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 investment properties of Regal REIT directly. Apart from the iclub Wan Chai Hotel, all the hotels are leased to Favour Link International Limited (the “RHIHL Lessee”), a wholly-owned subsidiary of Regal Hotels International Holdings Limited, under long-term lease agreements. The RHIHL 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.

Regal Hotels International Limited has also been appointed as the hotel manager to operate iclub Wan Chai Hotel under long-term hotel management agreement for a term of 10 years from 1st January, 2021 to 31st December, 2030.

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 of the Initial Hotels

Rental payments comprised of base rent and variable rent from RHIHL Lessee in accordance with the Market Rental Package for the relevant year.

Pursuant to the extended lease terms of the relevant lease agreements, for the years 2011 to 2028 (for Regal Airport Hotel) and 2030 (for the other four Initial Hotels), respectively, the rental packages in respect of the Initial Hotels are determined on a yearly basis by a jointly appointed independent professional property valuer. The determinations include the amount of market rents (inclusive of the amount of base rent for each Initial Hotel, the variable rent sharing percentage and the RHIHL Lessee’s contributions to the furniture, fixtures and equipment (the “FF&E”) reserve calculated as a percentage of total hotel revenue) to be applied for each of the Initial Hotels for the relevant respective years from 2011 to 2028 (for Regal Airport Hotel) and 2030 (for the other four Initial Hotels), respectively, together with the amount of the security deposit required.

Revenue Structure of iclub Wan Chai Hotel

Hotel Portion

Gross hotel revenue and the associated operating costs and expenses are accounted for directly by Regal REIT.

Other Portions

Certain areas of the premises are let out for generating monthly rental income to Regal REIT.

Revenue Structure and Market Rental Package of iclub Sheung Wan Hotel

Pursuant to the lease agreement, the RHIHL Lessee is obligated to pay rentals in respect of the iclub Sheung Wan Hotel to Regal REIT for the period from 10th February, 2014 to 31st December, 2024, with fixed rentals for the first three years of the lease term.

After the laspe of the three initial years, market rental reviews by a jointly appointed independent professional property valuer take place annually for each of the remaining periods of the lease term to determine the market rental components (comprising the base rent, variable rent and RHIHL Lessee’s contribution to the FF&E reserve) together with the amount of the security deposit required.

Revenue Structure and Market Rental Package of iclub Fortress Hill Hotel

Pursuant to the lease agreement, the RHIHL Lessee is obligated to pay rentals in respect of the iclub Fortress Hill Hotel to Regal REIT for the period from 28th July, 2014 to 31st December, 2024, with fixed rentals for the first three years of the lease term.

After the laspe of the three initial years, market rental reviews by a jointly appointed independent professional property valuer take place annually for each of the remaining periods of the lease term to determine the market rental components (comprising the base rent, variable rent and RHIHL Lessee’s contribution to the FF&E reserve) together with the amount of the security deposit required.

Revenue Structure of iclub To Kwa Wan Hotel (Formerly known as iclub Ma Tau Wai Hotel)

Pursuant to the lease agreement, the RHIHL Lessee is obligated to pay rentals in respect of the iclub To Kwa Wan Hotel to Regal REIT for the period from 4th September, 2017 to 31st December, 2027.

Rental receipts for the first five years of the lease term were pre-determined to be HK$54.4 million, HK$57.8 million, HK$61.2 million, HK$64.6 million and HK$68.0 million, respectively.

After the laspe of the five initial years, annual market rental reviews by a jointly appointed independent professional property valuer will take place for each of the remaining periods of the lease term to determine the market rental components (comprising the base rent, variable rent and RHIHL Lessee’s contribution to the FF&E reserve) together with the amount of the security deposit required.