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Extension Event Under The Earn-Out Agreement In Relation To The Acquisition Of Oasia Hotel Downtown

BackNov 25, 2022

Other Issuer(s) for Stapled Security
Name DBS TRUSTEE LIMITED
Announcement Title	General Announcement
Date & Time of Broadcast	Nov 25, 2022 19:32
Status	New
Announcement Sub Title	Extension Event Under The Earn-Out Agreement In Relation To The Acquisition Of Oasia Hotel Downtown
Announcement Reference	SG221125OTHR4D40
Submitted By (Co./ Ind. Name)	Gerald Lee Hwee Keong
Designation	Executive Director and Chief Executive Officer
Description (Please provide a detailed description of the event in the box below)	The Managers refer to: (i) the announcement dated 12 January 2018 titled "Acquisition of Oasia Hotel Downtown"; (ii) the circular to stapled securityholders of Far East Hospitality Trust ("Far East H-Trust") dated 13 February 2018 (the "Circular"); (iii) the announcement dated 2 April 2018 titled "Completion of the Acquisition of Oasia Hotel Downtown"; and (iv) the announcement dated 29 October 2020 titled "Extension Event under the Earn-Out Agreement in relation to the Acquisition of Oasia Hotel Downtown". Unless otherwise defined herein, all capitalised terms in this announcement shall have the meanings ascribed to them in the Circular. In connection with the acquisition of Oasia Hotel Downtown (the "Property"), DBS Trustee Limited, in its capacity as trustee of Far East H-REIT (the "REIT Trustee" ), and Far East SOHO Pte. Ltd. (the "Vendor") had entered into an earn-out agreement (the "Earn-out Agreement") on 2 April 2018. Pursuant to the Earn-out Agreement, the REIT Trustee will issue an aggregate of S$15.0 million worth of stapled securities of Far East H-Trust (the "Earn-out Stapled Securities") to the Vendor if, during the Earn-out Period, the net property income ("NPI") of the Property is at least S$9.9 million per annum (the "Target NPI PA") for two full consecutive years as determined in accordance with the Earn-out Agreement, the Earn-out Event Condition is deemed to have been met. It was announced on 29 October 2020 that an Extension Event has occurred and caused the Earn-out Expiry Date to be extended by one full Fiscal Year from 31 December 2023 to 31 December 2024, in accordance with Clause 2.5 of the Earn-out Agreement. For 2021, as a result of the continuous disruption caused by the Covid-19 pandemic and the various restrictions imposed, which has rendered the Property not fully operational and accessible in the normal course of business as a hotel for more than one month, an Extension Event has occurred and caused the Earn-out Expiry Date to be extended by one more Fiscal Year from 31 December 2024 to 31 December 2025, in accordance with Clause 2.5 of the Earn-out Agreement. For the Earn-out Year 2019, the Target NPI PA of at least S$9.9 million per annum was met for the Property. As the Specific Target NPI PA for the Earn-Out Year 2021 is not achieved, the Earn-Out Year 2021 will be regarded as a Disrupted Year and Earn-Out Year 2020 and Earn-Out Year 2021 will be regarded as Disrupted Years, and pursuant to Clause 2.1.1(ii)(b) of Earn-out Agreement, the Second Consecutive Earn-Out Year will refer to 2022, being the Fiscal Year immediately following the Earn-Out Year 2021. The Managers will provide further update(s) as and when there are material developments.