INSIDE INFORMATION ANNOUNCEMENT CONSOLIDATION OF U.S. REAL ESTATE FUND PLATFORM - HKEX :: HKEXnews
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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no
responsibility for the contents of this announcement, make no representation as to its accuracy or
completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or
in reliance upon the whole or any part of the contents of this announcement.
Gemini Investments (Holdings) Limited
盛 洋 投 資（控 股）有 限 公 司
(Incorporated in Hong Kong with limited liability)
(Stock Code: 174)
INSIDE INFORMATION ANNOUNCEMENT
CONSOLIDATION OF U.S. REAL ESTATE FUND PLATFORM
This announcement is made by Gemini Investments (Holdings) Limited (the “Company”, and
together with its subsidiaries, the “Group”) pursuant to Rule 13.09 of the Rules Governing the
Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and the
Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the Securities
and Future Ordinance (Chapter 571 of the Laws of Hong Kong).
References are made to the announcements of the Company dated 31 December 2014 and 22 August
2015 and the circular of the Company dated 23 June 2015 (the “Circular”) in relation to, among
others, subscription of 45% membership interests in Gemini-Rosemont Realty LLC (“NewSub” or
“GR Realty”). Capitalised terms used herein shall have the same meanings as defined in the Circular
unless the context requires otherwise.
As disclosed in the Circular, GR Realty was established as a jointly controlled and managed
investment platform of the Group to engage in the ownership and/or management of property
investment portfolio comprising commercial real estate in the United States. The NewSub Operating
Agreement (as amended, restated or otherwise modified from time to time) provides for the
management of the business and the affairs of GR Realty, the allocation of profits and losses, the
distribution of cash of GR Realty among the members, the rights, obligations and interests of the
members to each other and to GR Realty, and certain other matters.
—1—NewSub Operating Agreement
The Company wishes to announce that Gemini and other members of GR Realty entered into an
agreement to revise provisions regarding proceedings of the Operating Committee in the NewSub
Operating Agreement (the “Agreement”) on 31 July 2020.
A summary of the key provisions of the Agreement is set out below:
• the Operating Committee shall comprise six managers, (i) three of whom shall be appointed by
Gemini as Class A Member; (ii) one of whom shall be appointed by NPFL as Class A Member;
(iii) one of whom shall be appointed by NPFL as Class B Member; and (iv) one of whom shall
be appointed by the Management Entity as Class B Member;
• all actions of the Operating Committee require the approval of simple majority vote of the
managers; and
• in the event of a deadlock in respect of any actions of the Operating Committee, the managers
designated by a majority in interest of the Class A Members shall determine such action.
As a result of the Agreement, the Group has obtained control in GR Realty. The Group’s underlying
equity interest in GR Realty (i.e. 45%) remains unchanged.
Consolidation of GR Realty
Before the date of the Agreement, GR Realty has been classified as a joint venture of the Group
and accounted for using the equity method in accordance with the Hong Kong Financial Reporting
Standards (the “HKFRS”).
After discussion between the Company and its auditor, they agreed that GR Realty will be classified
as a subsidiary of the Company and the operating performance and financial position of GR Realty
will be consolidated into the financial statements of the Group under the HKFRS after the date of
the Agreement (the “Consolidation”).
For illustrative purpose only, set out below are (i) the key financial information of the Group
extracted from the unaudited condensed consolidated financial statements for the six months ended
30 June 2020 and as at 30 June 2020 respectively, as disclosed in the Company’s 2020 interim
results announcement dated 30 July 2020, and (ii) the key combined financial information of the
resultant Group (the “Resultant Group”) as if the operating performance and financial position of
GR Realty had been combined into the financial statements of the Group for the six months ended 30
June 2020 and as at 30 June 2020 respectively, based on the preliminary estimation by the Company:
—2—Investment properties Properties under development
(HK$ million) (HK$ million)
6.6 times 70%
1,317
11,583
773
1,516
The Group The Resultant Group The Group The Resultant Group
Bank balance and cash Borrowings
(HK$ million) (HK$ million)
74% 11.1 times
1,605
9,280
922
768
The Group The Resultant Group The Group The Resultant Group
Revenue
(HK$ million)
10.7 times
667
57
The Group The Resultant Group
—3—The above information is for illustrative purpose only, is not pro forma financial information under
Rule 4.29 of the Listing Rules and has not been reviewed by the auditors or the audit committee of
the Company.
