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80% Equity Interest of Baishizhou Urban Renewal Project Injected Into LVGEM Author: CHINA LVGEM

(25 August 2020, Hong Kong) LVGEM (China) Real Estate Investment Company Limited (“LVGEM (China)” or the “Company” or together with its subsidiaries, the “Group”, stock code: 95.HK) is pleased to announce a connected transition to subscribe for new shares in 3 target companies, namely Affluent Trade Investment Limited (“Affluent Trade”), Victor Success Investment Limited (“Victor Success”) and Multiple Ally Limited (“Multiple Ally”) with Mr. Wong Hong King, a controlling shareholder of the Company (“Mr. Wong”). Upon completion of the subscription agreements (the “Completion”), together with the 25% equity interest injected on 28 October 2019, LVGEM (China) will hold an 80% equity interest in the Baishizhou Urban Renewal Project (“Baishizhou Project”).

Affluent Trade, Victor Success and Multiple Ally respectively hold 25%, 24% and 26% equity interest of Intelligent City Development Limited (indirectly held as to 25% by the Company, its indirect wholly-owned subsidiary, the Project Company, mainly engaged in the development in the Baishizhou Project). Upon Completion, LVGEM (China) will hold 70%, 75% and 75% of Affluent Trade, Victor Success and Multiple Ally respectively. Hence, LVGEM (China) and Mr. Wong will hold an indirect approximately 80% and 20% equity interest in the Baishizhi Project, respectively.

Pursuant to the subscription agreements, the consideration for the subscription shares of Affluent Trade, Victor Success and Multiple Ally is RMB 1,200,000, RMB 1,380,000 and RMB 1,490,000.

The consideration was determined after arm’s length negotiations between the parties to each subscription agreement with reference to the valuation report on each target company conducted by an independent valuer based on the cost approach as at 30 June 2020. The consideration will be funded by the Group’s internal financial resources.

Injection of major equity interest of Baishizhou Project

Brings more benefits in win-win situation

This injection once again demonstrates the Company’s controlling shareholder’s gradual injection of high-quality urban renewal projects he holds into the Company in due course. Upon Completion, the Group directly controls the development of the Baishizhou Project through the Project Company. Accordingly, the Project’s development can be better secured, whilst the Group’s interests would also be protected.

The Group is confident in the outlook of the Shenzhen property market. The PRC government has adopted positive fiscal and monetary policies in the first half of 2020. Compounded with various political and economic advantages that Shenzhen has enjoyed compared to other mainland cities, domestic and overseas investors are stepping into Shenzhen to acquire properties as part of their mid- to long-term investment in the Greater Bay Area due to its special city positioning and its proximity to Hong Kong. The outlook for the Shenzhen commercial and residential property market is expected to remain positive in the long term given the strong demand and robust market confidence. Therefore, the Baishizhou Project will allow the Group to capitalise on the Shenzhen property market and generate returns to the Group in the long term.

In addition, it is believed that it will be beneficial to the Group and the Baishizhou Project and in the best interests of the Company and its shareholders for Mr. Wong to retain an approximate 20% interest. Mr. Wong has more than 40 years’ experience in the real estate industry in the PRC. He has extensive expertise in property development and urban renewal projects, and is well recognised in the market of village redevelopment. Mr. Wong has been planning and negotiating with villagers for the redevelopment of the Baishizhou Project since 2010. Mr. Wong can ensure that the resettlement and redevelopment of the Baishizhou Project can continue to proceed smoothly. The continuing strategic partnership of the Group with Mr. Wong would therefore be conducive to the success of the Baishizhou Project.

The Baishizhou urban renewal project is progressing steadily

The Baishizhou Project, a mega sized urban renewal project, is located on Shennan Avenue, Nanshan District, Shenzhen City and in proximity to Science Park and the sub-district of Overseas Chinese Town. It has a capacity area of 3.58 million square meters and will be developed in three phases. The entire development cycle of the project is expected to be eight to ten years. Currently, the Baishizhou Project is actively advancing its preliminary work.

The Baishizhou Project obtained its approved specific development plan at the end of 2018, and the signing of individual compensation agreement was initiated in July 2019. On 28 October 2019, 25% of the Baishizhou Project’s equity interest was successfully injected into LVGEM (China). Being a market recognized high quality residential and commercial project at a prime location in Nanshan District, Shenzhen City, the Baishizhou Project has also been placed on high expectations for comprehensive social benefits.

Ms. Huang Jingshu, the executive director and chairlady of LVGEM (China) said, “The construction and operation of Baishizhou Project will be further enhanced by the Company’s financial strength, credibility, brand influence, extremely high transparency, and strict internal and external supervision. As a listed company, major equity interest to be injecting when the Baishizhou Project is progressing smoothly, will not only avoid the uncertainty in the early development stage, but also bring a huge boost to the long-term development to LVGEM (China), which will provide strong supports for shareholders’ long-term benefits.”

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