The REIT Manager, The Lessee, The Hotel Manager and The Trustee

The REIT Manager is licensed by the Securities and Futures Commission in Hong Kong to undertake the regulated activity of asset management.

The REIT Manager does not manage the hotels directly. Apart from the Regal iClub Hotel and Offices in Wanchai, all the hotels are leased to, a wholly-owned subsidiary of Regal Hotels International Holdings Limited until 31st December, 2015, under long-term lease agreements. The lessee is responsible for the day-to-day running of the hotel businesses and has to that effect engaged Regal Hotels International Limited, as the hotel manager under long-term hotel management agreements.

The newly acquired Regal iClub Hotel is leased to a wholly-owned subsidiary of Paliburg Holdings Limited, of which Regal REIT is a listed associate, until 31st December, 2010, after which the REIT manager intends to lease the property to a third party under a long term lease contract.

The Trustee of Regal REIT is DB Trustees (Hong Kong) Limited, a wholly-owned subsidiary of Deutsche Bank AG. In this role, the Trustee holds the assets of Regal REIT in trust for the benefit of the unitholders as a whole and oversees the activities of the REIT Manager for compliance with the Trust Deed and regulatory requirements.

Rental Structure and Market Rental Package

Rental payments received by Regal REIT consist of three main elements, base rent, variable rent and furniture, fixtures and equipment reserve contribution.

Base Rent

Regal REIT receives rent in the form of a fixed cash base rent for each hotel for each of the years 2007 through 2010.

Variable Rent

Regal REIT receives variable rent through sharing of aggregate profits from the hotels’ operations after their base rent payments have been made by the lessee.

Furniture, Fixtures & Equipment Reserve Contribution

Regal REIT is obligated under its lease agreements with Regal Hotels International Holdings Limited to maintain a reserve to fund expenditures for replacements of furniture, fixture and equipment in the hotels. To maintain this reserve, the lessee contributes, in the form of additional rental payments, on a monthly basis, an amount equal to 2% of total hotel revenue (up to 31st December, 2010).

Rent Reviews for 2011 to 2015

A rent review by an independent professional property valuer will take place each of the years from 2010 to 2014 to determine the base rent, variable rent and the lessee’s contribution to the furniture, fixture and equipment reserve for the respective years from 2011 to 2015.