Regal Hotels International Holdings has vowed to stabilise the income of Hong Kong's first hotel-backed real estate investment trust by paying HK$2.9 billion in rent over the next three years.
The hotelier has also offered to meet any shortfall in the HK$420.3 million forecast distributable income of the Regal Real Estate Investment Trust in the period between listing on March 30 and the end of December this year.
Regal Reit launches the public portion of its offering today with 869.28 million shares available at between HK$2.68 and HK$3.38 a share in a bid to raise between HK$2.32 billion and HK$2.93 billion. The sale price means a yield of between 5.8 per cent and 7.51 per cent based on a forecast distributable income of between 14.88 HK cents and 15.27 HK cents per unit.
Regal Hotels and Regal Reit chairman Lo Yuk-sui said the international tranche, accounting for 90 per cent of the offering, had seen a strong response despite a volatile stock market.
'We offer the highest yields compared to two other hotel-backed reits in Asia,' Mr Lo said. 'Our yields are based on distributable income and are free of any financial re-engineering.'
Regal Hotels executive director Poman Lo, Mr Lo's daughter, expected the strong growth at Regal Reit's five-strong hotel portfolio would be sustained at least in the next three years, due largely to further growth in traveller numbers and a HK$320 million refurbishment programme.