Feb. 21, 2007 (China Knowledge) – Regal Hotels International Holdings Ltd. has applied to Hong Kong Securities & Futures Commission for the initial public offering of its real estate investment trust, the company said today.

The company said in a statement that it will spin off five Hong Kong hotel properties to the Regal REIT for around HK$12.5 billion and use 82% of the proceeds to repay debt and subscribe shares of the trust.

The REIT properties have HK$4.35 billion debt.

Regal Hotels said it intends to use HK$6 billion to buy the REIT shares and HK$4.3 billion to repay its outstanding bank loans. The remaining balance from the disposal, of not less than HK$2 million, will be retained for general working capital use.

Regal Hotels plans to own 50% to 72% of the REIT before it exercises the right to sell more units of the

trust, the statement said. Public shareholders may hold about 28% of the investment trust.

The Regal REIT manager’s current policy is to distribute 100% of the profit to be generated from the properties, the announcement said.