In addition, as the above information is hypothetical in nature (the Consolidation only being effective
from 31 July 2020), Shareholders and potential investors of the Company are advised to exercise
caution when dealing in the securities of the Company and not to place any excessive reliance on
the above information. The actual impact of the Consolidation will be disclosed in the annual results
announcement of the Company for the year ending 31 December 2020.
Business Outlook
The Group holds 45% membership interests in GR Realty. As at 30 June 2020, the total capital
contribution from the Group directly to GR Realty for its 45% membership interests and certain
syndicated projects controlled by GR Realty was approximately US$118.6 million (equivalent to
approximately HK$919.6 million). The Group’s direct interest in GR Realty, together with interest in
certain syndicated projects controlled by GR Realty, amounted to approximately HK$798.1 million
(representing about 11.2% of the Group’s total assets) as at 30 June 2020.
GR Realty has been providing tailored real estate solutions for investors and tenants for almost three
decades. GR Realty is a fully integrated real estate platform that invests in Class A office properties
in specific target markets in the United States. Its investment approach typically focuses on those
assets with core plus return profile while its development group’s expertise also allows GR Realty to
invest in value-added type of projects. GR Realty currently focuses on coastal gateway and selected
markets that exhibit compelling fundamentals, high liquidity, and improving demographics with a
focus on the tech industries.
As at 30 June 2020, GR Realty and its affiliates’ investment portfolios comprised of approximately
8 million square feet in 34 buildings in 14 states across the United States and the assets under GR
Realty and its affiliates’ management amounted to approximately US$1.5 billion. The corporate
headquarter of GR Realty is located at Los Angeles, which offers great access to industry investors,
partners and markets in the United States and internationally. There are approximately 130
professionals in three strategically located regional operation centers across the United States and
various United States local property offices providing on-site presence which is vital to creating a
competitive advantage.
At the same time, GR Realty has pursued a new business initiative to develop properties from
ground up. GR Realty is committed to enhance its ground-up development capabilities and pipeline,
thereby seizing this new and exciting value add business opportunity.
—4—The Company considers that the Agreement would enable the Group to exercise control over GR
Realty and therefore take a more active role in the management of the business of GR Realty,
including the identification and selection of investment opportunities and the financing of these
opportunities. In addition, the Group will be able to fully leverage on the expertise and relationships
of the management team of GR Realty, who have many years of investment experience in the
acquisition, management and disposition of commercial real properties in the United States.
As disclosed in the completion announcements of the Company dated 17 April 2020 and 27 May
2020, the Company has recently completed equity placing exercises in the second quarter of 2020
(the “Placing Exercises”). The Directors believe that the new Shareholders under the Placing
Exercises would be able to bring in not only funds but also strategic value to the Group, including
more potential sources of financing from the Asia Pacific region for the potential opportunities in
the United States property market identified by GR Realty from time to time.
Under the impact of the outbreak of COVID-19, the economies in China and the United States will
be inevitably affected. However, the Company believes that short-term pressure and adjustments will
create more investment opportunities. The Group is positive on the creation of medium term value
as a result of the repositioning strategy of GR Realty. The Group aims to dedicate more capital and
management resources to the business of GR Realty, strengthen its competitive advantage, capture
sound business opportunities in the United States market more efficiently, and prudently expand its
asset management scale and market influence.
There can be no assurance that any forward-looking statements regarding the business
development of the Group set out in this announcement and any of the matters set out herein
are attainable, will actually occur or will be realised or are complete or accurate. Shareholders
and/or potential investors of the Company are advised to exercise caution when dealing in the
securities of the Company and not to place any excessive reliance on the information disclosed
herein. Any Shareholder or potential investor who is in doubt is advised to seek advice from
professional advisors.
By order of the Board
Gemini Investments (Holdings) Limited
LAI Kwok Hung, Alex
Executive Director
Hong Kong, 31 July 2020
As at the date of this announcement, the Directors of the Company are as follows:
Executive Directors: Non-executive Directors: Independent non-executive Directors:
Mr. SUM Pui Ying Mr. TANG Runjiang Mr. LAW Tze Lun
Mr. LAI Kwok Hung, Alex Mr. WANG Xiao Mr. LO Woon Bor, Henry
Ms. LAM Yee Lan Ms. CHEN Yingshun
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