, there is a footbridge (referred to in this paragraph as the “footbridge”), which can be used by the general public. Under the Government Lease of Metro Town, it is a condition that the grantee (i.e., MTR Corporation Limited) shall erect and maintain the footbridge, which was erected by MTR Corporation Limited pursuant to the Government Lease at a location outside the lot on which Metro Town stands, and therefore, the footbridge is not part of Metro Town to which MTR Corporation Limited had title. However, the footbridge is included in the definition of the Commercial Development under the Deed of Mutual Covenant of Metro Town. When Fortune REIT, through Mega Gain Resources Limited, acquired Metro Town from MTR Corporation Limited, the footbridge was assigned to Mega Gain Resources Limited as part of the Commercial Development. As the owner of the Commercial Development, Fortune REIT is obliged to maintain the footbridge. Under the relevant assignment of the Commercial Development, Mega Gain Resources Limited covenanted with MTR Corporation Limited to manage, repair and maintain the footbridge and any replacement or substitution thereof in good and substantial repair and condition, and that if Metro Town ceases to be held by one single owner, the footbridge shall become or form part of the common areas of Metro Town and each of the co-owners of Metro Town shall then contribute to the expenses for the management, repair and maintenance of the footbridge.