Key Points of the Announcement

• Art Group Holdings Limited (the “Company”) has entered into two major lease agreements (the “Aggregated Lease Agreements”) relating to significant portions of the Zone C Shopping Mall in Zhengzhou, China.
• The Lease Agreement was executed on 27 April 2026 between China Orient Asset Management Co., Ltd. Hainan Branch (Lessor (1)) and Zhengzhou Yichi Commercial Operation Management Co., Ltd. (Lessee (1)), an indirect non-wholly-owned subsidiary of the Company.
• The Previous Lease Agreement was executed on 22 May 2025 between China Orient Asset Management Co., Ltd. Fujian Branch (Lessor (2)) and Zhengzhou Zhengxu Commercial Operation Management Co., Ltd. (Lessee (2)), also an indirect non-wholly-owned subsidiary of the Company.
• The fair value of the right-of-use assets recognized by the Group under these lease agreements is substantial, amounting to RMB 39.5 million (Lease Agreement as of 1 January 2026), and RMB 22.8 million and RMB 25.1 million (Previous Lease Agreement as of 28 February 2025 and 31 December 2025 respectively).
• The transactions, when aggregated, constitute a discloseable transaction under Hong Kong Listing Rules, requiring public notification and announcement, but not shareholder approval.

Details of the Lease Agreements

1. Lease Agreement (Subject Portion Property (1))

• Date: 27 April 2026
• Property: Level 1 of Zone C Shopping Mall, gross floor area 15,318.48 m²
• Lessor: China Orient Asset Management Co., Ltd. Hainan Branch
• Lessee: Zhengzhou Yichi Commercial Operation Management Co., Ltd. (90% owned by the Group)
• Lease Term: Initial 5 years from 1 January 2026, with automatic 5-year renewal unless objected
• Usage: Commercial operation and management
• Rental Terms:
  • Annual rental increases over the 10-year term, starting from RMB 5,514,652.80/year and rising to RMB 6,703,097.28/year by years 9 and 10
  • Security deposit: RMB 350,000
  • Quarterly rental payments, in advance
• Termination: Lessor can terminate unilaterally under certain events, such as prolonged rental non-payment, unauthorized alterations, illegal activities, or unrectified breaches.

2. Previous Lease Agreement (Subject Portion Property (2))

• Date: 22 May 2025
• Property: Level –1 of Zone C Shopping Mall, gross floor area 6,692.93 m²
• Lessor: China Orient Asset Management Co., Ltd. Fujian Branch
• Lessee: Zhengzhou Zhengxu Commercial Operation Management Co., Ltd. (77.78% owned by the Group)
• Lease Term: From 1 March 2025 to 31 October 2040
• Usage: Commercial operation and management
• Rental Terms:
  • 1 March 2025 – 31 October 2026: RMB 39,000/month (total RMB 780,000)
  • 1 November 2026 – 31 October 2040: RMB 325,000/quarter (total RMB 18,200,000)
  • Security deposit: RMB 100,000
  • Quarterly rental payments, in advance
• Termination: Lessor can terminate unilaterally for similar reasons as above.

Background and Rationale

• The lease agreements concern parts of the Zone C Shopping Mall, previously under a single lease contract (Lease Contract Zone C) with Zhengzhou Hanyuan Real Estate Co., Ltd. However, due to enforcement judgments by the Intermediate People’s Court of Zhengzhou in late 2023, ownership of key portions (Levels 1 and –1) was transferred to the respective Lessors (branches of China Orient Asset Management Co., Ltd.) as settlement for debts.
• Without these new lease agreements, the Group would have lost operational rights over these core mall sections. The new leases allow the Group to maintain its operational footprint and rental income continuity from the Zone C Shopping Mall.
• According to the Group’s PRC legal adviser, the new lease agreements are separate from the original Lease Contract Zone C and not considered supplemental agreements.

Potentially Price-Sensitive Information for Shareholders

• Significant Asset Acquisition: These leases require the Group to recognize major right-of-use assets (RMB 39.5 million, RMB 22.8 million, and RMB 25.1 million), which could impact the Group’s balance sheet and financial ratios.
• Discloseable Transaction: As the aggregated transactions exceed 5% but are below 25% of the applicable percentage ratios under the Listing Rules, they trigger a disclosable transaction but not a requirement for shareholder approval.
• Business Continuity and Income: The agreements safeguard the Group’s ability to continue operating the Zone C Shopping Mall and maintain rental income streams, which are vital for the Group’s revenue and potentially its share value.
• Legal and Operational Risks: If the Group failed to secure these leases, it would have lost management rights to significant mall areas, adversely affecting business operations and financial performance.
• Shareholder Caution: The Company specifically advises shareholders and potential investors to exercise caution in dealing in its shares, indicating that these developments may be material to the share price.

Information about the Parties Involved

• Lessors: Both lessors are regional offices of China Orient Asset Management Co., Ltd., a central state-owned financial enterprise specializing in distressed asset management.
• Lessee (1): 90% indirectly owned by the Group, 10% owned by Zhengzhou Zhenglin Commercial Operation Management Co., Ltd. (with detailed breakdown of beneficial owners, including entities tied to a Company executive).
• Lessee (2): 77.78% indirectly owned by the Group, 22.22% by Zhengzhou Zhenglin.
• All lessors and their ultimate beneficial owners are considered independent third parties from the Company.

Conclusion

The securing of these lease agreements is crucial for Art Group Holdings’ continued operation and revenue generation from the Zone C Shopping Mall. The transactions involve significant asset recognition and are deemed price-sensitive enough to require public disclosure under Hong Kong Listing Rules. Investors should closely monitor the Group’s future announcements for further developments that may impact share value.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult professional advisors before making investment decisions. The Company’s future performance may be affected by a variety of factors not limited to those discussed above.